MediciNova Inc.
Annual Report 2018

Plain-text annual report

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, DC 20549 Form 10-K (Mark One)☒☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2018or☐☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from. to Commission file number: 001-33185 MEDICINOVA, INC.(Exact Name of Registrant as Specified in its Charter) Delaware 33-0927979(State or Other Jurisdiction ofIncorporation or Organization) (I.R.S. EmployerIdentification No.) 4275 Executive Square, Suite 300, La Jolla, CA 92037(Address of Principal Executive Offices) (Zip Code)(858) 373-1500(Registrant’s Telephone Number, Including Area Code)Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Name of Each Exchange on Which RegisteredCommon Stock, par value $0.001 per share The NASDAQ Stock Market LLCSecurities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during thepreceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90days. Yes ☒ No ☐Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of theregistrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☒Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growthcompany. See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Checkone): Large accelerated filer☐ Accelerated filer☒ Non-accelerated filer☐ Smaller reporting company☒ Emerging growth company☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revisedfinancial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes ☐ No ☒The aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was approximately $314,684,033 based on the closing price of theregistrant’s common stock on the NASDAQ Global Market of $7.96 per share on June 30, 2018. Shares of common stock held by each executive officer and director and eachaffiliated entity has been excluded from this calculation. This determination of affiliate status may not be conclusive for other purposes.The number of outstanding shares of the registrant’s common stock, par value $0.001 per share, as of February 12, 2019 was 42,171,810. DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant’s Proxy Statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A in connection with the registrant’s 2019Annual Meeting of Stockholders, which will be filed subsequent to the date hereof, are incorporated by reference into Part III of this Form 10-K. iiMEDICINOVA, INC.FORM 10-K—ANNUAL REPORTFor the Fiscal Year Ended December 31, 2018Table of Contents PagePART I Item 1Business6 Item 1ARisk Factors28Item 1BUnresolved Staff Comments49Item 2Properties49Item 3Legal Proceedings49Item 4Mine Safety Disclosures49 PART II Item 5Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities50Item 6Selected Financial Data52Item 7Management’s Discussion and Analysis of Financial Condition and Results of Operations53Item 7AQuantitative and Qualitative Disclosures About Market Risk60Item 8Financial Statements and Supplementary Data60Item 9Changes in and Disagreements With Accountants on Accounting and Financial Disclosure79Item 9AControls and Procedures79Item 9BOther Information83 PART III Item 10Directors, Executive Officers and Corporate Governance84Item 11Executive Compensation84Item 12Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters84Item 13Certain Relationships and Related Transactions, and Director Independence85Item 14Principal Accountant Fees and Services85 PART IV Item 15Exhibits and Financial Statement Schedules86 Signatures90 The MediciNova logo is a registered trademark of MediciNova, Inc. All other product and company names are registered trademarks or trademarks oftheir respective companies. 3PART I CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTSThis Annual Report on Form 10-K includes forward-looking statements that involve a number of risks and uncertainties, many of which are beyondour control. The forward-looking statements are contained principally in the sections titled “Risk Factors” and “Management’s Discussion and Analysis ofFinancial Condition and Results of Operations,” but are also contained elsewhere in this report. Forward-looking statements include all statements thatare not historical facts and, in some cases, can be identified by terms such as "believe," "may," "will," "estimate," "continue," "anticipate," "design," "intend,""expect," "could," "plan," "potential," "predict," "seek," "should," "would" or the negative version of these words and similar expressions.Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance orachievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements,including those described in "Risk Factors" and elsewhere in this report. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Also, forward-looking statements represent our beliefs and assumptions only as of the date of this report. In light of the significantuncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that wewill achieve our objectives and plans in any specified time frame, or at all. You should read this report completely and with the understanding that ouractual future results may be materially different from what we expect.The following factors are among those that may cause actual results to differ materially from our forward-looking statements: •Inability to raise additional capital if needed; •Inability to generate revenues from product sales to continue business operations; •Inability to develop and commercialize our product candidates; •Failure or delay in completing clinical trials or obtaining FDA or foreign regulatory approval for our product candidates in a timely manner; •Unsuccessful clinical trials stemming from clinical trial designs, failure to enroll a sufficient number of patients, undesirable side effects andother safety concerns; •Inability to demonstrate sufficient efficacy of product candidates; •Reliance on the success of our MN-166 (ibudilast) and MN-001 (tipelukast) product candidates; •Delays in commencement or completion of clinical trials or suspension or termination of clinical trials; •Loss of our licensed rights to develop and commercialize a product candidate as a result of the termination of the underlying licensingagreement; •Competitors may develop products rendering our product candidates obsolete and noncompetitive; •Inability to successfully attract partners and enter into collaborations on acceptable terms; •Dependence on third parties to conduct clinical trials and to manufacture product candidates; •Dependence on third parties to market and distribute products; •Our product candidates, if approved, may not gain market acceptance or obtain adequate coverage for third party reimbursement; •Disputes or other developments concerning our intellectual property rights; •Actual and anticipated fluctuations in our quarterly or annual operating results; •Price and volume fluctuations in the overall stock markets; •Litigation or public concern about the safety of our potential products;4 •International trade or foreign exchange restrictions, increased tariffs, foreign currency exchange; •High quality material for our products may become difficult to obtain or expensive; •Strict government regulations on our business; •Regulations governing the production or marketing of our product candidates; •Loss of, or inability to attract, key personnel; and •Economic, political, foreign exchange and other risks associated with international operations. 5Item 1. Business Overview We are a biopharmaceutical company focused on developing novel, small molecule therapeutics for the treatment of serious diseases with unmet medicalneeds and a commercial focus on the United States market. Our current strategy is to focus our development activities on MN-166 (ibudilast) for neurologicaldisorders such as progressive multiple sclerosis (MS), amyotrophic lateral sclerosis (ALS), chemotherapy-induced peripheral neuropathy, degenerativecervical myelopathy, glioblastoma, and substance dependence and addiction (e.g., methamphetamine dependence, opioid dependence, and alcoholdependence), and MN-001 (tipelukast) for fibrotic diseases such as nonalcoholic steatohepatitis (NASH) and idiopathic pulmonary fibrosis (IPF). Ourpipeline also includes MN-221 (bedoradrine) for the treatment of acute exacerbation of asthma and MN-029 (denibulin) for solid tumor cancers. MN-166 (ibudilast) is currently in development for several different neurological diseases as described below. •Progressive Multiple Sclerosis: We completed a Phase 2b clinical trial of MN-166 (ibudilast) for the treatment of relapsing multiple sclerosis(MS), in which positive safety and neuroprotective efficacy indicators were observed. The data from this trial indicated that MN-166 (ibudilast)may have potential in the treatment of progressive MS. We partnered with investigators on a Phase 2b clinical trial of MN-166 (ibudilast) in primary progressive and secondary progressive MS whichwas conducted by NeuroNEXT and funded by the National Institute of Health’s (NIH) National Institute of Neurological Diseases and Stroke(NINDS). This progressive MS trial, known as SPRINT-MS, completed randomization of 255 subjects in 2015, which exceeded the goal of 250subjects that were planned for participation. In October 2017, we announced the presentation of positive top-line results from the SPRINT-MSPhase 2b clinical trial of MN-166 (ibudilast) in progressive MS. The trial achieved both primary endpoints of whole brain atrophy and safety andtolerability. MN-166 (ibudilast) demonstrated a statistically significant 48% reduction in the rate of progression of whole brain atrophycompared to placebo (p=0.04) as measured by MRI analysis using brain parenchymal fraction (BPF) and there was not an increased rate of seriousadverse events in the MN-166 (ibudilast) group compared to the placebo group. In February 2018, we announced the presentation of positiveclinical efficacy trends from this trial regarding the important secondary endpoint of confirmed disability progression. MN-166 (ibudilast)demonstrated a 26% reduction in the risk of confirmed disability progression compared to placebo (hazard ratio = 0.74), as measured by EDSS(Expanded Disability Status Scale). Results of the SPRINT-MS Phase 2b clinical trial of MN-166 (ibudilast) in progressive MS were published inthe New England Journal of Medicine in August 2018.The United States Food and Drug Administration (FDA) has granted Fast Track designation for the development of MN-166 (ibudilast) for thetreatment of patients with progressive MS. •Amyotrophic Lateral Sclerosis (ALS): We initiated a clinical trial of MN-166 (ibudilast) in amyotrophic lateral sclerosis (ALS) in the second halfof 2014, and this trial was completed during the second half of 2017. In December 2017, we announced positive top-line results from this trial.The trial achieved the primary endpoint of safety and tolerability. In addition, there was a higher rate of responders on the ALSFRS-R total scorein the MN-166 (ibudilast) group compared to the placebo group. The Amyotrophic Lateral Sclerosis Functional Rating Scale-Revised (ALSFRS-R) total score measures the functional activity of an ALS subject. In July 2018, we announced data from ad-hoc subgroup analyses in ALSsubjects who had either bulbar onset or upper limb onset. In September 2018, we received feedback from the FDA regarding our Phase 3 clinicaldevelopment plan for MN-166 (ibudilast) in ALS. In January 2019, we received a Notice of Allowance from the U.S. Patent and Trademark Officefor a pending patent application which covers the combination of MN-166 (ibudilast) and riluzole for the treatment of ALS and otherneurodegenerative diseases. We have collaborated with Massachusetts General Hospital (MGH) to conduct a clinical trial to study the effects of MN-166 (ibudilast) onreducing brain microglial activation in ALS subjects which can be monitored by a biomarker. This ongoing clinical trial, which we refer to as theALS / Biomarker study, will6also evaluate several clinical outcomes. In July 2018, we announced that the ALS / Biomarker study was fully enrolled. The FDA has granted Fast Track designation to MN-166 (ibudilast) for the treatment of ALS as well as Orphan-Drug designation for the treatmentof ALS, which will provide seven years of marketing exclusivity if it is approved for ALS. The European Commission also granted OrphanMedicinal Product Designation for MN-166 (ibudilast) for the treatment of ALS. •Substance Dependence and Addiction: In the area of addiction, the National Institute on Drug Abuse (NIDA) funded a Phase 2 clinical trial studying theuse of MN-166 (ibudilast) for the treatment of methamphetamine addiction. In collaboration with the University of California, Los Angeles (UCLA),this clinical trial commenced in 2013 and enrollment was completed in September 2017. In March 2018, we announced that this trial did not meetthe primary endpoint of methamphetamine abstinence confirmed via urine drug screens during the final two weeks of treatment. In November 2017,we announced a collaboration with Oregon Health & Science University to initiate a biomarker study for evaluating MN-166 (ibudilast) inmethamphetamine use disorder and this trial is ongoing.Investigators at Columbia University and the New York State Psychiatric Institute (NYSPI) previously completed a Phase 1b/2a clinical trial ofMN-166 (ibudilast) in opioid withdrawal that was funded by NIDA. Investigators at Columbia University and the NYSPI also conducted a NIDA-funded, Phase 2a clinical trial to evaluate the efficacy of MN-166 (ibudilast) in the treatment of patients addicted to prescription opioids orheroin. In March 2016, we announced that positive findings from the results of this completed study in opioid dependence were presented at theBehavior, Biology and Chemistry: Translational Research in Addiction Meeting. Researchers at UCLA were granted approval and funding by the National Institute on Alcoholism and Alcohol Abuse (NIAAA) for a clinical trialto evaluate MN-166 (ibudilast) for the treatment of alcohol dependence. This clinical trial has been completed and results were presented at theAmerican College of Neuropsychopharmacology (ACNP)’s 54th Annual Meeting in December 2015. In May 2018, we announced a new NIDA-funded clinical trial of MN-166 (ibudilast) in alcohol dependence and withdrawal in collaboration with researchers at UCLA and this trial isongoing. In August 2018, we announced a new NIAAA-funded Phase 2b clinical trial of MN-166 (ibudilast) which will evaluate heavy drinkingdays in subjects with alcohol dependence in collaboration with researchers at UCLA and this trial is ongoing. •Chemotherapy-Induced Peripheral Neuropathy: In March 2018, we announced plans to initiate a clinical trial to evaluate MN-166 (ibudilast) inchemotherapy-induced peripheral neuropathy, which is funded by the University of Sydney Concord Cancer Centre in Australia, and this trial isongoing. •Degenerative Cervical Myelopathy: In August 2018, we announced plans to initiate a clinical trial of MN-166 (ibudilast) in degenerative cervicalmyelopathy (DCM) in collaboration with the University of Cambridge. The trial is funded by a grant from the National Institute for Health Research(NIHR) in the United Kingdom (UK) and enrollment is expected to begin in mid-2019. •Glioblastoma: We have initiated clinical development to evaluate MN-166 (ibudilast) for the treatment of glioblastoma. In June 2017, we announcedpositive results from an animal model study that examined the potential clinical efficacy of MN-166 (ibudilast) for the treatment of glioblastoma.These results were presented at the 2017 American Society of Clinical Oncology (ASCO) Annual Meeting. In May 2018, we announced that theInvestigational New Drug Application (IND) for MN-166 (ibudilast) for treatment of glioblastoma was accepted and opened with the FDA. InOctober 2018, we announced that the FDA granted orphan-drug designation to MN-166 (ibudilast) as adjunctive therapy to temozolomide for thetreatment of glioblastoma. In January 2019, we announced the initiation of enrollment in a clinical trial of MN-166 (ibudilast) in combination withtemozolomide (TMZ, Temodar‑®) for the treatment of recurrent glioblastoma at the Dana-Farber Cancer Institute in Boston. MN-001 (tipelukast) is currently in development for fibrotic diseases including nonalcoholic steatohepatitis (NASH) and idiopathic pulmonary fibrosis(IPF), which are described below.7 •Nonalcoholic Steatohepatitis (NASH) and Nonalcoholic Fatty Liver Disease (NAFLD): We announced positive results of MN-001 (tipelukast) in twodifferent NASH mouse models in 2014 and we opened the IND (Investigational New Drug) application for MN-001 (tipelukast) for the treatment ofNASH with the FDA in 2015. The FDA subsequently granted Fast Track designation to MN-001 (tipelukast) for the treatment of patients with NASHwith fibrosis. We then initiated a clinical trial to investigate MN-001 (tipelukast) for the treatment of hypertriglyceridemia in NASH and NAFLDpatients. In April 2018, we announced that we would terminate this trial early after positive results from an interim analysis in which MN-001(tipelukast) significantly reduced mean serum triglycerides, a primary endpoint. This data was presented at the International Liver Congress 2018,the 53rd annual meeting of the European Association for the Study of the Liver (EASL) in Paris, France in April 2018. •Idiopathic Pulmonary Fibrosis (IPF): In 2014, we announced positive results of MN-001 (tipelukast) in a mouse model of pulmonary fibrosis. The FDAsubsequently granted Orphan-Drug designation to MN-001 (tipelukast) for treatment of IPF which will provide seven years of marketing exclusivityif MN-001 (tipelukast) is approved for IPF. The FDA granted Fast Track designation to MN-001 (tipelukast) for the treatment of patients with IPF inSeptember 2015. We then initiated a Phase 2 clinical trial of MN-001 (tipelukast) to treat IPF and this trial is currently enrolling patients. We completed a Phase 2 clinical trial of MN-221 (bedoradrine) for the treatment of acute exacerbations of asthma treated in the emergency room andconducted an End-of-Phase 2 meeting with the United States Food and Drug Administration (FDA) in October 2012. In that meeting, the FDA identified therisk/benefit profile of MN-221 (bedoradrine) as a focal point for further development and advised that a clinical outcome, such as a reduction inhospitalizations, would need to be a pivotal trial primary endpoint. We believe the appropriate clinical development for MN-221 (bedoradrine) wouldinvolve conducting dose regimen and acute exacerbations of asthma trial design optimization studies prior to commencing pivotal trials. We are working toidentify a partner for financial support before further clinical development is commenced. We have acquired licenses to MN-166 (ibudilast), MN-001 (tipelukast), MN-221 (bedoradrine), and MN-029 (denibulin) for the development of theseproduct candidates. We have pursued development of these product candidates in various indications including progressive MS, ALS, chemotherapy-induced peripheral neuropathy, degenerative cervical myelopathy, glioblastoma, various addictions, NASH and NAFLD, IPF, acute exacerbations of asthma,and solid tumor cancers. Our Strategy Our goal is to build a sustainable biopharmaceutical business through the successful development of differentiated products for the treatment of seriousdiseases with unmet medical needs in high-value therapeutic areas. Key elements of our strategy are as follows: •Pursue the development of MN-166 (ibudilast) for multiple potential indications with the support of non-dilutive financings. We intend to advance our diverse MN-166 (ibudilast) program through a combination of investigator-sponsored clinical trials, trials fundedthrough government grants or other grants, and trials funded by us. In addition to providing drug supply and regulatory support, we have fundedportions of some of the consortium-sponsored trials. For example, we contributed financially to the Secondary and Primary Progressive IbudilastNeuroNEXT Trial in Multiple Sclerosis (SPRINT-MS) Phase 2b clinical trial of MN-166 (ibudilast) for the treatment of progressive MS, whichwas primarily funded by the NIH. In addition, we contributed financially to the clinical trial of MN-166 (ibudilast) for the treatment of ALS aswell as the ongoing ALS / Biomarker study. We intend to pursue additional strategic alliances to help support further clinical development ofMN-166 (ibudilast). •Pursue the development of MN-001 (tipelukast) for fibrotic and other diseases. 8We intend to advance development of MN-001 (tipelukast) through a variety of means, which may include investigator-sponsored trials with orwithout grant funding as well as trials funded by us. •Consider strategic partnerships with one or more leading pharmaceutical companies to complete late-stage product development andsuccessfully commercialize our products. We develop and maintain relationships with pharmaceutical companies that are therapeutic category leaders. Upon completion of proof-of-concept Phase 2 clinical trials, we intend to discuss strategic alliances with leading pharmaceutical companies who seek late-stage productcandidates, such as MN-166 (ibudilast), MN-001 (tipelukast), MN-221 (bedoradrine) and MN-029, which could support further clinicaldevelopment and product commercialization. Our Product Candidates and Programs Our product development programs address diseases that we believe are not well served by currently available therapies and represent significantcommercial opportunities. We believe that we have product candidates that offer innovative therapeutic approaches that may provide significant advantagesrelative to current therapies. Our product acquisitions have focused primarily on product candidates with significant preclinical and early clinical testing data that have beendeveloped by the licensors outside of the United States. We utilize the existing data in preparing Investigational New Drug (INDs) Applications or theirforeign equivalents, and in designing and implementing additional preclinical or clinical trials to advance the development programs in the United States orabroad. Following are the details of our product development programs: MN-166 (ibudilast) MN-166 (ibudilast) is a novel, first-in-class, oral, anti-inflammatory and neuroprotective agent. MN-166 (ibudilast) inhibits macrophage migrationinhibitory factor (MIF) and certain phosphodiesterases (PDEs). MN-166 (ibudilast) also attenuates activated glia cells, which play a major role in certainneurological conditions. While it has been in use for more than 20 years in Japan and Korea for the treatment of asthma and post-stroke dizziness, we aredeveloping MN-166 (ibudilast) for the treatment of primary progressive and secondary progressive MS, ALS, chemotherapy-induced peripheral neuropathy,degenerative cervical myelopathy, glioblastoma, and substance dependence. We licensed MN-166 (ibudilast) from Kyorin Pharmaceuticals (Kyorin) in 2004. The FDA has granted Fast Track designations to MN-166 (ibudilast) for three separate indications: the treatment of progressive MS, the treatment ofALS, and the treatment of methamphetamine dependence. Fast track designation is a process designed to facilitate the development and expedite the reviewof drugs that are intended to treat serious diseases and have the potential to fill an unmet medical need. An important feature of the FDA’s Fast Track programis that it emphasizes early and frequent communication between the FDA and the sponsor throughout the entire drug development and review process toimprove the efficiency of product development. Accordingly, Fast Track status can potentially lead to a shortened timeline to ultimate drug approval. The FDA has granted Orphan-Drug designation to MN-166 (ibudilast) for the treatment of ALS, which will provide seven years of marketingexclusivity if it is approved for ALS in the U.S. The European Commission also granted Orphan Medicinal Product Designation for MN-166 (ibudilast) forthe treatment of ALS which offers potential benefits including 10 years of marketing exclusivity if it is approved for ALS in Europe. The FDA has alsogranted Orphan-Drug designation to MN-166 (ibudilast) as adjunctive therapy to temozolomide for the treatment of glioblastoma. We have filed patent applications for multiple uses of MN-166 (ibudilast) for the treatment of neurological conditions. Some of the patent estate hasreceived allowance in the United States and foreign countries. For example, we have been granted separate U.S. patents that cover the use of MN-166(ibudilast) for the treatment of progressive MS, for the treatment of ALS, for the treatment of drug addiction or dependence, and for the treatment ofneuropathic pain.9 Primary and Secondary Progressive Multiple Sclerosis: MS is a complex disease with predominantly unknown etiology and affects approximately2.3 million people worldwide, according to the National Multiple Sclerosis Society, or NMSS. Also, according to NMSS, approximately 85 percent of peoplewith MS are initially diagnosed with relapsing-remitting MS, or RRMS, and most people who are initially diagnosed with RRMS will eventually transitionto secondary progressive MS, or SPMS. About 15 percent of people with MS are diagnosed with primary progressive MS, or PPMS. There is only oneapproved drug for PPMS and it is administered by intravenous infusion. There are no approved drugs generally considered safe and efficacious for SPMS inthe absence of relapses. There is a significant medical need for a safe, effective, and conveniently administered therapy for patients with PPMS and SPMS.MN-166 (ibudilast) may meet these needs. Based on promising results from a Phase 2 trial in relapsing MS completed in 2008, investigators from NeuroNEXT, a NIH-funded Phase 2 clinical trialnetwork, evaluated MN-166 (ibudilast) in PPMS and SPMS patients in the United States. SPRINT-MS is the name of the Phase 2b, randomized, double-blind,placebo-controlled trial that evaluated the safety and tolerability of MN-166 (ibudilast) (up to 100 mg/day) in PPMS and SPMS patients. Recruitment andenrollment at 28 medical centers in the United States commenced in late 2013 and randomization of 255 subjects was completed in June 2015. In October2017, we announced the presentation of positive top-line results from the SPRINT-MS Phase 2b clinical trial of MN-166 (ibudilast) in progressive MS. Thetrial achieved both primary endpoints of whole brain atrophy and safety and tolerability. MN-166 (ibudilast) demonstrated a statistically significant 48%reduction in the rate of progression of whole brain atrophy compared to placebo (p=0.04) as measured by MRI analysis using brain parenchymal fraction(BPF) and there was not an increased rate of serious adverse events in the MN-166 (ibudilast) group compared to the placebo group. In February 2018, weannounced the presentation of positive clinical efficacy trends from this trial regarding the important secondary endpoint of confirmed disability progression.MN-166 (ibudilast) demonstrated a 26% reduction in the risk of confirmed disability progression compared to placebo (hazard ratio = 0.74), as measured byEDSS (Expanded Disability Status Scale). Results of the SPRINT-MS Phase 2b clinical trial of MN-166 (ibudilast) in progressive MS were published in theNew England Journal of Medicine in August 2018. We were granted Fast Track designation from the FDA for MN-166 (ibudilast) for the treatment ofprogressive MS in 2016. Amyotrophic Lateral Sclerosis (ALS): ALS, also known as Lou Gehrig’s disease, is a progressive neurodegenerative disease that affects nerve cells inthe brain and the spinal cord. The nerves lose the ability to trigger specific muscles, which causes the muscles to become weak. As a result, ALS affectsvoluntary movement and patients in the later stages of the disease may become totally paralyzed. Average life expectancy of an ALS patient is three yearsfrom diagnosis. According to the ALS Association, there are approximately 20,000 ALS patients in the United States and approximately 5,000 people in theUnited States are diagnosed with ALS each year. We have worked with Carolinas Neuromuscular/ALS-MDA Center at Carolinas HealthCare System Neurosciences Institute, which has conducted aclinical trial of MN-166 (ibudilast) in ALS. The trial was a randomized, double-blind, placebo-controlled study which included a six-month treatment periodfollowed by a six-month open-label extension. The study evaluated the safety and tolerability of MN-166 (ibudilast) 60 mg/day versus placebo whenadministered in combination with riluzole in subjects with ALS, as well as several efficacy endpoints. Subject enrollment began in October 2014. In April2016, we announced that interim efficacy data from a mid-study analysis of the clinical trial of MN-166 (ibudilast) in ALS was presented at the AmericanAcademy of Neurology (AAN) 68th Annual Meeting. In December 2017, we announced positive top-line results from the ALS trial at Carolinas Neuromuscular/ALS-MDA Center. The trial achieved theprimary endpoint of safety and tolerability. In addition, there was a higher rate of responders on the ALSFRS-R total score in the MN-166 (ibudilast) groupcompared to the placebo group. The Amyotrophic Lateral Sclerosis Functional Rating Scale-Revised (ALSFRS-R) total score measures the functional activityof an ALS subject. There was also a higher rate of responders on the ALSAQ-5 score in the MN-166 (ibudilast) group compared to the placebo group. TheAmyotrophic Lateral Sclerosis Assessment Questionnaire (ALSAQ-5) score measures the physical mobility, activities of daily living and independence,eating and drinking, communication, and emotional functioning of an ALS subject. In July 2018, we announced data from ad-hoc subgroup analyses insubjects who had either bulbar onset or upper limb onset in the ALS trial at Carolinas Neuromuscular/ALS-MDA Center. In September 2018, we receivedfeedback from the FDA regarding our Phase 3 clinical development plan for MN-166 (ibudilast) in ALS. 10In December 2015, we announced that the FDA granted Fast Track designation to MN-166 (ibudilast) for the treatment of patients with ALS. In March2016, we announced that we received a Notice of Allowance from the United States Patent and Trademark Office (PTO) for a new patent which covers MN-166 (ibudilast) for the treatment of ALS. In October 2016, we announced that the FDA granted Orphan-Drug designation to MN-166 (ibudilast) for thetreatment of ALS, which will provide seven years of marketing exclusivity if it is approved for ALS. In December 2016, we announced that the EuropeanCommission granted Orphan Medicinal Product Designation for MN-166 (ibudilast) for the treatment of ALS. In January 2019, we received a Notice ofAllowance from the U.S. PTO for a pending patent application which covers the combination of MN-166 (ibudilast) and riluzole for the treatment of ALS andother neurodegenerative diseases. In February 2016, we entered into an agreement to collaborate with Massachusetts General Hospital (MGH) to study the effects of MN-166 (ibudilast)on reducing brain microglial activation in ALS subjects measured by a positron emission tomography (PET) biomarker. This ongoing clinical trial, which werefer to as the ALS / Biomarker study, will also evaluate safety and tolerability as well as several clinical outcomes including ALS functional rating scale(ALSFRS-R), slow vital capacity (SVC), and muscle strength measured by hand-held dynamometry (HHD). In July 2018, we announced that the ALS /Biomarker study was fully enrolled. Methamphetamine Addiction: Methamphetamine is a central nervous system stimulant drug that is similar in structure to amphetamine. It is a ScheduleII drug, meaning that it has high abuse potential and low therapeutic potential. According to the Substance Abuse and Mental Health ServicesAdministration’s (SAMHSA) 2017 National Survey on Drug Use and Health, there are approximately 964,000 people aged 12 or older withmethamphetamine use disorder (includes those with dependence or abuse) in the United States. According to the Rand Corporation, the estimate of theeconomic burden in the United States of methamphetamine use, based on the most recent year for which data are available, is approximately $23.4 billion.Currently, there is no pharmaceutical treatment approved for methamphetamine dependence. Based on non-clinical results of the effects of MN-166(ibudilast) in an animal model of methamphetamine relapse, investigators at UCLA conducted a Phase 1b clinical trial funded by NIDA to examine the safetyand preliminary efficacy of MN-166 (ibudilast) in non-treatment-seeking, methamphetamine-dependent users in an inpatient trial that was completed in2012. Subsequently, UCLA investigators received NIDA grant funding for a Phase 2 clinical trial to evaluate MN-166 (ibudilast) in methamphetamine-dependent users in an outpatient trial setting that commenced in 2013. In March 2018, we announced that this trial did not meet the primary endpoint ofmethamphetamine abstinence confirmed via urine drug screens during the final two weeks of treatment. In November 2017, we announced a collaborationwith Oregon Health & Science University to initiate a biomarker study to evaluate MN-166 (ibudilast) in methamphetamine use disorder and this study isongoing. We were granted Fast Track designation from the FDA for MN-166 (ibudilast) for the treatment of methamphetamine dependence in 2013. Opioid Withdrawal and Dependency: According to the SAMHSA’s 2017 National Survey on Drug Use and Health, there are approximately 1.7 millionpeople aged 12 or older with pain reliever use disorder (includes those with dependence or abuse) and approximately 652,000 people aged 12 or older withheroin use disorder (includes those with dependence or abuse) in the United States. Access to prescription opioids has recently become more difficult due tomore stringent policies on prescribing opioids. An unintended consequence of this policy is increased use of heroin. Heroin is attractive to prescriptionopioid addicts because it is less expensive and more accessible than prescription opioids. Heroin poses serious health issues, such as risk of HIV and HepatitisC infection, overdose and death (Knopf, 2012). There is an urgent, significant unmet medical need for a safe, effective non-addictive, non-opioid therapy forthe treatment of prescription opioid and heroin addiction. Investigators at Columbia University and NYSPI previously completed a NIDA-funded,randomized, double-blind, placebo-controlled in-unit Phase 1b/2a clinical trial to evaluate the ability of MN-166 (ibudilast) to reduce opioid withdrawalsymptoms in humans. Subsequently, investigators at Columbia University and NYSPI conducted a NIDA-funded Phase 2a clinical trial of MN-166 (ibudilast)for the treatment of prescription opioid or heroin dependence. In March 2016, we announced that positive findings from the results of this completed study inopioid dependence were presented at the Behavior, Biology and Chemistry: Translational Research in Addiction Meeting. Alcohol Addiction: According to SAMHSA’s 2017 National Survey on Drug Use and Health, there are approximately 14.5 million people aged 12 orolder with alcohol use disorder (includes those with dependence or abuse) in the United States. The Centers for Disease Control and Prevention (CDC) reportsthat excessive alcohol use cost the United States $249 billion in 2010, the latest year for which complete data are available. Medicines that11have been approved by the FDA to treat alcohol dependence include Antabuse ®, Vivitrol ®, Campral ® and Revia ®. However, the search for a safe andeffective drug remains elusive due to limited success of these FDA-approved compounds (Witkiewitz et al., 2012). In a non-clinical trial (Bell et al., 2013),MN-166 (ibudilast) was examined in rats and mice and was found to reduce alcohol drinking in alcohol-preferring P rats and high-alcohol drinking (HAD1)rats by 50%, and in mice made dependent on alcohol at doses which had no effect on non-dependent mice. Investigators at UCLA received funding from theNIAAA to conduct a study to evaluate MN-166 (ibudilast) in a randomized, double-blind, placebo-controlled within-subject crossover design to determinethe safety, tolerability and initial human laboratory efficacy of MN-166 (ibudilast) in a sample of 24 non-treatment seeking individuals with either alcoholabuse or dependence. The study was initiated in early 2014 and completed enrollment of 24 subjects in June 2015. Results of the alcohol dependence studywere presented at the American College of Neuropsychopharmacology (ACNP)’s 54th Annual Meeting in December 2015. MN-166 (ibudilast), but notplacebo, significantly decreased basal, daily alcohol craving over the course of the study (p<0.05). MN-166 (ibudilast) did not affect cue- and stress-inducedalcohol craving. However, MN-166 (ibudilast) increased positive mood during both the cue reactivity and stress procedures. MN-166 (ibudilast) was safe andwell-tolerated during the study. In May 2018, we announced plans to initiate an NIH-funded clinical trial of MN-166 (ibudilast) in alcohol dependence andwithdrawal in collaboration with researchers at UCLA. This clinical trial, which is currently ongoing, is evaluating whether MN-166 (ibudilast) reduces basallevel negative affect during abstinence, and in doing so, will interfere with alcohol-induced blunting of negative affectivity. In August 2018, we announced anew NIAAA-funded Phase 2b clinical trial of MN-166 (ibudilast) in alcohol dependence in collaboration with researchers at UCLA. This clinical trial, whichis currently ongoing, is evaluating whether MN-166 (ibudilast) will decrease the percentage of heavy drinking days (defined as ≥ 5 drinks