Onconova Therapeutics

ONCONOVA THERAPEUTICS, INC.

FORM 10-K
(Annual Report)

Filed 03/28/16 for the Period Ending 12/31/15

Address

Telephone
CIK

375 PHEASANT RUN
NEWTOWN, PA 18940
267-759-3681
0001130598

Symbol ONTX

SIC Code
Fiscal Year

2834 - Pharmaceutical Preparations
12/31

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Table
of
Content
Financial
Statement
Table
of
ContentsUNITED
STATES
SECURITIES
AND
EXCHANGE
COMMISSION
Washington,
D.C.
20549Form
10-KCommission
file
number
001-36020Onconova
Therapeutics,
Inc.
(Exact
name
of
registrant
as
specified
in
its
charter)Delaware
(State
or
other
jurisdiction
of
incorporation
or
organization)
22-3627252
(I.R.S.
Employer
Identification
No.)375
Pheasant
Run,
Newtown,
PA
(Address
of
principal
executiveoffices)
18940
(Zip
Code)(267)
759-3680
(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
$.01
pershare
The
NASDAQ
Stock
Market
LLC








Securities
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

o




No

ý








Indicate
by
check
mark
if
the
registrant
is
not
required
to
file
reports
pursuant
to
Section
13
or
Section
15(d)
of
the
Act.
Yes

o




No

ý








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
1934during
the
preceding
12
months
(or
for
such
shorter
period
that
the
registrant
was
required
to
file
such
reports),
and
(2)
has
been
subject
to
such
filing
requirementsfor
the
past
90
days.
Yes

ý




No

o








Indicate
by
check
mark
whether
the
registrant
has
submitted
electronically
and
posted
on
its
corporate
Web
site,
if
any,
every
Interactive
Data
File
required
tobe
submitted
and
posted
pursuant
to
Rule
405
of
Regulation
S-T
(§232.405
of
this
chapter)
during
the
preceding
12
months
(or
for
such
shorter
period
that
theregistrant
was
required
to
submit
and
post
such
files).
Yes

ý




No

o








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
bestof
registrant'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.

o








Indicate
by
check
mark
whether
the
registrant
is
a
large
accelerated
filer,
an
accelerated
filer,
a
non-accelerated
filer,
or
a
smaller
reporting
company.
See
thedefinitions
of
"large
accelerated
filer,"
"accelerated
filer"
and
"smaller
reporting
company"
in
Rule
12b-2
of
the
Exchange
Act.(Mark
one)

ý
ANNUAL
REPORT
PURSUANT
TO
SECTION
13
OR
15(d)
OF
THE
SECURITIES
EXCHANGE
ACT
OF
1934For
the
fiscal
year
ended
December
31,
2015Oro
TRANSITION
REPORT
PURSUANT
TO
SECTION
13
OR
15(d)
OF
THE
SECURITIES
EXCHANGE
ACT
OF
1934For
the
transition
period
from















to
























Indicate
by
check
mark
whether
the
registrant
is
a
shell
company
(as
defined
in
Rule12b-2
of
the
Act).
Yes

o




No

ý








As
of
June
30,
2015,
the
last
business
day
of
the
registrant's
most
recently
completed
second
fiscal
quarter,
the
aggregate
market
value
of
the
registrant'svoting
stock
held
by
non-affiliates
was
approximately
$30.1
million,
based
on
the
last
reported
sale
price
of
the
registrant's
common
stock
on
the
NASDAQ
GlobalSelect
Market.








There
were
27,401,035
shares
of
Common
Stock
outstanding
as
of
March
15,
2016.DOCUMENTS
INCORPORATED
BY
REFERENCE:
[NONE]


Large
accelerated
filer

o
Accelerated
filer

o
Non-accelerated
filer

o
(Do
not
check
if
a
smaller
reporting
company)
Smaller
reporting
company

ýTable
of
ContentsONCONOVA
THERAPEUTICS,
INC.
INDEX
TO
REPORT
ON
FORM
10-K
i





Page

PART
I



Item
1:
Business

1
Item
1A:
Risk
Factors

26
Item
1B:
Unresolved
Staff
Comments

60
Item
2:
Properties

60
Item
3:
Legal
Proceedings

60
Item
4:
Mine
Safety
Disclosures

60

PART
II



Item
5:
Market
for
Registrant's
Common
Equity,
Related
Stockholder
Matters
and
Issuer
Purchases
of
EquitySecurities

61
Item
6:
Selected
Financial
Data

61
Item
7:
Management's
Discussion
and
Analysis
of
Financial
Condition
and
Results
of
Operations

62
Item
7A:
Quantitative
and
Qualitative
Disclosures
About
Market
Risk

77
Item
8:
Financial
Statements
and
Supplementary
Data

77
Item
9:
Changes
in
and
Disagreements
With
Accountants
on
Accounting
and
Financial
Disclosure

77
Item
9A:
Controls
and
Procedures

77
Item
9B:
Other
Information

78

PART
III



Item
10:
Directors,
Executive
Officers
and
Corporate
Governance

79
Item
11:
Executive
Compensation

88
Item
12:
Security
Ownership
of
Certain
Beneficial
Owners
and
Management
and
Related
Stockholder
Matters

95
Item
13:
Certain
Relationships
and
Related
Transactions,
and
Director
Independence

98
Item
14:
Principal
Accounting
Fees
and
Services

99

PART
IV



Item
15:
Exhibits,
Financial
Statement
Schedules

99
Table
of
ContentsSPECIAL
NOTE
REGARDING
FORWARD-LOOKING
STATEMENTS
AND
INDUSTRY
DATA








This
Annual
Report
on
Form
10-K
("Annual
Report")
includes
forward-looking
statements.
We
may,
in
some
cases,
use
terms
such
as
"believes,"
"estimates,""anticipates,"
"expects,"
"plans,"
"intends,"
"may,"
"could,"
"might,"
"will,"
"should,"
"approximately"
or
other
words
that
convey
uncertainty
of
future
events
oroutcomes
to
identify
these
forward-looking
statements.
Forward-looking
statements
appear
in
a
number
of
places
throughout
this
Annual
Report
and
includestatements
regarding
our
intentions,
beliefs,
projections,
outlook,
analyses
or
current
expectations
concerning,
among
other
things,
our
ongoing
and
plannedpreclinical
development
and
clinical
trials,
the
timing
of
and
our
ability
to
make
regulatory
filings
and
obtain
and
maintain
regulatory
approvals
for
our
productcandidates,
protection
of
our
intellectual
property
portfolio,
the
degree
of
clinical
utility
of
our
products,
particularly
in
specific
patient
populations,
our
ability
todevelop
commercial
and
manufacturing
functions,
expectations
regarding
clinical
trial
data,
our
results
of
operations,
cash
needs,
financial
condition,
liquidity,prospects,
growth
and
strategies,
the
industry
in
which
we
operate
and
the
trends
that
may
affect
the
industry
or
us.







By
their
nature,
forward-looking
statements
involve
risks
and
uncertainties
because
they
relate
to
events,
competitive
dynamics
and
industry
change,
anddepend
on
the
economic
circumstances
that
may
or
may
not
occur
in
the
future
or
may
occur
on
longer
or
shorter
timelines
than
anticipated.
Although
we
believethat
we
have
a
reasonable
basis
for
each
forward-looking
statement
contained
in
this
Annual
Report,
we
caution
you
that
forward-looking
statements
are
notguarantees
of
future
performance
and
that
our
actual
results
of
operations,
financial
condition
and
liquidity,
and
the
development
of
the
industry
in
which
weoperate
may
differ
materially
from
the
forward-looking
statements
contained
in
this
Annual
Report.
In
addition,
even
if
our
results
of
operations,
financialcondition
and
liquidity,
and
events
in
the
industry
in
which
we
operate
are
consistent
with
the
forward-looking
statements
contained
in
this
Annual
Report,
theymay
not
be
predictive
of
results
or
developments
in
future
periods.







Actual
results
could
differ
materially
from
our
forward-looking
statements
due
to
a
number
of
factors,
including
risks
related
to:•our
need
for
additional
financing
for
our
INSPIRE
trial
and
other
operations,
and
our
ability
to
obtain
sufficient
funds
on
acceptable
terms
whenneeded,
and
our
plans
and
future
needs
to
scale
back
operations
if
adequate
financing
is
not
obtained;
•our
ability
to
continue
as
a
going
concern;
•our
estimates
regarding
expenses,
future
revenues,
capital
requirements
and
needs
for
additional
financing;
•the
success
and
timing
of
our
preclinical
studies
and
clinical
trials,
including
site
initiation
and
patient
enrollment,
and
regulatory
approval
ofprotocols
for
future
clinical
trials;
•our
ability
to
enter
into,
maintain
and
perform
collaboration
agreements
with
other
pharmaceutical
companies,,
for
funding
and
commercializationof
our
clinical
drug
candidates
or
preclinical
compounds,
and
our
ability
to
achieve
certain
milestones
under
those
agreements;
•the
difficulties
in
obtaining
and
maintaining
regulatory
approval
of
our
product
candidates,
and
the
labeling
under
any
approval
we
may
obtain;
•our
plans
and
ability
to
develop,
manufacture
and
commercialize
our
product
candidates;
•our
failure
to
recruit
or
retain
key
scientific
or
management
personnel
or
to
retain
our
executive
officers;
•the
size
and
growth
of
the
potential
markets
for
our
product
candidates
and
our
ability
to
serve
those
markets;iiTable
of
Contents•regulatory
developments
in
the
United
States
and
foreign
countries;
•the
rate
and
degree
of
market
acceptance
of
any
of
our
product
candidates;
•obtaining
and
maintaining
intellectual
property
protection
for
our
product
candidates
and
our
proprietary
technology;
•the
successful
development
of
our
commercialization
capabilities,
including
sales
and
marketing
capabilities;
•recently
enacted
and
future
legislation
and
regulation
regarding
the
healthcare
system;
•the
success
of
competing
therapies
and
products
that
are
or
become
available;
•our
ability
to
maintain
the
listing
of
our
common
stock
on
a
national
securities
exchange;
•the
potential
for
third
party
disputes
and
litigation;
and
•the
performance
of
third
parties,
including
contract
research
organizations,
or
CROs
and
third-party
manufacturers.







Any
forward-looking
statements
that
we
make
in
this
Annual
Report
speak
only
as
of
the
date
of
such
statement,
and
we
undertake
no
obligation
to
updatesuch
statements
to
reflect
events
or
circumstances
after
the
date
of
this
Annual
Report
or
to
reflect
the
occurrence
of
unanticipated
events.
Comparisons
of
resultsfor
current
and
any
prior
periods
are
not
intended
to
express
any
future
trends
or
indications
of
future
performance,
unless
expressed
as
such,
and
should
only
beviewed
as
historical
data.







You
should
also
read
carefully
the
factors
described
in
the
"Risk
Factors"
section
of
this
Annual
Report
and
elsewhere
to
better
understand
the
risks
anduncertainties
inherent
in
our
business
and
underlying
any
forward-looking
statements.
As
a
result
of
these
factors,
actual
results
could
differ
materially
andadversely
from
those
anticipated
or
implied
in
the
forward-looking
statements
in
this
report
and
you
should
not
place
undue
reliance
on
any
forward-lookingstatements.iiiTable
of
ContentsPART
I
ITEM
1.




BUSINESS
Overview








Onconova
Therapeutics,
Inc.,
sometimes
referred
to
as
"we"
or
the
"Company,"
is
a
clinical-stage
biopharmaceutical
company
focused
on
discovering
anddeveloping
novel
small
molecule
drug
candidates
to
treat
cancer.
Using
our
proprietary
chemistry
platform,
we
have
created
an
extensive
library
of
targeted
anti-cancer
agents
designed
to
work
against
cellular
pathways
important
to
cancer
cells.
We
believe
that
the
drug
candidates
in
our
pipeline
have
the
potential
to
beefficacious
in
a
variety
of
cancers.
We
have
one
actively
enrolling
Phase
3
clinical-stage
product
candidate
and
two
other
clinical-stage
product
candidates
(one
ofwhich
is
being
developed
for
treatment
of
acute
radiation
syndromes)
and
several
preclinical
programs.
Substantially
all
of
our
current
effort
is
focused
on
our
leadproduct
candidate,
rigosertib.
Rigosertib
is
being
tested
in
both
intravenous
and
oral
formulations
as
a
single
agent,
and
the
oral
formulation
is
also
being
tested
incombination
with
azacitidine,
in
clinical
trials
for
patients
with
myelodysplastic
syndromes,
or
MDS,
and
related
cancers.







In
December
2015,
we
enrolled
the
first
patient
in
a
randomized
controlled
Phase
3
clinical
trial
of
rigosertib
IV
in
a
population
of
patients
with
higher-riskMDS
after
failure
of
hypomethylating
agent,
or
HMA,
therapy.
The
trial,
which
we
refer
to
as
INSPIRE,
is
expected
to
enroll
approximately
225
patients
at
morethan
100
sites
globally.
The
primary
endpoint
of
INSPIRE
is
overall
survival,
and
an
interim
analysis
is
anticipated.
We
anticipate
reporting
topline
data
from
theINSPIRE
trial
in
2018.







During
2015,
we
sold
shares
of
common
stock
for
net
proceeds
of
$7.5
million
and
at
December
31,
2015,
we
had
approximately
$19.8
million
in
cash
andcash
equivalents.
In
January
2016,
we
completed
a
sale
of
common
stock
and
warrants
for
net
proceeds
of
approximately
$1.6
million.
During
2015
and
into
2016,we
have
taken
significant
actions
to
conserve
cash,
including
reduction
in
personnel
and
expenditures.
While
we
will
continue
to
take
cash
conservation
actionswhere
appropriate,
our
costs
will
increase
in
subsequent
quarters
as
more
INSPIRE
sites
open
and
more
patients
enroll
in
the
INSPIRE
trial.
We
believe
that
ourcash
and
cash
equivalents,
together
with
anticipated
contractual
cost-sharing
payments
from
Baxalta
for
a
portion
of
the
INSPIRE
trial
costs,
will
be
sufficient
tofund
our
ongoing
trials
and
operations
into
the
first
quarter
of
2017,
although
there
is
substantial
doubt
about
our
ability
to
continue
as
a
going
concern.







We
are
exploring
various
sources
of
funding
for
continued
development
of
rigosertib
in
MDS
and
acute
myelogenous
leukemia,
or
AML.
If
we
raiseadditional
funds
through
strategic
collaborations
and
alliances
or
licensing
arrangements
with
third
parties,
which
may
include
existing
collaboration
partners,
wemay
have
to
relinquish
valuable
rights
to
our
technologies
or
product
candidates,
including
rigosertib,
or
grant
licenses
on
terms
that
are
not
favorable
to
us.
Therecan
be
no
assurance,
however,
that
the
Company
will
be
successful
in
obtaining
such
financing
at
the
level
needed
to
complete
its
research
and
developmentprograms,
on
terms
acceptable
to
the
Company,
or
at
all,
or
that
the
Company
will
obtain
approvals
necessary
to
market
its
products
or
achieve
profitability
orsustainable,
positive
cash
flow.
If
we
are
unable
to
successfully
raise
sufficient
additional
capital,
through
future
financings
or
through
strategic
and
collaborativearrangements,
we
will
not
have
sufficient
cash
to
fund
our
planned
business
operations
and
due
to
our
ongoing
losses
and
our
accumulated
deficit
in
combinationwith
these
factors,
the
opinion
of
our
independent
registered
public
accounting
firm
on
our
audited
consolidated
financial
statements
for
our
fiscal
year
endedDecember
31,
2015
contains
an
explanatory
paragraph
regarding
substantial
doubt
about
our
ability
to
continue
as
a
going
concern.Rigosertib







Rigosertib
is
a
small
molecule
that
inhibits
cellular
signaling
by
acting
as
a
Ras
mimetic.
This
is
believed
to
be
mediated
by
the
binding
of
rigosertib
to
theRas-binding
domain,
or
RBD,
found
in1Table
of
Contentsmany
Ras
effector
proteins,
including
the
Raf
and
PI3K
kinases.
This
mechanism
of
action
provides
a
new
approach
to
block
the
interactions
between
Ras
and
itstargets
containing
RBD
sites.
Rigosertib
is
being
tested
as
a
single
agent
and
in
combination
with
azacitidine,
in
clinical
trials
of
patients
with
MDS
and
relatedcancers.
We
have
enrolled
more
than
1,200
patients
in
rigosertib
clinical
trials.
We
are
a
party
to
a
license
and
development
agreement
with
Baxalta,
which
isscheduled
to
terminate
August
30,
2016.
Pursuant
to
that
agreement,
Baxalta
was
granted
certain
rights
to
commercialize
rigosertib
in
Europe,
which
rights
willrevert
to
us
upon
termination.
We
are
also
party
to
a
collaboration
agreement
with
SymBio,
which
grants
SymBio
certain
rights
to
commercialize
rigosertib
inJapan
and
Korea.
We
have
retained
development
and
commercialization
rights
to
rigosertib
in
the
rest
of
the
world,
including
in
the
United
States,
although
wecould
consider
licensing
commercialization
rights
to
other
territories
as
we
seek
additional
funding.Myelodysplastic Syndromes







MDS
is
a
group
of
blood
disorders
that
affect
bone
marrow
function.
MDS
typically
affects
older
patients.
In
MDS,
the
bone
marrow
cells
become
dysplastic,or
defective.
Therefore
blood
cells
do
not
develop
normally,
such
that
too
few
healthy
blood
cells
are
released
into
the
blood
stream,
leading
to
low
blood
cellcounts,
or
cytopenias.
Thus,
many
patients
with
MDS
require
frequent
blood
transfusions.
In
most
cases,
the
disease
worsens
and
the
patient
develops
progressivebone
marrow
failure.
In
advanced
stages
of
the
disease,
immature
blood
cells,
or
blasts,
leave
the
bone
marrow
and
enter
the
blood
stream,
leading
to
AML,
whichoccurs
in
approximately
one-third
of
patients
with
MDS.







Based
on
Surveillance
Epidemiology
and
End
Results
(SEER)
data
from
the
National
Cancer
Institute,
a
marketing
analytics
firm
has
estimated
the
2016incidence
of
MDS
will
be
approximately
17,390
cases
and
the
prevalence
of
MDS
at
approximately
61,690
cases
in
the
United
States.
We
believe
that
the
actualincidence
numbers
may
be
higher,
due
to
underdiagnosing
and
underreporting
of
new
cases
of
MDS
to
centralized
cancer
registries,
and
that
the
incidence
of
MDSin
the
United
States
is
likely
to
increase,
due
to
an
aging
population,
improved
disease
awareness
and
diagnostic
precision,
and
an
increase
in
the
number
of
casesof
secondary,
often
chemotherapy-induced,
MDS.







MDS
is
typically
diagnosed
using
routine
blood
tests
or
by
observing
combination
of
certain
symptoms,
such
as
shortness
of
breath,
weakness,
easy
bruisingor
bleeding,
or
fever
with
frequent
infections.
A
diagnosis
of
MDS
is
confirmed
by
evaluating
a
bone
marrow
biopsy/aspirate
showing
dysplastic
changes,
and,
inmore
advanced
cases,
the
presence
of
excess
blasts,
meaning
that
blasts
account
for
more
than
5%
of
the
total
number
of
nucleated
cells
in
the
bone
marrow.Several
classification
systems
have
been
developed
to
gauge
the
severity
of
disease
and
help
determine
prognosis
and
treatment
strategy.
Two
standardclassification
systems
can
be
used,
the
French-American-British
morphological
classification
system,
or
the
FAB
system,
as
modified
by
the
World
HealthOrganization,
or
WHO,
and
the
recently
revised
International
Prognostic
Scoring
System,
or
IPSS-R,
to
estimate
anticipated
survival
for
patients
with
MDS
basedon
marrow
function
and
marrow
cytogenetics.
IPSS-R
ranks
the
severity
of
chromosome
abnormalities,
number
of
cytopenias,
and
percentage
of
bone
marrowblasts
observed
at
diagnosis
to
calculate
a
five-level
risk
score:
Very
Low,
Low,
Intermediate,
High
and
Very
High.
MDS
patients
are
generally
classified
usingIPSS-R
in
order
to
assess
the
risk
of
dying
or
having
their
disease
progress
to
AML.Treating Myelodysplastic Syndromes







We
believe
that
most
higher-risk
and
some
lower-risk
MDS
patients
in
the
United
States
are
treated
with
azacitidine
or
decitabine,
the
two
approved
HMAsfor
treatment
of
MDS.
A
provider
of
information
services
and
technology
for
the
healthcare
industry
estimates
that
in
the
year
ended
June
2012,
approximately12,500
MDS
patients
in
the
United
States
received
treatment
with
HMAs.2Table
of
Contents







A
significant
number
of
higher-risk
MDS
patients
fail
or
cannot
tolerate
treatment
with
azacitidine
or
decitabine,
which
represent
the
current
standard
of
carefor
higher-risk
MDS
patients,
and
almost
all
patients
who
initially
respond
to
therapy
eventually
progress.
Median
survival
time
of
MDS
patients
who
have
failedHMAs
is
less
than
six
months.
Accordingly,
we
believe
that
a
new
therapy
that
would
extend
survival
in
these
patients
would
represent
a
major
contribution
in
thetreatment
of
MDS.







Allogeneic
peripheral
blood
stem
cell
or
bone
marrow
transplantation
is
a
potentially
curative
therapy
for
MDS.
However,
since
most
patients
with
MDS
areelderly
and
therefore
ineligible
for
transplantation
due
to
the
arduous
nature
of
the
procedure,
this
option
is
generally
considered
only
for
the
small
proportion
ofyounger
MDS
patients.







HMAs
are
believed
to
inhibit
the
methylation
of
DNA.
Methylation
is
a
biochemical
process
involving
the
addition
of
a
methyl
group
to
DNA
and
plays
animportant
role
in
gene
expression
during
cell
division
and
differentiation.
Hypomethylation
may
also
restore
normal
function
to
genes
that
are
critical
fordifferentiation
and
proliferation.
By
contrast,
rigosertib
works
by
blocking
multiple
oncogenic
pathways
through
a
Ras
mimetic
mechanism.
Because
rigosertib
hasa
mechanism
of
action
that
is
different
from
HMAs,
it
may
be
active
in
patients
who
have
failed
treatment
with
those
drugs.
Furthermore,
rigosertib's
distinctmechanism
of
action
has
been
shown
to
combine
well
with
approved
HMAs
and
preclinical
studies
testing
the
combination
of
rigosertib
with
azacitidine
havedemonstrated
synergy
between
the
two
agents.
Based
on
these
studies
and
our
current
understanding
of
the
mechanism
of
action
of
rigosertib,
we
believe
thatrigosertib
has
the
potential
to
be
developed
in
combination
with
azacitidine
for
front-line
or
second
line
MDS
patients
and
for
patients
with
AML
who
are
notcandidates
for
standard
induction
chemotherapy;
or
second-line
AML
who
have
failed
induction
chemotherapy.







Lower-risk
MDS
patients
are
those
categorized
as
Very
Low,
Low
or
Intermediate
risk
by
the
IPSS-R
scoring
system,
with
transfusion-dependent
anemia.The
subset
of
del(5q)
cytogenetic
abnormality
patients
are
generally
treated
with
lenalidomide
(Revlimid®).
For
all
other
lower-risk
MDS
patients,
supportive
careemploying
blood
products,
such
as
red
blood
cell
and
platelet
transfusions,
and
erythroid
stimulating
agents,
is
the
mainstay
of
therapy.
Frequent
transfusionsintroduce
many
risks,
including
iron
overload,
blood
borne
infections
and
immune-related
reactions.
We
believe
that
a
therapeutic
agent
that
could
lower
oreliminate
the
need
for
transfusions
over
an
extended
period
of
time
would
fulfill
a
significant
unmet
medical
need
for
this
patient
population.Rigosertib IV for higher-risk MDS







In
early
2014,
we
announced
topline
survival
results
from
our
"ONTIME"
trial,
a
multi-center
Phase
3
clinical
trial
of
rigosertib
IV
as
a
single
agent.
TheONTIME
trial
did
not
meet
its
primary
endpoint
in
the
intent-to-treat
population,
although
improvements
in
median
overall
survival
were
observed
in
various
pre-specified
and
exploratory
subgroups
of
higher-risk
MDS
patients.







During
2014
and
2015,
we
held
meetings
with
the
U.S.
Food
and
Drug
Administration,
or
FDA,
European
Medicines
Agency,
or
EMA,
and
several
Europeannational
regulatory
authorities
to
discuss
and
seek
guidance
on
a
path
for
approval
of
rigosertib
IV
in
higher-risk
MDS
patients
whose
disease
had
failed
HMAtherapy.
After
discussions
with
the
FDA
and
EMA,
we
have
refined
the
patient
eligibility
criteria
in
the
new
trial
by
defining
a
more
homogenous
patientpopulation.
After
regulatory
feedback,
input
from
key
opinion
leaders
in
the
U.S.
and
Europe
and
based
on
learnings
from
the
ONTIME
study,
we
designed
a
newrandomized
controlled
Phase
3
trial,
referred
to
as
INSPIRE,
with
overall
survival
as
a
primary
endpoint.
The
INSPIRE
trial
is
enrolling
higher-risk
MDS
patientsunder
80
years
of
age
who
have
progressed
on,
or
failed
to
respond
to,
previous
treatment
with
HMAs
within
the
first
nine
months
after
initiation
of
HMA
therapy,and
had
their
last
dose
of
HMA
within
six
months
prior
to
enrollment
in
the
trial.
The
primary
endpoint
of
this
study
is
overall
survival,
and
an
interim
analysis
isanticipated.
This
randomized
trial
of
approximately
225
patients
is
expected
to
be3Table
of
Contentsconducted
at
more
than
100
sites
globally.
In
August
2015,
we
submitted
an
updated
investigational
new
drug
application,
or
IND,
to
the
FDA,
and
in
August
2015we
submitted
Clinical
Trial
Applications,
or
CTAs,
with
the
United
Kingdom,
German
and
Austrian
regulatory
authorities
for
IV
rigosertib
as
a
treatment
forhigher-risk
MDS
after
failure
of
HMA
therapy.
The
first
CTA
has
been
cleared
by
the
Medicines
and
Healthcare
products
Regulatory
Agency.
The
first
patient
inthe
INSPIRE
trial
was
enrolled
at
the
MD
Anderson
Cancer
Center
in
December
2015
and,
as
of
March
22,
2016,
fourteen
clinical
sites
are
open
and
recruitingpatients.
The
first
patient
in
Europe
was
enrolled
on
March
18,
2016.Safety and Tolerability of rigosertib IV in MDS and other hematologic malignancies







Rigosertib
IV
monotherapy
has
been
evaluated
in
several
Phase
1,
2
and
3
studies
in
MDS
and
other
hematologic
malignancies.
Three
of
the
Phase
1
and
2studies
are
completed
and
clinical
study
reports
(CSRs)
are
available.
The
three
other
studies
have
not
yet
completed;
thus
data
are
subject
to
change.
The
mostfrequent
reason
for
study
discontinuation
(48.0%)
was
progressive
disease
(PD)
based
on
2006
International
Working
Group
(IWG)
criteria
(44.9%)
orsymptomatic
deterioration
(3.1%).
The
occurrence
of
adverse
events
(AEs)
led
to
withdrawal
of
21.2%
of
patients.
Withdrawal
was
at
patient's
request
in
15.4%
ofthe
cases.
A
total
of
109
patients
(24.4%)
died
due
to
TEAEs.
Only
four
of
the
TEAEs
leading
to
death
were
considered
related
to
rigosertib:
acute
renal
failure,renal
failure,
septic
shock,
and
sepsis.
Using
the
Medical
Dictionary
for
Regulatory
Activities
(MedDRA)
terminology,
the
most
frequently
reported
drug-relatedTEAEs
were
in
system
organ
class
(SOC)
categories
of
gastrointestinal
(GI)
disorders
(28.2%)
and
general
disorders
and
administration
site
conditions
(21.0%).Individual
TEAEs
reported
by
at
least
5%
of
patients
across
SOC
categories
included,
by
decreasing
order
of
frequency,
nausea
(14.8%),
fatigue
(13.9%),diarrhoea
(11.2%),
constipation
(8.5%),
and
decreased
appetite
(5.8%).
The
most
frequently
reported
³
Grade
3
drug-related
TEAEs
were
in
the
SOC
categories
ofblood
and
lymphatic
system
disorders
(8.3%)
and
Investigations
(6.5%).
Individual
TEAEs
reported
by
at
least
1%
of
patients
across
SOC
categories
were
anemia(4.0%);
neutrophil
count
decreased
(3.1%);
platelet
count
decreased
(2.9%
each);
neutropenia
and
thrombocytopenia
(2.2%
each);
hyponatraemia
(2.0%);
whiteblood
cell
count
decreased
(1.8%);
febrile
neutropenia
(1.6%);
and
fatigue
(1.6%).
Among
the
11.0%
of
patients
whose
serious
adverse
events
(SAEs)
wereconsidered
drug-related,
the
two
most
frequent
events
were
febrile
neutropenia
and
delirium
(1.1%
of
patients
each).
Other
drug-related
SAEs
includedhyponatraemia,
confusional
state,
dyspnoea,
dizziness,
and
mental
status
changes
(0.7%
each);
anaemia,
fatigue,
dehydration,
haematuria,
and
pollakiuria
(0.4%each);
and
autoimmune
haemolytic
anaemia,
thrombocytopenia,
diabetes
insipidus,
abdominal
distension,
gastrointestinal
haemorrhage,
retroperitoneal
fibrosis,asthenia,
malaise,
pyrexia,
cholecystitis,
bacteraemia,
bronchitis,
cystitis
escherichia,
lung
infection,
pneumonia,
sepsis,
septic
shock,
sinusitis
fungal,
urinary
tractinfection,
hypoglycaemia,
muscular
weakness,
convulsion,
headache,
dysuria,
nephrolithiasis,
renal
failure,
renal
failure
acute,
pulmonary
alveolar
haemorrhage,and
respiratory
distress
(0.2%
each).
Three
patients
(0.7%),
all
enrolled
in
a
Phase
1
dose-escalating
study,
experienced
dose-limiting
toxicities
(DLTs),
defined
asdrug-related
TEAEs
that
occurred
during
the
first
cycle
of
rigosertib
administration.
DLTs
included
pneumonia,
dysuria,
and
dyspnoea
(1
patient,
0.2%,
each).Rigosertib oral in combination with azacitidine for MDS and AML







We
have
completed
enrollment
in
the
Phase
2
portion
of
an
open
label
Phase
1/2
clinical
trial
testing
rigosertib
oral
in
combination
with
the
approved
dose
ofinjectable
azacitidine
for
patients
with
higher-risk
MDS
and
AML.
This
study
is
based
on
our
published
preclinical
data
demonstrating
synergistic
activity
of
thiscombination.
We
presented
Phase
1
results
from
this
trial
at
the
American
Society
of
Hematology
(ASH)
Annual
Meeting
in
December
2014
and
at
the
MDSSymposium
in
April
2015.
These
results
showed
encouraging
activity
in
MDS
and
AML
patients
in
terms
of
bone
marrow4Table
of
Contentsand
hematological
responses.
Patients
in
the
Phase
1
portion
were
treated
at
the
full
standard
dose
of
azacitidine,
and
the
drug
combination
was
well
tolerated
inrepetitive
cycles.







The
Phase
2
portion
of
the
trial
was
designed
to
assess
whether
treatment
with
rigosertib,
in
combination
with
the
approved
dose
of
injectable
azacitidine,reduces
the
number
of
bone
marrow
blasts,
improves
peripheral
blood
counts
and
can
resensitize
the
marrow
blast
cells
to
azacitidine
for
patients
who
werepreviously
exposed
to
azacitidine
Patient
enrollment
in
the
Phase
2
portion
of
this
trial
was
completed
in
the
fourth
quarter
of
2015
and
interim
data
weresummarized
by
way
of
an
oral
presentation
at
the
ASH
Annual
Meeting
in
December
2015.







The
Phase
2
combination
trial
included
both
front-line
MDS
patients
(that
is,
patients
not
previously
treated
with
HMAs)
and
MDS
patients
whose
disease
hadfailed
prior
HMA
therapy
(second-line
patients).
The
oral
presentation
at
ASH
presented
results
from
a
total
of
37
MDS
patients
treated
with
the
recommendedPhase
2
dose
of
oral
rigosertib
(560
mg
AM/280
mg
PM)
plus
the
full
standard
dose
of
injectable
azacitidine.
The
combination
of
oral
rigosertib
and
azacitidinewas
well
tolerated,
with
a
median
duration
of
treatment
of
four
months
(range
1
to
27
months).







At
the
time
of
the
ASH
2015
presentation,
30
MDS
patients
were
evaluable
for
efficacy
assessment
per
2006
IWG,
criteria.
Twenty-three
of
30
patients
(77%)responded
to
the
combination
therapy,
including
six
patients
who
had
complete
remissions.
Hematologic
improvement
was
observed
in
13
of
26
patients
that
wereevaluable
for
this
part
of
the
analysis.
Notably,
16
of
19
(84%)
HMA-naïve
patients
had
a
response
to
the
combination
therapy
and
7
of
11
(64%)
patients
whosedisease
had
previously
failed
HMAs
responded.
As
of
December
2015,
the
median
duration
of
these
responses
had
not
yet
been
reached.
Additional
data
collectioncontinues
for
the
patients
remaining
on
study
and
may
impact
the
final
results
of
the
trial.Rigosertib oral for lower-risk MDS







Higher-risk
MDS
patients
suffer
from
a
shortfall
in
normal
circulating
blood
cells,
or
cytopenias,
as
well
as
elevated
levels
of
cancer
cells,
or
blasts
in
theirbone
marrow
and
peripheral
blood,
whereas
lower-risk
MDS
patients
suffer
mainly
from
cytopenias,
that
is
low
levels
of
red
blood
cells,
white
blood
cells
orplatelets.
Thus,
lower-risk
MDS
patients
depend
on
transfusions
and
growth
factors
or
other
therapies
to
improve
their
low
blood
counts.







We
have
explored
single
agent
rigosertib
oral
as
a
treatment
for
lower-risk
MDS
in
two
Phase
2
clinical
trials,
09-05
and
09-07.
In
December
2013,
wepresented
data
at
the
Annual
ASH
Meeting
from
the
09-05
Phase
2
trial.
To
date,
Phase
2
clinical
data
have
shown
encouraging
signs
of
efficacy
of
single
agentoral
rigosertib
in
transfusion-dependent,
lower-risk
MDS
patients.
Rigosertib
has
been
generally
well
tolerated,
except
for
urinary
side
effects
at
higher
dose
levels.Future
clinical
trials
will
be
needed
to
evaluate
dosing
and
schedule
modifications
and
their
impact
on
efficacy
and
toxicity
of
oral
rigosertib
in
lower-risk
MDSpatients.







Data
presented
from
the
09-05
trial
also
suggested
the
potential
of
a
genomic
methylation
assessment
of
bone
marrow
cells
to
prospectively
identify
lower-risk
MDS
patients
likely
to
respond
to
oral
rigosertib.
We
therefore
expanded
the
09-05
trial
by
adding
an
additional
cohort
of
20
patients
to
advance
thedevelopment
of
this
genomic
methylation
test.
Enrollment
in
this
expansion
cohort
has
been
completed.
We
are
collaborating
with
a
methylation
genomicscompany
and
academic
collaborators
to
refine
this
genomic
methylation
test.Safety and Tolerability of rigosertib oral in MDS and other hematologic malignancies







Oral
rigosertib
as
a
monotherapy
has
been
evaluated
in
four
Phase
1
and
2
studies
in
MDS
and
other
hematologic
malignancies.
One
study
is
completed
and
aCSR
is
available.
The
three
other
studies
have
not
yet
completed;
thus
final
data
are
subject
to
change.
The
main
reasons
for
study5Table
of
Contentsdiscontinuation
were
Investigator's
decision
(22.6%)
and
PD
per
the
2006
IWG
criteria
(19.4%).
The
occurrence
of
AEs
led
to
withdrawal
of
20.0%
of
patients.Patients
requested
withdrawal
in
16.1%
of
the
cases.
Ten
patients
(6.1%)
died
due
to
TEAEs,
none
of
which
was
considered
related
to
rigosertib.
The
majority
ofpatients
(76.2%)
experienced
TEAEs
that
were
considered
drug-related.
The
most
frequently
reported
drug-related
TEAEs
were
in
the
SOC
category
of
renal
andurinary
disorders
(56.1%
of
patients);
and
22.6%
of
patients
experienced
drug-related
gastrointestinal
disorders.
Individual
TEAEs
reported
by
at
least
5%
ofpatients
across
SOC
categories
included,
by
decreasing
order
of
frequency,
pollakiuria
(31.1%),
dysuria
(26.8%),
haematuria
(20.7%),
urinary
tract
pain
(17.7%),micturition
urgency
(17.7%),
urinary
tract
infection
(12.8%),
diarrhoea
(9.8%),
fatigue
(7.9%),
decreased
appetite
(6.7%),
nausea
(9.8%),
and
cystitis
(6.1%).Drug-related
TEAEs
were
³
Grade
3
in
20.1%
of
the
patients.
The
most
frequently
reported
³
Grade
3
drug-related
TEAEs
were
blood
and
lymphatic
systemdisorders
(6.7%),
infections
and
infestations
(4.9%),
and
investigations
(4.9%).
Individual
drug-related
TEAEs
³
Grade
3
reported
by
at
least
1%
of
patientsincluded
neutropenia
(3.7%),
cystitis
(3.0%);
neutrophil
count
decreased
and
haematuria
(2.4%
each);
thrombocytopenia
and
dysuria
(1.8%);
leukopenia,
urinarytract
infection,
platelet
count
decreased,
hyponatraemia,
urinary
tract
pain,
and
dyspnoea
(1.2%
each).
Among
the
13
(7.9%)
patients
whose
SAEs
were
considereddrug-related,
the
events
were
mostly
urinary.
Drug-related
SAEs
included
cystitis
(3.0%),
haematuria
(1.2%);
and
anaemia,
angina
pectoris,
adverse
drug
reaction,urinary
tract
infection,
hyperglycaemia,
dysuria,
dyspnoea,
and
lung
disorder
(0.6%
each).
During
Phase
1
studies,
nine
patients
(5.5%)
experienced
14
DLTs,which
were
defined
as
drug-related
TEAEs
that
occurred
during
the
first
cycle
of
rigosertib
administration.
These
included
neutropenia,
pain,
cystitis,
limb
injury,alanine
aminotransferase
increased,
aspartate
aminotransferase
increased,
blood
creatinine
increased,
hypoalbuminaemia,
hypocalcaemia,
hyponatraemia,haematuria,
dyspnoea,
and
haematoma.







Oral
rigosertib
in
combination
with
azacitidine
is
under
evaluation
in
a
Phase
2
trial
for
patients
with
MDS.
As
of
December
2015,
37
MDS
patients
wereevaluable
for
safety
analysis.
The
occurrence
of
TEAEs
led
to
study
withdrawal
in
19%
of
patients.
3
patients
(8%)
of
patients
died
due
to
TEAEs,
none
of
whichwas
considered
drug-related.
The
majority
of
patients,
84%,
experienced
TEAEs
which
were
considered
drug-related.
The
most
frequently
reported
related
events(at
least
3
patients)
were
Dysuria
(32%),
Nausea
and
Haematuria
(22%
each),
Pollakiuria
(16%),
Neutropenia
(14%),
Decreased
appetite,
Diarrhoea,
andThrombocytopenia
(11%
each).
TEAEs
of
³
Grade
3
severity
were
observed
in
84%
of
the
patients
and
were
considered
drug-related
in
38%
of
the
patients.Other
Programs







The
vast
majority
of
the
Company's
efforts
are
now
devoted
to
the
advanced
stage
development
of
rigosertib
for
unmet
medical
needs
of
MDS
patients.
Otherprograms
are
either
paused,
inactive
or
require
only
minimal
internal
resources
and
efforts.Briciclib







Briciclib,
another
of
our
product
candidates,
a
small
molecule
targeting
an
important
intracellular
regulatory
protein,
cyclin
D1,
which
is
often
found
atelevated
levels
in
cancer
cells.
Cyclin
D1
expression
is
regulated
through
a
process
termed
cap-dependent
translation,
which
requires
the
function
of
eukaryoticinitiation
factor
4E
protein,
or
eIF4E.
In
vitro
evidence
indicates
briciclib
binds
to
eIF4E,
blocking
cap-dependent
translation
of
cyclin
D1
and
other
cancerproteins,
such
as
c-MYC,
leading
to
tumor
cell
death.
We
have
been
conducting
a
Phase
1
multisite
dose-escalation
trial
of
briciclib
in
patients
with
advanced
solidtumors
refractory
to
current
therapies.
Safety
and
efficacy
assessments
are
complete
in
six
of
the
seven
dose-escalation
cohorts
of
patients
in
this
trial.
As
ofDecember
2015,
however,
the
briciclib
IND
is
on
full
clinical
hold
following
a
drug
product
lot
testing
failure.
We
will
be
required
to
undertake
appropriateremedial
actions
prior
to
re-initiating
the
clinical
trial
and
completing
the
final
dose-escalation
cohort.6Table
of
ContentsRecilisib







Recilisib
is
a
product
candidate
being
developed
in
collaboration
with
the
U.S.
Department
of
Defense
for
acute
radiation
syndromes.
We
have
completedfour
Phase
1
trials
to
evaluate
the
safety
and
pharmacokinetics
of
recilisib
in
healthy
human
adult
subjects
using
both
subcutaneous
and
oral
formulations.
We
havealso
conducted
animal
studies
and
clinical
trials
of
recilisib
under
the
FDA's
Animal
Efficacy
Rule,
which
permits
marketing
approval
for
new
medicalcountermeasures
for
which
conventional
human
efficacy
studies
are
not
feasible
or
ethical,
by
relying
on
evidence
from
studies
in
appropriate
animal
models
tosupport
efficacy
in
humans.
Ongoing
studies
of
recilisib,
focusing
on
animal
models
and
biomarker
development
to
assess
the
efficacy
of
recilisib
are
beingconducted
by
third
parties
with
government
funding.
We
anticipate
that
any
future
development
of
recilisib
beyond
these
ongoing
studies
would
be
conductedsolely
with
government
funding
or
by
collaboration.Preclinical
Product
Candidates







In
addition
to
our
three
clinical-stage
product
candidates,
we
have
several
product
candidates
that
target
kinases,
cellular
metabolism
or
cell
division
inpreclinical
development.
We
may
explore
additional
collaborations
to
further
the
development
of
these
product
candidates
as
we
focus
internally
on
our
moreadvanced
programs.Research
and
Development








Since
commencing
operations,
we
have
dedicated
a
significant
portion
of
our
resources
to
the
development
of
our
clinical-stage
product
candidates,particularly
rigosertib.
We
incurred
research
and
development
expenses
of
$25.9
million,
$49.4
million
and
$50.2
during
the
years
ended
December
31,
2015,
2014and
2013,
respectively.
We
anticipate
that
a
significant
portion
of
our
operating
expenses
will
continue
to
be
related
to
research
and
development.Collaborations
Baxalta
GmbH







We
are
party
to
a
September
2012
development
and
license
agreement
with
Baxalta
GmbH,
successor
in
interest
to
Baxter
Healthcare
SA,
which
is
scheduledto
terminate
August
30,
2016.
We
generally
refer
to
Baxalta
GmbH,
together
with
its
predecessor,
collectively
as
"Baxalta."
The
development
and
licenseagreement
granted
Baxalta
an
exclusive,
royalty-bearing
license
for
the
research,
development,
commercialization
and
manufacture
(in
specified
instances)
ofrigosertib
in
all
therapeutic
indications
in
specified
countries
comprising
most
of
Europe
(the
"Baxalta
Territory").
Pursuant
to
the
agreement,
we
received
anupfront
payment
of
$50,000,000,
are
receiving
cost-sharing
payments
for
our
INSPIRE
trial
and
were
eligible
to
receive
certain
additional
milestone
payments
androyalties
as
further
described
below.







On
March
3,
2016,
we
received
a
notice
from
Baxalta
of
their
election
to
terminate
the
development
and
license
agreement
because
further
support
of
thisprogram
did
not
align
with
their
strategic
priorities.
The
termination
notice
was
received
after
commencement
of
the
INSPIRE
trial
which
was
designed
followingconsultation
with
Baxalta.
In
accordance
with
the
terms
of
the
Baxalta
agreement,
upon
termination,
the
rights
that
we
had
licensed
to
Baxalta
will
revert
to
us
atno
cost.
Additionally,
any
rights
we
have
to
previously-agreed
funding,
pre-commercial
milestone
payments
and
royalties
from
Baxalta
would
terminate
inaccordance
with
the
agreement,
absent
any
breaches.







Under
the
terms
of
the
Baxalta
agreement,
we
were
initially
required
to
perform
research
and
development
to
advance
three
initial
rigosertib
indications,rigosertib
intravenous
(IV)
in
higher-risk
MDS
patients,
rigosertib
IV
in
pancreatic
cancer
patients
and
rigosertib
oral
in
lower-risk
MDS
patients,
through
Phase
3,Phase
3
and
Phase
2
clinical
trials,
respectively.7Table
of
Contents







The
Baxalta
agreement
contemplated
development
of
rigosertib
IV
in
higher-risk
MDS
patients
through
our
ONTIME
trial
and
potentially
additional
Phase
3clinical
trials.
As
our
ONTIME
trial
did
not
achieve
its
primary
endpoint,
we
are
continuing
the
development
of
rigosertib
IV
in
higher-risk
MDS
patients
throughour
INSPIRE
trial.
In
accordance
with
the
agreement,
we
elected
to
have
Baxalta
fund
fifty
percent
of
the
costs
of
INSPIRE,
up
to
$15.0
million.
We
started
billingBaxalta
for
these
costs
starting
in
the
second
quarter
of
2015.
We
recorded
revenue
of
$2.9
million
during
2015
as
a
result
of
Baxalta's
funding
of
the
INSPIREtrial.
We
have
overall
responsibility
for
the
trial,
including
determination
of
the
trial
specifications,
selection
of
third
party
service
providers
and
payment
for
allservices
and
materials.
Baxalta
terminated
the
development
and
license
agreement
after
commencement
of
the
INSPIRE
trial
and
after
we
had
elected
to
haveBaxalta
reimburse
us
for
our
costs
incurred
in
running
this
trial,
per
contract.
We
will
attempt
to
maximize
Baxalta's
financial
support
for
the
INSPIRE
trial,
butthere
can
be
no
assurances
regarding
the
amount
of
funds
which
we
will
receive
from
Baxalta
following
termination.SymBio
Pharmaceuticals
Limited







In
July
2011,
we
entered
into
a
license
agreement
with
SymBio,
as
subsequently
amended,
granting
SymBio
an
exclusive,
royalty-bearing
license
for
thedevelopment
and
commercialization
of
rigosertib
in
Japan
and
Korea
(the
"Symbio
Territory").
Under
the
SymBio
license
agreement,
SymBio
is
obligated
to
usecommercially
reasonable
efforts
to
develop
and
obtain
market
approval
for
rigosertib
inside
the
licensed
territory
and
we
have
similar
obligations
outside
of
thelicensed
territory.
We
have
also
entered
into
an
agreement
with
SymBio
providing
for
it
to
supply
SymBio
with
development-stage
product.
Under
the
SymBiolicense
agreement,
we
also
agreed
to
supply
commercial
product
to
SymBio
under
specified
terms
that
will
be
included
in
a
commercial
supply
agreement
to
benegotiated
prior
to
the
first
commercial
sale
of
rigosertib.
The
supply
of
development-stage
product
and
the
supply
of
commercial
product
will
be
at
our
cost
plus
adefined
profit
margin.
Sales
of
development-stage
product
have
been
de
minimis.
We
have
additionally
granted
SymBio
a
right
of
first
negotiation
to
license
orobtain
the
rights
to
develop
and
commercialize
compounds
having
a
chemical
structure
similar
to
rigosertib
in
the
licensed
territory.







Under
the
terms
of
the
SymBio
license
agreement,
we
received
an
upfront
payment
of
$7,500,000.
We
are
eligible
to
receive
milestone
payments
of
up
to
anaggregate
of
$22,000,000
from
SymBio
upon
the
achievement
of
specified
development
and
regulatory
milestones
for
specified
indications.
Of
the
regulatorymilestones,
$5,000,000
is
due
upon
receipt
of
marketing
approval
in
the
United
States
for
rigosertib
IV
in
higher-risk
MDS
patients,
$3,000,000
is
due
upon
receiptof
marketing
approval
in
Japan
for
rigosertib
IV
in
higher-risk
MDS
patients,
$5,000,000
is
due
upon
receipt
of
marketing
approval
in
the
United
States
forrigosertib
oral
in
lower-risk
MDS
patients,
and
$5,000,000
is
due
upon
receipt
of
marketing
approval
in
Japan
for
rigosertib
oral
in
lower-risk
MDS
patients.Furthermore,
upon
receipt
of
marketing
approval
in
the
United
States
and
Japan
for
an
additional
specified
indication
of
rigosertib,
which
we
are
currently
notpursuing,
an
aggregate
of
$4,000,000
would
be
due.
In
addition
to
these
pre-commercial
milestones,
we
are
eligible
to
receive
tiered
milestone
payments
basedupon
annual
net
sales
of
rigosertib
by
SymBio
of
up
to
an
aggregate
of
$30,000,000.







Further,
under
the
terms
of
the
SymBio
license
agreement,
SymBio
will
make
royalty
payments
to
us
at
percentage
rates
ranging
from
the
mid-teens
to
20%based
on
net
sales
of
rigosertib
by
SymBio.







Royalties
will
be
payable
under
the
SymBio
agreement
on
a
country-by-country
basis
in
the
licensed
territory,
until
the
later
of
the
expiration
of
marketingexclusivity
in
those
countries,
a
specified
period
of
time
after
first
commercial
sale
of
rigosertib
in
such
country,
or
the
expiration
of
all
valid
claims
of
the
licensedpatents
covering
rigosertib
or
the
manufacture
or
use
of
rigosertib
in
such
country.
If
no
valid
claim
exists
covering
the
composition
of
matter
of
rigosertib
or
theuse
of
or
treatment
with
rigosertib
in
a
particular
country
before
the
expiration
of
the
royalty
term,
and
specified
competing
products
achieve
a
specified
marketshare
percentage
in
such
country,
SymBio's
obligation
to8Table
of
Contentspay
us
royalties
will
continue
at
a
reduced
royalty
rate
until
the
end
of
the
royalty
term.
In
addition,
the
applicable
royalties
payable
to
us
may
be
reduced
ifSymBio
is
required
to
pay
royalties
to
third-parties
for
licenses
to
intellectual
property
rights
necessary
to
develop,
use,
manufacture
or
commercialize
rigosertib
inthe
licensed
territory.
The
license
agreement
with
SymBio
will
remain
in
effect
until
the
expiration
of
the
royalty
term.
However,
the
SymBio
license
agreementmay
be
terminated
earlier
due
to
the
uncured
material
breach
or
bankruptcy
of
a
party,
or
force
majeure.
If
SymBio
terminates
the
license
agreement
in
thesecircumstances,
its
licenses
to
rigosertib
will
survive,
subject
to
SymBio's
milestone
and
royalty
obligations,
which
SymBio
may
elect
to
defer
and
offset
againstany
damages
that
may
be
determined
to
be
due
from
us.
In
addition,
we
may
terminate
the
license
agreement
in
the
event
that
SymBio
brings
a
challenge
against
itin
relation
to
the
licensed
patents,
and
SymBio
may
terminate
the
license
agreement







The
upfront
payment
is
being
recognized
ratably
using
the
straight
line
method
through
December
2027,
the
expected
term
of
the
agreement.
We
recognizedrevenues
under
this
agreement
of
$455,000
and
$455,000,
for
the
fiscal
years
ended
December
31,
2015
and
2014,
respectively.
We
recognized
revenues
related
tothe
supply
agreement
with
Symbio
of
$108,000
and
$11,000
for
the
fiscal
years
ended
December
31,
2015
and
2014,
respectively.







SymBio
has
conducted
phase
1
trials
with
IV
and
oral
rigosertib
in
Japan
at
their
own
expense.
Currently
SymBio
is
preparing
to
participate
in
the
INSPIREtrial
by
enrolling
patients
in
Japan.
For
all
rigosertib
trials
conducted
by
SymBio,
we
supply
clinical
trial
supplies
and
provide
other
assistance
as
requested.Preclinical
Collaboration







In
December
2012,
we
entered
into
an
agreement
with
GVK
Biosciences
Private
Limited,
or
GVK,
to
form
GBO,
LLC,
or
GBO,
a
joint
venture
entity
ownedby
us
and
GVK.
During
2013,
GVK
made
an
initial
capital
contribution
of
$500,000
in
exchange
for
a
10%
interest
in
GBO,
and
we
contributed
a
sublicense
to
theintellectual
property
related
to
two
of
our
preclinical
programs
in
exchange
for
a
90%
interest.
In
November
2014,
GVK
made
a
second
capital
contribution
of$500,000
which
increased
its
interest
in
GBO
to
17.5%
(and
decreased
our
interest
to
82.5%).
The
two
preclinical
programs
sublicensed
to
GBO
have
not
beendeveloped
to
clinical
stage
as
we
had
initially
hoped,
and
we
are
in
discussions
with
GVK
regarding
the
future
of
GBO.Intellectual
Property
Patents
and
Proprietary
Rights







Our
intellectual
property
is
derived
through
our
internal
research,
licensing
agreements
with
Temple
University,
or
Temple,
and
licensing
research
agreementswith
the
Mount
Sinai
School
of
Medicine,
or
Mount
Sinai.License Agreement with Temple University







In
January
1999,
we
entered
into
a
license
agreement
with
Temple
as
subsequently
amended,
to
obtain
an
exclusive,
world-wide
license
to
certain
Templepatents
and
technical
information
to
make,
have
made,
use,
sell,
offer
for
sale
and
import
several
classes
of
novel
compounds,
including
our
three
clinical-stageproduct
candidates,
rigosertib,
briciclib
and
recilisib.







Under
the
terms
of
the
license
agreement,
we
paid
Temple
a
non-refundable
up-front
payment,
and
are
required
to
pay
annual
license
maintenance
fees,
aswell
as
a
low
single-digit
percentage
of
net
sales
as
a
royalty.
In
addition,
we
agreed
to
pay
Temple
25%
of
any
consideration
received
from
any
sublicensee
of
thelicensed
Temple
patents
and
technical
information,
which
does
not
include
any9Table
of
Contentsroyalties
on
sales,
funds
received
for
research
and
development
or
proceeds
from
any
equity
or
debt
investment.







The
license
agreement
with
Temple
can
be
terminated
by
mutual
agreement
or
due
to
the
material
breach
or
bankruptcy
of
either
party.
We
may
terminate
thelicense
agreement
for
any
reason
by
giving
Temple
prior
written
notice.Research Agreement with Mount Sinai School of Medicine







In
May
2010,
we
entered
into
a
research
agreement
with
Mount
Sinai.
This
agreement
is
described
in
more
detail
under
the
caption
"Certain
Relationships
andRelated
Party
Transactions—Research
Agreement."Rigosertib Patents







As
of
March
2016,
we
owned
or
exclusively
licensed
77
issued
patents
and
13
pending
patent
applications
covering
composition-of-matter,
process,formulation
and
various
indications
for
method-of-use
for
rigosertib
filed
worldwide,
including
seven
patents
and
two
patent
applications
in
the
United
States.
TheU.S.
composition-of-matter
patent
for
rigosertib,
which
we
in-licensed
pursuant
to
the
license
agreement
with
Temple,
currently
expires
in
2026.
The
U.S.
methodof
treatment
patent
for
rigosertib,
which
we
also
in-licensed
from
Temple,
expires
in
2025.
A
patent
covering
the
use
of
rigosertib
in
combination
with
anticanceragents
including
azacitidine
is
issued
and
will
expire
in
2028.
Patent
term
extensions
may
be
available,
depending
on
various
provisions
in
the
law.Briciclib Patents







As
of
March
2016,
we
owned
or
exclusively
licensed
14
issued
patents
and
two
pending
patent
applications
covering
composition-of-matter,
process,formulation
and
various
indications
for
method-of-use
for
briciclib
filed
worldwide,
including
two
patent
in
the
United
States.
The
U.S.
composition-of-matterpatent
for
briciclib
expires
in
2025.Recilisib Patents







As
of
March
2016,
we
owned
or
exclusively
licensed
59
issued
patents
and
29
pending
patent
applications
covering
composition
of
matter,
formulation
andvarious
indications
for
method-of-use
for
recilisib
filed
worldwide,
including
four
patents
and
five
patent
applications
in
the
United
States.
The
U.S.
composition-of-matter
patent
for
recilisib
expires
in
2020.General
Considerations







As
with
other
biotechnology
and
pharmaceutical
companies,
our
ability
to
maintain
and
solidify
a
proprietary
position
for
our
product
candidates
will
dependupon
our
success
in
obtaining
effective
patent
claims
and
enforcing
those
claims
once
granted.







Our
commercial
success
will
depend
in
part
upon
not
infringing
upon
the
proprietary
rights
of
third
parties.
It
is
uncertain
whether
the
issuance
of
any
third-party
patent
would
require
us
to
alter
our
development
or
commercial
strategies,
or
our
product
candidates
or
processes,
obtain
licenses
or
cease
certain
activities.The
biotechnology
and
pharmaceutical
industries
are
characterized
by
extensive
litigation
regarding
patents
and
other
intellectual
property
rights.
If
a
third
partycommences
a
patent
infringement
action
against
us,
or
our
collaborators,
it
could
consume
significant
financial
and
management
resources,
regardless
of
the
meritof
the
claims
or
the
outcome
of
the
litigation.







The
term
of
a
patent
that
covers
an
FDA-approved
drug
may
be
eligible
for
additional
patent
term
extension,
which
provides
patent
term
restoration
ascompensation
for
the
patent
term
lost
during
the
FDA
regulatory
review
process.
The
Drug
Price
Competition
and
Patent
Term
Restoration
Act
of
1984,10Table
of
Contentsor
the
Hatch-Waxman
Act,
permits
a
patent
term
extension
of
up
to
five
years
beyond
the
expiration
of
the
patent.
The
length
of
the
patent
term
extension
is
relatedto
the
length
of
time
the
drug
is
under
regulatory
review.
Patent
extension
cannot
extend
the
remaining
term
of
a
patent
beyond
a
total
of
14
years
from
the
date
ofproduct
approval
and
only
one
patent
applicable
to
an
approved
drug
may
be
extended.
Similar
provisions
are
available
in
Europe
and
other
foreign
jurisdictions
toextend
the
term
of
a
patent
that
covers
an
approved
drug.
In
the
future,
if
and
when
our
pharmaceutical
products
receive
FDA
approval,
we
expect
to
apply
forpatent
term
extensions
on
patents
covering
those
products.







Furthermore,
we
may
be
able
to
obtain
extension
of
patent
term
by
adjustment
of
the
said
term
under
the
provisions
of
35
U.S.C.
§
154
if
the
issue
of
anoriginal
patent
is
delayed
due
to
the
failure
of
the
U.S.
Patent
and
Trademark
Office.
For
example,
we
have
received
adjustments
of
1,139
days
extension
to
thepatent
term
for
the
rigosertib
composition
of
matter
patent
(US
7,598,232),
1,155
days
extension
for
the
patent
covering
the
process
for
making
rigosertib
(US8,143,453)
and
751
days
extension
for
rigosertib
formulation
patent
(US
8,063,109)
under
the
provisions
of
35
U.S.C.
§154.







We
have
received
orphan
designation
for
rigosertib
for
the
treatment
of
MDS
in
the
US
and
Europe.
Our
partner
SymBio
has
received
similar
designation
inJapan.







In
addition
to
patents,
we
rely
upon
unpatented
trade
secrets,
know-how
and
continuing
technological
innovation
to
develop
and
maintain
a
competitiveposition.
We
seek
to
protect
our
proprietary
information,
in
part,
through
confidentiality
agreements
with
our
employees,
collaborators,
contractors
and
consultants,and
invention
assignment
agreements
with
our
employees.
We
also
have
agreements
requiring
assignment
of
inventions
with
selected
consultants
andcollaborators.
The
confidentiality
agreements
are
designed
to
protect
our
proprietary
information
and,
in
the
case
of
agreements
or
clauses
requiring
inventionassignment,
to
grant
us
ownership
of
technologies
that
are
developed
through
a
relationship
with
a
third
party.Competition








The
pharmaceutical
industry
is
highly
competitive
and
subject
to
rapid
and
significant
technological
change.
While
we
believe
that
our
developmentexperience
and
scientific
knowledge
provide
us
with
competitive
advantages,
we
face
competition
from
both
large
and
small
pharmaceutical
and
biotechnologycompanies.
There
are
a
number
of
pharmaceutical
companies,
biotechnology
companies,
public
and
private
universities
and
research
organizations
activelyengaged
in
the
research
and
development
of
products
that
may
compete
with
our
products.
Many
of
these
companies
are
multinational
pharmaceutical
orbiotechnology
organizations,
which
are
pursuing
the
development
of,
or
are
currently
marketing,
pharmaceuticals
that
target
the
key
oncology
indications
orcellular
pathways
on
which
we
are
focused.







It
is
probable
that
the
increasing
incidence
and
prevalence
of
cancer
will
lead
to
many
more
companies
seeking
to
develop
products
and
therapies
for
thetreatment
of
unmet
needs
in
oncology.
Many
of
our
competitors
have
significantly
greater
financial,
technical
and
human
resources
than
we
have.
Many
of
ourcompetitors
also
have
a
significant
advantage
with
respect
to
experience
in
the
discovery
and
development
of
product
candidates,
as
well
as
obtaining
FDA
andother
regulatory
approvals
of
products
and
the
commercialization
of
those
products.
We
anticipate
intense
and
increasing
competition
as
new
drugs
enter
themarket
and
as
more
advanced
technologies
become
available.
Our
success
will
be
based
in
part
on
our
ability
to
identify,
develop
and
manage
a
portfolio
of
drugsthat
are
safer
and
more
effective
than
competing
products
in
the
treatment
of
cancer
patients.11Table
of
ContentsMyelodysplastic
Syndromes







There
are
several
ongoing
clinical
trials
aimed
at
expanding
the
use
of
approved
chemotherapeutic
and
immunomodulatory
agents
in
higher-risk
MDS,
as
wellas
several
new
clinical
programs
testing
novel
technologies
in
this
area.
Companies
competing
in
this
space
include
Eisai
Inc.
(decitabine),
Celgene
Corporation(azacitidine
in
combination
with
lenalidomide,
Cell
Therapeutics,
Inc.
(tosedostat
in
combination
with
decitabine
or
cytarabine),
Cyclacel
Pharmaceuticals,
Inc.(sapacitabine),
and
Astex/Otsuka
(guadecitabine).
To
our
knowledge,
there
are
no
Phase
3
trials
being
conducted
for
higher-risk
MDS
patients
who
have
failedtreatment
with
HMAs.
In
the
lower-risk
MDS
market,
we
face
competition
from
a
number
of
companies
in
mid-stage
and
late-stage
clinical
trials,
such
as
CelgeneCorporation
(lenalidomide),
Array
BioPharma
Inc
(ARRY-614),
and
Acceleron
Pharma
(sotatercept
and
luspatercept).Acute
Radiation
Syndrome







Competitors
developing
products
to
address
ARS
include
Soligenix,
Inc.,
Cellerant
Therapeutics,
Inc.,
and
Cleveland
BioLabs,
Inc.
Each
of
these
companiesis
working
with
the
U.S.
government
to
develop
its
products
through
federal
contracts
and
grants.Manufacturing








Our
product
candidates
are
synthetic
small
molecules.
Manufacturing
activities
must
comply
with
FDA
current
good
manufacturing
practices,
or
cGMP,regulations.
We
conduct
our
manufacturing
activities
under
individual
purchase
orders
with
third-party
contract
manufacturers,
or
CMOs.
We
have
in
place
qualityagreements
with
our
key
CMOs.
We
have
also
established
an
internal
quality
management
organization,
which
audits
and
qualifies
CMOs
in
the
United
States
andabroad.







We
are
working
with
CMOs
to
produce
the
rigosertib
active
pharmaceutical
ingredient,
which
we
believe
will
enable
us
to
launch
and
commercializerigosertib
IV
if
and
when
marketing
approval
is
obtained.
Other
CMOs
produce
rigosertib
IV
and
rigosertib
oral
for
use
in
our
clinical
trials.
We
believe
that
themanufacturing
processes
for
the
active
pharmaceutical
ingredient
and
finished
drug
products
for
rigosertib
are
being
developed
to
adequately
support
futuredevelopment
and
commercial
demands.