for men and ≥ 4drinks for women), as compared to placebo, over the course of the 12-week trial. Chemotherapy-Induced Peripheral Neuropathy: Peripheral neuropathy is a set of symptoms caused by damage to peripheral nerves, the nerves that areaway from the brain and spinal cord. Some of the chemotherapy and other drugs used to treat cancer can damage peripheral nerves which carry sensations tothe brain and control the movement of the arms and legs. This damage results in chemotherapy-induced peripheral neuropathy (CIPN) which can be adisabling side effect of cancer treatment. Common symptoms of CIPN include pain, burning, tingling, loss of feeling, coordination and balance problems,muscle weakness, trouble swallowing and passing urine, constipation, and blood pressure changes. Severe CIPN may require chemotherapy dose reduction orcessation. According to a meta-analysis which included more than 4,000 patients, CIPN prevalence was 68% when measured in the first month afterchemotherapy, 60% at 3 months, and 30% at 6 months or more (“Incidence, prevalence, and predictors of chemotherapy-induced peripheral neuropathy: Asystematic review and meta-analysis,” Seretny M et al 2014). In March 2018, we announced plans to initiate a clinical trial to evaluate MN-166 (ibudilast) inchemotherapy-induced peripheral neuropathy which is funded by the University of Sydney Concord Cancer Centre in Australia. This is an ongoing, open-label, sequential cross-over pilot study assessing acute neurotoxicity, chemotherapy-induced peripheral neuropathy, and drug interactions of MN-166(ibudilast) in patients with metastatic gastrointestinal cancer (colorectal cancer and upper gastrointestinal cancers) who are receiving oxaliplatin. Degenerative Cervical Myelopathy: Degenerative cervical myelopathy (DCM), also known as cervical spondylotic myelopathy, involves spinal corddysfunction from compression in the neck. Degenerative cervical myelopathy is the most common form of spinal cord impairment in adults and results indisability and reduced quality of life. Patients report neurological symptoms such as pain and numbness in limbs, poor coordination, imbalance, and bladderproblems. According to the American Association of Neurological Surgeons, more than 200,000 cervical procedures are performed each year to relievecompression on the spinal cord or nerve roots. There are no pharmaceuticals approved for the treatment of DCM. In August 2018, we announced plans toinitiate a clinical trial of MN-166 (ibudilast) in DCM in collaboration with the University of Cambridge. The trial, which is funded by a grant from theNational Institute for Health Research (NIHR) in the United Kingdom (UK), will evaluate MN-166 (ibudilast) as an adjuvant treatment for DCM followingspinal surgery to determine whether MN-166 (ibudilast) is more effective than placebo in improving outcomes after spinal surgery. The primary endpoint isthe modified Japanese Orthopaedic Association (mJOA) Score, which evaluates motor dysfunction in upper and lower extremities, loss of sensation, andbladder sphincter dysfunction, at 6 months after surgery. Glioblastoma: According to the American Association of Neurological Surgeons, glioblastoma is an aggressive brain tumor that develops from glialcells (astrocytes and oligodendrocytes), grows rapidly, and commonly spreads12into nearby brain tissue. The American Brain Tumor Association reports that glioblastomas represent about 15% of all primary brain tumors and 56% of allgliomas. Glioblastoma has the highest number of cases of all malignant tumors, with an estimated 12,760 new cases predicted for 2018. Median survival isabout 14.6 months for adults with more aggressive glioblastoma treated with temozolomide and radiation therapy. In June 2017, we announced positiveresults from an animal model study that examined the potential clinical efficacy of MN-166 (ibudilast) for the treatment of glioblastoma which werepresented at the 2017 American Society of Clinical Oncology (ASCO) Annual Meeting. Results of the glioblastoma mouse model study showed that mediansurvival was higher in the group that received combination treatment with MN-166 (ibudilast) plus temozolomide compared to the group that receivedtemozolomide alone. In May 2018, we announced that the Investigational New Drug Application (IND) for MN-166 (ibudilast) for treatment of glioblastomawas accepted and opened with the FDA. We were also informed by the FDA that the proposed clinical investigation of MN-166 (ibudilast) in combinationwith temozolomide for treatment of glioblastoma may proceed. In October 2018, we announced that the FDA granted orphan-drug designation to MN-166(ibudilast) as adjunctive therapy to temozolomide for the treatment of glioblastoma. In January 2019, we announced the initiation of enrollment in a clinicaltrial of MN-166 (ibudilast) in combination with temozolomide (TMZ, Temodar‑®) for the treatment of recurrent glioblastoma at the Dana-Farber CancerInstitute in Boston. MN-221 (bedoradrine) MN-221 (bedoradrine) is a novel, highly selective ß2-adrenergic receptor agonist which has been developed for the treatment of acute exacerbations ofasthma. We licensed MN-221 (bedoradrine) from Kissei Pharmaceutical Co., Ltd. (Kissei) in February 2004. Current inhaled beta-agonist treatments forasthma exacerbations are limited by bronchoconstriction or insufficient airflow due to inflammation and airway constriction, which reduces the amount ofinhaled drug that can get into the lungs. In addition, the amount of inhaled treatments a patient can tolerate is limited due to the potential for cardiovascularside effects (e.g. increased heart rate). MN-221 (bedoradrine) is designed to treat acute exacerbations of asthma via intravenous (i.v.) infusion, bypassing constricted airways to deliver thedrug to the lungs. Preclinical studies showed MN-221 (bedoradrine) to have a high affinity for the ß 2 -adrenergic receptor, found primarily in the lungs, and amuch lower affinity for the ß 1 -adrenergic receptor found primarily in cardiac tissue. MN-221 (bedoradrine)’s improved delivery to the lungs and its cardiacsafety profile has potential to help fill an unmet need for patients with acute exacerbations of asthma, helping them to breathe easier and avoid a costlyhospital stay. Acute Exacerbation of Asthma: According to the most recent data available from the United States National Center for Health Statistics, there were1.74 million emergency department visits due to asthma in 2015, 439,000 hospitalizations due to asthma in 2010 (the most recent year for which data isavailable), and 3,518 deaths due to asthma in 2016. According to the United States National Heart, Lung and Blood Institute, the direct costs associated withhospital care due to asthma were estimated at $5.5 billion in the United States in 2010 (the most recent year for which data is available). We completed a Phase 2b randomized, double-blind, placebo-controlled clinical trial (N=175) evaluating MN-221 (bedoradrine) in patients with acuteexacerbations of asthma in the emergency department setting. MN-221 (bedoradrine) did not statistically meet the primary endpoint, improvement in FEV 1(Forced Expiratory Volume in One Second) compared to placebo. However, MN-221 (bedoradrine) treatment demonstrated statistically significantimprovements in endpoints associated with Dyspnea Index scores. MN-221 (bedoradrine) treatment significantly increased (improved) the change frombaseline in Dyspnea Index scale score over Hours 0-3 compared to placebo (based on AUC [0-3 hr], p = 0.0405), significantly increased the change frombaseline in Dyspnea Index scale scores at Hour 2 compared to placebo (based on mean score, p = 0.0042), and significantly increased the percentage ofsubjects who had improvement in the Dyspnea Index score ≥ 1 point at Hour 2 compared to placebo (p = 0.0323). A post-hoc analysis was performed toevaluate the Treatment Failure rate defined as the number of subjects who were either hospitalized or who returned to the emergency department during thecourse of the study. In subjects who received corticosteroids greater than 3 hours prior to study drug infusion, the number of treatment failures wassignificantly greater in the placebo group (74%) versus the MN-221 (bedoradrine) group (43%), p=0.0489. No safety/tolerability issues of clinicalsignificance were observed. 13In October 2012, we met with the FDA to review future development of this product candidate. The FDA identified the risk/benefit profile of MN-221(bedoradrine) as a focal point for further development and advised that a clinical outcome, such as a reduction in hospitalizations, would need to be a pivotaltrial primary endpoint. We have decided that any future MN-221 (bedoradrine) development will be designed based on the feedback received from the FDAand that any future MN-221 (bedoradrine) clinical trial development for asthma will be partner-dependent from a funding perspective. MN-001 (tipelukast) MN-001 (tipelukast) is a novel, orally bioavailable small molecule compound which exerts its effects through several mechanisms to produce its anti-fibrotic and anti-inflammatory activity in preclinical models, including leukotriene (LT) receptor antagonism, inhibition of PDEs (mainly 3 and 4), andinhibition of 5-lipoxygenase (5-LO). The 5-LO/LT pathway has been postulated as a pathogenic factor in fibrosis development and the inhibitory effect ofMN-001 (tipelukast) on 5-LO and the 5-LO/LT pathway is considered to be a novel approach to treat fibrosis. MN-001 (tipelukast) has been shown to down-regulate expression of genes that promote fibrosis including LOXL2, Collagen Type 1 and TIMP-1. MN-001 (tipelukast) has also been shown to down-regulate expression of genes that promote inflammation including CCR2 and MCP-1. In addition, histopathological data shows that MN-001 (tipelukast)reduces fibrosis in multiple animal models. We licensed MN-001 (tipelukast) from Kyorin in 2002. In addition to granting MN-001 (tipelukast) Fast Trackdesignation for the treatment of NASH with fibrosis, the FDA has also granted MN-001 (tipelukast) Orphan-Drug designation and Fast Track designation fortreatment of idiopathic pulmonary fibrosis (IPF). Previously, we evaluated MN-001 (tipelukast) for its potential clinical efficacy in asthma and completed a Phase 2 study in asthma with positiveresults. MN-001 (tipelukast) has been exposed to more than 600 subjects and is considered generally safe and well-tolerated. Nonalcoholic Steatohepatitis (NASH) and Nonalcoholic Fatty Liver Disease (NAFLD): Nonalcoholic steatohepatitis (NASH) is a condition in whichthere is fat in the liver along with inflammation and damage to liver cells. NASH is a common liver disease that resembles alcoholic liver disease but occursin people who drink little or no alcohol. According to the United States National Institute of Diabetes and Digestive and Kidney Diseases (NIDDK), NASHprevalence in adults in the United States is 3-12%, and an additional 30-40% of adult Americans have nonalcoholic fatty liver disease (NAFLD). Theunderlying cause of NASH is unclear, but it most often occurs in persons who are middle-aged and overweight or obese. Many patients with NASH haveelevated serum lipids, diabetes or pre-diabetes. Progression of NASH can lead to liver cirrhosis. Liver transplantation is the only treatment for advancedcirrhosis with liver failure. At this time, there is no pharmaceutical treatment approved for NASH. We completed a pre-clinical study evaluating the potential clinical efficacy of MN-001 (tipelukast) for the treatment of NASH. MN-001 (tipelukast)administered orally once daily (10, 30, and 100 mg/kg for three weeks) was evaluated in the STAM™ (NASH-HCC) mouse model of NASH, as measured byliver biochemistry and histopathology, NAFLD activity score (NAS), and percent of fibrosis and gene expression. MN-001 (tipelukast), in a dose-dependentmanner, significantly reduced fibrosis area compared with placebo (p<0.01) as demonstrated by a reduction in liver hydroxyproline content, supporting theanti-fibrotic properties of MN-001 (tipelukast). MN-001 (tipelukast) significantly improved NAS (p<0.01). MN-001 (tipelukast), in this animal model,improved NASH pathology by inhibiting hepatocyte damage (p<0.01) and ballooning (p<0.01). At the same time, MN-001 (tipelukast) was also shown toreduce certain gene expression levels in the liver, thus implying that MN-001 (tipelukast) reduces the formation of fibrosis in the NASH model. Wecompleted a second preclinical study that examined the potential clinical efficacy of MN-001 (tipelukast) for the treatment of advanced NASH. This studyused mice in more advanced stages of NASH as compared to the first study of MN-001 (tipelukast) in a NASH mouse model. MN-001 (tipelukast) showedanti-NASH and anti-fibrotic effects in the advanced NASH mouse model. NAFLD activity score (NAS) was significantly reduced in the MN-001 (tipelukast)-treated group compared to the non-treated group (p<0.001). The reduction was observed consistently in all NAS components including hepatocyteballooning score (p<0.001), lobular inflammation score (p<0.01), and steatosis score (p<0.05). Percent fibrosis area was also reduced in the MN-001(tipelukast) treated group (p<0.01). In addition, alpha-SMA-positive staining area was significantly reduced in the MN-001 (tipelukast)-treated group(p<0.001). Collectively, these results provided compelling evidence that MN-001 (tipelukast) warrants further evaluation for the treatment of NASH inhumans. We have an open IND and the FDA has approved two different Phase 2 clinical trial protocols for14MN-001 (tipelukast) for the treatment of NASH in the United States. In April 2018, we announced that we would terminate early the Phase 2 clinical trial ofMN-001 (tipelukast) in NASH and NAFLD patients with hypertriglyceridemia based on the significant positive results from an interim analysis. This data waspresented at the International Liver Congress 2018, the 53rd annual meeting of the European Association for the Study of the Liver (EASL) in Paris, France inApril 2018. MN-001 (tipelukast) significantly reduced mean serum triglycerides by 135.7 mg/dL, resulting in a 41.3% reduction (p=0.02), which includes thedata from the 15 subjects who completed 8 weeks of treatment. Excluding one outlier with an extremely high triglyceride level of 1288 mg/dL beforetreatment, MN-001 (tipelukast) significantly reduced mean serum triglycerides by 74.9 mg/dL, resulting in a 28.8% reduction (p=0.00006). The FDA hasgranted Fast Track designation to MN-001 (tipelukast) for the treatment of patients with NASH with fibrosis. Idiopathic Pulmonary Fibrosis (IPF): Pulmonary fibrosis (PF) is a progressive disease characterized by scarring of the lungs that thickens the lining,causing an irreversible loss of the tissue's ability to transport oxygen. The causes of PF vary and can be due to anti-cancer drug therapy or exposure tochemicals. Idiopathic pulmonary fibrosis (IPF) is one type of PF without a clear cause. According to the Pulmonary Fibrosis Foundation, IPF affects between132,000 – 200,000 people in the United States, and an estimated 50,000 new cases are diagnosed annually. The prognosis for IPF is poor with a mediansurvival of only two to three years following diagnosis and more than two-thirds of IPF patients die within five years. We completed a pre-clinical study evaluating the potential clinical efficacy of MN-001 (tipelukast) for the treatment of pulmonary fibrosis. MN-001(tipelukast), which was administered orally once daily (30, 100 and 300 mg/kg) for two weeks, was evaluated in a mouse model of bleomycin-inducedpulmonary fibrosis (PF) as measured by CT evaluation of lung density, degree of pulmonary fibrosis using the Ashcroft score based on histopathologicalstaining, and hydroxyproline content, which is an indicator of fibrosis or storage of collagen in tissue. MN-001 (tipelukast) significantly decreased theAshcroft score compared to Vehicle group (p<0.05) after two weeks of treatment and MN-001 (tipelukast) reduced lung density when compared to theVehicle-treated group. Moreover, lung hydroxyproline content was significantly reduced compared to the Vehicle group (p<0.01). These results show thattreatment with MN-001 (tipelukast) has significant anti-fibrogenic effects in bleomycin-induced pulmonary fibrosis in mice. We have an open IND and theFDA approved a Phase 2 clinical trial protocol for MN-001 (tipelukast) for the treatment of IPF in the United States. A Phase 2 clinical trial of MN-001(tipelukast) in IPF is currently ongoing at Penn State. The FDA has granted Orphan-Drug designation to MN-001 (tipelukast) for treatment of IPF. Orphan-Drug designation will provide seven years of marketing exclusivity for MN-001 (tipelukast) for the treatment of IPF if it is approved for this indication. TheFDA has also granted Fast Track designation to MN-001 (tipelukast) for the treatment of patients with IPF. MN-029 (denibulin) MN-029 (denibulin) is a novel tubulin binding agent (TBA) under development for the treatment of solid tumors. It exerts its activity throughreversible inhibition of tubulin polymerization resulting in disruption of the cell cytoskeleton, which causes the cancer cells to deform in shape andultimately leads to extensive central necrosis of the solid tumor. We licensed MN-029 (denibulin) from Angiogene Pharmaceuticals, Ltd. (Angiogene) in2002. Several preclinical pharmacology studies have assessed the mechanism of action and anti-tumor activity of MN-029 (denibulin) in vivo in rodentmodels of breast adenocarcinoma, colon carcinoma, lung carcinoma and KHT sarcoma. In these studies, MN-029 (denibulin) damaged poorly formed tumorblood vessels by weakening tumor blood vessel walls and causing leakage, clotting and eventual vascular shutdown within the tumor, in addition to thedirect effect over tumor cells. These studies suggest that MN-029 (denibulin) acts quickly and is rapidly cleared from the body, which may reduce thepotential for some adverse effects commonly associated with chemotherapy. Shutdown of tumor blood flow in tumor models was confirmed through the useof dynamic contrast-enhanced magnetic resonance imaging. In two Phase I clinical studies we conducted, MN-029 (denibulin) was well-tolerated at dosesthat reduced tumor blood flow. The first Phase 1 trial determined the safety, tolerability, and maximum tolerated dose (MTD) level of single doses of MN-029 (denibulin) given everythree weeks in 34 subjects with refractory cancer. The MTD was determined to be 180 mg/m2 and appeared to be safe as a single i.v. dose administered everythree weeks for as many as 25 cycles. There were no clinically significant changes in routine laboratory assessments, vital signs, or15ECG monitoring. The most commonly reported adverse events (AEs) were similar to other chemotherapies—vomiting, nausea, diarrhea, and fatigue. Therewere a total of nine serious adverse events (SAEs) and study discontinuations due to AEs. In a preliminary evaluation of anti-tumor activity, no patient had acomplete response or partial response; however stable disease was seen in 12 patients. MN-029 (denibulin) had a desired vascular effect in seven of 11patients that were administered drug at dose levels of ≥120 mg/m 2. Nine patients continued into extended cycles of treatment. The second Phase 1 study was conducted to determine the safety, tolerability and MTD of single doses of MN-029 (denibulin) given every seven daysfor a total of three doses (Days 1, 8 and 15), followed by 13-day recovery (Days 16-28) in subjects with advanced/metastatic solid tumor cancer. Subjects whotolerated treatment with MN-029 (denibulin) could receive additional cycles. All 20 subjects reported at least one AE related to study drug. The mostcommon AEs considered related to study drug were vomiting, nausea, arthralgia and headache. There were no clinically significant changes in routinelaboratory assessments, vital signs or ECG monitoring. There was one SAE considered unrelated to study drug. Consistent with the previous Phase 1 trial,MN-029 (denibulin) up to dose levels of 180 mg/m 2 appeared to be safe and well tolerated. One subject had a partial response which lasted for 74 days.Stable disease was observed in seven subjects. The results suggested an effect of MN-029 (denibulin) on vascular perfusion; however, a larger sample size iswarranted. In January 2014, we were granted a new patent from the United States Patent and Trademark Office which covers MN-029 (denibulin) di-hydrochloride.The patent, which will expire no earlier than July 2032, has claims that cover a compound, pharmaceutical composition and method of treating certain cellproliferation diseases, including solid tumors, based on denibulin di-hydrochloride. We have filed patent applications based on this U.S. patent in certainforeign countries, and most of them have been granted. Table 1 Product Candidates and Programs—MN-166 (ibudilast) Indication Clinical Study Principal Investigator /Institution/Funding Agency(s) Status Primary Progressive andSecondary ProgressiveMultiple Sclerosis A Randomized, Double-Blind, Placebo-Controlled Study to Evaluate the Safety,Tolerability and Activity of Ibudilast (MN-166(ibudilast)) in Subjects with ProgressiveMultiple Sclerosis Robert J. Fox, M.D., M.S., FAANCleveland ClinicNational Institute on Neurological Diseases andStrokeMediciNova, Inc. Completed Amyotrophic LateralSclerosis (ALS) A Single-Center, Randomized, Double-Blind,Placebo-Controlled, Six Month Clinical TrialFollowed by an Open-Label Extension toEvaluate the Safety, Tolerability, and ClinicalEndpoint Responsiveness of Ibudilast (MN-166(ibudilast)) in Subjects with AmyotrophicLateral Sclerosis (ALS) Benjamin R. Brooks, M.D.Carolinas HealthCare System NeurosciencesInstituteMediciNova, Inc. Completed ALS / Biomarker A Biomarker Study to Evaluate MN-166(ibudilast) (Ibudilast) in Subjects withAmyotrophic Literal Sclerosis (ALS) Nazem Atassi, M.D., MMScMassachusetts General HospitalMediciNova, Inc. Ongoing 16Degenerative CervicalMyelopathy A multi-centre, double-blind, randomised,placebo-controlled trial assessing the efficacyof Ibudilast as an adjuvant treatment todecompressive surgery for degenerativecervical myelopathy Dr. Mark KotterUniversity of CambridgeNational Institute for Health Research (NIHR) inthe U.K. Enrollmentexpected to beginin mid-2019 Chemotherapy-InducedPeripheral Neuropathy A pilot study evaluating the impact of ibudilaston prevention of chemotherapy-induced acuteneurotoxicity and evaluating pharmacokineticswith oxaliplatin in gastro-intestinal cancerpatients receiving oxaliplatin Dr. Janette VardyUniversity of SydneyConcord Cancer Centre in Australia OngoingGlioblastoma Phase 1b/2a Multi-center, Open-label, DoseEscalation Study to Evaluate the Safety,Tolerability and Efficacy of MN-166 (ibudilast)and Temozolomide Combination Treatment inPatients With Recurrent Glioblastoma Patrick Y. Wen, M.D.,Dana-Farber Cancer InstituteKerrie McDonald, Ph.D.,University of New South WalesMediciNova, Inc. OngoingSubstance Dependence /Addiction: MethamphetamineDependence Randomized Trial of Ibudilast forMethamphetamine Dependence Keith Heinzerling, M.D., MPHUCLANational Institute on Drug Abuse CompletedMethamphetamineDependence / Biomarker Effect of Ibudilast on Neuroinflammation inMethamphetamine Users Milky Kohno, Ph.D. andWilliam Hoffman, M.D., Ph.D.Oregon Health & Science Univ. OngoingOpioid Dependence Effects of Ibudilast (MN-166 (ibudilast)), a GlialActivation Inhibitor, on Oxycodone Self-Administration in Opioid Abusers Sandra D. Comer, Ph.D.Columbia University/NYSPINational Institute on Drug AbuseMediciNova, Inc. CompletedAlcohol Dependence Development of Ibudilast (MN-166 (ibudilast))as a Novel Treatment for Alcoholism Lara Ray, Ph.D.UCLANational Institute on Alcohol Abuseand Alcoholism Completed 17 Alcohol Dependence andWithdrawal Alcohol Dependence Ibudilast (MN-166 (ibudilast)) and Withdrawal-Related Dysphoria Ibudilast (MN-166 (ibudilast)) for the Treatmentof Alcohol Use Disorder Lara Ray, Ph.D.UCLANational Institute on Drug Abuse Lara Ray, Ph.D.UCLANational Institute on Alcohol Abuseand Alcoholism Ongoing Ongoing Sales and Marketing We currently have no marketing and sales capabilities and we expect to rely on strategic partners to commercialize our products. Manufacturing We rely on third parties to manufacture bulk active pharmaceutical ingredients (API) and finished investigational products for research, development,preclinical and clinical trials. We expect to continue to rely on third-party manufacturers for the manufacture of the API and finished products for our clinicaland any future commercial production requirements. We believe that there are several manufacturing sources available at commercially reasonable terms tomeet our clinical requirements and any future commercial production requirements for the API of our products and the finished drug products. For the MN-166 (ibudilast) development program, we have historically sourced and imported delayed-release ibudilast capsules, marketed in Japan asPinatos®, from Taisho Pharmaceutical Co., Ltd. (Taisho). In addition, we have begun using contract manufacturers to manufacture API and finished productfor the MN-166 (ibudilast) development program. Pursuant to the terms of our license agreement with Kissei for MN-221 (bedoradrine), Kissei has the exclusive right to manufacture the commercialsupply of the API for MN-221 (bedoradrine). If we enter into a supply agreement with Kissei, we will purchase from Kissei all API that we require for thecommercial supply of MN-221 (bedoradrine), if this product candidate is approved for commercial sale by the FDA or other regulatory authorities. Intellectual Property and License Agreements Since our inception in September 2000, we have entered into license agreements with pharmaceutical companies which cover our current productcandidates. We have also entered into license agreements with universities which cover additional intellectual property related to our product candidates. Ingeneral, we seek to procure patent protection for our anticipated products, or obtain such protection from the relevant patents owned by our licensors.Although the majority of our licensed patents have expired, we hold licensed rights to one issued foreign patent that is not expired. In addition to theselicensed rights, we hold 24 issued U.S. patents and have filed nine additional U.S. patent applications. We also hold 36 issued foreign patents and 40 pendingforeign patent applications corresponding to these U.S. patents and patent applications. We are not aware of any third-party infringement of the patentsowned or licensed by us and are not party to any material claims by third parties of infringement by us of such third parties’ intellectual property rights. Thefollowing is a description of our existing license agreements and intellectual property rights for each of our product candidates. MN-166 (ibudilast) On October 22, 2004, we entered into an exclusive license agreement with Kyorin for the development and commercialization of MN-166 (ibudilast).Kyorin is a fully integrated Japanese pharmaceutical company and is listed on the First Section of the Tokyo Stock Exchange. We obtained an exclusive,worldwide (excluding Japan, China, South Korea and Taiwan), sub-licensable license to the patent rights related to MN-166 (ibudilast) for the treatment ofMS, except for ophthalmic solution formulations. MN-166 (ibudilast) is not covered by a composition of matter patent. The United States method of usepatent for MN-166 (ibudilast) in MS underlying the license expired on August 10, 2018. Corresponding method of use patents in certain foreign countriesalso expired on August 10, 2018. Under the terms of the agreement, we granted to Kyorin an exclusive, royalty-free, sub-licensable license to use thepreclinical, clinical and regulatory databases to develop ophthalmic products incorporating the MN-166 (ibudilast) compound anywhere in the world andnon-ophthalmic products incorporating the MN-166 (ibudilast) compound outside of our territory. The license agreement may be terminated by either party following an uncured breach of any material provision in the agreement by the other party.We may terminate the agreement for any reason with 90 days’ written notice to18Kyorin or, in the event that a third party claims that MN-166 (ibudilast) infringes upon such third party’s intellectual property rights, with 30 days’ writtennotice. The term of this agreement is determined on a country-by-country basis and extends until the later of the expiration of the obligation to make paymentsunder the agreement or the last date on which the manufacture, use or sale of the product would infringe a valid patent claim held by Kyorin but for thelicense granted by the agreement or the last date of the applicable market exclusivity period. In the absence of a valid patent claim and generic competitionin a particular country, the agreement will expire on the earlier of five years from the date of the first commercial sale of the product by us or the end of thesecond consecutive calendar quarter in which generic competition exists in such country. Under the license agreement, we have paid Kyorin $700,000 to date, and we are obligated to make payments of up to $5.0 million based on theachievement of certain clinical and regulatory milestones. We are also obligated to pay a royalty on net sales of the licensed products. We own, co-own or hold licenses to seven issued U.S. patents and eight pending U.S. patent applications as well as 22 issued foreign patents and elevenpending foreign patent applications covering MN-166 (ibudilast) and its analogs. These patents and patent applications are related to our developmentportfolio and are primarily directed to methods of treating various indications using MN-166 (ibudilast) and its analogs. We have been granted a U.S. patent which covers the use of MN-166 (ibudilast) for the treatment of progressive forms of MS. This patent will expire noearlier than November 2029, not including a potential extension under patent term restoration rules, and covers a method of treating PPMS or SPMS byadministering MN-166 (ibudilast). Counterparts of this patent application have been granted in certain foreign jurisdictions. We have been granted a U.S.patent which covers the use of MN-166 (ibudilast) for the treatment of amyotrophic lateral sclerosis (ALS) and it expires no earlier than January 2029. Wehave been granted a patent which covers the use of MN-166 (ibudilast) for the treatment of drug addiction or drug dependence or withdrawal syndrome in theUnited States and it expires no earlier than January 2030. Counterparts of this patent application have been granted in certain foreign jurisdictions. We havebeen granted a patent which covers the use of MN-166 (ibudilast) for the treatment of neuropathic pain in the United States and it expires no earlier thanDecember 2025. MN-221 (bedoradrine) On February 25, 2004, we entered into an exclusive license agreement with Kissei for the development and commercialization of MN-221(bedoradrine). Kissei is a fully integrated Japanese pharmaceutical company and is listed on the Tokyo Stock Exchange. We obtained an exclusive,worldwide (excluding Japan), sub-licensable license to various patent rights and know-how related to MN-221 (bedoradrine) and other compounds disclosedor included in, or covered by, these patent rights, for all indications. This license includes an exclusive license under one U.S. patent and certaincorresponding patents in foreign countries and is sub-licensable upon receipt of the written consent of Kissei. The United States composition of matter patentunderlying the license issued on October 17, 2000 and it expired on February 18, 2017. Most of the corresponding composition of matter patents in variousother countries also expired on February 18, 2017. In addition to the licensed patents, we have filed patent applications in the United States and certain foreign countries regarding additional uses andformulations of MN-221 (bedoradrine). We have been granted a U.S. patent which covers the use of MN-221 (bedoradrine) for the treatment of acuteexacerbations of asthma and it expires no earlier than November 2030. This patent includes claims covering the use of MN-221 (bedoradrine) in combinationwith a standard of care treatment regimen and covers different routes of administration, including intravenous, oral and inhalation. We have been granted aU.S. patent that covers the use of MN-221 (bedoradrine) for the treatment of irritable bowel syndrome and it expires no earlier than April 2031. The license agreement may be terminated by either party following an uncured breach of any material provision in the agreement by the other party,and we may terminate the agreement for scientific or commercial reasons upon 100 days’ prior written notice to Kissei during the development phase and 180days’ prior written notice to Kissei during the commercialization phase.19 The term of the agreement is determined on a country-by-country basis and extends until the expiration of the last Kissei patent (or equivalent) underlicense to expire or in the event that a valid claim does not exist or, if a valid claim expired more than ten years from the date of first commercial sale, tenyears from the date of first commercial sale. In either case, the term of the agreement would not extend for any particular country past the date on whichgeneric competition exists in such country. Under the license agreement, we have paid Kissei $1.0 million to date, and we are obligated to make payments of up to $17.0 million based on theachievement of certain clinical and regulatory milestones. We are also obligated to pay a royalty on net sales of the licensed products. Under the terms of aletter agreement we entered into with Kissei in September 2011, we agreed to renegotiate in good faith with Kissei the existing levels of the milestonepayment amounts and royalty rates. MN-001 (tipelukast) On March 14, 2002, we entered into an exclusive license agreement with Kyorin for the development and commercialization of MN-001 (tipelukast).We obtained an exclusive, worldwide (excluding Japan, China, South Korea and Taiwan) sub-licensable license to the patent rights and know-how related toMN-001 (tipelukast) and its active metabolite, MN-002, disclosed and included in, or covered by, these patents, in all indications, except for ophthalmicsolution formulations. This license included an exclusive, sub-licensable license under two U.S. patents and certain corresponding patents in foreigncountries. The United States composition of matter patent for MN-001 (tipelukast) underlying the license expired on February 23, 2009, and the UnitedStates composition of matter patent for MN-002 underlying the license expired on December 30, 2011. Foreign composition of matter patents for MN-001(tipelukast) and MN-002 have also expired. We have been granted 14 U.S. patents covering certain compositions, uses and manufacturing processesassociated with MN-001 (tipelukast) and MN-002. Uses covered by these patents include nonalcoholic steatohepatitis (NASH), advanced NASH with fibrosis,nonalcoholic fatty liver disease (NAFLD), steatosis, hypertriglyceridemia, hypercholesterolemia, hyperlipoproteinemia, fibrosis, ulcerative colitis, interstitialcystitis, and irritable bowel syndrome. Patent applications corresponding to these U.S. patents have been filed in certain foreign countries and some of theforeign patents have issued. Under the terms of the agreement, we granted to Kyorin an exclusive, royalty-free, sub-licensable license to use the preclinical, clinical and regulatorydatabases to develop ophthalmic products incorporating MN-001 (tipelukast) anywhere in the world and non-ophthalmic products incorporating MN-001(tipelukast) outside of our territory. The license agreement may be terminated by either party following an uncured breach of any material provision in theagreement by the other party, and we may terminate the agreement for any reason with 90 days’ written notice to Kyorin or, in the event that a third partyclaims that the licensed patent rights or know-how infringe upon such third party’s intellectual property rights, with 30 days’ written notice. The term of this agreement is determined on a country-by-country basis and extends until the later of the expiration of the obligation to make paymentsunder the agreement or the last date on which the manufacture, use or sale of the product would infringe a valid patent claim held by Kyorin but for thelicense granted by the agreement or the last date of the applicable market exclusivity period. In the absence of a valid patent claim and generic competitionin a particular country, the agreement will expire on the earlier of five years from the date of the first commercial sale of the product by us or the end of thesecond consecutive calendar quarter in which generic competition exists in such country. Under the license agreement, we have paid Kyorin $4.0 million to date, and we are obligated to make payments of up to $5.0 million based on theachievement of clinical and regulatory milestones. We are also obligated to pay a royalty on net sales of the licensed products. MN-029 (denibulin) On June 19, 2002, we entered into an exclusive license agreement with Angiogene for the development and commercialization of the ANG-600 seriesof compounds. Angiogene is a privately held, British drug discovery company. We obtained an exclusive, worldwide, sub-licensable license to the patentrights and know-how related to20the ANG-600 series of compounds disclosed in and included or covered by these patents for all indications. MN-029 (denibulin) is one of the ANG-600 seriescompounds