The
FDA
regulates
and
inspects
equipment,
facilities
and
processes
used
in
manufacturing
pharmaceutical
products
prior
to
approval.
If
we
fail
to
complywith
applicable
cGMP
requirements
and
conditions
of
product
approval,
the
FDA
may
seek
sanctions,
including
fines,
civil
penalties,
injunctions,
suspension
ofmanufacturing
operations,
operating
restrictions,
withdrawal
of
FDA
approval,
seizure
or
recall
of
products
and
criminal
prosecution.
Although
we
periodicallymonitor
the
FDA
compliance
of
our
third-party
CMOs,
we
cannot
be
certain
that
our
present
or
future
third-party
CMOs
will
consistently
comply
with
cGMP
andother
applicable
FDA
regulatory
requirements.Commercial
Operations








We
do
not
currently
have
an
organization
for
the
sales,
marketing
and
distribution
of
pharmaceutical
products.
We
may
rely
on
licensing
and
co-promotionagreements
with
strategic
partners
for
the
commercialization
of
our
products
in
the
United
States
and
other
territories.
If
we
choose
to
build
a
commercialinfrastructure
to
support
marketing
in
the
United
States,
such
commercial
infrastructure
could
be
expected
to
include
a
targeted,
oncology
sales
force
supported
bysales
management,
internal
sales
support,
an
internal
marketing
group
and
distribution
support.
To
develop
the
appropriate
commercial
infrastructure
internally,
wewould
have
to
invest
financial
and
management
resources,
some
of
which
would
have
to
be
deployed
prior
to
any
confirmation
that
rigosertib
will
be
approved.12Table
of
ContentsGovernment
Regulation








As
a
pharmaceutical
company
that
operates
in
the
United
States,
we
are
subject
to
extensive
regulation
by
the
FDA,
and
other
federal,
state,
and
localregulatory
agencies.
The
Federal
Food,
Drug,
and
Cosmetic
Act,
or
the
FDC
Act,
and
its
implementing
regulations
set
forth,
among
other
things,
requirements
forthe
research,
testing,
development,
manufacture,
quality
control,
safety,
effectiveness,
approval,
labeling,
storage,
record
keeping,
reporting,
distribution,
import,export,
advertising
and
promotion
of
our
products.
Although
the
discussion
below
focuses
on
regulation
in
the
United
States,
we
anticipate
seeking
approval
for,and
marketing
of,
our
products
in
other
countries.
Generally,
our
activities
in
other
countries
will
be
subject
to
regulation
that
is
similar
in
nature
and
scope
as
thatimposed
in
the
United
States,
although
there
can
be
important
differences.
Additionally,
some
significant
aspects
of
regulation
in
Europe
are
addressed
in
acentralized
way
through
the
EMA,
but
country-specific
regulation
remains
essential
in
many
respects.
The
process
of
obtaining
regulatory
marketing
approvals
andthe
subsequent
compliance
with
appropriate
federal,
state,
local
and
foreign
statutes
and
regulations
require
the
expenditure
of
substantial
time
and
financialresources
and
may
not
be
successful.United
States
Government
Regulation







The
FDA
is
the
main
regulatory
body
that
controls
pharmaceuticals
in
the
United
States,
and
its
regulatory
authority
is
based
in
the
FDC
Act.
Pharmaceuticalproducts
are
also
subject
to
other
federal,
state
and
local
statutes.
A
failure
to
comply
explicitly
with
any
requirements
during
the
product
development,
approval,or
post-approval
periods,
may
lead
to
administrative
or
judicial
sanctions.
These
sanctions
could
include
the
imposition
by
the
FDA
or
an
institutional
reviewboard,
or
IRB,
of
a
hold
on
clinical
trials,
refusal
to
approve
pending
marketing
applications
or
supplements,
withdrawal
of
approval,
warning
letters,
productrecalls,
product
seizures,
total
or
partial
suspension
of
production
or
distribution,
injunctions,
fines,
civil
penalties
or
criminal
prosecution.







The
steps
required
before
a
new
drug
may
be
marketed
in
the
United
States
generally
include:•Completion
of
preclinical
laboratory
tests,
animal
studies
and
formulation
studies
in
compliance
with
the
FDA's
GLP
regulations;
•Submission
to
the
FDA
of
an
IND
to
support
human
clinical
testing;
•Approval
by
an
IRB
at
each
clinical
site
before
each
trial
may
be
initiated;
•Performance
of
adequate
and
well-controlled
clinical
trials
in
accordance
with
federal
regulations
and
with
current
good
clinical
practices,
or
GCPs,to
establish
the
safety
and
efficacy
of
the
investigational
drug
product
for
each
targeted
indication;
•Submission
of
a
new
drug
application,
or
NDA,
to
the
FDA;
•Satisfactory
completion
of
an
FDA
Advisory
Committee
review,
if
applicable;
•Satisfactory
completion
of
an
FDA
inspection
of
the
manufacturing
facilities
at
which
the
investigational
product
is
produced
to
assess
compliancewith
cGMP,
and
to
assure
that
the
facilities,
methods
and
controls
are
adequate;
and
•FDA
review
and
approval
of
the
NDA.Clinical Trials







An
IND
is
a
request
for
authorization
from
the
FDA
to
administer
an
investigational
drug
product
to
humans.
This
authorization
is
required
before
interstateshipping
and
administration
of
any
new
drug
product
to
humans
that
is
not
the
subject
of
an
approved
NDA.
A
30-day
waiting
period
after
the
submission
of
eachIND
is
required
prior
to
the
commencement
of
clinical
testing
in
humans.
If
the13Table
of
ContentsFDA
has
neither
commented
on
nor
questioned
the
IND
within
this
30-day
period,
the
clinical
trial
proposed
in
the
IND
may
begin.
Clinical
trials
involve
theadministration
of
the
investigational
drug
to
patients
under
the
supervision
of
qualified
investigators
following
GCPs,
an
international
standard
meant
to
protect
therights
and
health
of
patients
and
to
define
the
roles
of
clinical
trial
sponsors,
administrators
and
monitors.
Clinical
trials
are
conducted
under
protocols
that
detailthe
parameters
to
be
used
in
monitoring
safety,
and
the
efficacy
criteria
to
be
evaluated.
Each
protocol
involving
testing
on
U.S.
patients
and
subsequent
protocolamendments
must
be
submitted
to
the
FDA
as
part
of
the
IND.
The
informed
written
consent
of
each
participating
subject
is
required.
The
clinical
investigation
ofan
investigational
drug
is
generally
divided
into
three
phases.
Although
the
phases
are
usually
conducted
sequentially,
they
may
overlap
or
be
combined.
The
threephases
of
an
investigation
are
as
follows:•Phase
1.



Phase
1
includes
the
initial
introduction
of
an
investigation
drug
into
humans.
Phase
1
clinical
trials
may
be
conducted
in
patients
withthe
target
disease
or
condition
or
healthy
volunteers.
These
studies
are
designed
to
evaluate
the
safety,
metabolism,
pharmacokinetics
andpharmacologic
actions
of
the
investigational
drug
in
humans,
the
side
effects
associated
with
increasing
doses,
and
if
possible,
to
gain
earlyevidence
on
effectiveness.
During
Phase
1
clinical
trials,
sufficient
information
about
the
investigational
product's
pharmacokinetics
andpharmacological
effects
may
be
obtained
to
permit
the
design
of
Phase
2
clinical
trials.
The
total
number
of
participants
included
in
Phase
1
clinicaltrials
varies,
but
is
generally
in
the
range
of
20
to
80.
•Phase
2.



Phase
2
includes
the
controlled
clinical
trials
conducted
to
evaluate
the
effectiveness
of
the
investigational
product
for
a
particularindication(s)
in
patients
with
the
disease
or
condition
under
study,
to
determine
dosage
tolerance
and
optimal
dosage,
and
to
identify
possibleadverse
side
effects
and
safety
risks
associated
with
the
drug.
Phase
2
clinical
trials
are
typically
well-controlled,
closely
monitored,
and
conductedin
a
limited
patient
population,
usually
involving
no
more
than
several
hundred
participants.
•Phase
3.



Phase
3
clinical
trials
are
controlled
clinical
trials
conducted
in
an
expanded
patient
population
at
geographically
dispersed
clinical
trialsites.
They
are
performed
after
preliminary
evidence
suggesting
effectiveness
of
the
investigational
product
has
been
obtained,
and
are
intended
tofurther
evaluate
dosage,
clinical
effectiveness
and
safety,
to
establish
the
overall
benefit-risk
relationship
of
the
product,
and
to
provide
an
adequatebasis
for
product
approval.
Phase
3
clinical
trials
usually
involve
several
hundred
to
several
thousand
participants.
In
most
cases,
the
FDA
requirestwo
adequate
and
well
controlled
Phase
3
clinical
trials
to
demonstrate
the
efficacy
of
the
drug.
A
single
Phase
3
trial
with
other
confirmatoryevidence
may
be
sufficient
in
rare
instances
where
the
study
is
a
large
multicenter
trial
demonstrating
internal
consistency
and
a
statistically
verypersuasive
finding
of
a
clinically
meaningful
effect
on
mortality,
irreversible
morbidity
or
prevention
of
a
disease
with
a
potentially
seriousoutcome
and
confirmation
of
the
result
in
a
second
trial
would
be
practically
or
ethically
impossible.







The
decision
to
terminate
development
of
an
investigational
drug
product
may
be
made
by
either
a
health
authority
body,
such
as
the
FDA
or
IRB/ethicscommittees,
or
by
a
company
for
various
reasons.
The
FDA
may
order
the
temporary,
or
permanent,
discontinuation
of
a
clinical
trial
at
any
time,
or
impose
othersanctions,
if
it
believes
that
the
clinical
trial
either
is
not
being
conducted
in
accordance
with
FDA
requirements
or
presents
an
unacceptable
risk
to
the
clinical
trialpatients.
In
some
cases,
clinical
trials
are
overseen
by
an
independent
group
of
qualified
experts
organized
by
the
trial
sponsor,
or
the
clinical
monitoring
board.This
group
provides
authorization
for
whether
or
not
a
trial
may
move
forward
at
designated
check
points.
These
decisions
are
based
on
the
limited
access
to
datafrom
the
ongoing
trial.
The
suspension
or
termination
of
development
can
occur
during
any
phase
of
clinical
trials
if
it
is
determined
that
the
participants
orpatients
are
being
exposed
to
an
unacceptable
health
risk.
In
addition,
there
are
requirements
for
the
registration
of
ongoing
clinical
trials
of
drugs
on
public14Table
of
Contentsregistries
and
the
disclosure
of
certain
information
pertaining
to
the
trials
as
well
as
clinical
trial
results
after
completion.







A
sponsor
may
be
able
to
request
a
special
protocol
assessment,
or
SPA,
the
purpose
of
which
is
to
reach
agreement
with
the
FDA
on
the
Phase
3
clinical
trialprotocol
design
and
analysis
that
will
form
the
primary
basis
of
an
efficacy
claim.
A
sponsor
meeting
the
regulatory
criteria
may
make
a
specific
request
for
a
SPAand
provide
information
regarding
the
design
and
size
of
the
proposed
clinical
trial.
A
SPA
request
must
be
made
before
the
proposed
trial
begins,
and
all
openissues
must
be
resolved
before
the
trial
begins.
If
a
written
agreement
is
reached,
it
will
be
documented
and
made
part
of
the
record.
The
agreement
will
be
bindingon
the
FDA
and
may
not
be
changed
by
the
sponsor
or
the
FDA
after
the
trial
begins
except
with
the
written
agreement
of
the
sponsor
and
the
FDA
or
if
the
FDAdetermines
that
a
substantial
scientific
issue
essential
to
determining
the
safety
or
efficacy
of
the
product
candidate
was
identified
after
the
testing
began.
A
SPA
isnot
binding
if
new
circumstances
arise,
and
there
is
no
guarantee
that
a
study
will
ultimately
be
adequate
to
support
an
approval
even
if
the
study
is
subject
to
aSPA.
Having
a
SPA
agreement
does
not
guarantee
that
a
product
will
receive
FDA
approval.







Assuming
successful
completion
of
all
required
testing
in
accordance
with
all
applicable
regulatory
requirements,
detailed
investigational
drug
productinformation
is
submitted
to
the
FDA
in
the
form
of
a
NDA
to
request
market
approval
for
the
product
in
specified
indications.New Drug Applications







In
order
to
obtain
approval
to
market
a
drug
in
the
United
States,
a
marketing
application
must
be
submitted
to
the
FDA
that
provides
data
establishing
thesafety
and
effectiveness
of
the
drug
product
for
the
proposed
indication.
The
application
includes
all
relevant
data
available
from
pertinent
preclinical
and
clinicaltrials,
including
negative
or
ambiguous
results
as
well
as
positive
findings,
together
with
detailed
information
relating
to
the
product's
chemistry,
manufacturing,controls
and
proposed
labeling,
among
other
things.
Data
can
come
from
company-sponsored
clinical
trials
intended
to
test
the
safety
and
effectiveness
of
aproduct,
or
from
a
number
of
alternative
sources,
including
studies
initiated
by
investigators.
To
support
marketing
approval,
the
data
submitted
must
be
sufficientin
quality
and
quantity
to
establish
the
safety
and
effectiveness
of
the
investigational
drug
product
to
the
satisfaction
of
the
FDA.







In
most
cases,
the
NDA
must
be
accompanied
by
a
substantial
user
fee
(currently
exceeding
$2,374,200);
there
may
be
some
instances
in
which
the
user
fee
iswaived.
The
FDA
will
initially
review
the
NDA
for
completeness
before
it
accepts
the
NDA
for
filing.
The
FDA
has
60
days
from
its
receipt
of
an
NDA
todetermine
whether
the
application
will
be
accepted
for
filing
based
on
the
agency's
threshold
determination
that
it
is
sufficiently
complete
to
permit
substantivereview.
After
the
NDA
submission
is
accepted
for
filing,
the
FDA
begins
an
in-depth
review.
The
FDA
has
agreed
to
certain
performance
goals
in
the
review
ofNDAs.
Most
such
applications
for
standard
review
drug
products
are
reviewed
within
ten
to
twelve
months.
The
FDA
can
extend
this
review
by
three
months
toconsider
certain
late-submitted
information
or
information
intended
to
clarify
information
already
provided
in
the
submission.
The
FDA
reviews
the
NDA
todetermine,
among
other
things,
whether
the
proposed
product
is
safe
and
effective
for
its
intended
use,
and
whether
the
product
is
being
manufactured
inaccordance
with
cGMP.
The
FDA
may
refer
applications
for
novel
drug
products
which
present
difficult
questions
of
safety
or
efficacy
to
an
advisory
committee,typically
a
panel
that
includes
clinicians
and
other
experts,
for
review,
evaluation
and
a
recommendation
as
to
whether
the
application
should
be
approved
andunder
what
conditions.
The
FDA
is
not
bound
by
the
recommendations
of
an
advisory
committee,
but
it
considers
such
recommendations
carefully
when
makingdecisions.







Before
approving
an
NDA,
the
FDA
will
inspect
the
facilities
at
which
the
product
is
manufactured.
The
FDA
will
not
approve
the
product
unless
itdetermines
that
the
manufacturing15Table
of
Contentsprocesses
and
facilities
are
in
compliance
with
cGMP
requirements
and
adequate
to
assure
consistent
production
of
the
product
within
required
specifications.Additionally,
before
approving
an
NDA,
the
FDA
will
typically
inspect
one
or
more
clinical
sites
to
assure
compliance
with
GCP.
After
the
FDA
evaluates
theNDA
and
the
manufacturing
facilities,
it
issues
either
an
approval
letter
or
a
complete
response
letter.
A
complete
response
letter
generally
outlines
the
deficienciesin
the
submission
and
may
require
substantial
additional
testing
or
information
in
order
for
the
FDA
to
reconsider
the
application.
If,
or
when,
those
deficiencieshave
been
addressed
to
the
FDA's
satisfaction
in
a
resubmission
of
the
NDA,
the
FDA
will
issue
an
approval
letter.
The
FDA
has
committed
to
reviewing
suchresubmissions
in
two
or
six
months
depending
on
the
type
of
information
included.
Notwithstanding
the
submission
of
any
requested
additional
information,
theFDA
ultimately
may
decide
that
the
application
does
not
satisfy
the
regulatory
criteria
for
approval.







An
approval
letter
authorizes
commercial
marketing
of
the
drug
with
specific
prescribing
information
for
specific
indications.
As
a
condition
of
NDAapproval,
the
FDA
may
require
a
risk
evaluation
and
mitigation
strategy,
or
REMS,
to
help
ensure
that
the
benefits
of
the
drug
outweigh
the
potential
risks.
REMScan
include
medication
guides,
communication
plans
for
healthcare
professionals,
and
elements
to
assure
safe
use,
or
ETASU.
ETASU
can
include,
but
are
notlimited
to,
special
training
or
certification
for
prescribing
or
dispensing,
dispensing
only
under
certain
circumstances,
special
monitoring,
and
the
use
of
patientregistries.
The
requirement
for
a
REMS
can
materially
affect
the
potential
market
and
profitability
of
the
drug.
Moreover,
product
approval
may
require
substantialpost-approval
testing
and
surveillance
to
monitor
the
drug's
safety
or
efficacy.
Once
granted,
product
approvals
may
be
withdrawn
if
compliance
with
regulatorystandards
is
not
maintained
or
problems
are
identified
following
initial
marketing.







Changes
to
some
of
the
conditions
established
in
an
approved
application,
including
changes
in
indications,
labeling,
or
manufacturing
processes
or
facilities,require
submission
and
FDA
approval
of
a
new
NDA
or
NDA
supplement
before
the
change
can
be
implemented.
An
NDA
supplement
for
a
new
indicationtypically
requires
clinical
data
similar
to
that
in
the
original
application,
and
the
FDA
uses
the
same
procedures
and
actions
in
reviewing
NDA
supplements
as
itdoes
in
reviewing
NDAs.Advertising and Promotion







The
FDA
and
other
federal
regulatory
agencies
closely
regulate
the
marketing
and
promotion
of
drugs
through,
among
other
things,
standards
and
regulationsfor
direct-to-consumer
advertising,
communications
regarding
unapproved
uses,
industry-sponsored
scientific
and
educational
activities,
and
promotional
activitiesinvolving
the
Internet.
A
product
cannot
be
commercially
promoted
before
it
is
approved.
After
approval,
product
promotion
can
include
only
those
claims
relatingto
safety
and
effectiveness
that
are
consistent
with
the
labeling
approved
by
the
FDA.
Healthcare
providers
are
permitted
to
prescribe
drugs
for
"off-label"
uses—that
is,
uses
not
approved
by
the
FDA
and
therefore
not
described
in
the
drug's
labeling—because
the
FDA
does
not
regulate
the
practice
of
medicine.
However,FDA
regulations
impose
stringent
restrictions
on
manufacturers'
communications
regarding
off-label
uses.
Broadly
speaking,
a
manufacturer
may
not
promote
adrug
for
off-label
use,
but
may
engage
in
non-promotional,
balanced
communication
regarding
off-label
use
under
specified
conditions.
Failure
to
comply
withapplicable
FDA
requirements
and
restrictions
in
this
area
may
subject
a
company
to
adverse
publicity
and
enforcement
action
by
the
FDA,
the
DOJ,
or
the
Officeof
the
Inspector
General
of
HHS,
as
well
as
state
authorities.
This
could
subject
a
company
to
a
range
of
penalties
that
could
have
a
significant
commercial
impact,including
civil
and
criminal
fines
and
agreements
that
materially
restrict
the
manner
in
which
a
company
promotes
or
distributes
drug
products.16Table
of
ContentsPost-Approval Regulations







After
regulatory
approval
of
a
drug
is
obtained,
a
company
is
required
to
comply
with
a
number
of
post-approval
requirements.
For
example,
as
a
condition
ofapproval
of
an
NDA,
the
FDA
may
require
post-marketing
testing,
including
Phase
4
clinical
trials,
and
surveillance
to
further
assess
and
monitor
the
product'ssafety
and
effectiveness
after
commercialization.
Regulatory
approval
of
oncology
products
often
requires
that
patients
in
clinical
trials
be
followed
for
longperiods
to
determine
the
overall
survival
benefit
of
the
drug.
In
addition,
as
a
holder
of
an
approved
NDA,
a
company
would
be
required
to
report
adverse
reactionsand
production
problems
to
the
FDA,
to
provide
updated
safety
and
efficacy
information,
and
to
comply
with
requirements
concerning
advertising
and
promotionallabeling
for
any
of
its
products.
Also,
quality
control
and
manufacturing
procedures
must
continue
to
conform
to
cGMP
after
approval
to
assure
and
preserve
thelong
term
stability
of
the
drug
or
biological
product.
The
FDA
periodically
inspects
manufacturing
facilities
to
assess
compliance
with
cGMP,
which
imposesextensive
procedural
and
substantive
record
keeping
requirements.
In
addition,
changes
to
the
manufacturing
process
are
strictly
regulated,
and,
depending
on
thesignificance
of
the
change,
may
require
prior
FDA
approval
before
being
implemented.
FDA
regulations
also
require
investigation
and
correction
of
any
deviationsfrom
cGMP
and
impose
reporting
and
documentation
requirements
upon
a
company
and
any
third-party
manufacturers
that
a
company
may
decide
to
use.Accordingly,
manufacturers
must
continue
to
expend
time,
money
and
effort
in
the
area
of
production
and
quality
control
to
maintain
compliance
with
cGMP
andother
aspects
of
regulatory
compliance.







We
rely,
and
expect
to
continue
to
rely,
on
third
parties
for
the
production
of
clinical
and
commercial
quantities
of
our
product
candidates.
Future
FDA
andstate
inspections
may
identify
compliance
issues
at
our
facilities
or
at
the
facilities
of
our
contract
manufacturers
that
may
disrupt
production
or
distribution,
orrequire
substantial
resources
to
correct.
In
addition,
discovery
of
previously
unknown
problems
with
a
product
or
the
failure
to
comply
with
applicablerequirements
may
result
in
restrictions
on
a
product,
manufacturer
or
holder
of
an
approved
NDA,
including
withdrawal
or
recall
of
the
product
from
the
market
orother
voluntary,
FDA-initiated
or
judicial
action
that
could
delay
or
prohibit
further
marketing.







Newly
discovered
or
developed
safety
or
effectiveness
data
may
require
changes
to
a
product's
approved
labeling,
including
the
addition
of
new
warnings
andcontraindications,
and
also
may
require
the
implementation
of
other
risk
management
measures.
Also,
new
government
requirements,
including
those
resultingfrom
new
legislation,
may
be
established,
or
the
FDA's
policies
may
change,
which
could
delay
or
prevent
regulatory
approval
of
our
products
under
developmentor
result
in
additional
post-approval
requirements.FDA Animal Efficacy Rule for Approval of Medical Countermeasures







Marketing
approval
by
the
FDA
for
new
medical
countermeasures
in
situations
for
which
human
efficacy
testing
is
not
feasible
or
ethical,
such
as
for
ARS,
isbased
on
the
so-called
"Animal
Efficacy
Rule."
Under
this
rule,
FDA
can
rely
on
the
evidence
from
animal
studies
to
provide
substantial
prediction
ofeffectiveness
of
an
agent
in
humans,
when
coupled
with:•a
reasonably
well
understood
pathophysiological
mechanism
for
the
toxicity
of
the
radiological
or
nuclear
substance
and
its
amelioration
orprevention
by
the
agent;
•protective
effect
is
demonstrated
in
generally
more
than
one
animal
species
expected
to
react
with
a
response
predictive
for
humans,
and
hence
be
areliable
indicator
of
its
effectiveness
in
humans;
•animal
study
endpoint
is
clearly
related
to
the
desired
benefit
in
humans;
and17Table
of
Contents•data
or
information
on
the
pharmacokinetics
and
pharmacodynamics
of
the
product
in
animals
and
humans
is
sufficiently
well
understood
to
allowselection
of
a
dose
predicted
to
be
effective
in
humans.The Hatch-Waxman Amendments to the FDC ActOrange Book Listing







In
seeking
approval
for
a
drug
through
an
NDA,
applicants
are
required
to
list
with
the
FDA
each
patent
whose
claims
cover
the
applicant's
product
or
methodof
using
the
product.
Upon
approval
of
a
drug,
each
of
the
patents
listed
in
the
application
for
the
drug
is
then
published
in
the
FDA's
Approved
Drug
Productswith
Therapeutic
Equivalence
Evaluations,
commonly
known
as
the
Orange
Book.
Drugs
listed
in
the
Orange
Book
can,
in
turn,
be
cited
by
potential
genericcompetitors
in
support
of
approval
of
an
abbreviated
new
drug
application,
or
ANDA
or
505(b)(2)
application.
An
ANDA
provides
for
marketing
of
a
drug
productthat
has
the
same
active
ingredients
in
the
same
strengths
and
dosage
form
as
the
listed
drug
and
has
been
shown
through
bioequivalence
testing
to
betherapeutically
equivalent
to
the
listed
drug.
Other
than
the
requirement
for
bioequivalence
testing,
ANDA
applicants
are
not
required
to
conduct,
or
submit
resultsof,
pre-clinical
or
clinical
tests
to
prove
the
safety
or
effectiveness
of
their
drug
product.
Drugs
approved
in
this
way
are
commonly
referred
to
as
"genericequivalents"
to
the
listed
drug,
and
can
often
be
substituted
by
pharmacists
under
prescriptions
written
for
the
original
listed
drug.
505(b)(2)
applications
providefor
marketing
of
a
drug
product
that
may
have
the
same
active
ingredients
as
the
listed
drug
and
contain
the
same
full
safety
and
effectiveness
data
as
an
NDA,
butat
least
some
of
the
information
comes
from
studies
not
conducted
by
or
for
the
applicant.
The
ANDA
or
505(b)(2)
applicant
is
required
to
certify
to
the
FDAconcerning
any
patents
listed
for
the
approved
product
in
the
FDA's
Orange
Book.
Specifically,
the
applicant
must
certify
that:
(i)
the
required
patent
informationhas
not
been
filed;
(ii)
the
listed
patent
has
expired;
(iii)
the
listed
patent
has
not
expired,
but
will
expire
on
a
particular
date
and
approval
is
sought
after
patentexpiration;
or
(iv)
the
listed
patent
is
invalid
or
will
not
be
infringed
by
the
new
product.
The
ANDA
or
505(b)(2)
applicant
may
also
elect
to
submit
a
statementcertifying
that
its
proposed
label
does
not
contain
(or
carves
out)
any
language
regarding
the
patented
method-of-use
rather
than
certify
to
a
listed
method-of-usepatent.
If
the
applicant
does
not
challenge
the
listed
patents,
the
ANDA
or
505(b)(2)
application
will
not
be
approved
until
all
the
listed
patents
claiming
thereferenced
product
have
expired.







A
certification
that
the
new
product
will
not
infringe
the
already
approved
product's
listed
patents,
or
that
such
patents
are
invalid,
is
called
a
Paragraph
IVcertification.
If
the
ANDA
or
505(b)(2)
applicant
has
provided
a
Paragraph
IV
certification
to
the
FDA,
the
applicant
must
also
send
notice
of
the
Paragraph
IVcertification
to
the
NDA
and
patent
holders
once
the
ANDA
or
505(b)(2)
application
has
been
accepted
for
filing
by
the
FDA.
The
NDA
and
patent
holders
maythen
initiate
a
patent
infringement
lawsuit
in
response
to
the
notice
of
the
Paragraph
IV
certification.
The
filing
of
a
patent
infringement
lawsuit
within
45
days
ofthe
receipt
of
a
Paragraph
IV
certification
automatically
prevents
the
FDA
from
approving
the
ANDA
or
505(b)(2)
application
until
the
earlier
of
30
months,expiration
of
the
patent,
settlement
of
the
lawsuit,
or
a
decision
in
the
infringement
case
that
is
favorable
to
the
ANDA
or
505(b)(2)
applicant.







The
ANDA
or
505(b)(2)
application
also
will
not
be
approved
until
any
applicable
non-patent
exclusivity
listed
in
the
Orange
Book
for
the
referenced
producthas
expired.Exclusivity







Upon
NDA
approval
of
a
new
chemical
entity,
or
NCE,
which
is
a
drug
that
contains
no
active
moiety
that
has
been
approved
by
the
FDA
in
any
other
NDA,that
drug
receives
five
years
of
marketing
exclusivity
during
which
the
FDA
cannot
receive
any
ANDA
seeking
approval
of
a
generic18Table
of
Contentsversion
of
that
drug.
Certain
changes
to
a
drug,
such
as
the
addition
of
a
new
indication
to
the
package
insert,
are
associated
with
a
three-year
period
of
exclusivityduring
which
the
FDA
cannot
approve
an
ANDA
for
a
generic
drug
that
includes
the
change.







An
ANDA
may
be
submitted
one
year
before
NCE
exclusivity
expires
if
a
Paragraph
IV
certification
is
filed.
If
there
is
no
listed
patent
in
the
Orange
Book,there
may
not
be
a
Paragraph
IV
certification,
and,
thus,
no
ANDA
may
be
filed
before
the
expiration
of
the
exclusivity
period.Patent Term Extension







After
NDA
approval,
owners
of
relevant
drug
patents
may
apply
for
up
to
a
five
year
patent
extension.
The
allowable
patent
term
extension
is
calculated
ashalf
of
the
drug's
testing
phase—the
time
between
IND
application
and
NDA
submission—and
all
of
the
review
phase—the
time
between
NDA
submission
andapproval
up
to
a
maximum
of
five
years.
The
time
can
be
shortened
if
the
FDA
determines
that
the
applicant
did
not
pursue
approval
with
due
diligence.
The
totalpatent
term
after
the
extension
may
not
exceed
14
years.The Foreign Corrupt Practices Act







The
Foreign
Corrupt
Practices
Act,
or
FCPA,
prohibits
any
U.S.
individual
or
business
from
paying,
offering,
or
authorizing
payment
or
offering
of
anythingof
value,
directly
or
indirectly,
to
any
foreign
official,
political
party
or
candidate
for
the
purpose
of
influencing
any
act
or
decision
of
the
foreign
entity
in
order
toassist
the
individual
or
business
in
obtaining
or
retaining
business.
The
FCPA
also
obligates
companies
whose
securities
are
listed
in
the
United
States
to
complywith
accounting
provisions
requiring
the
company
to
maintain
books
and
records
that
accurately
and
fairly
reflect
all
transactions
of
the
corporation,
includinginternational
subsidiaries,
and
to
devise
and
maintain
an
adequate
system
of
internal
accounting
controls
for
international
operations.Europe
and
Other
International
Government
Regulation







In
addition
to
regulations
in
the
United
States,
we
will
be
subject
to
a
variety
of
regulations
in
other
jurisdictions
governing,
among
other
things,
clinical
trialsand
any
commercial
sales
and
distribution
of
our
products.
Whether
or
not
we
obtain
FDA
approval
for
a
product,
we
must
obtain
the
requisite
approvals
fromregulatory
authorities
in
foreign
countries
prior
to
the
commencement
of
clinical
trials
or
marketing
of
the
product
in
those
countries.
Some
countries
outside
of
theUnited
States
have
a
similar
process
that
requires
the
submission
of
a
clinical
trial
application,
or
CTA,
much
like
the
IND
prior
to
the
commencement
of
humanclinical
trials.
In
Europe,
for
example,
a
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.







To
obtain
regulatory
approval
to
commercialize
a
new
drug
under
European
Union
regulatory
systems,
we
must
submit
a
marketing
authorization
application,or
MAA.
The
MAA
is
similar
to
the
NDA,
with
the
exception
of,
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
conduct
ofclinical
trials,
product
licensing,
pricing
and
reimbursement
vary
from
country
to
country.
In
all
cases,
again,
the
clinical
trials
are
conducted
in
accordance
withGCP
and
the
applicable
regulatory
requirements
and
the
ethical
principles
that
have
their
origin
in
the
Declaration
of
Helsinki.19Table
of
ContentsCompliance







During
all
phases
of
development
(pre-
and
post-marketing),
failure
to
comply
with
applicable
regulatory
requirements
may
result
in
administrative
or
judicialsanctions.
These
sanctions
could
include
the
FDA's
imposition
of
a
clinical
hold
on
trials,
refusal
to
approve
pending
applications,
withdrawal
of
an
approval,warning
letters,
product
recalls,
product
seizures,
total
or
partial
suspension
of
production
or
distribution,
product
detention
or
refusal
to
permit
the
import
orexport
of
products,
injunctions,
fines,
civil
penalties
or
criminal
prosecution.
Any
agency
or
judicial
enforcement
action
could
have
a
material
adverse
effect
on
us.Other
Special
Regulatory
ProceduresOrphan Drug Designation







The
FDA
may
grant
Orphan
Drug
Designation
to
drugs
intended
to
treat
a
rare
disease
or
condition
that
affects
fewer
than
200,000
individuals
in
the
UnitedStates,
or,
if
the
disease
or
condition
affects
more
than
200,000
individuals
in
the
United
States,
there
is
no
reasonable
expectation
that
the
cost
of
developing
andmaking
the
drug
would
be
recovered
from
sales
in
the
United
States.
In
the
European
Union,
the
EMA's
Committee
for
Orphan
Medicinal
Products,
or
COMP,grants
Orphan
Drug
Designation
to
promote
the
development
of
products
that
are
intended
for
the
diagnosis,
prevention
or
treatment
of
life-threatening
orchronically
debilitating
conditions
affecting
not
more
than
five
in
10,000
persons
in
the
European
Union
community.
Additionally,
designation
is
granted
forproducts
intended
for
the
diagnosis,
prevention
or
treatment
of
a
life-
threatening,
seriously
debilitating
or
serious
and
chronic
condition
and
when,
withoutincentives,
it
is
unlikely
that
sales
of
the
drug
in
the
European
Union
would
be
sufficient
to
justify
the
necessary
investment
in
developing
the
drug.







In
the
United
States,
Orphan
Drug
Designation
entitles
a
party
to
financial
incentives,
such
as
opportunities
for
grant
funding
towards
clinical
trial
costs,
taxcredits
for
certain
research
and
user
fee
waivers
under
certain
circumstances.
In
addition,
if
a
product
receives
the
first
FDA
approval
for
the
indication
for
which
ithas
orphan
designation,
the
product
is
entitled
to
seven
years
of
market
exclusivity,
which
means
the
FDA
may
not
approve
any
other
application
for
the
same
drugfor
the
same
indication
for
a
period
of
seven
years,
except
in
limited
circumstances,
such
as
a
showing
of
clinical
superiority
over
the
product
with
orphanexclusivity.
Orphan
drug
exclusivity
does
not
prevent
the
FDA
from
approving
a
different
drug
for
the
same
disease
or
condition,
or
the
same
drug
for
a
differentdisease
or
condition.







In
the
European
Union,
Orphan
Drug
Designation
also
entitles
a
party
to
financial
incentives
such
as
reduction
of
fees
or
fee
waivers
and
ten
years
of
marketexclusivity
is
granted
following
drug
approval.
This
period
may
be
reduced
to
six
years
if
the
Orphan
Drug
Designation
criteria
are
no
longer
met,
including
whereit
is
shown
that
the
product
is
sufficiently
profitable
not
to
justify
maintenance
of
market
exclusivity.







Orphan
drug
designation
must
be
requested
before
submission
of
an
application
for
marketing
approval.
Orphan
drug
designation
does
not
convey
anyadvantage
in,
or
shorten
the
duration
of
the
regulatory
review
and
approval
process.Priority Review (United States) and Accelerated Review (European Union)







Based
on
results
of
one
or
more
Phase
3
clinical
trials
submitted
in
an
NDA,
upon
the
request
of
an
applicant,
a
priority
review
designation
may
be
granted
toa
product
by
the
FDA,
which
sets
the
target
date
for
FDA
action
on
the
application
at
six
months
from
FDA
filing,
or
eight
months
from
the
sponsor's
submission.Priority
review
is
given
where
preliminary
estimates
indicate
that
a
product,
if
approved,
has
the
potential
to
provide
a
safe
and
effective
therapy
where
nosatisfactory
alternative
therapy
exists,
or
a
significant
improvement
compared
to
marketed
products
is
possible.
If
criteria
are20Table
of
Contentsnot
met
for
priority
review,
the
standard
FDA
review
period
is
ten
months
from
FDA
filing,
or
12
months
from
sponsor
submission.
Priority
review
designationdoes
not
change
the
scientific/medical
standard
for
approval
or
the
quality
of
evidence
necessary
to
support
approval.







Under
the
Centralized
Procedure
in
the
European
Union,
the
maximum
timeframe
for
the
evaluation
of
a
marketing
authorization
application
is
210
days(excluding
clock
stops,
when
additional
written
or
oral
information
is
to
be
provided
by
the
applicant
in
response
to
questions
asked
by
the
CHMP).
Acceleratedevaluation
might
be
granted
by
the
CHMP
in
exceptional
cases,
when
a
medicinal
product
is
expected
to
be
of
a
major
public
health
interest,
defined
by
threecumulative
criteria:
the
seriousness
of
the
disease
(e.g.,
heavy
disabling
or
life-threatening
diseases)
to
be
treated;
the
absence
or
insufficiency
of
an
appropriatealternative
therapeutic
approach;
and
anticipation
of
high
therapeutic
benefit.
In
this
circumstance,
EMA
ensures
that
the
opinion
of
the
CHMP
is
given
within150
days.Pediatric Information







Under
the
Pediatric
Research
Equity
Act,
or
PREA,
NDAs
or
supplements
to
NDAs
must
contain
data
to
assess
the
safety
and
effectiveness
of
the
drug
for
theclaimed
indications
in
all
relevant
pediatric
subpopulations
and
to
support
dosing
and
administration
for
each
pediatric
subpopulation
for
which
the
drug
is
safe
andeffective.
The
FDA
may
grant
full
or
partial
waivers,
or
deferrals,
for
submission
of
data.
Unless
otherwise
required
by
regulation,
PREA
does
not
apply
to
anydrug
for
an
indication
for
which
orphan
designation
has
been
granted.







The
Best
Pharmaceuticals
for
Children
Act,
or
BPCA,
provides
NDA
holders
a
six-month
extension
of
any
exclusivity—patent
or
non-patent—for
a
drug
ifcertain
conditions
are
met.
Conditions
for
exclusivity
include
the
FDA's
determination
that
information
relating
to
the
use
of
a
new
drug
in
the
pediatric
populationmay
produce
health
benefits
in
that
population,
the
FDA
making
a
written
request
for
pediatric
studies,
and
the
applicant
agreeing
to
perform,
and
reporting
on,
therequested
studies
within
the
statutory
timeframe.
Applications
under
the
BPCA
receive
priority
review
designation,
with
all
of
the
benefits
that
designation
confers.Healthcare
Reform







In
March
2010,
the
President
of
the
United
States
signed
into
law
the
Patient
Protection
and
Affordable
Care
Act,
which
we
refer
to
collectively
as
theAffordable
Care
Act.
The
Affordable
Care
Act
substantially
changes
the
way
healthcare
will
be
financed
by
both
governmental
and
private
insurers,
andsignificantly
impacts
the
pharmaceutical
industry.
The
Affordable
Care
Act
is
a
sweeping
law
intended
to
broaden
access
to
health
insurance,
reduce
or
constrainthe
growth
of
healthcare
spending,
enhance
remedies
against
fraud
and
abuse,
add
new
transparency
requirements
for
healthcare
and
health
insurance
industries,impose
new
taxes
and
fees
on
the
health
industry
and
impose
additional
health
policy
reforms.







Among
the
Affordable
Care
Act's
provisions
of
importance
to
the
pharmaceutical
industry
are
the
following:•an
annual,
nondeductible
fee
on
any
entity
that
manufactures
or
imports
specified
branded
prescription
drugs
and
biologic
agents
apportionedamong
these
entities
according
to
their
market
share
in
some
government
healthcare
programs;
•an
increase
in
the
statutory
minimum
rebates
a
manufacturer
must
pay
under
the
Medicaid
Drug
Rebate
Program,
retroactive
to
January
1,
2010,
to23%
and
13%
of
the
average
manufacturer
price
for
most
branded
and
generic
drugs,
respectively;
•expansion
of
healthcare
fraud
and
abuse
laws,
including
the
False
Claims
Act
and
the
Anti-Kickback
Statute,
new
government
investigative
powers,and
enhanced
penalties
for
noncompliance;21Table
of
Contents•a
new
Medicare
Part
D
coverage
gap
discount
program,
in
which
manufacturers
must
agree
to
offer
50%
point-of-sale
discounts
off
negotiatedprices
of
applicable
brand
drugs
to
eligible
beneficiaries
during
their
coverage
gap
period,
as
a
condition
for
the
manufacturers'
outpatient
drugs
tobe
covered
under
Medicare
Part
D;
•extension
of
manufacturers'
Medicaid
rebate
liability
to
covered
drugs
dispensed
to
individuals
who
are
enrolled
in
Medicaid
managed
careorganizations;
•expansion
of
eligibility
criteria
for
Medicaid
programs
by,
among
other
things,
allowing
states
to
offer
Medicaid
coverage
to
additional
individualsand
by
adding
new
mandatory
eligibility
categories
for
individuals
with
income
at
or
below
133%
of
the
Federal
Poverty
Level,
thereby
potentiallyincreasing
manufacturers'
Medicaid
rebate
liability;
•expansion
of
the
entities
eligible
for
discounts
under
the
Public
Health
Service
pharmaceutical
pricing
program;
•new
requirements
to
report
annually
specified
financial
arrangements
with
physicians
and
teaching
hospitals,
as
defined
in
the
Affordable
Care
Actand
its
implementing
regulations,
including
reporting
any
"payments
or
transfers
of
value"
made
or
distributed
to
prescribers,
teaching
hospitals,and
other
healthcare
providers
and
reporting
any
ownership
and
investment
interests
held
by
physicians
and
other
healthcare
providers
and
theirimmediate
family
members
and
applicable
group
purchasing
organizations
during
the
preceding
calendar
year,
with
data
collection
requiredbeginning
August
1,
2013
and
reporting
to
the
Centers
for
Medicare
and
Medicaid
Services
required
by
March
31,
2014
and
by
the
90th
day
of
eachsubsequent
calendar
year;
•a
new
requirement
to
annually
report
drug
samples
that
manufacturers
and
distributors
provide
to
physicians;
•a
new
Patient-Centered
Outcomes
Research
Institute
to
oversee,
identify
priorities
in,
and
conduct
comparative
clinical
effectiveness
research,along
with
funding
for
such
research;
and
•a
mandatory
nondeductible
payment
for
employers
with
50
or
more
full
time
employees
(or
equivalents)
who
fail
to
provide
certain
minimumhealth
insurance
coverage
for
such
employees
and
their
dependents,
beginning
in
2015
(pursuant
to
relief
enacted
by
the
Treasury
Department).







The
Affordable
Care
Act
also
establishes
an
Independent
Payment
Advisory
Board,
or
IPAB,
to
reduce
the
per
capita
rate
of
growth
in
Medicare
spending.Beginning
in
2014,
IPAB
was
mandated
to
propose
changes
in
Medicare
payments
if
it
determines
that
the
rate
of
growth
of
Medicare
expenditures
exceeds
targetgrowth
rates.
The
IPAB
has
broad
discretion
to
propose
policies
to
reduce
expenditures,
which
may
have
a
negative
impact
on
payment
rates
for
pharmaceuticalproducts.
A
proposal
made
by
the
IPAB
is
required
to
be
implemented
by
the
U.S.
government's
Centers
for
Medicare
&
Medicaid
Services
unless
Congressadopts
a
proposal
with
savings
greater
than
those
proposed
by
the
IPAB.
IPAB
proposals
may
impact
payments
for
physician
and
free-standing
services
beginningin
2015
and
for
hospital
services
beginning
in
2020.







In
addition,
other
legislative
changes
have
been
proposed
and
adopted
since
the
Affordable
Care
Act
was
enacted.
On
August
2,
2011,
the
President
signedinto
law
the
Budget
Control
Act
of
2011,
which,
among
other
things,
created
the
Joint
Select
Committee
on
Deficit
Reduction
to
recommend
proposals
in
spendingreductions
to
Congress.
The
Joint
Select
Committee
did
not
achieve
its
targeted
deficit
reduction
of
at
least
$1.2
trillion
for
the
years
2013
through
2021,
triggeringthe
legislation's
automatic
reductions
to
several
government
programs.
These
reductions
include
aggregate
reductions
to
Medicare
payments
to
providers
of
up
to2%
per
fiscal
year,
starting
in
2013.
On
January
2,
2013,
President
Obama
signed
into
law
the
American
Taxpayer
Relief
Act
of
2012,
which,
among
other22Table
of
Contentsthings,
reduced
Medicare
payments
to
several
providers
and
increased
the
statute
of
limitations
period
for
the
government
to
recover
overpayments
to
providersfrom
three
to
five
years.
These
new
laws
may
result
in
additional
reductions
in
Medicare
and
other
healthcare
funding,
which
could
have
a
material
adverse
effecton
our
customers
and
accordingly,
our
financial
operations.







We
anticipate
that
the
Affordable
Care
Act
will
result
in
additional
downward
pressure
on
coverage
and
the
price
that
we
receive
for
any
approved
product,and
could
seriously
harm
our
business.
Any
reduction
in
reimbursement
from
Medicare
and
other
government
programs
may
result
in
a
similar
reduction
inpayments
from
private
payors.
The
implementation
of
cost
containment
measures
or
other
healthcare
reforms
may
prevent
us
from
being
able
to
generate
revenue,attain
profitability,
or
commercialize
our
products.
In
addition,
it
is
possible
that
there
will
be
further
legislation
or
regulation
that
could
harm
our
business,financial
condition,
and
results
of
operations.Coverage
and
Reimbursement







In
the
US,
many
independent
third-party
payers,
as
well
as
the
Medicare
and
state
Medicaid
programs,
reimburse
buyers
of
pharmaceutical
products.Medicare
is
the
federal
program
that
provides
health
care
benefits
to
senior
citizens
and
certain
disabled
and
chronically
ill
persons.
Medicaid
is
the
federalprogram
administered
by
the
states
to
provide
health
care
benefits
to
certain
indigent
persons.
In
return
for
including
our
pharmaceutical
commercial
products
inthe
Medicare
and
Medicaid
programs,
we
may
need
to
agree
to
pay
a
rebate
to
state
Medicaid
agencies
that
provide
reimbursement
for
those
products.
We
will
alsohave
to
agree
to
sell
our
commercial
products
under
contracts
with
the
Department
of
Veterans
Affairs,
Department
of
Defense,
Public
Health
Service,
andnumerous
other
federal
agencies
as
well
as
certain
hospitals
that
are
designated
as
340B
covered
entities
(entities
designated
by
federal
programs
to
receive
drugsat
discounted
prices)
at
prices
that
are
significantly
below
the
price
we
may
charge
to
commercial
pharmaceutical
distributors.
These
programs
and
contracts
arehighly
regulated
and
may
impose
restrictions
on
our
business.
Failure
to
comply
with
these
regulations
and
restrictions
could
result
in
a
loss
of
our
ability
tocontinue
receiving
reimbursement
for
our
drugs
once
approved.







Different
pricing
and
reimbursement
schemes
exist
in
other
countries.
In
the
European
Community,
governments
influence
the
price
of
pharmaceuticalproducts
through
their
pricing
and
reimbursement
rules
and
control
of
national
health
care
systems
that
fund
a
large
part
of
the
cost
of
those
products
to
consumers.Some
jurisdictions
operate
positive
and
negative
list
systems
under
which
products
may
only
be
marketed
once
a
reimbursement
price
has
been
agreed.
To
obtainreimbursement
or
pricing
approval,
some
of
these
countries
may
require
the
completion
of
clinical
trials
that
compare
the
cost-effectiveness
of
a
particular
drugcandidate
to
currently
available
therapies.
Other
member
states
allow
companies
to
fix
their
own
prices
for
medicines,
but
monitor
and
control
company
profits.The
downward
pressure
on
health
care
costs
in
general,
particularly
prescription
drugs,
has
become
very
intense.
As
a
result,
increasingly
high
barriers
are
beingerected
to
the
entry
of
new
products.
In
addition,
in
some
countries,
cross-border
imports
from
low-priced
markets
exert
a
commercial
pressure
on
pricing
within
acountry.
There
can
be
no
assurance
that
any
country
that
has
price
controls
or
reimbursement
limitations
for
dug
products
will
allow
favorable
reimbursement
andpricing
arrangements
of
our
products.Other
Healthcare
Laws
and
Compliance
Requirements







The
federal
Anti-Kickback
Statute
prohibits,
among
other
things,
knowingly
and
willfully
offering,
paying,
soliciting
or
receiving
remuneration
to
induce
orin
return
for
purchasing,
leasing,
ordering
or
arranging
for
the
purchase,
lease
or
order
of
any
healthcare
item
or
service
reimbursable
under
Medicare,
Medicaid
orother
federally
financed
healthcare
programs.
This
statute
has
been
interpreted
to
apply
to
arrangements
between
pharmaceutical
manufacturers
on
one
hand
andprescribers,
purchasers,
and
formulary
managers
on
the
other.
Although
there
are
a
number
of
statutory23Table
of
Contentsexemptions
and
regulatory
safe
harbors
protecting
some
business
arrangements
from
prosecution,
the
exemptions
and
safe
harbors
are
drawn
narrowly
andpractices
that
involve
remuneration
intended
to
induce
prescribing,
purchasing
or
recommending
may
be
subject
to
scrutiny
if
they
do
not
qualify
for
an
exemptionor
safe
harbor.
Our
practices
may
not
in
all
cases
meet
all
of
the
criteria
for
safe
harbor
protection
from
federal
Anti-Kickback
Statute
liability.
The
reach
of
theAnti-Kickback
Statute
was
broadened
by
the
Affordable
Care
Act,
which,
among
other
things,
amends
the
intent
requirement
of
the
federal
Anti-Kickback
Statute.Pursuant
to
the
statutory
amendment,
a
person
or
entity
no
longer
needs
to
have
actual
knowledge
of
this
statute
or
specific
intent
to
violate
it
in
order
to
havecommitted
a
violation.
In
addition,
the
Affordable
Care
Act
provides
that
the
government
may
assert
that
a
claim
including
items
or
services
resulting
from
aviolation
of
the
federal
Anti-Kickback
Statute
constitutes
a
false
or
fraudulent
claim
for
purposes
of
the
civil
False
Claims
Act
(discussed
below)
or
the
civilmonetary
penalties
statute,
which
imposes
penalties
against
any
person
who
is
determined
to
have
presented
or
caused
to
be
presented
a
claim
to
a
federal
healthprogram
that
the
person
knows
or
should
know
is
for
an
item
or
service
that
was
not
provided
as
claimed
or
is
false
or
fraudulent.







The
federal
False
Claims
Act
prohibits
any
person
from
knowingly
presenting,
or
causing
to
be
presented,
a
false
claim
for
payment
to
the
federal
governmentor
knowingly
making,
using,
or
causing
to
be
made
or
used
a
false
record
or
statement
material
to
a
false
or
fraudulent
claim
to
the
federal
government.
As
a
resultof
a
modification
made
by
the
Fraud
Enforcement
and
Recovery
Act
of
2009,
a
claim
includes
"any
request
or
demand"
for
money
or
property
presented
to
theU.S.
government.
Recently,
several
pharmaceutical
and
other
healthcare
companies
have
been
prosecuted
under
these
laws
for
allegedly
providing
free
product
tocustomers
with
the
expectation
that
the
customers
would
bill
federal
programs
for
the
product.
Other
companies
have
been
prosecuted
for
causing
false
claims
tobe
submitted
because
of
the
companies'
marketing
of
the
product
for
unapproved,
and
thus
non-reimbursable,
uses.
HIPAA
created
new
federal
criminal
statutesthat
prohibit
knowingly
and
willfully
executing
a
scheme
to
defraud
any
healthcare
benefit
program,
including
private
third-party
payors
and
knowingly
andwillfully
falsifying,
concealing
or
covering
up
a
material
fact
or
making
any
materially
false,
fictitious
or
fraudulent
statement
in
connection
with
the
delivery
of
orpayment
for
healthcare
benefits,
items
or
services.
Also,
many
states
have
similar
fraud
and
abuse
statutes
or
regulations
that
apply
to
items
and
servicesreimbursed
under
Medicaid
and
other
state
programs,
or,
in
several
states,
apply
regardless
of
the
payor.







In
addition,
we
may
be
subject
to
data
privacy
and
security
regulation
by
both
the
federal
government
and
the
states
in
which
we
conduct
our
business.HIPAA,
as
amended
by
HITECH,
and
its
implementing
regulations,
imposes
requirements
relating
to
the
privacy,
security
and
transmission
of
individuallyidentifiable
health
information.
Among
other
things,
HITECH
makes
HIPAA's
privacy
and
security
standards
directly
applicable
to
"business
associates"—independent
contractors
or
agents
of
covered
entities
that
receive
or
obtain
protected
health
information
in
connection
with
providing
a
service
on
behalf
of
acovered
entity.
HITECH
also
increased
the
civil
and
criminal
penalties
that
may
be
imposed
against
covered
entities,
business
associates
and
possibly
otherpersons,
and
gave
state
attorneys
general
new
authority
to
file
civil
actions
for
damages
or
injunctions
in
federal
courts
to
enforce
the
federal
HIPAA
laws
and
seekattorney's
fees
and
costs
associated
with
pursuing
federal
civil
actions.
In
addition,
state
laws
govern
the
privacy
and
security
of
health
information
in
specifiedcircumstances,
many
of
which
differ
from
each
other
in
significant
ways
and
may
not
have
the
same
effect,
thus
complicating
compliance
efforts.







In
the
United
States,
our
activities
are
potentially
subject
to
additional
regulation
by
various
federal,
state
and
local
authorities
in
addition
to
the
FDA,including
the
Centers
for
Medicare
and
Medicaid
Services,
other
divisions
of
HHS
(e.g.,
the
Office
of
Inspector
General),
the
DOJ
and
individual
U.S.
Attorneyoffices
within
the
DOJ,
and
state
and
local
governments.
If
a
drug
product
is
reimbursed
by
Medicare
or
Medicaid,
pricing
and
rebate
programs
must
comply
with,as
applicable,
the
Medicare
Prescription
Drug,
Improvement,
and
Modernization
Act
of
2003
as
well
as
the
Medicaid24Table
of
Contentsrebate
requirements
of
the
Omnibus
Budget
Reconciliation
Act
of
1990,
or
the
OBRA,
and
the
Veterans
Health
Care
Act
of
1992,
each
as
amended.
Among
otherthings,
the
OBRA
requires
drug
manufacturers
to
pay
rebates
on
prescription
drugs
to
state
Medicaid
programs
and
empowers
states
to
negotiate
rebates
onpharmaceutical
prices,
which
may
result
in
prices
for
our
future
products
that
will
likely
be
lower
than
the
prices
we
might
otherwise
obtain.
If
products
are
madeavailable
to
authorized
users
of
the
Federal
Supply
Schedule
of
the
General
Services
Administration,
additional
laws
and
requirements
apply.
Under
the
VeteransHealth
Care
Act,
or
VHCA,
drug
companies
are
required
to
offer
some
drugs
at
a
reduced
price
to
a
number
of
federal
agencies
including
the
U.S.
Department
ofVeterans
Affairs
and
DoD,
the
Public
Health
Service
and
some
private
Public
Health
Service
designated
entities
in
order
to
participate
in
other
federal
fundingprograms
including
Medicaid.
Recent
legislative
changes
require
that
discounted
prices
be
offered
for
specified
DoD
purchases
for
its
TRICARE
program
via
arebate
system.
Participation
under
the
VHCA
requires
submission
of
pricing
data
and
calculation
of
discounts
and
rebates
pursuant
to
complex
statutory
formulas,as
well
as
the
entry
into
government
procurement
contracts
governed
by
the
Federal
Acquisition
Regulation.







Because
of
the
breadth
of
these
laws
and
the
narrowness
of
available
statutory
and
regulatory
exemptions,
it
is
possible
that
some
of
our
business
activitiescould
be
subject
to
challenge
under
one
or
more
of
such
laws.
If
our
operations
are
found
to
be
in
violation
of
any
of
the
federal
and
state
laws
described
above
orany
other
governmental
regulations
that
apply
to
us,
we
may
be
subject
to
penalties,
including
criminal
and
significant
civil
monetary
penalties,
damages,
fines,imprisonment,
exclusion
from
participation
in
government
programs,
injunctions,
recall
or
seizure
of
products,
total
or
partial
suspension
of
production,
denial
orwithdrawal
of
pre-marketing
product
approvals,
private
"qui
tam"
actions
brought
by
individual
whistleblowers
in
the
name
of
the
government
or
refusal
to
allowus
to
enter
into
supply
contracts,
including
government
contracts,
and
the
curtailment
or
restructuring
of
our
operations,
any
of
which
could
adversely
affect
ourability
to
operate
our
business
and
our
results
of
operations.
To
the
extent
that
any
of
our
products
are
sold
in
a
foreign
country,
we
may
be
subject
to
similarforeign
laws
and
regulations,
which
may
include,
for
instance,
applicable
post-marketing
requirements,
including
safety
surveillance,
anti-fraud
and
abuse
laws,and
implementation
of
corporate
compliance
programs
and
reporting
of
payments
or
transfers
of
value
to
healthcare
professionals.







In
order
to
distribute
products
commercially,
we
must
comply
with
state
laws
that
require
the
registration
of
manufacturers
and
wholesale
distributors
ofpharmaceutical
products
in
a
state,
including,
in
some
states,
manufacturers
and
distributors
who
ship
products
into
the
state
even
if
such
manufacturers
ordistributors
have
no
place
of
business
within
the
state.
Some
states
also
impose
requirements
on
manufacturers
and
distributors
to
establish
the
pedigree
of
productin
the
chain
of
distribution,
including
some
states
that
require
manufacturers
and
others
to
adopt
new
technology
capable
of
tracking
and
tracing
product
as
itmoves
through
the
distribution
chain.
Several
states
have
enacted
legislation
requiring
pharmaceutical
companies
to,
among
other
things,
establish
marketingcompliance
programs,
file
periodic
reports
with
the
state,
make
periodic
public
disclosures
on
sales,
marketing,
pricing,
clinical
trials
and
other
activities,
and/
orregister
their
sales
representatives,
as
well
as
to
prohibit
pharmacies
and
other
healthcare
entities
from
providing
specified
physician
prescribing
data
topharmaceutical
companies
for
use
in
sales
and
marketing,
and
to
prohibit
other
specified
sales
and
marketing
practices.
All
of
our
activities
are
potentially
subjectto
federal
and
state
consumer
protection
and
unfair
competition
laws.Employees








As
of
December
31,
2015,
we
had
36
employees.
As
part
of
our
efforts
to
conserve
cash,
we
are
reducing
our
headcount
during
the
first
half
of
2016.
We
haveno
collective
bargaining
agreements
with
our
employees
and
have
not
experienced
any
work
stoppages.
We
believe
that
relations
with
our
employees
are
good.25Table
of
ContentsCorporate
Information








We
were
incorporated
in
Delaware
in
December
1998.
Our
primary
executive
offices
are
located
at
375
Pheasant
Run,
Newtown,
PA
18940
and
our
telephonenumber
is
(267)
759-3680.
Our
website
address
is
www.onconova.com.
The
information
contained
in,
or
that
can
be
accessed
through,
our
website
is
not
part
ofthis
Report.ITEM
1A.




RISK
FACTORS









You should carefully consider the following risk factors together with the other information contained in this Annual Report, including our financialstatements and the related notes appearing in this report. We cannot assure you that any of the events discussed in the risk factors below will not occur. If any ofthe following risks actually occur, they may materially harm our business and our financial condition and results of operations. In this event, the market price ofour common stock could decline and your investment could be lost. You should understand that it is not possible to predict or identify all such risks. Consequently,you should not consider the following to be a complete discussion of all potential risks or uncertaintiesRisks
Related
to
Our
Financial
Position
and
Capital
Needs
If
we
are
unable
to
meet
our
needs
for
additional
funding
in
the
future,
we
will
be
required
to
limit,
scale
back
or
cease
operations.







We
do
not
have
the
funding
resources
necessary
to
carry
out
all
of
our
proposed
operating
activities,
including
our
INSPIRE
trial.
We
will
need
to
obtainadditional
financing
in
the
future
in
order
to
fully
fund
rigosertib
or
any
other
product
candidates
through
the
regulatory
approval
process.
Accordingly,
we
maydelay
or
pause
our
planned
clinical
trials,
including
our
INSPIRE
trial,
until
we
secure
adequate
additional
funding.
If
we
seek
to
proceed
with
a
clinical
trialwithout
additional
funding,
we
may
receive
questions
or
comments
from
the
FDA,
fail
to
obtain
IRB
approval,
or
find
it
more
difficult
to
enroll
patients
in
the
trial.Additionally,
we
plan
to
scale
down
our
operations
in
order
to
reduce
spending
on
general
and
administrative
functions,
research
and
development,
and
otherclinical
trials,
but
may
not
be
able
to
do
so
quickly.







We
are
exploring
various
dilutive
and
non-dilutive
sources
of
funding,
including
equity
and
debt
financings,
strategic
alliances,
business
development
andother
sources.
However,
we
may
not
be
able
to
obtain
additional
funding
on
favorable
terms,
if
at
all.
If
we
are
unable
to
secure
adequate
additional
funding,
wewill
continue
to
delay,
scale-back
or
eliminate
certain
of
our
planned
research,
drug
discovery
and
development
activities
and
certain
other
aspects
of
ouroperations
and
our
business
until
such
time
as
we
are
successful
in
securing
adequate
additional
funding.
As
a
result,
our
business,
operating
results,
financialcondition
and
cash
flows
may
be
materially
and
adversely
affected.
We
will
incur
substantial
costs
beyond
the
present
and
planned
clinical
trials
in
order
to
file
anNDA
for
rigosertib.
The
nature,
design,
size
and
cost
of
further
studies
will
depend
in
large
part
on
the
outcome
of
preceding
studies
and
discussions
withregulators.







Our
future
capital
requirements
will
depend
on
many
factors,
including:•timing
and
success
of
our
clinical
trials
for
rigosertib;
•continued
progress
of
and
increased
spending
related
to
our
research
and
development
activities;
•conditions
in
the
capital
markets
and
the
biopharmaceutical
industry,
particularly
with
respect
to
raising
capital
or
entering
into
strategicarrangements;
•progress
with
preclinical
experiments
and
clinical
trials,
including
regulatory
approvals
necessary
for
advancement
and
continuation
of
ourdevelopment
programs;26Table
of
Contents•changes
in
regulatory
requirements
and
guidance
of
the
FDA
and
other
regulatory
authorities,
which
may
require
additional
clinical
trials
toevaluate
safety
and/or
efficacy,
and
thus
have
significant
impacts
on
our
timelines,
cost
projections,
and
financial
requirements;
•ongoing
general
and
administrative
expenses
related
to
our
reporting
obligations
under
the
Exchange
Act;
•cost,
timing,
and
results
of
regulatory
reviews
and
approvals;
•costs
of
any
legal
proceedings,
claims,
lawsuits
and
investigations;
•success,
timing,
and
financial
consequences
of
any
existing
or
future
collaborative,
licensing
and
other
arrangements
that
we
may
establish,including
potential
granting
of
licenses
to
one
or
more
of
our
programs
in
various
territories,
or
otherwise
monetizing
one
or
more
of
our
programs;
•cost
of
filing,
prosecuting,
defending
and
enforcing
any
patent
claims
and
other
intellectual
property
rights;
•costs
of
commercializing
any
of
our
other
product
candidates;
•technological
and
market
developments;
•cost
of
manufacturing
development;
and
•timing
and
volume
of
sales
of
products
for
which
we
obtain
marketing
approval.







These
factors
could
result
in
variations
from
our
projected
operating
and
liquidity
requirements.
Additional
funds
may
not
be
available
when
needed,
or,
ifavailable,
we
may
not
be
able
to
obtain
such
funds
on
terms
acceptable
to
us.
If
adequate
funds
are
unavailable,
we
may
be
required,
among
other
things,
to:•delay,
reduce
the
scope
of
or
eliminate
one
or
more
of
our
research
or
development
programs;
•license
rights
to
technologies,
product
candidates
or
products
at
an
earlier
stage
or
for
indications
or
territories
than
otherwise
would
be
desirable,
oron
terms
that
are
less
favorable
to
us
than
might
otherwise
be
available;
•obtain
funds
through
arrangements
that
may
require
us
to
relinquish
rights
to
product
candidates
or
products
that
we
would
otherwise
seek
todevelop
or
commercialize
by
ourselves;
or
•cease
operations.Baxalta's
election
to
terminate
our
development
and
license
agreement
may
negatively
impact
our
ability
to
fund
our
business
in
the
future.







Our
development
and
license
agreement
with
Baxalta
granted
it
an
exclusive,
royalty-bearing
license
for
the
development
and
commercialization
of
rigosertibin
specified
countries
comprising
most
of
Europe.
Under
the
agreement,
we
received
an
upfront
license
fee
upon
signing,
and
would
have
received
certain
pre-
andpost-commercialization
payments
and
royalties
if
specified
development
and
regulatory
milestones
had
been
achieved
and
Baxalta
had
engaged
in
sales
ofrigosertib
in
its
territory.
On
March
3,
2016,
we
received
a
notice
from
Baxalta
notifying
us
of
Baxalta's
election
to
terminate
the
development
and
licenseagreement
based
on
a
strategic
reprioritization
review,
effective
August
30,
2016.
The
decision
by
Baxalta
to
terminate
this
agreement,
will
reduce
the
funding
wewere
eligible
to
receive
under
the
collaboration
agreement
and
could
negatively
impact
our
ability
to
successfully
develop,
obtain
regulatory
approvals
for
andcommercialize
our
product
candidates.
In
addition,
the27Table
of
Contentsdecision
by
Baxalta
to
terminate
this
agreement
could
also
damage
our
reputation
and
negatively
impact
our
ability
to
obtain
financing
from
other
sources.Our
independent
auditors
have
expressed
substantial
doubt
about
our
ability
to
continue
as
a
going
concern
.







Our
consolidated
financial
statements
for
the
year
ended
December
31,
2015
have
been
prepared
assuming
we
will
continue
to
operate
as
a
going
concern.However,
due
to
our
ongoing
operating
losses
and
our
accumulated
deficit,
in
their
opinion
on
our
audited
financial
statements
for
our
fiscal
year
endedDecember
31,
2015,
our
auditors
indicated
that
there
is
substantial
doubt
about
our
ability
to
continue
as
a
going
concern.
Because
we
continue
to
experience
netoperating
losses,
our
ability
to
continue
as
a
going
concern
is
subject
to
our
ability
to
successfully
raise
sufficient
additional
capital,
through
future
financings
orthrough
strategic
and
collaborative
arrangements.
There
can
be
no
assurances
that
we
will
be
able
to
obtain
such
additional
capital
on
favorable
terms
or
at
all.
Ifwe
are
unable
to
obtain
sufficient
additional
capital,
through
future
financings
or
through
strategic
and
collaborative
arrangements
financing
from
the
sale
of
oursecurities
or
from
alternative
sources,
we
will
continue
to
delay,
scale-back
or
eliminate
certain
of
our
planned
research,
drug
discovery
and
development
activitiesand
certain
other
aspects
of
our
operations,
or
we
may
not
be
able
to
continue
as
a
going
concern.We
have
incurred
significant
losses
since
our
inception
and
anticipate
that
we
will
continue
to
incur
losses
in
the
future.







We
are
a
clinical-stage
biopharmaceutical
company.
Investment
in
biopharmaceutical
product
development
is
highly
speculative
because
it
entails
substantialupfront
capital
expenditures
and
significant
risk
that
a
product
candidate
will
fail
to
gain
regulatory
approval
or
become
commercially
viable.
We
do
not
have
anyproducts
approved
by
regulatory
authorities
for
marketing
and
have
not
generated
any
revenue
from
product
sales
to
date,
and
we
continue
to
incur
significantresearch,
development
and
other
expenses
related
to
our
ongoing
operations.
As
a
result,
we
are
not
profitable
and
have
incurred
losses
in
every
reporting
periodsince
our
inception
in
1998.
For
the
years
ended
December
31,
2015,
and
2014,
we
reported
net
losses
of
$24.0
million
and
$63.8
million,
respectively,
and
we
hadan
accumulated
deficit
of
$318.6
million
at
December
31,
2015.







We
expect
to
continue
to
incur
significant
expenses
and
operating
losses
for
the
foreseeable
future.
These
losses
may
increase
as
we
continue
the
research
anddevelopment
of,
and
seek
regulatory
approvals
for,
our
product
candidates,
and
potentially
begin
to
commercialize
any
products
that
may
achieve
regulatoryapproval.
We
may
encounter
unforeseen
expenses,
difficulties,
complications,
delays
and
other
unknown
factors
that
may
adversely
affect
our
business.
The
size
ofour
future
net
losses
will
depend,
in
part,
on
the
rate
of
future
growth
of
our
expenses
and
our
ability
to
generate
revenues.
If
any
of
our
product
candidates
fail
inclinical
trials
or
do
not
gain
regulatory
approval,
or
if
approved,
fail
to
achieve
market
acceptance,
we
may
never
become
profitable.
Even
if
we
achieveprofitability
in
the
future,
we
may
not
be
able
to
sustain
profitability
in
subsequent
periods.We
have
a
limited
operating
history,
which
may
make
it
difficult
for
you
to
evaluate
the
success
of
our
business
to
date
and
to
assess
our
future
viability.







Our
operations
to
date
have
been
limited
to
organizing
and
staffing
our
company,
acquiring
product
and
technology
rights,
discovering
novel
molecules
andconducting
product
development
activities
for
our
product
candidates.
We
have
not
yet
obtained
regulatory
approval
for
any
of
our
product
candidates.Consequently,
any
predictions
about
our
future
success,
performance
or
viability
may
not
be
as
accurate
as
they
could
be
if
we
had
a
longer
operating
history
orapproved
products
on
the
market.28Table
of
ContentsWe
currently
have
no
source
of
product
revenue
and
may
never
become
profitable.







To
date,
we
have
not
generated
any
revenues
from
commercial
product
sales.
Our
ability
to
generate
revenue
from
product
sales
and
achieve
profitability
willdepend
upon
our
ability
to
successfully
commercialize
products,
including
any
of
our
current
product
candidates,
or
other
product
candidates
that
we
may
in-license
or
acquire
in
the
future.
Even
if
we
are
able
to
successfully
achieve
regulatory
approval
for
these
product
candidates,
we
do
not
know
when
any
of
theseproducts
will
generate
revenue
from
product
sales
for
us,
if
at
all.
Our
ability
to
generate
revenue
from
product
sales
from
our
current
or
future
product
candidatesalso
depends
on
a
number
of
additional
factors,
including
our
ability
to:•successfully
complete
development
activities,
including
the
necessary
clinical
trials;
•complete
and
submit
NDAs,
to
the
U.S.
Food
and
Drug
Administration,
or
FDA,
and
obtain
regulatory
approval
for
indications
for
which
there
is
acommercial
market;
•complete
and
submit
applications
to,
and
obtain
regulatory
approval
from,
foreign
regulatory
authorities;
•successfully
complete
all
required
regulatory
agency
inspections;
•set
a
commercially
viable
price
for
our
products;
•obtain
commercial
quantities
of
our
products
at
acceptable
cost
levels;
•develop
a
commercial
organization
capable
of
sales,
marketing
and
distribution
for
any
products
we
intend
to
sell
ourselves
in
the
markets
in
whichwe
choose
to
commercialize
on
our
own;
•find
suitable
distribution
partners
to
help
us
market,
sell
and
distribute
our
approved
products
in
other
markets;
and
•obtain
coverage
and
adequate
reimbursement
from
third
parties,
including
government
and
private
payors.







In
addition,
because
of
the
numerous
risks
and
uncertainties
associated
with
product
development,
including
that
our
product
candidates
may
not
advancethrough
development
or
achieve
the
endpoints
of
applicable
clinical
trials,
we
are
unable
to
predict
the
timing
or
amount
of
increased
expenses,
or
when
or
if
wewill
be
able
to
achieve
or
maintain
profitability.
Even
if
we
are
able
to
complete
the
development
and
regulatory
process
for
any
product
candidates,
we
anticipateincurring
significant
costs
associated
with
commercializing
these
products.







Even
if
we
are
able
to
generate
revenues
from
the
sale
of
our
products,
we
may
not
become
profitable
and
may
need
to
obtain
additional
funding
to
continueoperations.
If
we
fail
to
become
profitable
or
are
unable
to
sustain
profitability
on
a
continuing
basis,
then
we
may
be
unable
to
continue
our
operations
at
plannedlevels
and
be
forced
to
reduce
or
suspend
our
operations.Raising
additional
capital
may
cause
dilution
to
our
existing
stockholders,
restrict
our
operations
or
require
us
to
relinquish
rights
to
our
technologies
orproduct
candidates.







Until
we
can
generate
substantial
revenue
from
product
sales,
if
ever,
we
expect
to
seek
additional
capital
through
a
combination
of
private
and
public
equityofferings,
debt
financings,
strategic
collaborations
and
alliances
and
licensing
arrangements.
To
the
extent
that
we
raise
additional
capital
through
the
sale
of
equityor
convertible
debt
securities,
the
ownership
interests
of
existing
stockholders
will
be
diluted,
and
the
terms
may
include
liquidation
or
other
preferences
thatadversely
affect
the
rights
of
existing
stockholders.
Debt
financing,
if
available,
may
involve
agreements
that
include
restrictive
covenants
limiting
our
ability
totake
important
actions,
such
as
incurring
additional
debt,
making
capital
expenditures
or
declaring
dividends.
If
we
raise
additional
funds
through
strategic29Table
of
Contentscollaborations
and
alliances
or
licensing
arrangements
with
third
parties,
which
may
including
existing
collaboration
partners,
we
may
have
to
relinquish
valuablerights
to
our
technologies
or
product
candidates,
including
rigosertib,
or
grant
licenses
on
terms
that
are
not
favorable
to
us.
If
we
are
unable
to
raise
additionalfunds
through
equity
or
debt
financing
when
needed,
we
may
be
required
to
delay,
limit,
reduce
or
terminate
our
product
development
or
commercialization
effortsor
grant
rights
to
develop
and
market
product
candidates
or
formulations
that
we
would
otherwise
prefer
to
develop
and
market
ourselves.The
sale
or
issuance
of
our
common
stock
to
Lincoln
Park
Capital
Fund
LLC,
or
Lincoln
Park,
may
cause
dilution
and
the
sale
of
the
shares
of
common
stockacquired
by
Lincoln
Park,
or
the
perception
that
such
sales
may
occur,
could
cause
the
price
of
our
common
stock
to
fall.







In
October
2015,
we
entered
into
a
purchase
agreement
with
Lincoln
Park,
pursuant
to
which
Lincoln
Park
has
committed
to
purchase
up
to
$16,500,000
ofour
common
stock.
Concurrently
with
the
execution
of
the
purchase
agreement,
Lincoln
Park
purchased
846,755
shares
of
our
common
stock
for
total
proceeds
of$1,500,000
and
we
issued
200,000
shares
of
our
common
stock
to
Lincoln
Park
as
a
fee
for
its
commitment
to
purchase
shares
of
our
common
stock
under
thepurchase
agreement.
We
may
sell
shares
to
Lincoln
Park
at
our
discretion
from
time
to
time
over
a
36-month
period
which
commenced
November
3,
2015,
afterthe
SEC
declared
effective
a
registration
statement
covering
the
resale
of
shares
we
have
sold
and
may
sell
in
the
future
to
Lincoln
Park
under
the
purchaseagreement.
The
purchase
price
for
the
shares
that
we
may
sell
to
Lincoln
Park
under
the
purchase
agreement
will
fluctuate
based
on
the
market
price
of
ourcommon
stock.
Depending
on
market
liquidity
at
the
time,
sales
of
such
shares
may
cause
the
trading
price
of
our
common
stock
to
fall.







We
generally
have
the
right
to
control
the
timing
and
amount
of
any
sales
of
our
shares
to
Lincoln
Park.
Additional
sales
of
our
common
stock,
if
any,
toLincoln
Park
will
depend
upon
market
conditions
and
other
factors
to
be
determined
by
us.
Lincoln
Park
may
ultimately
purchase
all,
some
or
none
of
the
shares
ofour
common
stock
that
may
be
sold
pursuant
to
the
purchase
agreement
and,
after
it
has
acquired
shares,
Lincoln
Park
may
sell
all,
some
or
none
of
those
shares.Therefore,
sales
to
Lincoln
Park
by
us
could
result
in
substantial
dilution
to
the
interests
of
other
holders
of
our
common
stock.
Additionally,
the
sale
of
asubstantial
number
of
shares
of
our
common
stock
to
Lincoln
Park,
or
the
anticipation
of
such
sales,
could
make
it
more
difficult
for
us
to
sell
equity
or
equity-related
securities
in
the
future
at
a
time
and
at
a
price
that
we
might
otherwise
wish
to
effect
sales.Risks
Related
to
Our
Business
and
Industry
Our
future
success
is
dependent
primarily
on
the
regulatory
approval
and
commercialization
of
our
product
candidates,
including
rigosertib.







We
do
not
have
any
products
that
have
gained
regulatory
approval.
Currently,
our
product
candidates
are
rigosertib,
briciclib
and
recilisib,
and
rigosertib
isour
only
late-stage
product
candidate.







As
a
result,
our
business
is
substantially
dependent
on
our
ability
to
obtain
regulatory
approval
for,
and,
if
approved,
to
successfully
commercialize
rigosertiband,
to
a
lesser
degree,
briciclib
and
recilisib
in
a
timely
manner.
We
cannot
commercialize
product
candidates
in
the
United
States
without
first
obtainingregulatory
approval
for
the
product
from
the
FDA.
Similarly,
we
cannot
commercialize
product
candidates
outside
of
the
United
States
without
obtainingregulatory
approval
from
comparable
foreign
regulatory
authorities.
Before
obtaining
regulatory
approvals
for
the
commercial
sale
of
any
product
candidate
for
atarget
indication,
we
must
demonstrate
with
substantial
evidence
gathered
in
preclinical
and
well-controlled
clinical
studies,
generally
including
two
well-controlled
Phase
3
trials,
and,
with
respect
to
approval
in
the
United
States,
to
the
satisfaction
of
the
FDA,
that
the
product
candidate
is
safe
and
effective
for
usefor
that
target
indication
and
that
the
manufacturing
facilities,
processes
and
controls
are
adequate.
Even
if
rigosertib
or
another
product
candidate
were
to30Table
of
Contentssuccessfully
obtain
approval
from
the
FDA
and
comparable
foreign
regulatory
authorities,
any
approval
might
contain
significant
limitations
related
to
userestrictions
for
specified
age
groups,
warnings,
precautions
or
contraindications,
or
may
be
subject
to
burdensome
post-approval
study
or
risk
managementrequirements.
If
we
are
unable
to
obtain
regulatory
approval
for
rigosertib
in
one
or
more
jurisdictions,
or
any
approval
contains
significant
limitations,
we
may
notbe
able
to
obtain
sufficient
funding
or
generate
sufficient
revenue
to
continue
the
development
of
briciclib,
recilisib,
or
any
other
product
candidate
that
we
maydiscover,
in-license,
develop
or
acquire
in
the
future.
Furthermore,
even
if
we
obtain
regulatory
approval
for
rigosertib,
we
will
still
need
to
develop
a
commercialorganization,
establish
commercially
viable
pricing
and
obtain
approval
for
adequate
reimbursement
from
third-party
and
government
payors.
If
we
or
ourcommercialization
collaborators
are
unable
to
successfully
commercialize
rigosertib,
we
may
not
be
able
to
earn
sufficient
revenues
to
continue
our
business.The
results
of
preclinical
testing
or
earlier
clinical
studies
are
not
necessarily
predictive
of
future
results,
rigosertib,
or
any
other
product
candidate
we
advanceinto
clinical
trials
may
not
have
favorable
results
in
later-stage
clinical
trials
or
receive
regulatory
approval.







Success
in
preclinical
testing
and
earlier
clinical
studies
does
not
ensure
that
later
clinical
trials
will
generate
adequate
data
to
demonstrate
the
efficacy
andsafety
of
an
investigational
drug.
A
number
of
companies
in
the
pharmaceutical
and
biotechnology
industries,
including
those
with
greater
resources
andexperience,
have
suffered
significant
setbacks
in
clinical
trials,
even
after
seeing
promising
results
in
earlier
clinical
trials.
Despite
the
results
reported
in
earlierclinical
trials
for
rigosertib
and
our
other
clinical-stage
product
candidates,
we
do
not
know
whether
the
later-stage
clinical
trials
we
may
conduct
in
the
future
willdemonstrate
adequate
efficacy
and
safety
to
result
in
regulatory
approval
to
market
any
of
our
product
candidates
in
any
particular
jurisdiction.
If
later-stageclinical
trials
do
not
produce
favorable
results,
our
ability
to
achieve
regulatory
approval
for
any
of
our
product
candidates
may
be
adversely
impacted.Clinical
drug
development
involves
a
lengthy
and
expensive
process
with
an
uncertain
outcome.







Clinical
testing
is
expensive,
can
take
many
years
to
complete,
and
its
outcome
is
inherently
uncertain.
Failure
can
occur
at
any
time
during
the
clinical
trialprocess.
Product
candidates
in
later
stages
of
clinical
trials
may
fail
to
show
the
desired
safety
and
efficacy
traits
despite
having
progressed
through
preclinicalstudies
and
early
clinical
trials.







We
may
experience
delays
in
our
ongoing
or
future
clinical
trials
and
we
do
not
know
whether
planned
clinical
trials
will
begin
or
enroll
subjects
on
time,need
to
be
redesigned
or
be
completed
on
schedule,
if
at
all.
For
example,
in
December
2015,
the
FDA
put
the
briciclib
IND
on
full
clinical
hold
following
a
drugproduct
lot
testing
failure.
There
can
be
no
assurance
that
the
FDA
will
not
put
clinical
trials
of
any
of
our
product
candidates
on
clinical
hold
in
the
future.
Clinicaltrials
may
be
delayed,
suspended
or
prematurely
terminated
for
a
variety
of
reasons,
such
as:•delay
or
failure
in
reaching
agreement
with
the
FDA
or
a
comparable
foreign
regulatory
authority
on
a
trial
design
that
we
are
able
to
execute;
•delay
or
failure
in
obtaining
authorization
to
commence
a
trial
or
inability
to
comply
with
conditions
imposed
by
a
regulatory
authority
regardingthe
scope
or
design
of
a
clinical
study;
•delay
or
failure
in
reaching
agreement
on
acceptable
terms
with
prospective
contract
research
organizations,
or
CROs,
and
clinical
trial
sites,
theterms
of
which
can
be
subject
to
extensive
negotiation
and
may
vary
significantly
among
different
CROs
and
trial
sites;
•delay
or
failure
in
obtaining
institutional
review
board,
or
IRB,
approval
or
the
approval
of
other
reviewing
entities,
including
comparable
foreignregulatory
authorities,
to
conduct
a
clinical
trial
at
each
site;31Table
of
Contents•withdrawal
of
clinical
trial
sites
from
our
clinical
trials
as
a
result
of
changing
standards
of
care
or
the
ineligibility
of
a
site
to
participate
in
ourclinical
trials;
•delay
or
failure
in
recruiting
and
enrolling
suitable
subjects
to
participate
in
a
trial;
•delay
or
failure
in
subjects
completing
a
trial
or
returning
for
post-treatment
follow-up;
•clinical
sites
and
investigators
deviating
from
trial
protocol,
failing
to
conduct
the
trial
in
accordance
with
regulatory
requirements,
or
dropping
outof
a
trial;
•inability
to
identify
and
maintain
a
sufficient
number
of
trial
sites,
many
of
which
may
already
be
engaged
in
other
clinical
trial
programs,
includingsome
that
may
be
for
the
same
indication;
•failure
of
our
third-party
clinical
trial
managers
to
satisfy
their
contractual
duties
or
meet
expected
deadlines;
•delay
or
failure
in
adding
new
clinical
trial
sites;
•delay
or
failure
in
meeting
regulatory
agency
inspectional
requirements;
•ambiguous
or
negative
interim
results
or
results
that
are
inconsistent
with
earlier
results;
•feedback
from
the
FDA,
the
IRB,
data
safety
monitoring
boards,
or
a
comparable
foreign
regulatory
authority,
or
results
from
earlier
stage
orconcurrent
preclinical
and
clinical
studies,
that
might
require
modification
to
the
protocol
for
the
trial;
•decision
by
the
FDA,
the
IRB,
a
comparable
foreign
regulatory
authority,
or
us,
or
recommendation
by
a
data
safety
monitoring
board
orcomparable
foreign
regulatory
authority,
to
suspend
or
terminate
clinical
trials
at
any
time
for
safety
issues
or
for
any
other
reason;
•unacceptable
risk-benefit
profile,
unforeseen
safety
issues
or
adverse
side
effects;
•failure
to
demonstrate
a
benefit
from
using
a
drug;
•difficulties
in
manufacturing
or
obtaining
from
third
parties
sufficient
quantities
of
a
product
candidate
for
use
in
clinical
trials;
•lack
of
adequate
funding
to
continue
the
clinical
trial,
including
the
incurrence
of
unforeseen
costs
due
to
enrollment
delays,
requirements
toconduct
additional
clinical
studies
or
increased
expenses
associated
with
the
services
of
our
CROs
and
other
third
parties;
or
•changes
in
governmental
regulations
or
administrative
actions
or
lack
of
adequate
funding
to
continue
the
clinical
trial.







Patient
enrollment,
a
significant
factor
in
the
timing
of
clinical
trials,
is
affected
by
many
factors
including
the
size
and
nature
of
the
patient
population,
theproximity
of
subjects
to
clinical
sites,
the
eligibility
criteria
for
the
trial,
the
design
of
the
clinical
trial,
ability
to
obtain
and
maintain
patient
consents,
risk
thatenrolled
subjects
will
drop
out
before
completion,
competing
clinical
trials
and
clinicians'
and
patients'
perceptions
as
to
the
potential
advantages
of
the
drug
beingstudied
in
relation
to
other
available
therapies,
including
any
new
drugs
that
may
be
approved
for
the
indications
we
are
investigating.
Furthermore,
we
rely
onCROs
and
clinical
trial
sites
to
ensure
the
proper
and
timely
conduct
of
our
clinical
trials,
and
while
we
have
agreements
governing
their
committed
activities,
wehave
limited
influence
over
their
actual
performance.







If
we
experience
delays
in
the
completion
or
termination
of,
any
clinical
trial
of
our
product
candidates,
the
commercial
prospects
of
our
product
candidateswill
be
harmed,
and
our
ability
to
generate
product
revenues
from
any
of
these
product
candidates
will
be
delayed.
In
addition,
any
delays
in
completing
ourclinical
trials
will
increase
our
costs,
slow
down
our
product
candidate
development
and
approval
process
and
jeopardize
our
ability
to
commence
product
salesand
generate
revenues.
In32Table
of
Contentsaddition,
many
of
the
factors
that
could
cause
a
delay
in
the
commencement
or
completion
of
clinical
trials
may
also
ultimately
lead
to
the
denial
of
regulatoryapproval
of
our
product
candidates.The
regulatory
approval
processes
of
the
FDA
and
comparable
foreign
regulatory
authorities
are
lengthy,
time
consuming
and
inherently
unpredictable,
and
ifwe
are
ultimately
unable
to
obtain
regulatory
approval
for
our
product
candidates,
our
business
will
be
substantially
harmed.







The
time
required
to
obtain
approval
by
the
FDA
and
comparable
foreign
regulatory
authorities
is
unpredictable,
but
typically
takes
many
years
following
thecommencement
of
preclinical
studies
and
clinical
trials
and
depends
upon
numerous
factors,
including
the
substantial
discretion
of
the
regulatory
authorities.
Inaddition,
approval
policies,
regulations,
or
the
type
and
amount
of
clinical
data
necessary
to
gain
approval
may
change
during
the
course
of
a
product
candidate'sclinical
development
and
may
vary
among
jurisdictions.
We
have
not
obtained
regulatory
approval
for
any
product
candidate,
and
it
is
possible
that
none
of
ourexisting
product
candidates
or
any
product
candidates
we
may
discover,
in-license
or
acquire
and
seek
to
develop
in
the
future
will
ever
obtain
regulatory
approval.







Our
product
candidates
could
fail
to
receive
regulatory
approval
from
the
FDA
or
a
comparable
foreign
regulatory
authority
for
many
reasons,
including:•disagreement
over
the
design
or
implementation
of
our
clinical
trials;
•failure
to
demonstrate
that
a
product
candidate
is
safe
and
effective
for
its
proposed
indication;
•failure
of
clinical
trials
to
meet
the
level
of
statistical
significance
required
for
approval;
•failure
to
demonstrate
that
a
product
candidate's
clinical
and
other
benefits
outweigh
its
safety
risks;
•disagreement
over
our
interpretation
of
data
from
preclinical
studies
or
clinical
trials;
•delay
or
failure
in
meeting
regulatory
agency
inspectional
requirements;
•disagreement
over
whether
to
accept
efficacy
results
from
clinical
trial
sites
outside
the
United
States
or
clinical
trial
sites
where
the
standard
ofcare
is
potentially
different
from
that
in
the
United
States;
•the
insufficiency
of
data
collected
from
clinical
trials
of
our
product
candidates
to
support
the
submission
and
filing
of
an
NDA
or
other
submissionor
to
obtain
regulatory
approval;
•disapproval
of
the
manufacturing
processes
or
facilities
of
third-party
manufacturers
with
whom
we
contract
for
clinical
and
commercial
supplies;or
•changes
in
the
approval
policies
or
regulations
that
render
our
preclinical
and
clinical
data
insufficient
for
approval.







The
FDA
or
a
comparable
foreign
regulatory
authority
may
require
more
information,
including
additional
preclinical
or
clinical
data
to
support
approval,which
may
delay
or
prevent
approval
and
our
commercialization
plans,
or
we
may
decide
to
abandon
the
development
program
altogether.
Even
if
we
do
obtainregulatory
approval,
our
product
candidates
may
be
approved
for
fewer
or
more
limited
indications
than
we
request,
approval
contingent
on
the
performance
ofcostly
post-marketing
clinical
trials,
or
approval
with
a
label
that
does
not
include
the
labeling
claims
necessary
or
desirable
for
the
successful
commercializationof
that
product
candidate.
In
addition,
the
FDA
may
require
the
establishment
of
Risk
Evaluation
Mitigation
Strategies,
or
REMS,
or
a
comparable
foreignregulatory
authority
may
require
the
establishment
of
a
similar
strategy,
that
may
restrict
distribution
of
our
products
and
impose
burdensome
implementationrequirements
on
us.
Any
of
the
foregoing
scenarios
could
materially
harm
the
commercial
prospects
for
our
product
candidates.33Table
of
Contents







Approval
by
the
FDA
does
not
ensure
approval
by
foreign
regulatory
authorities
and
approval
by
one
or
more
foreign
regulatory
authorities
does
not
ensureapproval
by
regulatory
authorities
in
other
countries
or
by
the
FDA.
However,
a
failure
or
delay
in
obtaining
regulatory
approval
in
one
country
may
have
anegative
effect
on
the
regulatory
process
in
others.
We
may
not
be
able
to
file
for
regulatory
approvals
and
even
if
we
file
we
may
not
receive
the
necessaryapprovals
to
commercialize
our
products
in
any
market.Our
product
candidates
may
cause
undesirable
side
effects
or
have
other
properties
that
could
delay
or
prevent
their
regulatory
approval,
limit
the
commercialprofile
of
an
approved
label,
or
result
in
significant
negative
consequences
following
any
marketing
approval.







Undesirable
side
effects
caused
by
our
product
candidates
could
cause
us
or
regulatory
authorities
to
interrupt,
delay
or
halt
clinical
trials
and
could
result
in
amore
restrictive
label
or
the
delay
or
denial
of
regulatory
approval
by
the
FDA
or
other
comparable
foreign
regulatory
authority.
For
example,
patients
in
ourearlier-stage
clinical
trials
of
rigosertib
in
some
cases
experienced
side
effects,
some
of
which
were
severe.







As
a
result
of
undesirable
side
effects
or
safety
or
toxicity
issues
that
we
may
experience
in
our
clinical
trials,
we
may
not
receive
approval
to
market
anyproduct
candidates,
which
could
prevent
us
from
ever
generating
revenues
or
achieving
profitability.
Results
of
our
trials
could
reveal
an
unacceptably
highseverity
and
prevalence
of
side
effects.
In
such
an
event,
our
trials
could
be
suspended
or
terminated
and
the
FDA
or
comparable
foreign
regulatory
authoritiescould
order
us
to
cease
further
development
or
deny
approval
of
our
product
candidates
for
any
or
all
targeted
indications.
These
side
effects
could
affect
patientrecruitment
or
the
ability
of
enrolled
subjects
to
complete
the
trial
or
result
in
potential
product
liability
claims.







Additionally,
if
any
of
our
product
candidates
receives
marketing
approval,
and
we
or
others
later
identify
undesirable
side
effects
caused
by
such
product,
anumber
of
potentially
significant
negative
consequences
could
result,
including:•we
may
be
forced
to
suspend
marketing
of
such
product;
•regulatory
authorities
may
withdraw
their
approvals
of
such
product;
•regulatory
authorities
may
require
additional
warnings
on
the
label
that
could
diminish
the
usage
or
otherwise
limit
the
commercial
success
of
suchproducts;
•we
may
be
required
to
conduct
post-market
studies;
•we
could
be
sued
and
held
liable
for
harm
caused
to
subjects
or
patients;
and
•our
reputation
may
suffer.







Any
of
these
events
could
prevent
us
from
achieving
or
maintaining
market
acceptance
of
the
particular
product
candidate,
if
approved.Even
if
our
product
candidates
receive
regulatory
approval,
they
may
still
face
future
development
and
regulatory
difficulties.







Even
if
we
obtain
regulatory
approval
for
a
product
candidate,
it
would
be
subject
to
ongoing
requirements
by
the
FDA
and
comparable
foreign
regulatoryauthorities
governing
the
manufacture,
quality
control,
further
development,
labeling,
packaging,
storage,
distribution,
safety
surveillance,
import,
export,advertising,
promotion,
recordkeeping
and
reporting
of
safety
and
other
post-market
information.
The
safety
profile
of
any
product
will
continue
to
be
closelymonitored
by
the
FDA
and
comparable
foreign
regulatory
authorities
after
approval.
If
the
FDA
or
comparable
foreign
regulatory
authorities
become
aware
of
newsafety
information
after
approval
of
any
of
our
product
candidates,34Table
of
Contentsthey
may
require
labeling
changes
or
establishment
of
a
REMS
or
similar
strategy,
impose
significant
restrictions
on
a
product's
indicated
uses
or
marketing,
orimpose
ongoing
requirements
for
potentially
costly
post-approval
studies
or
post-market
surveillance.
The
label
ultimately
approved
for
rigosertib,
if
it
achievesmarketing
approval,
may
include
restrictions
on
use.







In
addition,
manufacturers
of
drug
products
and
their
facilities
are
subject
to
continual
review
and
periodic
inspections
by
the
FDA
and
other
regulatoryauthorities
for
compliance
with
current
good
manufacturing
practices,
or
cGMP,
and
other
regulations.
If
we
or
a
regulatory
agency
discover
previously
unknownproblems
with
a
product,
such
as
adverse
events
of
unanticipated
severity
or
frequency,
or
problems
with
the
facility
where
the
product
is
manufactured,
aregulatory
agency
may
impose
restrictions
on
that
product,
the
manufacturing
facility
or
us,
including
requiring
recall
or
withdrawal
of
the
product
from
the
marketor
suspension
of
manufacturing.
If
we,
our
product
candidates
or
the
manufacturing
facilities
for
our
product
candidates
fail
to
comply
with
applicable
regulatoryrequirements,
a
regulatory
agency
may:•issue
warning
letters
or
untitled
letters
or
otherwise
unacceptable
inspectional
findings;
•mandate
modifications
to
promotional
materials
or
require
us
to
provide
corrective
information
to
healthcare
practitioners;
•require
us
to
enter
into
a
consent
decree,
which
can
include
imposition
of
various
fines,
reimbursements
for
inspection
costs,
required
due
dates
forspecific
actions
and
penalties
for
noncompliance;
•seek
an
injunction
or
impose
civil
or
criminal
penalties
or
monetary
fines;
•suspend
or
withdraw
regulatory
approval;
•suspend
any
ongoing
clinical
studies;
•refuse
to
approve
pending
applications
or
supplements
to
applications
filed
by
us;
•suspend
or
impose
restrictions
on
operations,
including
costly
new
manufacturing
requirements;
or
•seize
or
detain
products,
refuse
to
permit
the
import
or
export
of
products,
or
require
us
to
initiate
a
product
recall.







The
occurrence
of
any
event
or
penalty
described
above
may
inhibit
our
ability
to
commercialize
our
products
and
generate
revenue.







Advertising
and
promotion
of
any
product
candidate
that
obtains
approval
in
the
United
States
will
be
heavily
scrutinized
by
the
FDA,
the
Department
ofJustice,
or
the
DOJ,
the
Office
of
Inspector
General
of
the
Department
of
Health
and
Human
Services,
or
HHS,
state
attorneys
general,
members
of
Congress
andthe
public.
Violations,
including
promotion
of
our
products
for
unapproved
or
off-label
uses,
are
subject
to
enforcement
letters,
inquiries
and
investigations,
andcivil
and
criminal
sanctions
by
the
FDA.
Additionally,
advertising
and
promotion
of
any
product
candidate
that
obtains
approval
outside
of
the
United
States
willbe
heavily
scrutinized
by
comparable
foreign
regulatory
authorities.







In
the
United
States,
engaging
in
impermissible
promotion
of
our
products
for
off-label
uses
can
also
subject
us
to
false
claims
litigation
under
federal
andstate
statutes,
which
can
lead
to
civil
and
criminal
penalties
and
fines
and
agreements
that
materially
restrict
the
manner
in
which
we
promote
or
distribute
our
drugproducts.
These
false
claims
statutes
include
the
federal
False
Claims
Act,
which
allows
any
individual
to
bring
a
lawsuit
against
a
pharmaceutical
company
onbehalf
of
the
federal
government
alleging
submission
of
false
or
fraudulent
claims,
or
causing
to
present
such
false
or
fraudulent
claims,
for
payment
by
a
federalprogram
such
as
Medicare
or
Medicaid.
If
the
government
prevails
in
the
lawsuit,
the
individual
will
share
in
any
fines
or
settlement
funds.
Since
2004,
these
False35Table
of
ContentsClaims
Act
lawsuits
against
pharmaceutical
companies
have
increased
significantly
in
volume
and
breadth,
leading
to
several
substantial
civil
and
criminalsettlements
based
on
certain
sales
practices
promoting
off-label
drug
uses.
This
growth
in
litigation
has
increased
the
risk
that
a
pharmaceutical
company
will
haveto
defend
a
false
claim
action,
pay
settlement
fines
or
restitution,
agree
to
comply
with
burdensome
reporting
and
compliance
obligations,
and
be
excluded
fromthe
Medicare,
Medicaid
and
other
federal
and
state
healthcare
programs.
If
we
do
not
lawfully
promote
our
approved
products,
we
may
become
subject
to
suchlitigation
and,
if
we
are
not
successful
in
defending
against
such
actions,
those
actions
could
compromise
our
ability
to
become
profitable.Failure
to
obtain
regulatory
approval
in
international
jurisdictions
would
prevent
our
product
candidates
from
being
marketed
abroad.







In
order
to
market
and
sell
our
products
in
the
European
Union
and
many
other
jurisdictions,
including
Japan
and
Korea,
we
must
obtain
separate
marketingapprovals
and
comply
with
numerous
and
varying
regulatory
requirements.
The
approval
procedure
varies
among
countries
and
can
involve
additional
testing.
Thetime
required
to
obtain
approval
may
differ
substantially
from
that
required
to
obtain
FDA
approval.
The
regulatory
approval
process
outside
the
United
Statesgenerally
includes
all
of
the
risks
associated
with
obtaining
FDA
approval.
In
addition,
in
many
countries
outside
the
United
States,
it
is
required
that
the
productbe
approved
for
reimbursement
before
the
product
can
be
approved
for
sale
in
that
country.
We
may
not
obtain
approvals
from
regulatory
authorities
outside
theUnited
States
on
a
timely
basis,
if
at
all.
Approval
by
the
FDA
does
not
ensure
approval
by
regulatory
authorities
in
other
countries
or
jurisdictions,
and
approvalby
one
regulatory
authority
outside
the
United
States
does
not
ensure
approval
by
regulatory
authorities
in
other
countries
or
jurisdictions
or
by
the
FDA.
We
maynot
be
able
to
file
for
marketing
approvals
and
may
not
receive
necessary
approvals
to
commercialize
our
products
in
any
market.
If
we
are
unable
to
obtainapproval
of
any
of
our
product
candidates
by
regulatory
authorities
in
the
European
Union,
Japan,
Korea
or
another
country,
the
commercial
prospects
of
thatproduct
candidate
may
be
significantly
diminished
and
our
business
prospects
could
decline.Healthcare
legislation,
including
potentially
unfavorable
pricing
regulations
or
other
healthcare
reform
initiatives,
may
increase
the
difficulty
and
cost
for
usto
obtain
marketing
approval
of
and
commercialize
our
product
candidates
and
affect
the
prices
we
may
obtain.







The
regulations
that
govern,
among
other
things,
marketing
approvals,
coverage,
pricing
and
reimbursement
for
new
drug
products
vary
widely
from
countryto
country.
In
the
United
States
and
some
foreign
jurisdictions,
there
have
been
a
number
of
legislative
and
regulatory
changes
and
proposed
changes
regarding
thehealthcare
system
that
could
prevent
or
delay
marketing
approval
of
our
product
candidates,
restrict
or
regulate
post-approval
activities
and
affect
our
ability
tosuccessfully
sell
any
product
candidates
for
which
we
obtain
marketing
approval.
The
Patient
Protection
and
Affordable
Care
Act
and
the
Health
Care
andEducation
Affordability
Reconciliation
Act
of
2010,
or
the
Affordable
Care
Act,
among
other
things,
imposes
a
significant
annual
fee
on
companies
thatmanufacture
or
import
branded
prescription
drug
products.
It
also
contains
substantial
provisions
intended
to
broaden
access
to
health
insurance,
reduce
orconstrain
the
growth
of
healthcare
spending,
enhance
remedies
against
healthcare
fraud
and
abuse,
add
new
transparency
requirements
for
the
healthcare
and
healthinsurance
industries,
impose
new
taxes
and
fees
on
pharmaceutical
and
medical
device
manufacturers,
and
impose
additional
health
policy
reforms,
any
of
whichcould
negatively
impact
our
business.
A
significant
number
of
provisions
are
not
yet,
or
have
only
recently
become
effective,
but
the
Affordable
Care
Act
is
likelyto
continue
the
downward
pressure
on
pharmaceutical
and
medical
device
pricing,
especially
under
the
Medicare
program,
and
may
also
increase
our
regulatoryburdens
and
operating
costs.36Table
of
Contents







In
addition,
other
legislative
changes
have
been
proposed
and
adopted
since
passage
of
the
Affordable
Care
Act.
The
Budget
Control
Act
of
2011,
amongother
things,
created
the
Joint
Select
Committee
on
Deficit
Reduction
to
recommend
to
Congress
proposals
in
spending
reductions.
The
Joint
Select
Committee
didnot
achieve
a
targeted
deficit
reduction
of
an
amount
greater
than
$1.2
trillion
for
the
fiscal
years
2012
through
2021,
triggering
the
legislation's
automaticreduction
to
several
government
programs.
This
included
aggregate
reductions
to
Medicare
payments
to
healthcare
providers
of
up
to
2.0%
per
fiscal
year,
whichwent
into
effect
in
April
2013.
In
January
2013,
President
Obama
signed
into
law
the
American
Taxpayer
Relief
Act
of
2012,
which,
among
other
things,
reducedMedicare
payments
to
several
categories
of
healthcare
providers
and
increased
the
statute
of
limitations
period
for
the
government
to
recover
overpayments
toproviders
from
three
to
five
years.
If
we
ever
obtain
regulatory
approval
and
successfully
commercialize
our
product
candidates,
these
new
laws
may
result
inadditional
reductions
in
Medicare
and
other
healthcare
funding,
which
could
have
a
material
adverse
effect
on
our
customers
and
accordingly,
our
financialoperations.







In
the
United
States,
the
European
Union
and
other
potentially
significant
markets
for
our
product
candidates,
government
authorities
and
third-party
payorsare
increasingly
attempting
to
limit
or
regulate
the
price
of
medical
products
and
services,
particularly
for
new
and
innovative
products
and
therapies,
which
hasresulted
in
lower
average
selling
prices.
Furthermore,
the
increased
emphasis
on
managed
healthcare
in
the
United
States
and
on
country
and
regional
pricing
andreimbursement
controls
in
the
European
Union
will
put
additional
pressure
on
product
pricing,
reimbursement
and
usage,
which
may
adversely
affect
our
futureproduct
sales
and
results
of
operations.
These
pressures
can
arise
from
rules
and
practices
of
managed
care
groups,
judicial
decisions
and
governmental
laws
andregulations
related
to
Medicare,
Medicaid
and
healthcare
reform,
pharmaceutical
reimbursement
policies
and
pricing
in
general.







Some
countries
require
approval
of
the
sale
price
of
a
drug
before
it
can
be
marketed.
In
many
countries,
the
pricing
review
period
begins
after
marketing
orproduct
licensing
approval
is
granted.
In
some
foreign
markets,
prescription
pharmaceutical
pricing
remains
subject
to
continuing
governmental
control
even
afterinitial
approval
is
granted.
As
a
result,
we
might
obtain
marketing
approval
for
a
product
candidate
in
a
particular
country,
but
then
be
subject
to
price
regulationsthat
delay
our
commercial
launch
of
the
product,
possibly
for
lengthy
time
periods,
which
could
negatively
impact
the
revenues
we
are
able
to
generate
from
thesale
of
the
product
in
that
particular
country.
Adverse
pricing
limitations
may
hinder
our
ability
to
recoup
our
investment
in
one
or
more
product
candidates
even
ifour
product
candidates
obtain
marketing
approval.Laws
and
regulations
governing
international
operations
may
preclude
us
from
developing,
manufacturing
and
selling
certain
product
candidates
outside
ofthe
United
States
and
require
us
to
develop
and
implement
costly
compliance
programs.







As
we
expand
our
operations
outside
of
the
United
States,
we
must
comply
with
numerous
laws
and
regulations
in
each
jurisdiction
in
which
we
plan
tooperate.
The
creation
and
implementation
of
international
business
practices
compliance
programs
is
costly
and
such
programs
are
difficult
to
enforce,
particularlywhere
reliance
on
third
parties
is
required.







The
Foreign
Corrupt
Practices
Act,
or
FCPA,
prohibits
any
U.S.
individual
or
business
from
paying,
offering,
authorizing
payment
or
offering
anything
ofvalue,
directly
or
indirectly,
to
any
foreign
official,
political
party
or
candidate
for
the
purpose
of
influencing
any
act
or
decision
of
the
foreign
entity
in
order
toassist
the
individual
or
business
in
obtaining
or
retaining
business.
The
FCPA
also
obligates
companies
whose
securities
are
listed
in
the
United
States
to
complywith
certain
accounting
provisions
requiring
the
company
to
maintain
books
and
records
that
accurately
and
fairly
reflect
all
transactions
of
the
corporation,including
international
subsidiaries,
and
to
devise
and
maintain
an
adequate
system
of
internal
accounting
controls
for
international
operations.
The
anti-briberyprovisions
of
the
FCPA
are
enforced
primarily
by
the
DOJ.
The
Securities
and
Exchange
Commission,
or
the
SEC,
is
involved
with
enforcement
of
the
books
andrecords
provisions
of
the
FCPA.37Table
of
Contents







Compliance
with
the
FCPA
is
expensive
and
difficult,
particularly
in
countries
in
which
corruption
is
a
recognized
problem.
In
addition,
the
FCPA
presentsparticular
challenges
in
the
pharmaceutical
industry,
because,
in
many
countries,
hospitals
are
operated
by
the
government,
and
doctors
and
other
hospitalemployees
are
considered
foreign
officials.
Certain
payments
to
hospitals
in
connection
with
clinical
studies
and
other
work
have
been
deemed
to
be
improperpayments
to
government
officials
and
have
led
to
FCPA
enforcement
actions.







Various
laws,
regulations
and
executive
orders
also
restrict
the
use
and
dissemination
outside
of
the
United
States,
or
the
sharing
with
certain
non-U.S.nationals,
of
information
classified
for
national
security
purposes,
as
well
as
certain
products
and
technical
data
relating
to
those
products.
Our
expanding
presenceoutside
of
the
United
States
will
require
us
to
dedicate
additional
resources
to
comply
with
these
laws,
and
these
laws
may
preclude
us
from
developing,manufacturing,
or
selling
certain
products
and
product
candidates
outside
of
the
United
States,
which
could
limit
our
growth
potential
and
increase
ourdevelopment
costs.







The
failure
to
comply
with
laws
governing
international
business
practices
may
result
in
substantial
penalties,
including
suspension
or
debarment
fromgovernment
contracting.
Violation
of
the
FCPA
can
result
in
significant
civil
and
criminal
penalties.
Indictment
alone
under
the
FCPA
can
lead
to
suspension
ofthe
right
to
do
business
with
the
U.S.
government
until
the
pending
claims
are
resolved.
Conviction
of
a
violation
of
the
FCPA
can
result
in
long-termdisqualification
as
a
government
contractor.
The
termination
of
a
government
contract
or
relationship
as
a
result
of
our
failure
to
satisfy
any
of
our
obligationsunder
laws
governing
international
business
practices
would
have
a
negative
impact
on
our
operations
and
harm
our
reputation
and
ability
to
procure
governmentcontracts.
The
SEC
also
may
suspend
or
bar
issuers
from
trading
securities
on
U.S.
exchanges
for
violations
of
the
FCPA's
accounting
provisions.Even
if
we
are
able
to
commercialize
our
product
candidates,
the
products
may
not
receive
coverage
and
adequate
reimbursement
from
third-party
payors,which
could
harm
our
business.







Our
ability
to
commercialize
any
products
successfully
will
depend,
in
part,
on
the
extent
to
which
coverage
and
adequate
reimbursement
for
these
productsand
related
treatments
will
be
available
from
government
health
administration
authorities,
private
health
insurers
and
other
organizations.
Government
authoritiesand
third-party
payors,
such
as
private
health
insurers
and
health
maintenance
organizations,
determine
which
medications
they
will
cover
and
establishreimbursement
levels.
A
primary
trend
in
the
U.S.
healthcare
industry
and
elsewhere
is
cost
containment.
Government
authorities
and
third-party
payors
haveattempted
to
control
costs
by
limiting
coverage
and
the
amount
of
reimbursement
for
particular
medications.
Increasingly,
third-party
payors
are
requiring
that
drugcompanies
provide
them
with
predetermined
discounts
from
list
prices
and
are
challenging
the
prices
charged
for
medical
products.
Third-party
payors
may
alsoseek
additional
clinical
evidence,
beyond
the
data
required
to
obtain
marketing
approval,
demonstrating
clinical
benefits
and
value
in
specific
patient
populationsbefore
covering
our
products
for
those
patients.
We
cannot
be
sure
that
coverage
and
adequate
reimbursement
will
be
available
for
any
product
that
wecommercialize
and,
if
reimbursement
is
available,
what
the
level
of
reimbursement
will
be.
Coverage
and
reimbursement
may
impact
the
demand
for,
or
the
priceof,
any
product
candidate
for
which
we
obtain
marketing
approval.
If
reimbursement
is
not
available
or
is
available
only
at
limited
levels,
we
may
not
be
able
tosuccessfully
commercialize
any
product
candidate
for
which
we
obtain
marketing
approval.







In
the
United
States,
the
Medicare
Prescription
Drug,
Improvement,
and
Modernization
Act
of
2003,
or
Medicare
Modernization
Act,
established
theMedicare
Part
D
program
and
provided
authority
for
limiting
the
number
of
drugs
that
will
be
covered
in
any
therapeutic
class
thereunder.
The
MedicareModernization
Act,
including
its
cost
reduction
initiatives,
could
decrease
the
coverage
and
reimbursement
rate
that
we
receive
for
any
of
our
approved
products.Furthermore,
private
payors
often
follow
Medicare
coverage
policies
and
payment
limitations
in
setting
their
own
reimbursement38Table
of
Contentsrates.
Therefore,
any
reduction
in
reimbursement
that
results
from
the
Medicare
Modernization
Act
may
result
in
a
similar
reduction
in
payments
from
privatepayors.







There
may
be
significant
delays
in
obtaining
coverage
and
reimbursement
for
newly
approved
drugs,
and
coverage
may
be
more
limited
than
the
purposes
forwhich
the
drug
is
approved
by
the
FDA
or
comparable
foreign
regulatory
authorities.
Moreover,
eligibility
for
coverage
and
reimbursement
does
not
imply
that
anydrug
will
be
paid
for
in
all
cases
or
at
a
rate
that
covers
our
costs,
including
research,
development,
manufacture,
sale
and
distribution.
Interim
reimbursementlevels
for
new
drugs,
if
applicable,
may
also
not
be
sufficient
to
cover
our
costs
and
may
only
be
temporary.
Reimbursement
rates
may
vary
according
to
the
use
ofthe
drug
and
the
clinical
setting
in
which
it
is
used,
may
be
based
on
reimbursement
levels
already
set
for
lower
cost
drugs
and
may
be
incorporated
into
existingpayments
for
other
services.
Net
prices
for
drugs
may
be
reduced
by
mandatory
discounts
or
rebates
required
by
government
healthcare
programs
or
private
payorsand
by
any
future
relaxation
of
laws
that
presently
restrict
imports
of
drugs
from
countries
where
they
may
be
sold
at
lower
prices
than
in
the
United
States.
Third-party
payors
often
rely
upon
Medicare
coverage
policy
and
payment
limitations
in
setting
their
own
reimbursement
policies.
Our
inability
to
obtain
coverage
andprofitable
reimbursement
rates
from
both
government-funded
and
private
payors
for
any
approved
products
that
we
develop
could
have
a
material
adverse
effect
onour
operating
results,
our
ability
to
raise
capital
needed
to
commercialize
products
and
our
overall
financial
condition.If
we
are
unable
to
establish
sales
and
marketing
capabilities
or
enter
into
agreements
with
third
parties
to
market
and
sell
our
product
candidates,
we
may
beunable
to
generate
any
revenue.







We
do
not
currently
have
an
organization
for
the
sale,
marketing
and
distribution
of
pharmaceutical
products
and
the
cost
of
establishing
and
maintaining
suchan
organization
may
exceed
the
cost-effectiveness
of
doing
so.
In
order
to
market
any
products
that
may
be
approved
by
the
FDA
and
comparable
foreignregulatory
authorities,
we
must
build
our
sales,
marketing,
managerial
and
other
non-technical
capabilities
or
make
arrangements
with
third
parties
to
performthese
services.
If
we
are
unable
to
establish
adequate
sales,
marketing
and
distribution
capabilities,
whether
independently
or
with
third
parties,
we
may
not
be
ableto
generate
product
revenue
and
may
not
become
profitable.
We
will
be
competing
with
many
companies
that
currently
have
extensive
and
well-funded
sales
andmarketing
operations.
Without
an
internal
commercial
organization
or
the
support
of
a
third
party
to
perform
sales
and
marketing
functions,
we
may
be
unable
tocompete
successfully
against
these
more
established
companies.Our
commercial
success
depends
upon
attaining
significant
market
acceptance
of
our
product
candidates,
if
approved,
among
physicians,
patients,
healthcarepayors
and
the
major
operators
of
cancer
clinics.







Even
if
we
obtain
regulatory
approval
for
any
of
our
product
candidates
that
we
may
develop
or
acquire
in
the
future,
the
product
may
not
gain
marketacceptance
among
physicians,
healthcare
payors,
patients
or
the
medical
community.
Market
acceptance
of
any
of
our
product
candidates
for
which
we
receiveapproval
depends
on
a
number
of
factors,
including:•the
efficacy
and
safety
of
such
product
candidates
as
demonstrated
in
clinical
trials;
•the
clinical
indications
for
which
the
product
candidate
is
approved;
•acceptance
of
such
product
candidates
as
a
safe
and
effective
treatment
by
physicians,
major
operators
of
cancer
clinics
and
patients;
•the
potential
and
perceived
advantages
of
product
candidates
over
alternative
treatments;
•the
safety
of
product
candidates
seen
in
broader
patient
groups,
including
its
use
outside
the
approved
indications;39Table
of
Contents•the
prevalence
and
severity
of
any
side
effects;
•product
labeling
or
product
insert
requirements
of
the
FDA
or
other
regulatory
authorities;
•the
timing
of
market
introduction
of
our
products
as
well
as
competitive
products;
•the
cost
of
treatment
in
relation
to
alternative
treatments;
•the
availability
of
coverage
and
adequate
reimbursement
and
pricing
by
third-party
payors
and
government
authorities;
•relative
convenience
and
ease
of
administration;
and
•the
effectiveness
of
our
sales
and
marketing
efforts
and
those
of
our
collaborators.







If
any
of
our
product
candidates
are
approved
but
fail
to
achieve
market
acceptance
among
physicians,
patients,
or
healthcare
payors,
we
may
not
be
able
togenerate
significant
revenues,
which
would
compromise
our
ability
to
become
profitable.Our
relationships
with
customers
and
third-party
payors
will
be
subject
to
applicable
anti-kickback,
fraud
and
abuse
and
other
healthcare
laws
andregulations,
which
could
expose
us
to
criminal
sanctions,
civil
penalties,
contractual
damages,
reputational
harm
and
diminished
profits
and
future
earnings.







Healthcare
providers,
physicians
and
third-party
payors
will
all
play
important
roles
in
the
recommendation
and
prescription
of
any
product
candidates
forwhich
we
obtain
marketing
approval.
Our
future
arrangements
with
third-party
payors
and
customers
may
expose
us
to
broadly
applicable
fraud
and
abuse
andother
healthcare
laws
and
regulations
that
may
constrain
the
business
or
financial
arrangements
and
relationships
through
which
we
would
market,
sell
anddistribute
our
products.
As
a
pharmaceutical
company,
even
though
we
do
not
and
will
not
control
referrals
of
healthcare
services
or
bill
directly
to
Medicare,Medicaid
or
other
third-party
payors,
federal
and
state
healthcare
laws
and
regulations
pertaining
to
fraud
and
abuse
and
patients'
rights
are
and
will
be
applicableto
our
business.
Restrictions
under
applicable
federal
and
state
healthcare
laws
and
regulations
that
may
affect
our
ability
to
operate
include
the
following:•the
federal
healthcare
Anti-Kickback
Statute
will
constrain
our
marketing
practices,
educational
programs,
pricing
policies,
and
relationships
withhealthcare
providers
or
other
entities,
by
prohibiting,
among
other
things,
persons
from
knowingly
and
willfully
soliciting,
offering,
receiving
orproviding
remuneration,
directly
or
indirectly,
in
cash
or
in
kind,
to
induce
or
reward,
or
in
return
for,
either
the
referral
of
an
individual
for,
or
thepurchase,
order
or
recommendation
of,
any
good
or
service,
for
which
payment
may
be
made
under
a
federal
healthcare
program
such
as
Medicareand
Medicaid;
•federal
civil
and
criminal
false
claims
laws
and
civil
monetary
penalty
laws
impose
criminal
and
civil
penalties,
including
through
civilwhistleblower
or
qui
tam
actions,
against
individuals
or
entities
for
knowingly
presenting,
or
causing
to
be
presented,
to
the
federal
government,including
the
Medicare
and
Medicaid
programs,
claims
for
payment
that
are
false
or
fraudulent
or
making
a
false
statement
to
avoid,
decrease
orconceal
an
obligation
to
pay
money
to
the
federal
government;
•the
federal
Health
Insurance
Portability
and
Accountability
Act
of
1996,
or
HIPAA,
imposes
criminal
and
civil
liability
for
executing
a
scheme
todefraud
any
healthcare
benefit
program
and
also
created
federal
criminal
laws
that
prohibit
knowingly
and
willfully
falsifying,
concealing
orcovering
up
a
material
fact
or
making
any
materially
false
statements
in
connection
with
the
delivery
of
or
payment
for
healthcare
benefits,
items
orservices;
•HIPAA,
as
amended
by
the
Health
Information
Technology
for
Economic
and
Clinical
Health
Act,
or
HITECH,
also
imposes
obligations,
includingmandatory
contractual
terms,
with
respect40Table
of
Contentsto
safeguarding
the
privacy,
security
and
transmission
of
individually
identifiable
health
information;•the
federal
physician
sunshine
requirements
under
the
Affordable
Care
Act
requires
manufacturers
of
drugs,
devices,
biologics
and
medical
suppliesto
report
annually
to
HHS
information
related
to
payments
and
other
transfers
of
value
to
physicians,
other
healthcare
providers,
and
teachinghospitals,
and
ownership
and
investment
interests
held
by
physicians
and
other
healthcare
providers
and
their
immediate
family
members
andapplicable
group
purchasing
organizations;
and
•analogous
state
and
foreign
laws
and
regulations,
such
as
state
anti-kickback
and
false
claims
laws,
may
apply
to
sales
or
marketing
arrangementsand
claims
involving
healthcare
items
or
services
reimbursed
by
non-governmental
third-party
payors,
including
private
insurers;
some
state
lawsrequire
pharmaceutical
companies
to
comply
with
the
pharmaceutical
industry's
voluntary
compliance
guidelines
and
the
relevant
complianceguidance
promulgated
by
the
federal
government
and
may
require
drug
manufacturers
to
report
information
related
to
payments
and
other
transfersof
value
to
physicians
and
other
healthcare
providers
or
marketing
expenditures;
and
state
and
foreign
laws
govern
the
privacy
and
security
ofhealth
information
in
specified
circumstances,
many
of
which
differ
from
each
other
in
significant
ways
and
often
are
not
preempted
by
HIPAA,thus
complicating
compliance
efforts.







Efforts
to
ensure
that
our
business
arrangements
with
third
parties
will
comply
with
applicable
healthcare
laws
and
regulations
will
involve
substantial
costs.It
is
possible
that
governmental
authorities
will
conclude
that
our
business
practices
may
not
comply
with
current
or
future
statutes,
regulations
or
case
lawinvolving
applicable
fraud
and
abuse
or
other
healthcare
laws
and
regulations.
If
our
operations
are
found
to
be
in
violation
of
any
of
these
laws
or
any
othergovernmental
regulations
that
may
apply
to
us,
we
may
be
subject
to
significant
civil,
criminal
and
administrative
penalties,
damages,
fines,
imprisonment,exclusion
from
government
funded
healthcare
programs,
such
as
Medicare
and
Medicaid,
and
the
curtailment
or
restructuring
of
our
operations.
If
any
physiciansor
other
healthcare
providers
or
entities
with
whom
we
expect
to
do
business
are
found
to
not
be
in
compliance
with
applicable
laws,
they
may
be
subject
tocriminal,
civil
or
administrative
sanctions,
including
exclusions
from
government
funded
healthcare
programs.Our
employees
may
engage
in
misconduct
or
other
improper
activities,
including
noncompliance
with
regulatory
standards
and
requirements,
which
couldcause
significant
liability
for
us
and
harm
our
reputation.







We
are
exposed
to
the
risk
of
employee
fraud
or
other
misconduct,
including
intentional
failures
to
comply
with
FDA
regulations
or
similar
regulations
ofcomparable
foreign
regulatory
authorities,
provide
accurate
information
to
the
FDA
or
comparable
foreign
regulatory
authorities,
comply
with
manufacturingstandards
we
have
established,
comply
with
federal
and
state
healthcare
fraud
and
abuse
laws
and
regulations
and
similar
laws
and
regulations
established
andenforced
by
comparable
foreign
regulatory
authorities,
report
financial
information
or
data
accurately
or
disclose
unauthorized
activities
to
us.
Employeemisconduct
could
also
involve
the
improper
use
of
information
obtained
in
the
course
of
clinical
trials,
which
could
result
in
regulatory
sanctions
and
serious
harmto
our
reputation.
We
have
adopted
a
code
of
conduct
for
our
directors,
officers
and
employees,
or
the
code
of
conduct,
but
it
is
not
always
possible
to
identify
anddeter
employee
misconduct,
and
the
precautions
we
take
to
detect
and
prevent
this
activity
may
not
be
effective
in
controlling
unknown
or
unmanaged
risks
orlosses
or
in
protecting
us
from
governmental
investigations
or
other
actions
or
lawsuits
stemming
from
a
failure
to
be
in
compliance
with
such
laws
or
regulations.If
any
such
actions
are
instituted
against
us,
and
we
are
not
successful
in
defending
ourselves
or
asserting
our
rights,
those
actions
could
have
a
significant
impacton
our
business
and
results
of
operations,
including
the
imposition
of
significant
fines
or
other
sanctions.41Table
of
ContentsWe
face
substantial
competition,
which
may
result
in
others
discovering,
developing
or
commercializing
products
before
or
more
successfully
than
we
do.







The
development
and
commercialization
of
new
drug
products
is
highly
competitive.
We
face
competition
with
respect
to
our
current
product
candidates,rigosertib,
briciclib
and
recilisib,
and
will
face
competition
with
respect
to
any
product
candidates
that
we
may
seek
to
develop
or
commercialize
in
the
future,from
major
pharmaceutical
companies,
specialty
pharmaceutical
companies
and
biotechnology
companies
worldwide.
There
are
a
number
of
large
pharmaceuticaland
biotechnology
companies
that
currently
market
and
sell
products
or
are
pursuing
the
development
of
products
for
the
treatment
of
the
disease
indications
forwhich
we
are
developing
our
product
candidates.
Some
of
these
competitive
products
and
therapies
are
based
on
scientific
approaches
that
are
the
same
as
orsimilar
to
our
approach,
and
others
are
based
on
entirely
different
approaches.
Potential
competitors
also
include
academic
institutions,
government
agencies
andother
public
and
private
research
organizations
that
conduct
research,
seek
patent
protection
and
establish
collaborative
arrangements
for
research,
development,manufacturing
and
commercialization.







Our
product
candidates
are
being
developed
for
cancer
therapeutics
and
radiation
protection.
There
are
a
variety
of
available
therapies
and
supportive
careproducts
marketed
for
cancer
patients.
In
many
cases,
these
drugs
are
administered
in
combination
to
enhance
efficacy
or
to
reduce
side
effects.
Some
of
thesedrugs
are
branded
and
subject
to
patent
protection,
and
others
are
available
on
a
generic
basis.
Many
of
these
approved
drugs
are
well
established
therapies
orproducts
and
are
widely
accepted
by
physicians,
patients
and
third-party
payors.
Insurers
and
other
third-party
payors
may
also
encourage
the
use
of
genericproducts.
This
may
make
it
difficult
for
us
to
achieve
market
acceptance
at
desired
levels
in
a
timely
manner
to
ensure
viability
of
our
business.







More
established
companies
may
have
a
competitive
advantage
over
us
due
to
their
greater
size,
cash
flows
and
institutional
experience.
Compared
to
us,many
of
our
competitors
may
have
significantly
greater
financial,
technical
and
human
resources.







As
a
result
of
these
factors,
our
competitors
may
obtain
regulatory
approval
of
their
products
before
we
are
able
to
obtain
patent
protection
or
otherintellectual
property
rights
which
will
limit
our
ability
to
develop
or
commercialize
our
product
candidates.
Our
competitors
may
also
develop
drugs
that
are
safer,more
effective,
more
widely
used
and
cheaper
than
ours,
and
may
also
be
more
successful
than
us
in
manufacturing
and
marketing
their
products.
Theseappreciable
advantages
could
render
our
product
candidates
obsolete
or
non-competitive
before
we
can
recover
the
expenses
of
development
andcommercialization.







Mergers
and
acquisitions
in
the
pharmaceutical
and
biotechnology
industries
may
result
in
even
more
resources
being
concentrated
among
a
smaller
numberof
our
competitors.
Smaller
and
other
early-stage
companies
may
also
prove
to
be
significant
competitors,
particularly
through
collaborative
arrangements
withlarge
and
established
companies.
These
third
parties
compete
with
us
in
recruiting
and
retaining
qualified
scientific,
management
and
commercial
personnel,establishing
clinical
trial
sites
and
patient
registration
for
clinical
trials,
as
well
as
in
acquiring
technologies
complementary
to,
or
necessary
for,
our
programs.If
we
breach
the
license
agreements
or
fail
to
negotiate
new
agreements
pertaining
to
our
product
candidates,
we
could
lose
the
ability
to
continue
thedevelopment
and
potential
commercialization
of
these
product
candidates.







In
January
1999,
we
entered
into
an
agreement
with
Temple,
as
subsequently
amended,
to
obtain
an
exclusive,
world-wide
license
to
make,
have
made,
use,sell,
offer
for
sale
and
import
several
classes
of
novel
compounds,
including
all
three
of
our
clinical-stage
product
candidates.
In
May
2010,
we
entered
into
anagreement
with
Mount
Sinai
School
of
Medicine,
as
subsequently
amended,
giving
us
the
option
to
exclusively
negotiate
licenses
related
to
certain
compounds.
Ifwe
fail
to
meet
our42Table
of
Contentsobligations
under
these
license
agreements
or
if
we
fail
to
negotiate
future
license
agreements,
our
rights
under
the
licenses
could
be
terminated,
and
upon
theeffective
date
of
such
termination,
our
right
to
use
the
licensed
technology
would
terminate.
While
we
would
expect
to
exercise
all
rights
and
remedies
available
tous,
including
attempting
to
cure
any
breach
by
us,
and
otherwise
seek
to
preserve
our
rights
under
the
patents
and
other
technology
licensed
to
us,
we
may
not
beable
to
do
so
in
a
timely
manner,
at
an
acceptable
cost
or
at
all.
Any
uncured,
material
breach
under
the
license
agreement
could
result
in
our
loss
of
exclusiverights
and
may
lead
to
a
complete
termination
of
our
product
development
and
any
commercialization
efforts
for
the
applicable
product
candidates.Product
liability
lawsuits
against
us
could
cause
us
to
incur
substantial
liabilities
and
to
limit
commercialization
of
any
products
that
we
may
develop.







We
face
an
inherent
risk
of
product
liability
exposure
related
to
the
testing
of
our
product
candidates
in
human
clinical
trials
and
will
face
an
even
greater
riskif
we
commercially
sell
any
products
that
we
may
develop.
Product
liability
claims
may
be
brought
against
us
by
subjects
enrolled
in
our
clinical
trials,
patients,healthcare
providers
or
others
using,
administering
or
selling
our
products.
If
we
cannot
successfully
defend
ourselves
against
claims
that
our
product
candidates
orproducts
caused
injuries,
we
could
incur
substantial
liabilities.
Regardless
of
merit
or
eventual
outcome,
liability
claims
may
result
in:•decreased
demand
for
any
product
candidates
or
products
that
we
may
develop;
•termination
of
clinical
trial
sites
or
entire
trial
programs;
•injury
to
our
reputation
and
significant
negative
media
attention;
•withdrawal
of
clinical
trial
participants;
•significant
costs
to
defend
the
related
litigation;
•substantial
monetary
awards
to
trial
subjects
or
patients;
•loss
of
revenue;
•diversion
of
management
and
scientific
resources
from
our
business
operations;
and
•the
inability
to
commercialize
any
products
that
we
may
develop.







We
currently
hold
$10.0
million
in
product
liability
insurance
coverage
in
the
aggregate,
which
may
not
be
adequate
to
cover
all
liabilities
that
we
may
incur.Insurance
coverage
is
increasingly
expensive.
We
may
not
be
able
to
maintain
insurance
coverage
at
a
reasonable
cost
or
in
an
amount
adequate
to
satisfy
anyliability
that
may
arise.
We
intend
to
expand
our
insurance
coverage
for
products
to
include
the
sale
of
commercial
products
if
we
obtain
marketing
approval
forour
product
candidates
in
development,
but
we
may
be
unable
to
obtain
commercially
reasonable
product
liability
insurance
for
any
products
approved
formarketing.
Large
judgments
have
been
awarded
in
class
action
lawsuits
based
on
drugs
that
had
unanticipated
side
effects.
A
successful
product
liability
claim
orseries
of
claims
brought
against
us,
particularly
if
judgments
exceed
our
insurance
coverage,
could
decrease
our
cash
and
adversely
affect
our
business.Our
future
success
depends
on
our
ability
to
retain
our
executive
officers
and
to
attract,
retain
and
motivate
qualified
personnel.