covered by this license. We have been granted a U.S. patent which covers MN-029 (denibulin) di-hydrochloride and expires no earlier than July2032. The allowed claims cover a compound, pharmaceutical composition and method of treating certain cell proliferation diseases, including solid tumors,based on denibulin di-hydrochloride. Patent applications corresponding to this U.S. patent were filed in certain foreign countries and patents have beengranted or allowed in some of those countries. The license agreement may be terminated by either party following an uncured breach of any material provision in the agreement by the other party,and we may terminate the agreement at any time by giving 30 days’ advance written notice to Angiogene. The term of this agreement is determined on a country-by-country basis and extends until the earlier of the expiration of the last Angiogene patent (orequivalent) under license which has a valid claim to expire or 15 years from the date of first commercial sale. Under the license agreement, we have paid Angiogene $1.4 million to date and are obligated to make payments of up to $16.5 million based on theachievement of clinical and regulatory milestones. We are also obligated to pay a royalty on net sales of the licensed products. General Our proposed commercial activities may conflict with patents which have been or may be granted to competitors, universities and/or others. Thirdparties could bring legal action against us, our licensors or our sub-licensees claiming patent infringement and could seek damages or enjoin manufacturingand marketing of the affected product or its use or the use of a process for the manufacturing of such products. If any such actions were to be successful, inaddition to any potential liability for indemnification, damages and attorneys’ fees in certain cases, we could be required to obtain a license, which may notbe available on commercially reasonable terms or at all, in order to continue to manufacture, use or market the affected product. We also rely uponunpatented proprietary technology because, in some cases, our interests would be better served by reliance on trade secrets or confidentiality agreements thanby patents. However, others may independently develop substantially equivalent proprietary information and techniques or gain access to or disclose suchproprietary technology. We may not be able to meaningfully protect our rights in such unpatented proprietary technology. We may also conduct research onother pharmaceutical compounds or technologies, the rights to which may be held by, or be subject to patent rights of, third parties. Accordingly, if productsbased on such research are commercialized, such commercial activities may infringe patents or other rights, which may require us to obtain a license to suchpatents or other rights. We are not aware of any third-party infringements of patents we hold or have licensed and have not received any material claims bythird parties of infringement by us of such parties’ intellectual property rights. There can be no assurance that patent applications filed by us or others, in which we have an interest as assignee, licensee or prospective licensee, willresult in patents being issued or that, if issued, any of such patents will afford protection against competitors with similar technology or products or could notbe circumvented or challenged. For example, we have U.S. patents covering the method of treating progressive MS with MN-166 (ibudilast), the method oftreating ALS with MN-166 (ibudilast), the method of treating drug addiction or drug dependence with MN-166 (ibudilast), and the method of treatingneuropathic pain with MN-166 (ibudilast), but we do not have any composition of matter patent claims for MN-166 (ibudilast) because that patent hasexpired. As a result, unrelated third parties may develop products with the same API as MN-166 (ibudilast) so long as such parties do not infringe our methodof use patents, other patents we have exclusive rights to through our licensors or any patents we may obtain for MN-166 (ibudilast). In addition, if we develop certain products that are not covered by any patents, we will be dependent on obtaining market exclusivity under the newchemical entity exclusivity provisions of Hatch-Waxman Act for such products in the United States and/or data exclusivity provisions in Europe. If we areunable to obtain strong proprietary protection for our products after obtaining regulatory approval, competitors may be able to market competing genericproducts by taking advantage of an abbreviated procedure for obtaining regulatory clearance, including the ability to demonstrate bioequivalency to ourproduct(s) without being required to conduct lengthy21clinical trials. Certain of our license agreements provide for reduced or foregone royalties in the event of generic competition. Competition The development and commercialization of new drugs is extremely competitive and characterized by extensive research efforts and rapid technologicalprogress. Competition in our industry occurs on a variety of fronts, including developing and bringing new products to market before others, developing newproducts to provide the same benefits as existing products at lower cost and developing new products to provide benefits superior to those of existingproducts. We face competition from pharmaceutical and biotechnology companies, as well as numerous academic and research institutions and governmentalagencies in the United States and abroad. Some of these competitors have products or are pursuing the development of drugs that target the same diseases andconditions that are the focus of our product development programs. Many of our competitors have products that have been approved or are in advanceddevelopment and may succeed in developing drugs that are more effective, safer, more affordable or more easily administered than ours or that achieve patentprotection or commercialization sooner than our products. Our competitors may also develop alternative therapies that could further limit the market for anyproducts that we are able to obtain approval for, if at all. In many of our target disease areas, potential competitors are working to develop new compounds with different mechanisms of action and attractiveefficacy and safety profiles. Many of our competitors have substantially greater financial, research and development resources (including personnel andtechnology), clinical trial experience, manufacturing, sales and marketing capabilities and production facilities than we do. Smaller companies also mayprove to be significant competitors, particularly through proprietary research discoveries and collaboration arrangements with large pharmaceutical andestablished biotechnology companies. MN-166 (ibudilast) for Progressive Multiple Sclerosis (Progressive MS) Our MN-166 (ibudilast) product candidate is in development for the treatment of progressive MS. Only one drug, mitoxantrone, is approved for thetreatment of secondary progressive MS. However, mitoxantrone cannot be used on a long-term basis because of the potential for cardiac toxicity. Only onedrug, Ocrevus (ocrelizumab) is approved for the treatment of primary progressive MS. Other programs in clinical development for progressive MS includeNovartis’s BAF312 (siponimod), MedDay’s MD1003, and AB Science’s masitinib. MN-166 (ibudilast) for Amyotrophic Lateral Sclerosis (ALS) Our MN-166 (ibudilast) product candidate is also in development for the treatment of ALS. Riluzole and Radicava (edaravone) are approved for thetreatment of ALS. We are aware of additional compounds in clinical development for the treatment of ALS at other companies including Cytokinetics,BrainStorm Cell Therapeutics Inc., AB Science, Mallinckrodt, Biogen, and Amylyx Pharmaceuticals. MN-166 (ibudilast) for Substance Dependence and Addiction Our MN-166 (ibudilast) product candidate is also in development for the treatment of opioid dependence, methamphetamine addiction, and alcoholdependence. Current treatments for opioid withdrawal symptoms include narcotics such as generic methadone and Indivior, Inc.’s Suboxone ® Film(buprenorphine + the opioid antagonist naloxone). Other products approved for opioid dependence include Alkermes’s Vivitrol ® (naltrexone monthlyinjection), Orexo’s Zubsolv ® (buprenorphine and naloxone), BioDelivery Sciences’s Bunavail ® (buprenorphine and naloxone), Titan Pharmaceuticals Inc.’sProbuphine (buprenorphine) implant, and Indivior’s SublocadeTM (buprenorphine extended-release injection). In December 2018, Braeburn announcedtentative FDA approval of BRIXADI, an extended-release weekly and monthly injectable buprenorphine product, for the treatment of moderate to severeopioid use disorder. Limited non-narcotic drug candidates for opioid withdrawal symptoms exist. US WorldMeds, LLC’s Lucemyra™ (lofexidine) is a centralalpha-2 adrenergic agonist approved for mitigation of opioid withdrawal symptoms to facilitate abrupt opioid discontinuation. There are no pharmaceuticalscurrently approved for the treatment of methamphetamine addiction. Approved treatments for alcohol dependence include Antabuse ® (disulfiram), Vivitrol ®(naltrexone), and generic acamprosate. We are aware of additional treatments in22development for the treatment of alcohol dependence at other companies including Indivior and Opiant Pharmaceuticals. MN-166 (ibudilast) for Chemotherapy-Induced Peripheral NeuropathyOur MN-166 (ibudilast) product candidate is also in development for the treatment of chemotherapy-induced peripheral neuropathy. There are nopharmaceuticals currently approved for the treatment of chemotherapy-induced peripheral neuropathy. Duloxetine is sometimes used off-label for thisindication. MN-166 (ibudilast) for Degenerative Cervical Myelopathy Our MN-166 (ibudilast) product candidate is also in development for the treatment of degenerative cervical myelopathy. There are no pharmaceuticalscurrently approved for the treatment of degenerative cervical myelopathy. MN-166 (ibudilast) for Glioblastoma We have initiated clinical development of our MN-166 (ibudilast) product candidate for the treatment of glioblastoma. Surgery, radiation, andchemotherapy with the drug temozolomide is the current standard of treatment for glioblastoma. GLIADEL® WAFER (carmustine implant) and AVASTIN®(bevacizumab) are also approved for the treatment for glioblastoma. We are aware of additional compounds in development for the treatment of glioblastomaat companies including AbbVie, Celgene and Amgen. MN-221 (bedoradrine) for Acute Exacerbations of Asthma Our MN-221 (bedoradrine) product candidate has been developed for the treatment of acute exacerbations of asthma in the emergency room setting.The current standard of care for acute exacerbations of asthma is inhaled albuterol (a ß2-adrenergic receptor agonist), inhaled ipratropium (an anticholinergic)and oral or injected corticosteroids. In addition, subcutaneously administered terbutaline (a ß 2 -adrenergic receptor agonist) is sometimes used to treat thiscondition, particularly in pediatric patients. MN-001 (tipelukast) for Nonalcoholic Steatohepatitis (NASH) Our MN-001 (tipelukast) product candidate is being developed for the treatment of NASH. There are currently no therapeutic products approved for thetreatment of NASH. We are aware of compounds in clinical development for the treatment of NASH at other companies including Intercept Pharmaceuticals,Genfit, Galectin Therapeutics, Gilead Sciences, Allergan (which acquired Tobira Therapeutics), Galmed Pharmaceuticals, Bristol-Myers Squibb and ConatusPharmaceuticals. MN-001 (tipelukast) for Idiopathic Pulmonary Fibrosis (IPF) Our MN-001 (tipelukast) product candidate is also being developed for the treatment of IPF. Products approved in the United States for treatment of IPFinclude Roche’s (formerly InterMune) Esbriet ® (pirfenidone) and Boehringer Ingelheim’s OFEV ® (nintedanib). Companies working on clinical developmentprograms for treatment of IPF include Biogen and FibroGen. MN-029 (denibulin) for Solid Tumor Cancer Our MN-029 (denibulin) product candidate is being developed for the treatment of solid tumor cancers. Roche’s Kadcyla ®, a HER2-targeted antibodyand microtubule inhibitor conjugate, is approved for treatment of patients with HER2-positive metastatic breast cancer who previously were treated withtrastuzumab and a taxane. Bayer’s Stivarga ®, a kinase inhibitor approved for metastatic colorectal cancer, was also approved for patients with advanced,unresectable (not subject to surgical removal) or metastatic gastrointestinal stromal tumor. Other drugs approved for solid tumor cancers include Roche’sAvastin and Xeloda, Amgen’s Xgeva, Pfizer’s Sutent, and Novartis’s Afinitor. We are aware of additional compounds in development for the treatment ofsolid tumor cancers at companies including Eli Lilly, Roche, Novartis, Pfizer, Amgen and Celgene. 23Government Regulation Government authorities in the United States and other countries extensively regulate the research, development, testing, manufacture, labeling,promotion, advertising, distribution, sampling, marketing and import and export of pharmaceutical products and biologics such as those we are developing.In the United States, the FDA, under the Federal Food, Drug and Cosmetic Act, as amended, and other federal statutes and regulations, subjectspharmaceutical products to extensive and rigorous review. Any failure to comply with applicable requirements, both before and after approval, may subjectus, our third-party manufacturers, contractors, suppliers and partners to administrative and judicial sanctions, such as a delay in approving or refusal toapprove pending applications, fines, warning letters, product recalls, product seizures, total or partial suspension of manufacturing or marketing, injunctionsand/or criminal prosecution. United States Regulatory Approval Overview. In the United States, drugs and drug testing are regulated by the FDA under the Federal Food, Drug and Cosmetic Act, or FDCA, as well asstate and local government authorities. All our product candidates in development will require regulatory approval by government agencies prior tocommercialization. To obtain approval of a new product from the FDA, we must, among other requirements, submit data supporting safety and efficacy, aswell as detailed information on the manufacture and composition of the product and proposed labeling. Our product candidates are in the early stages oftesting and none has been approved. The steps required before a drug can be approved generally involve the following: •completion of nonclinical laboratory, animal studies, and formulation studies; •submission of an IND which must become effective before human clinical trials may begin in the United States; •completion of adequate and well-controlled human clinical trials to establish the safety and efficacy of the product candidate for each indicationfor which approval is sought; •submission to the FDA of a New Drug Application (NDA) accompanied by a substantial user fee; •development of manufacturing processes which conform to FDA-mandated commercial good manufacturing practices (cGMPs) and satisfactorycompletion of FDA inspections to assess cGMP compliance and clinical investigator compliance with good clinical practices; and •FDA review and approval of an NDA, which process may involve input from advisory committees to the FDA and may include post-approvalcommitments for further clinical studies and distribution restrictions intended to mitigate drug risks. The testing, collection of data, preparation of necessary applications and approval process requires substantial time, effort and financial resources.Additionally, statutes, rules, regulations and policies may change and new regulations may be issued that could delay approvals of our drugs. The FDA maynot act quickly or favorably in reviewing our applications, and we may encounter significant difficulties and costs in our efforts to obtain FDA approvals thatcould delay or preclude us from marketing our product candidates. Preclinical Tests. Preclinical tests include laboratory evaluation of the product candidate, its chemistry, toxicity, formulation and stability, as well asanimal studies to assess the potential safety and efficacy of the product candidate. The results of the preclinical tests, together with manufacturinginformation, analytical data and other available information about the product candidate, are submitted to the FDA as part of an IND. Preclinical tests andstudies can take several years to complete and, despite completion of those tests and studies, the FDA may not permit clinical testing to begin. The IND Process. An IND must be effective to administer an investigational drug to humans. The IND will automatically become effective 30 days afterits receipt by the FDA unless the FDA, before that time, places the24IND on clinical hold. At any time thereafter, the FDA may raise concerns or questions about the conduct of the trials as outlined in the IND and impose aclinical hold if the FDA deems it appropriate. In such case, the IND sponsor and the FDA must resolve any outstanding concerns before clinical trials canbegin or continue. The IND application process may become extremely costly and substantially delay development of our product candidates. Moreover,positive results in preclinical tests or prior human studies do not necessarily predict positive results in subsequent clinical trials. Annual progress reports detailing the results of the clinical trials must be submitted to the FDA and written IND safety reports must be promptlysubmitted to the FDA and the investigators for serious and unexpected adverse events or any findings from tests in laboratory animals that suggest asignificant risk for human subjects. Clinical Trials. Human clinical trials are typically conducted in three sequential phases that may overlap: •Phase 1: The drug candidate is initially introduced into a small number of healthy human subjects or patients and tested for safety, dosagetolerance, absorption, distribution, excretion and metabolism. If the investigational product is considered inherently toxic to ethically administerto healthy volunteers, the initial human testing is often conducted in the target population. •Phase 2: The drug candidate is introduced into a limited patient population to assess the efficacy of the drug in specific, targeted indications,assess dosage tolerance and optimal dosage, and to identify possible adverse effects and safety risks. •Phase 3: The drug candidate is introduced into an expanded patient population at geographically dispersed clinical trial sites to further evaluateclinical efficacy and safety. The purpose of the Phase 3 trial is to conduct a risk/benefit analysis of the potential drug and provide an adequatebasis for product labeling. It is common to have two adequate and well-controlled Phase 3 trials for the FDA to approve an NDA. Prior to initiation of each clinical trial, an independent Institutional Review Board (IRB) for each medical site proposing to conduct the clinical trialsmust review and approve the study protocol and study subjects must provide informed consent for participation in the study. We cannot be certain that we will successfully complete Phase 1, 2 or 3 testing of our drug candidates within any specific time period, if at all. Clinicaltrials must be conducted in accordance with the FDA’s good clinical practices (GCP) requirements. The FDA may order the partial, temporary or permanentdiscontinuation of a clinical trial at any time or impose other sanctions if it believes that the clinical trial is not being conducted in accordance with FDArequirements or presents an unacceptable risk to the clinical trial patients. The IRB may also require the clinical trial at that site to be halted, eithertemporarily or permanently, for failure to comply with the IRB’s requirements, or may impose other conditions. In addition, we may suspend or discontinue aclinical trial at any time for a variety of reasons, including a finding that the research subjects or patients are being exposed to an unacceptable health risk. During the development of a new drug, we may request to meet with the FDA at times such as prior to submitting an IND, at the End-of-Phase 2meeting, and before an NDA is submitted, and meetings are not limited to these certain times. The purpose of the End-of-Phase 2 meeting is to discuss thePhase 2 clinical trial results and present plans for a pivotal Phase 3 trial that, in our opinion, will support the approval of the new drug. Additional animalsafety studies, formulation studies and pharmacology studies are concurrently conducted with the ongoing clinical trials. Also, in compliance with cGMPrequirements, the process for manufacturing commercial quantities of the new drug is finalized, with the expectation that the quality, purity, and potency ofthe drug will meet standards. A sponsor may also request a Special Protocol Assessment (SPA), the purpose of which is to reach agreement with the FDA onthe Phase 3 clinical trial protocol design and analysis that will form the primary basis of an efficacy claim. Fast track designation: The FDA has a Fast Track program that is intended to expedite or facilitate the process for reviewing new drugs and biologicalproducts that meet certain criteria. Specifically, new drugs and biological products are eligible for Fast Track designation if they are intended to treat aserious or life-threatening condition and demonstrate the potential to address unmet medical needs for the condition. Fast Track designation applies to25the combination of the product and the specific indication for which it is being studied. Unique to a Fast Track product, the FDA may consider for reviewsections of the NDA on a rolling basis before the complete application is submitted, if the sponsor provides a schedule for the submission of the sections ofthe NDA, the FDA agrees to accept sections of the NDA and determines that the schedule is acceptable, and the sponsor pays any required user fees uponsubmission of the first section of the NDA. Any product submitted to the FDA for marketing, including a Fast Track program, may also be eligible for other types of FDA programs intended toexpedite development and review, such as priority review and accelerated approval. Any product is eligible for priority review if it has the potential toprovide safe and effective therapy where no satisfactory alternative therapy exists or a significant improvement in the treatment, diagnosis or prevention of adisease compared to marketed products. The FDA will attempt to direct additional resources to the evaluation of an NDA designated for priority review in aneffort to facilitate the review. Additionally, a product may be eligible for accelerated approval. Drug products studied for their safety and effectiveness intreating serious or life-threatening illnesses and that provide meaningful therapeutic benefit over existing treatments may receive accelerated approval, whichmeans that they may be approved on the basis of adequate and well-controlled clinical trials establishing that the product has an effect on a surrogateendpoint that is reasonably likely to predict a clinical benefit, or on the basis of an effect on a clinical endpoint other than survival or irreversible morbidity.As a condition of approval, the FDA may require that a sponsor of a drug product receiving accelerated approval perform adequate and well-controlled post-marketing clinical trials. In addition, the FDA currently requires as a condition for accelerated approval pre-approval of promotional materials, which couldadversely impact the timing of the commercial launch of the product. Fast Track designation, priority review and accelerated approval do not change thestandards for approval but may expedite the development or approval process. United States patent term restoration and marketing exclusivity: Depending upon the timing, duration and specifics of the FDA approval of a drugcandidate, some U.S. patents covering the product candidates may be eligible for limited patent term extension under the Drug Price Competition and PatentTerm Restoration Act of 1984, commonly referred to as the Hatch-Waxman Amendments. The Hatch-Waxman Amendments permit a patent restoration termof up to five years as compensation for patent term lost during product development and the FDA regulatory review process. However, patent term restorationcannot extend the remaining term of a patent beyond a total of 14 years from the product’s approval date. The patent term restoration period is generally one-half the time between the effective date of an IND and the submission date of an NDA plus the time between the submission date of an NDA and the approvalof that application. Only one patent applicable to an approved drug is eligible for the extension and the application for the extension must be submitted priorto the expiration of the patent. The United States Patent and Trademark Office, in consultation with the FDA, reviews and approves the application for anypatent term extension or restoration. In the future, we may apply for restoration of patent terms for one or more of our currently owned or licensed patents toadd patent life beyond its current expiration date, depending on the expected length of the clinical trials and other factors involved in the filing of therelevant NDA. Market exclusivity provisions under the FDCA can also delay the submission or the approval of certain applications of other companies seeking toreference another company’s NDA. The FDCA provides a five-year period of non-patent marketing exclusivity within the United States to the first applicantto obtain approval of an NDA for a new chemical entity. A drug is a new chemical entity if the FDA has not previously approved any other new drugcontaining the same active moiety, which is the molecule or ion responsible for the action of the drug substance. During the exclusivity period, the FDA maynot accept for review an abbreviated new drug application (ANDA) or a 505(b)(2) NDA submitted by another company for another version of such drug wherethe applicant does not own or have a legal right of reference to all the data required for approval. However, an application may be submitted after four years ifit contains a certification of patent invalidity or non-infringement to one of the patents listed with the FDA by the innovator NDA holder. The FDCA alsoprovides three years of marketing exclusivity for an NDA, or supplement to an existing NDA if new clinical investigations, other than bioavailability studies,that were conducted or sponsored by the applicant are deemed by the FDA to be essential to the approval of the application, for example new indications,dosages or strengths of an existing drug. This three-year exclusivity covers only the conditions associated with the new clinical investigations and does notprohibit the FDA from approving ANDAs for drugs containing the original active agent. Five-year and three-year exclusivity will not delay the submission orapproval of a full NDA. However, an applicant submitting a full NDA would be required to conduct or obtain a right of reference to all the preclinical studiesand adequate and well-controlled clinical trials necessary to demonstrate safety and effectiveness. Pediatric exclusivity is another type of regulatory marketexclusivity in the26United States Pediatric exclusivity, if granted, adds six months to existing exclusivity periods and patent terms. This six-month exclusivity, which runs fromthe end of other exclusivity protection or patent term, may be granted based on the voluntary completion of a pediatric trial in accordance with an FDA-issued “Written Request” for such a trial. Regulation outside the United States: In addition to regulations in the United States, we and our strategic alliance partners will be subject to a varietyof regulations in other jurisdictions governing, among other things, clinical trials and any commercial sales and distribution of our products. Whether or not we obtain FDA approval for a product, we must obtain the requisite approvals from regulatory authorities in foreign countries prior tothe commencement of clinical trials or marketing of the product in those countries. Certain countries outside of the United States have a similar process thatrequires the submission of a clinical trial application much like the IND prior to the commencement of human clinical trials. In the European Union, forexample, a clinical trial application (CTA) must be submitted to each country’s national health authority and an independent ethics committee, much like theFDA and IRB, respectively. Once the CTA is approved in accordance with a country’s requirements, clinical trial development may proceed. The requirements and process governing the conduct of clinical trials, product licensing, pricing and reimbursement vary from country to country. Inall cases, the clinical trials are conducted in accordance with GCP and the applicable regulatory requirements and the ethical principles that have their originin the Declaration of Helsinki. To obtain regulatory approval of an investigational drug under European Union regulatory systems, we or our strategic alliance partners must submit amarketing authorization application. The application used to file the NDA in the United States is similar to that required in the European Union, except for,among other things, country-specific document requirements. For other countries outside of the European Union, such as countries in Eastern Europe, Latin America or Asia, the requirements governing the conductof clinical trials, product licensing, pricing and reimbursement vary from country to country. In all cases, again, the clinical trials are conducted inaccordance with GCP and the applicable regulatory requirements and the ethical principles that have their origin in the Declaration of Helsinki. If we or our strategic alliance partners fail to comply with applicable foreign regulatory requirements, we may be subject to, among other things, fines,suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions and criminal prosecution. Employees We have assembled an experienced and cohesive management and support team, with core competencies in general management, clinicaldevelopment, regulatory affairs and corporate development. We have nine full-time employees as of the date of this report. We believe that our relations withour employees are good, and we have no history of work stoppages. Company Information We were originally incorporated in the State of Delaware in September 2000. Our principal executive offices are located at 4275 Executive Square,Suite 300, La Jolla, CA 92037. Our telephone number is 858-373-1500. Our website is www.medicinova.com, which includes links to reports we have filedwith the Securities and Exchange Commission, or SEC. The information contained in, or that can be accessed through, our website is not part of, and is notincorporated into, this Annual Report on Form 10-K. 27 Item 1A. Risk FactorsWe operate in a dynamic and rapidly changing environment that involves numerous risks and uncertainties. Certain factors may have a materialadverse effect on our business, financial condition and results of operations, and you should carefully consider them. Accordingly, in evaluating ourbusiness, we encourage you to consider the following discussion of risk factors, in its entirety, in addition to other information contained in this AnnualReport on Form 10-K and our other public filings with the SEC. Other events that we do not currently anticipate or that we currently deem immaterial mayalso affect our results of operations and financial condition.Risks Related to Our Business and IndustryWe have incurred significant operating losses since our inception and expect that we will incur continued losses for the foreseeable future.We have incurred significant net losses since our inception. For the year ended December 31, 2018, we had a net loss of $14.7 million. At December 31,2018, from inception, our accumulated deficit was $356.1 million. We expect to incur substantial net losses for the next several years as we continue todevelop certain of our existing product development candidates, and over the long-term if we expand our research and development programs and acquire orin-license products, technologies or businesses that are complementary to our own. As of December 31, 2018, we had available cash and cash equivalents of$62.3 million and working capital of $60.6 million. There can be no assurances that there will be adequate financing available to us in the future onacceptable terms, or at all. If we are unable to obtain additional financing, we may have to out-license or sell one or more of our programs or cease operations.Our future cash requirements will also depend on many factors, including: •progress in, and the costs of future planned clinical trials and other research and development activities; •the scope, prioritization and number of our product development programs; •our obligations under our license agreements, pursuant to which we may be required to make future milestone payments upon the achievement ofvarious milestones related to clinical, regulatory or commercial events; •our ability to establish and maintain strategic collaborations, including licensing agreements and other arrangements; •the time and costs involved in obtaining regulatory approvals; •the costs of securing manufacturing arrangements for clinical or commercial production of our product candidates; •the costs associated with any expansion of our management, personnel, systems and facilities; •the costs associated with any litigation; •the costs associated with the operations or wind-down of any business we may acquire; •the costs involved in filing, prosecuting, enforcing and defending patent claims and other intellectual property rights; and •the costs of establishing or contracting for sales and marketing capabilities and commercialization activities28 if we obtain regulatory approval to market our product candidates.We expect our research and development expenses to increase in 2019 relative to 2018 as we continue our focus on the development of MN-166(ibudilast) and MN-001 (tipelukast) in 2019. Our estimate of cash requirements for future operating expenses assumes that we do not incur significantadditional new clinical development expenditures unless we raise additional capital and/or enter into one or more strategic alliances. We do expect tocontinue to incur significant operating losses for the foreseeable future. Because of the numerous risks and uncertainties associated with developing drugproducts, we are unable to predict the extent of any future losses or when we will become profitable, if at all.If we have taxable income in the future, utilization of the net operating losses, or NOL, and tax credit carry-forwards will be subject to a substantialannual limitation under Sections 382 and 383 of the Internal Revenue Code of 1986, and similar state provisions due to ownership change limitations thathave occurred. These ownership changes will limit the amount of NOL and tax credit carry-forwards that can be utilized to offset future taxable income andtax, respectively.If we fail to obtain the capital necessary to fund our operations, we will be unable to develop and commercialize our product candidates.We have consumed substantial amounts of capital since our inception.Our business will continue to require us to incur substantial research and development expenses. We believe that without raising additional capitalfrom accessible sources of financing, we will not otherwise have adequate funding to continue our operations and to complete the development of ourexisting product candidates or the commercialization of any products we successfully develop. There is no guarantee that adequate funds will be availablewhen needed from debt or equity financings, arrangements with partners, or from other sources, on terms attractive to us, or at all. The inability to obtainsufficient additional funds when needed to fund our operations would require us to significantly delay, scale back, or eliminate some or all of our clinical orregulatory activities and reduce general and administrative expenses.We do not have any products that are approved for commercial sale and therefore do not expect to generate any revenues from product sales in theforeseeable future, if ever.To date, we have funded our operations primarily from sales of our securities and, to a lesser extent, debt financing. We do not expect to receive anyrevenues from the commercialization of our product candidates for at least the next several years, if at all. We anticipate that, prior to our commercializationof a product candidate, out-licensing upfront and milestone payments will be our primary source of revenue if we can enter into collaborations, strategicalliances or other agreements that would provide us with such revenues. To obtain revenues from sales of our product candidates, we must succeed, eitheralone or with third parties, in developing, obtaining regulatory approval for, manufacturing and marketing drugs with commercial potential. We may neversucceed in these activities, and we may not generate sufficient revenues to continue our business operations or achieve and maintain profitability.We are largely dependent on the success of our MN-166 (ibudilast) and MN-001 (tipelukast) product candidates and we cannot be certain that theseproduct candidates will receive regulatory approval or be successfully commercialized.We currently have no products for sale, and we cannot guarantee that we will ever have any drug products approved for sale. The