We
are
highly
dependent
upon
Ramesh
Kumar,
Ph.D.,
President
and
Chief
Executive
Officer;
Manoj
Maniar,
Ph.D.,
Senior
Vice
President,
ProductDevelopment;
Steven
Fruchtman,
M.
D.,
Chief
Medical
Officer
and
Senior
Vice
President,
Research
and
Development;
and
our
other
executive
officers.
Althoughwe
have
employment
agreements
with
the
persons
named
above,
these
agreements
are
at-will
and
do
not
prevent
such
persons
from
terminating
their
employmentwith
us
at
any
time.
We43Table
of
Contentsdo
not
maintain
"key
person"
insurance
for
any
of
our
executives
or
other
employees,
other
than
our
President
and
Chief
Executive
Officer.
The
loss
of
the
servicesof
any
of
these
persons
could
impede
the
achievement
of
our
research,
development
and
commercialization
objectives.If
we
are
unable
to
attract
and
retain
highly
qualified
employees,
we
may
not
be
able
to
grow
effectively.







Our
future
and
success
depend
on
our
ability
to
retain,
manage
and
motivate
our
employees.
During
2015
and
early
2016,
we
reduced
our
headcount
in
orderto
conserve
cash.
These
activities,
along
with
any
other
actions
we
are
taking
or
may
take
to
conserve
cash,
may
make
it
more
difficult
to
retain
key
employees.The
loss
of
any
member
of
our
senior
management
team
or
the
inability
to
hire
or
retain
experienced
management
personnel
could
compromise
our
ability
toexecute
our
business
plan
and
harm
our
operating
results.
Because
of
the
specialized
scientific
and
managerial
nature
of
our
business,
we
rely
heavily
on
our
abilityto
attract
and
retain
qualified
scientific,
technical
and
managerial
personnel.
The
competition
for
qualified
personnel
in
the
pharmaceutical
field
is
intense
and
as
aresult,
we
may
be
unable
to
continue
to
retain
qualified
personnel
necessary
for
the
development
of
our
business.
In
addition,
if
our
development
plans
aresuccessful,
we
will
need
additional
managerial,
operational,
sales,
marketing,
financial
and
other
resources,
and
may
find
it
more
difficult
to
attract
such
qualifiedpersonnel.We
may
engage
in
future
business
combinations
that
could
disrupt
our
business,
cause
dilution
to
our
stockholders
and
harm
our
financial
condition
andoperating
results.







While
we
currently
have
no
specific
plans
to
acquire
any
other
businesses,
we
may,
in
the
future,
make
acquisitions
of,
or
investments
in,
or
otherwise
engagein
business
combinations
with
companies
that
we
believe
have
products
or
capabilities
that
are
a
strategic
or
commercial
fit
with
our
current
product
candidates
andbusiness
or
otherwise
offer
opportunities
for
our
company.
In
connection
with
these
acquisitions
or
investments,
we
may:•issue
stock
that
would
dilute
our
existing
stockholders'
percentage
of
ownership;
•incur
debt
and
assume
liabilities;
and
•incur
amortization
expenses
related
to
intangible
assets
or
incur
large
and
immediate
write-offs.







We
may
not
be
able
to
complete
any
future
business
combination
on
favorable
terms,
if
at
all.
If
we
do
complete
a
business
combination,
we
cannot
assureyou
that
it
will
ultimately
strengthen
our
competitive
position
or
that
it
will
be
viewed
positively
by
customers,
financial
markets
or
investors.
Furthermore,
futurebusiness
combinations
could
pose
numerous
additional
risks
to
our
operations,
including:•problems
integrating
the
businesses,
products
or
technologies;
•increases
to
our
expenses;
•the
failure
to
discover
undisclosed
liabilities
of
an
acquired
asset
or
transaction
partner;
•diversion
of
management's
attention
from
their
day-to-day
responsibilities;
•harm
to
our
operating
results
or
financial
condition;
•entrance
into
markets
in
which
we
have
limited
or
no
prior
experience;
and
•potential
loss
of
key
employees.







We
may
not
be
able
to
complete
any
business
combination
or
effectively
integrate
the
operations,
products
or
personnel
gained
through
any
such
businesscombination.44Table
of
ContentsOur
business
and
operations
would
suffer
in
the
event
of
computer
system
failures.







Despite
the
implementation
of
security
measures,
our
internal
computer
systems,
and
those
of
our
CROs
and
other
third
parties
on
which
we
rely,
arevulnerable
to
damage
from
computer
viruses,
unauthorized
access,
natural
disasters,
fire,
terrorism,
war
and
telecommunication
and
electrical
failures.
If
such
anevent
were
to
occur
and
cause
interruptions
in
our
operations,
it
could
result
in
a
material
disruption
of
our
drug
development
programs.
For
example,
the
loss
ofclinical
trial
data
from
completed,
ongoing
or
planned
clinical
trials
could
result
in
delays
in
our
regulatory
approval
efforts
and
significantly
increase
our
costs
torecover
or
reproduce
the
data.
To
the
extent
that
any
disruption
or
security
breach
results
in
a
loss
of
or
damage
to
our
data
or
applications,
or
inappropriatedisclosure
of
confidential
or
proprietary
information,
we
could
incur
liability
and
the
further
development
of
our
product
candidates
could
be
delayed.If
we
fail
to
comply
with
environmental,
health
and
safety
laws
and
regulations,
we
could
become
subject
to
fines
or
penalties
or
incur
costs
that
could
have
amaterial
adverse
effect
on
the
success
of
our
business.







We
are
subject
to
numerous
environmental,
health
and
safety
laws
and
regulations,
including
those
governing
laboratory
procedures
and
the
handling,
use,storage,
treatment
and
disposal
of
hazardous
materials
and
wastes.
Our
operations
involve
the
use
of
hazardous
and
flammable
materials,
including
chemicals
andbiological
materials.
Our
operations
also
produce
hazardous
waste
products.
We
generally
contract
with
third
parties
for
the
disposal
of
these
materials
and
wastes.We
cannot
eliminate
the
risk
of
contamination
or
injury
from
these
materials.
In
the
event
of
contamination
or
injury
resulting
from
our
use
of
hazardous
materials,we
could
be
held
liable
for
any
resulting
damages,
and
any
liability
could
exceed
our
resources.
We
also
could
incur
significant
costs
associated
with
civil
orcriminal
fines
and
penalties.







Although
we
maintain
workers'
compensation
insurance
to
cover
us
for
costs
and
expenses
we
may
incur
due
to
injuries
to
our
employees
resulting
from
theuse
of
hazardous
materials,
this
insurance
may
not
provide
adequate
coverage
against
potential
liabilities.
We
do
not
maintain
insurance
for
environmental
liabilityor
toxic
tort
claims
that
may
be
asserted
against
us
in
connection
with
our
storage
or
disposal
of
biological
or
hazardous
materials.







In
addition,
we
may
incur
substantial
costs
in
order
to
comply
with
current
or
future
environmental,
health
and
safety
laws
and
regulations.
These
current
orfuture
laws
and
regulations
may
impair
our
research,
development
or
production
efforts.
Failure
to
comply
with
these
laws
and
regulations
also
may
result
insubstantial
fines,
penalties
or
other
sanctions.Business
disruptions
could
seriously
harm
our
future
revenues
and
financial
condition
and
increase
our
costs
and
expenses.







Our
operations
could
be
subject
to
earthquakes,
power
shortages,
telecommunications
failures,
water
shortages,
floods,
hurricanes,
typhoons,
fires,
extremeweather
conditions,
medical
epidemics
and
other
natural
or
manmade
disasters
or
business
interruptions,
for
which
we
are
predominantly
self-insured.
Theoccurrence
of
any
of
these
business
disruptions
could
seriously
harm
our
operations
and
financial
condition
and
increase
our
costs
and
expenses.
We
rely
on
third-party
manufacturers
to
produce
our
product
candidates.
Our
ability
to
obtain
clinical
supplies
of
product
candidates
could
be
disrupted
if
the
operations
of
thesesuppliers
is
affected
by
a
man-made
or
natural
disaster
or
other
business
interruption.
The
ultimate
impact
on
us,
our
significant
suppliers
and
our
generalinfrastructure
of
being
consolidated
in
certain
geographical
areas
is
unknown,
but
our
operations
and
financial
condition
could
suffer
in
the
event
of
a
majorearthquake,
fire
or
other
natural
disaster.45Table
of
ContentsWe
are
relying
on
the
FDA's
"Animal
Efficacy
Rule"
to
demonstrate
efficacy
of
recilisib,
which
could
result
in
delays
or
failure
at
any
stage
of
recilisib'sdevelopment
process,
increase
our
development
costs
and
adversely
affect
the
commercial
prospects
of
recilisib.







Because
humans
are
not
normally
exposed
to
radiation
and
it
would
be
unethical
to
expose
humans
to
such,
effectiveness
of
recilisib
cannot
be
demonstratedin
humans,
but
instead,
under
the
FDA's
"Animal
Efficacy
Rule,"
can
be
demonstrated,
in
part,
by
utilizing
animal
models.
This
effect
has
to
be
demonstrated
inmore
than
one
animal
species
expected
to
be
predictive
of
a
response
in
humans,
but
an
effect
in
a
single
animal
species
may
be
acceptable
if
that
animal
model
issufficiently
well-characterized
for
predicting
a
response
in
humans.
The
animal
study
endpoint
must
be
clearly
related
to
the
desired
benefit
in
humans
and
theinformation
obtained
from
animal
studies
must
allow
selection
of
an
effective
dose
in
humans.
Safety
may
be
demonstrated
in
human
studies.







We
may
not
be
able
to
sufficiently
demonstrate
the
animal
correlation
to
the
satisfaction
of
the
FDA,
as
these
correlates
are
difficult
to
establish
and
are
oftenunclear.
The
FDA
may
decide
that
our
data
are
insufficient
for
approval
and
require
additional
preclinical,
clinical
or
other
studies,
refuse
to
approve
recilisib,
orplace
restrictions
on
our
ability
to
commercialize
recilisib.
Furthermore,
other
countries,
at
this
time,
have
not
established
criteria
for
review
and
approval
of
thesetypes
of
products
outside
their
normal
review
process.
There
is
no
"Animal
Efficacy
Rule"
equivalent
in
countries
other
than
the
United
States,
and
consequentlythere
can
be
no
assurance
that
we
will
be
able
to
make
a
submission
for
marketing
approval
in
foreign
countries
based
on
such
animal
data.Risks
Related
to
Our
Dependence
on
Third
Parties
We
rely
on
third
parties
to
conduct
our
preclinical
and
clinical
trials.
If
these
third
parties
do
not
successfully
carry
out
their
contractual
duties
or
meetexpected
deadlines,
we
may
not
be
able
to
obtain
regulatory
approval
for
or
commercialize
our
product
candidates.







We
have
relied
upon
and
plan
to
continue
to
rely
upon
third-party
CROs
to
monitor
and
manage
data
for
our
ongoing
preclinical
and
clinical
programs.
Werely
on
these
parties
for
execution
of
our
preclinical
and
clinical
trials,
and
we
control
only
some
aspects
of
their
activities.
Nevertheless,
we
are
responsible
forensuring
that
each
of
our
studies
is
conducted
in
accordance
with
the
applicable
protocol
and
legal,
regulatory
and
scientific
standards,
and
our
reliance
on
theCROs
does
not
relieve
us
of
our
regulatory
responsibilities.
We
also
rely
on
third
parties
to
assist
in
conducting
our
preclinical
studies
in
accordance
with
GoodLaboratory
Practices,
or
GLP,
and
the
Animal
Welfare
Act
requirements.
We
and
our
CROs
are
required
to
comply
with
federal
regulations
and
current
GoodClinical
Practices,
or
GCP,
which
are
international
standards
meant
to
protect
the
rights
and
health
of
patients
that
are
enforced
by
the
FDA,
the
CompetentAuthorities
of
the
Member
States
of
the
European
Economic
Area,
or
EEA,
and
comparable
foreign
regulatory
authorities
for
all
of
our
products
in
clinicaldevelopment.
Regulatory
authorities
enforce
GCP
through
periodic
inspections
of
trial
sponsors,
principal
investigators
and
trial
sites.
If
we
or
any
of
our
CROsfail
to
comply
with
applicable
GCP,
the
clinical
data
generated
in
our
clinical
trials
may
be
deemed
unreliable
and
the
FDA
or
comparable
foreign
regulatoryauthorities
may
require
us
to
perform
additional
clinical
trials
before
approving
our
marketing
applications.
We
cannot
assure
you
that
upon
inspection
by
a
givenregulatory
authority,
such
regulatory
authority
will
determine
that
any
of
our
clinical
trials
comply
with
GCP
requirements.
In
addition,
our
clinical
trials
must
beconducted
with
product
produced
under
cGMP
requirements.
Failure
to
comply
with
these
regulations
may
require
us
to
repeat
preclinical
and
clinical
trials,
whichwould
delay
the
regulatory
approval
process.







Our
CROs
are
not
our
employees,
and
except
for
remedies
available
to
us
under
our
agreements
with
such
CROs,
we
cannot
control
whether
or
not
theydevote
sufficient
time
and
resources
to
our
ongoing
clinical,
nonclinical
and
preclinical
programs.
If
CROs
do
not
successfully
carry
out
their
contractual
duties
orobligations
or
meet
expected
deadlines
or
if
the
quality
or
accuracy
of
the
clinical46Table
of
Contentsdata
they
obtain
is
compromised
due
to
the
failure
to
adhere
to
our
clinical
protocols,
regulatory
requirements
or
for
other
reasons,
our
clinical
trials
may
beextended,
delayed
or
terminated
and
we
may
not
be
able
to
obtain
regulatory
approval
for
or
successfully
commercialize
our
product
candidates.
As
a
result,
ourresults
of
operations
and
the
commercial
prospects
for
our
product
candidates
would
be
harmed,
our
costs
could
increase
and
our
ability
to
generate
revenues
couldbe
delayed.







Because
we
have
relied
on
third
parties,
our
internal
capacity
to
perform
these
functions
is
limited.
Outsourcing
these
functions
involves
risk
that
third
partiesmay
not
perform
to
our
standards,
may
not
produce
results
in
a
timely
manner
or
may
fail
to
perform
at
all.
In
addition,
the
use
of
third-party
service
providersrequires
us
to
disclose
our
proprietary
information
to
these
parties,
which
could
increase
the
risk
that
this
information
will
be
misappropriated.
We
currently
have
asmall
number
of
employees,
which
limits
the
internal
resources
we
have
available
to
identify
and
monitor
our
third-party
providers.
To
the
extent
we
are
unable
toidentify
and
successfully
manage
the
performance
of
third-party
service
providers
in
the
future,
our
business
may
be
adversely
affected.
Though
we
carefullymanage
our
relationships
with
our
CROs,
there
can
be
no
assurance
that
we
will
not
encounter
challenges
or
delays
in
the
future
or
that
these
delays
or
challengeswill
not
have
a
material
adverse
impact
on
our
business,
financial
condition
and
prospects.If
we
lose
our
relationships
with
CROs,
our
drug
development
efforts
could
be
delayed.







We
rely
on
third-party
vendors
and
CROs
for
preclinical
studies
and
clinical
trials
related
to
our
drug
development
efforts.
Switching
or
adding
additionalCROs
would
involve
additional
cost
and
requires
management
time
and
focus.
Our
CROs
have
the
right
to
terminate
their
agreements
with
us
in
the
event
of
anuncured
material
breach.
In
addition,
some
of
our
CROs
have
an
ability
to
terminate
their
respective
agreements
with
us
if
it
can
be
reasonably
demonstrated
thatthe
safety
of
the
subjects
participating
in
our
clinical
trials
warrants
such
termination,
if
we
make
a
general
assignment
for
the
benefit
of
our
creditors
or
if
we
areliquidated.
Identifying,
qualifying
and
managing
performance
of
third-party
service
providers
can
be
difficult,
time
consuming
and
cause
delays
in
ourdevelopment
programs.
In
addition,
there
is
a
natural
transition
period
when
a
new
CRO
commences
work
and
the
new
CRO
may
not
provide
the
same
type
orlevel
of
services
as
the
original
provider.
If
any
of
our
relationships
with
our
third-party
CROs
terminate,
we
may
not
be
able
to
enter
into
arrangements
withalternative
CROs
or
to
do
so
on
commercially
reasonable
terms.We
have
limited
experience
manufacturing
our
product
candidates
on
a
large
clinical
or
commercial
scale
and
have
no
manufacturing
facility.
We
aredependent
on
third-party
manufacturers
for
the
manufacture
of
our
most
advanced
product
candidate
as
well
as
on
third
parties
for
our
supply
chain,
and
ifwe
experience
problems
with
any
third
parties,
the
manufacturing
of
our
product
candidates
or
products
could
be
delayed.







We
do
not
own
or
operate
facilities
for
the
manufacture
of
our
product
candidates.
We
currently
have
no
plans
to
build
our
own
clinical
or
commercial
scalemanufacturing
capabilities.
We
currently
rely
on
a
single
source
contract
manufacturing
organization,
or
CMO,
for
the
chemical
manufacture
of
activepharmaceutical
ingredient
for
rigosertib,
another
CMO
for
the
production
of
the
rigosertib
intravenous
formulation
for
our
Phase
3
clinical
trial,
and
a
third
CMOfor
the
production
of
the
rigosertib
oral
formulation
for
a
Phase
2
clinical
trial.
To
meet
our
projected
needs
for
clinical
supplies
to
support
our
activities
throughregulatory
approval
and
commercial
manufacturing,
the
CMOs
with
whom
we
currently
work
will
need
to
increase
the
scale
of
production.
We
may
need
toidentify
additional
CMOs
for
continued
production
of
supply
for
our
product
candidates.
In
addition,
regulatory
authorities
enforce
cGMP
through
periodicinspections
of
active
pharmaceutical
ingredient,
or
API
and
drug
product
manufacturing
sites,
quality
control
contract
laboratories
and
distribution
centers.
If
we
orour
CMO
fail
to
comply
with
applicable
cGMP,
the
manufacturing
data
generated
and
subsequent
API
lots
and
drug
product
batches
in
our
supply
chain
may
bedeemed
unreliable
and
the
FDA
or
comparable
foreign
regulatory
authorities
may
require
us
to
perform
additional
API
and
drug
product47Table
of
Contentsmanufacturing
before
approving
our
marketing
applications.
In
2013,
we
began
preparing
a
second
CMO
for
potential
manufacture
of
API
and
incurred
significantexpense
to
do
so.
During
the
first
quarter
of
2015,
we
suspended
the
original
CMO
for
manufacture
of
the
rigosertib
intravenous
formulation
for
quality
relatedreasons,
leaving
us
again
with
a
single
source
of
manufacture
for
this
formulation.
We
have
not
yet
identified
alternate
suppliers
in
the
event
the
current
CMOs
weutilize
are
unable
to
scale
production,
or
if
we
otherwise
experience
any
problems
with
them.
Although
alternative
third-party
suppliers
with
the
necessarymanufacturing
and
regulatory
expertise
and
facilities
exist,
as
we
have
experienced
with
respect
to
our
existing
CMOs,
it
could
be
expensive
and
take
a
significantamount
of
time
to
arrange
for
alternative
suppliers.
If
we
are
unable
to
arrange
for
alternative
third-party
manufacturing
sources,
or
to
do
so
on
commerciallyreasonable
terms
or
in
a
timely
manner,
we
may
not
be
able
to
complete
development
of
our
product
candidates,
or
market
or
distribute
them.







Reliance
on
third-party
manufacturers
entails
risks
to
which
we
would
not
be
subject
if
we
manufactured
product
candidates
or
products
ourselves,
includingreliance
on
the
third
party
for
regulatory
compliance
and
quality
assurance,
the
possibility
of
breach
of
the
manufacturing
agreement
by
the
third
party
because
offactors
beyond
our
control,
including
a
failure
to
synthesize
and
manufacture
our
product
candidates
or
any
products
we
may
eventually
commercialize
inaccordance
with
our
specifications,
and
the
possibility
of
termination
or
nonrenewal
of
the
agreement
by
the
third
party,
based
on
its
own
business
priorities,
at
atime
that
is
costly
or
damaging
to
us.
In
addition,
the
FDA
and
other
regulatory
authorities
require
that
our
product
candidates
and
any
products
that
we
mayeventually
commercialize
be
manufactured
according
to
cGMP
and
similar
foreign
standards.
Any
failure
by
our
third-party
manufacturers
to
comply
with
cGMPor
failure
to
scale
up
manufacturing
processes,
including
any
failure
to
deliver
sufficient
quantities
of
product
candidates
in
a
timely
manner,
could
lead
to
a
delayin,
or
failure
to
obtain,
regulatory
approval
of
any
of
our
product
candidates.
In
addition,
such
failure
could
be
the
basis
for
the
FDA
to
issue
a
warning
letter,withdraw
approvals
for
product
candidates
previously
granted
to
us,
or
take
other
regulatory
or
legal
action,
including
recall
or
seizure
of
outside
supplies
of
theproduct
candidate,
total
or
partial
suspension
of
production,
suspension
of
ongoing
clinical
trials,
refusal
to
approve
pending
applications
or
supplementalapplications,
detention
or
product,
refusal
to
permit
the
import
or
export
of
products,
injunction,
or
imposing
civil
and
criminal
penalties.







Any
significant
disruption
in
our
supplier
relationships
could
harm
our
business.
Any
significant
delay
in
the
supply
of
a
product
candidate
or
its
key
materialsfor
an
ongoing
clinical
study
could
considerably
delay
completion
of
our
clinical
studies,
product
testing
and
potential
regulatory
approval
of
our
productcandidates.
If
our
manufacturers
or
we
are
unable
to
purchase
these
key
materials
after
regulatory
approval
has
been
obtained
for
our
product
candidates,
thecommercial
launch
of
our
product
candidates
would
be
delayed
or
there
would
be
a
shortage
in
supply,
which
would
impair
our
ability
to
generate
revenues
fromthe
sale
of
our
product
candidates.We
have
entered
into
collaboration
agreements
with
SymBio
and
Baxalta
for
rigosertib
development
and
commercialization
in
certain
territories
and
we
mayelect
to
enter
into
additional
licensing
or
collaboration
agreements
to
partner
rigosertib
in
territories
currently
retained
by
us.
Our
dependence
on
suchrelationships
may
adversely
affect
our
business.







Because
we
have
limited
resources,
we
seek
to
enter
into,
and
in
the
past
we
have
entered
into,
collaboration
agreements
with
other
pharmaceuticalcompanies.
We
may
elect
to
enter
into
more
of
these
agreements
in
the
future.
In
July
2011,
we
entered
into
a
license
agreement
with
SymBio,
as
subsequentlyamended,
granting
an
exclusive,
royalty-bearing
license
for
the
development
and
commercialization
of
rigosertib
in
Japan
and
Korea.
In
September
2012,
weentered
into
a
development
and
license
agreement
with
Baxter
Healthcare
SA,
which
subsequently
assigned
its
interest
in
the
agreement
to
Baxalta.
Our
agreementwith
Baxalta,
which
is
scheduled
to
terminate
August
30,
2016,48Table
of
Contentsgrants
it
an
exclusive,
royalty-bearing
license
for
the
development
and
commercialization
of
rigosertib
in
specified
countries
comprising
most
of
Europe.
Anyfailure
by
our
partners
to
perform
their
obligations
or
any
decision
by
our
partners
to
terminate
these
agreements,
including
the
termination
of
the
Baxaltaagreement,
could
reduce
or
terminate
the
funding
we
may
receive
under
the
relevant
collaboration
agreement
and
could
negatively
impact
our
ability
tosuccessfully
develop,
obtain
regulatory
approvals
for
and
commercialize
the
applicable
product
candidate.
In
addition,
any
decision
by
our
partners
to
terminatethese
agreements
could
also
damage
our
reputation
and
negatively
impact
our
ability
to
obtain
financing
from
other
sources.







We
may
not
achieve
the
milestones
set
forth
in
our
collaboration
agreements,
or
may
disagree
with
our
collaboration
partners
as
to
whether
certain
milestoneshave
been
met.
Any
such
failure
or
disagreement
would
negatively
impact
our
potential
funding
sources
if
we
are
unable
to
receive
the
contemplated
milestonepayments.







Our
commercialization
strategy
for
rigosertib
in
territories
currently
retained
by
us
may
depend
on
our
ability
to
enter
into
agreements
with
collaborators
toobtain
assistance
and
funding
for
the
development
and
potential
commercialization
of
rigosertib
in
those
territories.
Despite
our
efforts,
we
may
be
unable
to
secureadditional
collaborative
licensing
or
other
arrangements
that
are
necessary
for
us
to
further
develop
and
commercialize
rigosertib.
Supporting
diligence
activitiesconducted
by
potential
collaborators
and
negotiating
the
financial
and
other
terms
of
a
collaboration
agreement
are
long
and
complex
processes
with
uncertainresults.
Even
if
we
are
successful
in
entering
into
one
or
more
collaboration
agreements,
collaborations
may
involve
greater
uncertainty
for
us,
as
we
have
lesscontrol
over
certain
aspects
of
our
collaborative
programs
than
we
do
over
our
proprietary
development
and
commercialization
programs.
We
may
determine
thatcontinuing
a
collaboration
under
the
terms
provided
is
not
in
our
best
interest,
and
we
may
terminate
the
collaboration.
Our
collaborators
could
delay
or
terminatetheir
agreements,
and
as
a
result
rigosertib
may
never
be
successfully
commercialized.







Further,
collaborators
may
develop
alternative
products
or
pursue
alternative
technologies
either
on
their
own
or
in
collaboration
with
others,
including
ourcompetitors,
and
the
priorities
or
focus
of
our
collaborators
may
shift
such
that
rigosertib
receives
less
attention
or
resources
than
we
would
like,
or
they
may
beterminated
altogether.
Any
such
actions
by
our
collaborators
may
adversely
affect
our
business
prospects
and
ability
to
earn
revenues.
In
addition,
we
could
havedisputes
with
our
current
or
future
collaborators,
such
as
the
interpretation
of
terms
in
our
agreements.
Any
such
disagreements
could
lead
to
delays
in
thedevelopment
or
commercialization
of
rigosertib
or
could
result
in
time-consuming
and
expensive
litigation
or
arbitration,
which
may
not
be
resolved
in
our
favor.







With
respect
to
our
programs
that
are
currently
not
the
subject
of
collaborations,
we
may
enter
into
agreements
with
collaborators
to
share
in
the
burden
ofconducting
clinical
trials,
manufacturing
and
marketing
these
product
candidates.
In
addition,
our
ability
to
develop
additional
proprietary
compounds
may
dependon
our
ability
to
establish
and
maintain
licensing
arrangements
or
other
collaborative
arrangements
with
the
holders
of
proprietary
rights
to
such
compounds.
Wemay
not
be
able
to
establish
such
arrangements
on
favorable
terms
or
at
all,
and
our
future
collaborative
arrangements
may
not
be
successful.Risks
Related
to
Our
Intellectual
Property
If
we
are
unable
to
protect
our
intellectual
property
rights,
our
competitive
position
could
be
harmed.







We
depend
on
our
ability
to
protect
our
proprietary
technology.
We
rely
on
trade
secret,
patent,
copyright
and
trademark
laws,
and
confidentiality,
licensingand
other
agreements
with
employees
and
third
parties,
all
of
which
offer
only
limited
protection.
Our
commercial
success
will
depend
in
large
part
on
our
abilityto
obtain
and
maintain
patent
protection
in
the
United
States
and
other
countries
with
respect
to
our
proprietary
technology
and
products.
Where
we
have
the
rightto
do
so
under
our49Table
of
Contentslicense
agreements,
we
seek
to
protect
our
proprietary
position
by
filing
patent
applications
in
the
United
States
and
abroad
related
to
our
novel
technologies
andproducts
that
are
important
to
our
business.
The
patent
positions
of
biotechnology
and
pharmaceutical
companies
generally
are
highly
uncertain,
involve
complexlegal
and
factual
questions
and
have
in
recent
years
been
the
subject
of
much
litigation.
As
a
result,
the
issuance,
scope,
validity,
enforceability
and
commercialvalue
of
our
patents,
including
those
patent
rights
licensed
to
us
by
third
parties,
are
highly
uncertain.







The
steps
we
have
taken
to
protect
our
proprietary
rights
may
not
be
adequate
to
preclude
misappropriation
of
our
proprietary
information
or
infringement
ofour
intellectual
property
rights,
both
inside
and
outside
the
United
States.
The
rights
already
granted
under
any
of
our
currently
issued
patents
and
those
that
maybe
granted
under
future
issued
patents
may
not
provide
us
with
the
proprietary
protection
or
competitive
advantages
we
are
seeking.
If
we
are
unable
to
obtain
andmaintain
patent
protection
for
our
technology
and
products,
or
if
the
scope
of
the
patent
protection
obtained
is
not
sufficient,
our
competitors
could
develop
andcommercialize
technology
and
products
similar
or
superior
to
ours,
and
our
ability
to
successfully
commercialize
our
technology
and
products
may
be
adverselyaffected.







With
respect
to
patent
rights,
we
do
not
know
whether
any
of
the
pending
patent
applications
for
any
of
our
licensed
compounds
will
result
in
the
issuance
ofpatents
that
protect
our
technology
or
products,
or
if
any
of
our
issued
patents
will
effectively
prevent
others
from
commercializing
competitive
technologies
andproducts.
Our
pending
applications
cannot
be
enforced
against
third
parties
practicing
the
technology
claimed
in
such
applications
unless
and
until
a
patent
issuesfrom
such
applications.
Further,
the
examination
process
may
require
us
or
our
licensor
to
narrow
the
claims
for
our
pending
patent
applications,
which
may
limitthe
scope
of
patent
protection
that
may
be
obtained
if
these
applications
issue.
Because
the
issuance
of
a
patent
is
not
conclusive
as
to
its
inventorship,
scope,validity
or
enforceability,
issued
patents
that
we
own
or
have
licensed
from
third
parties
may
be
challenged
in
the
courts
or
patent
offices
in
the
United
States
andabroad.
Such
challenges
may
result
in
the
loss
of
patent
protection,
the
narrowing
of
claims
in
such
patents
or
the
invalidity
or
unenforceability
of
such
patents,which
could
limit
our
ability
to
stop
others
from
using
or
commercializing
similar
or
identical
technology
and
products,
or
limit
the
duration
of
the
patentprotection
for
our
technology
and
products.
Protecting
against
the
unauthorized
use
of
our
patented
technology,
trademarks
and
other
intellectual
property
rights
isexpensive,
difficult
and
may
in
some
cases
not
be
possible.
In
some
cases,
it
may
be
difficult
or
impossible
to
detect
third-party
infringement
or
misappropriationof
our
intellectual
property
rights,
even
in
relation
to
issued
patent
claims,
and
proving
any
such
infringement
may
be
even
more
difficult.We
could
be
required
to
incur
significant
expenses
to
perfect
our
intellectual
property
rights,
and
our
intellectual
property
rights
may
be
inadequate
to
protectour
competitive
position.







The
patent
prosecution
process
is
expensive
and
time-consuming,
and
we
or
our
licensors
may
not
be
able
to
file
and
prosecute
all
necessary
or
desirablepatent
applications
at
a
reasonable
cost
or
in
a
timely
manner.
It
is
also
possible
that
we
or
our
licensors
will
fail
to
identify
patentable
aspects
of
inventions
madein
the
course
of
our
development
and
commercialization
activities
before
it
is
too
late
to
obtain
patent
protection
on
them.
Further,
given
the
amount
of
timerequired
for
the
development,
testing
and
regulatory
review
of
new
product
candidates,
patents
protecting
such
candidates
might
expire
before
or
shortly
after
suchcandidates
are
commercialized.
We
expect
to
seek
extensions
of
patent
terms
in
the
United
States
and,
if
available,
in
other
countries
where
we
are
prosecutingpatents.
In
the
United
States,
the
Drug
Price
Competition
and
Patent
Term
Restoration
Act
of
1984
permits
a
patent
term
extension
of
up
to
five
years
beyond
theexpiration
of
the
patent.
However,
the
applicable
authorities,
including
the
FDA
in
the
United
States,
and
any
equivalent
regulatory
authority
in
other
countries,may
not
agree
with
our
assessment
of
whether
such
extensions
are
available,
and
may
refuse
to
grant
extensions
to
our
patents,
or
may
grant
more
limitedextensions
than
we
request.
If
this
occurs,50Table
of
Contentsour
competitors
may
be
able
to
take
advantage
of
our
investment
in
development
and
clinical
trials
by
referencing
our
clinical
and
preclinical
data
and
launch
theirproduct
earlier
than
might
otherwise
be
the
case.
Changes
in
either
the
patent
laws
or
interpretation
of
the
patent
laws
in
the
United
States
and
other
countries
maydiminish
the
value
of
our
patents
or
narrow
the
scope
of
our
patent
protection.
The
laws
of
foreign
countries
may
not
protect
our
rights
to
the
same
extent
as
thelaws
of
the
United
States,
and
these
foreign
laws
may
also
be
subject
to
change.
For
example,
methods
of
treatment
and
manufacturing
processes
may
not
bepatentable
in
certain
jurisdictions.
Publications
of
discoveries
in
the
scientific
literature
often
lag
behind
the
actual
discoveries,
and
patent
applications
in
theUnited
States
and
other
jurisdictions
are
typically
not
published
until
18
months
after
filing
or
in
some
cases
not
at
all.
Therefore
we
cannot
be
certain
that
we
orour
licensors
were
the
first
to
make
the
inventions
claimed
in
our
owned
or
licensed
patents
or
pending
patent
applications,
or
that
we
or
our
licensors
were
the
firstto
file
for
patent
protection
of
such
inventions.Patent
reform
legislation
could
increase
the
uncertainties
and
costs
surrounding
the
prosecution
of
our
patent
applications
and
the
enforcement
or
defense
ofour
issued
patents.







On
September
16,
2011,
the
Leahy-Smith
America
Invents
Act,
or
the
Leahy-Smith
Act,
was
signed
into
law.
The
Leahy-Smith
Act
includes
a
number
ofsignificant
changes
to
U.S.
patent
law.
These
include
provisions
that
affect
the
way
patent
applications
will
be
prosecuted
and
may
also
affect
patent
litigation.
Inparticular,
under
the
Leahy-Smith
Act,
the
United
States
transitioned
in
March
2013
to
a
"first
to
file"
system
in
which
the
first
inventor
to
file
a
patent
applicationwill
be
entitled
to
the
patent.
Third
parties
are
allowed
to
submit
prior
art
before
the
issuance
of
a
patent
by
the
U.S.
Patent
and
Trademark
Office,
or
the
USPTO,and
may
become
involved
in
opposition,
derivation,
reexamination,
inter
partes
review,
post
grant
review
or
interference
proceedings
challenging
our
patent
rightsor
the
patent
rights
of
others.
An
adverse
determination
in
any
such
submission,
proceeding
or
litigation
could
reduce
the
scope
of,
or
invalidate,
our
patent
rights,which
could
adversely
affect
our
competitive
position.







Many
of
the
substantive
changes
to
patent
law
associated
with
the
Leahy-Smith
Act,
and
in
particular,
the
first
to
file
provisions,
did
not
become
effectiveuntil
March
16,
2013.
Currently,
it
is
not
clear
what,
if
any,
impact
the
Leahy-Smith
Act
will
have
on
the
operation
of
our
business.
However,
the
Leahy-Smith
Actand
its
implementation
could
increase
the
uncertainties
and
costs
surrounding
the
prosecution
of
our
patent
applications
and
the
enforcement
or
defense
of
ourissued
patents.Obtaining
and
maintaining
our
patent
protection
depends
on
compliance
with
various
procedural,
document
submissions,
fee
payment
and
other
requirementsimposed
by
governmental
patent
agencies,
and
our
patent
protection
could
be
reduced
or
eliminated
for
non-compliance
with
these
requirements.







Periodic
maintenance
fees
on
any
issued
patent
are
due
to
be
paid
to
the
USPTO
and
foreign
patent
agencies
in
several
stages
over
the
lifetime
of
the
patent.The
USPTO
and
various
foreign
governmental
patent
agencies
require
compliance
with
a
number
of
procedural,
documentary,
fee
payment
and
other
similarprovisions
during
the
patent
application
process.
While
an
inadvertent
lapse
can
in
many
cases
be
cured
by
payment
of
a
late
fee
or
by
other
means
in
accordancewith
the
applicable
rules,
there
are
situations
in
which
noncompliance
can
result
in
abandonment
or
lapse
of
the
patent
or
patent
application,
resulting
in
partial
orcomplete
loss
of
patent
rights
in
the
relevant
jurisdiction.
Non-compliance
events
that
could
result
in
abandonment
or
lapse
of
a
patent
or
patent
applicationinclude,
but
are
not
limited
to,
failure
to
respond
to
official
actions
within
prescribed
time
limits,
non-payment
of
fees
and
failure
to
properly
legalize
and
submitformal
documents.
If
we
or
our
licensors
fail
to
maintain
the
patents
and
patent
applications
covering
our
product
candidates,
our
competitive
position
would
beadversely
affected.51Table
of
ContentsWe
may
become
involved
in
lawsuits
to
protect
or
enforce
our
intellectual
property,
which
could
be
expensive,
time
consuming
and
unsuccessful.







Competitors
may
infringe
our
patents
or
misappropriate
or
otherwise
violate
our
intellectual
property
rights.
To
counter
infringement
or
unauthorized
use,litigation
may
be
necessary
in
the
future
to
enforce
or
defend
our
intellectual
property
rights,
to
protect
our
trade
secrets
or
to
determine
the
validity
and
scope
ofour
own
intellectual
property
rights
or
the
proprietary
rights
of
others.
This
can
be
expensive
and
time
consuming.
Many
of
our
current
and
potential
competitorshave
the
ability
to
dedicate
substantially
greater
resources
to
defend
their
intellectual
property
rights
than
we
can.
Accordingly,
despite
our
efforts,
we
may
not
beable
to
prevent
third
parties
from
infringing
upon
or
misappropriating
our
intellectual
property.
Litigation
could
result
in
substantial
costs
and
diversion
ofmanagement
resources.
In
addition,
in
an
infringement
proceeding,
a
court
may
decide
that
a
patent
owned
by
or
licensed
to
us
is
invalid
or
unenforceable,
or
mayrefuse
to
stop
the
other
party
from
using
the
technology
at
issue
on
the
grounds
that
our
patents
do
not
cover
the
technology
in
question.
An
adverse
result
in
anylitigation
proceeding
could
put
one
or
more
of
our
patents
at
risk
of
being
invalidated,
held
unenforceable
or
interpreted
narrowly.
Furthermore,
because
of
thesubstantial
amount
of
discovery
required
in
connection
with
intellectual
property
litigation,
there
is
a
risk
that
some
of
our
confidential
information
could
becompromised
by
disclosure
during
this
type
of
litigation.Third
parties
may
initiate
legal
proceedings
alleging
that
we
are
infringing
their
intellectual
property
rights,
the
outcome
of
which
would
be
uncertain
andcould
harm
our
business.







Our
commercial
success
depends
upon
our
ability
and
the
ability
of
our
collaborators
to
develop,
manufacture,
market
and
sell
our
product
candidates,
and
touse
our
proprietary
technologies
without
infringing
the
proprietary
rights
of
third
parties.
We
may
become
party
to,
or
threatened
with,
future
adversarialproceedings
or
litigation
regarding
intellectual
property
rights
with
respect
to
our
products
and
technology,
including
interference
or
derivation
proceedings
beforethe
USPTO.
Third
parties
may
assert
infringement
claims
against
us
based
on
existing
patents
or
patents
that
may
be
granted
in
the
future.
If
we
are
found
toinfringe
a
third
party's
intellectual
property
rights,
we
could
be
required
to
obtain
a
license
from
such
third
party
to
continue
developing
and
commercializing
ourproducts
and
technology.
However,
we
may
not
be
able
to
obtain
any
required
license
on
commercially
reasonable
terms
or
at
all.
Even
if
we
are
able
to
obtain
alicense,
it
may
be
non-exclusive,
thereby
giving
our
competitors
access
to
the
same
technologies
licensed
to
us.
We
could
be
forced,
including
by
court
order,
tocease
commercializing
the
infringing
technology
or
product.
In
addition,
in
any
such
proceeding
or
litigation,
we
could
be
found
liable
for
monetary
damages.
Afinding
of
infringement
could
prevent
us
from
commercializing
our
product
candidates
or
force
us
to
cease
some
of
our
business
operations,
which
could
materiallyharm
our
business.
Any
claims
by
third
parties
that
we
have
misappropriated
their
confidential
information
or
trade
secrets
could
have
a
similar
negative
impact
onour
business.We
may
be
subject
to
claims
that
our
employees
have
wrongfully
used
or
disclosed
alleged
trade
secrets
of
their
former
employers.







Many
of
our
employees,
including
our
senior
management,
were
previously
employed
at
other
biotechnology
or
pharmaceutical
companies,
including
ourcompetitors
or
potential
competitors.
Some
of
these
employees,
including
each
member
of
our
senior
management,
executed
proprietary
rights,
non-disclosure
andnon-competition
agreements
in
connection
with
such
previous
employment.
Although
we
try
to
ensure
that
our
employees
do
not
use
the
proprietary
information
orknow-how
of
others
in
their
work
for
us,
we
may
be
subject
to
claims
that
we
or
these
employees
have
used
or
disclosed
intellectual
property,
including
tradesecrets
or
other
proprietary
information,
of
any
such
employee's
former
employer.
We
are
not
aware
of
any
threatened
or
pending
claims
related
to
these
matters
orconcerning
the
agreements
with
our
senior
management,
but
in
the
future
litigation
may
be52Table
of
Contentsnecessary
to
defend
against
such
claims.
If
we
fail
in
defending
any
such
claims,
in
addition
to
paying
monetary
damages,
we
may
lose
valuable
intellectualproperty
rights
or
personnel.
Even
if
we
are
successful
in
defending
against
such
claims,
litigation
could
result
in
substantial
costs
and
be
a
distraction
tomanagement.Intellectual
property
disputes
could
cause
us
to
spend
substantial
resources
and
distract
our
personnel
from
their
normal
responsibilities.







Even
if
resolved
in
our
favor,
litigation
or
other
legal
proceedings
relating
to
intellectual
property
claims
may
cause
us
to
incur
significant
expenses,
and
coulddistract
our
technical
and
management
personnel
from
their
normal
responsibilities.
In
addition,
there
could
be
public
announcements
of
the
results
of
hearings,motions
or
other
interim
proceedings
or
developments
and
if
securities
analysts
or
investors
perceive
these
results
to
be
negative,
it
could
have
a
substantialadverse
effect
on
the
market
price
of
our
common
stock.
Such
litigation
or
proceedings
could
substantially
increase
our
operating
losses
and
reduce
the
resourcesavailable
for
development
activities
or
any
future
sales,
marketing
or
distribution
activities.
We
may
not
have
sufficient
financial
or
other
resources
to
adequatelyconduct
such
litigation
or
proceedings.
Some
of
our
competitors
may
be
able
to
sustain
the
costs
of
such
litigation
or
proceedings
more
effectively
than
we
canbecause
of
their
greater
financial
resources.
Uncertainties
resulting
from
the
initiation
and
continuation
of
patent
litigation
or
other
proceedings
could
compromiseour
ability
to
compete
in
the
marketplace.If
we
are
unable
to
protect
the
confidentiality
of
our
trade
secrets,
our
business
and
competitive
position
would
be
harmed.







In
addition
to
seeking
patents
for
some
of
our
technology
and
products,
we
also
rely
on
trade
secrets,
including
unpatented
know-how,
technology
and
otherproprietary
information,
to
maintain
our
competitive
position.
We
seek
to
protect
these
trade
secrets,
in
part,
by
entering
into
non-disclosure
and
confidentialityagreements
with
parties
who
have
access
to
them,
such
as
our
employees,
corporate
collaborators,
outside
scientific
collaborators,
CMOs,
consultants,
advisors
andother
third
parties.
We
also
generally
enter
into
confidentiality
and
invention
or
patent
assignment
agreements
with
our
employees
and
consultants.
Despite
theseefforts,
any
of
these
parties
may
breach
the
agreements
and
disclose
our
proprietary
information,
including
our
trade
secrets,
and
we
may
not
be
able
to
obtainadequate
remedies
for
such
breaches.
Enforcing
a
claim
that
a
party
illegally
disclosed
or
misappropriated
a
trade
secret
is
difficult,
expensive
and
time-consuming,and
the
outcome
is
unpredictable.
In
addition,
some
courts
both
within
and
outside
the
United
States
may
be
less
willing
or
unwilling
to
protect
trade
secrets.
If
anyof
our
trade
secrets
were
to
be
lawfully
obtained
or
independently
developed
by
a
competitor,
we
would
have
no
right
to
prevent
such
competitor
from
using
thattechnology
or
information
to
compete
with
us,
which
could
harm
our
competitive
position.







Although
we
expect
all
of
our
employees
to
assign
their
inventions
to
us,
and
all
of
our
employees,
consultants,
advisors
and
any
third
parties
who
have
accessto
our
proprietary
know-how,
information
or
technology
to
enter
into
confidentiality
agreements,
we
cannot
provide
any
assurances
that
all
such
agreements
havebeen
duly
executed
or
that
our
trade
secrets
and
other
confidential
proprietary
information
will
not
be
disclosed
or
that
competitors
will
not
otherwise
gain
accessto
our
trade
secrets
or
independently
develop
substantially
equivalent
information
and
techniques.
Additionally,
if
the
steps
taken
to
maintain
our
trade
secrets
aredeemed
inadequate,
we
may
have
insufficient
recourse
against
third
parties
for
misappropriating
the
trade
secret,
In
addition,
others
may
independently
discoverour
trade
secrets
and
proprietary
information.
For
example,
the
FDA,
as
part
of
its
Transparency
Initiative,
is
currently
considering
whether
to
make
additionalinformation
publicly
available
on
a
routine
basis,
including
information
that
we
may
consider
to
be
trade
secrets
or
other
proprietary
information,
and
it
is
not
clearat
the
present
time
how
the
FDA's
disclosure
policies
may
change
in
the
future,
if
at
all.53Table
of
ContentsWe
may
not
be
able
to
protect
our
intellectual
property
rights
throughout
the
world.







Filing,
prosecuting
and
defending
patents
on
all
of
our
product
candidates
throughout
the
world
would
be
prohibitively
expensive.
Competitors
may
use
ourtechnologies
in
jurisdictions
where
we
have
not
obtained
patent
protection
to
develop
their
own
products,
and
may
export
otherwise
infringing
products
toterritories
where
we
have
patent
protection,
but
where
enforcement
is
not
as
strong
as
that
in
the
United
States.
These
products
may
compete
with
our
products
injurisdictions
where
we
do
not
have
any
issued
patents
and
our
patent
claims
or
other
intellectual
property
rights
may
not
be
effective
or
sufficient
to
prevent
themfrom
so
competing.







Many
companies
have
encountered
significant
problems
in
protecting
and
defending
intellectual
property
rights
in
foreign
jurisdictions.
The
legal
systems
ofcertain
countries,
particularly
certain
developing
countries,
do
not
favor
the
enforcement
of
patents
and
other
intellectual
property
protection,
particularly
thoserelating
to
biopharmaceuticals,
which
could
make
it
difficult
for
us
to
stop
the
infringement
of
our
patents
or
marketing
of
competing
products
in
violation
of
ourproprietary
rights
generally.
Proceedings
to
enforce
our
patent
rights
in
foreign
jurisdictions
could
result
in
substantial
cost
and
divert
our
efforts
and
attention
fromother
aspects
of
our
business.Intellectual
property
rights
do
not
necessarily
address
all
potential
threats
to
our
competitive
advantage.







The
degree
of
future
protection
afforded
by
our
intellectual
property
rights
is
uncertain
because
intellectual
property
rights
have
limitations,
and
may
notadequately
protect
our
business,
or
permit
us
to
maintain
our
competitive
advantage.
The
following
examples
are
illustrative:•Others
may
be
able
to
make
compounds
that
are
the
same
as
or
similar
to
our
product
candidates
but
that
are
not
covered
by
the
claims
of
thepatents
that
we
own
or
have
exclusively
licensed.
•We
or
our
licensors
or
any
strategic
partners
might
not
have
been
the
first
to
make
the
inventions
covered
by
the
issued
patent
or
pending
patentapplication
that
we
own
or
have
exclusively
licensed.
•We
or
our
licensors
or
any
strategic
partners
might
not
have
been
the
first
to
file
patent
applications
covering
certain
of
our
inventions.
•Others
may
independently
develop
similar
or
alternative
technologies
or
duplicate
any
of
our
technologies
without
infringing
our
intellectualproperty
rights.
•It
is
possible
that
our
pending
patent
applications
will
not
lead
to
issued
patents.
•Issued
patents
that
we
own
or
have
exclusively
licensed
may
not
provide
us
with
any
competitive
advantages,
or
may
be
held
invalid
orunenforceable,
as
a
result
of
legal
challenges
by
our
competitors.
•Our
competitors
might
conduct
research
and
development
activities
in
the
United
States
and
other
countries
that
provide
a
safe
harbor
from
patentinfringement
claims
for
certain
research
and
development
activities,
as
well
as
in
countries
where
we
do
not
have
patent
rights
and
then
use
theinformation
learned
from
such
activities
to
develop
competitive
products
for
sale
in
our
major
commercial
markets.
•We
may
not
develop
additional
proprietary
technologies
that
are
patentable.
•The
patents
of
others
may
have
an
adverse
effect
on
our
business.54Table
of
ContentsRisks
Related
to
Ownership
of
Our
Common
Stock
The
trading
market
in
our
common
stock
has
been
extremely
limited
and
substantially
less
liquid
than
the
average
trading
market
for
a
stock
quoted
on
theNASDAQ
Markets.







Since
our
initial
listing
on
the
NASDAQ
Global
Select
Market
on
July
25,
2013
and
transfer
to
the
NASDAQ
Capital
Market
on
February
5,
2016,
the
tradingmarket
in
our
common
stock
has
been
limited
and
substantially
less
liquid
than
the
average
trading
market
for
companies
listed
on
the
NASDAQ
exchange.
Thelisting
of
our
common
stock
on
the
NASDAQ
Capital
Market
does
not
assure
that
a
meaningful,
consistent
and
liquid
trading
market
currently
exists.
We
cannotpredict
whether
a
more
active
market
for
our
common
stock
will
develop
in
the
future.
An
absence
of
an
active
trading
market
could
adversely
affect
ourstockholders'
ability
to
sell
our
common
stock
at
current
market
prices
in
short
time
periods,
or
possibly
at
all.
Additionally,
market
visibility
for
our
common
stockmay
be
limited
and
such
lack
of
visibility
may
have
a
depressive
effect
on
the
market
price
for
our
common
stock.
As
of
March
15,
2016,
approximately
43%
ofour
outstanding
shares
of
common
stock
was
held
by
our
officers,
directors,
beneficial
owners
of
5%
or
more
of
our
capital
stock
and
their
respective
affiliates,which
adversely
affects
the
liquidity
of
the
trading
market
for
our
common
stock,
in
as
much
as
federal
securities
laws
restrict
sales
of
our
shares
by
thesestockholders.
If
our
affiliates
continue
to
hold
their
shares
of
common
stock,
there
will
be
limited
trading
volume
in
our
common
stock,
which
may
make
it
moredifficult
for
investors
to
sell
their
shares
or
increase
the
volatility
of
our
stock
price.Our
share
price
may
be
volatile,
which
could
subject
us
to
securities
class
action
litigation
and
result
in
substantial
losses
to
our
stockholders.







The
trading
price
of
our
common
stock
is
highly
volatile
and
could
be
subject
to
wide
fluctuations
in
response
to
various
factors,
some
of
which
are
beyondour
control.
Between
January
1,
2014
and
March
15,
2016,
the
price
of
our
common
stock
on
the
NASDAQ
Stock
Market
has
ranged
from
$16.22
per
share
to$0.32
per
share.
In
addition
to
the
factors
discussed
in
this
"Risk
Factors"
section
and
elsewhere
in
this
Annual
Report,
factors
that
could
impact
the
trading
priceof
our
common
stock
include:•results
of
clinical
trials
of
our
product
candidates
or
those
of
our
competitors;
•regulatory
actions
with
respect
to
our
products
or
our
competitors'
products;
•actual
or
anticipated
changes
in
our
growth
rate
relative
to
our
competitors;
•announcements
by
us
or
our
competitors
of
significant
acquisitions,
strategic
partnerships,
joint
ventures,
collaborations
or
capital
commitments;
•the
success
of
competitive
products
or
technologies;
•regulatory
or
legal
developments
in
the
United
States
and
other
countries;
•developments
or
disputes
concerning
patent
applications,
issued
patents
or
other
proprietary
rights;
•the
recruitment
or
departure
of
key
personnel;
•the
level
of
expenses
related
to
any
of
our
product
candidates
or
clinical
development
programs;
•the
results
of
our
efforts
to
in-license
or
acquire
additional
product
candidates
or
products;
•actual
or
anticipated
changes
in
estimates
as
to
financial
results,
development
timelines
or
recommendations
by
securities
analysts;
•variations
in
our
financial
results
or
those
of
companies
that
are
perceived
to
be
similar
to
us;
•fluctuations
in
the
valuation
of
companies
perceived
by
investors
to
be
comparable
to
us;55Table
of
Contents•share
price
and
volume
fluctuations
attributable
to
inconsistent
trading
volume
levels
of
our
shares;
•announcement
or
expectation
of
additional
financing
efforts;
•sales
of
our
common
stock
by
us,
our
insiders
or
our
other
stockholders;
•changes
in
the
structure
of
healthcare
payment
systems;
•market
conditions
in
the
pharmaceutical
and
biotechnology
sectors;
and
•general
economic,
industry
and
market
conditions.







In
addition,
the
stock
market
in
general,
and
pharmaceutical
and
biotechnology
companies
in
particular,
have
experienced
extreme
price
and
volumefluctuations
that
have
often
been
unrelated
or
disproportionate
to
the
operating
performance
of
these
companies.
Broad
market
and
industry
factors
may
negativelyaffect
the
market
price
of
our
common
stock,
regardless
of
our
actual
operating
performance.
The
realization
of
any
of
these
risks
or
any
of
a
broad
range
of
otherrisks,
including
those
described
in
these
"Risk
Factors,"
could
have
a
dramatic
and
material
adverse
impact
on
the
market
price
of
our
common
stock.If
we
are
unable
to
regain
compliance
with
the
requirements
to
maintain
a
continued
listing
on
the
NASDAQ
Capital
Market,
our
common
stock
may
bedelisted
and
the
price
of
our
common
stock
and
our
ability
to
access
the
capital
markets
could
be
negatively
impacted.







Our
common
stock
is
currently
listed
for
trading
on
the
NASDAQ
Capital
Market.
We
must
satisfy
NASDAQ's
continued
listing
requirements
or
riskdelisting,
which
would
have
a
material
adverse
effect
on
our
business.
On
February
10,
2016,
we
received
a
deficiency
letter
from
NASDAQ
notifying
us
that
forthe
preceding
30
consecutive
business
days
the
bid
price
of
our
common
stock
had
closed
below
the
minimum
$1.00
per
share
requirement
for
continued
listing.
Inaccordance
with
NASDAQ
listing
rules,
we
have
been
provided
an
initial
period
of
180
calendar
days,
or
until
August
8,
2016,
to
regain
compliance.
We
arecurrently
considering
available
options
to
resolve
the
listing
deficiency
and
to
regain
compliance.
There
can
be
no
assurance
that
we
will
be
able
to
regaincompliance
with
the
NASDAQ
Capital
Market
listing
requirements.
A
delisting
of
our
common
stock
from
the
NASDAQ
Capital
Market
could
materially
reducethe
liquidity
of
our
common
stock
and
result
in
a
corresponding
material
reduction
in
the
price
of
our
common
stock.
In
addition,
delisting
could
harm
our
abilityto
raise
capital
through
alternative
financing
sources
on
terms
acceptable
to
us,
or
at
all,
and
may
result
in
the
potential
loss
of
confidence
by
investors,
suppliers,customers
and
employees
and
fewer
business
development
opportunities.We
may
be
subject
to
securities
litigation,
which
is
expensive
and
could
divert
management
attention.







The
market
price
of
our
common
stock
has
been
and
may
continue
to
be
volatile,
and
in
the
past
companies
that
have
experienced
volatility
in
the
marketprice
of
their
stock
have
been
subject
to
securities
class
action
litigation.
Likewise,
companies
that
have
experienced
a
clinical
hold,
as
we
have
with
one
of
oursecondary
compounds,
have
been
subject
to
securities
class
action
litigation.
We
may
be
the
target
of
this
type
of
litigation
in
the
future.
Securities
litigationagainst
us
could
result
in
substantial
costs
and
divert
our
management's
attention
from
other
business
concerns,
which
could
seriously
harm
our
business.Our
principal
stockholders
and
management
own
a
significant
percentage
of
our
stock
and
will
be
able
to
exert
significant
control
over
matters
subject
tostockholder
approval.







Our
executive
officers,
directors
and
holders
of
five
percent
or
more
of
our
capital
stock,
including
Baxalta,
in
the
aggregate
beneficially
ownedapproximately
43%
of
our
voting
stock
at
March
15,
2016.56Table
of
ContentsThese
stockholders
may
be
able
to
determine
the
outcome
of
all
matters
requiring
stockholder
approval.
For
example,
these
stockholders
may
be
able
to
controlelections
of
directors,
amendments
of
our
organizational
documents,
or
approval
of
any
merger,
sale
of
assets,
or
other
major
corporate
transaction.
This
mayprevent
or
discourage
unsolicited
acquisition
proposals
or
offers
for
our
common
stock
that
you
may
feel
are
in
your
best
interest
as
one
of
our
stockholders.
Theinterests
of
this
group
of
stockholders
may
not
always
coincide
with
your
interests
or
the
interests
of
other
stockholders
and
they
may
act
in
a
manner
that
advancestheir
best
interests
and
not
necessarily
those
of
other
stockholders,
including
seeking
a
premium
value
for
their
common
stock,
and
might
affect
the
prevailingmarket
price
for
our
common
stock.We
are
an
"emerging
growth
company"
and
we
take
advantage
of
reduced
disclosure
and
governance
requirements
applicable
to
emerging
growth
companies,which
could
result
in
our
common
stock
being
less
attractive
to
investors.







We
are
an
"emerging
growth
company,"
as
defined
in
the
JOBS
Act,
and
we
take
advantage
of
certain
exemptions
from
various
reporting
requirements
thatare
applicable
to
other
public
companies
that
are
not
emerging
growth
companies
including,
but
not
limited
to,
not
being
required
to
comply
with
the
auditorattestation
requirements
of
Section
404
of
the
Sarbanes-Oxley
Act,
reduced
disclosure
obligations
regarding
executive
compensation
in
our
periodic
reports
andproxy
statements,
and
exemptions
from
the
requirements
of
holding
a
nonbinding
advisory
vote
on
executive
compensation
and
stockholder
approval
of
any
goldenparachute
payments
not
previously
approved.
We
may
take
advantage
of
these
reporting
exemptions
until
we
are
no
longer
an
emerging
growth
company,
which
incertain
circumstances
could
be
until
December
31,
2018.
We
cannot
predict
if
investors
will
find
our
common
stock
less
attractive
because
we
will
rely
on
theseexemptions.
If
some
investors
find
our
common
stock
less
attractive
as
a
result,
there
may
be
a
less
active
trading
market
for
our
common
stock
and
our
stock
pricemay
be
more
volatile.
In
addition,
it
may
be
difficult
for
us
to
raise
additional
capital
as
and
when
we
need
it.
Investors
may
be
unable
to
compare
our
businesswith
other
companies
in
our
industry
if
they
believe
that
our
financial
accounting
is
not
as
transparent
as
other
companies
in
our
industry.
If
we
are
unable
to
raiseadditional
capital
as
and
when
we
need
it,
our
financial
condition
and
results
of
operations
may
be
materially
and
adversely
affected.If
we
fail
to
maintain
an
effective
system
of
internal
control
over
financial
reporting
in
the
future,
we
may
not
be
able
to
accurately
report
our
financialcondition,
results
of
operations
or
cash
flows,
which
may
adversely
affect
investor
confidence
in
us
and,
as
a
result,
the
value
of
our
common
stock.







The
Sarbanes-Oxley
Act
requires,
among
other
things,
that
we
maintain
effective
internal
controls
for
financial
reporting
and
disclosure
controls
andprocedures.
Under
Section
404
of
the
Sarbanes-Oxley
Act,
we
are
required
to
furnish
a
report
by
management
on,
among
other
things,
the
effectiveness
of
ourinternal
control
over
financial
reporting.
This
assessment
includes
disclosure
of
any
material
weaknesses
identified
by
our
management
in
our
internal
control
overfinancial
reporting.
A
material
weakness
is
a
deficiency,
or
combination
of
deficiencies,
in
internal
control
over
financial
reporting
that
results
in
more
than
areasonable
possibility
that
a
material
misstatement
of
annual
or
interim
financial
statements
will
not
be
prevented
or
detected
on
a
timely
basis.
Section
404
of
theSarbanes-Oxley
Act
also
generally
requires
an
attestation
from
our
independent
registered
public
accounting
firm
on
the
effectiveness
of
our
internal
control
overfinancial
reporting.
However,
for
as
long
as
we
remain
an
"emerging
growth
company"
as
defined
in
the
JOBS
Act
or
a
"Smaller
Reporting
Company",
we
intendto
utilize
the
provision
exempting
us
from
the
requirement
that
our
independent
registered
public
accounting
firm
provide
an
attestation
on
the
effectiveness
of
ourinternal
control
over
financial
reporting.







We
cannot
assure
you
that
there
will
not
be
material
weaknesses
or
significant
deficiencies
in
our
internal
control
over
financial
reporting
in
the
future.
Anyfailure
to
maintain
internal
control
over57Table
of
Contentsfinancial
reporting
could
severely
inhibit
our
ability
to
accurately
report
our
financial
condition,
results
of
operations
or
cash
flows.
If
we
are
unable
to
concludethat
our
internal
control
over
financial
reporting
is
effective,
or
if
our
independent
registered
public
accounting
firm
determines
we
have
a
material
weakness
orsignificant
deficiency
in
our
internal
control
over
financial
reporting
once
that
firm
begins
its
Section
404
audits
of
internal
control
over
financial
reporting,
wecould
lose
investor
confidence
in
the
accuracy
and
completeness
of
our
financial
reports,
the
market
price
of
our
common
stock
could
decline,
and
we
could
besubject
to
sanctions
or
investigations
by
the
NASDAQ
Stock
Market,
the
SEC
or
other
regulatory
authorities.
Failure
to
remedy
any
material
weakness
in
ourinternal
control
over
financial
reporting,
or
to
implement
or
maintain
other
effective
control
systems
required
of
public
companies,
could
also
restrict
our
futureaccess
to
the
capital
markets.Our
disclosure
controls
and
procedures
may
not
prevent
or
detect
all
errors
or
acts
of
fraud.







We
are
subject
to
the
periodic
reporting
requirements
of
the
Exchange
Act.
Our
disclosure
controls
and
procedures
are
designed
to
reasonably
assure
thatinformation
required
to
be
disclosed
by
us
in
reports
we
file
or
submit
under
the
Exchange
Act
is
accumulated
and
communicated
to
management,
recorded,processed,
summarized
and
reported
within
the
time
periods
specified
in
the
rules
and
forms
of
the
SEC.
We
believe
that
any
disclosure
controls
and
procedures
orinternal
controls
and
procedures,
no
matter
how
well
conceived
and
operated,
can
provide
only
reasonable,
not
absolute,
assurance
that
the
objectives
of
the
controlsystem
are
met.







These
inherent
limitations
include
the
realities
that
judgments
in
decision-making
can
be
faulty,
and
that
breakdowns
can
occur
because
of
simple
error
ormistake.
Additionally,
controls
can
be
circumvented
by
the
individual
acts
of
some
persons,
by
collusion
of
two
or
more
people
or
by
an
unauthorized
override
ofthe
controls.
Accordingly,
because
of
the
inherent
limitations
in
our
control
system,
misstatements
or
insufficient
disclosures
due
to
error
or
fraud
may
occur
andnot
be
detected.We
incur
increased
costs
as
a
result
of
operating
as
a
public
company,
and
our
management
is
required
to
devote
substantial
time
to
new
complianceinitiatives.







As
a
public
company,
we
are
incurring
and
will
continue
to
incur
significant
legal,
accounting
and
other
expenses
that
we
did
not
incur
as
a
private
company,and
these
expenses
may
increase
even
more
after
we
are
no
longer
an
"emerging
growth
company."
We
are
subject
to
the
reporting
requirements
of
the
ExchangeAct,
the
Sarbanes-Oxley
Act,
the
Dodd-Frank
Wall
Street
Reform
and
Protection
Act,
as
well
as
rules
adopted,
and
to
be
adopted,
by
the
SEC
and
NASDAQ
StockMarket.
Our
management
and
other
personnel
need
to
devote
a
substantial
amount
of
time
to
these
compliance
initiatives.
Moreover,
these
rules
and
regulationsincrease
our
legal
and
financial
compliance
costs
and
make
some
activities
more
time-consuming
and
costly.
For
example,
these
rules
and
regulations
can
make
itmore
difficult
and
more
expensive
for
us
to
obtain
director
and
officer
liability
insurance
and
we
may
be
required
to
incur
substantial
costs
to
maintain
thesufficient
coverage.
We
cannot
predict
or
estimate
the
amount
or
timing
of
additional
costs
we
may
incur
to
respond
to
these
requirements.
The
impact
of
theserequirements
could
also
make
it
more
difficult
for
us
to
attract
and
retain
qualified
persons
to
serve
on
our
board
of
directors,
our
board
committees
or
as
executiveofficers.Because
we
do
not
anticipate
paying
any
cash
dividends
on
our
capital
stock
in
the
foreseeable
future,
capital
appreciation,
if
any,
will
be
our
stockholders'sole
source
of
gain.







We
have
never
declared
or
paid
cash
dividends
on
our
capital
stock.
We
currently
intend
to
retain
all
of
our
future
earnings,
if
any,
to
finance
the
growth
anddevelopment
of
our
business.
In
addition,
the
terms
of
any
future
debt
agreements
may
preclude
us
from
paying
dividends.
As
a
result,
capital
appreciation,
if
any,of
our
common
stock
will
be
our
stockholders'
sole
source
of
gain
for
the
foreseeable
future.58Table
of
ContentsFuture
sales
and
issuances
of
our
common
stock
or
rights
to
purchase
common
stock,
including
pursuant
to
our
equity
incentive
plans,
could
result
inadditional
dilution
of
the
percentage
ownership
of
our
stockholders
and
could
cause
our
stock
price
to
fall.







We
expect
that
significant
additional
capital
will
be
needed
in
the
future
to
continue
our
planned
operations.
To
raise
capital,
we
may
sell
substantial
amountsof
common
stock
or
securities
convertible
into
or
exchangeable
for
common
stock.
These
future
issuances
of
common
stock
or
common
stock-related
securities,together
with
the
exercise
of
outstanding
options
and
any
additional
shares
issued
in
connection
with
acquisitions,
if
any,
may
result
in
material
dilution
to
ourinvestors.
Such
sales
may
also
result
in
material
dilution
to
our
existing
stockholders,
and
new
investors
could
gain
rights,
preferences
and
privileges
senior
tothose
of
holders
of
our
common
stock.







Pursuant
to
our
equity
incentive
plans,
our
compensation
committee
is
authorized
to
grant
equity-based
incentive
awards
to
our
directors,
executive
officersand
other
employees
and
service
providers,
including
officers,
employees
and
service
providers
of
our
subsidiaries
and
affiliates.
At
December
31,
2015,
therewere
5,157,602
shares
of
our
common
stock
underlying
outstanding
options
and
1,354,133
shares
available
for
future
grant
under
our
2013
Equity
CompensationPlan.
In
accordance
with
the
terms
of
the
2013
Equity
Compensation
Plan,
on
January
1,
2016,
the
maximum
aggregate
number
of
shares
of
our
common
stock
thatmay
be
issued
under
the
plan
was
automatically
increased
by
1,018,567
shares,
such
that
immediately
after
such
increase
the
number
of
shares
remaining
availablefor
future
issuance
under
the
plan
was
2,372,700.
On
January
11,
2016,
we
issued
warrants
to
purchase
968,421
shares
of
our
common
stock
at
an
exercise
price
of$1.15
per
share,
subject
to
customary
adjustments.
Future
option
grants
and
issuances
of
common
stock
under
our
2013
Equity
Compensation
and
warrants
mayhave
an
adverse
effect
on
the
market
price
of
our
common
stock.Some
provisions
of
our
charter
documents
and
Delaware
law
may
have
anti-takeover
effects
that
could
discourage
an
acquisition
of
us
by
others,
even
if
anacquisition
would
be
beneficial
to
our
stockholders
and
may
prevent
attempts
by
our
stockholders
to
replace
or
remove
our
current
management.







Provisions
in
our
tenth
amended
and
restated
certificate
of
incorporation,
or
certificate
of
incorporation,
and
amended
and
restated
bylaws,
as
well
asprovisions
of
Delaware
law,
could
make
it
more
difficult
for
a
third
party
to
acquire
us
or
increase
the
cost
of
acquiring
us,
even
if
doing
so
would
benefit
ourstockholders,
or
remove
our
current
management.
These
include
provisions
that
will:•permit
our
board
of
directors
to
issue
up
to
5,000,000
shares
of
preferred
stock,
with
any
rights,
preferences
and
privileges
as
they
may
designate;
•provide
that
all
vacancies
on
our
board
of
directors,
including
as
a
result
of
newly
created
directorships,
may,
except
as
otherwise
required
by
law,be
filled
by
the
affirmative
vote
of
a
majority
of
directors
then
in
office,
even
if
less
than
a
quorum;
•require
that
any
action
to
be
taken
by
our
stockholders
must
be
effected
at
a
duly
called
annual
or
special
meeting
of
stockholders
and
not
be
takenby
written
consent;
•provide
that
stockholders
seeking
to
present
proposals
before
a
meeting
of
stockholders
or
to
nominate
candidates
for
election
as
directors
at
ameeting
of
stockholders
must
provide
advance
notice
in
writing,
and
also
specify
requirements
as
to
the
form
and
content
of
a
stockholder's
notice;
•not
provide
for
cumulative
voting
rights,
thereby
allowing
the
holders
of
a
majority
of
the
shares
of
common
stock
entitled
to
vote
in
any
election
ofdirectors
to
elect
all
of
the
directors
standing
for
election;
and59Table
of
Contents•provide
that
special
meetings
of
our
stockholders
may
be
called
only
by
the
board
of
directors
or
by
such
person
or
persons
requested
by
a
majorityof
the
board
of
directors
to
call
such
meetings.







These
provisions
may
frustrate
or
prevent
any
attempts
by
our
stockholders
to
replace
or
remove
our
current
management
by
making
it
more
difficult
forstockholders
to
replace
members
of
our
board
of
directors,
who
are
responsible
for
appointing
the
members
of
our
management.
Because
we
are
incorporated
inDelaware,
we
are
governed
by
the
provisions
of
Section
203
of
the
Delaware
General
Corporation
Law,
which
may
discourage,
delay
or
prevent
someone
fromacquiring
us
or
merging
with
us
whether
or
not
it
is
desired
by
or
beneficial
to
our
stockholders.
Under
Delaware
law,
a
corporation
may
not,
in
general,
engage
ina
business
combination
with
any
holder
of
15%
or
more
of
its
capital
stock
unless
the
holder
has
held
the
stock
for
three
years
or,
among
other
things,
the
board
ofdirectors
has
approved
the
transaction.
Any
provision
of
our
amended
and
restated
certificate
of
incorporation
or
amended
and
restated
bylaws
or
Delaware
lawthat
has
the
effect
of
delaying
or
deterring
a
change
in
control
could
limit
the
opportunity
for
our
stockholders
to
receive
a
premium
for
their
shares
of
our
commonstock,
and
could
also
affect
the
price
that
some
investors
are
willing
to
pay
for
our
common
stock.If
securities
or
industry
analysts
do
not
publish
research
or
publish
inaccurate
or
unfavorable
research
about
our
business,
our
stock
price
and
trading
volumecould
decline.







The
trading
market
for
our
common
stock
is
influenced
by
the
research
and
reports
that
securities
or
industry
analysts
publish
about
us
or
our
business.
We
donot
have
any
control
over
these
analysts.
There
can
be
no
assurance
that
analysts
will
continue
to
cover
us
or
provide
favorable
coverage.
If
one
or
more
of
theanalysts
who
cover
us
downgrade
our
stock
or
change
their
opinion
of
our
stock,
our
share
price
would
likely
decline.
If
one
or
more
of
these
analysts
ceasecoverage
of
our
company
or
fail
to
regularly
publish
reports
on
us,
we
could
lose
visibility
in
the
financial
markets,
which
could
cause
our
share
price
or
tradingvolume
to
decline.ITEM
1B.




UNRESOLVED
STAFF
COMMENTS








None.ITEM
2.




PROPERTIES








Our
corporate
headquarters
and
research
facilities
are
located
in
Newtown,
Pennsylvania,
where
we
lease
an
aggregate
of
approximately
9,500
square
feet
ofoffice
and
laboratory
space,
pursuant
to
lease
agreements,
the
terms
of
which
expire
in
March
2017
and
February
2017,
respectively.







We
believe
that
our
Newtown,
Pennsylvania
facility
is
adequate
for
our
near-term
needs.
When
our
lease
expires,
we
may
exercise
renewal
options
or
look
foradditional
or
alternate
space
for
our
operations.
We
believe
that
suitable
additional
or
alternative
space
would
be
available
on
commercially
reasonable
terms
ifrequired
in
the
future.







We
lease
temporary
office
space
in
Munich,
Germany,
for
our
European
personnel.ITEM
3.




LEGAL
PROCEEDINGS








We
are
not
a
party
to
any
legal
proceedings
and
we
are
not
aware
of
any
such
proceedings
contemplated
by
government
authorities.ITEM
4.




MINE
SAFETY
DISCLOSURES








Not
applicable.60Table
of
ContentsPART
II
ITEM
5.




MARKET
FOR
REGISTRANT'S
COMMON
EQUITY,
RELATED
STOCKHOLDER
MATTERS
AND
ISSUER
PURCHASES
OF
EQUITYSECURITIES
Market
Information








Our
common
stock
began
trading
on
the
NASDAQ
Global
Select
Market
on
July
25,
2013
under
the
symbol
"ONTX."
The
following
table
sets
forth
the
highand
low
sales
prices
per
share
of
our
common
stock
as
reported
on
the
NASDAQ
Global
Select
Market
for
the
period
indicated.







In
February
2016,
we
transferred
the
listing
of
our
common
stock
from
the
NASDAQ
Global
Select
Market
to
the
NASDAQ
Capital
Market
and
subsequentlyreceived
a
deficiency
letter
from
NASDAQ
notifying
us
that
we
had
failed
to
meet
the
minimum
bid
price
required
for
continued
listing
for
30
consecutivebusiness
days.
In
accordance
with
NASDAQ
listing
rules,
we
have
been
provided
an
initial
period
of
180
calendar
days,
or
until
August
8,
2016,
to
regaincompliance.Stockholders








As
of
February
29,
2016,
there
were
167
holders
of
record
for
shares
of
our
common
stock.
This
does
not
reflect
beneficial
stockholders
who
held
theircommon
stock
in
"street"
or
nominee
name
through
brokerage
firms.Securities
Authorized
for
Issuance
Under
Equity
Compensation
Plans








Information
regarding
securities
authorized
for
issuance
under
the
Company's
equity
compensation
plans
is
contained
in
Part
III,
Item
11
of
this
AnnualReport.Dividend
Policy








We
have
never
declared
or
paid
any
cash
dividends
on
our
capital
stock.
We
currently
intend
to
retain
all
available
funds
and
any
future
earnings
to
supportour
operations
and
finance
the
growth
and
development
of
our
business.
We
do
not
intend
to
pay
cash
dividends
on
our
common
stock
for
the
foreseeable
future.ITEM
6.




SELECTED
FINANCIAL
DATA








As
a
smaller
reporting
company,
the
Company
is
not
required
to
provide
the
information
otherwise
required
by
this
Item.61


High
Low
Year
Ended
December
31,
2015






First
Quarter
$4.43
$2.15
Second
Quarter

3.02

2.26
Third
Quarter

4.00

1.35
Fourth
Quarter

1.89

0.92
Year
Ended
December
31,
2014






First
Quarter
$16.22
$6.05
Second
Quarter

6.49

4.10
Third
Quarter

5.78

4.24
Fourth
Quarter

5.00

3.24
Table
of
ContentsITEM
7.




MANAGEMENT'S
DISCUSSION
AND
ANALYSIS
OF
FINANCIAL
CONDITION
AND
RESULTS
OF
OPERATIONS









You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statementsand the related notes and other financial information included elsewhere in this Annual Report. Some of the information contained in this discussion and analysisor set forth elsewhere in this Annual Report, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. You should review the "Risk Factors" section of this Annual Report for a discussion of important factorsthat could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussionand analysis .Overview








We
are
a
clinical-stage
biopharmaceutical
company
focused
on
discovering
and
developing
novel
small
molecule
drug
candidates
to
treat
cancer.
Using
ourproprietary
chemistry
platform,
we
have
created
an
extensive
library
of
targeted
anti-cancer
agents
designed
to
work
against
cellular
pathways
important
to
cancercells.
We
believe
that
the
drug
candidates
in
our
pipeline
have
the
potential
to
be
efficacious
in
a
variety
of
cancers.
We
have
one
actively
enrolling
Phase
3clinical-stage
product
candidate
and
two
other
clinical-stage
product
candidates
(one
of
which
is
being
developed
for
treatment
of
acute
radiation
syndromes)
andseveral
preclinical
programs.
Substantially
all
of
our
current
effort
is
focused
on
our
lead
product
candidate,
rigosertib.
Rigosertib
is
being
tested
in
bothintravenous
and
oral
formulations
as
a
single
agent,
and
the
oral
formulation
is
also
being
tested
in
combination
with
azacitidine,
in
clinical
trials
for
patients
withmyelodysplastic
syndromes,
or
MDS,
and
related
cancers.







We
were
incorporated
in
Delaware
in
December
1998
and
commenced
operations
in
January
1999.
Our
operations
to
date
have
included
our
organization
andstaffing,
business
planning,
raising
capital,
in-licensing
technology
from
research
institutions,
identifying
potential
product
candidates,
developing
productcandidates
and
building
strategic
alliances,
as
well
as
undertaking
preclinical
studies
and
clinical
trials
of
our
product
candidates.







Since
commencing
operations,
we
have
dedicated
a
significant
portion
of
our
resources
to
the
development
of
our
clinical-stage
product
candidates,particularly
rigosertib.
We
incurred
research
and
development
expenses
of
$25.9
million
and
$49.4
million
during
the
years
ended
December
31,
2015
and
2014,respectively.
We
anticipate
that
a
significant
portion
of
our
operating
expenses
will
continue
to
be
related
to
research
and
development
as
we
continue
to
advanceour
programs.
In
July
2013,
we
completed
our
initial
public
offering,
or
IPO,
from
which
we
received
net
proceeds
of
$79.8
million.
Prior
to
the
consummation
ofthe
IPO,
we
funded
our
operations
primarily
through
the
sale
of
preferred
stock
amounting
to
$144.7
million,
the
issuance
of
debt
amounting
to
$26.8
million,which
was
later
converted
into
shares
of
preferred
stock,
the
receipt
of
$8.0
million
from
The
Leukemia
and
Lymphoma
Society
under
a
May
2010
fundingagreement,
and
the
receipt
of
upfront
payments
of
$57.5
million
from
Baxter
(predecessor
to
Baxalta)
and
SymBio
in
connection
with
our
collaborationagreements.
During
2015
we
sold
3,761,920
shares
of
common
stock
for
net
proceeds
of
$7.5
million.
Under
the
Baxalta
collaboration
agreement,
we
are
receivingpayments
towards
costs
for
the
INSPIRE
trial,
with
a
cap
of
$15.0
million.
The
agreement
is
scheduled
to
terminate
in
August
2016
as
a
result
of
Baxalta's
decisionto
terminate
following
its
strategic
review
of
priorities.
We
received
the
termination
notice
from
Baxalta
in
March
2016,
after
we
had
consulted
with
Baxalta
on
thedesign
of
the
INSPIRE
trial
and
commenced
patient
enrollment.
We
will
attempt
to
maximize
Baxalta's
financial
support
for
the
INSPIRE
trial,
but
there
can
be
noassurances
regarding
the
amount
of
funds
we
will
receive
from
Baxalta
following
termination.
As
of
December
31,
2015,
we
had
$19.8
million
in
cash
and
cashequivalents.
In
January
2016,
we
completed
a
sale
of
common
stock
and
warrants
for
net
proceeds
of
approximately
$1.6
million.62Table
of
Contents







Our
net
losses
were
$24.0
million
and
$63.8
million
for
the
years
ended
December
31,
2015
and
2014,
respectively.
As
of
December
31,
2015,
we
had
anaccumulated
deficit
of
$318.6
million.
We
expect
to
incur
significant
expenses
and
operating
losses
for
the
foreseeable
future
as
we
continue
the
development
andclinical
trials
of,
and
seek
regulatory
approval
for,
our
product
candidates,
even
if
milestones
under
our
license
and
collaboration
agreements
may
be
met.
If
weobtain
regulatory
approval
for
any
of
our
product
candidates,
we
expect
to
incur
significant
commercialization
expenses.
We
do
not
currently
have
an
organizationfor
the
sales,
marketing
and
distribution
of
pharmaceutical
products.
We
may
rely
on
licensing
and
co-promotion
agreements
with
strategic
or
collaborativepartners
for
the
commercialization
of
our
products
in
the
United
States
and
other
territories.
If
we
choose
to
build
a
commercial
infrastructure
to
support
marketingin
the
United
States
for
any
of
our
product
candidates
that
achieve
regulatory
approval,
such
commercial
infrastructure
could
be
expected
to
include
a
targeted,oncology
sales
force
supported
by
sales
management,
internal
sales
support,
an
internal
marketing
group
and
distribution
support.
To
develop
the
appropriatecommercial
infrastructure
internally,
we
would
have
to
invest
financial
and
management
resources,
some
of
which
would
have
to
be
deployed
prior
to
having
anycertainty
about
marketing
approval.
Furthermore,
we
have
and
expect
to
continue
to
incur
additional
costs
associated
with
operating
as
a
public
company.







We
do
not
have
the
funding
resources
necessary
to
carry
out
all
of
our
proposed
operating
activities.
We
will
need
to
obtain
additional
financing
in
the
futurein
order
to
fully
fund
our
INSPIRE
trial
and
to
further
develop
rigosertib
or
any
other
product
candidates
through
the
regulatory
approval
process.
Accordingly,
wemay
delay
our
ongoing
clinical
trials,
including
the
INSPIRE
trial,
until
we
secure
adequate
additional
funding.
Additionally,
we
plan
to
scale
down
our
operationsin
order
to
reduce
spending
on
general
and
administrative
functions,
research
and
development,
and
other
clinical
trials.
We
are
exploring
various
dilutive
and
non-dilutive
sources
of
funding,
including
equity
and
debt
financings,
strategic
alliances,
business
development
and
other
sources.
If
we
raise
additional
funds
throughstrategic
collaborations
and
alliances
or
licensing
arrangements
with
third
parties,
which
may
including
existing
collaboration
partners,
we
may
have
to
relinquishvaluable
rights
to
our
technologies
or
product
candidates,
including
rigosertib,
or
grant
licenses
on
terms
that
are
not
favorable
to
us.
If
we
are
unable
to
secureadequate
additional
funding,
we
will
continue
to
delay,
scale-back
or
eliminate
certain
of
our
planned
research,
drug
discovery
and
development
activities
andcertain
other
aspects
of
our
operations
and
our
business
until
such
time
as
we
are
successful
in
securing
adequate
additional
funding.
As
a
result,
our
business,operating
results,
financial
condition
and
cash
flows
may
be
materially
and
adversely
affected.
We
will
incur
substantial
costs
beyond
the
present
and
plannedclinical
trials
in
order
to
file
an
NDA
for
rigosertib.
The
nature,
design,
size
and
cost
of
further
studies,
if
required,
will
depend
in
large
part
on
the
outcome
ofpreceding
studies
and
discussions
with
regulators.Financial
Overview
Revenue







During
the
years
ended
December
31,
2015
and
2014,
our
revenues
were
derived
exclusively
from
activities
conducted
in
accordance
with
our
collaborationarrangements
with
Baxalta
and
SymBio,
as
well
as
recognition
of
revenue
from
our
May
2010
funding
agreement
with
The
Leukemia
and63Table
of
ContentsLymphoma
Society,
or
LLS.
The
following
table
sets
forth
a
summary
of
revenue
recognized
during
the
years
ended
December
31,
2015
and
2014:







In
May
2010,
we
entered
into
a
funding
agreement
with
LLS
to
fund
our
ONTIME
trial
and
certain
related
activities.
We
received
$8.0
million
under
the
LLSfunding
agreement,
as
amended,
and
terminated
the
funding
agreement
effective
March
2013.
As
a
result
of
the
potential
obligation
to
repay
LLS,
we
initiallyrecorded
the
funding
received
as
deferred
revenue.
During
the
fourth
quarter
of
2015,
however,
we
determined,
based
in
part
on
the
commencement
of
theINSPIRE
trial,
that
the
research
program
covered
by
the
LLS
funding
agreement
was
unsuccessful
and,
as
a
result,
the
funding
received
non-repayable.Accordingly,
we
recognized
$8.0
million
of
deferred
revenue
during
the
quarter
ended
December
31,
2015.







We
have
not
generated
any
revenue
from
commercial
product
sales.
In
the
future,
if
any
of
our
product
candidates
currently
under
development
are
approvedfor
commercial
sale
in
the
United
States
or
other
territories
where
we
have
retained
commercialization
rights,
we
may
generate
revenue
from
product
sales,
oralternatively,
we
may
choose
to
select
a
collaborator
to
commercialize
our
product
candidates
in
these
markets.







The
Baxalta
collaboration
agreement
was
considered
to
be
a
multiple-element
arrangement
for
accounting
purposes.
We
determined
that
there
were
twodeliverables
under
the
Baxalta
agreement;
specifically,
the
license
to
rigosertib
for
Europe
and
the
related
research
and
development
services
that
we
wereobligated
to
provide.
We
concluded
that
$42.4
million
of
the
fixed
and
determinable
$50.0
million
upfront
payment
was
associated
with
the
license
and$7.6
million
was
associated
with
the
research
and
development
services.
We
recognized
the
entire
$42.4
million
associated
with
the
upfront
license
as
revenueduring
the
third
quarter
of
2012
upon
the
execution
of
the
Baxalta
agreement,
and
we
recognized
the
research
and
development
services
revenue
of
$7.6
million
onthe
proportional
performance
method
over
the
period
of
commitment
and
development,
which
was
estimated
to
be
through
March
31,
2014,
the
period
of
our
non-contingent
obligations
to
perform
research
and
development
services
sufficient
to
advance
rigosertib.
For
the
years
ended
December
31,
2015
and
2014,
werecognized
$2.9
million
and
$0.3
million,
respectively,
of
research
and
development
services
revenue
under
the
Baxalta
agreement.







The
SymBio
collaboration
agreement
is
also
considered
to
be
a
multiple-element
arrangement
for
accounting
purposes.
We
determined
that
there
were
threedeliverables
under
the
SymBio
collaboration
agreement;
specifically,
the
license
to
rigosertib
for
Japan
and
Korea,
our
obligation
to
perform
research
anddevelopment
services
necessary
for
SymBio
to
seek
approval
in
its
territory
and
our
obligation
to
participate
on
a
joint
steering
committee.
We
concluded
thatthese
deliverables
should
be
accounted
for
as
a
single
unit
of
accounting.
We
determined
that
the
$7.5
million
upfront
payment
received
in
2011
should
be
deferredand
recognized
as
revenue
on
a
straight-line
basis
through
December
2027,
reflecting
our
estimate
of
when
we
will
complete
our
obligations
under
the
agreement.For
the
years
ended
December
31,
2015
and
2014,
we
recognized
revenues
of
$455,000
and
$455,000,
respectively,
under
the
SymBio
collaboration
agreement.
Inaddition,
we
recognized
revenues
of
$108,000
and
$11,000
for
the
years
ended
December
31,
2015
and
2014,
respectively,
related
to
the
supply
agreement
withSymBio.64


Year
ended
December
31,



2015
2014
Baxalta
license
and
collaboration
revenue
$2,893,000
$334,000
SymBio
license
and
collaboration
revenue

563,000

466,000
LLS
Research
funding
revenue

8,000,000

—

$11,456,000
$800,000
Table
of
ContentsOperating
Expenses







The
following
table
summarizes
our
operating
expenses
for
the
years
ended
December
31,
2015
and
2014:General and Administrative Expenses







General
and
administrative
expenses
consist
principally
of
salaries
and
related
costs
for
executive
and
other
administrative
personnel,
including
stock-basedcompensation
and
travel
expenses.
Other
general
and
administrative
expenses
include
facility-related
costs,
communication
expenses,
insurance,
board
of
directorsexpenses
and
professional
fees
for
legal,
patent
review,
consulting
and
accounting
services.







We
anticipate
that
our
general
and
administrative
expenses
will
decrease
in
the
short-term,
but
would
increase
in
the
future
with
the
continued
research
anddevelopment
and
potential
commercialization
of
our
product
candidates.
These
increases
will
likely
include
increased
costs
for
insurance,
costs
related
to
the
hiringof
additional
personnel
and
payments
to
outside
consultants
among
other
expenses.
Additionally,
if
and
when
we
believe
a
regulatory
approval
of
a
productcandidate
appears
likely,
we
anticipate
an
increase
in
payroll
and
expense
as
a
result
of
our
preparation
for
commercial
operations,
especially
as
it
relates
to
thesales
and
marketing
of
our
product
candidates.Research and Development Expenses







Our
research
and
development
expenses
consist
primarily
of
costs
incurred
for
the
development
of
our
product
candidates,
which
include:•employee-related
expenses,
including
salaries,
benefits,
travel
and
stock-based
compensation
expense;
•expenses
incurred
under
agreements
with
CROs
and
investigative
sites
that
conduct
our
clinical
trials
and
preclinical
studies;
•the
cost
of
acquiring,
developing
and
manufacturing
clinical
trial
materials;
•direct
expenses
for
maintenance
of
research
equipment,
clinical
trial
insurance
and
other
supplies;
and
•costs
associated
with
preclinical
activities
and
regulatory
operations.







Research
and
development
costs
are
expensed
as
incurred.
License
fees
and
milestone
payments
we
make
related
to
in-licensed
products
and
technology
areexpensed
if
it
is
determined
that
they
have
no
alternative
future
use.
We
record
costs
for
some
development
activities,
such
as
clinical
trials,
based
on
an
evaluationof
the
progress
to
completion
of
specific
tasks
using
data
such
as
patient
enrollment,
clinical
site
activations
or
information
provided
to
us
by
our
vendors.







Research
and
development
activities
are
central
to
our
business
model.
Product
candidates
in
later
stages
of
clinical
development
generally
have
higherdevelopment
costs
than
those
in
earlier
stages
of
clinical
development,
primarily
due
to
the
increased
size
and
duration
of
later-stage
clinical
trials.
We
plan
todecrease
our
research
and
development
expenses
in
the
short-term
by
reducing
the
number
of
product
candidates
currently
under
development.65


2015
2014
General
and
administrative
$9,533,000
$15,119,000
Research
and
development

25,895,000

49,425,000
Total
operating
expenses
$35,428,000
$64,544,000
Table
of
Contents







To
date,
our
research
and
development
expenses
have
related
primarily
to
the
development
of
rigosertib.
We
do
not
currently
utilize
a
formal
time
allocationsystem
to
capture
expenses
on
a
project-by-project
basis
because
we
are
organized
and
record
expense
by
functional
department
and
our
employees
may
allocatetime
to
more
than
one
development
project.
Accordingly,
we
do
not
allocate
expenses
to
individual
projects
or
product
candidates,
although
we
do
allocate
someportion
of
our
research
and
development
expenses
by
functional
area
and
by
compound.







The
following
table
summarizes
our
research
and
development
expenses
by
functional
area
for
the
years
ended
December
31,
2015
and
2014:







It
is
difficult
to
determine
with
certainty
the
duration
and
completion
costs
of
our
current
or
future
preclinical
programs
and
clinical
trials
of
our
productcandidates,
or
if,
when
or
to
what
extent
we
will
generate
revenues
from
the
commercialization
and
sale
of
any
of
our
product
candidates
that
obtain
regulatoryapproval.
We
may
never
succeed
in
achieving
regulatory
approval
for
any
of
our
product
candidates.
The
duration,
costs
and
timing
of
clinical
trials
anddevelopment
of
our
product
candidates
will
depend
on
a
variety
of
factors,
including
the
uncertainties
of
future
clinical
and
preclinical
studies,
uncertainties
inclinical
trial
enrollment
rate
and
significant
and
changing
government
regulation.
In
addition,
the
probability
of
success
for
each
product
candidate
will
depend
onnumerous
factors,
including
competition,
manufacturing
capability
and
commercial
viability.
We
will
determine
which
programs
to
pursue
and
how
much
to
fundeach
program
in
response
to
the
scientific
and
clinical
success
of
each
product
candidate,
an
assessment
of
each
product
candidate's
commercial
potential
and
ouravailable
funds.Interest Expense and Other Income, Net







Other
income,
net
consists
principally
of
interest
income
earned
on
cash
and
cash
equivalent
balances
and
foreign
exchange
gains
and
losses.Critical
Accounting
Policies
and
Significant
Judgments
and
Estimates








This
management's
discussion
and
analysis
of
our
financial
condition
and
results
of
operations
is
based
on
our
consolidated
financial
statements,
which
havebeen
prepared
in
accordance
with
GAAP.
The
preparation
of
these
financial
statements
requires
us
to
make
estimates
and
judgments
that
affect
the
reportedamounts
of
assets,
liabilities,
revenues
and
expenses
and
the
disclosure
of
contingent
assets
and
liabilities
in
our
consolidated
financial
statements.
On
an
ongoingbasis,
we
evaluate
our
estimates
and
judgments,
including
those
related
to
accrued
expenses,
revenue
recognition,
deferred
revenue
and
stock-based
compensation.We
base
our
estimates
on
historical
experience,
known
trends
and
events
and
various
other
factors
that
we
believe
to
be
reasonable
under
the
circumstances,
theresults
of
which
form
the
basis
for
making
judgments
about
the
carrying
values
of
assets
and
liabilities
that
are
not
readily
apparent
from
other
sources.
Actualresults
may
differ
from
these
estimates
under
different
assumptions
or
conditions.66


Year
ended
December
31,



2015
2014
Pre-clinical
&
clinical
development
$12,200,000
$25,303,000
Personnel
related

6,988,000

10,336,000
Manufacturing,
formulation
&
development

2,838,000

5,069,000
Stock-based
compensation

1,850,000

2,986,000
Consulting
fees

2,019,000

5,731,000

$25,895,000
$49,425,000
Table
of
Contents







While
our
significant
accounting
policies
are
described
in
the
notes
to
our
consolidated
financial
statements
appearing
elsewhere
in
this
Annual
Report,
webelieve
the
following
accounting
policies
to
be
most
critical
to
the
judgments
and
estimates
used
in
the
preparation
of
our
consolidated
financial
statements.Revenue
Recognition







We
generate
revenue
primarily
through
collaborative
research
and
license
agreements.
The
terms
of
these
agreements
contain
multiple
deliverables,
whichmay
include
licenses,
research
and
development
activities,
participation
in
joint
steering
committees
and
product
supply.
The
terms
of
these
agreements
mayinclude
nonrefundable
upfront
license
fees,
payments
for
research
and
development
activities,
payments
based
upon
the
achievement
of
specified
milestones,royalty
payments
based
on
product
sales
derived
from
the
collaboration,
and
payments
for
supplying
product.
In
all
instances,
we
recognize
revenue
only
when
theprice
is
fixed
or
determinable,
persuasive
evidence
of
an
arrangement
exists,
delivery
has
occurred
or
the
services
have
been
rendered,
collectability
of
the
resultingreceivable
is
reasonably
assured
and
we
have
fulfilled
our
performance
obligations
under
the
contract.







Effective
January
1,
2011,
we
adopted
the
Financial
Accounting
Standards
Board,
or
FASB,
Accounting
Standards
Update,
or
ASU,
No.
2009-13,
Multiple-Deliverable Revenue Arrangements ,
or
ASU
2009-13.
This
guidance,
which
applies
to
multiple-element
arrangements
entered
into
or
materially
modified
on
orafter
January
1,
2011,
amends
the
criteria
for
separating
and
allocating
consideration
in
a
multiple-element
arrangement
by
modifying
the
fair
value
requirementsfor
revenue
recognition
and
eliminating
the
use
of
the
residual
value
method.
The
selling
prices
of
deliverables
under
an
arrangement
may
be
derived
using
third-party
evidence,
or
TPE,
or
a
best
estimate
of
selling
price,
or
BESP,
if
vendor-specific
objective
evidence
of
fair
value,
or
VSOE,
is
not
available.
The
objective
ofBESP
is
to
determine
the
price
at
which
we
would
transact
a
sale
if
the
element
within
the
license
agreement
was
sold
on
a
standalone
basis.
Establishing
BESPinvolves
management's
judgment
and
takes
into
account
multiple
factors,
including
market
conditions
and
company-specific
factors,
such
as
those
factorscontemplated
in
negotiating
the
agreements
as
well
as
internally
developed
models
that
include
assumptions
related
to
market
opportunity,
discounted
cash
flows,estimated
development
costs,
probability
of
success,
and
the
time
needed
to
commercialize
a
product
candidate
pursuant
to
the
license.
In
validating
the
BESP,management
considers
whether
changes
in
key
assumptions
used
to
determine
the
BESP
will
have
a
significant
effect
on
the
allocation
of
the
arrangementconsideration
between
the
multiple
deliverables.
We
may
use
third-party
valuation
specialists
to
assist
us
in
determining
BESP.
Deliverables
under
the
arrangementare
separate
units
of
accounting
if
(i)
the
delivered
item
has
value
to
the
customer
on
a
standalone
basis
and
(ii)
if
the
arrangement
includes
a
general
right
of
returnrelative
to
the
delivered
item,
delivery
or
performance
of
the
undelivered
item
is
considered
probable
and
substantially
within
our
control.
The
arrangementconsideration
that
is
fixed
or
determinable
at
the
inception
of
the
arrangement
is
allocated
to
the
separate
units
of
accounting
based
on
their
relative
selling
prices.The
appropriate
revenue
recognition
model
is
applied
to
each
element
and
revenue
is
accordingly
recognized
as
each
element
is
delivered.
Management
exercisessignificant
judgment
in
determining
whether
a
deliverable
is
a
separate
unit
of
accounting.







In
determining
the
separate
units
of
accounting,
we
evaluate
whether
the
license
has
standalone
value
to
the
collaborator
based
on
consideration
of
therelevant
facts
and
circumstances
for
each
arrangement.
Factors
considered
in
this
determination
include
the
research
and
development
capabilities
of
thecollaborator
and
the
availability
of
relevant
research
expertise
in
the
marketplace.
In
addition,
we
consider
whether
or
not
(i)
the
collaborator
can
use
the
license
forits
intended
purpose
without
the
receipt
of
the
remaining
deliverables,
(ii)
the
value
of
the
license
is
dependent
on
the
undelivered
items
and
(iii)
the
collaborator
orother
vendors
can
provide
the
undelivered
items.67Table
of
Contents







Under
a
collaborative
research
and
license
agreement,
a
steering
committee
is
typically
responsible
for
overseeing
the
general
working
relationships,determining
the
protocols
to
be
followed
in
the
research
and
development
performed,
and
evaluating
the
results
from
the
continued
development
of
the
product.We
evaluate
whether
our
participation
in
joint
steering
committees
is
a
substantive
obligation
or
whether
the
services
are
considered
inconsequential
orperfunctory.
The
factors
we
consider
in
determining
if
our
participation
in
a
joint
steering
committee
is
a
substantive
obligation
include:
(i)
which
party
negotiatedor
requested
the
steering
committee,
(ii)
how
frequently
the
steering
committee
meets,
(iii)
whether
or
not
there
are
any
penalties
or
other
recourse
if
we
do
notattend
the
steering
committee
meetings,
(iv)
which
party
has
decision
making
authority
on
the
steering
committee
and
(v)
whether
or
not
the
collaborator
has
therequisite
experience
and
expertise
associated
with
the
research
and
development
of
the
licensed
intellectual
property.







For
all
periods
presented,
whenever
we
determine
that
an
element
is
delivered
over
a
period
of
time,
we
recognize
revenue
using
either
a
proportionalperformance
model
or
a
straight-line
model
over
the
period
of
performance,
which
is
typically
the
research
and
development
term.
We
typically
use
progressachieved
under
our
various
CRO
contracts
as
the
measure
of
performance.
At
each
reporting
period,
we
reassess
our
cumulative
measure
of
performance
and
makeappropriate
adjustments,
if
necessary.
We
recognize
revenue
using
the
proportional
performance
model
whenever
we
can
make
reasonably
reliable
estimates
of
thelevel
of
effort
required
to
complete
our
performance
obligations
under
an
arrangement.
We
recognize
revenue
under
the
proportional
performance
model
at
eachreporting
period
by
multiplying
the
total
expected
payments
under
the
contract,
excluding
royalties
and
payments
contingent
upon
achievement
of
milestones,
bythe
ratio
of
the
level
of
effort
incurred
to
date
to
the
estimated
total
level
of
effort
required
to
complete
the
performance
obligations
under
the
arrangement.Revenue
is
limited
to
the
lesser
of
the
cumulative
amount
of
payments
received
or
the
cumulative
amount
of
revenue
earned,
as
determined
using
the
proportionalperformance
model
as
of
each
reporting
period.
Alternatively,
if
we
cannot
make
reasonably
reliable
estimates
of
the
level
of
effort
required
to
complete
ourperformance
obligations
under
an
arrangement,
then
we
recognize
revenue
under
the
arrangement
on
a
straight-line
basis
over
the
period
expected
to
complete
ourperformance
obligations.







Incentive
milestone
payments
may
be
triggered
either
by
the
results
of
our
research
efforts
or
by
events
external
to
us,
such
as
regulatory
approval
to
market
aproduct.
We
recognize
consideration
that
is
contingent
upon
achievement
of
a
milestone
in
its
entirety
as
revenue
in
the
period
in
which
the
milestone
is
achieved,but
only
if
the
consideration
earned
from
the
achievement
of
a
milestone
meets
all
the
criteria
for
the
milestone
to
be
considered
substantive
at
the
inception
of
thearrangement.
For
a
milestone
to
be
considered
substantive,
the
consideration
earned
by
achieving
the
milestone
must
be
commensurate
with
either
our
performanceto
achieve
the
milestone
or
the
enhancement
of
the
value
of
the
item
delivered
as
a
result
of
a
specific
outcome
resulting
from
our
performance
to
achieve
themilestone,
relate
solely
to
our
past
performance
and
be
reasonable
relative
to
all
deliverables
and
payment
terms
in
the
collaboration
agreement.







For
events
for
which
the
occurrences
are
contingent
solely
upon
the
passage
of
time
or
are
the
result
of
performance
by
a
third
party,
we
will
recognize
thecontingent
payments
as
revenue
when
payments
are
earned,
the
amounts
are
fixed
and
determinable
and
collectability
is
reasonably
assured.







We
will
recognize
royalty
revenue,
if
any,
as
earned
in
accordance
with
the
contract
terms
when
third-party
sales
can
be
reliably
measured
and
collectability
isreasonably
assured.







We
recognized
revenue
of
$2.9
million
and
$0.3
million
during
the
years
ended
December
31,
2015
and
2014,
respectively,
under
our
license
andcollaboration
agreement
with
Baxalta.
We
recognized
revenue
of
$0.6
million
and
$0.5
million
during
the
years
ended
December
31,
2015
and
2014,
respectively,under
our
license
and
collaboration
agreement
with
SymBio.
We
recognized
revenue
of
$8.0
million
and
$0
during
the
years
ended
December
31,
2015
and
2014,respectively,
under
our
funding
agreement
with
LLS.
The
Baxalta
and
SymBio
agreements
are
the
only
agreements
that
are
being
accounted
for
under
ASU
2009-13.68Table
of
ContentsResearch
and
Development
Expenses







Research
and
development
costs
are
charged
to
expense
as
incurred
and
include,
but
are
not
limited
to,
license
fees
related
to
the
acquisition
of
in-licensedproducts,
employee-related
expenses,
including
salaries,
benefits
and
travel,
expenses
incurred
under
agreements
with
CROs
and
investigative
sites
that
conductclinical
trials
and
preclinical
studies,
the
cost
of
acquiring,
developing
and
manufacturing
clinical
trial
materials,
facilities,
depreciation
and
other
expenses,
whichinclude
direct
and
allocated
expenses
for
rent
and
maintenance
of
facilities,
insurance
and
other
supplies
and
costs
associated
with
preclinical
activities
andregulatory
operations.







We
record
costs
for
certain
development
activities,
such
as
clinical
trials,
based
on
our
evaluation
of
the
progress
to
completion
of
specific
tasks
using
datasuch
as
patient
enrollment,
clinical
site
activations,
or
information
provided
to
us
by
our
vendors
on
their
actual
costs
incurred.
Payments
for
these
activities
arebased
on
the
terms
of
the
individual
arrangements,
which
may
differ
from
the
pattern
of
costs
incurred,
and
are
reflected
in
the
consolidated
financial
statements
asprepaid
or
accrued
research
and
development
expense,
as
the
case
may
be.Income
Taxes







We
recorded
deferred
tax
assets
of
$149.1
million
as
of
December
31,
2015,
which
have
been
fully
offset
by
a
valuation
allowance
due
to
uncertaintiessurrounding
our
ability
to
realize
these
tax
benefits.
The
deferred
tax
assets
are
primarily
composed
of
federal
and
state
tax
net
operating
loss,
or
NOL,
carryforwards
and
research
and
development
tax
credit
carry
forwards.
As
of
December
31,
2015,
we
had
federal
NOL
carry
forwards
of
$178.9
million,
state
NOLcarry
forwards
of
$201.5
million
and
research
and
development
tax
credit
carry
forwards
of
$66.2
million
available
to
reduce
future
taxable
income,
if
any.
Thesefederal
NOL
carry
forwards
will
begin
to
expire
at
various
dates
starting
in
2022.
The
state
NOL
carry
forwards
will
begin
to
expire
at
various
dates
starting
in2016.
In
general,
if
we
experience
a
greater
than
50
percentage
point
aggregate
change
in
ownership
of
specified
significant
stockholders
over
a
three-year
period,utilization
of
our
pre-change
NOL
carry
forwards
will
be
subject
to
an
annual
limitation
under
Section
382
of
the
U.S.
Internal
Revenue
Code
of
1986,
as
amended,or
the
Code,
and
similar
state
laws.
Such
limitations
may
result
in
expiration
of
a
portion
of
the
NOL
carry
forwards
before
utilization
and
may
be
substantial.
Wehave
determined
that
we
have
experienced
ownership
changes
in
the
past
and
approximately
$24.0
million
of
our
NOL
carry
forwards
are
subject
to
an
annuallimitation
under
Section
382
of
the
Code.
If
we
experienced
a
Section
382
ownership
change
in
connection
with
the
offering
or
as
a
result
of
future
changes
in
ourstock
ownership,
some
of
which
changes
are
outside
our
control,
the
tax
benefits
related
to
the
NOL
carry
forwards
may
be
further
limited
or
lost.Stock-Based
Compensation







Prior
to
April
2013,
our
stock
option
awards
were
accounted
for
as
liability
awards
as
we,
through
our
chairman
of
the
board
of
directors,
who
is
also
asignificant
stockholder,
had
established
a
pattern
of
settling
these
awards
for
cash.
Accordingly,
we
measured
stock-based
compensation
expense
at
the
end
of
eachreporting
period
based
on
the
intrinsic
value
of
all
outstanding
vested
stock
options
on
each
reporting
date
and
recognized
expense
based
on
any
increases
in
theirintrinsic
value
since
the
last
measurement
date
to
the
extent
the
stock
options
vested.
The
intrinsic
value
represented
the
difference
between
the
current
fair
valueof
our
common
stock
and
the
contractual
exercise
prices
of
the
awards.







On
April
23,
2013,
we
distributed
a
notification
letter
to
all
holders
of
stock
options
under
our
2007
Equity
Compensation
Plan
advising
them
that
cashsettlement
transactions
would
no
longer
occur,
unless,
at
the
time
of
a
cash
settlement
transaction,
the
option
holder
has
held
the
common
stock
issued
uponexercise
of
options
for
a
period
of
greater
than
six
months
prior
to
such
cash
settlement
transaction
and
that
any
such
settlement
would
be
at
the
fair
value
of
thecommon
stock
on
the
date
of69Table
of
Contentssuch
sale.
Following
this
notification,
we
reclassified
options
outstanding
under
our
2007
Equity
Compensation
Plan
from
liabilities
to
stockholders'
deficit
withinour
consolidated
balance
sheets.
Upon
issuing
the
notification,
a
modification
to
the
liability
awards
occurred
and
the
awards
are
now
accounted
for
as
equityawards
from
the
date
of
modification
with
compensation
expense
fixed
at
fair
value
at
the
modification
date.
As
a
result,
we
reclassified
the
amount
of
stock-basedcompensation
liability
at
the
modification
date
to
additional
paid-in
capital.
The
modification
date
fair
value
is
recognized
over
the
remaining
service
period,generally
the
vesting
period,
on
a
straight-line
basis.
The
fair
value
of
the
modified
awards
was
estimated
on
the
modification
date
using
the
intrinsic
value
model.The
grant
date
fair
value
of
awards
granted
after
the
modification
is
estimated
using
the
Black-Scholes
valuation
model,
net
of
estimated
forfeitures.
Awardsgranted
to
non-employees
will
also
be
valued
using
the
Black-Scholes
valuation
model
and
will
be
subject
to
periodic
adjustment
until
the
underlying
equityinstruments
vest.







We
record
stock-based
compensation
expense
as
a
component
of
research
and
development
expenses
or
general
and
administrative
expenses,
depending
onthe
function
performed
by
the
optionee.
For
the
years
ended
December
31,
2015
and
2014,
we
allocated
stock-based
compensation
as
follows:Fair Value Estimates







Since
April
23,
2013,
we
estimate
the
fair
value
of
share-based
awards
to
employees
and
directors
using
the
Black-Scholes
option
pricing
model.
The
Black-Scholes
model
requires
the
input
of
highly
complex
and
subjective
assumptions,
including
(a)
the
expected
stock
price
volatility,
(b)
the
calculation
of
the
expectedterm
of
the
award,
(c)
the
risk
free
interest
rate
and
(d)
expected
dividends.
Due
to
our
limited
operating
history
and
a
lack
of
company
specific
historical
andimplied
volatility
data,
we
based
our
estimate
of
expected
volatility
on
the
historical
volatility
of
a
group
of
similar
companies
that
are
publicly
traded.
Whenselecting
these
public
companies
on
which
we
have
based
its
expected
stock
price
volatility,
we
selected
companies
with
comparable
characteristics
to
us,including
enterprise
value,
risk
profiles,
position
within
the
industry,
and
with
historical
share
price
information
sufficient
to
meet
the
expected
life
of
the
stock-based
awards.
The
historical
volatility
data
was
computed
using
the
daily
closing
prices
for
the
selected
companies'
shares
during
the
equivalent
period
of
thecalculated
expected
term
of
the
stock-based
awards.
Due
to
our
lack
of
sufficient
historical
data,
we
will
continue
to
apply
this
process
until
a
sufficient
amount
ofhistorical
information
regarding
the
volatility
of
our
own
stock
price
becomes
available.
We
estimate
the
expected
life
of
our
employee
stock
options
using
the"simplified"
method,
whereby,
the
expected
life
equals
the
arithmetic
average
of
the
vesting
term
and
the
original
contractual
term
of
the
option.
The
risk-freeinterest
rates
for
periods
within
the
expected
life
of
the
option
are
based
on
the
U.S.
Treasury
yield
curve
in
effect
during
the
period
the
options
were
granted.
Wehave
never
paid,
and
do
not
expect
to
pay
dividends
in
the
foreseeable
future.







Prior
to
April
23,
2013,
we
were
required
to
estimate
the
fair
value
of
the
common
stock
underlying
our
stock-based
awards
when
performing
the
fair
valuecalculations
using
the
intrinsic
value
method
at
each
reporting
date.
In
the
absence
of
a
public
trading
market
for
our
common
stock,
on
each
grant
date,
wedeveloped
an
estimate
of
the
fair
value
of
our
common
stock
by
engaging
an
independent
third-party
valuation
firm
to
assist
our
board
of
directors
in
determiningthe
fair
value
of
the
common
stock
underlying
our
stock-based
awards.
We
determined
the
fair
value
of
our
common70


Year
ended
December
31,



2015
2014
General
and
administrative
$1,936,000
$2,082,000
Research
and
development

1,850,000

2,986,000

$3,786,000
$5,068,000
Table
of
Contentsstock
using
methodologies,
approaches
and
assumptions
consistent
with
the
American
Institute
of
Certified
Public
Accountants,
or
AICPA,
Audit
and
AccountingPractice
Aid
Series:
Valuation of Privately Held Company Equity Securities Issued as Compensation, or
the
AICPA
Practice
Guide.
All
options
to
purchase
sharesof
our
common
stock
were
granted
with
an
exercise
price
per
share
no
less
than
the
fair
value
per
share
of
our
common
stock
underlying
those
options
on
the
dateof
grant,
based
on
the
information
known
to
us
on
the
date
of
grant.
Accordingly,
under
the
liability
method
of
accounting,
we
did
not
record
any
stock-basedcompensation
expense
on
the
grant
dates
of
our
options.
However,
under
the
liability
method,
the
liability
for
all
outstanding
vested
stock-based
awards
wasadjusted
through
our
statement
of
operations,
based
on
the
current
estimated
fair
value
of
our
common
stock
at
each
reporting
date.Clinical
Trial
Expense







As
part
of
the
process
of
preparing
our
consolidated
financial
statements,
we
are
required
to
estimate
our
accrued
expenses.
Our
clinical
trial
accrual
process
isdesigned
to
account
for
expenses
resulting
from
our
obligations
under
contracts
with
vendors,
consultants
and
CROs
and
clinical
site
agreements
in
connectionwith
conducting
clinical
trials.
The
financial
terms
of
these
contracts
are
subject
to
negotiations,
which
vary
from
contract
to
contract
and
may
result
in
paymentflows
that
do
not
match
the
periods
over
which
materials
or
services
are
provided
to
us
under
such
contracts.
Our
objective
is
to
reflect
the
appropriate
clinical
trialexpenses
in
our
consolidated
financial
statements
by
matching
the
appropriate
expenses
with
the
period
in
which
services
are
provided
and
efforts
are
expended.We
account
for
these
expenses
according
to
the
progress
of
the
trial
as
measured
by
patient
progression
and
the
timing
of
various
aspects
of
the
trial.
We
determineaccrual
estimates
through
financial
models
that
take
into
account
discussion
with
applicable
personnel
and
outside
service
providers
as
to
the
progress
or
state
ofcompletion
of
trials,
or
the
services
completed.
During
the
course
of
a
clinical
trial,
we
adjust
our
clinical
expense
recognition
if
actual
results
differ
from
ourestimates.
We
make
estimates
of
our
accrued
expenses
as
of
each
balance
sheet
date
in
our
consolidated
financial
statements
based
on
the
facts
and
circumstancesknown
to
us
at
that
time.
Our
clinical
trial
accrual
and
prepaid
assets
are
dependent,
in
part,
upon
the
receipt
of
timely
and
accurate
reporting
from
CROs
and
otherthird-party
vendors.
Although
we
do
not
expect
our
estimates
to
be
materially
different
from
amounts
actually
incurred,
our
understanding
of
the
status
and
timingof
services
performed
relative
to
the
actual
status
and
timing
of
services
performed
may
vary
and
may
result
in
us
reporting
amounts
that
are
too
high
or
too
lowfor
any
particular
period.JOBS
Act








In
April
2012,
the
JOBS
Act
was
enacted.
Section
107
of
the
JOBS
Act
provides
that
an
"emerging
growth
company"
can
take
advantage
of
an
extendedtransition
period
for
complying
with
new
or
revised
accounting
standards.
Thus,
an
"emerging
growth
company"
can
delay
the
adoption
of
certain
accountingstandards
until
those
standards
would
otherwise
apply
to
private
companies.
We
have
irrevocably
elected
not
to
avail
ourselves
of
this
extended
transition
periodand,
as
a
result,
we
will
adopt
new
or
revised
accounting
standards
on
the
relevant
dates
on
which
adoption
of
such
standards
is
required
for
other
companies.71Table
of
ContentsResults
of
Operations
Comparison
of
Years
Ended
December
31,
2015
and
2014Revenues







Revenues
increased
by
$10.7
million
in
2015
when
compared
to
2014
primarily
as
a
result
of
recognizing
in
the
fourth
quarter
of
2015,
$8
million
of
deferredrevenue
from
our
May
2010
funding
agreement
with
LLS.
The
increase
was
also
caused
by
$2.9
million
of
contractual
cost-sharing
revenue
from
Baxalta
for
aportion
of
the
costs
of
the
INSPIRE
trial
in
2015,
partially
offset
by
$0.3
million
of
research
and
development
revenue
under
the
Baxalta
agreement
which
wasrecognized
on
a
proportional
performance
basis
which
was
completed
during
the
first
quarter
of
2014.
In
addition,
clinical
supply
revenue
from
SymBio
was$0.1
million
in
2015
compared
to
$0
in
2014.General and administrative expenses







General
and
administrative
expenses
decreased
by
$5.6
million,
or
36.9%,
to
$9.5
million
for
the
year
ended
December
31,
2015
compared
to
$15.1
millionfor
the
year
ended
December
31,
2014.
The
decrease
was
primarily
caused
by
a
decrease
in
professional
fees
and
consulting
fees
of
$2.7
million
as
a
result
ofhigher
pre-commercialization
consulting
during
the
2014
period.
The
decrease
was
also
caused
by
a
$2.1
million
decrease
in
facilities
and
personnel
and
relatedcosts
from
a
reduction
in
general
and
administrative
headcount
to
13
at
December
31,
2015
from
15
at
December
31,
2014.
Stock-based
compensation
expense
was$0.2
million
lower
in
the
2015
period
as
a
result
of
fewer
outstanding
options
following
the
reduction
in
workforce.
Meetings
and
sponsorship
expenses
were$0.6
million
lower
in
the
2015
period
as
the
company
attended
and
presented
at
fewer
conferences.Research and development expenses







Research
and
development
expenses
decreased
by
$23.5
million,
or
47.6%,
to
$25.9
million
for
the
year
ended
December
31,
2015
compared
to
$49.4
millionfor
the
year
ended
December
31,
2014.
This
decrease
was
caused
primarily
by
a
$13.1
million
decrease
in
pre-clinical
and
clinical
development
costs
in
the
2015period,
as
we
focused
our
planning
and
development
efforts
on
the
INSPIRE
trial
and
worked
to
reduce
expenses
related
to
other
programs
or
legacy
studies.
Theclinical
and
preclinical
decrease
was
comprised
of
$6.8
million
less
expense
in
the
2015
period
for
the
higher-risk
MDS
studies
which
preceded
INSPIRE,
offsetby
$1.9
million
of
clinical
expense
related
to
INSPIRE.
The
clinical
and
preclinical
decrease
was
also
attributable
to
$3.0
million
less
expense
related
to
lower
riskMDS
studies
in
2015,
$2.2
million
less
preclinical
and
sponsored
research
in
2015,
and
$3.0
million
less72


Year
ended
December
31,






2015
2014
Change
Revenue
$11,456,000
$800,000
$10,656,000
Operating
expenses:









General
and
administrative

9,533,000

15,119,000

5,586,000
Research
and
development

25,895,000

49,425,000

23,530,000
Total
operating
expenses

35,428,000

64,544,000

29,116,000
Loss
from
operations

(23,972,000)
(63,744,000)
39,772,000
Change
in
fair
value
of
warrant
liability

—

20,000

(20,000)Other
income
(expense),
net

(35,000)
(52,000)
17,000
Net
loss
before
income
taxes

(24,007,000)
(63,776,000)
39,769,000
Income
taxes

16,000

19,000

3,000
Net
loss
$(24,023,000)$(63,795,000)$39,772,000
Table
of
Contentsexpense
related
to
legacy
studies
and
other
clinical
costs
during
2015.
The
decrease
in
research
and
development
expenses
in
2015
was
also
caused
by
a
reductionof
$2.3
million
in
API
manufacturing
and
formulation
costs
related
to
validation
activities
and
a
reduction
of
$3.7
million
in
consulting
expenses
related
toanalyzing
clinical
trial
results
and
preparing
for
meetings
with
regulatory
authorities
in
the
2014
period.
Personnel
and
related
costs
were
$3.3
million
lower
asresearch
and
development
headcount
was
down
to
23
at
December
31,
2015
from
35
at
December
31,
2014.
Stock-based
compensation
expense
was
$1.1
millionlower
in
the
2015
period
as
a
result
of
acceleration
of
vesting
and
expense
recognition
in
the
2014
period
in
connection
with
our
reductions
in
workforce
in
thethird
quarter
of
2014.Change in fair value of warrant liability







The
fair
value
of
the
warrant
liability,
which
relates
to
a
warrant
issued
in
June
2009,
was
unchanged
during
the
year
ended
December
31,
2015
compared
to
adecrease
of
$20,000
during
the
year
ended
December
31,
2014.
The
decrease
in
the
fair
value
of
the
warrant
liability
in
2014
was
primarily
due
to
the
revaluationof
the
warrants,
which,
at
December
31,
2015,
entitled
the
holder
to
purchase
up
to
4,597
shares
of
our
common
stock.
These
warrants
are
expected
to
expireunexercised
on
July
30,
2016.Other income, net







Other
income
(expense),
net,
was
$35,000
of
other
expense
for
the
year
ended
December
31,
2015,
compared
to
$52,000
of
other
expense
for
the
year
endedDecember
31,
2015.
This
change
of
$17,000
was
due
primarily
to
a
$43,000
lower
exchange
loss
in
the
2015
period,
partially
offset
by
the
loss
on
disposal
ofoffice
furniture
of
$15,000
related
to
closing
of
one
office
location
and
$11,000
less
interest
income
as
a
result
of
lower
cash
balances
in
the
2015
period.Liquidity
and
Capital
Resources








Since
our
inception,
we
have
incurred
net
losses
and
generally
negative
cash
flows
from
our
operations.
We
incurred
net
losses
of
$24.0
million
and$63.8
million
for
the
years
ended
December
31,
2015
and
2014,
respectively.
Since
inception
our
accumulated
deficit
is
$318.6
million.
We
believe
that
our
cashand
cash
equivalents,
together
with
anticipated
contractual
cost-sharing
payments
from
Baxalta
for
a
portion
of
the
INSPIRE
trial
costs,
will
be
sufficient
to
fundour
ongoing
trials
and
operations
into
the
first
quarter
of
2017.
Due
to
our
ongoing
operating
losses
and
our
accumulated
deficit,
in
combination
with
the
fact
thatthe
future
success
of
the
Company
is
dependent
on
its
ability
to
obtain
additional
financing,
the
opinion
of
our
independent
registered
public
accounting
firm
onour
audited
consolidated
financial
statements
for
our
fiscal
year
ended
December
31,
2015
contains
an
explanatory
paragraph
regarding
substantial
doubt
about
ourability
to
continue
as
a
going
concern.Cash
Flows







The
following
table
summarizes
our
cash
flows
for
the
years
ended
December
31,
2015
and
2014:73


Year
Ended
December
31,



2015
2014
Net
cash
(used
in)
provided
by:






Operating
activities
$(31,238,000)$(57,648,000)Investing
activities

—

39,772,000
Financing
activities

7,464,000

1,463,000
Effect
of
foreign
currency
translation

(9,000)
(14,000)Net
decrease
in
cash
and
cash
equivalents
$(23,783,000)$(16,427,000)Table
of
ContentsNet cash used in operating activities







Net
cash
used
in
operating
activities
was
$31.2
million
for
the
year
ended
December
31,
2015
and
consisted
primarily
of
a
net
loss
of
$24.0
million,
and
adecrease
in
deferred
revenue
of
$8.0
million
and
$0.5
million
of
revenue
from
our
LLS
research
agreement
and
SymBio
collaboration,
respectively,
partially
offsetby
$3.8
million
of
noncash
stock-based
compensation
expense
and
$0.2
million
of
depreciation
and
amortization
expense.
Changes
in
operating
assets
andliabilities
resulted
in
a
net
decrease
in
cash
of
$2.7
million.
Significant
changes
in
operating
assets
and
liabilities
included
an
increase
of
$1.4
million
inreceivables,
primarily
due
to
our
collaboration
with
Baxalta.
Accrued
expenses
decreased
$2.0
million
due
to
lower
accrued
clinical
costs
and
bonus,
and
thetiming
of
invoices
for
clinical
trial
and
manufacturing
development
costs
related
to
the
ongoing
trials
at
December
31,
2015.
Accounts
payable
decreased$0.6
million
due
to
the
timing
of
payments
to
our
vendors.
Prepaid
expenses
and
other
current
assets
decreased
$1.2
million
as
a
result
of
the
recognition
ofexpense
for
clinical
and
manufacturing
activities,
as
well
as
insurance
expense.
Restricted
cash
decreased
$0.1
million
due
to
the
expiration
of
a
letter
of
creditrelated
to
an
office
lease
which
was
terminated
during
the
first
quarter
of
2015.







Net
cash
used
in
operating
activities
was
$57.6
million
for
the
year
ended
December
31,
2014
and
consisted
primarily
of
a
net
loss
of
$63.8
million,
and
adecrease
in
deferred
revenue
of
$0.8
million
related
to
the
recognition
of
deferred
revenue
under
the
Baxalta
and
SymBio
collaboration
agreements,
which
waspartially
offset
by
$5.5
million
of
noncash
increases
primarily
related
to
stock
compensation
expense
of
$5.1
million
and
depreciation
of
$0.4
million.
The
cashused
in
operating
activities
was
also
impacted
by
the
changes
in
operating
assets
and
liabilities
including
a
decrease
in
prepaid
expenses
and
other
current
assets
of$1.2
million
which
was
the
result
of
the
timing
of
expense
recognition
and
payments
to
our
contract
research
and
manufacturing
organizations,
and
an
increase
of$0.3
million
in
accounts
payable
and
accrued
expenses,
which
was
primarily
due
to
the
timing
of
our
payments
of
clinical
trial
costs
related
to
the
ongoing
trialsand
development
of
our
product
candidates.Net cash provided by investing activities







Net
cash
provided
by
investing
activities
for
the
year
ended
December
31,
2015
was
$0.







Net
cash
provided
by
investing
activities
for
the
year
ended
December
31,
2014
was
$39.8
million,
and
consisted
of
maturities
of
marketable
securities
of$40.0
million,
offset
by
purchases
of
fixed
assets
of
$0.2
million.Net cash provided by financing activities







Net
cash
provided
by
financing
activities
was
$7.5
million
for
the
year
ended
December
31,
2015,
which
was
due
to
proceeds
from
the
sales
of
our
commonstock.







Net
cash
provided
by
financing
activities
was
$1.5
million
for
the
year
ended
December
31,
2014,
which
was
due
to
$1.0
million
in
proceeds
from
theexercise
of
stock
options
and
the
$0.5
million
capital
contribution
to
GBO
by
our
collaboration
partner,
GVK.
GBO,
the
entity
which
represents
our
pre-clinicalcollaboration
with
GVK,
is
consolidated
in
our
financial
statements
for
the
years
ended
December
31,
2015
and
2014.
GBO's
assets
and
liabilities
are
included
inour
balance
sheets
and
its
expenses
in
our
statements
of
operations,
less
those
amounts
comprising
the
non-controlling
interest.
The
consolidation
of
GBO
did
nothave
a
material
effect
on
our
consolidated
financial
position
or
results
of
operations.Operating
and
Capital
Expenditure
Requirements








We
have
not
achieved
profitability
since
our
inception
and
we
expect
to
continue
to
incur
net
losses
for
the
foreseeable
future.
We
expect
our
net
cashexpenditures
in
2016
to
decrease
from
201574Table
of
Contentsdue
to
a
reduction
in
cash
expenses
related
to
administrative
expenses
and
non-core
clinical
trials,
which
will
be
partially
offset
by
an
increase
in
cash
expendituresrelated
to
our
INSPIRE
trial.
In
February
2016,
we
communicated
to
certain
employees
our
plan
of
termination
to
reduce
a
number
of
positions
as
part
of
ourongoing
commitment
to
reduce
costs
and
conserve
cash.
We
estimate
the
net
reduction
to
be
approximately
6
employees,
which
represents
approximately17
percent
of
our
workforce.
Affected
employees
have
been
offered
severance
pay
in
accordance
with
our
policy
or,
if
applicable,
their
employment
agreements.As
a
result
of
the
workforce
reduction,
we
estimate
that
we
will
record
in
the
first
quarter
of
2016,
a
one-time
severance-related
charge
totaling
approximately$2.8
million,
which
includes
a
non-cash
charge
of
approximately
$1.6
million
related
to
the
accelerated
vesting
of
the
outstanding
stock
options
for
certain
of
theaffected
employees.
The
severance-related
charge
that
we
expect
to
incur
in
connection
with
the
workforce
reduction
is
subject
to
a
number
of
assumptions,
andactual
results
may
differ
materially.
We
may
also
incur
other
charges
or
cash
expenditures
not
currently
contemplated
due
to
events
that
may
occur
as
a
result
of,
orassociated
with,
the
workforce
reduction.







We
do
not
have
the
funding
resources
necessary
to
carry
out
all
of
our
proposed
operating
activities.
We
will
need
to
obtain
additional
financing
in
the
futurein
order
to
fully
fund
our
INSPIRE
trial
and
to
further
develop
rigosertib
or
any
other
product
candidates
through
the
regulatory
approval
process.
Accordingly,
wemay
delay
or
pause
our
planned
clinical
trials,
including
the
INSPIRE
trial,
until
we
secure
adequate
additional
funding.
If
we
seek
to
proceed
with
a
clinical
trialwithout
additional
funding,
we
may
receive
questions
or
comments
from
the
FDA,
fail
to
obtain
IRB
approval,
or
find
it
more
difficult
to
enroll
patients
in
the
trial.Additionally,
we
plan
to
scale
down
our
operations
in
order
to
reduce
spending
on
general
and
administrative
functions,
research
and
development,
and
otherclinical
trials.