research, testing,manufacturing, labeling, approval, sales, marketing and distribution of drug products are subject to extensive regulation by the FDA and comparableregulatory authorities in other countries. We are not permitted to market any of our product candidates in the United States until we submit and receiveapproval of a New Drug Application, or NDA, for a product candidate from the FDA or its foreign equivalent from a foreign regulatory authority. ObtainingFDA approval is a lengthy, expensive and uncertain process. The success of our business currently depends primarily on the successful development andcommercialization of our MN-166 (ibudilast) and MN-001 (tipelukast) product candidates. These product candidates have not completed the clinicaldevelopment process, and therefore we have not submitted an NDA or foreign equivalent or received marketing approval.29The clinical development program for our product candidates may not lead to commercial products for a number of reasons, including our clinicaltrials’ failure to demonstrate to the FDA’s satisfaction that the product candidate is safe and effective, or our failure to obtain necessary approvals from theFDA or similar foreign regulatory authorities for any reason. We may also fail to obtain the necessary approvals if we have inadequate financial or otherresources to advance our product candidates through the clinical trial process or are unable to secure a strategic collaboration or partnership with a thirdparty. Any failure or delay in completing clinical trials or obtaining regulatory approval for our product candidates in a timely manner would have a materialand adverse impact on our business and our stock price.Because the results of early clinical trials are not necessarily predictive of future results, our product candidates we advance into clinical trials in anyindication may not have favorable results in later clinical trials, if any, or receive regulatory approval.Our product candidates are subject to the risks of failure inherent in drug development. We will be required to demonstrate through well-controlledclinical trials that our product candidates are safe and effective for use in a diverse population for its target indications before we can seek regulatoryapprovals for their commercial sale. Success in early clinical trials does not mean that later clinical trials will be successful because product candidates inlater-stage clinical trials may fail to demonstrate sufficient safety or efficacy despite having progressed through initial clinical testing, even at statisticallysignificant levels.Companies frequently suffer significant setbacks in advanced clinical trials, even after earlier clinical trials have shown promising results. Any of ourplanned clinical trials for our product candidates may not be successful for a variety of reasons, including the clinical trial designs, the failure to enroll asufficient number of patients, undesirable side effects and other safety concerns and the inability to demonstrate sufficient efficacy. If a product candidatefails to demonstrate sufficient safety or efficacy, we would experience potentially significant delays in, or be required to abandon, development of suchproduct candidate.Our attempts to develop MN-001 (tipelukast) in NASH and IPF may detract from our efforts to develop other product candidates and may limit theeffectiveness of our product development efforts as a whole.We have decided to pursue development of MN-001 (tipelukast) in NASH and IPF. These activities will divert financial and management resourcesfrom our other product development activities and may limit our ability to complete or continue those other programs.In order to commercialize a therapeutic drug successfully, a product candidate must receive regulatory approval after the successful completion of clinicaltrials, which are long, complex and costly, have a high risk of failure and can be delayed or terminated at any time.Our product candidates are subject to extensive government regulations related to development, clinical trials, manufacturing and commercialization.The process of obtaining FDA and other regulatory approvals is costly, time-consuming, uncertain and subject to unanticipated delays. To receive regulatoryapproval for the commercial sale of any of our product candidates, we must conduct, at our own expense, adequate and well-controlled clinical trials inhuman patients to demonstrate the efficacy and safety of the product candidate. Clinical testing is expensive, takes many years and has an uncertain outcome.To date, we have obtained regulatory authorization to conduct clinical trials for our product development programs. INDs were approved by the FDA and areactive for our product candidates.It may take years to complete the clinical development necessary to commercialize a drug, and delays or failure can occur at any stage, which mayresult in our inability to market and sell any of our product candidates that are ultimately approved by the FDA or foreign regulatory authorities. Our clinicaltrials may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical and/or non-clinicaltesting. Interim results of clinical trials do not necessarily predict final results, and success in preclinical testing and early clinical trials does not ensure thatlater clinical trials will be successful. A number of companies in the pharmaceutical industry have suffered significant setbacks in advanced clinical trialseven after obtaining promising results in earlier clinical trials. In addition, any delays in completing clinical trials or the rejection of data from a clinical trialby a regulatory authority will result in increased development costs and could have a material30adverse effect on the development of the impacted product candidate.In connection with the conduct of clinical trials for each of our product candidates, we face many risks, including the risks that: •the product candidate may not prove to be effective in treating the targeted indication; •clinical trial participants and/or patients may experience serious adverse events or other undesirable drug-related side effects; •the results may not confirm the positive results of earlier trials; •the FDA or other regulatory authorities may not agree with our proposed development plans or accept the results of completed clinical trials; and •our planned clinical trials and the data collected from such clinical trials may be deemed by the FDA or other regulatory authorities not to besufficient, which would require additional development for the product candidate before it can be evaluated in late stage clinical trials or beforethe FDA will consider an application for marketing approval.If we do not complete clinical development of our product candidates successfully, we will be unable to obtain regulatory approval to market productsand generate revenues from such product candidates. We may also fail to obtain the necessary regulatory approvals if we have inadequate financial or otherresources to advance our product candidates through the clinical trial process. In addition, even if we believe that the preclinical and clinical data aresufficient to support regulatory approval for a product candidate, the FDA and foreign regulatory authorities may not ultimately approve such productcandidate for commercial sale in any jurisdiction, which would limit our ability to generate revenues and adversely affect our business. In addition, even ifour product candidates receive regulatory approval, they remain subject to ongoing FDA regulations, including obligations to conduct additional clinicaltrials, changes to the product label, new or revised regulatory requirements for manufacturing practices, written advisements to physicians, and/or a productrecall or withdrawal.We are subject to stringent regulation of our product candidates, which could delay the development and commercialization of our product candidates.We, our third-party manufacturers, service providers, suppliers and partners, if any, and our product candidates are subject to stringent regulation by theFDA and other regulatory agencies in the United States and by comparable authorities in other countries. None of our product candidates can be marketed inthe United States until it has been approved by the FDA. None of our product candidates has been approved by the FDA to date, and we may never receiveFDA approval for any of our product candidates. Obtaining FDA approval for a product takes many years of clinical development and requires substantialresources. Additionally, changes in regulatory requirements and guidance may occur or new information regarding the product candidate or the targetindication may emerge, and we may need to perform additional, unanticipated non-clinical or clinical testing of our product candidates or amend clinicaltrial protocols to reflect these changes. Any additional unanticipated testing would add costs and could delay or result in the denial of regulatory approvalfor a product candidate. These regulatory requirements may limit the size of the market for the product candidate or result in the incurrence of additionalcosts. Any delay or failure in obtaining required approvals could substantially reduce or negate our ability to generate revenues from the particular productcandidate.In addition, both before and after regulatory approval, we, our partners and our product candidates are subject to numerous FDA requirements,including requirements related to testing, manufacturing, quality control, labeling, advertising, promotion, distribution and export. The FDA’s requirementsmay change and additional government regulations may be promulgated that could affect us, our partners and our product candidates. Given the number ofrecent high profile adverse safety events with certain drug products, the FDA may require, as a condition of approval, costly risk management programs,which may include safety surveillance, restricted distribution and use, patient education, enhanced labeling, special packaging or labeling, expeditedreporting of certain adverse events,31preapproval of promotional materials and restrictions on direct-to-consumer advertising. Furthermore, we cannot predict the likelihood, nature or extent ofgovernment regulation that may arise from future legislation or administrative action, either in the United States or abroad.In order to market any of our products outside of the United States, we and our strategic partners and licensees must establish and comply withnumerous and varying regulatory requirements of other countries regarding safety and efficacy. Approval procedures vary among countries and can involveadditional product testing and additional administrative review periods beyond the requirements of the FDA and the time required to obtain approval inother countries might differ from that required to obtain FDA approval. The regulatory approval process in other countries may include all of the risksdetailed above regarding FDA approval in the United States. Regulatory approval in one country, including FDA approval in the United States, does notensure regulatory approval in another. In addition, a failure or delay in obtaining regulatory approval in one country may negatively impact the regulatoryprocess in others. A product candidate may not be approved for all indications that we request, which would limit the uses of our product and adverselyimpact our potential royalties and product sales, and any approval that we receive may be subject to limitations on the indicated uses for which the productmay be marketed or require costly, post-marketing follow-up studies.If we fail to comply with applicable regulatory requirements in the United States or other countries, we may be subject to regulatory and otherconsequences, including fines and other civil penalties, delays in approving or failure to approve a product, suspension or withdrawal of regulatoryapprovals, product recalls, seizure of products, operating restrictions, interruption of manufacturing or clinical trials, injunctions and criminal prosecution,any of which would harm our business.Even if our product candidates receive regulatory approval, they may still face future development and regulatory difficulties.Even if U.S. regulatory approval is obtained, the FDA may still impose significant restrictions on a product’s indicated uses or marketing or imposeongoing requirements for potentially costly post-approval studies, including additional research and development and clinical trials. Any of theserestrictions or requirements could adversely affect our potential product revenues. For example, the label ultimately approved for any of our other productcandidates or any other product candidates that we may in-license or acquire, if any, may include a restriction on the terms of its use, or it may not includeone or more of our intended indications.Our product candidates, if approved, will also be subject to ongoing FDA requirements for the labeling, packaging, storage, advertising, promotion,record-keeping and submission of safety and other post-market information on the drug. In addition, approved products, manufacturers and manufacturers’facilities are subject to continual review and periodic inspections. If a regulatory agency discovers previously unknown problems with a product, such asadverse events of unanticipated severity or frequency or problems with the facility where the product is manufactured, a regulatory agency may imposerestrictions on that product or us, including requiring withdrawal of the product from the market. If our product candidates fail to comply with applicableregulatory requirements, such as cGMPs, a regulatory agency may: •issue warning letters or untitled letters; •require us to enter into a consent decree, which can include imposition of various fines, reimbursements for inspection costs, required due datesfor specific actions and penalties for noncompliance; •impose other civil or criminal penalties; •suspend regulatory approval; •suspend any ongoing clinical trials; •refuse to approve pending applications or supplements to approved applications filed by us; 32 •impose restrictions on operations, including costly new manufacturing requirements; or •seize or detain products or require a product recall.Any of our product candidates that we advance into clinical trials may cause undesirable side effects or have other properties that could delay or preventregulatory approval or commercialization or limit its commercial potential.Undesirable side effects caused by any of our product candidates that we advance into clinical trials could cause us or regulatory authorities tointerrupt, delay or halt clinical trials and could result in the denial of regulatory approval by the FDA or other regulatory authorities for any or all targetedindications, or cause us to evaluate the future of our development programs. This, in turn, could prevent us from commercializing the affected productcandidate and generating revenues from its sale.In addition, if any product candidates we may develop receives marketing approval and we or others later identify undesirable side effects caused bythe product, a number of significant negative consequences could result, including: •regulatory authorities may withdraw their approval of the product or place restrictions on the way it is prescribed; •regulatory authorities may require a larger clinical benefit for approval to offset the risk; •regulatory authorities may require the addition of labeling statements that could diminish the usage of the product or otherwise limit thecommercial success of the product; •we may be required to change the way the product is administered, conduct additional clinical trials or change the labeling of the product orimplement a risk evaluation and mitigation strategy; •we may choose to discontinue sale of the product; •we could be sued and held liable for harm caused to patients; •we may not be able to enter into collaboration agreements on acceptable terms and execute our business model; and •our reputation may suffer.Delays in the commencement or completion of clinical trials, or suspension or termination of our clinical trials, could result in increased costs to us anddelay or limit our ability to obtain regulatory approval for our product candidates.If we experience delays in the commencement or completion of our clinical trials, we could incur significantly higher product development costs andour ability to obtain regulatory approvals for our product candidates could be delayed or limited. The commencement and completion of clinical trialsrequires us to identify and maintain a sufficient number of study sites and enroll a sufficient number of patients at such sites. We do not know whetherenrollment in our future clinical trials for our product candidates will be completed on time, or whether our additional planned and ongoing clinical trials forour product candidates will be completed on schedule, if at all.The commencement and completion of clinical trials can be delayed for a variety of other reasons, including delays in: •regulatory approval to commence or amend a clinical trial; •reaching agreements on acceptable terms with prospective clinical research organizations, or CROs, and33 trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; •recruiting and enrolling patients to participate in clinical trials; •retaining patients who have initiated a clinical trial but who may be prone to withdraw due to the treatment protocol, lack of efficacy, personalissues or side effects from the therapy or who are lost to further follow-up; •manufacturing sufficient quantities of a product candidate; and •IRB approval or approval from foreign counterparts to conduct or amend a clinical trial at a prospective site.In addition, a clinical trial may be delayed, suspended or terminated by us, the FDA or other regulatory authorities due to a number of factors,including: •ongoing discussions with regulatory authorities regarding the scope or design of our clinical trials or requests by them for supplementalinformation with respect to our clinical trial results, which may result in the imposition of a clinical hold on the IND for any clinical trial, as wellas the inability to resolve any outstanding concerns with the FDA so that a clinical hold already placed on the IND may be lifted and the clinicaltrial may begin; •inspections of our own clinical trial operations, the operations of our CROs or our clinical trial sites by the FDA or other regulatory authorities,which may result in the imposition of a clinical hold or potentially prevent us from using some of the data generated from our clinical trials tosupport requests for regulatory approval of our product candidates; •our failure or inability, or the failure or inability of our CROs, clinical trial site staff or other third-party service providers involved in the clinicaltrial, to conduct clinical trials in accordance with regulatory requirements or our clinical protocols; •lower than anticipated enrollment or retention rates of patients in clinical trials; •new information suggesting unacceptable risk to subjects or unforeseen safety issues or any determination that a clinical trial presentsunacceptable health risks; •insufficient supply or deficient quality of product candidates or other materials necessary for the conduct of our clinical trials; •lack of adequate funding to continue the clinical trial, including the incurrence of unforeseen costs due to enrollment delays, requirements toconduct additional trials and studies and increased expenses associated with the services of our CROs and other third parties; and •the formulation or dosing regimen of a product candidate may result, unintentionally, in patient non-compliance, leading to low patient retentionrates, incomplete data to conduct an adequate analysis, and failure to complete the trial.If we experience delays in the completion of our clinical trials for a product candidate, the commercial prospects for such product candidate may beharmed, we may incur increased costs for development of such product candidate and our ability to obtain regulatory approval for such product candidatecould be delayed or limited. Many of the factors that cause or lead to delays in the commencement or completion of clinical trials may also ultimately lead tothe denial of regulatory approval for a product candidate. In addition, any amendment to a clinical trial protocol may require us to resubmit our clinical trialprotocols to IRBs or their foreign counterparts for reexamination, which may delay or otherwise impact the costs, timing or successful completion of aclinical trial.34The loss of any rights to develop and market any of our product candidates could significantly harm our business.We license the rights to certain compounds to develop and market our product candidates.We are obligated to develop and commercialize certain product candidates in accordance with mutually agreed upon terms and conditions. Our abilityto satisfy some or all of the terms and conditions of our license agreements is dependent on numerous factors, including some factors that are outside of ourcontrol. Any of our license agreements may be terminated if we breach our obligations under the agreement materially and fail to cure any such breach withina specified period of time.If any of our license agreements is terminated, we would have no further rights to develop and commercialize the product candidate that is the subjectof the license. The termination of any of our license agreements could materially and adversely affect our business.If our competitors develop and market products that are more effective than our product candidates, they may reduce or eliminate our commercialopportunities.The biotechnology and pharmaceutical industries are subject to rapid and intense technological change. We face, and will continue to face,competition from pharmaceutical and biotechnology companies, as well as numerous academic and research institutions and governmental agencies, in theUnited States and abroad. Some of these competitors have products or are pursuing the development of drugs that target the same diseases and conditions thatare the focus of our product development programs. We cannot assure you that developments by others will not render our product candidates obsolete ornoncompetitive. Many of our competitors have products that have been approved or are in advanced development and may succeed in developing drugs thatare more effective, safer, more affordable or more easily administered than ours, or that achieve patent protection or commercialization sooner than ourproducts. Our competitors may also develop alternative therapies that could further limit the market for any product candidates that we are able to obtainapproval for, if at all. In addition, new developments, including the development of other drug technologies and methods of preventing the incidence ofdisease, occur in the pharmaceutical industry at a rapid pace. These developments may render our product candidates obsolete or noncompetitive.In many of our target disease areas, potential competitors are working to develop new compounds with different mechanisms of action and attractiveefficacy and safety profiles. Many of our competitors have substantially greater financial, research and development resources, including personnel andtechnology, clinical trial experience, manufacturing, sales and marketing capabilities and production facilities than we do. Smaller companies also mayprove to be significant competitors, particularly through proprietary research discoveries and collaboration arrangements with large pharmaceutical andestablished biotechnology companies.Our competitors may obtain regulatory approval of their products more rapidly than we are able to or may obtain patent protection or other intellectualproperty rights that limit our ability to develop or commercialize our product candidates. Our competitors may also develop drugs that are more effective andless costly than ours and may also be more successful than us in manufacturing and marketing their products. We also expect to face similar competition inour efforts to identify appropriate collaborators or partners to help develop or commercialize our product candidates.We will depend on strategic collaborations with third parties to develop and commercialize selected product candidates and will not have control over anumber of key elements relating to the development and commercialization of these product candidates if we are able to achieve such third-partyarrangements.A key aspect of our strategy is to seek collaborations with partners, such as large pharmaceutical companies, that are willing to conduct later-stageclinical trials and further develop and commercialize selected product candidates. To date, we have not entered into any such collaborative arrangements,and we may not be able to enter into any collaborations or otherwise monetize these product candidates on acceptable terms, if at all.35By entering into a strategic collaboration with a partner, we may rely on the partner for financial resources and for development, regulatory andcommercialization expertise. Even if we are successful in entering into a strategic collaboration for one of our product candidates, our partner may fail todevelop or effectively commercialize the product candidate because such partner: •does not have sufficient resources or decides not to devote the necessary resources due to internal constraints such as limited cash or humanresources; •decides to pursue a competitive potential product developed outside of the collaboration; •cannot obtain the necessary regulatory approvals; •determines that the market opportunity is not attractive; or •cannot manufacture the necessary materials in sufficient quantities from multiple sources or at a reasonable cost.We also face competition in our search for partners from other biotechnology and pharmaceutical companies worldwide, many of whom are larger andable to offer more attractive deals in terms of financial commitments, contribution of human resources, or development, manufacturing, regulatory orcommercial expertise and support.If we are not successful in attracting partners and entering into collaborations on acceptable terms for these product candidates or otherwise monetizingthese product candidates, we may not be able to complete development of or obtain regulatory approval for such product candidates. In such event, ourability to generate revenues from such products and achieve or sustain profitability would be significantly hindered.The terms under which we enter collaborations or raise additional equity or debt financing may harm our business and may significantly dilutestockholders’ ownership interests.If we raise additional funds through collaborations or licensing arrangements with third parties, we may need to relinquish some rights to our productcandidates, including commercialization rights, which may hinder our ability to generate revenues and achieve or sustain profitability. If we raise additionalfunds by issuing equity securities, including as part of a debt financing, stockholders may experience substantial dilution. Debt financing, if available, mayinvolve significant cash payment obligations and restrictive covenants and other financial terms that may impede our ability to operate our business. Anydebt financing or additional equity that we raise may contain terms that are not favorable to us or our stockholders.We rely on third parties to conduct our clinical trials, and we may incur additional development costs, experience delays in the commencement andcompletion of clinical trials, and be unable to obtain regulatory approval for or commercialize our product candidates on our anticipated timeline if thesethird parties do not successfully carry out their contractual duties or meet expected deadlines.We rely extensively on CROs, medical institutions, clinical investigators, contract laboratories and other service providers to perform importantfunctions related to the conduct of our clinical trials, the collection and analysis of data and the preparation of regulatory submissions. Although we designand/or manage our current clinical trials to ensure that each clinical trial is conducted in accordance with its investigational plan and protocol, we do nothave the ability to conduct all aspects of our clinical trials directly for our product candidates.The FDA requires us and our CROs to comply with regulations and standards, commonly referred to as good clinical practices, or GCPs, for conducting,monitoring, recording and reporting the results of clinical trials to ensure that the data and results are scientifically credible and accurate and that the trialsubjects are adequately informed of the potential risks of participating in clinical trials. Our reliance on CROs does not relieve us of these responsibilities andrequirements. The CROs, medical institutions, clinical investigators, contract laboratories and other service providers that we employ in the conduct of ourclinical trials are not our employees, and we cannot control the amount or timing of resources that they devote to our product development programs. If anyof these third parties fails to devote sufficient care, time and resources to our product development programs, if its performance is36substandard, or if any third party is inspected by the FDA and found not to be in compliance with GCPs, it will delay the completion of the clinical trial inwhich they are involved and the progress of the affected development program. The CROs with which we contract for execution of our clinical trials play asignificant role in the conduct of the clinical trials and the subsequent collection and analysis of data. Any failure of the CROs to meet their obligationscould adversely affect clinical development of our product candidates. Moreover, the CROs, clinical investigators and other service providers may haverelationships with other commercial entities, some of which may have competitive products under development or currently marketed, and our competitiveposition could be harmed if they assist our competitors. If any of these third parties does not successfully carry out their contractual duties or obligations ormeet expected deadlines, or if the quality or accuracy of the clinical data is compromised for any reason, our clinical trials may be extended, delayed orterminated, and we may not be able to obtain regulatory approval for our product candidates. In addition, while we believe that there are numerousalternative sources to provide these services, we might not be able to enter into replacement arrangements without delays or additional expenditures if wewere to seek such alternative sources.We rely on third-party manufacturers to produce our product candidates, which may result in delays in our clinical trials and the commercialization ofproducts, as well as increased costs.We have no manufacturing facilities, and we do not intend to develop facilities for the manufacture of our product candidates for clinical trials orcommercial purposes in the foreseeable future. We contract with third-party manufacturers to produce, in collaboration with us, sufficient quantities of ourproduct candidates for clinical trials, and we plan to contract with third-party manufacturers to produce sufficient quantities of any product candidates thatmay be approved by the FDA or other regulatory authorities for commercial sale. While we believe that there are competitive sources available tomanufacture our product candidates, we may not be able to enter into arrangements without delays or additional expenditures. We cannot estimate thesedelays or costs with certainty.Reliance on third-party manufacturers limits our ability to control certain aspects of the manufacturing process and therefore exposes us to a variety ofsignificant risks, including risks related to our ability to commercialize any products approved by regulatory authorities or conduct clinical trials, reliance onsuch third parties for regulatory compliance and quality assurance, and the refusal or inability of a third-party manufacturer to supply our requirements on along-term basis. In addition, manufacturers of pharmaceutical products often encounter difficulties in production, particularly in scaling up initialproduction. These problems include difficulties with production costs and yields, quality control, including stability of the product candidate and qualityassurance testing, shortages of qualified personnel and compliance with federal, state and foreign regulations. Also, our manufacturers may not perform asagreed. If our manufacturers were to encounter any of these difficulties, our ability to timely produce our product candidates for clinical trials and commercialsale may be interrupted, which could result in delayed clinical trials or delayed regulatory approval and lost or delayed revenues.We may not be able to establish or maintain any commercial manufacturing and supply arrangements on commercially reasonable terms that we requirefor purposes of commercializing a product. Any failure by us to secure or maintain any such required commercial supply agreements could result ininterruption of supply and lost or delayed revenues, which would adversely affect our business. Any problems or delays we experience in preparing forcommercial-scale manufacturing of a product candidate may result in a delay in FDA or other regulatory approval of the product candidate or may impair ourability to manufacture commercial quantities, which would adversely affect our business. For example, our manufacturers will need to produce specificbatches of a product candidate to demonstrate acceptable stability under various conditions and for commercially viable lengths of time. We and our third-party manufacturers will need to demonstrate to the FDA and other regulatory authorities this acceptable stability data for the product candidate, as well asvalidate methods and manufacturing processes, in order to receive regulatory approval to commercialize such product candidate.Our manufacturers are obligated to operate in accordance with FDA-mandated current good manufacturing practices, or cGMPs and, in some cases,International Convention on Harmonization, or ICH, standards. A failure of any of our third-party manufacturers to establish and follow cGMPs and/or ICHstandards and to document their adherence to such practices may lead to significant delays in our ability to timely conduct and complete clinical trials,obtain regulatory approval of product candidates or launch of our products into the market. In addition, changing third-party manufacturers is difficult. Forexample, a change in third-party manufacturer for a particular product candidate requires re-validation of the manufacturing processes and procedures inaccordance with cGMPs,37which may be costly and time-consuming and, in some cases, our manufacturers may not provide us with adequate assistance to transfer the manufacturingprocesses and procedures for our product candidates to new manufacturers or may possess intellectual property rights covering parts of these processes orprocedures for which we may need to obtain a license. Failure by our third-party manufacturers or us to comply with applicable regulations could result insanctions being imposed on us, including fines, injunctions, civil penalties, delays, suspension or withdrawal of regulatory approvals, seizures or recalls ofproducts, operating restrictions and criminal prosecutions.We may not be able to manufacture our product candidates in commercial quantities, which would prevent us from commercializing our productcandidates.To date, our product candidates have been manufactured in small quantities for preclinical studies and clinical trials. If any of our product candidates isapproved by the FDA or comparable regulatory authorities in other countries for commercial sale, we will need to manufacture such product candidate inlarger quantities. We may not be able to increase successfully the manufacturing capacity for any of our product candidates in a timely or economic manner,or at all. Significant scale-up of manufacturing may require additional validation studies, which the FDA must review and approve. If we are unable toincrease successfully the manufacturing capacity for a product candidate, the regulatory approval or commercial launch of that product candidate may bedelayed or there may be a shortage in supply. Our product candidates require precise, high quality manufacturing. Our failure to achieve and maintain thesehigh manufacturing standards in collaboration with our third-party manufacturers, including the incidence of manufacturing errors, could result in patientinjury or death, product recalls or withdrawals, delays or failures in product testing or delivery, cost overruns or other problems that could harm our business,financial condition and results of operations.Materials necessary to manufacture our product candidates may not be available on commercially reasonable terms, or at all, which may delay thedevelopment and commercialization of our product candidates.We rely on the third-party manufacturers of our product candidates to purchase from third-party suppliers the materials necessary to produce the APIand product candidates for our clinical trials, and we will rely on such manufacturers to purchase such materials to produce the API and finished product forany commercial distribution of our products if we obtain marketing approval. Suppliers may not sell these materials to our manufacturers at the time theyneed them in order to meet our required delivery schedule or on commercially reasonable terms, if at all. We do