We
are
exploring
various
dilutive
and
non-dilutive
sources
of
funding,
including
equity
and
debt
financings,
strategic
alliances,
business
development
andother
sources.
However,
we
may
not
be
able
to
obtain
additional
funding
on
favorable
terms,
if
at
all.
If
we
are
unable
to
secure
adequate
additional
funding,
wewill
continue
to
delay,
scale-back
or
eliminate
certain
of
our
planned
research,
drug
discovery
and
development
activities
and
certain
other
aspects
of
ouroperations
and
our
business
until
such
time
as
we
are
successful
in
securing
adequate
additional
funding.
As
a
result,
our
business,
operating
results,
financialcondition
and
cash
flows
may
be
materially
and
adversely
affected.
We
will
incur
substantial
costs
beyond
the
present
and
planned
clinical
trials
in
order
to
file
aNew
Drug
Application
(NDA)
for
rigosertib.
The
nature,
design,
size
and
cost
of
further
studies
will
depend
in
large
part
on
the
outcome
of
preceding
studies
anddiscussions
with
regulators.







Our
future
capital
requirements
will
depend
on
many
factors,
including:•timing
and
success
of
our
clinical
trials
for
rigosertib;
•continued
progress
of
and
increased
spending
related
to
our
research
and
development
activities;
•conditions
in
the
capital
markets
and
the
biopharmaceutical
industry,
particularly
with
respect
to
raising
capital
or
entering
into
strategicarrangements;
•progress
with
preclinical
experiments
and
clinical
trials,
including
regulatory
approvals
necessary
for
advancement
and
continuation
of
ourdevelopment
programs;
•changes
in
regulatory
requirements
and
guidance
of
the
FDA
and
other
regulatory
authorities,
which
may
require
additional
clinical
trials
toevaluate
safety
and/or
efficacy,
and
thus
have
significant
impacts
on
our
timelines,
cost
projections,
and
financial
requirements;
•ongoing
general
and
administrative
expenses
related
to
our
reporting
obligations
under
the
Exchange
Act;
•cost,
timing,
and
results
of
regulatory
reviews
and
approvals;75Table
of
Contents•costs
of
pending
or
future
legal
proceedings,
claims,
lawsuits
and
investigations;
•success,
timing,
and
financial
consequences
of
any
existing
or
future
collaborative,
licensing
and
other
arrangements
that
we
may
establish,including
potential
granting
of
licenses
to
one
or
more
of
our
programs
in
various
territories,
or
otherwise
monetizing
one
or
more
of
our
programs;
•cost
of
filing,
prosecuting,
defending
and
enforcing
any
patent
claims
and
other
intellectual
property
rights;
•costs
of
commercializing
any
of
our
other
product
candidates;
•technological
and
market
developments;
•cost
of
manufacturing
development;
and
•timing
and
volume
of
sales
of
products
for
which
we
obtain
marketing
approval.







If
we
are
unable
to
successfully
raise
sufficient
additional
capital,
through
future
debt
or
equity
financings,
product
sales,
or
through
strategic
andcollaborative
ventures
with
third
parties,
we
will
not
have
sufficient
cash
flows
and
liquidity
to
fund
our
planned
business
operations.
In
that
event,
we
may
beforced
to
limit
many,
if
not
all,
of
our
programs
and
consider
other
means
of
creating
value
for
our
stockholders,
such
as
licensing
to
others
the
development
andcommercialization
of
products
that
we
consider
valuable
and
would
otherwise
likely
develop
ourselves.
If
we
are
unable
to
raise
the
necessary
capital,
we
may
beforced
to
curtail
all
of
our
activities
and,
ultimately,
potentially
cease
operations.
Even
if
we
are
able
to
raise
additional
capital,
such
financings
may
only
beavailable
on
unattractive
terms,
or
could
result
in
significant
dilution
of
stockholders'
interests.
The
consolidated
financial
statements
do
not
include
anyadjustments
relating
to
recoverability
and
classification
of
recorded
asset
amounts
or
the
amounts
and
classification
of
liabilities
that
might
be
necessary
should
webe
unable
to
continue
in
existence.







Please
see
"Risk
Factors"
for
additional
risks
associated
with
our
substantial
capital
requirements.Off-Balance
Sheet
Arrangements








We
do
not
have
any
off-balance
sheet
arrangements,
as
defined
by
applicable
SEC
regulations.Segment
Reporting








We
view
our
operations
and
manage
our
business
in
one
segment,
which
is
the
identification
and
development
of
oncology
therapeutics.Recent
Accounting
Pronouncements








In
May
2014,
the
FASB
issued
guidance
on
revenue
from
contracts
with
customers
that
will
supersede
most
current
revenue
recognition
guidance.
Theunderlying
principle
is
that
an
entity
will
recognize
revenue
to
depict
the
transfer
of
goods
or
services
to
customers
at
an
amount
that
the
entity
expects
to
beentitled
to
in
exchange
for
those
goods
or
services.
The
guidance
permits
the
use
of
either
a
retrospective
or
cumulative
effect
transition
method.
In
July
2015,
theFASB
approved
a
one-year
deferral
of
the
effective
date
of
the
guidance
to
interim
and
annual
periods
beginning
on
or
after
December
15,
2017.
Early
adoption
ispermitted
but
not
before
the
original
effective
date
of
December
15,
2016.
We
have
not
yet
selected
a
transition
method
and
are
currently
evaluating
the
impact
ofthe
amended
guidance
on
our
consolidated
financial
position,
results
of
operations
and
related
disclosures.







In
August
2014,
the
FASB
issued
guidance
on
determining
when
and
how
to
disclose
going-concern
uncertainties
in
the
financial
statements.
The
newstandard
requires
management
to
perform76Table
of
Contentsinterim
and
annual
assessments
of
an
entity's
ability
to
continue
as
a
going
concern
within
one
year
of
the
date
the
financial
statements
are
issued.
An
entity
mustprovide
certain
disclosures
if
conditions
or
events
raise
substantial
doubt
about
the
entity's
ability
to
continue
as
a
going
concern.
The
guidance
applies
to
allentities
and
is
effective
for
annual
periods
ending
after
December
15,
2016,
and
interim
periods
thereafter,
with
early
adoption
permitted.
We
are
evaluating
thepotential
impact
of
the
new
guidance
on
our
quarterly
reporting
process
and
our
consolidated
financial
position,
results
of
operations
and
related
disclosures.ITEM
7A.




QUANTITATIVE
AND
QUALITATIVE
DISCLOSURES
ABOUT
MARKET
RISK








As
a
smaller
reporting
company,
the
Company
is
not
required
to
provide
the
information
otherwise
required
by
this
Item.ITEM
8.




FINANCIAL
STATEMENTS
AND
SUPPLEMENTARY
DATA








The
financial
statements
and
supplementary
data
required
by
this
item
are
listed
in
Item
15—"Exhibits
and
Financial
Statement
Schedules"
of
this
AnnualReport.ITEM
9.




CHANGES
IN
AND
DISAGREEMENTS
WITH
ACCOUNTANTS
ON
ACCOUNTING
AND
FINANCIAL
DISCLOSURE








None.ITEM
9A.




CONTROLS
AND
PROCEDURES
Evaluation
of
Disclosure
Controls
and
Procedures








Our
management,
with
the
participation
of
our
President
and
Chief
Executive
Officer
(our
principal
executive
officer)
and
our
Vice
President,
FinancialPlanning
&
Accounting
and
Chief
Accounting
Officer
(our
principal
financial
officer),
evaluated
the
effectiveness
of
our
disclosure
controls
and
procedures
as
ofDecember
31,
2015
The
term
"disclosure
controls
and
procedures,"
as
defined
in
Rules
13a-15(e)
and
15d-15(e)
under
the
Securities
Exchange
Act
of
1934,
asamended
(the
"Exchange
Act"),
means
controls
and
other
procedures
of
a
company
that
are
designed
to
ensure
that
information
required
to
be
disclosed
by
acompany
in
the
reports
that
it
files
or
submits
under
the
Exchange
Act
is
recorded,
processed,
summarized
and
reported,
within
the
time
periods
specified
in
theSEC's
rules
and
forms.
Disclosure
controls
and
procedures
include,
without
limitation,
controls
and
procedures
designed
to
ensure
that
information
required
to
bedisclosed
by
a
company
in
the
reports
that
it
files
or
submits
under
the
Exchange
Act
is
accumulated
and
communicated
to
the
company's
management,
includingits
principal
executive
and
principal
financial
officers,
as
appropriate
to
allow
timely
decisions
regarding
required
disclosure.
Based
on
the
evaluation
of
ourdisclosure
controls
and
procedures
as
of
December
31,
2015,
our
principal
executive
officer
and
principal
financial
officer
concluded
that,
as
of
such
date,disclosure
controls
and
procedures
were
effective
at
the
reasonable
assurance
level.Internal
Control
Over
Financial
Reporting








This
Annual
Report
does
not
include
an
attestation
report
of
our
registered
public
accounting
firm
regarding
internal
control
over
financial
reporting.Management's
report
was
not
subject
to
attestation
by
our
registered
public
accounting
firm
pursuant
to
exemptions
provided
to
issuers
that
are
non-acceleratedfilers
or
qualify
as
an
"emerging
growth
company,"
as
defined
in
Section
2(a)
of
the
Securities
Act
of
1933,
or
the
Securities
Act,
as
modified
by
the
Jumpstart
OurBusiness
Startups
Act
of
2012,
or
the
JOBS
Act.77Table
of
Contents







Our
management
is
responsible
for
establishing
and
maintaining
adequate
internal
control
over
financial
reporting.
Management
assessed
the
effectiveness
ofour
internal
control
over
financial
reporting
as
of
December
31,
2015.
In
making
this
assessment,
management
used
the
criteria
set
forth
by
the
Committee
ofSponsoring
Organizations
of
the
Treadway
Commission
(COSO)
in
Internal
Control—Integrated
Framework
issued
in
2013.
Based
upon
the
assessments,management
has
concluded
that
as
of
December
31,
2015
our
internal
control
over
financial
reporting
was
effective
to
provide
reasonable
assurance
regarding
thereliability
of
financial
reporting
and
the
preparation
of
financial
statements
in
accordance
with
GAAP.Changes
in
Internal
Control
Over
Financial
Reporting








There
has
been
no
change
in
our
internal
control
over
financial
reporting
during
the
fiscal
quarter
ended
December
31,
2015
that
has
materially
affected,
or
isreasonably
likely
to
materially
affect,
our
internal
control
over
financial
reporting.ITEM
9B.




OTHER
INFORMATION








None.78Table
of
ContentsPART
III
ITEM
10.




DIRECTORS,
EXECUTIVE
OFFICERS
AND
CORPORATE
GOVERNANCE








The
names
and
biographies
of
our
current
directors
are
set
forth
below.
We
believe
that
all
of
our
directors
bring
to
our
board
executive
leadership
experiencefrom
their
service
as
executives
and/or
directors
of
our
Company
and/or
other
entities.







Henry
S.
Bienen,
Ph.D.




Dr.
Bienen
has
served
as
a
member
of
our
board
of
directors
since
May
2009.
He
currently
serves
as
the
chairman
of
RasmussenCollege,
has
served
as
the
president
emeritus
of
Northwestern
University
since
August
2009
and
served
as
the
president
of
Northwestern
University
from
1995
to2009.
Dr.
Bienen
was
the
James
S.
McDonnell
Distinguished
University
Professor
and
Dean
of
the
Woodrow
Wilson
School
of
Public
and
International
Affairs
atPrinceton
University
prior
to
his
appointment
at
Northwestern.
Dr.
Bienen
began
his
association
with
Princeton
University
in
1966,
advancing
from
assistantprofessor
to
professor
of
politics
and
international
affairs,
and
was
then
appointed
the
William
Stewart
Tod
Professor
of
Politics
and
International
Affairs
in
1981and
the
James
S.
McDonnell
Distinguished
University
Professor
in
1985.
Dr.
Bienen
has
served
as
a
director
of
the
Grosvenor
Registered
Multi
Strategy
Fund
(TI1),
LLC,
the
Grosvenor
Registered
Multi
Strategy
Fund
(TI
2),
LLC,
the
Grosvenor
Registered
Multi
Strategy
Fund
(TE),
LLC
and
the
Grosvenor
Registered
MultiStrategy
Master
Fund,
LLC
since
April
2011.
Dr.
Bienen
serves
on
the
board
of
directors
of
Ryan
Specialty
Group
and
previously
served
on
the
boards
of
directorsof
The
Bear
Stearns
Companies
Inc.,
until
its
purchase
by
JP
Morgan
Chase
&
Co.
in
2008,
SPSS
Inc.
from
2007
until
2009,
when
the
company
was
sold
to
IBMCorporation,
and
Gleacher
&
Company,
a
publicly
held
investment
banking
firm,
from
May
2010
to
April
2013.
Dr.
Bienen
also
currently
chairs
the
advisoryboard
of
The
Vistria
Group,
a
private
equity
firm,
and
serves
on
the
Chicago
Board
of
Education.
Dr.
Bienen
received
his
Bachelor's
Degree
with
honors
fromCornell
University
and
both
his
Master's
Degree
and
Ph.D.,
from
the
University
of
Chicago.







Our
board
of
directors
believes
Dr.
Bienen's
perspective
and
experience
as
a
director
of
a
public
company,
as
well
as
his
educational
background,
provide
himwith
the
qualifications
and
skills
to
serve
as
a
director.







Jerome
E.
Groopman,
M.D.




Dr.
Groopman
has
served
as
a
member
of
our
board
of
directors
since
July
2013.
Dr.
Groopman
has
served
as
the
Dina
andRaphael
Recanati
Professor
of
Medicine
at
Harvard
Medical
School
since
January
1992.
He
has
also
served
as
Attending
Hematologist/Oncologist
at
Beth
IsraelDeaconess
Medical
Center
since
July
1996.
Dr.
Groopman
received
an
M.D.
from
Columbia
University
College
of
Physicians
and
Surgeons,
and
a
B.A.
inPolitical
Philosophy
from
Columbia
College.







Our
board
of
directors
believes
Dr.
Groopman's
perspective
and
experience
in
the
healthcare
industry,
as
well
as
his
educational
background,
provide
himwith
the
qualifications
and
skills
to
serve
as
a
director.79Name
Age
Position(s)
with
Onconova
Therapeutics,
Inc.
Served
as
Director
From
Henry
S.
Bienen,
Ph.D.


77
Director

2009
Jerome
E.
Groopman,
M.D.


64
Director

2013
Michael
B.
Hoffman

65
Chairman
of
the
Board
of
Directors

2002
Ramesh
Kumar,
Ph.D.


60
Director,
President
and
Chief
Executive
Officer

1998
Viren
Mehta

66
Director

2004
James
J.
Marino

65
Director

2015
E.
Premkumar
Reddy,
Ph.D.


72
Director

1999
Anne
M.
VanLent

68
Director

2013
Table
of
Contents







Michael
B.
Hoffman.




Mr.
Hoffman
has
served
as
Chairman
of
the
Board
of
Directors
since
2006
and
as
a
member
of
our
board
of
directors
sinceDecember
2002.
Since
2003,
Mr.
Hoffman
has
been
a
partner
of
Riverstone
Holdings
LLC,
or
Riverstone,
where
he
is
principally
responsible
for
investments
inpower
and
renewable
energy.
Before
joining
Riverstone,
Mr.
Hoffman
was
senior
managing
director
and
head
of
the
mergers
and
acquisitions
advisory
business
ofThe
Blackstone
Group
L.P.,
or
Blackstone,
where
he
also
served
on
the
firm's
principal
group
investment
committee
as
well
as
its
executive
committee.
Prior
tojoining
Blackstone,
Mr.
Hoffman
was
managing
director
and
co-head
of
the
mergers
and
acquisitions
department
at
Smith
Barney,
Harris
Upham
&
Co.Mr.
Hoffman
currently
serves
as
a
director
of
Pattern
Energy,
Inc.,
Talen
Energy
Corporation,
and
the
general
partner
of
Enviva
Partners.
Mr.
Hoffman
also
serveson
the
board
of
directors
of
QR
Pharma
and
various
private
companies
sponsored
by
Riverstone.
His
non-profit
board
affiliations
include
Rockefeller
University.Mr.
Hoffman
received
his
Bachelor's
and
Master's
Degrees
from
Northwestern
University
and
his
M.B.A.
from
the
Harvard
Business
School.







Our
board
of
directors
believes
Mr.
Hoffman's
perspective
and
experience
as
an
investor,
as
well
as
his
educational
background,
provide
him
with
thequalifications
and
skills
to
serve
as
a
director.







Ramesh
Kumar,
Ph.D.




Dr.
Kumar
is
one
of
our
co-founders,
and
is
currently
our
President
and
Chief
Executive
Officer,
a
position
he
has
held
since
1998,as
well
as
a
member
of
our
board
of
directors.
Prior
to
our
founding,
Dr.
Kumar
held
positions
in
research
and
development
or
management
at
PrincetonUniversity,
Bristol-Myers
Squibb
Company,
or
Bristol-Myers
Squibb,
DNX
Corp.
(later
Nextran
Corp.,
a
subsidiary
of
Baxter
International
Inc.)
andKimeragen,
Inc.
(later
ValiGen
Inc.),
a
genomics
company,
where
he
was
President
of
the
Genomics
and
Transgenics
Division.
Dr.
Kumar
received
his
Ph.D.
inMolecular
Biology
from
the
University
of
Illinois,
Chicago,
and
trained
at
the
National
Cancer
Institute.
Additionally,
Dr.
Kumar
received
his
B.Sc.
and
M.Sc.,both
with
honors,
in
Microbiology
from
Panjab
University.







Our
board
of
directors
believes
Dr.
Kumar's
perspective
and
experience
as
our
co-founder,
President
and
Chief
Executive
Officer,
as
well
as
his
depth
ofoperating
and
senior
management
experience
in
our
industry,
provide
him
with
the
qualifications
and
skills
to
serve
as
a
director.







James
J.
Marino.




Mr.
Marino
has
served
as
a
member
of
our
board
of
directors
since
July
2015.
Prior
to
July
2015,
Mr.
Marino
was
a
Partner
at
the
globallaw
firm
of
Dechert
LLP
for
28
years,
where
he
served
as
Managing
Partner
of
the
Princeton
Office.
Mr.
Marino
served
as
the
outside
counsel
for
Onconova
fromits
inception
through
and
including
its
initial
public
offering.
Previously,
he
served
on
the
board
of
directors
of
Pharmacopeia
Drug
Discovery,
Inc.
from
2000
to2006
and
has
worked
in
advisory
capacities
and
on
the
boards
of
multiple
non-profit
organizations,
including
Robert
Wood
Johnson
University
Hospital.
Hecurrently
serves
on
the
Board
of
Trustees
of
Wake
Forest
University
and
Wake
Forest
Baptist
Medical
Center.
Mr.
Marino
received
his
B.A.,
J.D.
and
MBA
fromRutgers
University.







Our
board
of
directors
believes
that
Mr.
Marino's
perspective
and
experience
advising
Onconova
and
numerous
other
leading
life
science
companies
inconnection
with
financings,
acquisitions
and
strategic
alliances,
provide
him
with
the
qualifications
and
skills
to
serve
as
a
director.







Viren
Mehta.




Dr.
Mehta
has
served
as
a
member
of
our
board
of
directors
since
February
2004.
Dr.
Mehta
has
been
a
managing
member
of
Mehta
Partnerssince
1997.
Mehta
Partners
provides
strategic
advisory
services
to
the
biotechnology
and
pharmaceutical
companies
worldwide.
Prior
to
founding
Mehta
Partners,Dr.
Mehta
co-founded
Mehta
and
Isaly
in
1989,
and
prior
to
that
was
a
part
of
the
strategic
planning
team
of
the
International
Division
at
Merck
&
Co.
Dr.
Mehtaearned
a
Doctor
of
Pharmacy
at
the
University
of
Southern
California,
and
an
M.B.A.
from
the
Anderson
School
of
Business
at
the
University
of
California,
LosAngeles.80Table
of
Contents







Our
board
of
directors
believes
Dr.
Mehta's
perspective
and
experience
in
the
life
sciences
industry
as
a
biopharma
fund
manager,
fund
consultant
and
astrategic
advisor
to
senior
managers
in
the
biopharma
industry,
as
well
as
his
educational
background,
provide
him
with
the
qualifications
and
skills
to
serve
as
adirector.







E.
Premkumar
Reddy,
Ph.D.




Dr.
Reddy
is
one
of
our
scientific
founders
and
has
served
as
a
member
of
our
board
of
directors
since
February
1999.
SinceMarch
2010,
Dr.
Reddy
has
served
as
a
Professor
at
Mount
Sinai
School
of
Medicine,
or
Mount
Sinai
and
Director
of
the
Experimental
Cancer
TherapeuticsProgram
at
the
Tisch
Cancer
Institute
at
Mount
Sinai.
From
1992
to
February
2010,
Dr.
Reddy
served
as
a
Professor
and
Director
of
the
Fels
Institute
for
CancerResearch
of
Temple
University.
He
was
the
founder
and
co-editor
of
the
international
journal
of
cancer
research,
Oncogene,
published
by
Nature
PublishingGroup.
Dr.
Reddy
received
his
B.Sc.,
M.Sc.
and
Ph.D.
from
Osmania
University.







Our
board
of
directors
believes
Dr.
Reddy's
perspective
and
experience
as
our
co-founder,
his
educational
background,
as
well
as
his
experience
in
researchand
product
development,
provide
him
with
the
qualifications
and
skills
to
serve
as
a
director.







Anne
M.
VanLent.




Ms.
VanLent
has
served
as
a
member
of
our
board
of
directors
since
July
2013.
Ms.
VanLent
has
served
as
President
of
AMV
Advisors,a
personal
consulting
firm
providing
strategic
and
financial
services
to
companies
in
the
greater
life
sciences
sector,
since
May
2008.
Ms.
VanLent
has
served
as
adirector
of
Biota
Pharmaceuticals,
Inc.
since
May
2013,
where
she
has
also
served
as
chair
of
the
audit
committee
and
as
a
member
of
the
nominating
andgovernance
committee
since
May
2013
and
lead
independent
director
since
November
2015;
as
a
director
and
chair
of
the
audit
committee
of
AegerionPharmaceuticals,
Inc.
since
April
2013
and
a
member
of
the
compensation
committee
and
the
compliance
committee
since
2015;
and
as
a
director
of
OceraTherapeutics,
Inc.
(formerly
Tranzyme
Pharmaceuticals,
Inc.)
since
April
2011,
where
she
has
also
served
as
chair
of
the
nominating
and
governance
committeesince
December
2013.
From
December
2004
to
May
2013,
Ms.
Van
Lent
served
as
a
director
of
Integra
Life
Sciences
Holding
Corporation,
where
she
was
amember
of
the
audit
committee
from
December
2004
to
May
2013,
serving
as
its
chair
from
May
2006
to
May
2012,
and
a
member
of
the
compensationcommittee
from
2004
to
2006.
Ms.
VanLent
also
served
as
a
director
of
Penwest
Pharmaceuticals
Co.,
from
1997
to
2010,
where
she
was
chair
of
the
auditcommittee
from
2002
to
2010
and
chair
of
the
nomination
and
governance
committee
in
2010.
Ms.
VanLent
received
a
B.A.
degree
in
Physics
from
MountHolyoke
College.







Our
board
of
directors
believes
that
Ms.
VanLent's
extensive
leadership
and
finance
experience,
and
her
extensive
experience
serving
as
a
board
member,audit
committee
member
and
audit
committee
chair
of
public
companies
in
the
life
sciences
industry,
provide
her
with
the
qualifications
and
skills
to
serve
as
adirector.Executive
Officers








The
following
table
sets
forth
certain
information
regarding
our
executive
officers
who
are
not
also
directors.81Name
Age
Position(s)
with
Onconova
Therapeutics,
Inc.Steven
M.
Fruchtman,M.D.


65
Chief
Medical
Officer,
and
Senior
Vice
President,
Research
andDevelopmentManoj
Maniar,
Ph.D.


53
Senior
Vice
President,
Product
DevelopmentMark
P.
Guerin

47
Vice
President—Financial
Planning
&
Accounting,
and
Chief
AccountingOfficerTable
of
Contents







Steven
M.
Fruchtman,
M.D.




Dr.
Fruchtman
has
served
as
our
Chief
Medical
Officer
and
Senior
Vice
President,
Research
and
Development
since
January2015.
Dr.
Fruchtman
is
a
board
certified
hematologist
with
extensive
industry
experience
in
clinical
research
for
myelodysplastic
syndromes,
hematologicmalignancies
and
solid
tumors.
From
June
2014
to
January
2015,
Dr.
Fruchtman
was
a
hematology
oncology
drug
development
consultant.
From
September
2013to
June
2014,
Dr.
Fruchtman
served
as
Chief
Medical
Officer
at
Syndax
Pharmaceuticals,
Inc.,
a
biopharmaceutical
company.
From
July
2011
to
July
2013,Dr.
Fruchtman
was
the
Chief
Medical
Officer
and
Senior
Vice
President
of
Research
and
Regulatory
Affairs
at
Spectrum
Pharmaceuticals.
From
February
2011
toJune
2011,
he
was
Vice
President
of
Research
at
Spectrum
Pharmaceuticals,
Inc.,
a
biopharmaceutical
company.
From
February
2009
to
January
2011,Dr.
Fruchtman
was
Vice
President,
Clinical
Research
at
Allos
Therpeutics,
Inc.,
a
biopharmaceutical
company.
Prior
to
this,
Dr.
Fruchtman
held
senior
positions
atNovartis
and
Ortho
Biotech
Products.
Dr.
Fruchtman
was
on
the
faculty
of
the
Mount
Sinai
School
of
Medicine
and
was
the
Director
of
the
Stem
CellTransplantation
and
Myeloproliferative
Disorder
Programs
at
Mount
Sinai
Hospital
in
New
York
City.
Dr.
Fruchtman
received
his
medical
degree
from
New
YorkMedical
College
and
his
B.A.
from
Cornell
University.







Mark
P.
Guerin




Mr.
Guerin
has
served
as
Vice
President—Financial
Planning
&
Accounting,
and
Chief
Accounting
Officer
since
May
2014,
and
as
VicePresident—Financial
Planning
&
Accounting
from
September
2013
to
May
2014.
He
has
also
served
as
our
principal
financial
officer
since
Februaury
12,
2016.Between
January
2012
and
September
2013,
Mr.
Guerin
was
self-employed
as
a
financial
and
accounting
consultant.
For
more
than
six
years,
through
December2011,
Mr.
Guerin
was
employed
by
CardioKine,
Inc.,
serving
as
Chief
Financial
Officer
from
mid-2009
through
December
2011.
Mr.
Guerin
received
his
B.A.
inAccounting
from
DeSales
University.







Manoj
Maniar,
Ph.D.




Dr.
Maniar
has
served
as
our
Senior
Vice
President,
Product
Development
since
August
2005.
Prior
to
joining
us,
Dr.
Maniar
waswith
SRI
International,
Inc.,
a
nonprofit
research
institute,
where
he
served
as
Senior
Director,
Formulations
and
Drug
Delivery.
Dr.
Maniar
received
his
B.S.
inPharmacy
from
Bombay
College
of
Pharmacy
and
his
Ph.D.
in
Pharmaceutics
from
the
University
of
Connecticut.Corporate
Governance
Board
Composition







Our
board
of
directors
currently
consists
of
eight
members.
Our
board
of
directors
has
undertaken
a
review
of
the
independence
of
our
directors
and
hasdetermined
that
all
directors
except
Ramesh
Kumar,
Ph.D.
and
E.
Premkumar
Reddy,
Ph.D.
are
independent
within
the
meaning
of
Section
5605(a)(2)
of
theNASDAQ
Stock
Market
listing
rules
and
Rule
10A-3
under
the
Securities
Exchange
Act
of
1934,
as
amended
(the
"Exchange
Act").
Our
tenth
amended
andrestated
certificate
of
incorporation
provides
that
our
board
of
directors
will
consist
of
not
less
than
three
nor
more
than
11
directors,
as
such
number
of
directorsmay
from
time
to
time
be
fixed
by
our
board
of
directors.
Each
director
shall
be
elected
to
the
board
to
hold
office
until
his
or
her
successor
is
elected
and
qualifiedat
the
next
annual
meeting
of
stockholders.Board
Leadership
Structure
and
Role
in
Risk
Oversight







Our
board
of
directors
recognizes
the
time,
effort
and
energy
that
the
chief
executive
officer
is
required
to
devote
to
his
position
in
the
current
businessenvironment,
as
well
as
the
commitment
required
to
serve
as
our
chairman,
particularly
as
the
board
of
directors'
oversight
responsibilities
continue
to
grow.
Webelieve
that,
at
present,
separating
these
positions
allows
our
chief
executive
officer
to
focus
on
our
day-to-day
business,
while
allowing
our
chairman
to
lead
theboard
of
directors
in
its
fundamental
role
of
providing
advice
to,
and
independent
oversight
of,
management.
Our
board
of
directors
also
believes
that
this
structureensures
a
greater
role
for
the
independent
directors
in
the82Table
of
Contentsoversight
of
our
company
and
active
participation
of
the
independent
directors
in
setting
agendas
and
establishing
priorities
and
procedures
for
the
work
of
ourboard
of
directors.







While
our
bylaws
do
not
require
that
our
chairman
and
chief
executive
officer
positions
be
separate,
our
board
of
directors
believes
that
having
separatepositions
is
the
appropriate
leadership
structure
for
us
at
this
time
and
demonstrates
our
commitment
to
good
corporate
governance.







Risk
is
inherent
with
every
business,
and
how
well
a
business
manages
risk
can
ultimately
determine
its
success.
We
face
a
number
of
risks,
including
but
notlimited
to
risks
relating
to
limited
cash
resources,
need
to
raise
additional
funds,
product
candidate
development,
technological
uncertainty,
dependence
oncollaborative
partners
and
other
third
parties,
uncertainty
regarding
patents
and
proprietary
rights,
comprehensive
government
regulations,
having
no
commercialmanufacturing
experience,
marketing
or
sales
capability
or
experience
and
dependence
on
key
personnel.
Management
is
responsible
for
the
day-to-daymanagement
of
risks
we
face,
while
our
board
of
directors,
as
a
whole
and
through
its
committees,
has
responsibility
for
the
oversight
of
risk
management.
In
itsrisk
oversight
role,
our
board
of
directors
has
the
responsibility
to
satisfy
itself
that
the
risk
management
processes
designed
and
implemented
by
management
areadequate
and
functioning
as
designed.
The
board
of
directors
periodically
consults
with
management
regarding
the
Company's
risks.







Our
board
of
directors
is
actively
involved
in
oversight
of
risks
that
could
affect
us.
This
oversight
is
conducted
primarily
through
the
audit
committee
of
ourboard
of
directors,
but
the
full
board
of
directors
has
retained
responsibility
for
general
oversight
of
risks.Board
Committees







Our
board
of
directors
has
established
three
standing
committees:
the
audit
committee,
the
compensation
committee
and
the
nominating
and
corporategovernance
committee.
The
current
members
of
our
audit
committee
are
Henry
S.
Bienen,
Ph.D.,
James
J.
Marino,
Viren
Mehta
and
Anne
M.
VanLent,
with
AnneM.
VanLent
serving
as
chairperson.
The
current
members
of
our
compensation
committee
are
Michael
B.
Hoffman,
Henry
S.
Bienen,
Ph.D.,
James
J.
Marino
andAnne
M.
VanLent,
with
Michael
B.
Hoffman
serving
as
chairperson.
The
current
members
of
our
nominating
and
corporate
governance
committee
are
Michael
B.Hoffman,
Viren
Mehta
and
Jerome
E.
Groopman,
M.D.,
with
Viren
Mehta
serving
as
chairperson.







Our
board
of
directors
has
determined
that
Henry
S.
Bienen,
Ph.D.,
James
J.
Marino,Viren
Mehta
and
Anne
M.
VanLent
meet
the
additional
test
forindependence
for
audit
committee
members
imposed
by
Securities
and
Exchange
Commission
("SEC")
regulations
and
Section
5605(c)(2)(A)
of
the
NASDAQStock
Market
listing
rules
and
that
Michael
B.
Hoffman,
Henry
S.
Bienen,
Ph.D,
James
J.
Marino
and
Anne
M.
VanLent
meet
the
additional
test
for
independencefor
compensation
committee
members
imposed
by
Section
5605(d)(2)(A)
of
the
NASDAQ
Stock
Market
listing
rules.Audit Committee







The
primary
purpose
of
our
audit
committee
is
to
assist
the
board
of
directors
in
the
oversight
of
the
integrity
of
our
accounting
and
financial
reportingprocess,
the
audits
of
our
consolidated
financial
statements,
and
our
compliance
with
legal
and
regulatory
requirements.
Our
audit
committee
met
five
times
duringfiscal
2015.
The
functions
of
our
audit
committee
include,
among
other
things:•hiring
the
independent
registered
public
accounting
firm
to
conduct
the
annual
audit
of
our
consolidated
financial
statements
and
monitoring
itsindependence
and
performance;
•reviewing
and
approving
the
planned
scope
of
the
annual
audit
and
the
results
of
the
annual
audit;83Table
of
Contents•pre-approving
all
audit
services
and
permissible
non-audit
services
provided
by
our
independent
registered
public
accounting
firm;
•reviewing
the
significant
accounting
and
reporting
principles
to
understand
their
impact
on
our
consolidated
financial
statements;
•reviewing
our
internal
financial,
operating
and
accounting
controls
with
management,
our
independent
registered
public
accounting
firm
and
ourinternal
audit
provider;
•reviewing
with
management
and
our
independent
registered
public
accounting
firm,
as
appropriate,
our
financial
reports,
earnings
announcementsand
our
compliance
with
legal
and
regulatory
requirements;
•reviewing
potential
conflicts
of
interest
under
and
violations
of
our
code
of
conduct;
•establishing
procedures
for
the
treatment
of
complaints
received
by
us
regarding
accounting,
internal
accounting
controls
or
auditing
matters
andconfidential
submissions
by
our
employees
of
concerns
regarding
questionable
accounting
or
auditing
matters;
•reviewing
and
approving
related-party
transactions;
and
•reviewing
and
evaluating,
at
least
annually,
our
audit
committee's
charter.







With
respect
to
reviewing
and
approving
related-party
transactions,
our
audit
committee
reviews
related-party
transactions
for
potential
conflicts
of
interestsor
other
improprieties.
Under
SEC
rules,
related-party
transactions
are
those
transactions
to
which
we
are
or
may
be
a
party
in
which
the
amount
involved
exceedsthe
lesser
of
$120,000
or
1%
of
total
assets,
and
in
which
any
of
our
directors
or
executive
officers
or
any
other
related
person
had
or
will
have
a
direct
or
indirectmaterial
interest,
excluding,
among
other
things,
compensation
arrangements
with
respect
to
employment
and
board
membership.
Our
audit
committee
couldapprove
a
related-party
transaction
if
it
determines
that
the
transaction
is
in
our
best
interests.
Our
directors
are
required
to
disclose
to
this
committee
or
the
fullboard
of
directors
any
potential
conflict
of
interest,
or
personal
interest
in
a
transaction
that
our
board
is
considering.
Our
executive
officers
are
required
to
discloseany
related-party
transaction
to
the
audit
committee.
We
also
poll
our
directors
on
an
annual
basis
with
respect
to
related-party
transactions
and
their
service
as
anofficer
or
director
of
other
entities.
Any
director
involved
in
a
related-party
transaction
that
is
being
reviewed
or
approved
must
recuse
himself
or
herself
fromparticipation
in
any
related
deliberation
or
decision.
Whenever
possible,
the
transaction
should
be
approved
in
advance
and
if
not
approved
in
advance,
must
besubmitted
for
ratification
as
promptly
as
practical.







The
financial
literacy
requirements
of
the
SEC
require
that
each
member
of
our
audit
committee
be
able
to
read
and
understand
fundamental
financialstatements.
In
addition,
at
least
one
member
of
our
audit
committee
must
qualify
as
an
audit
committee
financial
expert,
as
defined
in
Item
407(d)(5)
ofRegulation
S-K
promulgated
under
the
Securities
Act,
and
have
financial
sophistication
in
accordance
with
the
NASDAQ
Stock
Market
listing
rules.
Our
board
ofdirectors
has
determined
that
Anne
M.
VanLent
qualifies
as
an
audit
committee
financial
expert.







Both
our
independent
registered
public
accounting
firm
and
management
periodically
will
meet
privately
with
our
audit
committee.







The
board
of
directors
has
adopted
a
charter
for
the
audit
committee,
which
is
available
in
the
corporate
governance
section
of
our
website
athttp://www.onconova.com.Compensation Committee







The
primary
purpose
of
our
compensation
committee
is
to
assist
our
board
of
directors
in
exercising
its
responsibilities
relating
to
compensation
of
ourexecutive
officers
and
employees
and
to
administer
our
equity
compensation
and
other
benefit
plans.
In
carrying
out
these
responsibilities,
this84Table
of
Contentscommittee
reviews
all
components
of
executive
officer
and
employee
compensation
for
consistency
with
its
compensation
philosophy,
as
in
effect
from
time
totime.
Our
compensation
committee
met
ten
times
during
fiscal
2015.
The
functions
of
our
compensation
committee
include,
among
other
things:•designing
and
implementing
competitive
compensation,
severance
and
change
in
control
policies
to
attract
and
retain
key
personnel;
•reviewing
and
formulating
policy
and
determining
the
compensation
of
our
executive
officers
and
employees;
•reviewing
and
recommending
to
our
board
of
directors
the
compensation
of
our
non-employee
directors;
•reviewing
and
evaluating
our
compensation
risk
policies
and
procedures;
•administering
our
equity
incentive
plans
and
granting
equity
awards
to
our
employees,
consultants
and
directors
under
these
plans;
•administering
our
performance
bonus
plans
and
granting
bonus
opportunities
to
our
employees,
consultants
and
non-employee
directors
under
theseplans;
•if
required
from
time
to
time,
preparing
the
executive
officer
compensation
information
required
to
be
included
in
our
annual
proxy
statement;
•engaging
compensation
consultants
or
other
advisors
it
deems
appropriate
to
assist
with
its
duties;
and
•reviewing
and
evaluating,
at
least
annually,
our
compensation
committee's
charter.







The
board
of
directors
has
adopted
a
charter
for
the
compensation
committee,
which
is
available
in
the
corporate
governance
section
of
our
website
athttp://www.onconova.com.







During
2014
and
2015,
the
compensation
committee
has
utilized
Radford
("Radford"),
an
Aon
Hewitt
company,
as
its
executive
compensation
consultant.Radford
reports
directly
to
the
compensation
committee.
The
compensation
committee
may
replace
Radford
or
hire
additional
consultants
at
any
time.
Uponrequest
by
the
compensation
committee
or
its
chair,
a
representative
of
Radford
attends
meetings
of
the
compensation
committee
and
is
available
to
discusscompensation
issues
in
between
meetings.







In
connection
with
its
work
for
the
compensation
committee,
Radford
provided
various
executive
compensation
services
to
the
compensation
committeepursuant
to
a
written
consulting
agreement.
Generally,
these
services
included
advising
the
compensation
committee
on
the
principal
aspects
of
our
executivecompensation
program
and
evolving
industry
practices
and
providing
market
information
and
analysis
regarding
the
competitiveness
of
our
program
design
andour
award
values
in
relation
to
performance.







The
compensation
committee
retains
sole
authority
to
hire
any
compensation
consultant,
approve
such
consultant's
compensation,
determine
the
nature
andscope
of
its
services,
evaluate
its
performance,
and
terminate
its
engagement.
We
assessed
the
independence
of
Radford
pursuant
to
SEC
rules
and
determined
thatno
known
conflict
of
interest
existed
that
would
prevent
Radford
from
serving
as
an
independent
consultant
to
the
compensation
committee.







The
compensation
committee
has
reviewed
our
compensation
policies
and
practices
for
all
employees,
including
our
named
executive
officers,
as
they
relateto
risk
management
practices
and
risk-taking
incentives,
and
has
determined
that
there
are
no
risks
arising
from
these
policies
and
practices
that
are
reasonablylikely
to
have
a
material
adverse
effect
on
us.85Table
of
ContentsNominating and Corporate Governance Committee







The
primary
purpose
of
our
nominating
and
corporate
governance
committee
is
to
assist
our
board
of
directors
in
promoting
the
best
interest
of
our
companyand
our
stockholders
through
the
implementation
of
sound
corporate
governance
principles
and
practices.
Our
nominating
and
corporate
governance
committeemet
two
times
during
fiscal
2015.
The
functions
of
our
nominating
and
corporate
governance
committee
include,
among
other
things:•identifying,
reviewing
and
evaluating
candidates
to
serve
on
our
board
of
directors;
•determining
the
minimum
qualifications
for
service
on
our
board
of
directors;
•developing
and
recommending
to
our
board
an
annual
self-evaluation
process
for
our
board
of
directors
and
overseeing
the
annual
self-evaluationprocess;
•developing,
as
appropriate,
a
set
of
corporate
governance
principles,
and
reviewing
and
recommending
to
our
board
of
directors
any
changes
tosuch
principles;
and
•periodically
reviewing
and
evaluating
our
nominating
and
corporate
governance
committee's
charter.







The
board
of
directors
has
adopted
a
charter
for
the
nominating
and
corporate
governance
committee,
which
is
available
in
the
corporate
governance
sectionof
our
website
at
http://www.onconova.com.Code
of
Conduct
for
Employees,
Executive
Officers
and
Directors








We
have
adopted
a
code
of
conduct
applicable
to
all
of
our
employees,
executive
officers
and
directors.
The
code
of
conduct
is
available
in
the
corporategovernance
section
of
our
website
at
http://www.onconova.com.







The
audit
committee
of
our
board
of
directors
is
responsible
for
overseeing
the
code
of
conduct
and
must
approve
any
waivers
of
the
code
of
conduct
foremployees,
executive
officers
or
directors.Meetings
of
the
Board
of
Directors








The
board
of
directors
held
20
meetings
during
fiscal
2015.
During
fiscal
2015,
each
director
attended
at
least
75
percent
of
the
aggregate
of
the
total
numberof
meetings
of
the
board
of
directors
and
the
committees
on
which
such
director
served.







Directors
are
encouraged,
but
not
required,
to
attend
the
annual
meeting
of
stockholders.
Michael
B.
Hoffman,
Ramesh
Kumar,
Ph.D.,
E.
Premkumar
Reddy,Ph.D.,
and
Anne
M.
VanLent
attended
the
2015
annual
meeting
of
stockholders.Director
Nomination
Process








The
process
followed
by
our
nominating
and
corporate
governance
committee
to
identify
and
evaluate
director
candidates
includes
requests
to
board
membersand
others
for
recommendations,
meetings
from
time
to
time
to
evaluate
biographical
information
and
background
material
relating
to
potential
candidates
andinterviews
of
selected
candidates
by
members
of
the
nominating
and
corporate
governance
committee
and
the
board
of
directors.







In
determining
whether
to
recommend
any
particular
candidate
for
inclusion
in
the
board
of
director's
slate
of
recommended
director
nominees,
ournominating
and
corporate
governance
committee
considers
the
composition
of
the
board
of
directors
with
respect
to
depth
of
experience,
balance
of
professionalinterests,
required
expertise
and
other
factors.
The
nominating
and
corporate
governance
committee
considers
the
value
of
diversity
when
recommendingcandidates.
The
committee86Table
of
Contentsviews
diversity
broadly
to
include
diversity
of
experience,
skills
and
viewpoint.
The
nominating
and
corporate
governance
committee
does
not
assign
specificweights
to
particular
criteria
and
no
particular
criterion
is
a
prerequisite
for
each
prospective
nominee.
Our
board
of
directors
believe
that
the
backgrounds
andqualifications
of
its
directors,
considered
as
a
group,
should
provide
a
composite
mix
of
experience,
knowledge
and
abilities
that
will
allow
it
to
fulfill
itsresponsibilities.







Stockholders
may
recommend
individuals
to
our
nominating
and
corporate
governance
committee
for
consideration
as
potential
director
candidates.
Thenominating
and
corporate
governance
committee
will
evaluate
stockholder-recommended
candidates
by
following
the
same
process
and
applying
the
same
criteriaas
it
follows
for
candidates
submitted
by
others.







Stockholders
may
directly
nominate
a
person
for
election
to
our
board
of
directors
by
complying
with
the
procedures
set
forth
in
Section
2.2(A)
of
our
bylaws,and
with
the
rules
and
regulations
of
the
SEC.
Under
our
bylaws,
only
persons
nominated
in
accordance
with
the
procedures
set
forth
in
the
bylaws
will
be
eligibleto
serve
as
directors.
In
order
to
nominate
a
candidate
for
service
as
a
director,
you
must
be
a
stockholder
at
the
time
you
give
the
board
of
directors
notice
of
yournomination,
and
you
must
be
entitled
to
vote
for
the
election
of
directors
at
the
meeting
at
which
your
nominee
will
be
considered.
In
addition,
the
stockholdermust
have
given
timely
notice
in
writing
to
our
Secretary.
To
be
timely,
a
stockholder's
notice
must
be
delivered
to
the
Secretary
at
our
principal
executive
officesnot
later
than
the
90th
day,
nor
earlier
than
the
120th
day,
prior
to
the
first
anniversary
of
the
prior
year's
annual
meeting
of
stockholders
(provided,
however,
thatin
the
event
that
the
date
of
the
annual
meeting
is
more
than
30
days
before
or
60
days
after
such
anniversary
date,
notice
by
the
stockholder
must
be
delivered
noearlier
than
the
120th
day
prior
to
the
annual
meeting
and
no
later
than
the
later
of
the
90th
day
prior
to
such
annual
meeting
or
the
10th
day
following
the
day
onwhich
public
announcement
of
the
date
of
such
annual
meeting
is
first
made
by
us).
Your
notice
must
set
forth
(i)
the
name,
age,
business
address
and,
if
known,residence
address
of
the
nominee,
(ii)
the
principal
occupation
or
employment
of
the
nominee,
(iii)
the
class
and
number
of
shares
of
stock
of
the
Company
directlyor
indirectly,
owned
beneficially
or
of
record
by
the
nominee,
(iv)
a
description
of
all
arrangements
or
understandings
between
you
and
the
nominee
and
any
otherperson
or
persons
(naming
such
person
or
persons)
pursuant
to
which
the
nomination
is
to
be
made
by
you,
and
(v)
all
other
information
relating
to
the
nomineethat
is
required
to
be
disclosed
in
solicitations
of
proxies
for
the
election
of
directors
in
an
election
contest,
or
is
otherwise
required,
in
each
case,
pursuant
toSection
14
of
the
Exchange
Act
and
the
rules
and
regulations
promulgated
thereunder.
Nominations
for
director
must
be
accompanied
by
the
nominee's
writtenconsent
to
being
named
in
the
proxy
statement
as
a
nominee
and
to
serving
as
a
director
if
elected.Stockholder
Communications
with
the
Board








You
can
contact
our
board
of
directors
to
provide
comments,
to
report
concerns,
or
to
ask
a
question,
at
the
following
address.Corporate
Secretary
Onconova
Therapeutics,
Inc.
375
Pheasant
Run
Newtown,
PA
18940
United
States







You
may
submit
your
concern
anonymously
or
confidentially
by
postal
mail.
You
may
also
indicate
whether
you
are
a
stockholder,
customer,
supplier,
orother
interested
party.







Communications
are
distributed
to
our
board
of
directors,
or
to
any
individual
directors,
as
appropriate,
depending
on
the
facts
and
circumstances
outlined
inthe
communication.87Table
of
ContentsSection
16(a)
Beneficial
Ownership
Reporting
Compliance








Pursuant
to
Section
16(a)
of
the
Exchange
Act
and
the
rules
issued
thereunder,
our
executive
officers,
directors
and
beneficial
owners
of
more
than
ten
percentof
our
common
stock
are
required
to
file
with
the
SEC
reports
of
holdings
of
and
transactions
in
our
securities.
Copies
of
such
reports
are
required
to
be
furnishedto
us.
Based
solely
on
a
review
of
the
copies
of
such
reports
furnished
to
us,
or
written
representations
that
no
other
reports
were
required,
we
believe
that
allrequired
reports
were
filed
in
fiscal
2015
in
a
timely
manner,
except
that,
one
Form
4
for
each
of
our
executive
officers
subject
to
Section
16(a)
reporting:
AjayBansal,
Steven
M.
Fruchtman,
M.D.,
Mark
P.
Guerin,
Ramesh
Kumar,
Ph.D.,
and
Manoj
Manair,
Ph.D.,
related
to
a
grant
of
stock
options
on
September
25,
2015,and
one
Form
3
for
Manoj
Manair,
Ph.D
related
to
his
initial
Section
16
(a)
filing
upon
becoming
an
executive
officer
on
April
27,
2015,
were
filed
late.ITEM
11.




EXECUTIVE
COMPENSATION
Overview
of
Executive
Compensation








The
compensation
committee
of
our
board
of
directors
is
responsible
for
overseeing
the
compensation
of
all
of
our
executive
officers.
In
this
capacity,
ourcompensation
committee
annually
reviews
and
approves
the
compensation
of
our
chief
executive
officer
and
other
executive
officers,
including
such
goals
andobjectives
relevant
to
the
executive
officers'
compensation
that
the
committee,
in
its
discretion,
determines
are
appropriate,
evaluates
their
performance
in
light
ofthose
goals
and
objectives,
and
sets
their
compensation
based
on
this
evaluation.2015
Summary
Compensation
Table








The
following
table
sets
forth
information
for
the
fiscal
years
ended
December
31,
2015
and
2014
concerning
compensation
of
our
principal
executive
officerand
the
two
most
highly
compensated
executive
officers
during
2015.
We
refer
to
these
three
executive
officers
as
our
"named
executive
officers."88Name
and
Principal
Position
Year
Salary
($)
Bonus
($)(1)
Option
Awards
($)(2)
All
Other
Compensation
($)(3)
Total
($)
Ramesh
Kumar,
Ph.D.


2015

542,810

—

224,056

12,960

779,826
President
and
Chief
Executive
Officer

2014

525,000

188,409

484,961

18,804

1,217,174
Steven
M.
Fruchtman,
M.D.


2015

395,769

50,000

459,904

7,528

913,201
Chief
Medical
Officer
and
Senior
Vice
President,Research
and
Development(4)


















Manoj
Maniar,
Ph.D.


2015

370,695

—

102,425

20,000

493,120
Senior
Vice
President,
Product

2014

356,860

108,664

166,272

30,589

662,385
Development


















(1)Represents
discretionary
annual
bonus
amounts
paid.
(2)The
entries
in
the
option
awards
column
reflect
the
grant
date
fair
value
of
the
awards,
as
calculated
for
financial
statement
reportingpurposes
in
accordance
with
Accounting
Standards
Codification
(ASC)
No.
718,
Compensation—Stock Compensation. The
option
valueswere
calculated
using
the
Black-Scholes
option
pricing
model.
These
amounts
do
not
represent
the
actual
value
realized
by
the
namedexecutive
officers.
See
Note
8
of
the
Notes
to
Consolidated
Financial
Statements
for
the
fiscal
year
ended
December
31,
2014
for
adiscussion
of
the
relevant
assumptions
used
to
determine
the
valuation
of
our
stock
options
for
accounting
purposes.Table
of
ContentsEmployment
Agreements








We
have
entered
into
employment
agreements
with
each
of
our
named
executive
officers,
and
the
compensation
of
our
named
executive
officers
isdetermined,
in
large
part,
by
the
terms
of
those
employment
agreements.
Following
are
descriptions
of
the
material
terms
of
each
named
executive
officer'semployment
agreement.Ramesh
Kumar,
Ph.D.







We
entered
into
an
employment
agreement
with
Dr.
Kumar
on
July
1,
2015,
which
supersedes
any
prior
employment
agreements.
The
employment
agreementcontinues
indefinitely,
unless
terminated
in
accordance
with
the
terms
of
the
agreement.







The
employment
agreement
provided
for
an
initial
base
salary
of
$543,375,
subject
to
adjustment
upon
annual
review
by
our
board
of
directors,
and
an
annualbonus
of
up
to
55%
of
such
base
salary,
payable
upon
our
achievement
of
revenue
or
profit
objectives,
specific
business
plan
goals
or
other
performancemilestones
mutually
agreed
to
by
Dr.
Kumar
and
our
board
of
directors,
provided
that
Dr.
Kumar
remain
employed
by
us
throughout
the
performance
year.
Thebonus
may
be
paid
in
the
form
of
cash,
stock
options,
shares
of
our
Common
Stock,
or
a
combination
thereof,
at
our
compensation
committee's
discretion.Dr.
Kumar
may
also
be
entitled
to
additional
compensation
in
recognition
of
extraordinary
contributions,
at
the
sole
discretion
of
our
compensation
committee.
OnFebruary
12,
2016,
we
entered
into
a
letter
agreement
with
Dr.
Kumar
pursuant
to
which
Dr.
Kumar
agreed
to
a
voluntary
reduction
in
his
base
salary
from$543,375
to
$407,531,
effective
as
of
January
1,
2016.
For
purposes
of
severance
and
other
benefits
calculated
based
upon
base
salary,
however,
Dr.
Kumar's
basesalary
will
be
deemed
to
remain
at
$543,375.







Dr.
Kumar
is
entitled
to
participate
in
all
of
our
employee
benefit
plans
and
programs
that
are
made
generally
available
from
time
to
time
to
our
executiveofficers
and
is
entitled
to
vacation
benefits.
Pursuant
to
his
employment
agreement,
Dr.
Kumar
is
entitled
to
term
life
insurance
coverage
in
a
face
amount
that
isnot
less
than
his
base
salary,
a
reasonable
transportation
allowance
if
we
relocate
our
research
facility
more
than
40
miles
from
its
present
location,
and
up
to$10,000
annually
for
educational
programs
related
to
the
performance
of
his
duties.
If
Dr.
Kumar
dies
during
his
employment,
we
will
be
entitled
to
a
$1
milliondeath
benefit
under
a
"key
man"
life
insurance
policy.
Dr.
Kumar's
employment
agreement
contains
non-solicitation,
non-competition,
confidentiality
andinventions
assignment
provisions
that,
among
other
things,
prevent
him
from
competing
with
us
during
the
term
of
his
employment
and
for
a
specified
timethereafter.







If
Dr.
Kumar's
employment
is
terminated
due
to
his
death,
disability,
by
us
for
"cause"
or
by
Dr.
Kumar
without
"good
reason"
during
the
term
of
hisemployment
agreement,
we
will
pay
to
Dr.
Kumar
or
his
spouse
or
estate
the
balance
of
his
accrued
and
unpaid
salary,
unreimbursed
expenses,
and
unused
accruedvacation
time
through
the
termination
date.







If
Dr.
Kumar's
employment
is
terminated
by
us
without
"cause"
or
by
Dr.
Kumar
for
"good
reason,"
other
than
during
a
change
in
control
protection
period,Dr.
Kumar
will
be
entitled
to
receive
severance
equal
to
his
current
base
salary
and
target
bonus
for
the
fiscal
year
during
which
his
employment
ceases.
If
thetermination
is
during
a
change
in
control
protection
period,
Dr.
Kumar
will
be
entitled
to
receive
severance
equal
to
two
times
the
sum
of
his
current
base
salaryand
target
bonus
for
the
fiscal
year
during
which
his
employment
ceases,
less
any
severance
previously
paid.
A
change
in
control
protection
period
commencesthree
months
prior
to
and
ends
twelve
months
following
a
change89(3)Includes
amounts
paid
for
insurance
premiums
on
behalf
of
the
named
executive
officer
and
matching
funds
paid
pursuant
to
our
401(k)Plan.
(4)Dr.
Fruchtman
was
not
a
named
executive
officer
in
fiscal
2014.Table
of
Contentsin
control.
The
Company
will
also
reimburse
Dr.
Kumar
for
a
portion
of
his
medical
insurance
costs
and
all
of
Dr.
Kumar's
incentive
stock
options
that
areunvested
as
of
the
date
of
such
termination
would
fully
vest
as
of
the
date
of
termination.Steven
Fruchtman,
M.D.







We
entered
into
an
employment
agreement
with
Dr.
Fruchtman
on
January
12,
2015.
The
employment
agreement
provides
for
an
initial
term
of
two
years,unless
extended
by
mutual
agreement
of
the
parties
or
sooner
terminated
in
accordance
with
the
terms
of
the
agreement.







The
employment
agreement
provides
for
an
initial
base
salary
of
$420,000,
subject
to
adjustment
upon
annual
review,
and
subject
to
the
compensationcommittee's
sole
discretion,
an
annual
bonus,
based
on
the
performance
of
Dr.
Fruchtman
and
the
Company,
of
up
to
40%
of
such
base
salary.
The
bonus
may
bepaid
in
the
form
of
cash,
stock
options,
shares
of
our
Common
Stock,
or
a
combination
thereof,
at
our
compensation
committee's
discretion.







In
accordance
with
the
agreement,
upon
hiring,
Dr.
Fruchtman
received
120,000
stock
options
that
vest
proportionately
over
four
years,
a
sign-on
bonus
of$25,000
and
an
advance
against
his
annual
bonus
of
$25,000.







Dr.
Fruchtman
is
entitled
to
participate
in
all
of
our
employee
benefit
plans
and
programs
that
are
made
generally
available
from
time
to
time
to
our
executiveofficers
and
is
entitled
to
vacation
benefits.
Dr.
Fruchtman's
employment
agreement
contains
non-solicitation,
non-competition,
confidentiality
and
inventionsassignment
provisions
that,
among
other
things,
prevent
him
from
competing
with
us
during
the
term
of
his
employment
and
for
a
specified
time
thereafter.
TheCompany
will
reimburse
Dr.
Fruchtman
for
reasonable
expenses
including
certain
commuting
costs
to
the
Company's
offices.







If
Dr.
Fruchtman's
employment
is
terminated
due
to
his
death,
disability,
by
us
for
"cause"
or
by
Dr.
Fruchtman
without
"good
reason"
during
the
term
of
hisemployment
agreement,
we
will
pay
to
Dr.
Fruchtman
or
his
spouse
or
estate
the
balance
of
his
accrued
and
unpaid
salary,
unreimbursed
expenses,
and
unusedaccrued
vacation
time
through
the
termination
date.







If
Dr.
Fruchtman's
employment
is
terminated
by
us
without
"cause",
by
Dr.
Fruchtman
for
"good
reason,"
or
at
the
expiration
of
the
term
of
the
agreement,Dr.
Fruchtman
will
be
entitled
to
payments
equal
to
six
months
base
salary
and
also
to
continued
health
benefits
for
six
months.
All
incentive
stock
options
that
areunvested
as
of
the
date
of
such
termination
would
fully
vest
as
of
the
date
of
termination.Manoj
Maniar,
Ph.D.







We
entered
into
an
employment
agreement
with
Dr.
Manair
on
July
1,
2015,
which
supersedes
any
prior
employment
agreements.
The
employmentagreement
continues
indefinitely,
unless
terminated
in
accordance
with
the
terms
of
the
agreement.







The
employment
agreement
provides
for
an
initial
base
salary
of
$371,135,
subject
to
adjustment
upon
annual
review
by
our
board
of
directors,
and
subject
tothe
compensation
committee's
sole
discretion,
an
annual
bonus,
based
on
the
performance
of
Dr.
Manair
and
the
Company,
of
up
to
40%
of
such
base
salary.
Thebonus
may
be
paid
in
the
form
of
cash,
stock
options,
shares
of
our
Common
Stock,
or
a
combination
thereof,
at
our
compensation
committee's
discretion.







Dr.
Manair
is
entitled
to
participate
in
all
of
our
employee
benefit
plans
and
programs
that
are
made
generally
available
from
time
to
time
to
our
executiveofficers
and
is
entitled
to
vacation
benefits.
Dr.
Manair's
employment
agreement
contains
non-solicitation,
non-competition,
confidentiality
and
inventionsassignment
provisions
that,
among
other
things,
prevent
him
from
competing
with
us
during
the
term
of
his
employment
and
for
a
specified
time
thereafter.90Table
of
Contents







If
Dr.
Manair's
employment
is
terminated
due
to
his
death,
disability,
by
us
for
"cause"
or
by
Dr.
Manair
without
"good
reason"
during
the
term
of
hisemployment
agreement,
we
will
pay
to
Dr.
Manair
or
his
spouse
or
estate
the
balance
of
his
accrued
and
unpaid
salary,
unreimbursed
expenses,
and
unusedaccrued
vacation
time
through
the
termination
date.







If
Dr.
Manair's
employment
is
terminated
by
us
without
"cause"
or
by
Dr.
Manair
for
"good
reason,"
other
than
during
a
change
in
control
protection
period,Dr.
Manair
will
be
entitled
to
receive
severance
equal
to
nine-twelfths
of
the
sum
of
his
current
base
salary
and
target
bonus
for
the
fiscal
year
during
which
hisemployment
ceases.
If
the
termination
is
during
a
change
in
control
protection
period,
Dr.
Manair
will
be
entitled
to
receive
severance
equal
to
the
sum
of
hiscurrent
base
salary
and
target
bonus
for
the
fiscal
year
during
which
his
employment
ceases.
A
change
in
control
protection
period
is
the
twelve
months
following
achange
in
control.
The
Company
will
also
reimburse
Dr.
Manair
for
a
portion
of
his
medical
insurance
costs
and
all
of
Dr.
Manair's
incentive
stock
options
that
areunvested
as
of
the
date
of
such
termination
would
fully
vest
as
of
the
date
of
termination.Stock
Option
and
Other
Compensation
Plans








We
maintain
our
2013
Equity
Compensation
Plan
for
the
purpose
of
attracting
key
employees,
directors
and
consultants,
inducing
them
to
remain
with
us
andencouraging
them
to
increase
their
efforts
to
make
our
business
more
successful.
The
plan
provides
for
awards
of
stock
options,
stock
appreciation
rights,
restrictedstock,
restricted
stock
units,
deferred
shares
and
other
equity-based
awards.91Table
of
Contents







The
following
table
contains
certain
information
regarding
equity
awards
held
by
the
named
executive
officers
as
of
December
31,
2015:Outstanding
Equity
Awards
at
2015
Fiscal
Year-End
92Name
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
Number
of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
Option
Exercise
Price
($)
Option
Expiration
Date
Ramesh
Kumar

16,739

—

6.00

4/7/2017


18,754

—

5.76

3/17/2020


75,018

—

5.76

3/17/2020


52,513

—

6.13

12/10/2020


10,335

—

6.13

12/5/2021


93,773

—

13.28

12/18/2022


70,315(1)
23,458

13.28

12/18/2022


100,000

—

15.00

7/25/2023


3,018(2)
1,982

15.00

7/25/2023


67,500(3)
67,500

13.48

12/20/2023


43,750(3)
131,250

3.98

12/18/2024


14,583(3)
72,917

2.32

4/16/2025


5,468(3)
82,032

1.48

9/25/2025
Steven
Fruchtman

27,500(3)
92,500

4.37

1/12/2025


5,833(3)
29,167

2.48

4/20/2025


2,500(3)
37,500

1.48

9/25/2025
Manoj
Maniar

11,252

—

6.00

8/1/2017


37,509

—

5.76

3/17/2020


18,754

—

5.76

3/17/2020


7,501

—

6.13

12/10/2020


18,754

—

6.13

12/10/2020


3,780

—

6.13

12/5/2021


22,501(1)
7,506

13.28

12/18/2022


3,018(2)
1,982

15.00

7/25/2023


20,000(3)
20,000

13.48

12/20/2023


15,000(3)
45,000

3.98

12/18/2024


6,666(3)
33,334

2.32

4/16/2025


2,500(3)
37,500

1.48

9/25/2025
(1)25%
of
the
total
shares
underlying
this
option
vested
on
December
18,
2013.
The
remaining
shares
vest
1/36th
monthly
over
36
monthsthereafter,
subject
to
continued
service
to
us
through
each
vesting
date.
(2)25%
of
the
total
shares
underlying
this
option
will
vest
on
July
25,
2014.
The
remaining
shares
vest
1/36th
monthly
over
36
monthsthereafter,
subject
to
continued
service
to
us
through
each
vesting
date.
(3)Shares
vest
in
equal
monthly
installments
over
four
years,
1/48th
per
month.
The
first
shares
vest
one
month
after
the
date
of
grant.Table
of
ContentsPotential
Payments
Upon
Termination
of
Employment
or
Change
in
Control








As
discussed
under
the
caption
"—Employment
Agreements"
above,
we
have
agreements
with
our
named
executive
officers
pursuant
to
which
they
willreceive
severance
payments
upon
certain
termination
events.
The
information
below
describes
certain
compensation
that
would
be
available
under
our
existingplans
and
arrangements
if
(i)
the
named
executive
officer
was
terminated
as
of
December
31,
2015
or
(ii)
if
a
Change
in
Control,
as
defined
herein,
occurred
onDecember
31,
2015
and
the
named
executive
officer's
employment
had
been
subsequently
terminated
on
the
same
date.Acceleration
of
Equity
Awards







Pursuant
to
the
terms
of
each
named
executive
officer's
option
agreements,
in
the
event
of
a
"Change
in
Control"
that
occurs
during
any
time
prior
to
suchnamed
executive
officer's
Termination
of
Service
(as
such
terms
are
defined
in
our
2013
Equity
Compensation
Plan)
with
us,
all
stock
options
granted
pursuant
tosuch
option
agreement
shall
fully
vest.Termination
Other
than
for
Cause,
Death
or
Disability;
Resignation
for
Good
Reason







The
payments
and
benefits
to
which
each
named
executive
officer
would
be
entitled
in
the
event
the
named
executive
officer's
employment
is
terminated
forany
reason
other
than
for
cause,
death,
or
disability,
or
if
the
named
executive
officer
resigns
for
good
reason,
whether
or
not
following
a
"change
in
control"
isdescribed
above.Director
Compensation








The
following
table
summarizes
compensation
paid
to
our
non-employee
directors
in
fiscal
2015.2015
Director
Compensation








In
June
2013,
our
board
of
directors
approved
a
non-employee
director
compensation
policy,
which
became
effective
for
all
non-employee
directors
in
July2013.
In
accordance
with
this
policy,
each93Name
Fees
Earned
or
Paid
in
Cash
($)
Stock
Option
Awards
($)(1)
All
Other
Compensation
($)
Total
($)
Henry
S.
Bienen,
Ph.D.


41,000

16,977

—

57,977
Jerome
E.
Groopman,
M.D.


33,000

16,977

—

49,977
Michael
B.
Hoffman

68,000

22,070

—

90,070
James
J.
Marino

20,250

46,888

—

67,138
Viren
Mehta

45,000

16,977

—

61,977
E.
Premkumar
Reddy,
Ph.D.


30,000

16,977

196,526(2)
243,503
Anne
M.
VanLent

56,000

16,977

—

72,977
(1)Represents
the
fair
value
of
the
shares
and
options
on
the
date
of
grant,
calculated
in
accordance
with
Accounting
Standards
Codification(ASC)
No.
718,
Compensation—Stock Compensation (ASC
718).
(2)Represents
consulting
fees
paid
to
Dr.
Reddy.
See
"Certain
Relationships
and
Related
Person
Transactions."
(3)At
December
31,
2015,
the
aggregate
number
of
outstanding
stock
option
awards
held
by
each
non-employee
director
was:
Dr.
Bienen—67,803;
Dr.
Groopman—94,252;
Mr.
Hoffman—222,794;
Mr.
Marino—30,000;
Dr.
Mehta—30,000;
Dr.
Reddy—48,754;
andMs.
VanLent—50,000.Table
of
Contentsnon-employee
director
receives
an
annual
base
retainer
of
$30,000.
In
addition,
our
non-employee
directors
receive
the
following
cash
compensation
for
boardservices,
as
applicable:•the
chairman
of
our
board
of
directors
receives
an
additional
annual
retainer
of
$20,000;
•each
member
of
our
audit,
compensation
and
nominating
and
corporate
governance
committees
receives
an
additional
retainer
of
$6,000,
$5,000and
$3,000,
respectively;
and
•each
chairperson
of
our
audit,
compensation
and
nominating
and
corporate
governance
committees
receives
an
additional
annual
retainer
of$15,000,
$10,000
and
$6,000,
respectively,
in
addition
to
the
retainer
received
for
service
as
a
member
of
such
committee.







All
amounts
are
paid
in
quarterly
installments.







In
addition,
newly
appointed
non-employee
directors
receive
a
one-time
initial
award
of
options
to
purchase
20,000
shares
of
our
common
stock,
which
vestsannually
over
a
three-year
period
subject
to
the
director's
continued
service
on
the
board
of
directors.
Thereafter,
each
non-employee
director
receives
an
annualaward
of
options
to
purchase
10,000
shares
of
our
common
stock,
which
vests
monthly
over
a
twelve-month
period
subject
to
the
director's
continued
service
onthe
board
of
directors.
The
chairman
of
our
board
of
directors
additionally
receives
an
annual
award
of
options
to
purchase
3,000
shares
of
our
common
stock,which
vests
monthly
over
a
twelve-month
period
subject
to
the
director's
continued
service
on
the
board
of
directors.







All
of
our
directors
are
eligible
to
receive
additional
discretionary
awards
under
our
2013
Equity
Compensation
Plan,
provided
that
non-employee
directorsmay
not
receive
incentive
stock
options.







We
reimburse
each
non-employee
director
for
out-of-pocket
expenses
incurred
in
connection
with
attending
our
board
of
directors
and
committee
meetings.Compensation
for
our
directors,
including
cash
and
equity
compensation,
is
determined,
and
remains
subject
to
adjustment,
by
our
board
of
directors.Equity
Compensation
Plan
Information








The
following
table
summarizes
the
total
number
of
outstanding
options
and
shares
available
for
other
future
issuances
of
options
under
all
of
our
equitycompensation
plans
as
of
December
31,
2015.
All
of
the
outstanding
awards
listed
below
were
granted
under
our
2013
Equity
Compensation
Plan.
See
"StockOption
and
Other
Compensation
Plans—2013
Equity
Compensation
Plan"
above
for
a
summary
of
the
2013
Equity
Compensation
Plan.







In
accordance
with
the
terms
of
the
2013
Equity
Compensation
Plan,
on
January
1,
2016,
the
maximum
aggregate
number
of
shares
of
our
common
stock
thatmay
be
issued
under
the
plan
was
automatically
increased
by
1,018,567
shares,
such
that
immediately
after
such
increase
the
number
of
shares
remaining
availablefor
future
issuance
under
the
plan
was
2,372,700.94Plan
Category
Number
of
Shares
to
be
Issued
Upon
Exercise
of
Outstanding
Options,
Warrants
and
Rights
Weighted-Average
Exercise
Price
of
Outstanding
Options,
Warrants
and
Rights
Number
of
Shares
Remaining
Available
for
Future
Issuance
Under
the
Equity
Compensation
Plan
(Excluding
Shares
in
First
Column)
Equity
compensation
plans
approved
by
stockholders

5,157,602
$8.56

1,354,133
Equity
compensation
plans
not
approved
by
stockholders

—

—

—
Table
of
ContentsITEM
12.




SECURITY
OWNERSHIP
OF
CERTAIN
BENEFICIAL
OWNERS
AND
MANAGEMENT
AND
RELATED
STOCKHOLDER
MATTERS








The
following
table
sets
forth
certain
information
regarding
the
beneficial
ownership
of
our
common
stock
as
of
March
15,
2016
by
(a)
each
person
known
byus
to
be
the
beneficial
owner
of
more
than
5%
of
the
outstanding
shares
of
our
common
stock,
(b)
each
named
executive
officer
identified
in
Part
III,
Item
11
ofthis
Annual
Report,
(c)
each
of
our
directors,
and
(d)
all
of
our
executive
officers
and
directors
as
a
group.







The
percentage
of
common
stock
outstanding
is
based
on
27,401,035
shares
of
our
Common
Stock
outstanding
on
March
15,
2016.
For
purposes
of
the
tablebelow,
and
in
accordance
with
the
rules
of
the
SEC,
we
deem
shares
of
common
stock
subject
to
options
that
are
currently
exercisable
or
exercisable
within
sixtydays
of
March
15,
2016
to
be
outstanding
and
to
be
beneficially
owned
by
the
person
holding
the
options
for
the
purpose
of
computing
the
percentage
ownership
ofthat
person,
but
we
do
not
treat
them
as
outstanding
for
the
purpose
of
computing
the
percentage
ownership
of
any
other
person.
Except
as
otherwise
noted,
each
ofthe
persons
or
entities
in
this
table
has
sole
voting
and
investing
power
with
respect
to
all
of
the
shares
of
common
stock
beneficially
owned
by
him,
her
or
it,subject
to
community
property
laws,
where
applicable.
Except
as
otherwise
noted
below,
the
street95Table
of
Contentsaddress
of
each
beneficial
owner
is
c/o
Onconova
Therapeutics,
Inc.,
375
Pheasant
Run,
Newtown,
PA
18940.96Name
and
Address
of
Beneficial
Owner
Number
of
Shares
Beneficially
Owned
Percentage
of
Shares
Beneficially
Owned
5%
or
greater
stockholders:






The
Michael
and
Jane
Hoffman
2013






Descendants
Trust






712
Fifth
Avenue,
51st
Fl.






New
York,
NY
10019

4,518,275

16.5%Michael
B.
Hoffman(1)






(Includes
The
Michael
and
Jane






Hoffman
2013
Descendants
Trust)






712
Fifth
Avenue,
51st
Fl






New
York,
NY
10019

4,842,186

17.5%Baxalta
GmbH(2)






Thurgauerstrasse
130






Glattpark
(Opfikon)
Switzerland
8152

2,603,295

9.5%Frigate
Ventures
LP(3)






5950
Berkshire
Lane,
Suite
210






Dallas,
TX
75225

1,936,842

7.1%E.
Premkumar
Reddy,
Ph.D.(4)

1,384,925

5.0%Other
Directors,
Director
Nominees
and
Named
Executive
Officers:






Henry
S.
Bienen,
Ph.D.(5)

81,071

*
Jerome
E.
Groopman,
M.D.(6)

80,749

*
Ramesh
Kumar,
Ph.D.(7)

935,578

3.3%Manoj
Maniar,
Ph.D.(8)

211,859

*
James
J.
Marino

*

*
Steven
M.
Fruchtman,
M.D.(9)

85,859

*
Viren
Mehta(10)

173,331

*
Anne
M.
VanLent(11)

41,533

*
All
current
executive
officers,
directors
and
director
nominees
as
a
group
(11persons)(12)

7,899,670

27.3%*Represents
a
beneficial
ownership
of
less
than
one
percent
of
our
outstanding
Common
Stock.
(1)Includes
(i)
4,518,275
shares
of
Common
Stock
held
by
the
Michael
and
Jane
Hoffman
2013
Descendants
Trust
of
which
Mr.
Hoffman
isdonor,
(ii)
84,530
shares
of
Common
Stock
held
by
the
Michael
and
Jane
Hoffman
2013
Descendants
Trust
(Non-GST
Exempt
Trust)
ofwhich
Mr.
Hoffman
is
donor
and
(iii)
220,627
shares
of
Common
Stock
subject
to
outstanding
options
that
are
exercisable
within
60
daysof
March
15,
2016.
Mr.
Hoffman
has
no
voting
or
dispositive
power
with
regard
to
any
of
the
shares
held
by
the
Michael
and
JaneHoffman
2013
Descendants
Trust
and
the
Michael
and
Jane
Hoffman
2013
Descendants
Trust
(Non-GST
Exempt
Trust).
A.J.
Agarwal
andJane
Hoffman,
Mr.
Hoffman's
spouse,
as
trustees,
have
voting
and
dispositive
power
with
regard
to
the
shares
held
by
the
Michael
and
JaneHoffman
2013
Descendants
Trust
and
the
Michael
and
Jane
Hoffman
2013
Descendants
Trust
(Non-GST
Exempt
Trust).Table
of
Contents97(2)The
shares
are
owned
directly
by
Baxalta
GmbH,
which
is
an
indirect
wholly
owned
subsidiary
of
Baxalta
Incorporated,
and
as
suchBaxalta
Incorporated
is
an
indirect
beneficial
owner
of
the
shares.
(3)Based
on
a
Schedule
13G
filed
with
the
SEC
on
January
13,
2016.
The
Schedule
13G
was
filed
on
behalf
of
Frigate
Ventures
LP
(d/b/aAnson
Group),
a
Texas
limited
partnership
("Frigate"),
Admiralty
Advisors
LLC,
a
Texas
limited
liability
company
("Admiralty"),Mr.
Bruce
R.
Winson,
the
principal
of
Frigate
and
Admiralty,
M5V
Advisors
Inc.
(d/b/a
Anson
Group
Canada),
an
Ontario,
Canadacorporation
("M5V"),
Mr.
Adam
Spears,
a
director
of
M5V,
and
Mr.
Moez
Kassam,
a
director
of
M5V.
The
shares
were
purchased
by
aprivate
fund
to
which
Frigate
and
M5V
serve
as
co-investment
advisors
(the
"Fund").
Frigate
and
M5V
serve
as
co-investment
advisors
tothe
Fund
and
may
direct
the
vote
and
disposition
of
the
1,936,842
shares
of
Common
Stock
held
by
the
Fund.
As
the
general
partner
ofFrigate,
Admiralty
may
direct
the
vote
and
disposition
of
the
1,936,842
shares
of
Common
Stock
held
by
the
Fund.
As
the
principal
ofFrigate
and
Admiralty,
Mr.
Winson
may
direct
the
vote
and
disposition
of
the
1,936,842
shares
of
Common
Stock
held
by
the
Fund.
Asdirectors
of
M5V,
Mr.
Spears
and
Mr.
Kassam
may
each
direct
the
vote
and
disposition
of
the
1,936,842
shares
of
Common
Stock
held
bythe
Fund.
(4)Includes
47,087
shares
of
Common
Stock
issuable
upon
the
exercise
of
options
that
are
currently
exercisable
or
exercisable
within
sixtydays
of
March
15,
2016.
(5)Includes
66,136
shares
of
Common
Stock
issuable
upon
the
exercise
of
options
that
are
currently
exercisable
or
exercisable
within
sixtydays
of
March
15,
2016.
(6)Includes
80,749
shares
of
Common
Stock
issuable
upon
the
exercise
of
options
that
are
currently
exercisable
or
exercisable
within
sixtydays
of
March
15,
2016.
(7)Includes
(i)
150,037
shares
of
Common
Stock
held
by
the
Ramesh
Kumar
2012
Trust
and
(ii)
659,078
shares
of
Common
Stock
subject
tooutstanding
options
that
are
exercisable
within
60
days
of
March
15,
2016.
Dr.
Kumar
has
voting
and
dispositive
power
with
regard
to
theshares
held
by
the
Ramesh
Kumar
2012
Trust.
(8)Includes
211,859
shares
of
Common
Stock
issuable
upon
the
exercise
of
options
that
are
currently
exercisable
or
exercisable
within
sixtydays
of
March
15,
2016.
(9)Includes
85,859
shares
of
Common
Stock
issuable
upon
the
exercise
of
options
that
are
currently
exercisable
or
exercisable
within
sixtydays
of
March
15,
2016.
(10)Includes
(i)
28,438
shares
of
Common
Stock
held
jointly
with
Dr.
Mehta's
spouse,
(ii)
8,056
shares
of
Common
Stock
held
by
MehtaPartners,
LLC,
(iii)
1,733
shares
of
Common
Stock
held
by
Mehta
Partners,
LLC
FBO
Jean
Marie
Kiss
IRA,
(iv)
8,295
shares
of
CommonStock
held
by
Viram
Foundation
and
(v)
28,333
shares
of
Common
Stock
subject
to
outstanding
options
that
are
exercisable
within
60
daysof
March
15,
2016.
Dr.
Mehta,
as
managing
member,
has
voting
and
dispositive
power
with
regard
to
the
shares
held
by
MehtaPartners,
LLC.
Dr.
Mehta,
as
trustee,
has
voting
and
dispositive
power
with
regard
to
the
shares
held
by
Mehta
Partners,
LLC
FBO
JeanMarie
Kiss
IRA.
Dr.
Mehta,
as
trustee
has
voting
and
dispositive
power
with
regard
to
the
shares
held
by
Viram
Foundation.
(11)Includes
41,533
shares
of
Common
Stock
issuable
upon
the
exercise
of
options
that
are
currently
exercisable
or
exercisable
within
sixtydays
of
March
15,
2016.
(12)Includes
1,503,840
shares
of
Common
Stock
issuable
upon
the
exercise
of
options
that
are
currently
exercisable
or
exercisable
within
sixtydays
of
March
15,
2016.Table
of
ContentsITEM
13.




CERTAIN
RELATIONSHIPS
AND
RELATED
TRANSACTIONS,
AND
DIRECTOR
INDEPENDENCE
Review
and
Approval
of
Related
Person
Transactions








The
audit
committee
of
our
board
of
directors
is
charged
with
the
responsibility
of
reviewing
and
approving
all
related
person
transactions
(as
defined
in
SECregulations),
and
periodically
reassessing
any
related
person
transaction
that
we
enter
to
ensure
continued
appropriateness.
This
responsibility
is
set
forth
in
ouraudit
committee
charter.
A
related
party
transaction
will
only
be
approved
if
the
audit
committee
determines
that
the
transaction
is
in
the
best
interests
of
theCompany.
If
a
director
is
involved
in
the
transaction,
he
or
she
will
recuse
himself
or
herself
from
all
decisions
regarding
the
transaction.







The
following
is
a
description
of
transactions
during
fiscal
2015,
to
which
we
have
been
a
party,
in
which
the
amount
involved
in
the
transaction
exceeds$120,000
or
1%
of
total
assets,
and
in
which
any
of
our
current
directors,
executive
officers
or
to
our
knowledge,
beneficial
owners
of
more
than
5%
of
our
capitalstock
or
an
affiliate
or
immediate
family
member
thereof,
had
or
will
have
a
direct
or
indirect
material
interest,
other
than
the
employment
relationships
with
ourexecutive
officers
and
the
related
compensation
solely
resulting
from
those
employment
relationships.







On
May
3,
2010,
as
subsequently
amended,
we
entered
into
a
research
agreement
with
the
Mount
Sinai
School
of
Medicine
("Mount
Sinai"),
with
which
E.Premkumar
Reddy,
Ph.D.,
a
member
of
our
board
of
directors
and
the
beneficial
owner
of
more
than
5%
of
our
capital
stock,
is
associated.
The
research
isundertaken
by
Mount
Sinai
on
our
behalf.
Mount
Sinai,
in
connection
with
us,
will
prepare
applications
for
patents
generated
from
the
research.
Results
from
allprojects
will
belong
exclusively
to
Mount
Sinai,
but
we
will
have
an
exclusive
option
to
license
any
inventions.
The
initial
term
of
the
research
agreement
was
oneyear
with
options
to
extend
by
mutual
agreement.
The
term
of
the
agreement
has
been
extended
through
July
4,
2016.
Payments
to
Mount
Sinai
for
the
year
endedDecember
31,
2015
were
$1,089,000.







We
entered
into
a
consulting
agreement
with
E.
Premkumar
Reddy,
Ph.D.,
a
member
of
our
board
of
directors
and
the
beneficial
owner
of
more
than
5%
ofour
capital
stock,
effective
as
of
January
1,
2012
for
consulting
services
rendered
in
addition
to
his
membership
on
our
board
of
directors.
The
consultingagreement
provided
for
a
term
of
one
year,
unless
renewed
by
mutual
agreement
of
the
parties.
The
current
term
has
been
extended
through
December
31,
2016,unless
sooner
terminated
in
accordance
with
the
terms
of
the
agreement.
The
board
member
provides
consulting
services
to
the
Company
on
the
terms
set
forth
inthe
agreement.
Payments
to
this
board
member
for
the
year
ended
December
31,
2015
were
$197,000.







See
"
Item 10—Directors, Executive Officers and Corporate Governance "
for
additional
disclosure
required
pursuant
to
Item
13.98Table
of
ContentsITEM
14.




PRINCIPAL
ACCOUNTING
FEES
AND
SERVICES
Fees
of
Independent
Registered
Public
Accounting
Firm








The
following
table
summarizes
the
fees
of
Ernst
&
Young
LLP,
our
independent
registered
public
accounting
firm,
billed
to
us
for
each
of
the
last
two
fiscalyears.Pre-Approval
Policies
and
Procedures








The
audit
committee's
policy
is
that
all
audit
services
and
all
non-audit
services
to
be
provided
to
us
by
our
independent
registered
public
accounting
firmmust
be
approved
in
advance
by
our
audit
committee.
The
audit
committee's
approval
procedures
include
the
review
and
approval
of
engagement
letters
from
ourindependent
registered
public
accounting
firm
that
document
the
fees
for
all
audit
services
and
non-audit
services,
primarily
tax
advice
and
tax
return
preparationand
review.







All
audit
services
and
all
non-audit
services
in
fiscal
2015
were
pre-approved
by
the
audit
committee.
The
audit
committee
has
determined
that
the
provisionof
the
non-audit
services
for
which
these
fees
were
rendered
is
compatible
with
maintaining
the
independent
auditor's
independence.PART
IV
ITEM
15.




EXHIBITS
AND
FINANCIAL
STATEMENT
SCHEDULES








(a)


(1)
Financial
Statements:
See
Index
to
Consolidated
Financial
Statements
on
page
F-1.







(3)


Exhibits:
See
Exhibits
Index
on
pages
102
to
10499Fee
Category
Fiscal
2015
Fiscal
2014
Audit
Fees(1)
$338,000
$337,000
Audit-Related
Fees(2)

85,000

25,000
Tax
Fees(3)

65,000

117,000
Total
Fees
$488,000
$479,000
(1)Audit
fees
consist
of
fees
for
the
audits
of
fiscal
2015
and
2014
and
quarterly
reviews
of
our
consolidated
financial
statements
andother
professional
services
provided
in
connection
with
statutory
and
regulatory
filings
or
engagements.
(2)Audit-related
fees
consist
of
fees
for
assurance
and
related
services
that
are
reasonably
related
to
the
performance
of
the
audit
andthe
review
of
our
consolidated
financial
statements
and
which
are
not
reported
under
"Audit
Fees."
(3)Tax
fees
for
fiscal
2015
and
fiscal
2014
include
fees
for
tax
advice,
tax
return
preparation
assistance
and
review.Table
of
ContentsSIGNATURES








Pursuant
to
the
requirements
of
Section
13
or
15(d)
of
the
Securities
Exchange
Act
of
1934,
the
registrant
has
duly
caused
this
report
to
be
signed
on
its
behalfby
the
undersigned,
thereunto
duly
authorized.







Pursuant
to
the
requirements
of
the
Securities
Exchange
Act
of
1934,
this
report
has
been
signed
below
by
the
following
persons
on
behalf
of
the
registrantand
in
the
capacities
and
on
the
dates
indicated:100

Onconova
Therapeutics,
Inc.Date:
March
28,
2016





By:
/s/
RAMESH
KUMAR
Ramesh
Kumar
Chief Executive OfficerSignature
Title
Date




/s/
RAMESH
KUMAR,
PH.D.
Ramesh
Kumar,
Ph.D.
Director,
President
and
Chief
Executive
Officer(Principal
Executive
Officer)
March
28,
2016/s/
MARK
GUERIN
Mark
Guerin
Vice
President,
Financial
Planning
&Accounting
(Principal
Financial
Officer)
March
28,
2016/s/
MICHAEL
B.
HOFFMAN
Michael
B.
Hoffman
Chairman,
Board
of
Directors
March
28,
2016/s/
HENRY
S.
BIENEN,
PH.D.
Henry
S.
Bienen,
Ph.D.
Director
March
28,
2016/s/
JEROME
E.
GROOPMAN,
M.D.
Jerome
E.
Groopman,
M.D.
Director
March
28,
2016/s/
JAMES
J.
MARINO
James
J.
Marino
Director
March
28,
2016/s/
VIREN
MEHTA
Viren
Mehta
Director
March
28,
2016Table
of
Contents101Signature
Title
Date




/s/
E.
PREMKUMAR
REDDY,
PH.D.
E.
Premkumar
Reddy,
Ph.D.
Director
March
28,
2016/s/
ANNE
M.
VANLENT
Anne
M.
VanLent
Director
March
28,
2016Table
of
ContentsEXHIBITS
INDEX
102Exhibit
Number
Exhibit
Description
3.1
Tenth
Amended
and
Restated
Certificate
of
Incorporation
of
Onconova
Therapeutics,
Inc.
(Incorporated byreference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on July 25, 2013).





3.2
Amended
and
Restated
Bylaws
of
Onconova
Therapeutics,
Inc.
(Incorporated by reference to Exhibit 3.1 to theCompany's Current Report on Form 8-K filed on July 25, 2013).





4.1
Form
of
Certificate
of
Common
Stock
(Incorporated by reference to Exhibit 4.1 to Pre-Effective Amendment No. 1the Company's Registration Statement on Form S-1 filed on July 11, 2013.)





4.2
Eighth
Amended
and
Restated
Stockholders'
Agreement,
effective
as
of
July
27,
2012,
by
and
among
OnconovaTherapeutics,
Inc.
and
certain
stockholders
named
therein
(Incorporated by reference to Exhibit 4.2to Pre-EffectiveAmendment No. 1 to the Company's Registration Statement on Form S-1 filed on July 11, 2013).





4.3
Amendment
No.
1
to
Eighth
Amended
and
Restated
Stockholders'
Agreement,
effective
as
of
July
9,
2013(Incorporated by reference to Exhibit 4.2 to Pre-Effective Amendment No. 1 the Company's Registration Statementon Form S-1 filed on July 11, 2013).





10.1*Development
and
License
Agreement,
effective
as
of
September
19,
2012,
by
and
between
OnconovaTherapeutics,
Inc.
and
Baxter
Healthcare
SA
(Incorporated by reference to Exhibit 10.1 to Pre-EffectiveAmendment No. 2 the Company's Registration Statement on Form S-1 filed on July 18, 2013).





10.2*License
Agreement,
effective
as
of
July
5,
2011,
by
and
between
Onconova
Therapeutics,
Inc.
and
SymBioPharmaceuticals
Limited
(Incorporated by reference to Exhibit 10.2 to Pre-Effective Amendment No. 2 theCompany's Registration Statement on Form S-1 filed on July 18, 2013).





10.3*First
Amendment
to
License
Agreement,
effective
as
of
September
2,
2011,
by
and
between
OnconovaTherapeutics,
Inc.
and
SymBio
Pharmaceuticals
Limited
(Incorporated by reference to Exhibit 10.3 to theCompany's Registration Statement on Form S-1 filed on June 14, 2013).





10.4*License
Agreement,
effective
as
of
January
1,
1999,
by
and
between
Onconova
Therapeutics,
Inc.
and
TempleUniversity—Of
The
Commonwealth
System
of
Higher
Education
(Incorporated by reference to Exhibit 10.4 to theCompany's Registration Statement on Form S-1 filed on June 14, 2013).





10.5*Amendment
to
License
Agreement,
effective
as
of
September
1,
2000,
by
and
between
Temple
University—Of
TheCommonwealth
System
of
Higher
Education
and
Onconova
Therapeutics,
Inc.
(Incorporated by reference toExhibit 10.5 to the Company's Registration Statement on Form S-1 filed on June 14, 2013).





10.6*Amendment
#1
to
Exclusive
License
Agreement,
effective
as
of
March
21,
2013,
by
and
between
TempleUniversity—Of
The
Commonwealth
System
of
Higher
Education
and
Onconova
Therapeutics,
Inc.
(Incorporatedby reference to Exhibit 10.6 to the Company's Registration Statement on Form S-1 filed on June 14, 2013).





10.7*Definitive
Agreement,
effective
as
of
May
12,
2010,
by
and
between
Onconova
Therapeutics,
Inc.
and
TheLeukemia
and
Lymphoma
Society
(Incorporated by reference to Exhibit 10.7 to the Company's RegistrationStatement on Form S-1 filed on June 14, 2013).Table
of
Contents103Exhibit
Number
Exhibit
Description
10.8*First
Amendment
to
Definitive
Agreement,
effective
as
of
June
23,
2011,
by
and
between
OnconovaTherapeutics,
Inc.
and
The
Leukemia
and
Lymphoma
Society
(Incorporated by reference to Exhibit 10.8 to theCompany's Registration Statement on Form S-1 filed on June 14, 2013).





10.9*Second
Amendment
to
Definitive
Agreement,
effective
as
of
May
29,
2012,
by
and
between
OnconovaTherapeutics,
Inc.
and
The
Leukemia
and
Lymphoma
Society
(Incorporated by reference to Exhibit 10.9 to theCompany's Registration Statement on Form S-1 filed on June 14, 2013).





10.10*Third
Amendment
to
Definitive
Agreement,
effective
as
of
January
5,
2013,
by
and
between
OnconovaTherapeutics,
Inc.
and
The
Leukemia
and
Lymphoma
Society
(Incorporated by reference to Exhibit 10.10 to theCompany's Registration Statement on Form S-1 filed on June 14, 2013).





10.11
Termination
of
Agreement,
effective
as
of
February
5,
2013,
by
and
between
Onconova
Therapeutics,
Inc.
and
TheLeukemia
and
Lymphoma
Society
(Incorporated by reference to Exhibit 10.11 to the Company's RegistrationStatement on Form S-1 filed on June 14, 2013).





10.12*Limited
Liability
Company
Agreement
of
GBO,
LLC,
dated
as
of
December
12,
2012,
by
and
between
OnconovaTherapeutics,
Inc.
and
GVK
Biosciences
Private
Limited
(Incorporated by reference to Exhibit 10.12 to theCompany's Registration Statement on Form S-1 filed on June 14, 2013).





10.13+Onconova
Therapeutics,
Inc.
2007
Equity
Compensation
Plan,
and
forms
of
agreement
thereunder
(Incorporated byreference to Exhibit 10.13 to Pre-Effective Amendment No. 1 the Company's Registration Statement on Form S-1filed on July 11, 2013).





10.14+Employment
Agreement,
effective
as
of
July
1,
2015,
by
and
between
Onconova
Therapeutics,
Inc.
and
RameshKumar,
Ph.D.
(Incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed onJuly 8, 2015).





10.15+Letter
Agreement,
effective
as
of
January
1,
2016,
by
and
between
Onconova
Therapeutics,
Inc.
and
RameshKumar,
Ph.D.
(Incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed onFebruary 17, 2016).





10.16+Amended
and
Restated
Employment
Agreement,
effective
as
of
July
1,
2015,
by
and
between
OnconovaTherapeutics,
Inc.
and
Thomas
McKearn,
M.D.,
Ph.D.
(Incorporated by reference to Exhibit 10.2 to the Company'sCurrent Report on Form 8-K filed on July 8, 2015).





10.17+Amended
and
Restated
Employment
Agreement,
effective
as
of
July
1,
2015,
by
and
between
OnconovaTherapeutics,
Inc.
and
Ajay
Bansal.
(Incorporated by reference to Exhibit 10.4 to the Company's Current Report onForm 8-K filed on July 8, 2015).





10.18+Consulting
Agreement,
effective
as
of
January
1,
2012,
by
and
between
Onconova
Therapeutics,
Inc.
and
E.Premkumar
Reddy,
Ph.D.,
including
Consultant
Agreement
Renewal,
dated
February
27,
2013
(Incorporated byreference to Exhibit 10.23 to the Company's Registration Statement on Form S-1 filed on June 14, 2013).





10.19+Form
of
Indemnification
Agreement
entered
into
by
and
between
Onconova
Therapeutics,
Inc.
and
each
directorand
executive
officer
(Incorporated by reference to Exhibit 10.24 to Pre-Effective Amendment No. 1 the Company'sRegistration Statement on Form S-1 filed on July 11, 2013).


Table
of
Contents104Exhibit
Number
Exhibit
Description
10.20+Onconova
Therapeutics,
Inc.
2013
Equity
Compensation
Plan,
and
forms
of
agreement
thereunder
(Incorporated byreference to Exhibit 10.25 to Pre-Effective Amendment No. 1 the Company's Registration Statement on Form S-1filed on July 11, 2013).





10.21+Onconova
Therapeutics,
Inc.
2013
Performance
Bonus
Plan
(Incorporated by reference to Exhibit 10.26 to Pre-Effective Amendment No. 1 the Company's Registration Statement on Form S-1 filed on July 11, 2013).





10.22+Employment
Agreement,
effective
as
of
July
1,
2015,
by
and
between
Onconova
Therapeutics,
Inc.
and
Dr.ManojManair.
(Incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K filed on July 8,2015).





10.23+Employment
Agreement,
effective
as
of
July
1,
2015,
by
and
between
Onconova
Therapeutics,
Inc.
and
MarkGuerin.
(Incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed onFebruary 17, 2016)





10.24+Amended
and
Restated
Employment
Agreement,
effective
as
of
July
1,
2015,
by
and
between
OnconovaTherapeutics,
Inc.
and
Steven
M.
Fruchtman,
M.D.
(Incorporated by reference to Exhibit 10.5 to the Company'sQuarterly Report on Form 10-Q filed on August 13, 2015).





21.1
Subsidiaries
of
Onconova
Therapeutics,
Inc.





23.1
Consent
of
Ernst
&
Young,
LLP.





31.1
Certification
of
Principal
Executive
Officer
pursuant
to
Section
302
of
the
Sarbanes-Oxley
Act
of
2002.





31.2
Certification
of
Principal
Financial
Officer
pursuant
to
Section
302
of
the
Sarbanes-Oxley
Act
of
2002.





32.1
Certification
of
Principal
Executive
Officer
pursuant
to
18
U.S.C.
Section
1350
as
adopted
pursuant
to
Section
906of
the
Sarbanes-Oxley
Act
of
2002.





32.2
Certification
of
Principal
Financial
Officer
pursuant
to
18
U.S.C.
Section
1350
as
adopted
pursuant
to
Section
906of
the
Sarbanes-Oxley
Act
of
2002.





101.INS
XBRL
Instance





101.SCH
XBRL
Taxonomy
Extension
Schema
Document





101.CAL
XBRL
Taxonomy
Extension
Calculation
Linkbase
Document





101.DEF
XBRL
Taxonomy
Extension
Calculation
Linkbase
Document





101.LAB
XBRL
Taxonomy
Extension
Labels
Linkbase
Document





101.PRE
XBRL
Taxonomy
Extension
Presentation
Linkbase
Document+Indicates
management
contract
or
compensatory
plan.
*Confidential
treatment
has
been
requested
with
respect
to
certain
portions
of
this
exhibit.
Omitted
portions
have
been
filed
separately
withthe
Securities
and
Exchange
Commission.Table
of
ContentsONCONOVA
THERAPEUTICS,
INC.
AND
SUBSIDIARIES
Index
to
Consolidated
Financial
Statements
F-1


Page
Report
of
Independent
Registered
Public
Accounting
Firm

F-2
Consolidated
Balance
Sheets,
December
31,
2015
and
2014

F-3
Consolidated
Statements
of
Operations,
Years
ended
December
31,
2015
and
2014

F-4
Consolidated
Statements
of
Comprehensive
Loss,
Years
ended
December
31,
2015
and
2014

F-5
Consolidated
Statements
of
Stockholders'
Equity,
Years
ended
December
31,
2015
and
2014

F-6
Consolidated
Statements
of
Cash
Flows,
Years
ended
December
31,
2015
and
2014

F-7
Notes
to
Consolidated
Financial
Statements

F-8
Table
of
ContentsReport
of
Independent
Registered
Public
Accounting
Firm
The
Board
of
Directors
and
Stockholders
of
Onconova
Therapeutics,
Inc.







We
have
audited
the
accompanying
consolidated
balance
sheets
of
Onconova
Therapeutics,
Inc.
as
of
December
31,
2015
and
2014,
and
the
relatedconsolidated
statements
of
operations,
comprehensive
loss,
stockholders'
equity
and
cash
flows
for
each
of
the
two
years
in
the
period
ended
December
31,
2015.These
financial
statements
are
the
responsibility
of
the
Company's
management.
Our
responsibility
is
to
express
an
opinion
on
these
financial
statements
based
onour
audits.







We
conducted
our
audits
in
accordance
with
the
standards
of
the
Public
Company
Accounting
Oversight
Board
(United
States).
Those
standards
require
thatwe
plan
and
perform
the
audit
to
obtain
reasonable
assurance
about
whether
the
financial
statements
are
free
of
material
misstatement.
We
were
not
engaged
toperform
an
audit
of
the
Company's
internal
control
over
financial
reporting.
Our
audits
included
consideration
of
internal
control
over
financial
reporting
as
a
basisfor
designing
audit
procedures
that
are
appropriate
in
the
circumstances,
but
not
for
the
purpose
of
expressing
an
opinion
on
the
effectiveness
of
the
Company'sinternal
control
over
financial
reporting.
Accordingly,
we
express
no
such
opinion.
An
audit
also
includes
examining,
on
a
test
basis,
evidence
supporting
theamounts
and
disclosures
in
the
financial
statements,
assessing
the
accounting
principles
used
and
significant
estimates
made
by
management,
and
evaluating
theoverall
consolidated
financial
statement
presentation.
We
believe
that
our
audits
provide
a
reasonable
basis
for
our
opinion.







In
our
opinion,
the
financial
statements
referred
to
above
present
fairly,
in
all
material
respects,
the
consolidated
financial
position
of
OnconovaTherapeutics,
Inc.
at
December
31,
2015
and
2014,
and
the
consolidated
results
of
its
operations
and
its
cash
flows
for
each
of
the
two
years
in
the
period
endedDecember
31,
2015,
in
conformity
with
U.S.
generally
accepted
accounting
principles.







The
accompanying
consolidated
financial
statements
have
been
prepared
assuming
that
the
Company
will
continue
as
a
going
concern.
As
discussed
in
Note
1to
the
consolidated
financial
statements,
the
Company
has
incurred
operating
losses
and
negative
cash
flows
from
operations
and
will
require
additional
capital
tofund
planned
operations.
These
conditions
raise
substantial
doubt
about
the
Company's
ability
to
continue
as
a
going
concern.
Management's
plans
in
regard
tothese
matters
are
also
described
in
Note
1.
The
consolidated
financial
statements
do
not
include
any
adjustments
that
might
result
from
the
outcome
of
thisuncertainty.F-2

/s/
Ernst
&
Young
LLPPhiladelphia,
Pennsylvania
March
28,
2016

Table
of
ContentsOnconova
Therapeutics,
Inc.
Consolidated
Balance
Sheets



See
accompanying
notes
to
consolidated
financial
statements.F-3


December
31,



2015
2014
Assets






Current
assets:






Cash
and
cash
equivalents
$19,799,000
$43,582,000
Receivables

1,504,000

132,000
Prepaid
expenses
and
other
current
assets

1,832,000

3,066,000
Restricted
cash

50,000

125,000
Total
current
assets

23,185,000

46,905,000
Property
and
equipment,
net

248,000

420,000
Other
non-current
assets

12,000

12,000
Total
assets
$23,445,000
$47,337,000
Liabilities
and
stockholders'
equity






Current
liabilities:






Accounts
payable
$3,421,000
$4,027,000
Accrued
expenses
and
other
current
liabilities

3,729,000

5,777,000
Deferred
revenue

455,000

455,000
Total
current
liabilities

7,605,000

10,259,000
Deferred
revenue,
non-current

5,000,000

13,455,000
Other

—

1,000
Total
liabilities

12,605,000

23,715,000
Commitments
and
contingencies






Stockholders'
equity:






Preferred
stock,
$0.01
par
value,
5,000,000
authorized
at
December
31,
2015
and
2014,none
issued
and
outstanding
at
December
31,
2015
and
2014

—

—
Common
stock,
$0.01
par
value,
75,000,000
authorized
at
December
31,
2015
and
2014,25,464,193
and
21,703,173
shares
issued
and
outstanding
at
December
31,
2015
and2014

255,000

217,000
Additional
paid
in
capital

328,334,000

317,122,000
Accumulated
other
comprehensive
income

(22,000)
(13,000)Accumulated
deficit

(318,557,000)
(294,578,000)Total
Onconova
Therapeutics,
Inc.
stockholders'
equity

10,010,000

22,748,000
Non-controlling
interest

830,000

874,000
Total
stockholders'
equity

10,840,000

23,622,000
Total
liabilities
and
stockholders'
equity
$23,445,000
$47,337,000
Table
of
ContentsOnconova
Therapeutics,
Inc.
Consolidated
Statements
of
Operations



See
accompanying
notes
to
consolidated
financial
statements.F-4


Years
ended
December
31,



2015
2014
Revenue
$11,456,000
$800,000
Operating
expenses:






General
and
administrative

9,533,000

15,119,000
Research
and
development

25,895,000

49,425,000
Total
operating
expenses

35,428,000

64,544,000
Loss
from
operations

(23,972,000)
(63,744,000)Change
in
fair
value
of
warrant
liability

—

20,000
Other
income,
net

(35,000)
(52,000)Net
loss
before
income
taxes

(24,007,000)
(63,776,000)Income
taxes

16,000

19,000
Net
loss

(24,023,000)
(63,795,000)Net
loss
attributable
to
non-controlling
interest

44,000

113,000
Net
loss
attributable
to
Onconova
Therapeutics,
Inc

(23,979,000)
(63,682,000)Net
loss
per
share
of
common
stock,
basic
and
diluted
$(1.05)$(2.94)Basic
and
diluted
weighted
average
shares
outstanding

22,739,760

21,653,536
Table
of
ContentsOnconova
Therapeutics,
Inc.
Consolidated
Statements
of
Comprehensive
Income
(Loss)



See
accompanying
notes
to
consolidated
financial
statements.F-5


Years
ended
December
31,



2015
2014
Net
loss
$(24,023,000)$(63,795,000)Other
comprehensive
income,
before
tax:






Foreign
currency
translation
adjustments,
net

(9,000)
(14,000)Other
comprehensive
income
(loss),
net
of
tax

(9,000)
(14,000)Comprehensive
income
(loss)

(24,032,000)
(63,809,000)Comprehensive
income
(loss)
attributable
to
non-controlling
interest

44,000

113,000
Comprehensive
income
(loss)
attributable
to
Onconova
Therapeutics,
Inc
$(23,988,000)$(63,696,000)Table
of
ContentsOnconova
Therapeutics,
Inc.
Consolidated
Statements
of
Stockholders'
Equity



See
accompanying
notes
to
consolidated
financial
statements.F-6


Stockholders'
Equity
(Deficit)



Common
Stock






Accumulated
other
comprehensive
income
(loss)









Additional
Paid
in
Capital
Accumulated
deficit
Non-
controlling
interest






Shares
Amount
Total
Balance
at
December
31,
2013

21,467,482

215,000

311,093,000

(230,896,000)
1,000

487,000

80,900,000
Net
loss

—

—

—

(63,682,000)
—

(113,000)
(63,795,000)Contribution
from
non-controlling
interest

—

—

—

—

—

500,000

500,000
Other
comprehensive
loss

—

—

—

—

(14,000)
—

(14,000)Exercise
of
stock
options

235,691

2,000

961,000

—

—

—

963,000
Stock-based
compensation

—

—

5,068,000

—

—

—

5,068,000
Balance
at
December
31,
2014

21,703,173
$217,000
$317,122,000
$(294,578,000)$(13,000)$874,000
$23,622,000
Net
loss

—

—

—

(23,979,000)
—

(44,000)
(24,023,000)Other
comprehensive
loss

—

—

—

—

(9,000)
—

(9,000)Stock-based
compensation

—

—

3,786,000

—

—

—

3,786,000
Issuance
of
common
stock,
net

3,761,920

38,000

7,426,000

—

—

—

7,464,000
Common
stock
surrendered

(900)
—

—

—

—

—

—
Balance
at
December
31,
2015

25,464,193
$255,000
$328,334,000
$(318,557,000)$(22,000)$830,000
$10,840,000
Table
of
ContentsOnconova
Therapeutics,
Inc.
Consolidated
Statements
of
Cash
Flows



See
accompanying
notes
to
consolidated
financial
statements.F-7


Year
Ended
December
31,



2015
2014
Operating
activities:






Net
loss
$(24,023,000)$(63,795,000)Adjustment
to
reconcile
net
loss
to
net
cash
(used
in)
provided
by
operating
activities:






Depreciation
and
amortization

150,000

434,000
Loss
on
asset
disposal

22,000

—
Change
in
fair
value
of
warrant
liabilities

—

(20,000)Treasury
note
discount
amortization

—

(6,000)Stock
compensation
expense

3,786,000

5,068,000
Changes
in
assets
and
liabilities:






Receivables

(1,372,000)
(31,000)Prepaid
expenses
and
other
current
assets

1,234,000

1,220,000
Restricted
cash

75,000

—
Accounts
payable

(606,000)
317,000
Accrued
expenses
and
other
current
liabilities

(2,048,000)
(43,000)Other
liabilites

(1,000)
(5,000)Deferred
revenue

(8,455,000)
(787,000)Net
cash
used
in
operating
activities

(31,238,000)
(57,648,000)Investing
activities:






Payments
for
purchase
of
property
and
equipment

—

(228,000)Maturities
of
marketable
securities

—

40,000,000
Net
cash
provided
by
investing
activities

—

39,772,000
Financing
activities:






Proceeds
from
the
sale
of
common
stock,
net
of
costs

7,464,000

—
Proceeds
from
the
exercise
of
stock
options

—

963,000
Contribution
from
non-controlling
interest

—

500,000
Net
cash
provided
by
financing
activities

7,464,000

1,463,000
Effect
of
foreign
currency
translation
on
cash

(9,000)
(14,000)Net
decrease
in
cash
and
cash
equivalents

(23,783,000)
(16,427,000)Cash
and
cash
equivalents
at
beginning
of
period

43,582,000

60,009,000
Cash
and
cash
equivalents
at
end
of
period
$19,799,000
$43,582,000
Table
of
ContentsOnconova
Therapeutics,
Inc.
Notes
to
Consolidated
Financial
Statements
1.
Nature
of
BusinessThe
Company








Onconova
Therapeutics,
Inc.
(the
"Company")
was
incorporated
in
the
State
of
Delaware
on
December
22,
1998
and
commenced
operations
on
January
1,1999.
The
Company's
headquarters
are
located
in
Newtown,
Pennsylvania.
The
Company
is
a
clinical-stage
biopharmaceutical
company
focused
on
discoveringand
developing
novel
small
molecule
drug
candidates
to
treat
cancer.
Using
its
proprietary
chemistry
platform,
the
Company
has
created
an
extensive
library
oftargeted
anti-cancer
agents
designed
to
work
against
specific
cellular
pathways
that
are
important
to
cancer
cells.
The
Company
believes
that
the
drug
candidates
inits
pipeline
have
the
potential
to
be
efficacious
in
a
variety
of
cancers.
The
Company
has
three
clinical-stage
product
candidates
and
several
preclinical
programs.To
accelerate
and
broaden
the
development
of
rigosertib,
the
Company's
most
advanced
product
candidate,
the
Company
entered
into
a
development
and
licenseagreement
in
2012
with
Baxter
Healthcare
SA
("BHSA").
Subsequently,
Baxter
International
Inc.("Baxter")
assigned
the
development
and
license
agreement
fromBHSA
to
Baxalta
GmbH
("Baxalta"),
in
preparation
for
the
anticipated
spin-off
by
Baxter
of
Baxalta
Incorporated.
The
spin-off
was
effective
on
July
1,
2015.
TheCompany
understands
that
Baxalta
is
an
indirect
wholly-owned
subsidiary
of
Baxalta
Incorporated.
The
development
and
license
agreement
granted
Baxalta
anexclusive,
royalty-bearing
license
for
the
research,
development,
commercialization
and
manufacture
(in
specified
instances)
of
rigosertib
in
all
therapeuticindications
in
Europe
(the
"Baxalta
Territory").
On
March
3,
2016,
the
Company
received
a
notification
of
Baxalta's
election
to
terminate
the
development
andlicense
agreement
based
on
a
strategic
reprioritization
review,
effective
August
30,
2016.
In
2011,
the
Company
entered
into
a
license
agreement,
as
subsequentlyamended,
with
SymBio
Pharmaceuticals
Limited
("SymBio"),
which
grants
SymBio
certain
rights
to
commercialize
rigosertib
in
Japan
and
Korea.
The
Companyhas
retained
development
and
commercialization
rights
to
rigosertib
in
the
rest
of
the
world,
including
the
United
States.
During
2012,
Onconova
Europe
GmbHwas
established
as
a
wholly
owned
subsidiary
of
the
Company
for
the
purpose
of
further
developing
business
in
Europe.
In
April
2013,
GBO,
LLC,
a
Delawarelimited
liability
company,
("GBO")
was
formed
pursuant
to
an
agreement
with
GVK
Biosciences
Private
Limited,
a
private
limited
company
located
in
India,("GVK")
to
collaborate
and
develop
two
programs
using
the
Company's
technology
platform.
The
two
preclinical
programs
sublicensed
to
GBO
have
not
beendeveloped
to
clinical
stage
as
initially
hoped,
and
the
Company
is
in
discussions
with
GVK
regarding
the
future
of
GBO.Liquidity








The
Company
has
incurred
recurring
operating
losses
since
inception.
For
the
year
ended
December
31,
2015,
the
Company
incurred
a
net
loss
of
$24,023,000and
as
of
December
31,
2015
the
Company
had
generated
an
accumulated
deficit
of
$318,557,000.
The
Company
anticipates
operating
losses
to
continue
for
theforeseeable
future
due
to,
among
other
things,
costs
related
to
research,
development
of
its
product
candidates
and
its
preclinical
programs,
strategic
alliances
andits
administrative
organization.
The
Company
will
require
substantial
additional
financing
to
fund
its
operations
and
to
continue
to
execute
its
strategy.







From
its
inception
through
July
2013,
the
Company
raised
significant
capital
through
the
issuance
of
redeemable
convertible
preferred
stock,
par
value
$0.01per
share,
in
ten
series
denominated
as
Series
A
through
Series
J
("Series
A
Preferred
Stock"
through
"Series
J
Preferred
Stock,"
respectively,
and
collectively
the"Preferred
Stock").
On
July
30,
2013,
the
Company
completed
its
initial
public
offering
(the
"IPO")
of
5,941,667
shares
of
the
Company's
common
stock,
par
value$0.01
per
shareF-8Table
of
ContentsOnconova
Therapeutics,
Inc.Notes
to
Consolidated
Financial
Statements
(Continued)1.
Nature
of
Business
(Continued)("Common
Stock"),
at
a
price
of
$15.00
per
share,
including
775,000
shares
of
Common
Stock
issued
upon
the
exercise
in
full
by
the
underwriters
of
their
optionto
purchase
additional
shares
at
the
same
price
to
cover
over-allotments.
The
Company
received
net
proceeds
of
$79,811,000
from
the
sale,
net
of
underwritingdiscounts
and
commissions
and
other
estimated
offering
expenses.
Immediately
prior
to
the
consummation
of
the
IPO,
all
outstanding
shares
of
Preferred
Stockautomatically
converted
into
shares
of
Common
Stock
at
the
applicable
conversion
ratio
then
in
effect.







In
October
2014,
the
Company
entered
into
a
sales
agreement
(the
"Sales
Agreement")
with
Cantor
Fitzgerald
&
Co.
("Cantor")
to
create
an
at-the-marketequity
program
under
which
the
Company
from
time
to
time
may
offer
and
sell
shares
of
its
Common
Stock,
having
an
aggregate
offering
price
of
up
to$20,000,000
through
Cantor
(see
Note
15).
Net
proceeds
from
sales
of
Common
Stock
under
this
program
were
$6,018,000
during
the
year
ended
December
31,2015.
The
Cantor
Sales
Agreement
was
terminated
on
January
5,
2016.







In
October
2015
the
Company
entered
into
a
purchase
agreement
(the
"Purchase
Agreement")
with
Lincoln
Park
Capital
Fund,
LLC
("Lincoln
Park").
Uponsigning
of
the
Purchase
Agreement,
Lincoln
Park
purchased
846,755
shares
of
the
Company's
Common
Stock
for
$1,500,000.
Under
the
Purchase
Agreement,
theCompany
may
from
time
to
time,
after
the
effectiveness
of
a
registration
statement
covering
such
shares,
offer
and
sell
additional
shares
of
its
Common
Stock,having
an
aggregate
offering
price
of
up
to
$15,000,000
to
Lincoln
Park.
On
January
5,
2016,
the
Company
entered
into
a
Securities
Purchase
Agreement
with
aninstitutional
investor
(the
"Investor")
providing
for
the
issuance
and
sale
by
the
Company
of
1,936,842
shares
of
the
Company's
common
stock
and
warrants
topurchase
968,421
shares
of
the
Company's
common
stock
for
aggregate
net
proceeds
of
$1,646,000.
(See
Note
16)







During
2015,
the
Company
implemented
cost-reduction
programs
to
reduce
its
operating
losses.
These
programs
may
delay,
scale-back,
or
eliminate
certainof
the
Company's
research
and
development
activities
and
other
aspects
of
its
operations
until
such
time
as
the
Company
is
successful
in
securing
adequateadditional
funding.
The
Company
is
also
exploring
various
dilutive
and
non-dilutive
sources
of
funding,
including
equity
and
debt
financings,
strategic
alliances,business
development
and
other
sources.
Such
financings
would
be
used
to
fund
future
research
and
development
programs,
including
clinical
trials
for
which
theCompany
does
not
currently
have
the
resources
to
fund,
and
the
future
success
of
the
Company
is
dependent
upon
its
ability
to
obtain
additional
financing.
Therecan
be
no
assurance,
however,
that
the
Company
will
be
successful
in
obtaining
such
financing
at
the
level
needed
to
complete
its
research
and
developmentprograms,
on
terms
acceptable
to
the
Company,
or
at
all,
or
that
the
Company
will
obtain
approvals
necessary
to
market
its
products
or
achieve
profitability
orsustainable,
positive
cash
flow.
These
factors
raise
substantial
doubt
about
the
Company's
ability
to
continue
as
a
going
concern.2.
Summary
of
Significant
Accounting
PoliciesBasis
of
Presentation








The
consolidated
financial
statements
are
prepared
in
conformity
with
accounting
principles
generally
accepted
in
the
United
States
("GAAP").
The
financialstatements
include
the
consolidated
accounts
of
the
Company,
its
wholly-owned
subsidiary,
Onconova
Europe
GmbH,
and
GBO.
All
significant
intercompanytransactions
have
been
eliminated.F-9Table
of
ContentsOnconova
Therapeutics,
Inc.Notes
to
Consolidated
Financial
Statements
(Continued)2.
Summary
of
Significant
Accounting
Policies
(Continued)Segment
Information








Operating
segments
are
defined
as
components
of
an
enterprise
about
which
separate
discrete
information
is
available
for
evaluation
by
the
chief
operatingdecision
maker,
or
decision-making
group,
in
deciding
how
to
allocate
resources
and
in
assessing
performance.
The
Company
views
its
operations
and
manages
itsbusiness
in
one
segment,
which
is
the
identification
and
development
of
oncology
therapeutics.Use
of
Estimates








The
preparation
of
financial
statements
in
conformity
with
GAAP
requires
management
to
make
estimates
and
assumptions
that
affect
the
reported
amountsof
assets,
liabilities,
revenues,
expenses,
other
comprehensive
income
and
related
disclosures.
On
an
ongoing
basis,
management
evaluates
its
estimates,
includingestimates
related
to
clinical
trial
accruals,
warrant
liability,
and
allocation
of
consideration
to
multiple
element
collaborative
arrangements.
The
Company
bases
itsestimates
on
historical
experience
and
other
market-specific
or
other
relevant
assumptions
that
it
believes
to
be
reasonable
under
the
circumstances.
Actual
resultsmay
differ
from
those
estimates
or
assumptions.Concentrations
of
Credit
Risk
and
Off-Balance
Sheet
Risk








Financial
instruments
that
potentially
subject
the
Company
to
concentrations
of
credit
risk
are
primarily
cash,
cash
equivalents,
restricted
cash
and
marketablesecurities.
The
Company
maintains
a
portion
of
its
cash
and
cash
equivalent
balances
in
the
form
of
money
market
accounts
with
financial
institutions
thatmanagement
believes
are
creditworthy.
Marketable
securities
are
invested
in
U.S.
Treasury
obligations.
The
Company
has
no
financial
instruments
with
off-balance
sheet
risk
of
loss.Cash
and
Cash
Equivalents








The
Company
considers
all
highly
liquid
investments
with
original
or
remaining
maturity
from
the
date
of
purchase
of
three
months
or
less
to
be
cashequivalents.
Cash
and
cash
equivalents
include
bank
demand
deposits,
marketable
securities
with
maturities
of
three
months
or
less
at
purchase,
and
money
marketfunds
that
invest
primarily
in
certificates
of
deposit,
commercial
paper
and
U.S.
government
and
U.S.
government
agency
obligations.
Cash
equivalents
arereported
at
fair
value.Fair
Value
of
Financial
Instruments








The
carrying
amounts
reported
in
the
accompanying
consolidated
financial
statements
for
cash
and
cash
equivalents,
accounts
payable
and
accrued
liabilitiesapproximate
their
respective
fair
values
because
of
the
short-term
nature
of
these
accounts.Property
and
Equipment








Property
and
equipment
are
stated
at
cost,
less
accumulated
depreciation.
Property
and
equipment
are
depreciated
using
the
straight-line
method
over
theestimated
useful
lives
of
the
assets.
Leasehold
improvements
are
amortized
over
the
useful
life
of
the
asset
or
the
lease
term,
whichever
is
shorter.F-10Table
of
ContentsOnconova
Therapeutics,
Inc.Notes
to
Consolidated
Financial
Statements
(Continued)2.
Summary
of
Significant
Accounting
Policies
(Continued)Maintenance
and
repairs
are
expensed
as
incurred.
The
following
estimated
useful
lives
were
used
to
depreciate
the
Company's
assets:







Upon
retirement
or
sale,
the
cost
of
the
disposed
asset
and
the
related
accumulated
depreciation
are
removed
from
the
accounts
and
any
resulting
gain
or
lossis
recognized.







The
Company
reviews
long-lived
assets
for
impairment
when
events
or
changes
in
circumstances
indicate
that
the
carrying
value
of
the
assets
may
not
berecoverable.
Recoverability
is
measured
by
comparison
of
the
assets'
book
value
to
future
net
undiscounted
cash
flows
that
the
assets
are
expected
to
generate.
Ifsuch
assets
are
considered
to
be
impaired,
the
impairment
to
be
recognized
is
measured
by
the
amount
by
which
the
book
value
of
the
assets
exceeds
their
fairvalue,
which
is
measured
based
on
the
projected
discounted
future
net
cash
flows
generated
from
the
assets.
No
impairment
losses
have
been
recorded
throughDecember
31,
2015.Restricted
Cash








Under
one
of
the
Company's
office
leases,
the
Company
is
required
to
provide
the
landlord
a
$125,000
letter
of
credit,
which
is
secured
by
cash
collateralrecorded
as
restricted
cash
on
the
consolidated
balance
sheet
as
of
December
31,
2014.
The
letter
of
credit
expired
in
March
2015
and
the
restriction
on
cash
wasdiscontinued.
In
February
2015,
the
Company
was
required
to
provide
a
$50,000
letter
of
credit
to
a
surety
company
related
to
the
Company's
internationalshipments,
which
is
secured
by
cash
collateral
recorded
as
restricted
cash
on
the
consolidated
balance
sheet
as
of
December
31,
2015.Foreign
Currency
Translation








The
reporting
currency
of
the
Company
and
its
U.S.
subsidiaries
is
the
U.S.
dollar.
The
functional
currency
of
the
Company's
non-U.S.
subsidiary
is
the
localcurrency.
Assets
and
liabilities
of
the
foreign
subsidiary
are
translated
into
U.S.
dollars
based
on
exchange
rates
at
the
end
of
the
period.
Revenues
and
expensesare
translated
at
average
exchange
rates
during
the
reporting
period.
Gains
and
losses
arising
from
the
translation
of
assets
and
liabilities
are
included
as
acomponent
of
accumulated
other
comprehensive
income.
Gains
and
losses
resulting
from
foreign
currency
transactions
are
reflected
within
the
Company's
resultsof
operations.
The
Company
has
not
utilized
any
foreign
currency
hedging
strategies
to
mitigate
the
effect
of
its
foreign
currency
exposure.Revenue
Recognition








The
Company's
revenue
is
generated
primarily
through
collaborative
research
and
license
agreements.
The
terms
of
these
agreements
contain
multipledeliverables
which
may
include
(i)
licenses,
(ii)
research
and
development
activities,
(iii)
participation
in
joint
steering
committees
and
(iv)
product
supply.
Theterms
of
these
agreements
may
include
nonrefundable
upfront
license
fees,F-11


Estimated
Useful
LifeLab
equipment
5
-
6
yearsSoftware
3
yearsComputer
and
office
equipment
5
-
6
yearsLeasehold
improvements
Shorter
of
the
lease
term
or
estimated
useful
lifeTable
of
ContentsOnconova
Therapeutics,
Inc.Notes
to
Consolidated
Financial
Statements
(Continued)2.
Summary
of
Significant
Accounting
Policies
(Continued)payments
for
research
and
development
activities,
payments
based
upon
the
achievement
of
certain
milestones,
royalty
payments
based
on
product
sales
derivedfrom
the
collaboration,
and
payments
for
supplying
product.
In
all
instances,
revenue
is
recognized
only
when
the
price
is
fixed
or
determinable,
persuasiveevidence
of
an
arrangement
exists,
delivery
has
occurred
or
the
services
have
been
rendered,
collectability
of
the
resulting
receivable
is
reasonably
assured,
and
theCompany
has
fulfilled
its
performance
obligations
under
the
contract.







For
arrangements
with
multiple
elements,
the
Company
recognizes
revenue
in
accordance
with
the
Financial
Accounting
Standards
Board
("FASB")Accounting
Standards
Update
("ASU")
No.
2009-13,
Multiple-Deliverable Revenue Arrangements ("ASU
2009-13"),
which
provides
guidance
for
separating
andallocating
consideration
in
a
multiple
element
arrangement.
The
selling
prices
of
deliverables
under
an
arrangement
may
be
derived
using
third-party
evidence("TPE"),
or
a
best
estimate
of
selling
price
("BESP"),
if
vendor-specific
objective
evidence
of
selling
price
("VSOE")
is
not
available.
The
objective
of
BESP
is
todetermine
the
price
at
which
the
Company
would
transact
a
sale
if
the
element
within
the
license
agreement
was
sold
on
a
standalone
basis.
Establishing
BESPinvolves
management's
judgment
and
considers
multiple
factors,
including
market
conditions
and
company-specific
factors,
including
those
factors
contemplatedin
negotiating
the
agreements,
as
well
as
internally
developed
models
that
include
assumptions
related
to
market
opportunity,
discounted
cash
flows,
estimateddevelopment
costs,
probability
of
success
and
the
time
needed
to
commercialize
a
product
candidate
pursuant
to
the
license.
In
validating
the
BESP,
managementconsiders
whether
changes
in
key
assumptions
used
to
determine
the
BESP
will
have
a
significant
effect
on
the
allocation
of
the
arrangement
considerationbetween
the
multiple
deliverables.
The
Company
may
use
third-party
valuation
specialists
to
assist
it
in
determining
BESP.
Deliverables
under
the
arrangement
areseparate
units
of
accounting
if
(i)
the
delivered
item
has
value
to
the
customer
on
a
standalone
basis
and
(ii)
if
the
arrangement
includes
a
general
right
of
returnrelative
to
the
delivered
item,
delivery
or
performance
of
the
undelivered
item
is
considered
probable
and
substantially
within
the
Company's
control.
Thearrangement
consideration
that
is
fixed
or
determinable
at
the
inception
of
the
arrangement
is
allocated
to
the
separate
units
of
accounting
based
on
their
relativeselling
prices.
The
appropriate
revenue
recognition
model
is
applied
to
each
element
and
revenue
is
accordingly
recognized
as
each
element
is
delivered.Management
exercises
significant
judgment
in
determining
whether
a
deliverable
is
a
separate
unit
of
accounting.







In
determining
the
separate
units
of
accounting,
the
Company
evaluates
whether
the
license
has
standalone
value
to
the
collaborator
based
on
consideration
ofthe
relevant
facts
and
circumstances
for
each
arrangement.
Factors
considered
in
this
determination
include
the
research
and
development
capabilities
of
thecollaborator
and
the
availability
of
relevant
research
expertise
in
the
marketplace.
In
addition,
the
Company
considers
whether
or
not
(i)
the
collaborator
could
usethe
license
for
its
intended
purpose
without
the
receipt
of
the
remaining
deliverables,
(ii)
the
value
of
the
license
was
dependent
on
the
undelivered
items
and(iii)
the
collaborator
or
other
vendors
could
provide
the
undelivered
items.







Under
a
collaborative
research
and
license
agreement,
a
steering
committee
is
typically
responsible
for
overseeing
the
general
working
relationships,determining
the
protocols
to
be
followed
in
the
research
and
development
performed
and
evaluating
the
results
from
the
continued
development
of
the
product.
TheCompany
evaluates
whether
its
participation
in
joint
steering
committees
is
a
substantive
obligation
or
whether
the
services
are
considered
inconsequential
orperfunctory.
The
factors
the
Company
considers
in
determining
if
its
participation
in
a
joint
steering
committee
is
a
substantiveF-12Table
of
ContentsOnconova
Therapeutics,
Inc.Notes
to
Consolidated
Financial
Statements
(Continued)2.
Summary
of
Significant
Accounting
Policies
(Continued)obligation
include:
(i)
which
party
negotiated
or
requested
the
steering
committee,
(ii)
how
frequently
the
steering
committee
meets,
(iii)
whether
or
not
there
areany
penalties
or
other
recourse
if
the
Company
does
not
attend
the
steering
committee
meetings,
(iv)
which
party
has
decision
making
authority
on
the
steeringcommittee
and
(v)
whether
or
not
the
collaborator
has
the
requisite
experience
and
expertise
associated
with
the
research
and
development
of
the
licensedintellectual
property.







Whenever
the
Company
determines
that
an
element
is
delivered
over
a
period
of
time,
revenue
is
recognized
using
either
a
proportional
performance
model,
ifa
pattern
of
performance
can
be
determined
or
a
straight-line
model
over
the
period
of
performance,
which
is
typically
the
research
and
development
term.
Progressachieved
under
the
Company's
various
clinical
research
organization
contracts
are
typically
used
as
the
measure
of
performance
when
applying
the
proportionalperformance
method.
At
the
end
of
each
reporting
period,
the
Company
reassesses
its
cumulative
measure
of
performance
and
makes
appropriate
adjustments,
ifnecessary.
The
Company
recognizes
revenue
using
the
proportional
performance
model
whenever
the
Company
is
able
to
make
reasonably
reliable
estimates
of
thelevel
of
effort
required
to
complete
its
performance
obligations
under
an
arrangement.
Revenue
recognized
under
the
proportional
performance
model
at
eachreporting
period
is
determined
by
multiplying
the
total
expected
payments
under
the
contract
(excluding
royalties
and
payments
contingent
upon
achievement
ofmilestones)
by
the
ratio
of
the
level
of
effort
incurred
to
date
to
the
estimated
total
level
of
effort
required
to
complete
the
performance
obligations
under
thearrangement.
Revenue
is
limited
to
the
lesser
of
the
cumulative
amount
of
payments
received
or
the
cumulative
amount
of
revenue
earned,
as
determined
using
theproportional
performance
model
as
of
each
reporting
period.
Alternatively,
if
the
Company
is
not
able
to
make
reasonably
reliable
estimates
of
the
level
of
effortrequired
to
complete
its
performance
obligations
under
an
arrangement,
then
revenue
under
the
arrangement
is
recognized
on
a
straight-line
basis
over
the
periodexpected
to
be
required
to
complete
the
Company's
performance
obligations.