not have any control over the process ortiming of the acquisition of these materials by our manufacturers. Moreover, we currently do not have any agreements for the production of these materials. Ifour manufacturers are unable to obtain these materials for our clinical trials, testing of the affected product candidate would be delayed, which maysignificantly impact our ability to develop the product candidate. If we or our manufacturers are unable to purchase these materials after regulatory approvalhas been obtained for one of our products, the commercial launch of such product would be delayed or there would be a shortage in supply of such product,which would harm our ability to generate revenues from such product and achieve or sustain profitability.Our product candidates, if approved for sale, may not gain acceptance among physicians, patients and the medical community, thereby limiting ourpotential to generate revenues.If one of our product candidates is approved for commercial sale by the FDA or other regulatory authorities, the degree of market acceptance of anyapproved product by physicians, healthcare professionals and third-party payers and our profitability and growth will depend on a number of factors,including: •demonstration of efficacy; •changes in the standard of care for the targeted indication; •relative convenience and ease of administration; •the prevalence and severity of any adverse side effects; •availability, cost and potential advantages of alternative treatments, including less expensive generic drugs; •pricing and cost effectiveness, which may be subject to regulatory control;38 •effectiveness of our or any of our partners’ sales and marketing strategies; •the product labeling or product insert required by the FDA or regulatory authority in other countries; andthe availability of adequate third-party insurance coverage or reimbursement.If any product candidate that we develop does not provide a treatment regimen that is as beneficial as, or is perceived as being as beneficial as, thecurrent standard of care or otherwise does not provide patient benefit, that product candidate, if approved for commercial sale by the FDA or other regulatoryauthorities, likely will not achieve market acceptance. Our ability to effectively promote and sell any approved products will also depend on pricing andcost-effectiveness, including our ability to produce a product at a competitive price and our ability to obtain sufficient third-party coverage orreimbursement. If any product candidate is approved but does not achieve an adequate level of acceptance by physicians, patients and third-party payers, ourability to generate revenues from that product would be substantially reduced. In addition, our efforts to educate the medical community and third-partypayers on the benefits of our product candidates may require significant resources and may never be successful.If our products are not accepted by the market or if users of our products are unable to obtain adequate coverage of and reimbursement for our productsfrom government and other third-party payers, our revenues and profitability will suffer.Our ability to commercialize our products successfully will depend in significant part on pricing and cost effectiveness, including our ability toproduce a product at a competitive price and our ability to obtain appropriate coverage of and reimbursement for our products and related treatments fromgovernmental authorities, private health insurers and other organizations, such as health maintenance organizations, or HMOs. Third-party payers areincreasingly challenging the prices charged for medical products and services. We cannot provide any assurances that third-party payers will consider ourproducts cost-effective or provide coverage of and reimbursement for our products, in whole or in part.Uncertainty exists as to the coverage and reimbursement status of newly approved medical products and services and newly approved indications forexisting products. Third-party payers may conclude that our products are less safe, less clinically effective or less cost-effective than existing products, andthird-party payers may not approve our products for coverage and reimbursement. If we are unable to obtain adequate coverage of and reimbursement for ourproducts from third-party payers, physicians may limit how much or under what circumstances they will prescribe or administer them. Such reduction orlimitation in the use of our products could cause our sales to suffer. Even if third-party payers make reimbursement available, payment levels may not besufficient to make the sale of our products profitable.Market acceptance and sales of our current or future product candidates will depend in large part on global reimbursement policies and may be affectedby future healthcare reform measures, both in the United States and other key international markets. For example, continuing health care reform in the UnitedStates will control or significantly influence the purchase of medical services and products, and may result in inadequate coverage of and reimbursement forour products. Many third-party payers are pursuing various ways to reduce pharmaceutical costs, including the use of formularies. The market for ourproducts depends on access to such formularies, which are lists of medications for which third-party payers provide reimbursement. These formularies areincreasingly restricted, and pharmaceutical companies face significant competition in their efforts to place their products on formularies. This increasedcompetition has led to a downward pricing pressure in the industry. The cost containment measures that third-party payers, including government payers, areinstituting could have a material adverse effect on our ability to operate profitably.We are dependent on our management team, particularly our President and Chief Executive Officer, and our experienced scientific staff, and if we areunable to retain, motivate and attract key personnel, our product development programs may be delayed and we may be unable to develop successfully orcommercialize our product candidates.We are dependent upon the continued services of our executive officers and other key personnel, particularly39Yuichi Iwaki, M.D., Ph.D., a founder and our President and Chief Executive Officer, who has been instrumental in our ability to in-license product candidatesfrom Japanese pharmaceutical companies and secure financing from Japanese institutions. The relationships that certain of our key managers have cultivatedwith pharmaceutical companies from whom we license product candidates and to whom we expect to out-license product candidates make us particularlydependent upon their continued services with us, whether through employment, service on our board of directors or a consulting agreement. We are alsosubstantially dependent on the continued services of clinical development personnel because of the highly technical nature of our product developmentprograms. We are not presently aware of any plans of our executive officers or key personnel to retire or leave employment. Following termination ofemployment, these individuals may engage in other businesses that may compete with us.If we acquire or license new product candidates, our success may depend on our ability to attract, retain and motivate highly qualified management andscientific personnel to manage the development of these new product candidates. In particular, our product development programs depend on our ability toattract and retain highly experienced clinical development personnel. However, we face competition for experienced professional personnel from numerouscompanies and academic and other research institutions. Competition for qualified personnel is particularly intense in the San Diego, California area, whereour corporate headquarters is located. Our short operating history and the uncertainties could impair our ability to attract and retain personnel and impede theachievement of our development and commercialization objectives. In addition, we have scientific and clinical advisors who assist us in our productdevelopment and clinical strategies. These third parties are not our employees and may have commitments to, or contracts with, other entities that may limittheir availability to us, or may have arrangements with other companies to assist in the development of products that may compete with our productcandidates.Although we have employment agreements with key members of management, each of our employees, subject to applicable notice requirements, mayterminate his or her employment at any time. We do not carry “key person” insurance covering members of senior management. If we lose any of our keymanagement personnel, we may not be able to find suitable replacements, which would adversely affect our business.If we are unable to establish sales, marketing and distribution capabilities, whether independently or with third parties, we will be unable tocommercialize our product candidates successfully.To date, we have not sold, marketed or distributed any pharmaceutical products. If we are successful in obtaining regulatory approvals for any of ourproduct candidates or acquiring other approved products, we will need to establish sales, marketing and distribution capabilities on our own or with partnersin order to commercialize an approved product. The acquisition or development of an effective sales and marketing infrastructure will require a significantamount of our financial resources and time and could negatively impact our commercialization efforts, including delay of a product launch. We may beunable to establish and manage a sufficient or effective sales force in a timely or cost-effective manner, if at all, and any sales force we do establish may notbe capable of generating demand for our products, therefore hindering our ability to generate revenues and achieve or sustain profitability. In addition, if weare unable to develop internal sales capabilities, we will need to contract with third parties or establish a partnership to market and sell the product. If we areunable to establish adequate sales, marketing and distribution capabilities, whether independently or with third parties, we may not be able to generate anyproduct revenues, may generate increased expenses and may never become profitable. In addition, although we intend to establish strategic collaborations tomarket any products approved for sale by regulatory authorities outside of the United States, we may be required to market our product candidates outside ofthe United States directly if we are unable to establish such collaborations. In that event, we may need to build a corresponding international sales andmarketing capability with technical expertise and with supporting distribution capabilities.Health care reform measures could adversely affect our business.The business and financial condition of pharmaceutical and biotechnology companies are affected by the efforts of governmental and third-partypayers to contain or reduce the costs of health care. In the United States and in foreign jurisdictions, there have been, and we expect that there will continueto be, a number of legislative and regulatory proposals aimed at changing the health care system. For example, in some countries, pricing of prescriptiondrugs is subject to government control, and we expect to continue to see proposals to implement similar controls in the United States to continue. Anotherexample of proposed reform that could affect our business is drug40reimportation into the United States. Moreover, the pendency or approval of such proposals could result in a decrease in our stock price or our ability to raisecapital or to obtain strategic partnerships or licenses. More recently, the Patient Protection and Affordable Care Act imposed numerous reforms that mayimpact the costs, legal requirements and potential success of our operations.We may be sued for product liability, which could result in substantial liabilities that exceed our available resources and damage our reputation.The development and commercialization of drug products entails significant product liability risks. Product liability claims may arise from use of anyof our product candidates in clinical trials and the commercial sale of any approved products. If we cannot successfully defend ourselves against these claims,we will incur substantial liabilities. Regardless of merit or eventual outcome, product liability claims may result in: •withdrawal of clinical trial participants; •termination of clinical trial sites or entire clinical trial programs; •decreased demand for our product candidates; •impairment of our business reputation; •costs of related litigation; •substantial monetary awards to patients or other claimants; •loss of revenues; and •the inability to commercialize our product candidates.We currently have insurance that covers our clinical trials. We believe our current insurance coverage is reasonably adequate at this time; however, ourinsurance coverage may not reimburse us or may not be sufficient to reimburse us for all expenses or losses we may suffer. In addition, we will need toincrease and expand this coverage as we commence additional clinical trials, as well as larger scale clinical trials, and in the event that any of our productcandidates is approved for commercial sale. This insurance may be prohibitively expensive or may not fully cover our potential liabilities. In addition, ourinability to obtain sufficient insurance coverage at an acceptable cost or otherwise to protect against potential product liability claims could prevent orinhibit the regulatory approval or commercialization of products that we or one of our collaborators develop. Successful product liability claims could have amaterial adverse effect on our business and results of operations. Liability from such claims could exceed our total assets if we do not prevail in any lawsuitbrought by a third party alleging that an injury was caused by one of our product candidates.We expect that our results of operations will fluctuate, which may make it difficult to predict our future performance from period to period.Our quarterly operating results have fluctuated in the past and are likely to continue to do so in the future. Some of the factors that could cause ouroperating results to fluctuate from period to period include: •the status of development of our product candidates and, in particular, the advancement or termination of activities related to our productdevelopment programs and the timing of any milestone payments payable under our licensing agreements; •the execution of other collaboration, licensing and similar arrangements and the timing of payments we may make or receive under thesearrangements; •variations in the level of expenses related to our product development programs; •the unpredictable effects of collaborations during these periods;41 •the timing of our satisfaction of applicable regulatory requirements, if at all; •the rate of expansion of our clinical development and other internal research and development efforts; •the costs of any litigation; •the effect of competing technologies and products and market developments; and •general and industry-specific economic conditions.We believe that quarterly or yearly comparisons of our financial results are not necessarily meaningful and should not be relied upon as indications ofour future performance.We will continue to incur significant increased costs as a result of operating as a public company, and our management will be required to devotesubstantial time to new compliance initiatives.As a public company, we are required to comply with the Sarbanes-Oxley Act of 2002, as well as rules and regulations implemented by the SEC, theNASDAQ Stock Market, or NASDAQ, and Japanese securities laws, and incur significant legal, accounting and other expenses as a result. These rules imposevarious requirements on public companies, including requiring the establishment and maintenance of effective disclosure and financial controls andappropriate corporate governance practices. Our management and other personnel have devoted and will continue to devote a substantial amount of time tothese compliance initiatives. Moreover, these rules and regulations increase our legal and financial compliance costs and may make it more difficult andexpensive for us to renew our director and officer liability insurance, and may result in imposition of reduced policy limits and coverage.The Sarbanes-Oxley Act requires that we (i) maintain effective internal controls for financial reporting and disclosure controls and procedures and (ii)perform an evaluation of our internal control over financial reporting to allow management to report on the effectiveness of those controls, as required bySection 404. Our listing obligations under the JASDAQ Market of the Tokyo Stock Exchange, or TSE, also require that we comply either with Section 404 ofthe Sarbanes-Oxley Act or equivalent regulations in Japan and we elected to comply with Section 404. Additionally, we are subject to attestation by ourindependent registered public accounting firm regarding our internal controls over financial reporting as of December 31, 2018 under Japanese securitieslaws. Our efforts to comply with Section 404 and related regulations have required, and continue to require, the commitment of significant financial andmanagerial resources. We cannot be certain that a material weakness will not be identified when we test the effectiveness of our controls in the future. If amaterial weakness is identified, we could be subject to sanctions or investigations by NASDAQ, the SEC, the TSE or other regulatory authorities, whichwould require additional financial and management resources, costly litigation or a loss of public confidence in our internal controls, which could have anadverse effect on the market price of our stock.Additionally, in July 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, was enacted. There are significantcorporate governance and executive compensation related provisions in the Dodd-Frank Act that require the SEC to adopt additional rules and regulations inthese areas. To maintain high standards of corporate governance and public disclosure, we intend to invest all reasonably necessary resources to comply withsuch compliance programs and rules and all other evolving standards. These investments may result in increased general and administrative costs and adiversion of our management’s time and attention from strategic revenue generating and cost management activities.Our business and operations would suffer in the event of system failures and natural disasters.Despite the implementation of security measures, our internal computer systems are vulnerable to damage from computer viruses, unauthorized access,natural disasters, terrorism, war and telecommunication and electrical failures. Any system failure, accident or security breach that causes interruptions in ouroperations could result in a material disruption of our drug development programs, including delays in our regulatory approval efforts and significantlyincrease our costs to recover or reproduce the data. To the extent that any disruption or security breach results in a loss or damage to our data or applications,or inappropriate disclosure of confidential or proprietary information, we may incur liability and the further development of our product candidates may bedelayed.42A variety of risks associated with operating our business and marketing our products internationally could materially adversely affect our business.A significant amount of our business activity is outside of the United States. We face risks associated with our international operations, includingpossible unfavorable regulatory, pricing and reimbursement, political, tax and labor conditions, which could harm our business. We are subject to numerousrisks associated with international business activities, including, but not limited to: •compliance with differing or unexpected regulatory requirements for our products; •difficulties in staffing and managing foreign operations; •in certain circumstances, including with respect to the commercialization of our product candidates in Europe, increased dependence on thecommercialization efforts of our distributors or strategic partners; •foreign government taxes, regulations and permit requirements; •United States and foreign government tariffs, trade restrictions, price and exchange controls and other regulatory requirements; •economic weakness, including inflation, natural disasters, war, events of terrorism or political instability in particular foreign countries; •fluctuations in currency exchange rates, which could result in increased operating expenses and reduced revenues, and other obligations relatedto doing business in another country; •compliance with tax, employment, immigration and labor laws, regulations and restrictions for employees living or traveling abroad; •workforce uncertainty in countries where labor unrest is more common than in the United States; •changes in diplomatic and trade relationships; and •challenges in enforcing our contractual and intellectual property rights, especially in those foreign countries that do not respect and protectintellectual property rights to the same extent as the United StatesThese and other risks associated with our international operations may materially adversely affect our business, financial condition and results ofoperations.Risks Related to Our Intellectual PropertyOur ability to compete may decline if we do not adequately protect our proprietary rights.There is the risk that our patents (both those owned by us and those in-licensed) may not provide a competitive advantage, including the risk that ourpatents expire before we obtain regulatory and marketing approval for one or more of our product candidates, particularly our in-licensed patents. Also, ourcompetitors may develop products similar to ours using methods and technologies that are beyond the scope of our intellectual property rights. Compositionof matter patents on APIs may provide protection for pharmaceutical products without regard to formulation, method of use, or other type of limitation. Wedo not have compound patent protection for the API in our MN-166 (ibudilast), MN-001 (tipelukast), and MN-221 (bedoradrine) product candidates,although we do have patent protection for a particular crystalline polymorph of MN-001 (tipelukast) and we have composition of matter protection on ananalog of MN-166 (ibudilast). As a result, competitors that obtain the requisite regulatory approval will be able to offer products with the same API as foundin our MN-166 (ibudilast), MN-001 (tipelukast), and MN-221 (bedoradrine) product candidates so long as such competitors do not infringe any methods ofuse, methods of manufacture, formulation or, in the case of MN-001 (tipelukast), specific polymorph patents that we hold or have exclusive rights to throughour licensors. For example, we currently rely on method of use patents for MN-166 (ibudilast), MN-001 (tipelukast), and MN-221 (bedoradrine) although wehave a compound patent for MN-029.43It is our policy to consult with our licensors in the maintenance of granted patents we have licensed and in their pursuit of patent applications that wehave licensed, but each of our licensors generally remains primarily responsible for or in control of the maintenance of the granted patents. We have limitedcontrol, if any, over the amount or timing of resources that each licensor devotes on our behalf. As a result of this lack of control, we cannot be sure that ourlicensed patents will be maintained and that any additional patents will ever mature from our licensed applications. Issued U.S. patents require the paymentof maintenance fees to continue to be in force. We typically rely on our licensors to do this and their failure to do so could result in the forfeiture of patentsnot timely maintained. Many foreign patent offices also require the payment of periodic annuities to keep patents and patent applications in good standing.As we generally do not maintain control over the payment of annuities, we cannot be certain that our licensors will timely pay such annuities and that thegranted patents will not become abandoned. For example, certain annuities were not paid in a timely manner with respect to foreign patents licensed underMN-002 (the active metabolite of MN-001 (tipelukast) and, as a result, our patent rights may be impaired in those territories. In addition, our licensors mayhave selected a limited amount of foreign patent protection, and therefore applications have not been filed in, and foreign patents may not have beenperfected in, all commercially significant countries.The patent protection of our product candidates and technology involves complex legal and factual questions. Most of our license agreements give usa right, but not an obligation, to enforce our patent rights. To the extent it is necessary or advantageous for any of our licensors’ cooperation in theenforcement of our patent rights, we cannot control the amount or timing of resources our licensors devote on our behalf or the priority they place onenforcing our patent rights. We may not be able to protect our intellectual property rights against third party infringement, which may be difficult to detect,especially for infringement of patent claims for methods of manufacturing. Additionally, challenges may be made to the ownership of our intellectualproperty rights, our ability to enforce them or our underlying licenses, which in some cases have been made under foreign laws and may provide differentprotections than that of U.S. law.We cannot be certain that any of the patents or patent applications owned by us or our licensors related to our product candidates and technology willprovide adequate protection from competing products. Our success will depend, in part, on whether we or our licensors can: •obtain and maintain patents to protect our product candidates; •obtain and maintain any required or desirable licenses to use certain technologies of third parties, which may be protected by patents; •protect our trade secrets and know-how; •operate without infringing the intellectual property and proprietary rights of others; •enforce the issued patents under which we hold rights; and •develop additional proprietary technologies that are patentable.The degree of future protection for our proprietary rights is uncertain. For example: •we or our licensor might not have been the first to make the inventions covered by each of our pending patent applications or issued patents; •we or our licensor might not have been the first to file patent applications for these inventions; •others may independently develop similar or alternative technologies or duplicate any of our technologies; •it is possible that none of our pending patent applications will result in issued patents; •any patents under which we hold rights may not provide us with a basis for maintaining market exclusivity44 for commercially viable products, may not provide us with any competitive advantages or may be challenged by third parties as invalid, notinfringed or unenforceable under U.S. or foreign laws; or •any of the issued patents under which we hold rights may not be valid or enforceable or may be circumvented successfully in light of thecontinuing evolution of domestic and foreign patent laws.Confidentiality agreements with employees and others may not adequately prevent disclosure of our trade secrets and other proprietary information andmay not adequately protect our intellectual property, which could limit our ability to compete.Because we operate in the highly technical field of research and development of small molecule drugs, we rely in part on trade secret protection in orderto protect our proprietary trade secrets and unpatented know-how. However, trade secrets are difficult to protect, and we cannot be certain that others will notdevelop the same or similar technologies on their own. We have taken steps, including entering into confidentiality agreements with our employees,consultants, outside scientific collaborators, sponsored researchers and other advisors, to protect our trade secrets and unpatented know-how. Theseagreements generally require that the other party keep confidential and not disclose to third parties all confidential information developed by the party ormade known to the party by us during the course of the party’s relationship with us. We also typically obtain agreements from these parties which providethat inventions conceived by the party in the course of rendering services to us will be our exclusive property. However, these agreements may not behonored and may not effectively assign intellectual property rights to us. Further, we have limited control, if any, over the protection of trade secretsdeveloped by our licensors. Enforcing a claim that a party illegally obtained and is using our trade secrets or know-how is difficult, expensive and timeconsuming, and the outcome is unpredictable. In addition, courts outside the United States may be less willing to protect trade secrets or know-how. Thefailure to obtain or maintain trade secret protection could adversely affect our competitive position.A dispute concerning the infringement or misappropriation of our proprietary rights or the proprietary rights of others could be time consuming andcostly, and an unfavorable outcome could harm our business.There is significant litigation in our industry regarding patent and other intellectual property rights. While we are not currently subject to any pendingintellectual property litigation, and are not aware of any such threatened litigation, we may be exposed to future litigation by third parties based on claimsthat our product candidates, their methods of use, manufacturing or other technologies or activities infringe the intellectual property rights of such thirdparties. There are many patents relating to chemical compounds and methods of use. If our compounds or their methods of use or manufacture are found toinfringe any such patents, we may have to pay significant damages or seek licenses under such patents. We have not conducted comprehensive searches forunexpired patents issued to third parties relating to our product candidates. Consequently, no assurance can be given that unexpired, third-party patentscontaining claims covering our product candidates, their methods of use or manufacture do not exist. Moreover, because some patent applications in theUnited States may be maintained in secrecy until the patents are issued, and because patent applications in the United States and many foreign jurisdictionsare typically not published until 18 months after filing, we cannot be certain that others have not filed patent applications that will mature into issued patentsthat relate to our current or future product candidates and which could have a material effect in developing and commercializing one or more of our productcandidates. The owner of a patent that is arguably infringed can bring a civil action seeking to enjoin an accused infringer from importing, making,marketing, distributing, using or selling an infringing product. We may need to resort to litigation to enforce our intellectual property rights or to seek adeclaratory judgment concerning the scope, validity or enforceability of third-party proprietary rights. Similarly, we may be subject to claims that we haveinappropriately used or disclosed trade secrets or other proprietary information of third parties. If we become involved in litigation, it could consume asubstantial portion of our managerial and financial resources, regardless of whether we win or lose. Some of our competitors may be able to sustain the costsof complex intellectual property litigation more effectively than we can because they have substantially greater resources. We may not be able to afford thecosts of litigation. Any legal action against us or our collaborators could lead to: •payment of actual damages, royalties, lost profits, potential enhanced damages and attorneys’ fees, if any infringement for which we are foundliable is deemed willful, or a case against us is determined by a judge to be exceptional; 45 •injunctive or other equitable relief that may effectively block our ability to further develop, commercialize and sell our products; •having to enter into license arrangements that may not be available on reasonable or commercially acceptable terms; or •significant cost and expense, as well as distraction of our management from our business.As a result, we could lose our ability to develop and commercialize current or future product candidates.We may be subject to claims that our employees have wrongfully used or disclosed alleged trade secrets of their former employers.As is common in the biotechnology and pharmaceutical industry, we employ individuals who were previously employed at other biotechnology orpharmaceutical companies, including our competitors or potential competitors. From time to time, we may be subject to claims that these employees or wehave inadvertently or otherwise used or disclosed trade secrets or other proprietary information of their former employers. Litigation may be necessary todefend against these claims. Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction tomanagement.Risks Related to the Securities Markets and Investment in Our Common StockOur stock price may be volatile, and you may not be able to resell our shares at a profit or at all.Despite the listing of our common stock on the NASDAQ Global Market and the JASDAQ Market of the Tokyo Stock Exchange in Japan, tradingvolume in our securities has been light and an active trading market may not develop for our common stock. In 2018, our average trading volume wasapproximately 160,365 shares per day on the NASDAQ Global Market and approximately 348,379 shares per day on the JASDAQ Market.The market prices for securities of biopharmaceutical and biotechnology companies, and early-stage drug discovery and development companies likeus in particular, have historically been highly volatile and may continue to be highly volatile in the future. For example, since the date of our initial publicoffering in Japan on February 8, 2005 through December 31, 2018, our common stock has traded as high as approximately $42.00 and as low asapproximately $1.30. The following factors, in addition to other risk factors described in this section, may have a significant impact on the market price ofour common stock: •the development status of our product candidates, including clinical trial results and determinations by regulatory authorities with respect to ourproduct candidates; •the initiation, termination, or reduction in the scope of any collaboration arrangements or any disputes or developments regarding suchcollaborations; •FDA or foreign regulatory actions, including failure to receive regulatory approval for any of our product candidates; •announcements of technological innovations, new commercial products or other material events by us or our competitors; •disputes or other developments concerning our intellectual property rights; •market conditions in the pharmaceutical and biotechnology sectors; •actual and anticipated fluctuations in our quarterly or annual operating results; •price and volume fluctuations in the overall stock markets; 46 •changes in, or failure to meet, securities analysts’ or investors’ expectations of our financial performance; •additions or departures of key personnel; •discussions of our business, management, products, financial performance, prospects or stock price by the financial and scientific press and onlineinvestor communities; •litigation or public concern about the safety of our potential products; •public concern as to, and legislative action with respect to, the pricing and availability of prescription drugs or the safety of drugs and drugdelivery techniques; or •regulatory developments in the United States and in foreign countries.Broad market and industry factors, as well as economic and political factors, also may materially adversely affect the market price of our common stock.Our common stock may be delisted on the NASDAQ Global Market or the JASDAQ Market of the Tokyo Stock Exchange.In addition to the risks identified immediately above, the market price of our common stock, and your ability to sell your shares at a profit, or at all,may be affected by the delisting of our shares for failure to meet applicable listing standards. For example, price per share minimums are maintained by theNASDAQ Global Market, and our share price has, in the past, fallen below the required minimum. In addition, JASDAQ Market listing requirements currentlymandate that listed companies achieve a profit or positive cash flow from operations within a five-year period. Failure to meet these or other listingrequirements for either of the stock exchanges on which our common stock is listed could adversely affect the market price for our common stock and yourability to sell your shares at a profit, or at all.The sale of additional common stock under our existing at-the-market issuance sales agreement may cause substantial dilution to our existingstockholders and/or the price of our common stock to decline.On May 22, 2015, we entered into an at-the-market issuance sales agreement (the ATM Agreement) with MLV & Co. LLC, (MLV), pursuant to whichwe may sell common stock through MLV from time to time up to an aggregate offering price of $30.0 million. On September 16, 2016, we entered into anamendment to the ATM Agreement to also include FBR Capital Markets & Co as a sales agent thereunder. From time to time, we may sell additional shares ofour common stock under the ATM Agreement. Depending upon market liquidity at the time, sales of shares of our common stock under the ATM Agreementmay cause the trading price of our common stock to decline and may result in substantial dilution to the interests of other holders of our common stock. Thesale of a substantial number of shares of our common stock under the ATM Agreement, or anticipation of such sales, could make it more difficult for us to sellequity or equity-related securities in the future at a time and at a price that we might otherwise wish to effect sales.We may become involved in securities class action litigation that could divert management’s attention and harm our business.The stock markets have from time to time experienced significant price and volume fluctuations that have affected the market prices for the commonstock of biotechnology and biopharmaceutical companies. These broad market fluctuations may cause the market price of our common stock to decline. Inthe past, securities class action litigation has often been brought against a company following a decline in the market price of its securities. This risk isespecially relevant for us because biotechnology and biopharmaceutical companies have in the past experienced significant stock price volatility. We maybecome involved in this type of litigation in the future. Litigation often is expensive and diverts management’s attention and resources, which couldadversely affect our business.Future sales of our common stock may cause our stock price to decline and may make it difficult for us to raise additional capital or for you to sell yourshares.47Sales of substantial amounts of our common stock, or the availability of such common stock for sale, could adversely affect the prevailing market pricesfor our common stock. If this occurs and continues, it could impair our ability to raise additional capital through the sale of securities if we should desire todo so. In addition, it may be difficult, or even impossible, to find a buyer for shares of our common stock.We have also registered all common stock that we may issue under our current employee benefits plans. As a result, these shares can be freely sold inthe public market upon issuance, subject to the terms of the underlying agreements governing the grants and the restrictions of the securities laws. Inaddition, our directors and officers may in the future establish programmed selling plans under Rule 10b5-1 of the Exchange Act, for the purpose of effectingsales of our common stock. If any of these events cause a large number of our shares to be sold in the public market, the sales could reduce the trading price ofour common stock and impede our ability to raise future capital.Anti-takeover provisions in our charter documents and under Delaware law may make an acquisition of us more complicated and the removal andreplacement of our directors and management more difficult.Our restated certificate of incorporation and amended and restated bylaws contain provisions that may delay or prevent a change in control, discouragebids at a premium over the market price of our common stock or adversely affect the market price of our common stock and the voting and other rights of theholders of our common stock. These provisions may also make it difficult for stockholders to remove and replace our board of directors and management.These provisions: •establish that members of the board of directors may be removed only for cause upon the affirmative vote of stockholders owning at least amajority of our capital stock; •authorize the issuance of “blank check” preferred stock that could be issued by our board of directors in a discriminatory fashion designed toincrease the number of outstanding shares and prevent or delay a takeover attempt; •limit who may call a special meeting of stockholders; •establish advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted upon atstockholder meetings; •prohibit our stockholders from making certain changes to our restated certificate of incorporation or amended and restated bylaws except with 66-2/3% stockholder approval; and •provide for a classified board of directors with staggered terms.We also may be subject to provisions of the Delaware corporation law that, in general, prohibit any business combination with a beneficial owner of15% or more of our common stock for three years unless the holder’s acquisition of our stock was approved in advance by our board of directors. Althoughwe believe these provisions collectively provide for an opportunity to receive higher bids by requiring potential acquirers to negotiate with our board ofdirectors, they would apply even if the offer may be considered beneficial by some stockholders. In any event, these provisions may delay or prevent a thirdparty from acquiring us. Any such delay or prevention could cause the market price of our common stock to decline.We have never paid dividends on our capital stock, and we do not anticipate paying any cash dividends in the foreseeable future.We have paid no cash dividends on any of our classes of capital stock to date, and we currently intend to retain our future earnings, if any, to fund thedevelopment and growth of our business. We do not anticipate paying any cash dividends on our common stock in the foreseeable future. As a result, capitalappreciation, if any, of our common stock will be your sole source of gain for the foreseeable future. 48 Item 1B. Unresolved Staff CommentsNot applicable.Item 2. PropertiesWe executed a sublease agreement for our headquarters effective December 1, 2017 (the “Sublease”) with Cardinal Health 127 Inc., the sublessor, towhich Irvine Company, the master lessor, has provided its consent. The Sublease is for approximately 4,400 square feet and has a term of four years and onemonth. In June 2005, we leased office space in Tokyo, Japan under a non-cancelable operating lease with an original expiration date of May 2013 and anauto-renewal two-year extension, which we have extended through May 2019, with the acceptance of the extensions for those given periods. We have nolaboratory, research or manufacturing facilities, and we currently do not plan to purchase or lease any such facilities, as such services are provided to us bythird-party service providers. We believe that our current facilities are adequate for our needs for the immediate future and that, should it be needed, suitableadditional space will be available to accommodate expansion of our operations on commercially reasonable terms.Item 3. Legal ProceedingsWe are not involved in any material legal proceedings as of the date of this report. We may become involved in various disputes and legal proceedingswhich arise in the ordinary course of business. Our assessment of the likely impact of our pending litigation may change over time. An adverse result in anyof these matters may occur which could harm our business and result in a material liability.Item 4. Mine Safety DisclosuresNot applicable. 49PART IIItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesMarket InformationOur common stock is listed on the JASDAQ Market of the Tokyo Stock Exchange and trades under the code “4875,” and is listed on the NASDAQGlobal Market and trades under the symbol “MNOV.” Our stock had been traded on the Hercules Market since February 8, 2005 (through the HerculesMarket’s closure in 2010) and now is currently traded on the JASDAQ Market and on the NASDAQ Global Market since December 7, 2006.Holders of Common StockAs of December 31, 2018, there were approximately 15,246 holders of record of our common stock.Dividend PolicyWe have never declared or paid any cash dividends on our capital stock, and we do not anticipate paying any cash dividends in the foreseeable future.We expect to retain our future earnings, if any, to fund the growth and development of our business.Securities Authorized for Issuance Under Equity Compensation PlansInformation regarding the securities authorized for issuance under our equity compensation plans can be found under Item 12 of this Annual Report onForm 10-K. 50Performance Measurement ComparisonThe following graph illustrates the total stockholder return of an investment of $100 in cash made on December 31, 2013 in each of our common stockand two indices: the NASDAQ Composite Index and the NASDAQ Biotechnology Index.The performance graph assumes an initial investment of $100 on December 31, 2013 and that all dividends were reinvested. No dividends have beendeclared nor paid on our common stock. The comparisons in the graph below are required by the SEC and are not intended to forecast or be indicative ofpossible future performance of our common stock.This performance graph is furnished and shall not be deemed “filed” with the SEC for purposes of Section 18 of the Exchange Act, or incorporated byreference into any of our other filings under the Exchange Act or the Securities Act except to the extent we specifically incorporate it by reference into suchfiling.Comparison of Cumulative Total Return on Investment 12/31/2013 12/31/2014 12/31/2015 12/31/2016 12/31/2017 12/31/2018 MEDICINOVA, Inc.$100.00 $142.06 $165.89 $281.78 $302.34 $381.78 NASDAQ Composite Index$100.00 $113.40 $119.89 $128.89 $165.29 $158.87 NASDAQ Biotechnology Index$100.00 $134.10 $149.42 $117.02 $141.66 $128.45 51Item 6. Selected Financial DataThe selected financial data set forth below is derived from our audited consolidated financial statements and may not be indicative of future operatingresults. The following selected financial data should be read in conjunction with the Consolidated Financial Statements and notes thereto and Item 7,“Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this Annual Report on Form 10-K.Amounts are in thousands, except per share amounts. Years ended December 31, 2018 2017 2016 2015 2014 Statements of Operations Data: Revenues $— $— $— $— $— Operating expenses: Research, development and patents 5,626 4,224 3,519 3,017 3,260 General and administrative 9,961 8,803 7,363 5,805 5,963 Total operating expenses 15,587 13,027 10,882 8,822 9,223 Operating loss (15,587) (13,027) (10,882) (8,822) (9,223)Other expense, net (23) (26) (47) (55) (13)Interest income 940 146 67 39 37 Loss before income taxes (14,670) (12,907) (10,862) (8,838) (9,199)Income tax benefit (expense) (5) 1,744 (4) (7) 4 Net loss $(14,675) $(11,163) $(10,866) $(8,845) $(9,195)Net loss applicable to common stockholders $(14,675) $(11,163) $(10,866) $(8,845) $(9,195)Basic and diluted net loss per share $(0.36) $(0.32) $(0.33) $(0.33) $(0.38)Shares used to compute basic and diluted net loss per share 41,124,909 35,137,028 32,986,740 26,578,770 24,067,781 As of December 31, 2018 2017 2016 2015 2014 Balance Sheet Data: Cash and cash equivalents $62,313 $27,992 $24,118 $22,077 $11,669 Working capital 60,566 25,447 23,074 21,236 10,539 Total assets 77,223 43,419 39,813 37,906 27,273 Accumulated deficit (356,131) (341,456) (330,293) (319,427) (310,582)Total stockholders’ equity 73,108 38,642 34,532 32,753 22,011 52Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsYou should read the following discussion and analysis together with “Item 6. Selected Financial Data” and the consolidated financial statements andrelated notes included elsewhere in this Annual Report on Form 10-K. The following discussion contains forward-looking statements that involve risks anduncertainties. Our actual results could differ materially from those expressed or implied in any forward-looking statements as a result of various factors,including those set forth under the caption “Item 1A. Risk Factors.”OverviewBackgroundWe are a biopharmaceutical company focused on acquiring and developing novel, small molecule therapeutics for the treatment of serious diseaseswith unmet medical needs and a commercial focus on the United States market. We were incorporated in Delaware in September 2000.We have incurred significant net losses since our inception. For the year ended December 31, 2018, we had a net loss of $14.7 million. At December 31,2018, from inception, our accumulated deficit was $356.1 million. We expect to incur substantial net losses for the next several years as we continue todevelop certain of our existing product development programs, and over the long-term if we expand our research and development programs and acquire orin-license products, technologies or businesses that are complementary to our own. Our current strategy is to focus our development activities on MN-166 (ibudilast) for neurological disorders such as progressive multiple sclerosis (MS),amyotrophic lateral sclerosis (ALS), chemotherapy-induced peripheral neuropathy, degenerative cervical myelopathy, glioblastoma, and substancedependence and addiction (e.g., methamphetamine dependence, opioid dependence, and alcohol dependence), and MN-001 (tipelukast) for fibrotic diseasessuch as nonalcoholic steatohepatitis (NASH) and idiopathic pulmonary fibrosis (IPF). Our pipeline also includes MN-221 (bedoradrine) for the treatment ofacute exacerbation of asthma and MN-029 (denibulin) for solid tumor cancers. Upon completion of proof-of-concept Phase 2 clinical trials, we intend to discuss strategic alliances with leading pharmaceutical or biotechnologycompanies who seek late stage product candidates to support further clinical development and product commercialization. Depending on decisions we maymake as to further clinical development, we may seek to raise additional capital. We may also pursue potential partnerships and potential acquirers of licenserights to our programs in markets outside the United States.We entered into an agreement to form a joint venture company with Zhejiang Medicine Co., Ltd. and Beijing Medfron Medical Technologies Co. Ltd.,(formerly Beijing Make-Friend Medicine Technology Co., Ltd.) effective September 27, 2011. The joint venture agreement provided for the joint venturecompany, Zhejiang Sunmy Bio-Medical Co., Ltd. (Zhejiang Sunmy), to develop and commercialize MN-221 (bedoradrine) in China and search for additionalcompounds to develop. On July 24, 2017, the Company and Beijing Medfron Medical Technologies Co., Ltd. agreed to dissolve Zhejiang Sunmy, subject toapproval by applicable Chinese regulatory authorities which was granted on December 11, 2017. At December 31, 2017, we reflected a long-term asset on ourconsolidated balance sheet which represented our investment in Zhejiang Sunmy, net of our portion of any generated loss or income. In April 2018, wereceived proceeds of $0.6 million from the dissolution of the joint venture and liquidation of our investment, resulting in an immaterial gain recorded withinother expense, net in the statement of operations for the year ended December 31, 2018.Revenues and Cost of RevenuesWe did not recognize any revenue for the years ended December 31, 2018, 2017 or 2016.In October 2011, we entered into an agreement with Kissei Pharmaceutical Co., Ltd. (Kissei) to perform research and development services relating toMN-221 (bedoradrine) in exchange for a non-refundable upfront payment of $2.5 million. Under the terms of the agreement, we are responsible for all costsincurred and to be incurred in the performance of these services. The $2.5 million was initially recorded as deferred revenue of which $0.8 million wasrecognized through 2013 for the completion of the first study. The timing of the second study is53undetermined as of December 31, 2018. No revenue was recorded in 2018, 2017 and 2016 associated with the Kissei agreement.Research, Development and Patent ExpensesOur research, development and patent expenses consist primarily of the license fees related to our product candidates, salaries and related employeebenefits, costs associated with the preclinical and clinical development of our product development programs, costs associated with non-clinical activities,such as regulatory expenses, and pre-commercialization manufacturing development activities. We use external service providers to manufacture ourcompounds to be used in clinical trials and for the majority of the services performed in connection with the preclinical and clinical development of ourproduct candidates. Research, development and patent expenses include fees paid to consultants, contract research organizations, contract manufacturers andother external service providers, including professional fees and costs associated with legal services, patents and patent applications for our intellectualproperty. Internal research and development expenses include costs of compensation and other expenses for research and development personnel, supplies,facility costs and depreciation. Research, development and patent costs are expensed as incurred, and we expect to increase such costs in 2019 as ourdevelopment programs progress.The following table summarizes our research, development and patent expenses for the periods indicated for each of our product developmentprograms. To the extent that costs, including personnel costs, are not tracked to a specific product development program, such costs are included in the“Other R&D expense” category (in thousands): Year Ended December 31, 2018 2017 2016 External development expense: MN-166 $1,993 $1,055 $707 MN-001 278 420 364 MN-221 35.00 12.00 6.23 MN-029 2 3 3 Total external development expense 2,308 1,490 1,080 R&D personnel expense 2,818 2,264 1,951 R&D facility expense 47 57 57 Patent expense 284 311 369 Other R&D expense 169 102 62 Total research, development and patent expense $5,626 $4,224 $3,519 Our goal is to build a sustainable biopharmaceutical business through the successful development of differentiated products for the treatment of seriousdiseases with unmet medical needs in high-value therapeutic areas. Key elements of our strategy are as follows:•Pursue the development of MN-166 (ibudilast) for multiple potential indications with the support of non-dilutive financings.We intend to advance our diverse MN-166 (ibudilast) program through a combination of investigator-sponsored clinical trials, trials fundedthrough government grants or other grants, and trials funded by us. In addition to providing drug supply and regulatory support, we have fundedportions of some of the consortium-sponsored trials. For example, we contributed financially to the Secondary and Primary Progressive IbudilastNeuroNEXT Trial in Multiple Sclerosis (SPRINT-MS) Phase 2b clinical trial of MN-166 (ibudilast) for the treatment of progressive MS, which wasprimarily funded by the NIH. In addition, we contributed financially to the clinical trial of MN-166 (ibudilast) for the treatment of ALS as well asthe ongoing ALS / Biomarker study. We intend to pursue additional strategic alliances to help support further clinical development of MN-166(ibudilast).•Pursue the development of MN-001 (tipelukast) for fibrotic diseases and other diseases.54We intend to advance development of MN-001 (tipelukast) through a variety of means, which may include investigator-sponsored trials with orwithout grant funding as well as trials funded by us.•Consider strategic partnerships with one or more leading pharmaceutical companies to complete late-stage product development and successfullycommercialize our products.We develop and maintain relationships with pharmaceutical companies that are therapeutic category leaders. Upon completion of proof-of-conceptPhase 2 clinical trials, we intend to discuss strategic alliances with leading pharmaceutical companies who seek late-stage product candidates, suchas MN-166 (ibudilast), MN-001 (tipelukast), MN-221 (bedoradrine) and MN-029, which could support further clinical development and productcommercialization.General and AdministrativeOur general and administrative costs primarily consist of salaries, benefits and consulting and professional fees related to our administrative, finance,human resources, business development, legal, information systems support functions, facilities and insurance costs. General and administrative costs areexpensed as incurred.Our general and administrative expenses may increase in future periods if we are required to expand our infrastructure based on the success of ourproduct development programs and in raising capital to support our product development programs or otherwise in connection with increased businessdevelopment activities related to partnering, out-licensing or product disposition.Other Expense, netOther expense primarily consists of net losses from the joint venture and net foreign exchange losses related to vendor invoices denominated in foreigncurrencies.Interest IncomeInterest income consists of interest earned on our cash and cash equivalents.Critical Accounting Policies and EstimatesOur management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, whichhave been prepared in accordance with accounting principles generally accepted in the United States. The preparation of the consolidated financialstatements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the relateddisclosure of contingent liabilities. We review our estimates on an ongoing basis, including those related to our significant accruals. We base our estimateson historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis formaking judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates.Our significant accounting policies are more fully described in Note 1 to our consolidated financial statements included elsewhere in this AnnualReport on Form 10-K. Our most critical accounting estimates include research, development and patent expenses which impacts operating expenses andaccrued liabilities, stock-based compensation which impacts operating expenses and goodwill and purchased intangibles. We review our estimates andassumptions periodically and reflect the effects of revisions in the period in which they are deemed to be necessary. We believe that the following accountingpolicies are critical to the judgments and estimates used in preparation of our consolidated financial statements.Research, Development and Patent ExpensesResearch, development and patent costs are expensed as incurred based on certain contractual factors such as estimates of work performed, milestonesachieved, patient enrollment and experience with similar contracts. As actual costs become known, accruals are adjusted. To date, our accrued research,development and patent expenses have not differed significantly from the actual expenses incurred.55Stock-based CompensationWe grant options to purchase our common stock to our employees and directors under our 2013 Stock Incentive Plan. Additionally, we haveoutstanding stock options that were granted under our Amended and Restated 2004 Stock Incentive Plan. Under our 2007 Employee Stock Purchase Plan,full-time employees are permitted to purchase common stock through payroll deduction at the lower of 85% of fair market value at the beginning of theoffering period or the end of each six-month offering period. The benefits provided under all these plans require stock-based compensation for an award ofequity instruments, including stock options and employee stock purchase rights issued to employees to be recognized as a cost in the consolidated financialstatements. The cost of these awards is measured according to the grant date fair value of the stock award and is recognized on a straight-line basis over theperiod during which an employee is required to provide service in exchange for the award, which is usually the vesting period. We issue employeeperformance-based stock options, the vesting of which is subsequently based on a determination made by our board of directors as to the achievement ofcertain corporate objectives. The grant date of such awards is the date on which our board of directors makes its determination. For periods preceding thegrant date, the cost of these awards is measured according to their fair value at each reporting date.Valuation of our stock option grants requires us to estimate certain variables, such as estimated volatility and expected life. If any of our estimationschange, such changes could have a significant impact on the stock-based compensation amount we recognize.Goodwill and Purchased IntangiblesGoodwill is recorded when the consideration paid for an acquisition exceeds the fair value of the identified net tangible and intangible assets ofacquired businesses. The allocation of purchase price for acquisitions require extensive use of accounting estimates and judgments to allocate the purchaseprice to the identifiable tangible and intangible assets acquired and liabilities assumed based on their respective fair values. Additionally, we must determinewhether an acquired entity is considered a business or a set of net assets as a portion of the purchase price can only be allocated to goodwill in a businesscombination.Goodwill and intangible assets deemed to have indefinite lives, such as in-process research and development (IPR&D), are not amortized but aresubject to annual impairment tests. The amounts and useful lives assigned to intangible assets that have finite useful lives require the use of estimates and theexercise of judgment. These judgments can significantly affect our net operating results. Goodwill and IPR&D are considered to have indefinite lives and arecarried at cost. As of December 31, 2018, and 2017, we have goodwill and IPR&D, of $9.6 million and $4.8 million, respectively. At least annually in the fourth quarter, or more frequently if indicators of impairment exist, we complete an impairment test for goodwill and purchasedindefinite life intangibles. The impairment evaluation is performed assuming that the Company operates in a single operating segment and reporting unit.When impaired, the carrying value of goodwill is written down to fair value. The goodwill impairment test involves consideration of qualitative informationto determine if it is more likely than not, that the fair value of a reporting unit is less than its carrying value. If the carrying value of the reporting unit exceedsits fair value, a goodwill impairment charge is recorded for the difference (up to the carrying value of the intangible asset). There was no impairment ofgoodwill for all periods presented.We periodically re-evaluate the original assumptions and rationale utilized in the establishment of the carrying value and estimated lives of our long-lived assets. The criteria used for these evaluations include management’s estimate of the asset’s continuing ability to generate income from operations andpositive cash flows in future periods as well as the strategic significance of any intangible assets in our business objectives. If assets are considered to beimpaired, the impairment recognized is the amount by which the carrying value of the assets exceeds the fair value of the assets.Recent Accounting PronouncementsThe impact of recent accounting pronouncements is more fully described in Note 1 of our consolidated financial statements included elsewhere in thisAnnual Report on Form 10-K.56Results of OperationsComparison of the Years ended December 31, 2018 and 2017RevenuesWe did not recognize any revenue for the years ended December 31, 2018 and 2017.Research, Development and Patent ExpensesResearch, development and patent expenses for the year ended December 31, 2018 increased by $1.4 million as compared to the same period in 2017,primarily due to an increase in clinical trial activities related to the MN-166 (ibudilast) trials as well as higher stock compensation expense for performance-based stock options.General and AdministrativeGeneral and administrative expenses for the year ended December 31, 2018 increased by $1.2 million compared to the same period in 2017, primarilydriven by higher stock compensation expense for performance-based stock options.Other Expense, netOther expense for the years ended 2018 and 2017 was approximately $23,000 and $26,000, respectively. Other expense consisted of net losses from thejoint venture accounted for under the equity method according to our percentage ownership, interest expense and net transaction losses related to vendorinvoices denominated in foreign currencies.Interest IncomeInterest income for the year ended December 31, 2018 was approximately $940,000, as compared to approximately $146,000 for the same period in2017. Interest income consists of interest earned on our cash and cash equivalents.Comparison of the Years ended December 31, 2017 and 2016 RevenuesWe did not recognize any revenue for the years ended December 31, 2017 and 2016.Research, Development and Patent ExpensesResearch, development and patent expenses for the year ended December 31, 2017 increased by $0.7 million compared to the same period in 2016,primarily due to an increase in clinical trial activities related to the MN-001 (tipelukast) and MN-166 (ibudilast) trials as well as higher stock compensationexpense for performance-based stock options.General and AdministrativeGeneral and administrative expenses for the year ended December 31, 2017 increased by $1.4 million compared to the same period in 2016, primarilydriven by higher stock compensation expense for performance-based stock options as well as an increase in legal fees related to the Company’s SEC filingsand other legal matters.Other Expense, netOther expense for the years ended 2017 and 2016 was approximately $26,000 and $47,000, respectively. Other expense consisted of net losses from thejoint venture accounted for under the equity method according to our57percentage ownership, interest expense and net transaction losses related to vendor invoices denominated in foreign currencies.Interest IncomeInterest income for the year ended December 31, 2017 was approximately $146,000, as compared to approximately $67,000 for the same period in2016. Interest income consists of interest earned on our cash and cash equivalents. Liquidity and Capital ResourcesWe incurred losses of $14.7 million, $11.2 million, and $10.9 million for the years ended December 31, 2018, 2017, and 2016, respectively. AtDecember 31, 2018, our accumulated deficit was $356.1 million. Our operating losses to date have been funded primarily through the private placement ofour equity securities, the public sale of our common stock, long-term debt, development agreements with partners and the exercise of founder’s warrants, netof treasury stock repurchases.The following table shows a summary of our cash flows for the years ended December 31: 2018 2017 2016 Net cash (used in) provided by: Operating activities $(9,114) $(6,924) $(6,546)Investing activities 626 — (84)Financing activities 42,809 10,797 8,666 Total $34,321 $3,873 $2,036 Equity FinancingOn May 22, 2015, we entered into an at-the-market issuance sales agreement (the “ATM Agreement”) with MLV & Co. LLC (MLV), pursuant to whichwe may sell common stock through MLV from time to time up to an aggregate offering price of $30.0 million. Sales of our common stock through MLV, ifany, will be made by any method that is deemed to be an “at-the-market” equity offering as defined in Rule 415 promulgated under the Securities Act of1933, as amended, including sales made directly on NASDAQ, on any other existing trading market for the common stock or to or through a market maker.MLV may also sell the common stock in privately negotiated transactions, subject to our prior approval. We agreed to pay MLV an aggregate commissionrate of up to 4.0% of the gross proceeds of any common stock sold under this agreement. Proceeds from sales of common stock will depend on the number ofshares of common stock sold to MLV and the per share purchase price of each transaction. We are not obligated to make any sales of common stock under thesales agreement and may terminate the sales agreement at any time upon written notice.On August 24, 2015, we completed a firm-commitment underwritten public offering of 5,000,000 shares of common stock at a purchase price of $3.50per share for gross proceeds of $17.5 million, and received net proceeds of approximately $16.0 million, net of underwriting discounts and commissions andoffering expenses.On September 16, 2016, we entered into an amendment No. 1 to the ATM Agreement with MLV to also include FBR Capital Markets & Co (FBR) as asales agent. For the year ended December 31, 2018, we generated gross and net proceeds of $1.6 million and $1.5 million, respectively, on sales of 200,000 sharesof our common stock at $7.81 per share. For the year ended December 31, 2017, we generated gross and net proceeds of $10.3 million and $9.9 million,respectively, on sales of 1,689,436 shares of our common stock at prices ranging from $5.30 to $6.98 per share. Public OfferingOn February 12, 2018, we completed a firm-commitment underwritten public offering of 4,419,890 shares of common stock at a purchase price of $9.05per share for aggregate gross proceeds of $40.0 million, and received58aggregate net proceeds of approximately $37.4 million, net of underwriting discounts and commissions and offering expenses. Additionally, we granted theunderwriters a 30-day option to purchase up to an additional 662,983 shares of common stock at the public offering price, and on February 21, 2018, we soldan additional 126,038 shares of common stock for gross proceeds of $1.1 million pursuant to the partial exercise by the underwriters of their over-allotmentoption. Warrants During the years ended December 31, 2018 and 2017, warrants to purchase 750,000 and 119,047 shares were exercised for gross proceeds of $2.4million and $0.4 million respectively. Factors That May Affect Future Financial Condition and LiquidityAs of December 31, 2018, we had available cash and cash equivalents of $62.3 million and working capital of $60.6 million. As of the date of thisreport, we believe we have working capital sufficient to fund operations through the end of 2020.Our future funding requirements will depend on many factors, including, but not limited to: •progress in, and the costs of, future planned clinical trials and other research and development activities; •the scope, prioritization and number of our product development programs; •our obligations under our license agreements, pursuant to which we may be required to make future milestone payments upon the achievement ofvarious milestones related to clinical, regulatory or commercial events; •our ability to establish and maintain strategic collaborations, including licensing and other arrangements, and to complete acquisitions ofadditional product candidates; •the time and costs involved in obtaining regulatory approvals; •the costs of securing manufacturing arrangements for clinical or commercial production of our product candidates; •the costs associated with any expansion of our management, personnel, systems and facilities; •the costs associated with any litigation; •the costs associated with the operations or wind-down of any business we may acquire; •the costs involved in filing, prosecuting, enforcing and defending patent claims and other intellectual property rights; and •the costs of establishing or contracting for sales and marketing capabilities and commercialization activities if we obtain regulatory approval tomarket our product candidates.Other Significant Contractual ObligationsThe following summarizes our scheduled long-term contractual obligations that may affect our future liquidity as of December 31, 2018 (in thousands): Contractual Obligations Total Less than 1Year 1-3Years 3-5Years More than 5Years Operating leases $480 $183 $296 $1 $— Research and development services (1) 2,351 — 2,351 — — Total (2) $2,831 $183 $2,647 $1 $— (1)In October 2011, we entered into an agreement with Kissei to perform research and development services relating to MN-221 (bedoradrine) in exchangefor a non-refundable upfront payment of $2.5 million. We are59responsible for all costs to be incurred in the performance of these services. The estimated remaining costs to be incurred in the performance of all suchremaining services are included above.(2)We also enter into agreements with third parties to conduct our clinical trials, manufacture our product candidates, and perform data collection, analysisand other services in connection with our product development programs. As our payment obligations under these agreements depend upon theprogress of our product development programs, we are unable at this time to estimate the future costs we might incur under these agreements.Off-Balance Sheet ArrangementsAt December 31, 2018, we did not have any relationship with unconsolidated entities or financial partnerships, such as entities often referred to asstructured finance variable interest, or special purpose entities, which would have been established for the purpose of facilitating off-balance sheetarrangements or other contractually narrow or limited purposes. In addition, we did not engage in trading activities involving non-exchange traded contracts.As a result, we are not exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in such relationships. We do not haverelationships and transactions with persons and entities that derive benefits from their non-independent relationship with us or our related parties except asdisclosed herein.Item 7A. Quantitative and Qualitative Disclosures About Market RiskNot applicable. Item 8. Financial Statements and Supplementary Data 60Report of Independent Registered Public Accounting Firm Shareholders and Board of DirectorsMediciNova, Inc.La Jolla, CaliforniaOpinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of MediciNova, Inc. (the “Company”) as of December 31, 2018 and 2017, the relatedconsolidated statements of operations and comprehensive loss, stockholders’ equity, and cash flows for each of the three years in the period ended December31, 2018, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statementspresent fairly, in all material respects, the financial position of the Company at December 31, 2018 and 2017, and the results of its operations and its cashflows for each of the three years in the period ended December 31, 2018, in conformity with accounting principles generally accepted in the United States ofAmerica.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company'sinternal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control – Integrated Framework (2013) issued bythe Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and our report dated February 13, 2019 expressed an unqualifiedopinion thereon.Basis for OpinionThese consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’sconsolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent withrespect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and ExchangeCommission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud,and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosuresin the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management,as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ BDO USA, LLPWe have served as the Company's auditor since 2015.San Diego, CaliforniaFebruary 13, 2019 61MEDICINOVA, INC.CONSOLIDATED BALANCE SHEETS December 31, 2018 2017 Assets: Current assets: Cash and cash equivalents $62,313,418 $27,991,743 Prepaid expense and other current assets 444,942 336,580 Total current assets 62,758,360 28,328,323 Goodwill 9,600,240 9,600,240 In-process research and development 4,800,000 4,800,000 Investment in joint venture — 616,657 Property and equipment, net 53,134 62,886 Other long-term assets 10,958 10,958 Total assets $77,222,692 $43,419,064 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $616,753 $1,520,225 Accrued liabilities 1,575,161 1,360,744 Total current liabilities 2,191,914 2,880,969 Long-term deferred rent and lease liability 27,211 — Deferred tax liability 201,792 201,792 Long-term deferred revenue 1,694,163 1,694,163 Total liabilities 4,115,080 4,776,924 Commitments and contingencies Stockholders’ equity: Common stock, $0.001 par value; 100,000,000 shares authorized atDecember 31, 2018 and December 31, 2017; 42,081,306 and 36,452,893shares issued and outstanding at December 31, 2018 and December 31, 2017, respectively 42,081 36,453 Additional paid-in capital 429,289,968 380,156,510 Accumulated other comprehensive loss (93,150) (94,623)Accumulated deficit (356,131,287) (341,456,200)Total stockholders’ equity 73,107,612 38,642,140 Total liabilities and stockholders’ equity $77,222,692 $43,419,064 See accompanying notes to consolidated financial statements. 62MEDICINOVA, INC.CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS Years ended December 31, 2018 2017 2016 Operating expenses: Research, development and patents $5,625,814 $4,223,746 $3,519,172 General and administrative 9,961,012 8,803,347 7,362,662 Total operating expenses 15,586,826 13,027,093 10,881,834 Operating loss (15,586,826) (13,027,093) (10,881,834)Other expense, net (22,894) (25,601) (47,038)Interest income 939,909 145,508 66,647 Loss before income taxes (14,669,811) (12,907,186) (10,862,225)Income tax benefit (expense) (5,276) 1,744,050 (3,754)Net loss applicable to common stockholders $(14,675,087) $(11,163,136) $(10,865,979)Basic and diluted net loss per common share $(0.36) $(0.32) $(0.33)Shares used to compute basic and diluted net loss per share 41,124,909 35,137,028 32,986,740 Net loss applicable to common stockholders $(14,675,087) $(11,163,136) $(10,865,979)Other comprehensive income, net of tax: Foreign currency translation adjustments 1,473 1,377 6,765 Comprehensive loss $(14,673,614) $(11,161,759) $(10,859,214) See accompanying notes to consolidated financial statements. 63MEDICINOVA, INC.CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY Preferred stock Common stock Additionalpaid-in Accumulatedothercomprehensive Accumulated Totalstockholders’ Shares Amount Shares Amount capital income (loss) deficit equity Balance at December 31, 2015 220,000 $2,200 29,956,495 $29,957 $352,250,667 $(102,765) $(319,427,085) $32,752,974 Share-based compensation — — — — 3,972,533 — — 3,972,533 Issuance of shares under an employee stock purchaseplan — — 26,650 27 87,702 — — 87,729 Issuance of common stock under at-the-market equitydistribution and sales agreements, net of offering costs — — 36,248 36 159,493 — — 159,529 Conversion of preferred stock to common stock (220,000) (2,200) 2,200,000 2,200 — — — — Issuance of common stock for option exercises — — 172,585 173 829,353 — — 829,526 Exercise of warrants — — 2,131,700 2,132 7,586,720 — — 7,588,852 Net loss — — — — — — (10,865,979) (10,865,979)Foreign currency translation adjustments — — — — — 6,765 — 6,765 Balance at December 31, 2016 — — 34,523,678 34,525 364,886,468 (96,000) (330,293,064) 34,531,929 Share-based compensation — — — — 4,474,945 — — 4,474,945 Issuance of shares under an employee stock purchaseplan — — 15,153 15 77,304 — — 77,319 Issuance of common stock under at-the-market equitydistribution and sales agreements, net of offering costs — — 1,689,436 1,689 9,889,626 — — 9,891,315 Issuance of common stock for option exercises — — 105,579 105 425,908 — — 426,013 Exercise of warrants — — 119,047 119 402,259 — — 402,378 Net loss — — — — — — (11,163,136) (11,163,136)Foreign currency translation adjustments — — — — — 1,377 — 1,377 Balance at December 31, 2017 — — 36,452,893 36,453 380,156,510 (94,623) (341,456,200) 38,642,140 Share-based compensation — — — — 6,330,305 — — 6,330,305 Issuance of shares under an employee stock purchaseplan — — 7,094 7 51,002 — — 51,009 Issuance of common stock under public offering, net ofoffering costs — — 4,545,928 4,546 38,468,425 — — 38,472,971 Issuance of common stock under at-the-market equitydistribution and sales agreements, net of offering costs — — 200,000 200 1,514,905 — — 1,515,105 Issuance of common stock for option exercises — — 125,391 125 407,071 — — 407,196 Exercise of warrants — — 750,000 750 2,361,750 — — 2,362,500 Net loss — — — — — — (14,675,087) (14,675,087)Foreign currency translation adjustments — — — — — 1,473 — 1,473 Balance at December 31, 2018 — $— 42,081,306 $42,081 $429,289,968 $(93,150) $(356,131,287) $73,107,612 See accompanying notes to consolidated financial statements. 64 MEDICINOVA, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS Years ended December 31, 2018 2017 2016 Operating activities: Net loss $(14,675,087) $(11,163,136) $(10,865,979)Adjustments to reconcile net loss to net cash (used in) provided by operating activities: Non-cash share-based compensation 6,330,305 4,474,945 3,972,533 Depreciation and amortization 25,881 28,098 14,127 Tax benefit from fluctuations in other comprehensive income — — (1,901)Change in joint venture investment (19,867) 1,673 32,139 Changes in assets and liabilities: Receivables, prepaid expenses and other assets (111,682) 242,064 175,495 Accounts payable, accrued liabilities and other current liabilities (663,671) 1,246,630 127,373 Deferred tax liability, deferred revenue and other long-term liabilities — (1,754,208) — Net cash used in operating activities (9,114,121) (6,923,934) (6,546,213)Investing activities: Proceeds from dissolution of joint venture 636,524 — — Acquisitions of property and equipment (10,200) — (84,483)Net cash provided by (used) in investing activities 626,324 — (84,483)Financing activities: Proceeds from issuance of common stock, exercise of common stock options and warrants, net of issuance costs 42,757,772 10,719,707 8,577,907 Proceeds from issuance of equity under ESPP 51,009 77,319 87,729 Net cash provided by financing activities 42,808,781 10,797,026 8,665,636 Effects of foreign exchange rates on cash 691 614 6,348 Net increase in cash and cash equivalents 34,321,675 3,873,706 2,041,288 Cash and cash equivalents, beginning of period 27,991,743 24,118,037 22,076,749 Cash and cash equivalents, end of period $62,313,418 $27,991,743 $24,118,037 Supplemental disclosure of cash flow information: Income taxes paid $6,005 $9,203 $6,035 See accompanying notes to consolidated financial statements. 65  MEDICINOVA, INC.Notes to Consolidated Financial Statements 1. Organization and Summary of Significant Accounting PoliciesOrganization and BusinessThe Company was incorporated in the state of Delaware in September 2000 and is a public company. The Company’s common stock is listed in boththe United States and Japan and trades on the NASDAQ Global Market and the JASDAQ Market of the Tokyo Stock Exchange. The Company is abiopharmaceutical company focused on developing novel, small molecule therapeutics for the treatment of serious diseases with unmet medical needs with acommercial focus on the United States market. The Company’s current strategy is to focus its development activities on MN-166 (ibudilast) for neurologicaldisorders such as progressive multiple sclerosis (MS), amyotrophic lateral sclerosis (ALS), chemotherapy-induced peripheral neuropathy, degenerativecervical myelopathy, glioblastoma, and substance dependence and addiction (e.g., methamphetamine dependence, opioid dependence, and alcoholdependence), and MN-001 (tipelukast) for fibrotic diseases such as nonalcoholic steatohepatitis (NASH) and idiopathic pulmonary fibrosis (IPF). TheCompany’s pipeline also includes MN-221 (bedoradrine) for the treatment of acute exacerbation of asthma and MN-029 (denibulin) for solid tumor cancers.As of December 31, 2018, the Company had available cash and cash equivalents of $62.3 million and working capital of $60.6 million.Principles of ConsolidationThe consolidated financial statements include the accounts of MediciNova, Inc. and its wholly-owned subsidiaries. All intercompany transactions andbalances are eliminated in consolidation. Segment ReportingThe Company operates in a single operating segment – the acquisition and development of small molecule therapeutics for the treatment of seriousdiseases with unmet medical needs.Use of EstimatesThe accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the UnitedStates (“GAAP”). The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptionsthat affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and thereported amounts of expenses during the reporting period. Actual results could differ from those estimates.Cash and Cash EquivalentsCash and cash equivalents consist of cash and other highly liquid investments with original maturities of three months or less from the date of purchase.Cash equivalents at December 31, 2018 and 2017 consisted of money market funds.Concentrations and Credit RiskThe Company maintains cash balances at various financial institutions and such balances commonly exceed the $250,000 amount insured by theFederal Deposit Insurance Corporation. The Company also maintains money market funds at various financial institutions which are not federally insuredalthough are invested primarily in U.S. government securities. The Company has not experienced any losses in such accounts and management believes thatthe Company does not have significant credit risk with respect to such cash and cash equivalents.66  Fair Value of Financial InstrumentsFinancial instruments, including cash and cash equivalents, prepaid expenses and other current assets, accounts payable and accrued liabilities, arecarried at cost, which management believes approximates fair value because of the short-term maturity of these instruments.Goodwill and Purchased IntangiblesThe Company records goodwill and other intangible assets based on the fair value of the assets acquired. In determining the fair value of the assetsacquired, the Company utilizes extensive accounting estimates and judgments to allocate the purchase price to the fair value of the net tangible andintangible assets acquired. The Company uses the discounted cash flow method to estimate the value of intangible assets acquired.The Company assesses goodwill and indefinite lived intangible assets for impairment using fair value measurement techniques on an annual basisduring the fourth quarter of the year, or more frequently if indicators of impairment exist. The impairment evaluation is performed assuming that theCompany operates in a single operating segment and reporting unit. When impaired, the carrying value of goodwill is written down to fair value. Thegoodwill impairment test involves consideration of qualitative information to determine if it is more likely than not that the fair value of a reporting unit isless than its carrying value. If such a determination is made, then the traditional two-step goodwill impairment test is applied. The first step, identifying apotential impairment, compares the fair value of a reporting unit with its carrying amount, including goodwill. If the carrying value of the reporting unitexceeds its fair value, the second step would need to be conducted; otherwise, no further steps are necessary as no potential impairment exists. The secondstep, measuring the impairment loss, compares the implied fair value of the reporting unit goodwill with the carrying amount of that goodwill. Any excess ofthe reporting unit goodwill carrying value over the respective implied fair value is recognized as an impairment loss. There was no impairment of goodwillfor all periods presented.The Company periodically re-evaluates the original assumptions and rationale utilized in the establishment of the carrying value and estimated lives ofits long-lived assets. The criteria used for these evaluations include management’s estimate of the asset’s continuing ability to generate income fromoperations and positive cash flows in future periods as well as the strategic significance of any intangible assets in the Company’s business objectives. Ifassets are considered to be impaired, the impairment recognized is the amount by which the carrying value of the assets exceeds the fair value of the assets.There was no impairment of long-lived assets for the periods presented.Research, Development and PatentsResearch and development costs are expensed in the period incurred. Research and development costs primarily consist of salaries and related expensesfor personnel, facilities and depreciation, research and development supplies, licenses and outside services. Such research and development costs totaled $5.3million, $3.9 million and $3.1 million for the years ended December 31, 2018, 2017 and 2016, respectively.Costs related to filing and pursuing patent applications are expensed as incurred, as recoverability of such expenditures is uncertain. The Companyincludes all external costs related to the filing of patents on developments in Research, Development and Patents expenses. Such patent-related expensestotaled $0.3 million for the years ended December 31, 2018 and 2017 and $0.4 million for the year ended December 31, 2016.Share-Based CompensationThe Company estimates the fair value of stock options using the Black-Scholes option pricing model on the date of grant. The fair value of equityinstruments expected to vest are recognized and amortized on a straight-line basis over the requisite service period of the award, which is generally three tofour years; however, the Company’s equity compensation plans provide for any vesting schedule as the board may deem appropriate. Forfeitures arerecognized as they occur.67  Net Loss Per ShareThe Company computes basic net loss per share using the weighted average number of common shares outstanding during the period. Diluted netincome per share is based upon the weighted average number of common shares and potentially dilutive securities (common share equivalents) outstandingduring the period. Common share equivalents outstanding, determined using the treasury stock method, are comprised of shares that may be issued under theCompany’s stock option agreements and warrants. Common share equivalents were excluded from the diluted net loss per share calculation because of theiranti-dilutive effect for all periods presented.Potentially dilutive outstanding securities excluded from diluted net loss per common share because of their anti-dilutive effect for the periodspresented are as follows: December 31, 2018 2017 2016 Stock options 6,609,647 5,514,038 4,432,017 Warrants — 750,000 1,067,067 Total 6,609,647 6,264,038 5,499,084 Recent Accounting Pronouncements In May 2017, the FASB issued ASU No. 2017-09, Compensation-Stock Compensation Topic 718-Scope of Modification Accounting ("ASU 2017-09").This guidance will clarify when changes to the terms and conditions of share-based payment awards must be accounted for as modifications. Entities willapply the modification accounting guidance if the value, vesting conditions, or classification of an award changes. ASU 2017-09 is effective for theCompany at the beginning of fiscal 2018, including interim periods within fiscal 2018. Early adoption is permitted and the guidance will be appliedprospectively to awards modified on or after adoption. The Company adopted this standard in 2018 and there was no significant impact on the Company’sconsolidated financial statements at the time of adoption.In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue fromContracts with Customers. ASU 2014-09 and its related amendments provide companies with a single model for accounting for revenue arising fromcontracts with customers and supersedes prior revenue recognition guidance, including industry-specific revenue guidance. The core principle of the modelis to recognize revenue when control of the goods or services transfers to the customer, as opposed to recognizing revenue when the risks and rewards transferto the customer under the existing revenue guidance. The guidance permits companies to either apply the requirements retrospectively to all prior periodspresented, or apply the requirements in the year of adoption, through a cumulative adjustment. The Company adopted the new accounting standard using themodified retrospective transition method effective January 1, 2018 and there was no impact to the Company’s historical Kissei contract. See Note 2 for furtherinformation.In February 2016, the FASB issued ASU 2016-02, Leases, which introduces the recognition of lease assets and lease liabilities by lessees for thoseleases classified as operating leases under previous guidance. The new standard establishes a right-of-use (ROU) model that requires a lessee to record anROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. The new standard is effective for fiscal years beginningafter December 15, 2018 and interim periods within those fiscal years with early adoption permitted. The Company has completed its identification of leaseswhich is comprised of two building leases and copiers. The Company is in the process of quantifying the impact to the balance sheet while the impact to thestatement of operations is expected to be immaterial. The Company will adopt the new accounting standard using a modified retrospective transition optioneffective January 1, 2019.In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other, which eliminates step two of the quantitative goodwillimpairment test. Step two required determination of the implied fair value of a reporting unit, and then a comparison of this implied fair value with thecarrying amount of goodwill for the reporting unit, in order to determine any goodwill impairment. Under the new guidance, an entity is only required to68  complete a one-step quantitative test, by comparing the fair value of a reporting unit with its carrying amount, and any goodwill impairment charge isdetermined by the amount by which the carrying amount exceeds the reporting unit’s fair value. However, the loss should not exceed the total amount ofgoodwill allocated to the reporting unit. The standard is effective for the Company in the first quarter of 2020, with early adoption permitted as of January 1,2017, and is to be applied on a prospective basis. The Company early adopted this standard with its December 31, 2018 impairment test. The Company’sannual impairment test was completed using a qualitative approach, so the early adoption did not impact the results of the Company’s impairment test.In August 2018, the FASB ASU No. 2018-13, Fair Value Measurement (Topic 820), which eliminates, adds and modifies certain disclosurerequirements for fair value measurements. The modified standard eliminates the requirement to disclose changes in unrealized gains and losses included inearnings for recurring Level 3 fair value measurements and requires that changes in unrealized gains and losses be included in other comprehensive incomefor recurring Level 3 fair value measurements of instruments. The standard also requires the disclosure of the range and weighted average used to developsignificant unobservable inputs and how weighted average is calculate for recurring and nonrecurring Level 3 fair value measurements. The amendment iseffective for fiscal years beginning after December 15, 2019 and interim periods within that fiscal year with early adoption permitted. The Company does notexpect the standard to have a material impact on its consolidated financial statements. 2. Revenue RecognitionRevenue Recognition PolicyRevenues consist mainly of research and development services performed under a contract with a customer. The Company evaluates the separateperformance obligation(s) under each contract, allocates the transaction price to each performance obligation considering the estimated stand-alone sellingprices of the services and recognizes revenue upon the satisfaction of such obligations over time or at a point in time dependent on the satisfaction of one ofthe following criteria: (1) the customer simultaneously receives and consumes the economic benefits provided by the vendor’s performance (2) the vendorcreates or enhances an asset controlled by the customer (3) the vendor’s performance does not create an asset for which the vendor has an alternative use, andthe vendor has an enforceable right to payment for performance completed to date.Kissei Pharmaceutical Co., LtdIn October 2011, the Company entered into a collaboration agreement with Kissei Pharmaceutical Co., Ltd., (“Kissei”), to perform research anddevelopment services relating to MN-221 (bedoradrine) in exchange for a non-refundable upfront payment of $2.5 million. Under the terms of the agreement,the Company is responsible for all costs to be incurred in the performance of these services. The Company assessed the services in accordance with theauthoritative guidance and concluded that its meets the definition of a collaborative arrangement per ASC 808 which is outside of the scope of ASC 606.Since ASC 808 does not provide recognition and measurement guidance for collaborative arrangements, the Company analogized to ASC 606.The Company concluded the two studies to be performed under the agreement represented two separate performance obligations. The transaction pricewas allocated among the two studies that were deemed separate performance obligations based on the expected costs to be incurred for each obligation.While amounts were received in advance for the studies, at contract inception, both parties anticipated the contract would be completed within 1 year, so nosignificant financing component existed at contract inception. Revenue is recognized proportional to the total costs expected for each performanceobligation as incurred over the service period. The first study was completed in 2013 and the timing of the second study is undetermined as of December 31,2018. The amount received from Kissei and allocated, net of the amount recorded as revenue, is included on the balance sheet as long-term deferred revenueand will be recognized as revenue as the remaining performance obligation is satisfied. No revenue was recognized for the years ended December 31, 2018,2017 or 2016 in connection with the collaboration agreement with Kissei. 69  3. Fair Value MeasurementsFair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction betweenmarket participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use inpricing an asset or liability. As a basis for considering such assumptions, a three-tier fair value hierarchy has been established, which prioritizes the inputsused in measuring fair value as follows: Level 1: Observable inputs such as quoted prices in active markets; Level 2: Inputs are quoted prices for similar items in active markets or inputs are quoted prices for identical or similar items in marketsthat are not active near the measurement date; and Level 3: Unobservable inputs due to little or no market data, which require the reporting entity to develop its own assumptionsCash equivalents including money market accounts of $677,594 and $666,265 measured at fair value as of December 31, 2018 and 2017, respectively,are classified within Level 1. 4. Balance Sheet DetailsProperty and EquipmentProperty and equipment, net, consist of the following: December 31, 2018 2017 Leasehold improvements $16,121 $15,742 Furniture and equipment 235,095 233,441 Software 285,446 285,418 536,662 534,601 Less accumulated depreciation and amortization (483,528) (471,715)Property and equipment, net $53,134 $62,886 The Company uses the straight-line method to record depreciation expense with useful lives of three to five years. Depreciation and amortization ofproperty and equipment of $25,881, $28,098, and $14,127, was recorded for the years ended December 31, 2018, 2017 and 2016, respectively.Accrued LiabilitiesAccrued liabilities consist of the following: December 31, 2018 2017 Accrued compensation $1,137,869 $952,470 Research and development costs 226,597 122,665 Professional services fees 18,763 144,105 Other 191,932 141,504 Total accrued liabilities $1,575,161 $1,360,744 70  5. Commitments and ContingenciesLease CommitmentsThe Company subleases its office space under an operating lease with an initial term of four years and one month, expiring in December 2021. Rentexpense for the years ended December 31, 2018, 2017 and 2016 was $229,613, $254,593 and $256,314, respectively. The difference between the minimumlease payments and the straight-line amount of total rent expense is recorded as deferred rent. Deferred rent at December 31, 2018 and 2017 was $24,762 and$253, respectively.As of December 31, 2018, the total estimated future annual minimum lease payments under the Company’s non-cancelable building and copier leasesfor the years ending after December 31, 2018 are as follows: Years ending December 31: 2019 $182,847 2020 144,234 2021 149,951 2022 1,532 2023 1,404 Total minimum payments $479,968 Product LiabilityThe Company’s business exposes it to liability risks from its potential drug products. A successful product liability claim or series of claims broughtagainst the Company could result in the payment of significant amounts of money and divert management’s attention from running the business. TheCompany may not be able to maintain insurance on acceptable terms, or the insurance may not provide adequate protection in the case of a product liabilityclaim. To the extent that product liability insurance, if available, does not cover potential claims, the Company would be required to self-insure the risksassociated with such claims. The Company believes it carries reasonably adequate insurance for product liability.License and Research AgreementsThe Company has entered into in-licensing agreements with various pharmaceutical companies. Under the terms of these agreements, the Company hasreceived licenses to research, know-how and technology claimed, in certain patents or patent applications. Under these license agreements, the Company isgenerally required to make upfront payments and additional payments upon the achievement of milestones and/or royalties on future sales of products untilthe later of the expiration of the applicable patent or the applicable last date of market exclusivity after the first commercial sale, on a country-by-countrybasis.No amounts have been expended under these agreements during the years ended December 31, 2018, 2017 or 2016. For products currently indevelopment, future potential milestone payments based on product development of MN-166 (ibudilast) and MN-001 (tipelukast) are $10.0 million as ofDecember 31, 2018. For all other products, future potential milestone payments related to development milestones and commercialization milestones totaled$33.5 million as of December 31, 2018. There are no minimum royalties required under any of the license agreements. The Company is unable to estimatewith certainty the timing on when these milestone payments will occur as these payments are dependent upon the progress of the Company’s productdevelopment programs.Legal ProceedingsFrom time to time, the Company may be subject to legal proceedings and claims in the ordinary course of business. The Company is not aware of anysuch proceedings or claims that it believes will have, individually or in aggregate, a material adverse effect on its business, financial condition or results ofoperations. 71  6. Joint VentureThe Company entered into an agreement to form a joint venture company with Zhejiang Medicine Co., Ltd. and Beijing Medfron MedicalTechnologies Co., Ltd. (formerly Beijing Make-Friend Medicine Technology Co., Ltd.) effective September 27, 2011. In August 2014, the Chinesegovernment approved the amendment to the joint venture agreement to allow for the departure of Zhejiang Medicine Co., Ltd. The amended joint ventureagreement provided for the joint venture company, Zhejiang Sunmy Bio-Medical Co., Ltd. (Zhejiang Sunmy), to develop and commercialize MN-221(bedoradrine) in China and pursue additional compounds to develop, each with a 50% interest in Zhejiang Sunmy.On July 24, 2017, the Company and Beijing Medfron Medical Technologies Co., Ltd. agreed to dissolve Zhejiang Sunmy, subject to approval byapplicable Chinese regulatory authorities which was granted on December 11, 2017. At December 31, 2017, the Company reflected a long-term asset on itsconsolidated balance sheet which represented the Company’s investment in Zhejiang Sunmy, net of the Company’s portion of any generated loss or income.In April 2018, the Company received proceeds of $0.6 million from the dissolution of the joint venture and liquidation of its investment, resulting in animmaterial gain recorded within other expense, net in the statement of operations for the year ended December 31, 2018. 7. Share-based CompensationStock Incentive PlansIn June 2013, the Company adopted the 2013 Equity Incentive Plan, or 2013 Plan, under which the Company may grant stock options, stockappreciation rights, restricted stock, restricted stock units and other awards to individuals who are then employees, officers, non-employee directors orconsultants of the Company or its subsidiaries. The 2013 Plan is the successor to the Company’s Amended and Restated 2004 Stock Incentive Plan, or 2004Plan. A total of 2,500,000 shares of common stock were initially reserved for issuance under the 2013 Plan. At the annual meeting of stockholders held inJune 2018, the Company’s stockholders approved an amendment to the 2013 Plan to increase the number of shares of common stock reserved for issuanceunder the plan by 1,500,000 shares. In addition, “returning shares” that may become available from time to time are added back to the plan. “Returningshares” are shares that are subject to outstanding awards granted under the 2004 Plan that expire or terminate prior to exercise or settlement, are forfeitedbecause of the failure to vest, are repurchased, or are withheld to satisfy tax withholding or purchase price obligations in connection with such awards.Although the Company no longer grants equity awards under the 2004 Plan, all outstanding stock awards granted under the 2004 Plan will continue to besubject to the terms and conditions as set forth in the agreements evidencing such stock awards and the terms of the 2004 Plan. As of December 31, 2018,1,494,592 shares remain available for future grant under the 2013 Plan.The Company issues employee performance-based stock options, the vesting of which is based on a determination made by the board of directors as tothe achievement of certain corporate objectives at the end of the performance period. The grant date of such awards is the date on which the board of directorsmakes its determination. For periods preceding the grant date, the expense related to these awards is measured based on their fair value at each reporting date.As of December 31, 2018, total performance options outstanding and unvested was 1,162,000. These options became vested in 2019.Stock OptionsOptions granted under the 2013 Plan and 2004 Plan have terms of ten years from the date of grant unless earlier terminated and generally vest over athree or four-year period.The exercise price of all options granted during the years ended December 31, 2018, 2017 and 2016 was equal to the market value of the Company’scommon stock on the date of grant.72  A summary of stock option activity and related information for the years ended December 31, 2018, 2017 and 2016 is as follows: Number ofOption Shares Weighted AverageExercise Price Outstanding at December 31, 2015 4,133,969 $4.69 Granted 1,158,000 $4.00 Exercised (172,585) $4.81 Cancelled (687,367) $11.27 Outstanding at December 31, 2016 4,432,017 $3.47 Granted 1,195,000 $6.10 Exercised (105,579) $4.04 Cancelled (7,400) $7.76 Outstanding at December 31, 2017 5,514,038 $4.03 Granted 1,222,000 $7.11 Exercised (125,391) $3.25 Cancelled (1,000) $4.52 Outstanding at December 31, 2018 6,609,647 $4.61 Exercisable at December 31, 2018 5,408,814 $4.07 Number ofOption Shares Weighted AverageGrant-Date Fair Value Non-vested at December 31, 2017 1,261,837 $3.73 Granted 1,222,000 $4.57 Vested (1,283,004) $3.78 Non-vested at December 31, 2018 1,200,833 $4.04 Cash received from stock option exercises for the years ended December 31, 2018, 2017 and 2016 was $407,196, $426,013 and $829,526, respectively.The aggregate intrinsic value of options exercised was $788,423, $198,164 and $414,572 for the years ended December 31, 2018, 2017 and 2016,respectively. Options outstanding and exercisable at December 31, 2018 had a weighted average contractual life of 6.32 years, respectively.As of December 31, 2018 and 2017, the total intrinsic value of options outstanding was $23.6 million and $13.6 million, respectively. Total intrinsicvalue of options exercisable was $22.2 million and $12.9 million as of December 31, 2018 and 2017, respectively.Employee Stock Purchase PlanUnder the Company’s 2007 Employee Stock Purchase Plan (ESPP), 300,000 shares of common stock were originally reserved for issuance. In addition,the shares reserved automatically increase each year by a number equal to the lesser of: (i) 15,000 shares; (ii) 1% of the outstanding shares of common stockon the last day of the immediately preceding fiscal year; or (iii) such lesser amount as determined by the Board. The ESPP permits full-time employees topurchase common stock through payroll deductions (which cannot exceed 15% of each employee’s compensation) at the lower of 85% of fair market value atthe beginning of the offering period or the end of each six-month offering period. The ESPP is considered a compensatory plan and the Company recordscompensation expense.For the year ended December 31, 2018, an aggregate of 7,094 shares were issued under the ESPP, leaving 191,878 shares available for future issuance.73  Compensation ExpenseThe estimated fair value of each stock option award was determined on the date of grant using the Black-Scholes option valuation model with thefollowing weighted-average assumptions for stock option grants: Year EndedDecember 31, 2018 2017 2016 Stock Options Risk-free interest rate 2.52% 2.06% 1.60%Expected volatility of common stock 61.56% 72.55% 78.30%Dividend yield 0.00% 0.00% 0.00%Expected option term (in years) 4.56 5.67 5.57 The estimated fair value of employee stock purchase rights under the Company’s ESPP was determined on the date of grant using the Black-Scholesoption valuation model with the following weighted-average assumptions for stock option grants: Year EndedDecember 31, 2018 2017 2016 Employee Stock Purchase Plan Risk-free interest rate 2.07% 1.09% 0.44%Expected volatility of common stock 70.41% 38.34% 51.65%Dividend yield 0.00% 0.00% 0.00%Expected option term (in years) 0.5 0.5 0.5 The risk-free interest rate assumption is based upon observed interest rates appropriate for the expected term of employee stock options. The expectedvolatility is based on the historical volatility of the Company’s common stock. The Company has not paid nor does the Company anticipate payingdividends on its common stock in the foreseeable future. The expected term of employee stock options is based on the simplified method as provided by theauthoritative guidance on stock compensation, as the historical stock option exercise experience does not provide a reasonable basis to estimate the expectedterm.The weighted-average fair value of each stock option granted during the years ended December 31, 2018, 2017 and 2016, estimated as of the grant dateusing the Black-Scholes option valuation model, was $4.57 per option, $3.78 per option and $2.64 per option, respectively.Share-based compensation expense for stock option awards and ESPP shares are reflected in total operating expense for each respective year. For theyears ended December 31, 2018, 2017 and 2016, share-based compensation expense related to stock options and the ESPP was $6.3 million, $4.5 million and$4.0 million, respectively, of which $4.5 million, $3.1 million and $2.9 million was recorded as a component of general and administrative expense,respectively, and $1.8 million, $1.4 million and $1.1 million was recorded as a component of research, development and patents expense, respectively.As of December 31, 2018, there was $0.3 million of unamortized compensation cost related to unvested stock option awards which is expected to berecognized over a remaining weighted-average vesting period of 0.03 years, on a straight-line basis. 8. Stockholders’ EquityEquity OfferingsOn May 22, 2015, the Company entered into an at-the-market issuance sales agreement (ATM Agreement) with MLV & Co. LLC (MLV), pursuant towhich the Company may sell common stock through MLV from time to time up to an aggregate offering price of $30.0 million. Sales of the Company’scommon stock through MLV, if any, can74  be made by any method that is deemed to be an “at-the-market” equity offering as defined in Rule 415 promulgated under the Securities Act of 1933, asamended, including sales made directly on NASDAQ, on any other existing trading market for the common stock or to or through a market maker. MLV mayalso sell the common stock in privately negotiated transactions, subject to the Company’s prior approval. The Company agreed to pay MLV an aggregatecommission rate of up to 4.0% of the gross proceeds of any common stock sold under this agreement. Proceeds from sales of common stock will depend onthe number of shares of common stock sold to MLV and the per share purchase price of each transaction. The Company is not obligated to make any sales ofcommon stock under the sales agreement and may terminate the sales agreement at any time upon written notice. On September 16, 2016, the Companyamended the original sales agreement with MLV to also include FBR Capital Markets & Co as a sales agent.The following table summarizes the activity under the ATM agreements for the following periods (in thousands except share price and shares sold): Year EndedDecember 31, 2018 2017 2016 Gross proceeds 1,562 10,303.0 264 Net proceeds 1,515 9,891.3 159.5 Shares sold 200,000 1,689,436 36,248 Price range$7.81 $5.30 - 6.98 $6.90 - 7.54WarrantsDuring the year ended December 31, 2018, 750,000 shares of the Company’s common stock were issued upon exercise of warrants for gross proceeds of$2.4 million. During the years ended December 31, 2017 and 2016, 119,047 and 2,131,700 shares of the Company’s common stock were issued uponexercise of warrants for gross proceeds of $0.4 million and $7.6 million, respectively, with warrants exercisable for 198,020 shares expiring unexercised onMay 10, 2017.At December 31, 2018, there were no warrants outstanding to purchase shares of the Company’s common stock.Common Stock Reserved for Future IssuanceThe following table summarizes common stock reserved for future issuance at December 31, 2018: Common Stock reserved for issuance under the ESPP 191,878 Common stock reserved for issuance upon exercise of options outstanding (under the 2004 Plan and 2013 Plan) 6,609,647 Common stock reserved for future equity awards (under the 2013 Plan) 1,494,592 8,296,117 Public OfferingOn February 12, 2018, the Company completed a firm-commitment underwritten public offering of 4,419,890 shares of common stock at a purchaseprice of $9.05 per share for aggregate gross proceeds of $40.0 million and received aggregate net proceeds of approximately $37.4 million, net ofunderwriting discounts and commissions and offering expenses. Additionally, the Company granted the underwriters a 30-day option to purchase up to anadditional 662,983 shares of common stock at the public offering price, and on February 21, 2018, the Company sold an additional 126,038 shares ofCommon Stock for gross proceeds of $1.1 million pursuant to the partial exercise by the underwriters of their over-allotment option. 75  9. Income TaxesA reconciliation of loss before income taxes for domestic and foreign locations for the years ended December 31, 2018, 2017 and 2016 is as follows: 2018 2017 2016 United States $(14,689,617) $(12,940,362) $(10,892,276)Foreign 19,807 33,176 30,050 Loss before income taxes $(14,669,810) $(12,907,186) $(10,862,226) A reconciliation of income tax benefit (expense) for the years ended December 31, 2018, 2017 and 2016 is as follows: Current: 2018 2017 2016 Federal $— $— $1,489 State — — 412 Foreign (5,276) (10,158) (5,655)Total current income tax benefit (expense) (5,276) (10,158) (3,754)Deferred: Federal — 1,329,888 — State — 424,320 — Foreign — — — Total deferred income tax benefit (expense) — 1,754,208 — Total income tax benefit (expense) $(5,276) $1,744,050 $(3,754) The significant components of deferred income taxes at December 31, 2018 and 2017 are as follows (in thousands): Deferred tax assets: 2018 2017 Net operating loss carryforwards $62,025 $59,480 Capitalized licenses 286 429 Research tax credits 8,434 8,160 Stock options 3,922 2,585 Other, net 580 572 Total deferred tax assets 75,247 71,226 Deferred tax liabilities In process R&D (1,343) (1,343)Total deferred tax liabilities (1,343) (1,343)Net deferred tax assets 73,904 69,883 Valuation allowance (74,106) (70,085)Net deferred tax liability $(202) $(202) The Company has established a valuation allowance against net deferred tax assets due to the uncertainty that such assets will be realized. TheCompany periodically evaluates the recoverability of the deferred tax assets. At such time as it is determined that it is more likely than not that deferred taxassets will be realizable, the valuation allowance will be reduced.76  At December 31, 2018, the Company has federal and California net operating losses, or NOL, carryforwards of approximately $248.9 million and$139.6 million, respectively. The federal NOL carryforwards begin to expire in 2020, and the California NOL carryforwards begin to expire in 2028. AtDecember 31, 2018, the Company also had federal and California research tax credit carryforwards of approximately $6.96 million and $1.9 million,respectively. The federal research tax credit carryforwards begin to expire in 2024, and the California research tax credit carryforward does not expire and canbe carried forward indefinitely until utilized.The above NOL carryforward and the research tax credit carryforwards are subject to an annual limitation under Section 382 and 383 of the InternalRevenue Code of 1986, and similar state provisions due to ownership change limitations that have occurred which will limit the amount of NOL and taxcredit carryforwards that can be utilized to offset future taxable income and tax, respectively. In general, an ownership change, as defined by Section 382 and383, results from transactions increasing ownership of certain stockholders or public groups in the stock of the corporation by more than 50 percentage pointsover a three-year period. The Company has not completed an IRC Section 382/383 analysis since 2011 regarding the limitation of net operating loss andresearch and development credit carryforwards. There is a risk that additional changes in ownership have occurred since the completion of the Company’sanalysis, which was through December 2011. If a change in ownership were to have occurred, additional NOL and tax credit carryforwards could beeliminated or restricted. If eliminated, the related asset would be removed from the deferred tax asset schedule with a corresponding reduction in thevaluation allowance. Due to the existence of the valuation allowance, limitations created by future ownership changes, if any, related to the Company’soperations in the United States will not impact the Company’s effective tax rate.A reconciliation of the federal statutory income tax rate to the Company’s effective income tax rate is as follows: 2018 2017 2016 Federal statutory income tax rate 21.0% 35.0% 35.0%State income taxes, net of federal benefit 6.4 5.2 3.5 Tax credits 1.5 1.1 0.9 Change in valuation allowance (27.2) 247.4 (8.4)Permanent differences (0.1) (0.3) (0.1)Expiration of attributes — (18.7) (17.2)Tax Cuts and Jobs Act — (253.7) — Stock compensation (1.7) (2.9) (13.6)Other 0.1 0.4 (0.1)Provision for income taxes 0.0% 13.5% 0.0% On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (TCJA) was signed into law making significant changes to the Internal Revenue Code,including, but are not limited to (a) reducing the federal corporate income tax rate from 35% to 21%, effective January 1, 2018; and (b) eliminating thefederal corporate alternative minimum tax (AMT) and changing how existing AMT credits can be realized; and (c) eliminating several business deductionsand credits, including deductions for certain executive compensation in excess of $1 million. As a result of the rate reduction, the company reduced thedeferred tax asset balance as of December 31, 2017 by $32.7 million and the valuation allowance by $33.4 million. In December 2017, the SEC issued Staff Accounting Bulletin No. 118 (SAB 118), which provides guidance on accounting for the income tax effects ofthe TCJA. SAB 118 provides a measurement period that should not extend beyond one year from the TCJA enactment date for companies to complete theaccounting relating to the TCJA under Accounting Standards Codification Topic 740, “Income Taxes” (ASC 740). In accordance with SAB 118, a companymust reflect the income tax effects of those aspects of the TCJA for which the accounting under ASC 740 is complete. To the extent that a company’saccounting for TCJA-related income tax effects is incomplete, but the company is able to determine a reasonable estimate, it must record a provisionalestimate in its financial statements. If a company cannot determine a provisional estimate to be included in its financial statements, it should continue toapply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of77  the TCJA. The Company has completed its evaluation of the potential impacts of IRC Section 162(m) as amended by the Act of 2017 prior to December 22,2018 and there was no change to the Company’s previous analysis. The Company files income tax returns in the United States, California and foreign jurisdictions. Due to the Company’s losses incurred, the Company isessentially subject to income tax examination by tax authorities from inception to date. The Company’s policy is to recognize interest expense and penaltiesrelated to income tax matters as tax expense. At December 31, 2018, there are no unrecognized tax benefits nor any significant accruals for interest related tounrecognized tax benefits or tax penalties. 10. Employee Savings PlanThe Company has an employee savings plan available to substantially all employees. Under the plan, an employee may elect salary reductions whichare contributed to the plan. The plan provides for discretionary contributions by the Company, which totaled $76,903, $65,995 and $66,289 for the yearsended December 31, 2018, 2017 and 2016, respectively. 11. Quarterly Financial Data (Unaudited)The following table presents certain quarterly financial data for eight consecutive quarters ended December 31, 2018 and 2017. The unaudited quarterlyinformation has been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, includes alladjustments, necessary for a fair presentation of this data (in thousands, except per share data). Year Ended December 31, 2018 1stQuarter 2ndQuarter 3rdQuarter 4thQuarter Selected quarterly financial data: Total operating expenses $4,667 $3,400 $7,028 $492 Net loss (4,543) (3,144) (6,780) (208)Net loss applicable to common stockholders (4,543) (3,144) (6,780) (208)Basic and diluted net loss per common share (1) (0.12) (0.08) (0.16) (0.00) Year Ended December 31, 2017 1stQuarter 2ndQuarter 3rdQuarter 4thQuarter Selected quarterly financial data: Total operating expenses $3,024 $2,805 $3,792 $3,406 Net loss (3,017) (2,789) (3,755) (1,602)Net loss applicable to common stockholders (3,017) (2,789) (3,755) (1,602)Basic and diluted net loss per common share (1) (0.09) (0.08) (0.11) (0.02) (1)Net loss per share is computed independently for each of the quarters presented. Therefore, the sum of the quarterly net income and loss per share willnot necessarily equal the annual per share calculation. 12. Subsequent EventsThe Company has evaluated all subsequent events that have occurred after the date of the accompanying financial statements through February 13,2019 and determined that there were no events or transactions occurring which require recognition or disclosure in the Company’s consolidated financialstatements. 78  Item 9. Changes in and Disagreements With Accountants on Accounting and Financial DisclosureNoneItem 9A. Controls and ProceduresEvaluation of Disclosure Controls and ProceduresAn evaluation was performed by our Chief Executive Officer and Chief Financial Officer of the effectiveness of the design and operation of ourdisclosure controls and procedures as defined in the Rules 13(a)-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Disclosurecontrols and procedures are those controls and procedures designed to provide reasonable assurance that the information required to be disclosed in ourExchange Act filings is (1) recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission’s rulesand forms, and (2) accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, toallow timely decisions regarding required disclosure. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as ofDecember 31, 2018, our disclosure controls and procedures were effective.Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our procedures or our internal controls willprevent or detect all errors and all fraud. An internal control system, no matter how well conceived and operated, can provide only reasonable, not absolute,assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of our controls canprovide absolute assurance that all control issues and instances of fraud, if any, have been detected.Changes in Internal Control over Financial ReportingThere was no change in internal control over financial reporting (as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) during ourfourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.Management’s Report on Internal Control over Financial ReportingInternal control over financial reporting refers to the process designed by, or under the supervision of, our Chief Executive Officer and Chief FinancialOfficer, and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, and includes thosepolicies and procedures that:(1) Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;(2) Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorization of our managementand directors; and(3) Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could havea material effect on the financial statements.Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherentlimitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment andbreakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override.Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financialreporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the processsafeguards to reduce, though not79  eliminate, this risk. Management is responsible for establishing and maintaining adequate internal control over financial reporting for the company.Management has used the framework set forth in the report entitled Internal Control-Integrated Framework (2013 framework) published by theCommittee of Sponsoring Organizations of the Treadway Commission (2013 framework), known as COSO, to evaluate the effectiveness of our internalcontrol over financial reporting. Based on this assessment, management has concluded that our internal control over financial reporting was effective as ofDecember 31, 2018.BDO USA, LLP, an independent registered public accounting firm, has audited our consolidated financial statements included in this Annual Report onForm 10-K and has issued an attestation report, included herein, on the effectiveness of our internal control over financial reporting as of December 31, 2018.80  Report of Independent Registered Public Accounting FirmShareholders and Board of DirectorsMediciNova, Inc.La Jolla, CaliforniaOpinion on Internal Control over Financial Reporting We have audited MediciNova, Inc.’s (the “Company’s”) internal control over financial reporting as of December 31, 2018, based on criteria established inInternal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO criteria”).In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2018, based on theCOSO criteria.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidatedbalance sheets of the Company and subsidiaries as of December 31, 2018 and 2017, the related consolidated statements of operations and comprehensiveloss, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2018, and the related notes and our report datedFebruary 13, 2019 expressed an unqualified opinion thereon.Basis for OpinionThe Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness ofinternal control over financial reporting, included in the accompanying Item 9A, “Management’s Report on Internal Control over Financial Reporting”. Ourresponsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firmregistered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicablerules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audit of internal control over financial reporting in accordance with the standards of the PCAOB. Those standards require that we plan andperform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Ouraudit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing andevaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures aswe considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.Definition and Limitations of Internal Control over Financial ReportingA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal controlover financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are beingmade only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention ortimely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate.81  /s/ BDO USA, LLPSan Diego, CaliforniaFebruary 13, 2019 82  Item 9B. Other InformationNone. 83  PART IIIItem 10. Directors, Executive Officers and Corporate GovernanceThe information required by this item and not set forth below will be contained in the sections titled “Election of Directors,” “Section 16(a) BeneficialOwnership Reporting Compliance, “Corporate Governance,” “Meetings and Committees of the Board, and “Executive Officers” in our definitive proxystatement for our 2019 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the conclusion of our fiscal year ended December 31,2018 (the “Proxy Statement”) and is incorporated in this Annual Report on Form 10-K by reference.We have adopted a Code of Ethics for Senior Officers, or Code of Ethics, that applies to our Chief Executive Officer, President, Chief Financial Officerand key management employees (including other senior financial officers) who have been identified by our Board of Directors. We have also adopted a Codeof Business Conduct that applies to all of our officers, directors, employees, consultants and representatives. Each of the Code of Ethics and Code of BusinessConduct are available on our website at www.medicinova.com under the Corporate Governance section of our Investor Relations page. We will promptly poston our website (i) any waiver, if and when granted, to any provision of the Code of Ethics or Code of Business Conduct (for executive officers or directors)and (ii) any amendment to the Code of Ethics or Code of Business Conduct.Item 11. Executive CompensationThe information required by this item will be contained in the section titled “Executive Compensation” in our Proxy Statement and is incorporated inthis Annual Report on Form 10-K by reference.Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersCertain of the information required by this item will be contained in section titled “Security Ownership of Certain Beneficial Owners and Management”the Proxy Statement and is incorporated in this Annual Report on Form 10-K by reference.The following table provides information as of December 31, 2018 with respect to the shares of our common stock that may be issued under ourexisting equity compensation plans.Equity Compensation Plan Information Plan Category Number of Securitiesto be IssuedUpon Exercise ofOutstandingOptions and Rights Weighted AverageExercise Price ofOutstandingOptionsand Rights Number of SecuritiesRemainingAvailable for FutureIssuanceUnder EquityCompensation Plans Equity Compensation Plans Approved by Stockholders (1) 6,609,647 $4.61 1,686,470 Equity Compensation Plans Not Approved by Stockholders — — — Total 6,609,647 $4.61 1,686,470 (1)Consists of the Amended and Restated 2004 Stock Incentive Plan, the 2013 Equity Incentive Plan and the 2007 Employee Stock Purchase Plan, orESPP. Under the ESPP, the shares reserved automatically increase by a number equal to the lesser of: (i) 15,000 shares; (ii) 1% of the outstanding sharesof our common stock on the last day of the immediately preceding fiscal year; or (iii) such lesser amount as determined by the Board.84  Item 13. Certain Relationships and Related Transactions, and Director IndependenceThe information required by this item will be contained in the sections titled “Certain Relationships and Related Transactions” and “CorporateGovernance” in our Proxy Statement and is incorporated in this Annual Report on Form 10-K by reference.Item 14. Principal Accountant Fees and ServicesThe information required by this item will be contained in the section titled “Ratification of Appointment of Independent Registered PublicAccounting Firm” in our Proxy Statement and is incorporated in this Annual Report on Form 10-K by reference. 85  PART IVItem 15. Exhibits and Financial Statement Schedules(a) Documents filed as part of this report.1. Financial Statements. The following financial statements of MediciNova, Inc. and Reports of BDO USA, LLP, an independent registered publicaccounting firm, are included in this Annual Report on Form 10-K: PageReport of Independent Registered Public Accounting Firm 61Consolidated Balance Sheets 62Consolidated Statements of Operations and Comprehensive Loss 63Consolidated Statements of Stockholders’ Equity 64Consolidated Statements of Cash Flows 65Notes to Consolidated Financial Statements 66 2. Financial Statement Schedules. None.3. Exhibits. ExhibitNumber Description 3.1 Restated Certificate of Incorporation of the Registrant, as amended (incorporated by reference to Exhibit 3.1 of the Registrant’s QuarterlyReport on Form 10-Q filed August 9, 2012). 3.2 Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.4 of the Registrant’s Registration Statement on Form S-1 (File No. 333-119433) filed October 1, 2004). 4.1 Specimen of Common Stock Certificate (incorporated by reference to Exhibit 4.1 of the Registrant’s Annual Report on Form 10-K (File No.001-33185) filed February 15, 2007). 4.2 Amended and Restated Registration Rights Agreement, dated September 2, 2004, by and among the Registrant, its founders and the investorsnamed therein (incorporated by reference to Exhibit 4.2 of the Registrant’s Registration Statement on Form S-1 (File No. 333-119433) filedOctober 1, 2004). 4.3 Form of Warrant to Purchase Common Stock, dated May 14, 2013, issued to Samurai Investments San Diego LLC and Fountain Erika LLC(incorporated by reference to Exhibit 4.1 of the Registrant’s Current Report on Form 8-K filed May 10, 2013). 10.1* Amended and Restated 2004 Stock Incentive Plan of the Registrant (incorporated by reference to Exhibit 10.2 of the Registrant’s AnnualReport on Form 10-K filed March 29, 2012). 10.2* Form of Indemnity Agreement between the Registrant and its officers and directors (incorporated by reference to Exhibit 10.3 of theRegistrant’s Annual Report on Form 10-K filed March 28, 2013). 10.3† License Agreement, dated March 14, 2002, between the Registrant and Kyorin Pharmaceutical Co., Ltd. (incorporated by reference to Exhibit10.4 of the Registrant’s Registration Statement on Form S-1, as amended (File No. 333-119433), originally filed on October 1, 2004). 10.4† License Agreement, dated June 19, 2002, between the Registrant and Angiogene Pharmaceuticals, Ltd. (incorporated by reference to Exhibit10.5 of the Registrant’s Registration Statement on Form S-1, as amended (File No. 333-119433), originally filed on October 1, 2004). 10.5† Exclusive License Agreement, dated February 25, 2004, between the Registrant and Kissei Pharmaceutical Co., Ltd. (incorporated by referenceto Exhibit 10.7 of the Registrant’s Registration Statement on Form S-1, as amended (File No. 333-119433), originally filed on October 1, 2004).86  ExhibitNumber Description 10.6† License Agreement, dated April 27, 2004, between the Registrant and Mitsubishi Tanabe Pharma Corporation (incorporated by reference toExhibit 10.8 of the Registrant’s Registration Statement on Form S-1, as amended (File No. 333-119433), originally filed on October 1, 2004). 10.7† License Agreement, dated October 22, 2004, between the Registrant and Kyorin Pharmaceutical Co., Ltd., (incorporated by reference to Exhibit10.18 of the Registrant’s Registration Statement on Form S-1, as amended (File No. 333-119433), originally filed on October 1, 2004). 10.8† License Agreement, dated December 8, 2004, between the Registrant and Mitsubishi Tanabe Pharma Corporation (incorporated by reference toExhibit 10.21 of the Registrant’s Registration Statement on Form S-1, as amended (File No. 333-119433), originally filed on October 1, 2004). 10.9* Employment Agreement, dated September 1, 2006, between the Registrant and Masatsune Okajima (incorporated by reference to Exhibit 10.12of the Registrant’s Annual Report on Form 10-K (File No. 001-33185) filed February 15, 2007). 10.10† License Agreement, dated October 31, 2006, by and between the Registrant and Meiji Seika Kaisha, Ltd. (incorporated by reference to Exhibit10.1 of the Registrant’s Current Report on Form 8-K (File No. 000-51133) filed November 2, 2006). 10.11† License Agreement, dated October 31, 2006, by and between the Registrant and Meiji Seika Kaisha, Ltd. (incorporated by reference to Exhibit10.2 of the Registrant’s Current Report on Form 8-K (File No. 000-51133) filed November 2, 2006). 10.12* Executive Employment Agreement, dated April 1, 2007, between the Registrant and Yuichi Iwaki, M.D., Ph.D. (incorporated by reference toExhibit 10.1 of the Registrant’s Current Report on Form 8-K (File No. 001-33185) filed April 4, 2007). 10.13* 2007 Employee Stock Purchase Plan of the Registrant (incorporated by reference to Appendix A of the Registrant’s Definitive Proxy Statementon Schedule 14A (File No. 001-33185) filed March 13, 2007). 10.14† Development and Supply Agreement, dated as of March 26, 2009, between the Registrant and Hospira Worldwide, Inc. (incorporated byreference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed March 30, 2009). 10.15† Assignment Agreement, dated December 19, 2005, between Genzyme Corporation and Avigen, Inc. (incorporated by reference to Exhibit 10.58of Avigen, Inc.’s Annual Report on Form 10-K (File No. 000-28272) filed March 16, 2006). 10.16† Asset Purchase Agreement, dated December 17, 2008, between Baxter Healthcare Corporation, Baxter International Inc., and Baxter HealthcareS.A. and Avigen, Inc. (incorporated by reference to Exhibit 2.2 of Avigen, Inc.’s Annual Report on Form 10-K (File No. 000-28272) filedMarch 16, 2009). 10.17* Form of Amendment to Employment Agreement, dated December 31, 2011, between the Registrant and Yuichi Iwaki, M.D., Ph.D. (incorporatedby reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K (File No. 001-33185) filed January 4, 2011). 10.18† Joint Venture Agreement, dated June 29, 2011, among the Registrant, Zhejiang Medicine Co., Ltd. and Beijing Make-Friend MedicineTechnology Co., Ltd. (incorporated by reference to Exhibit 10.44 of the Registrant’s Current Report on Form 10-Q (File No. 001-33185) filedAugust 15, 2011). 10.19 Sublease, by and between MediciNova, Inc. and Cardinal Health 127 Inc., dated August 31, 2017 (incorporated by reference to Exhibit 10.1 toCurrent Report on Form 8-K filed with the SEC on September 7, 2017). 10.20 Securities Purchase Agreement, dated May 9, 2013, between the Registrant and Samurai Investments San Diego LLC and Fountain Erika LLC(incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed May 10, 2013).87  ExhibitNumber Description 10.21* 2013 Equity Incentive Plan of the Registrant (incorporated by reference to Exhibit 10.23 of the Registrant’s Annual Report on Form 10-K filedMarch 27, 2014). 10.22* Amended and Restated 2013 Equity Incentive Plan of the Registrant.* (incorporated by reference to Exhibit 10.1 of the Registrant’s QuarterlyReport on Form 10-Q filed July 26, 2017). 10.23* Form of Notice of Stock Option Grant and Stock Option Agreement for awards pursuant to the 2013 Equity Incentive Plan (incorporated byreference to Exhibit 10.3 of the Registrant’s Quarterly Report on Form 10-Q filed November 7, 2013). 10.24* Severance Protection Agreement, dated July 14, 2014, by and between MediciNova, Inc. and Dr. Yuichi Iwaki (incorporated by reference toExhibit 10.2 of the Registrant’s Quarterly Report on Form 10-Q filed August 13, 2014). 10.25* Severance Protection Agreement, dated July 14, 2014, by and between MediciNova, Inc. and Masatsune Okajima (incorporated by reference toExhibit 10.3 of the Registrant’s Quarterly Report on Form 10-Q filed August 13, 2014). 10.26* Severance Protection Agreement, dated July 14, 2014, by and between MediciNova, Inc. and Dr. Kazuko Matsuda (incorporated by reference toExhibit 10.4 of the Registrant’s Quarterly Report on Form 10-Q filed August 13, 2014). 10.27* Severance Protection Agreement, dated July 14, 2014, by and between MediciNova, Inc. and Geoffrey O’Brien (incorporated by reference toExhibit 10.5 of the Registrant’s Quarterly Report on Form 10-Q filed August 13, 2014). 10.28 At-the-Market Issuance Sales Agreement, dated May 22, 2015, by and between MediciNova, Inc. and MLV & Co. LLC (incorporated byreference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed May 22, 2015). 10.29 Services Agreement, effective March 31, 2016, by and between MediciNova, Inc. and Signature Analytics San Diego, LLC (incorporated byreference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed March 31, 2016). 10.30 Amendment No. 1 to At-the Market Issuance Sales Agreement, dated September 16, 2016, by and among MediciNova, Inc., MLV & Co. LLCand FBR Capital Markets & Co. (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed September16, 2016). 23.1 Consent of Independent Registered Public Accounting Firm. 24.1 Powers of Attorney (see signature page). 31.1 Certification of the Principal Executive Officer pursuant to Rules 13a-14 and 15d-14 promulgated under the Securities Act of 1933. 31.2 Certification of the Principal Financial Officer pursuant to Rules 13a-14 and 15d-14 promulgated under the Securities Act of 1933. 32.1 Certification of the Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-OxleyAct of 2002. 32.2 Certification of the Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-OxleyAct of 2002. 88  ExhibitNumber Description 101 The following financial statements from MediciNova, Inc. on Form 10-K as of and for the year ended December 31, 2018 formatted inExtensible Business Reporting Language (XBRL): (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Operations andComprehensive Loss; (iii) Consolidated Statements of Stockholders’ Equity; (iv) Consolidated Statements of Cash Flows; and (v) the notes tothe consolidated financial statements. †Portions of this Exhibit have been omitted pursuant to a grant of confidential treatment by the SEC.*Indicates management contract or compensatory plan. 89  SIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this AnnualReport on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized. MEDICINOVA, INC. A Delaware Corporation Date: February 13, 2019 By: /s/ Yuichi Iwaki Yuichi Iwaki, M.D., Ph.D. President & Chief Executive OfficerPOWER OF ATTORNEYKNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Yuichi Iwaki his true and lawfulattorney-in-fact, with full power of substitution, for him in any and all capacities, to sign any amendments to this Annual Report on Form 10-K and to file thesame, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming allthat said attorney-in-fact or his substitute or substitutes may do or cause to be done by virtue hereof.Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed below by the following personson behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date /s/ Yuichi IwakiYuichi Iwaki, M.D., Ph.D. Director, President and Chief Executive Officer(Principal executive officer) February 13, 2019 /s/ Carla ReyesCarla Reyes Chief Financial Officer(Principal financial and accounting officer) February 13, 2019 /s/ Jeff HimawanJeff Himawan, Ph.D. Chairman of the Board of Directors February 13, 2019 /s/ Yoshio IshizakaYoshio Ishizaka Director February 13, 2019 /s/ Yutaka KobayashiYutaka Kobayashi Director February 13, 2019 /s/ Hideki NagaoHideki Nagao Director February 13, 2019 90 Exhibit 23.1Consent of Independent Registered Public Accounting FirmMediciNova, Inc.La Jolla, CaliforniaWe hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (Nos. 333-220593, 333-214830 and 333-208274) and FormS-8 (Nos. 333-219491, 333-190490, 333-151808, 333-141694 and 333-122665) of MediciNova, Inc. of our reports dated February 13, 2019, relating to theconsolidated financial statements and the effectiveness of MediciNova, Inc.’s internal control over financial reporting, which appear in this Form 10-K./s/ BDO USA, LLPSan Diego, CaliforniaFebruary 13, 2019 Exhibit 31.1CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICERPURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002I, Yuichi Iwaki, certify that:1. I have reviewed this Annual Report on Form 10-K for the fiscal year ended December 31, 2018 of MediciNova, Inc.;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financialcondition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for theregistrant and have:a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,particularly during the period in which this report is being prepared;b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposesin accordance with generally accepted accounting principles;c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; andd) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, theregistrant’s internal control over financial reporting; and5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; andb) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controlover financial reporting. /s/ Yuichi IwakiYuichi Iwaki, M.D., Ph.D.President and Chief Executive Officer(Principal executive officer)Date: February 13, 2019 Exhibit 31.2 CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICERPURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002I, Carla Reyes, certify that:1. I have reviewed this Annual Report on Form 10-K for the fiscal year ended December 31, 2018 of MediciNova, Inc.;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financialcondition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for theregistrant and have:a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,particularly during the period in which this report is being prepared;b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposesin accordance with generally accepted accounting principles;c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; andd) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, theregistrant’s internal control over financial reporting; and5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; andb) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controlover financial reporting. /s/ Carla ReyesCarla ReyesChief Financial Officer(Principal financial officer)Date: February 13, 2019 Exhibit 32.1CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICERPursuant to Section 906 of the Sarbanes-Oxley Act of 2002(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)In connection with the Annual Report on Form 10-K of MediciNova, Inc. (the “Company”) for the period ended December 31, 2018, as filed with theSecurities and Exchange Commission on the date hereof (the “Report”), I, Yuichi Iwaki, M.D., Ph.D., as President and Chief Executive Officer of theCompany, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: February 13, 2019 /s/ Yuichi Iwaki Yuichi Iwaki, M.D., Ph.D. President and Chief Executive Officer (Principal executive officer)The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. § 1350, and is not being filed for purposes ofSection 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether madebefore or after the date hereof, regardless of any general incorporation language in such filing. A signed original of this written statement required bySection 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staffupon request. Exhibit 32.2 CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICERPursuant to Section 906 of the Sarbanes-Oxley Act of 2002(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)In connection with the Annual Report on Form 10-K of MediciNova, Inc. (the “Company”) for the period ended December 31, 2018, as filed with theSecurities and Exchange Commission on the date hereof (the “Report”),I, Carla Reyes, as Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of theSarbanes-Oxley Act of 2002, that to my knowledge:1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: February 13, 2019 /s/ Carla Reyes Carla Reyes Chief Financial Officer (Principal financial officer)The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. § 1350, and is not being filed for purposes ofSection 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether madebefore or after the date hereof, regardless of any general incorporation language in such filing. A signed original of this written statement required bySection 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staffupon request. 

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