Incentive
milestone
payments
may
be
triggered
either
by
the
results
of
the
Company's
research
efforts
or
by
events
external
to
it,
such
as
regulatory
approvalto
market
a
product
or
attaining
agreed-upon
sales
levels.
Consideration
that
is
contingent
upon
achievement
of
a
milestone
is
recognized
in
its
entirety
as
revenuein
the
period
in
which
the
milestone
is
achieved,
but
only
if
the
consideration
earned
from
the
achievement
of
a
milestone
meets
all
the
criteria
for
the
milestone
tobe
considered
substantive
at
the
inception
of
the
arrangement.
For
a
milestone
to
be
considered
substantive,
the
consideration
earned
by
achieving
the
milestonemust
(i)
be
commensurate
with
either
the
Company's
performance
to
achieve
the
milestone
or
the
enhancement
of
the
value
of
the
item
delivered
as
a
result
of
aspecific
outcome
resulting
from
the
Company's
performance
to
achieve
the
milestone,
(ii)
relate
solely
to
past
performance
and
(iii)
be
reasonable
relative
to
alldeliverables
and
payment
terms
in
the
collaboration
agreement.







For
events
for
which
the
occurrences
are
contingent
solely
upon
the
passage
of
time
or
are
the
result
of
performance
by
a
third
party,
the
contingent
paymentswill
be
recognized
as
revenue
when
payments
are
earned,
the
amounts
are
fixed
and
determinable
and
collectability
is
reasonably
assured.







Royalties
are
recorded
as
earned
in
accordance
with
the
contract
terms
when
third
party
sales
can
be
reliably
measured
and
collectability
is
reasonablyassured.F-13Table
of
ContentsOnconova
Therapeutics,
Inc.Notes
to
Consolidated
Financial
Statements
(Continued)2.
Summary
of
Significant
Accounting
Policies
(Continued)Research
and
Development
Expenses








Research
and
development
costs
are
charged
to
expense
as
incurred.
These
costs
include,
but
are
not
limited
to,
license
fees
related
to
the
acquisition
of
in-licensed
products;
employee-related
expenses,
including
salaries,
benefits
and
travel;
expenses
incurred
under
agreements
with
contract
research
organizations
andinvestigative
sites
that
conduct
clinical
trials
and
preclinical
studies;
the
cost
of
acquiring,
developing
and
manufacturing
clinical
trial
materials;
facilities,depreciation
and
other
expenses,
which
include
direct
and
allocated
expenses
for
rent
and
maintenance
of
facilities,
insurance
and
other
supplies;
and
costsassociated
with
preclinical
activities
and
regulatory
operations.







Costs
for
certain
development
activities,
such
as
clinical
trials,
are
recognized
based
on
an
evaluation
of
the
progress
to
completion
of
specific
tasks
using
datasuch
as
patient
enrollment,
clinical
site
activations,
or
information
provided
to
the
Company
by
its
vendors
with
respect
to
their
actual
costs
incurred.
Payments
forthese
activities
are
based
on
the
terms
of
the
individual
arrangements,
which
may
differ
from
the
pattern
of
costs
incurred,
and
are
reflected
in
the
consolidatedfinancial
statements
as
prepaid
or
accrued
research
and
development
expense,
as
the
case
may
be.Comprehensive
Loss







Comprehensive
loss
is
defined
as
the
change
in
equity
of
a
business
enterprise
during
a
period
from
transactions
and
other
events
and
circumstances
from
non-owner
sources.Income
Taxes








The
Company
accounts
for
income
taxes
under
the
asset
and
liability
method.
Deferred
tax
assets
and
liabilities
are
recognized
for
the
future
tax
consequencesattributable
to
differences
between
the
financial
statement
carrying
amounts
of
existing
assets
and
liabilities
and
their
respective
tax
bases
using
enacted
tax
rates
ineffect
for
the
year
in
which
the
differences
are
expected
to
affect
taxable
income.
The
deferred
tax
asset
primarily
includes
net
operating
loss
and
tax
credit
carryforwards,
accrued
expenses
not
currently
deductible
and
the
cumulative
temporary
differences
related
to
certain
research
and
patent
costs,
which
have
beencharged
to
expense
in
the
accompanying
statements
of
operations
but
have
been
recorded
as
assets
for
income
tax
purposes.
The
portion
of
any
deferred
tax
assetfor
which
it
is
more
likely
than
not
that
a
tax
benefit
will
not
be
realized
must
then
be
offset
by
recording
a
valuation
allowance.
A
full
valuation
allowance
hasbeen
established
against
all
of
the
deferred
tax
assets
(see
Note
7,
"Income
Taxes"),
as
it
is
more
likely
than
not
that
these
assets
will
not
be
realized
given
theCompany's
history
of
operating
losses.
The
Company
recognizes
the
tax
benefit
from
an
uncertain
tax
position
only
if
it
is
more
likely
than
not
to
be
sustainedupon
examination
based
on
the
technical
merits
of
the
position.
The
amount
for
which
an
exposure
exists
is
measured
as
the
largest
amount
of
benefit
determinedon
a
cumulative
probability
basis
that
the
Company
believes
is
more
likely
than
not
to
be
realized
upon
ultimate
settlement
of
the
position.Stock-Based
Compensation
Expense








The
Company
applies
the
provisions
of
FASB
Accounting
Standards
Codification
("ASC")
Topic
718,
Compensation—Stock
Compensation
("ASC
718"),which
requires
the
measurement
and
recognition
of
compensation
expense
for
all
stock-based
awards
made
to
employees
and
non-employees,
including
employeestock
options.F-14Table
of
ContentsOnconova
Therapeutics,
Inc.Notes
to
Consolidated
Financial
Statements
(Continued)2.
Summary
of
Significant
Accounting
Policies
(Continued)







At
certain
times
throughout
the
Company's
history,
the
chairman
of
the
Company's
board
of
directors,
who
is
also
a
significant
stockholder
of
the
Company(the
"Significant
Holder"),
afforded
option
holders
the
opportunity
for
liquidity
in
transactions
in
which
options
were
exercised
and
the
shares
of
Common
Stockissued
in
connection
therewith
were
simultaneously
purchased
by
the
Significant
Holder
(each,
a
"Purchase
Transaction")
(See
Note
8).
Because
the
Company
hadestablished
a
pattern
of
providing
cash
settlement
alternatives
for
option
holders,
the
Company
accounted
for
its
stock-based
compensation
awards
as
liabilityawards.
The
Company
measured
liability
awards
based
on
the
award's
intrinsic
value
on
the
grant
date
and
then
re-measured
them
at
each
reporting
date
until
thedate
of
settlement.
Compensation
expense
was
recognized
on
a
straight-line
basis
over
the
requisite
service
period
for
each
separately
vesting
portion
of
the
award.Compensation
expense
for
each
period
until
settlement
was
based
on
the
change
in
intrinsic
value
(or
a
portion
of
the
change
in
intrinsic
value,
depending
on
thepercentage
of
the
requisite
service
that
has
been
rendered
at
the
reporting
date).
Changes
in
the
intrinsic
value
of
a
liability
that
occur
after
the
end
of
the
requisiteservice
period
were
considered
compensation
expense
in
the
period
in
which
the
changes
occur.
On
April
23,
2013,
the
Company
distributed
a
notification
letter
toall
equity
award
holders
under
the
2007
Plan
advising
them
that
Purchase
Transactions
would
no
longer
occur,
unless,
at
the
time
of
a
Purchase
Transaction,
theoption
holder
has
held
the
Common
Stock
issued
upon
exercise
of
options
for
a
period
of
greater
than
six
months
prior
to
selling
such
Common
Stock
to
theSignificant
Holder
and
that
any
such
sale
to
the
Significant
Holder
would
be
at
the
fair
value
of
the
Common
Stock
on
the
date
of
such
sale.
Based
on
these
newcriteria
for
Purchase
Transactions,
the
Company
remeasured
options
outstanding
under
the
2007
Plan
as
of
April
23,
2013
to
their
intrinsic
value
and
reclassifiedsuch
options
from
liabilities
to
stockholders'
deficit
within
the
Company's
consolidated
balance
sheets,
which
amounted
to
$14,482,000.
The
remaining
expense
forthese
options
is
being
recognized
on
a
straight-line
basis
over
the
remaining
requisite
service
period.







Share-based
payment
transactions
with
employees,
including
grants
of
employee
stock
options,
are
recognized
as
compensation
expense
over
the
requisiteservice
period
based
on
their
estimated
fair
values.
ASC
718
also
requires
significant
judgment
and
the
use
of
estimates,
particularly
surrounding
Black-Scholesassumptions
such
as
stock
price
volatility
over
the
option
term
and
expected
option
lives,
as
well
as
expected
option
forfeiture
rates,
to
estimate
the
grant
date
fairvalue
of
equity-based
compensation
and
requires
the
recognition
of
the
fair
value
of
stock
compensation
in
the
statement
of
operations.Clinical
Trial
Expense
Accruals








As
part
of
the
process
of
preparing
its
financial
statements,
the
Company
is
required
to
estimate
its
expenses
resulting
from
its
obligations
under
contractswith
vendors,
clinical
research
organizations
and
consultants
and
under
clinical
site
agreements
in
connection
with
conducting
clinical
trials.
The
financial
terms
ofthese
contracts
are
subject
to
negotiations,
which
vary
from
contract
to
contract
and
may
result
in
payment
flows
that
do
not
match
the
periods
over
whichmaterials
or
services
are
provided
under
such
contracts.
The
Company's
objective
is
to
reflect
the
appropriate
trial
expenses
in
its
financial
statements
by
matchingthose
expenses
with
the
period
in
which
services
are
performed
and
efforts
are
expended.
The
Company
accounts
for
these
expenses
according
to
the
progress
ofthe
trial
as
measured
by
patient
progression
and
the
timing
of
various
aspects
of
the
trial.
The
Company
determines
accrual
estimates
through
financial
modelstaking
into
account
discussion
with
applicable
personnel
and
outside
service
providers
as
to
the
progress
or
state
of
consummation
of
trials,
or
theF-15Table
of
ContentsOnconova
Therapeutics,
Inc.Notes
to
Consolidated
Financial
Statements
(Continued)2.
Summary
of
Significant
Accounting
Policies
(Continued)services
completed.
During
the
course
of
a
clinical
trial,
the
Company
adjusts
its
clinical
expense
recognition
if
actual
results
differ
from
its
estimates.
TheCompany
makes
estimates
of
its
accrued
expenses
as
of
each
balance
sheet
date
based
on
the
facts
and
circumstances
known
to
it
at
that
time.
The
Company'sclinical
trial
accruals
are
dependent
upon
the
timely
and
accurate
reporting
of
contract
research
organizations
and
other
third-party
vendors.
Although
the
Companydoes
not
expect
its
estimates
to
be
materially
different
from
amounts
actually
incurred,
its
understanding
of
the
status
and
timing
of
services
performed
relative
tothe
actual
status
and
timing
of
services
performed
may
vary
and
may
result
in
it
reporting
amounts
that
are
too
high
or
too
low
for
any
particular
period.
For
theyears
ended
December
31,
2015
and
2014,
there
were
no
material
adjustments
to
the
Company's
prior
period
estimates
of
accrued
expenses
for
clinical
trials.Collaboration
Arrangements








A
collaboration
arrangement
is
defined
as
a
contractual
arrangement
that
has
or
may
have
significant
financial
milestones
associated
with
success-baseddevelopment,
which
include
certain
arrangements
the
Company
has
entered
into
regarding
the
research
and
development,
manufacture
and/or
commercialization
ofproducts
and
product
candidates.
These
collaborations
generally
provide
for
non-refundable,
upfront
license
fees,
research
and
development
and
commercialperformance
milestone
payments,
cost
sharing
and
royalty
payments.
The
collaboration
agreements
with
third-parties
are
performed
on
a
"best
efforts"
basis
withno
guarantee
of
either
technological
or
commercial
success.
The
Company
evaluates
whether
an
arrangement
is
a
collaboration
arrangement
at
its
inception
basedon
the
facts
and
circumstances
specific
to
the
arrangement.
The
Company
reevaluates
whether
an
arrangement
qualifies
or
continues
to
qualify
as
a
collaborationarrangement
whenever
there
is
a
change
in
the
anticipated
or
actual
ultimate
commercial
success
of
the
endeavor.
See
Note
12,
"License
and
CollaborationAgreements,"
for
a
discussion
of
the
Company's
current
collaborations
with
Baxalta
and
SymBio.Basic
and
Diluted
Net
Loss
Per
Share
of
Common
Stock








Basic
net
loss
per
share
of
common
stock
is
computed
by
dividing
net
loss
applicable
to
common
stockholders
by
the
weighted-average
number
of
shares
ofCommon
Stock
outstanding
during
the
period,
excluding
the
dilutive
effects
of
stock
options
and
warrants.
Diluted
net
loss
per
share
of
common
stock
is
computedby
dividing
the
net
loss
applicable
to
common
stockholders
by
the
sum
of
the
weighted-average
number
of
shares
of
Common
Stock
outstanding
during
the
periodplus
the
potential
dilutive
effects
of
stock
options
and
warrants
outstanding
during
the
period
calculated
in
accordance
with
the
treasury
stock
method,
but
areexcluded
if
their
effect
is
anti-dilutive.
Because
the
impact
of
these
items
is
anti-dilutive
during
periods
of
net
loss,
there
was
no
difference
between
basic
anddiluted
net
loss
per
share
of
Common
Stock
for
the
years
ended
December
31,
2015
and
2014.Recent
Accounting
Pronouncements








In
May
2014,
the
FASB
issued
guidance
on
revenue
from
contracts
with
customers
that
will
supersede
most
current
revenue
recognition
guidance.
Theunderlying
principle
is
that
an
entity
will
recognize
revenue
to
depict
the
transfer
of
goods
or
services
to
customers
at
an
amount
that
the
entity
expects
to
beentitled
to
in
exchange
for
those
goods
or
services.
The
guidance
permits
the
use
of
either
a
retrospective
or
cumulative
effect
transition
method.
In
July
2015,
theFASB
approved
a
one-year
deferral
of
the
effective
date
of
the
guidance
to
interim
and
annual
periods
beginning
on
orF-16Table
of
ContentsOnconova
Therapeutics,
Inc.Notes
to
Consolidated
Financial
Statements
(Continued)2.
Summary
of
Significant
Accounting
Policies
(Continued)after
December
15,
2017.
Early
adoption
is
permitted
but
not
before
the
original
effective
date
of
December
15,
2016.
The
Company
has
not
yet
selected
atransition
method
and
is
currently
evaluating
the
impact
of
the
amended
guidance
on
the
Company's
consolidated
financial
position,
results
of
operations
andrelated
disclosures.







In
August
2014,
the
FASB
issued
guidance
on
determining
when
and
how
to
disclose
going-concern
uncertainties
in
the
financial
statements.
The
newstandard
requires
management
to
perform
interim
and
annual
assessments
of
an
entity's
ability
to
continue
as
a
going
concern
within
one
year
of
the
date
thefinancial
statements
are
issued.
An
entity
must
provide
certain
disclosures
if
conditions
or
events
raise
substantial
doubt
about
the
entity's
ability
to
continue
as
agoing
concern.
The
guidance
applies
to
all
entities
and
is
effective
for
annual
periods
ending
after
December
15,
2016,
and
interim
periods
thereafter,
with
earlyadoption
permitted.
The
Company
is
evaluating
the
potential
impact
of
the
new
guidance
on
its
financial
reporting
process
and
its
consolidated
financial
position,results
of
operations
and
related
disclosures.3.
Property
and
Equipment







Property
and
equipment
and
related
accumulated
depreciation
are
as
follows:







Depreciation
and
amortization
expense
was
$150,000
and
$434,000
for
the
years
ended
December
31,
2015
and
2014,
respectively.4.
Net
Loss
Per
Share
of
Common
Stock







The
following
table
sets
forth
the
computation
of
basic
and
diluted
earnings
per
share
for
the
years
ended
December
31,
2015
and
2014:F-17


December
31,



2015
2014
Laboratory
equipment
$1,037,000
$1,037,000
Software

92,000

92,000
Computer
and
office
equipment

354,000

433,000
Leasehold
improvements

745,000

1,063,000


2,228,000

2,625,000
Less
accumulated
depreciation

(1,980,000)
(2,205,000)
$248,000
$420,000



Year
ended
December
31,



2015
2014
Basic
and
diluted
net
loss
per
share
of
common
stock:






Net
loss
attributable
to
Onconova
Therapeutics,
Inc
$(23,979,000)$(63,682,000)Weighted
average
shares
of
common
stock
outstanding

22,739,760

21,653,536
Net
loss
per
share
of
common
stock—basic
and
diluted
$(1.05)$(2.94)Table
of
ContentsOnconova
Therapeutics,
Inc.Notes
to
Consolidated
Financial
Statements
(Continued)4.
Net
Loss
Per
Share
of
Common
Stock
(Continued)







The
following
potentially
dilutive
securities
outstanding
at
December
31,
2015
and
2014
have
been
excluded
from
the
computation
of
diluted
weightedaverage
shares
outstanding,
as
they
would
be
antidilutive:5.
Revenue







The
Company
recognized
revenue
under
its
funding,
license
and
collaboration
agreements
with
LLS,
Baxalta
and
SymBio
as
follows:







See
Note
11,
"Research
Agreements,"
and
Note
12,
"License
and
Collaboration
Agreements,"
for
a
further
discussion
of
the
agreements
with
LLS,
Baxaltaand
SymBio.6.
Balance
Sheet
Detail







Receivables:F-18


December
31,



2015
2014
Warrants

4,597

4,597
Stock
options

5,157,602

4,631,299


5,162,199

4,635,896



Year
ended
December
31,



2015
2014
LLS
$8,000,000
$—
Baxalta

2,893,000

334,000
SymBio

563,000

466,000

$11,456,000
$800,000



December
31,



2015
2014
Amounts
due
from
Baxalta
$1,384,000
$—
Other

120,000

132,000

$1,504,000
$132,000
Table
of
ContentsOnconova
Therapeutics,
Inc.Notes
to
Consolidated
Financial
Statements
(Continued)6.
Balance
Sheet
Detail
(Continued)







Prepaid
expenses
and
other
current
assets
are
as
follows:







Accrued
expenses
and
other
current
liabilities
are
as
follows:7.
Income
Taxes







The
Company
accounts
for
income
taxes
under
FASB
ASC
740
("ASC
740").
Deferred
income
tax
assets
and
liabilities
are
determined
based
upondifferences
between
financial
reporting
and
tax
bases
of
assets
and
liabilities,
which
are
measured
using
the
enacted
tax
rates
and
laws
that
will
be
in
effect
whenthe
differences
are
expected
to
reverse.







Income
taxes
have
been
based
on
the
following
income
(loss)
before
income
tax
expense:F-19


December
31,



2015
2014
Research
and
development
$1,018,000
$1,782,000
Manufacturing

168,000

451,000
Insurance

451,000

578,000
Other

195,000

255,000

$1,832,000
$3,066,000



December
31,



2015
2014
Research
and
development
$2,979,000
$4,482,000
Employee
compensation

438,000

854,000
Professional
fees

306,000

418,000
Other

6,000

23,000

$3,729,000
$5,777,000



December
31,



2015
2014
Domestic
$(24,057,000)$(63,910,000)Foreign

50,000

134,000

$(24,007,000)$(63,776,000)Table
of
ContentsOnconova
Therapeutics,
Inc.Notes
to
Consolidated
Financial
Statements
(Continued)7.
Income
Taxes
(Continued)







The
provision
for
income
taxes
consists
of
the
following:







As
of
December
31,
2015,
the
Company
had
federal
net
operating
loss
("NOL")
carry
forwards
of
$178,911,000,
state
NOL
carry
forwards
of
$201,464,000and
research
and
development
tax
credit
carry
forwards
of
$66,237,000,
which
are
available
to
reduce
future
taxable
income.
The
federal
NOL
and
tax
credit
carryforwards
will
begin
to
expire
at
various
dates
starting
in
2022.
The
state
NOL
carry
forwards
will
begin
to
expire
at
various
dates
starting
in
2016.
The
NOL
carryforwards
are
subject
to
review
and
possible
adjustment
by
the
Internal
Revenue
Service
and
state
tax
authorities.
NOL
and
tax
credit
carry
forwards
may
becomesubject
to
an
annual
limitation
in
the
event
of
certain
cumulative
changes
in
the
ownership
interest
of
significant
stockholders
over
a
three-year
period
in
excess
of50%,
as
defined
under
Sections
382
and
383
of
the
Internal
Revenue
Code
of
1986,
as
amended,
as
well
as
similar
state
tax
provisions.
This
could
limit
the
amountof
NOLs
that
the
Company
can
utilize
annually
to
offset
future
taxable
income
or
tax
liabilities.
The
amount
of
the
annual
limitation,
if
any,
will
be
determinedbased
on
the
value
of
the
Company
immediately
prior
to
the
ownership
change.
Subsequent
ownership
changes
may
further
affect
the
limitation
in
future
years.







The
Company's
reserves
related
to
taxes
are
based
on
a
determination
of
whether
and
how
much
of
a
tax
benefit
taken
by
the
Company
in
its
tax
filings
orpositions
is
more
likely
than
not
to
be
realized.
The
Company
recognized
no
material
adjustment
for
unrecognized
income
tax
benefits.
Through
December
31,2015,
the
Company
had
no
unrecognized
tax
benefits
or
related
interest
and
penalties
accrued.F-20


December
31,



2015
2014
Current






US
Federal
$—
$—
State
and
Local

—

—
Foreign

16,000

19,000
Total
Current
$16,000
$19,000
Deferred






US
Federal
$—
$—
State
and
Local

—

—
Foreign

—

—
Total
Deferred
$—
$—
Total
Expense
(Benefit)
$16,000
$19,000
Table
of
ContentsOnconova
Therapeutics,
Inc.Notes
to
Consolidated
Financial
Statements
(Continued)7.
Income
Taxes
(Continued)







The
principal
components
of
the
Company's
deferred
tax
assets
are
as
follows:







ASC
740
requires
a
valuation
allowance
to
reduce
the
deferred
tax
assets
reported
if,
based
on
the
weight
of
available
evidence,
it
is
more
likely
than
not
thatsome
portion
or
all
of
the
deferred
tax
assets
will
not
be
realized.
After
consideration
of
all
the
evidence,
both
positive
and
negative,
the
Company
has
recorded
afull
valuation
allowance
against
its
deferred
tax
assets
at
December
31,
2015
and
2014,
respectively,
because
the
Company's
management
has
determined
that
is
itmore
likely
than
not
that
these
assets
will
not
be
fully
realized.
The
Company
experienced
a
net
change
in
valuation
allowance
of
$17,120,000
and
$38,647,000
forthe
years
ended
December
31,
2015
and
2014,
respectively.







A
reconciliation
of
income
tax
(expense)
benefit
at
the
statutory
federal
income
tax
rate
and
income
taxes
as
reflected
in
the
financial
statements
is
as
follows:8.
Stock-Based
Compensation







In
January
2008,
the
board
of
directors
approved
the
2007
Equity
Compensation
Plan
(the
"2007
Plan"),
which
amended,
restated
and
renamed
the
Company's1999
Stock
Based
Compensation
PlanF-21


December
31,



2015
2014
Deferred
tax
assets:






Net
operating
loss
carryovers
$73,648,000
$63,776,000
R&D
tax
credits

66,374,000

56,750,000
Non-qualified
stock
options

6,079,000

4,916,000
Deferred
revenue

2,198,000

5,648,000
Charitable
contributions

6,000

6,000
Accrued
expenses

617,000

691,000
Fixed
assets

149,000

164,000
Deferred
tax
assets

149,071,000

131,951,000
Less
valuation
allowance

(149,071,000)
(131,951,000)Net
deferred
tax
assets
$—
$—



December
31,



2015
2014
Federal
income
tax
expense
at
statutory
rate

34.0%
34.0%Permanent
items

(13.6)
(8.9)State
income
tax,
net
of
federal
benefit

12.9

4.2
Tax
credits

40.2

33.8
Provision
to
return

(2.1)
(2.4)Change
in
valuation
allowance

(71.4)
(60.7)Other

—

—
Effective
income
tax
rate

(0.0)%
(0.0)%Table
of
ContentsOnconova
Therapeutics,
Inc.Notes
to
Consolidated
Financial
Statements
(Continued)8.
Stock-Based
Compensation
(Continued)(the
"1999
Plan"),
which
provided
for
the
granting
of
incentive
and
nonqualified
stock
options
and
restricted
stock
to
its
employees,
directors
and
consultants
at
thediscretion
of
the
board
of
directors.







Further,
in
July
2013,
the
Company's
board
of
directors
and
stockholders
approved
the
2013
Equity
Compensation
Plan
(the
"2013
Plan"),
which
amended,restated
and
renamed
the
2007
Plan
.
Under
the
2013
Plan,
the
Company
may
grant
incentive
stock
options,
non-statutory
stock
options,
stock
appreciation
rights,restricted
stock,
restricted
stock
units,
deferred
share
awards,
performance
awards
and
other
equity-based
awards
to
employees,
directors
and
consultants.
TheCompany
initially
reserved
6,107,831
shares
of
Common
Stock
for
issuance,
subject
to
adjustment
as
set
forth
in
the
2013
Plan.
The
2013
Plan
includes
anevergreen
provision,
pursuant
to
which
the
maximum
aggregate
number
of
shares
that
may
be
issued
under
the
2013
Plan
is
increased
on
the
first
day
of
each
fiscalyear
by
the
lesser
of
(a)
a
number
of
shares
equal
to
four
percent
(4%)
of
the
issued
and
outstanding
Common
Stock
of
the
Company,
without
duplication,(b)
2,000,000
shares
and
(c)
such
lesser
number
as
determined
by
the
Company's
board
of
directors,
subject
to
specified
limitations.
At
December
31,
2015,
therewere
1,354,133
shares
available
for
future
issuance.







Stock-based
compensation
expense
includes
stock
options
granted
to
employees
and
non-employees
and
has
been
reported
in
the
Company's
statements
ofoperations
and
comprehensive
loss
in
either
research
and
development
expenses
or
general
and
administrative
expenses
depending
on
the
function
performed
bythe
optionee.
No
net
tax
benefits
related
to
the
stock-based
compensation
costs
have
been
recognized
since
the
Company's
inception.
The
Company
recognizedstock-based
compensation
expense
as
follows
for
the
years
ended
December
31,
2015
and
2014:







A
summary
of
stock
option
activity
for
the
year
ended
December
31,
2015
is
as
follows:F-22


Year
ended
December
31,



2015
2014
General
and
administrative
$1,936,000
$2,082,000
Research
and
development

1,850,000

2,986,000

$3,786,000
$5,068,000






Options
Outstanding



Shares
Available
for
Grant
Number
of
Shares
Weighted-
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Term
(in
years)
Aggregate
Intrinsic
Value
Balance,
December
31,
2014

1,012,310

4,631,299
$10.04

7.89
$42,923
Authorized

868,126

—









Granted

(1,018,100)
1,018,100
$2.27






Exercised

—

—









Forfeitures

491,797

(491,797)$9.49






Balance,
December
31,
2015

1,354,133

5,157,602
$8.56

7.46
$0
Vested
or
expected
to
vest,
December
31,
2015




5,077,680
$8.56

7.46
$0
Exercisable
at
December
31,
2015




3,227,121
$10.05

6.66
$0
Table
of
ContentsOnconova
Therapeutics,
Inc.Notes
to
Consolidated
Financial
Statements
(Continued)8.
Stock-Based
Compensation
(Continued)







The
intrinsic
value
of
options
exercised
during
the
years
ended
December
31,
2015
and
2014
was
$0
and
$1,842,000,
respectively.
The
aggregate
intrinsicvalue
is
calculated
as
the
difference
between
the
exercise
price
of
the
underlying
awards
and
the
quoted
price
of
the
Company's
common
stock
for
those
awardsthat
have
an
exercise
price
currently
below
the
closing
price.







Information
with
respect
to
stock
options
outstanding
and
exercisable
at
December
31,
2015
is
as
follows:Options granted after April 23, 2013







The
Company
accounts
for
all
stock-based
payments
made
after
April
23,
2013
to
employees
and
directors
using
an
option
pricing
model
for
estimating
fairvalue.
Accordingly,
stock-based
compensation
expense
is
measured
based
on
the
estimated
fair
value
of
the
awards
on
the
date
of
grant,
net
of
forfeitures.Compensation
expense
is
recognized
for
the
portion
that
is
ultimately
expected
to
vest
over
the
period
during
which
the
recipient
renders
the
required
services
tothe
Company
using
the
straight-line
single
option
method.
In
accordance
with
authoritative
guidance,
the
fair
value
of
non-employee
stock
based
awards
is
re-measured
as
the
awards
vest,
and
the
resulting
increase
in
fair
value,
if
any,
is
recognized
as
expense
in
the
period
the
related
services
are
rendered.







The
Company
uses
the
Black-Scholes
option-pricing
model
to
estimate
the
fair
value
of
stock
options
at
the
grant
date.
The
Black-Scholes
model
requires
theCompany
to
make
certain
estimates
and
assumptions,
including
estimating
the
fair
value
of
the
Company's
common
stock,
assumptions
related
to
the
expectedprice
volatility
of
the
Company's
stock,
the
period
during
which
the
options
will
be
outstanding,
the
rate
of
return
on
risk-free
investments
and
the
expecteddividend
yield
for
the
Company's
stock.







As
of
December
31,
2015,
there
was
$6,040,000
of
unrecognized
compensation
expense
related
to
the
unvested
stock
options
issued
from
April
24,
2013through
December
31,
2015,
which
is
expected
to
be
recognized
over
a
weighted-average
period
of
approximately
2.85
years.F-23Exercise
Price
Shares
Exercisable
$1.48
-
$2.69

908,725

141,483
$3.98
-
$4.52

918,388

347,524
$5.76
-
$7.53

1,079,786

1,025,289
$13.28
-
$13.48

1,518,704

1,078,982
$14.68
-
$15.12

668,499

585,632
$21.79
-
$29.14

63,500

48,211


5,157,602

3,227,121
Table
of
ContentsOnconova
Therapeutics,
Inc.Notes
to
Consolidated
Financial
Statements
(Continued)8.
Stock-Based
Compensation
(Continued)







The
weighted-average
assumptions
underlying
the
Black-Scholes
calculation
of
grant
date
fair
value
include
the
following:







The
weighted-average
valuation
assumptions
were
determined
as
follows:•Risk-free
interest
rate:
The
Company
based
the
risk-free
interest
rate
on
the
interest
rate
payable
on
U.S.
Treasury
securities
in
effect
at
the
time
ofgrant
for
a
period
that
is
commensurate
with
the
assumed
expected
option
term.
•Expected
term
of
options:
Due
to
its
lack
of
sufficient
historical
data,
the
Company
estimates
the
expected
life
of
its
employee
stock
options
usingthe
"simplified"
method,
as
prescribed
in
Staff
Accounting
Bulletin
(SAB)
No.
107,
whereby
the
expected
life
equals
the
arithmetic
average
of
thevesting
term
and
the
original
contractual
term
of
the
option.
•Expected
stock
price
volatility:
Due
to
the
Company's
limited
operating
history
and
a
lack
of
company
specific
historical
and
implied
volatility
data,the
Company
has
based
its
estimate
of
expected
volatility
on
the
historical
volatility
of
a
group
of
similar
companies
that
are
publicly
traded.
Whenselecting
these
public
companies
on
which
it
has
based
its
expected
stock
price
volatility,
the
Company
selected
companies
with
comparablecharacteristics
to
it,
including
enterprise
value,
risk
profiles,
position
within
the
industry,
and
with
historical
share
price
information
sufficient
tomeet
the
expected
life
of
the
stock-based
awards.
The
historical
volatility
data
was
computed
using
the
daily
closing
prices
for
the
selectedcompanies'
shares
during
the
equivalent
period
of
the
calculated
expected
term
of
the
stock-based
awards.
Due
to
its
lack
of
sufficient
historicaldata,
the
Company
will
continue
to
apply
this
process
until
a
sufficient
amount
of
historical
information
regarding
the
volatility
of
its
own
stockprice
becomes
available.
•Expected
annual
dividend
yield:
The
Company
has
never
paid,
and
does
not
expect
to
pay
dividends
in
the
foreseeable
future.
Accordingly,
theCompany
assumed
an
expected
dividend
yield
of
0.0%.
•Estimated
forfeiture
rate:
The
Company's
estimated
annual
forfeiture
rate
on
stock
option
grants
was
4.14%
in
2015
and
4.14%
in
2014,
based
onthe
historical
forfeiture
experience.Options granted on or prior to April 23, 2013







At
certain
times
throughout
the
Company's
history,
the
chairman
of
the
Company's
board
of
directors,
who
is
also
a
significant
stockholder
of
the
Company(the
"Significant
Holder"),
has
afforded
option
holders
the
opportunity
for
liquidity
in
transactions
in
which
options
were
exercised
and
the
shares
of
CommonStock
issued
in
connection
therewith
were
simultaneously
purchased
by
theF-24


Year
ended
December
31,


2015
2014Risk-free
interest
rate
1.60%
1.84%Expected
volatility
75.8%
78.6%Expected
term
6.17
years
6.15
yearsExpected
dividend
yield
0%
0%Weighted-average
grant
date
fair
value
$1.50
$3.10Table
of
ContentsOnconova
Therapeutics,
Inc.Notes
to
Consolidated
Financial
Statements
(Continued)8.
Stock-Based
Compensation
(Continued)Significant
Holder
(each,
a
"Purchase
Transaction").
Because
the
Company
had
established
a
pattern
of
providing
cash
settlement
alternatives
for
option
holders,the
Company
has
accounted
for
its
stock-based
compensation
awards
as
liability
awards,
the
fair
value
of
which
is
then
re-measured
at
each
balance
sheet
date.







On
April
23,
2013,
the
Company
distributed
a
notification
letter
to
all
equity
award
holders
under
the
Company's
2007
Equity
Compensation
Plan
(the
"2007Plan")
advising
them
that
Purchase
Transactions
would
no
longer
occur,
unless,
at
the
time
of
a
Purchase
Transaction,
the
option
holder
has
held
the
CommonStock
issued
upon
exercise
of
options
for
a
period
of
greater
than
six
months
prior
to
selling
such
Common
Stock
to
the
Significant
Holder
and
that
any
such
saleto
the
Significant
Holder
would
be
at
the
fair
value
of
the
Common
Stock
on
the
date
of
such
sale.
Based
on
these
new
criteria
for
Purchase
Transactions,
theCompany
remeasured
options
outstanding
under
the
2007
Plan
as
of
April
23,
2013
to
their
intrinsic
value
and
reclassified
such
options
from
liabilities
tostockholders'
deficit
within
the
Company's
consolidated
balance
sheets,
which
amounted
to
$14,482,000.
As
of
December
31,
2015,
there
was
$249,000
ofunrecognized
compensation
expense
related
to
these
unvested
awards,
which
is
expected
to
be
recognized
over
a
weighted-average
period
of
approximately1.04
years.9.
Employee
Benefit
Plan







In
October
2007,
the
Company
established
a
401(k)
Retirement
Savings
Plan.
Employees
are
eligible
to
participate
in
the
plan
as
soon
as
they
join
theCompany
if
they
are
at
least
21
years
of
age
and
work
a
minimum
of
1,000
hours
per
year.
The
Company
matches
$0.60
for
every
dollar
of
the
first
6%
of
payrollthat
employees
invest,
up
to
the
legal
limit.
Employer
contributions
vest
over
four
years
at
the
rate
of
25%
per
year.
For
the
years
ended
December
31,
2015
and2014,
the
Company
contributed
$146,000
and
$276,000,
respectively.10.
Commitments
and
ContingenciesOperating
leases








In
January
2007,
the
Company
entered
into
a
lease
for
8,100
square
feet
of
office
and
lab
space
in
Newtown,
Pennsylvania,
and
in
October
2009,
theCompany
and
the
landlord
amended
the
lease
to
add
three
additional
one-year
options
to
extend
the
lease
term.
In
November
2013
the
Company
renewed
the
leasefor
the
period
April
1,
2014
to
March
31,
2015,
for
rent
of
$11,000
per
month.
In
December
2014
the
Company
renewed
the
lease
for
the
period
April
1,
2015
toMarch
31,
2016,
for
rent
of
$11,500
per
month.
In
November
2015
the
Company
renewed
the
lease
for
the
period
April
1,
2016
to
March
31,
2017,
for
rent
of$11,900
per
month
In
September
2012,
the
Company
sub-leased
an
additional
1,356
square
feet
of
office
space.
The
lease
has
been
renewed
through
February
28,2017
for
rent
of
$1,600
per
month.







The
Company
rents
office
space
in
Munich,
Germany
under
one
year
leases
that
run
from
January
1
to
December
31.
For
the
period
January
1,
2015
toDecember
31,
2015
the
rent
was
€5,700
per
month.
For
the
period
January
1,
2016
to
December
31,
2016
the
rent
is
€3,500
per
month.F-25Table
of
ContentsOnconova
Therapeutics,
Inc.Notes
to
Consolidated
Financial
Statements
(Continued)10.
Commitments
and
Contingencies
(Continued)







Future
minimum
lease
payments
under
these
non-cancellable
leases
having
terms
in
excess
of
one
year
as
of
December
31,
2015
are
as
follows:







Rent
expense
was
$288,000
and
$389,000
for
the
years
ended
December
31,
2015
and
2014,
respectively.Employment
agreements








The
Company
has
entered
into
employment
agreements
with
certain
of
its
executives.
The
agreements
provide
for,
among
other
things,
salary,
bonus
andseverance
payments.11.
Research
Agreements







The
Company
has
entered
into
various
licensing
and
right-to-sublicense
agreements
with
educational
institutions
for
the
exclusive
use
of
patents
and
patentapplications,
as
well
as
any
patents
that
may
develop
from
research
being
conducted
by
such
educational
institutions
in
the
field
of
anticancer
therapy,
genes
andproteins.
Results
from
this
research
have
been
licensed
to
the
Company
pursuant
to
these
agreements.
Under
one
of
these
agreements
with
Temple
University("Temple"),
the
Company
is
required
to
make
annual
maintenance
payments
to
Temple
and
royalty
payments
based
upon
a
percentage
of
sales
generated
from
anyproducts
covered
by
the
licensed
patents,
with
minimum
specified
royalty
payments.
As
no
sales
had
been
generated
through
December
31,
2015
under
thelicensed
patents,
the
Company
has
not
incurred
any
royalty
expenses
related
to
this
agreement.
In
addition,
the
Company
is
required
to
pay
Temple
25%
of
anysublicensing
fees
received
by
the
Company.
In
2011,
the
Company
recorded
$1,875,000
of
expense
related
to
the
Temple
agreement
in
connection
with
thecollaboration
agreement
the
Company
executed
with
SymBio.
In
2012,
the
company
recorded
$12,500,000
of
expense
related
to
the
Temple
agreement
inconnection
with
the
collaboration
agreement
the
Company
executed
with
Baxter.







The
Company
signed
a
funding
agreement
with
the
Leukemia
and
Lymphoma
Society
("LLS")
in
May
2010,
which
was
amended
in
January
2013,
to
fund
thedevelopment
of
rigosertib
(the
"LLS-funded
Research
Program").
Under
the
LLS-funded
Research
Program,
the
Company
was
entitled
to
receive
milestonepayments
of
up
to
$8,000,000
through
2013
in
connection
with
the
proposed
clinical
trial
to
be
conducted,
ON
TIME,
after
which
LLS
was
not
obligated
to
fundany
further
amounts.
Under
the
terms
of
the
funding
agreement,
if
the
LLS-funded
Research
Program
lead
to
approval
of
rigosertib
by
the
regulatory
authorities,the
Company
would
have
been
required
to
proceed
with
commercialization
of
the
licensed
product
or
repay
the
amount
funded.
LLS
was
entitled
to
receiveregulatory
and
commercial
milestone
payments
and
royalties
from
the
Company
based
on
the
Company's
net
sales
of
the
licensed
product
after
regulatoryapproval,
with
the
amount
of
such
milestone
payments
and
royalties
not
to
exceed
three
times
the
amount
funded.
During
the
year
ended
December
31,
2012,
inconnection
with
the
execution
of
the
Baxter
agreement,
the
Company
paidF-26


December
31,
2015
2016
$161,000
2017

39,000
Total
minimum
lease
payments
$200,000
Table
of
ContentsOnconova
Therapeutics,
Inc.Notes
to
Consolidated
Financial
Statements
(Continued)11.
Research
Agreements
(Continued)$1,000,000
to
LLS.
This
payment
reduced
the
maximum
potential
milestone
and
royalty
payment
obligation
under
this
agreement
to
$23,000,000.
No
furtherpayments
would
be
due
to
LLS
if
the
LLS-funded
Research
Program
did
not
meet
its
clinical
endpoints
for
safety
and
efficacy.
As
a
result
of
the
potentialobligation
to
repay
the
funds
under
this
arrangement,
the
$8,000,000
of
milestone
payments
received
was
initially
recorded
as
deferred
revenue.
The
Companyreceived
guidance
from
regulatory
authorities
during
2015
that
the
LLS-funded
Research
Program
was
not
sufficient
to
support
a
regulatory
submission.
Based
onthe
guidance
and
the
commencement
of
the
INSPIRE
trial
during
the
fourth
quarter
of
2015,
the
company
determined
that
the
research
program
covered
by
theLLS
funding
agreement
was
unsuccessful
and,
as
a
result,
the
funding
received
non-repayable.
Accordingly,
the
Company
recognized
the
$8.0
million
of
deferredrevenue
during
the
quarter
ended
December
31,
2015.12.
License
and
Collaboration
AgreementsBaxalta
Agreement








In
September
2012,
the
Company
entered
into
a
development
and
license
agreement
with
Baxter
Healthcare
SA.
Subsequently,
Baxter
International
Inc.("Baxter")
assigned
the
development
and
license
agreement
from
Baxter
Healthcare
SA
("BHSA")
to
Baxalta
GmbH
("Baxalta"),
in
preparation
for
the
anticipatedspin-off
by
Baxter
of
Baxalta
Incorporated.
The
spin-off
was
effective
on
July
1,
2015
and
Baxalta
Incorporated,
became
a
standalone,
publicly
traded
companytraded
on
the
New
York
Stock
Exchange.
The
Company
understands
that
Baxalta
is
an
indirect
wholly-owned
subsidiary
of
Baxalta
Incorporated.
Thedevelopment
and
license
agreement
granted
Baxalta
an
exclusive,
royalty-bearing
license
for
the
research,
development,
commercialization
and
manufacture
(inspecified
instances)
of
rigosertib
in
all
therapeutic
indications
in
Europe
(the
"Baxalta
Territory").
In
accordance
with
this
agreement,
BHSA
made
a
$50,000,000upfront
payment
to
the
Company.
In
July
2012,
BHSA
purchased
$50,000,000
of
the
Company's
Series
J
Preferred
Stock,
which
automatically
converted
to
sharesof
Common
Stock
immediately
prior
to
the
consummation
of
the
IPO.
BHSA
also
invested
$4,950,000
in
the
Company's
IPO.
The
securities
of
the
Companyowned
by
BHSA
have
also
been
transferred
to
Baxalta
as
part
of
the
spin-off
of
Baxalta
Incorporated.
On
March
3,
2016,
the
Company
received
a
notice
fromBaxalta
notifying
the
Company
of
Baxalta's
election
to
terminate
the
development
and
license
agreement
based
on
a
strategic
reprioritization
review,
effectiveAugust
30,
2016.
In
accordance
with
the
terms
of
the
Baxalta
agreement,
upon
termination,
the
rights
that
the
Company
had
licensed
to
Baxalta
would
revert
to
theComapny
at
no
cost.
Additionally,
any
rights
the
Company
had
to
funding,
pre-commercial
milestone
payments
and
royalties
from
Baxalta
would
terminate
inaccordance
with
the
agreement.







Under
the
terms
of
the
agreement,
the
Company
was
initially
required
to
perform
research
and
development
to
advance
three
initial
rigosertib
indications,rigosertib
intravenous
("IV")
in
higher-risk
myelodysplastic
syndrome
("MDS")
patients,
rigosertib
IV
in
pancreatic
cancer
patients
and
rigosertib
oral
in
lower-risk
MDS
patients,
through
Phase
3,
Phase
3
and
Phase
2
clinical
trials,
respectively.F-27Table
of
ContentsOnconova
Therapeutics,
Inc.Notes
to
Consolidated
Financial
Statements
(Continued)12.
License
and
Collaboration
Agreements
(Continued)







The
Baxalta
agreement
contemplated
development
of
rigosertib
IV
in
higher-risk
MDS
patients,
through
the
Company's
ONTIME
trial
and
potentially,additional
Phase
3
clinical
trials.
As
the
Company's
ONTIME
trial
did
not
achieve
its
primary
endpoint,
the
Company
is
continuing
the
development
of
rigosertibIV
in
higher-risk
MDS
patients
through
its
INSPIRE
trial.
In
accordance
with
the
agreement,
the
Company
elected
to
have
Baxalta
fund
fifty
percent
of
the
costs
ofthe
INSPIRE
trial,
up
to
$15.0
million.
The
Company
recorded
revenue
of
$2,893,000
during
the
year
ended
December
31,
2015
related
to
Baxalta's
funding
of
theINSPIRE
trial.
The
Company
has
overall
responsibility
for
the
trial,
including
determination
of
the
trial
specifications,
selection
of
third
party
service
providers
andpayment
for
all
services
and
materials.
Baxalta
terminated
the
development
and
license
agreement
after
commencement
of
the
INSPIRE
trial
and
after
theCompany
had
elected
to
have
Baxalta
reimburse
the
Company
for
costs
incurred
in
running
this
trial,
per
contract.
The
Company
will
attempt
to
maximizeBaxalta's
financial
support
for
the
INSPIRE
trial,
but
there
can
be
no
assurances
regarding
the
amount
of
funds
which
the
Company
will
receive
from
Baxaltafollowing
termination.







In
December
2013,
a
pre-planned
interim
futility
and
safety
analysis
of
the
pancreatic
cancer
trial
was
performed
and
the
trial
was
discontinued.
As
a
result,the
Company
is
not
pursuing
a
pancreatic
cancer
indication
at
this
time.
On
January
27,
2015,
Onconova
was
notified
that
BHSA
had
elected
not
to
pursueadditional
clinical
trials,
or
the
submission
of
a
drug
approval
application,
for
rigosertib
oral
in
lower-risk
MDS
patients.
Onconova
would
have
received
amilestone
payment
under
its
agreement
with
BHSA
if
the
parties
had
mutually
agreed
to
progress
the
development
of
oral
rigosertib
in
lower-risk
MDS
patients.







The
Company
would
have
been
eligible
to
receive
pre-commercial
milestone
payments
if
specified
development
and
regulatory
milestones
were
achievedduring
the
term
of
the
agreement.
The
potential
pre-commercial
development
milestone
payments
to
the
Company
included
$25,000,000
for
each
drug
approvalapplication
filed
for
indications
specified
in
the
agreement
and
up
to
$100,000,000
for
marketing
approval
for
each
of
the
specified
MDS
indications.







In
addition
to
these
pre-commercial
milestones,
the
Company
would
have
been
eligible
to
receive
up
to
an
aggregate
of
$250,000,000
in
milestone
paymentsbased
on
Baxalta's
achievement
of
pre-specified
threshold
levels
of
annual
net
sales
of
rigosertib.
The
Company
would
also
have
been
entitled
to
receive
royaltiesat
percentage
rates
ranging
from
the
low-teens
to
the
low-twenties
on
net
sales
of
rigosertib
by
Baxalta
in
the
Baxalta
Territory.







On
March
3,
2016,
the
Company
received
notification
from
Baxalta
of
its
election
to
terminate
the
development
and
license
agreement
based
on
a
strategicreprioritization
review,
effective
August
30,
2016.
The
agreement
with
Baxalta
remains
in
effect
pending
the
effectiveness
of
such
termination.







The
Company
determined
that
the
deliverables
under
the
original
Baxter
agreement
included
the
exclusive,
royalty-bearing,
sublicensable
license
to
rigosertiband
the
research
and
development
services
to
be
performed
by
the
Company.
The
Company
concluded
that
the
license
had
standalone
value
to
Baxter
and
wasseparable
from
the
research
and
development
services
because
the
license
was
sublicensable,
there
were
no
restrictions
as
to
Baxter's
use
of
the
license
and
Baxterhad
significant
research
capabilities
in
this
field.







In
determining
the
separate
units
of
accounting,
the
Company
considered
applicable
accounting
guidance
and
noted
that
in
an
arrangement
with
multipledeliverables,
the
delivered
item
or
items
shallF-28Table
of
ContentsOnconova
Therapeutics,
Inc.Notes
to
Consolidated
Financial
Statements
(Continued)12.
License
and
Collaboration
Agreements
(Continued)be
considered
a
separate
unit
of
accounting
if
the
delivered
item
or
items
have
value
to
the
customer
on
a
stand-alone
basis.
The
item
or
items
have
value
on
astand-alone
basis
if
they
are
sold
separately
by
any
vendor
or
the
customer
could
resell
the
delivered
item(s)
on
a
stand-alone
basis.
In
the
context
of
a
customer'sability
to
resell
the
delivered
item(s),
this
criterion
does
not
require
the
existence
of
an
observable
market
for
the
deliverable(s).







The
Baxter
agreement
allowed
Baxter
to
sublicense
rigosertib
and
its
ability
to
sublicense
was
not
contingent
on
the
approval
or
right
of
first
refusal
by
theCompany.
The
Company
determined
that
Baxter's
ability
to
sublicense
the
intellectual
property
to
others
demonstrates
that
the
license
had
stand-alone
value.
Inaddition,
at
the
time
of
entering
into
the
Baxter
agreement
in
September
2012,
the
rigosertib
program
was
in
a
Phase
3
clinical
trial
for
higher-risk
MDS,
a
Phase
3clinical
trial
for
pancreatic
cancer
and
a
Phase
2
trial
for
lower-risk
MDS.
The
protocols
for
the
clinical
trials
had
been
written
and
provided
to
Baxter
and
a
SpecialProtocol
Assessment
had
already
been
granted
to
the
Company
by
the
U.S.
Food
and
Drug
Administration
(the
"FDA")
for
higher-risk
MDS.
These
later
stageclinical
trials,
where
protocols
had
been
prepared
and
trials
were
in
process,
could
have
been
completed
more
easily
by
entities
other
than
the
Company,
ascompared
to
earlier
stage
clinical
trials.
The
remaining
services
to
be
performed
by
the
Company
were
not
proprietary
and
could
have
been
performed
by
otherqualified
parties.
For
example,
the
Company
relied
on
clinical
research
organizations
("CROs")
to
complete
the
clinical
trials,
and
Baxter
could
have
engaged
thesame
or
similar
CROs
to
complete
the
trials
on
its
behalf.
Although
Baxter
was
not
performing
development
activities
related
to
rigosertib,
Baxter
possessed
theinternal
expertise
(or
a
vendor
could
have
been
hired)
to
complete
the
efforts
under
the
rigosertib
programs
without
further
assistance
from
the
Company.







Baxter
had
the
rights
and
full
access
to
past
and
future
intellectual
information
in
order
to
obtain
regulatory
approval
of
rigosertib
in
Europe.
In
connectionwith
the
Baxter
agreement,
the
Company
licensed
to
Baxter
all
information
and
all
patents
controlled
by
the
Company
necessary
for
the
development,
manufacture,use
and
sale
of
rigosertib
and
all
present
and
future
formulations
and
dosages
in
all
present
and
future
therapeutic
indications
in
the
licensed
territory.







Accordingly,
given
Baxter's
ability
to
sublicense
under
the
agreement
and
its
ability
internally
or
with
outside
help
to
conduct
the
ongoing
developmentefforts,
the
Company
concluded
that
the
license
had
stand-alone
value.
In
order
to
determine
if
the
license
can
be
treated
as
a
separate
unit
of
accounting,
theCompany
also
considered
whether
there
was
a
general
right
of
return
associated
with
the
license.
The
$50,000,000
upfront
payment
received
by
the
Company
wasnon-refundable;
therefore,
there
was
no
right
of
return
for
the
license.
As
a
result,
the
Company
concluded
that
the
license
was
a
separate
unit
of
accounting.







The
Company
was
not
able
to
establish
vendor-specific
objective
evidence
of
selling
price
or
third-party
evidence
for
either
the
license
or
the
research
anddevelopment
services
and
instead
allocated
the
arrangement
consideration
between
the
license
and
research
and
development
services
based
on
their
relativeselling
prices
using
best
estimate
of
selling
price
("BESP").
Management
developed
the
BESP
of
the
license
using
a
discounted
cash
flow
model,
taking
intoconsideration
assumptions
including
the
development
and
commercialization
timeline,
discount
rate
and
probability
of
success.
Management
utilized
a
third
partyvaluation
specialist
to
assist
with
the
determination
of
BESP
of
the
license.
Management
estimated
the
selling
price
of
the
research
and
development
services
usingthird
party
costs
and
a
discounted
cash
flow
model.
The
estimated
selling
prices
utilized
assumptions
includingF-29Table
of
ContentsOnconova
Therapeutics,
Inc.Notes
to
Consolidated
Financial
Statements
(Continued)12.
License
and
Collaboration
Agreements
(Continued)internal
estimates
of
research
and
development
personnel
needed
to
perform
the
research
and
development
services;
and
estimates
of
expected
cash
outflows
tothird
parties
for
services
and
supplies
over
the
expected
period
that
the
services
will
be
performed.







The
key
assumptions
in
these
models
included
the
following
market
conditions
and
entity-specific
factors:
(a)
the
specific
rights
provided
under
the
license,(b)
the
stage
of
development
of
rigosertib
and
estimated
remaining
development
and
commercialization
timelines,
(c)
the
probability
of
successfully
developingand
commercializing
rigosertib,
(d)
the
market
size
including
the
associated
sales
figures
which
generate
royalty
revenue,
(e)
cost
of
goods
sold,
which
wasassumed
to
be
a
specified
percentage
of
revenues
based
on
estimated
cost
of
goods
sold
of
a
typical
oncology
product,
(f)
sales
and
marketing
costs,
which
werebased
on
the
costs
required
to
field
an
oncology
sales
force
and
marketing
group,
including
external
costs
required
to
promote
an
oncology
product,
(g)
theexpected
product
life
of
rigosertib
assuming
commercialization
and
(h)
the
competitive
environment.
The
Company
utilized
a
discount
rate
of
16%,
representingthe
cost
of
capital
derived
from
returns
on
equity
for
comparable
companies.







Based
on
management's
analyses,
it
was
determined
that
the
BESP
of
the
license
was
$120,000,000
and
the
BESP
of
the
research
and
development
serviceswas
$20,600,000.
As
noted
above,
the
Company
received
an
up-front
payment
of
$50,000,000
under
the
Baxter
agreement,
which
represented
the
allocableagreement
consideration.
Based
on
the
respective
BESPs,
this
payment
was
allocated
$42,400,000
to
the
license
and
$7,600,000
to
the
research
and
developmentservices.
Since
the
delivery
of
the
license
occurred
upon
the
execution
of
the
Baxter
agreement
and
there
was
no
general
right
of
return,
$42,400,000
of
the$50,000,000
upfront
payment
was
recognized
upon
the
execution
of
the
Baxter
agreement.
The
portion
allocated
to
research
and
development
services
wasrecognized
over
the
period
of
performance
on
a
proportional
performance
basis
through
March
31,
2014.
Management
estimated
the
period
of
performance
to
bethe
period
necessary
for
completion
of
the
non-contingent
obligations
to
perform
research
and
development
services
required
to
advance
the
three
formulations
ofrigosertib
described
above.
As
of
March
31,
2014,
all
of
the
deferred
revenue
related
to
such
research
and
development
services
was
recognized.
The
amount
ofthis
revenue
recognized
during
the
year
ended
December
31,
2014
was
$333,000.







The
Company
and
Baxter
agreed
to
establish
a
joint
committee
to
facilitate
the
governance
and
oversight
of
the
parties'
activities
under
the
agreements.Management
considered
whether
participation
on
the
joint
committee
was
a
deliverable
and
determined
that
it
was
not
a
deliverable.
Had
management
consideredparticipation
on
the
joint
committee
as
a
deliverable,
it
would
not
have
had
a
material
impact
on
the
accounting
for
the
arrangement
based
on
the
analysis
of
theestimated
selling
price
of
such
participation.







As
noted
above,
in
July
2012,
Baxter
purchased
Series
J
Preferred
Stock.
Because
the
Series
J
Preferred
Stock
was
acquired
within
several
months
of
theBaxter
development
and
license
agreement,
management
considered
whether
the
Series
J
Preferred
Stock
was
issued
at
fair
value
and
if
not,
whether
theconsideration
received
for
the
Series
J
Preferred
Stock
($50,000,000)
or
for
the
collaboration
and
license
agreement
($50,000,000)
should
be
allocated
in
thefinancial
statements
in
a
manner
differently
than
the
prices
stated
in
the
agreements.
Management,
with
the
assistance
of
an
outside
valuation
specialist,
determinedthat
the
price
paid
by
Baxter
for
the
Series
J
Preferred
Stock
approximated
its
fair
value,
and
therefore
the
consideration
received
under
the
agreements
wasallocated
in
accordance
with
terms
of
the
individual
agreements.F-30Table
of
ContentsOnconova
Therapeutics,
Inc.Notes
to
Consolidated
Financial
Statements
(Continued)12.
License
and
Collaboration
Agreements
(Continued)SymBio
Agreement








In
July
2011,
the
Company
entered
into
a
license
agreement
with
SymBio,
as
subsequently
amended,
granting
SymBio
an
exclusive,
royalty-bearing
licensefor
the
development
and
commercialization
of
rigosertib
in
Japan
and
Korea.
Under
the
SymBio
license
agreement,
SymBio
is
obligated
to
use
commerciallyreasonable
efforts
to
develop
and
obtain
market
approval
for
rigosertib
inside
the
licensed
territory
and
the
Company
has
similar
obligations
outside
of
the
licensedterritory.
The
Company
has
also
entered
into
an
agreement
with
SymBio
providing
for
it
to
supply
SymBio
with
development-stage
product.
Under
the
SymBiolicense
agreement,
the
Company
also
agreed
to
supply
commercial
product
to
SymBio
under
specified
terms
that
will
be
included
in
a
commercial
supplyagreement
to
be
negotiated
prior
to
the
first
commercial
sale
of
rigosertib.
The
supply
of
development-stage
product
and
the
supply
of
commercial
product
will
beat
the
Company's
cost
plus
a
defined
profit
margin.
Sales
of
development-stage
product
have
been
de
minimis.
The
Company
has
additionally
granted
SymBio
aright
of
first
negotiation
to
license
or
obtain
the
rights
to
develop
and
commercialize
compounds
having
a
chemical
structure
similar
to
rigosertib
in
the
licensedterritory.







Under
the
terms
of
the
SymBio
license
agreement,
the
Company
received
an
upfront
payment
of
$7,500,000.
The
Company
is
eligible
to
receive
milestonepayments
of
up
to
an
aggregate
of
$22,000,000
from
SymBio
upon
the
achievement
of
specified
development
and
regulatory
milestones
for
specified
indications.Of
the
regulatory
milestones,
$5,000,000
is
due
upon
receipt
of
marketing
approval
in
the
United
States
for
rigosertib
IV
in
higher-risk
MDS
patients,
$3,000,000is
due
upon
receipt
of
marketing
approval
in
Japan
for
rigosertib
IV
in
higher-risk
MDS
patients,
$5,000,000
is
due
upon
receipt
of
marketing
approval
in
theUnited
States
for
rigosertib
oral
in
lower-risk
MDS
patients,
and
$5,000,000
is
due
upon
receipt
of
marketing
approval
in
Japan
for
rigosertib
oral
in
lower-riskMDS
patients.
Furthermore,
upon
receipt
of
marketing
approval
in
the
United
States
and
Japan
for
an
additional
specified
indication
of
rigosertib,
which
theCompany
is
currently
not
pursuing,
an
aggregate
of
$4,000,000
would
be
due.
In
addition
to
these
pre-commercial
milestones,
the
Company
is
eligible
to
receivetiered
milestone
payments
based
upon
annual
net
sales
of
rigosertib
by
SymBio
of
up
to
an
aggregate
of
$30,000,000.







Further,
under
the
terms
of
the
SymBio
license
agreement,
SymBio
will
make
royalty
payments
to
the
Company
at
percentage
rates
ranging
from
the
mid-teens
to
20%
based
on
net
sales
of
rigosertib
by
SymBio.







Royalties
will
be
payable
under
the
SymBio
agreement
on
a
country-by-country
basis
in
the
licensed
territory,
until
the
later
of
the
expiration
of
marketingexclusivity
in
those
countries,
a
specified
period
of
time
after
first
commercial
sale
of
rigosertib
in
such
country,
or
the
expiration
of
all
valid
claims
of
the
licensedpatents
covering
rigosertib
or
the
manufacture
or
use
of
rigosertib
in
such
country.
If
no
valid
claim
exists
covering
the
composition
of
matter
of
rigosertib
or
theuse
of
or
treatment
with
rigosertib
in
a
particular
country
before
the
expiration
of
the
royalty
term,
and
specified
competing
products
achieve
a
specified
marketshare
percentage
in
such
country,
SymBio's
obligation
to
pay
the
Company
royalties
will
continue
at
a
reduced
royalty
rate
until
the
end
of
the
royalty
term.
Inaddition,
the
applicable
royalties
payable
to
the
Company
may
be
reduced
if
SymBio
is
required
to
pay
royalties
to
third-parties
for
licenses
to
intellectual
propertyrights
necessary
to
develop,
use,
manufacture
or
commercialize
rigosertib
in
the
licensed
territory.
The
license
agreement
with
SymBio
will
remain
in
effect
untilthe
expiration
of
the
royalty
term.
However,
the
SymBio
license
agreement
may
be
terminated
earlier
due
to
the
uncured
material
breach
or
bankruptcy
of
a
party,or
forceF-31Table
of
ContentsOnconova
Therapeutics,
Inc.Notes
to
Consolidated
Financial
Statements
(Continued)12.
License
and
Collaboration
Agreements
(Continued)majeure.
If
SymBio
terminates
the
license
agreement
in
these
circumstances,
its
licenses
to
rigosertib
will
survive,
subject
to
SymBio's
milestone
and
royaltyobligations,
which
SymBio
may
elect
to
defer
and
offset
against
any
damages
that
may
be
determined
to
be
due
from
the
Company.
In
addition,
the
Company
mayterminate
the
license
agreement
in
the
event
that
SymBio
brings
a
challenge
against
it
in
relation
to
the
licensed
patents,
and
SymBio
may
terminate
the
licenseagreement
without
cause
by
providing
the
Company
with
written
notice
within
a
specified
period
of
time
in
advance
of
termination.







The
Company
determined
that
the
deliverables
under
the
SymBio
agreement
include
the
exclusive,
royalty-bearing,
sublicensable
license
to
rigosertib,
theresearch
and
development
services
to
be
provided
by
the
Company
and
its
obligation
to
serve
on
a
joint
committee.
The
Company
concluded
that
the
license
didnot
have
standalone
value
to
SymBio
and
was
not
separable
from
the
research
and
development
services,
because
of
the
uncertainty
of
SymBio's
ability
to
developrigosertib
in
the
SymBio
territory
on
its
own
and
the
uncertainty
of
SymBio's
ability
to
sublicense
rigosertib
and
recover
a
substantial
portion
of
the
originalupfront
payment
of
$7,500,000
paid
by
SymBio
to
the
Company.







The
supply
of
rigosertib
for
SymBio's
commercial
requirements
is
contingent
upon
the
receipt
of
regulatory
approvals
to
commercialize
rigosertib
in
Japanand
Korea.
Because
the
Company's
commercial
supply
obligation
was
contingent
upon
the
receipt
of
future
regulatory
approvals,
and
there
were
no
bindingcommitments
or
firm
purchase
orders
pending
for
commercial
supply
at
or
near
the
execution
of
the
agreement,
the
commercial
supply
obligation
is
deemed
to
becontingent
and
is
not
valued
as
a
deliverable
under
the
SymBio
agreement.
If
SymBio
orders
the
supplies
from
the
Company,
the
Company
expects
the
pricing
forthis
supply
to
equal
its
third-party
manufacturing
cost
plus
a
pre-negotiated
percentage,
which
will
not
result
in
a
significant
incremental
discount
to
market
rates.







Due
to
the
lack
of
standalone
value
for
the
license,
research
and
development
services,
and
joint
committee
obligation,
the
upfront
payment
is
beingrecognized
ratably
using
the
straight
line
method
through
December
2027,
the
expected
term
of
the
agreement.
The
Company
recognized
revenues
under
thisagreement
of
$455,000
and
$455,000,
for
the
years
ended
December
31,
2015
and
2014,
respectively.
In
addition,
the
Company
recognized
revenues
related
to
thesupply
agreement
with
Symbio
in
the
amounts
of
$108,000
and
$11,000
for
the
years
ended
December
31,
2015
and
2014,
respectively.13.
Preclinical
Collaboration







In
December
2012,
the
Company
agreed
to
form
GBO,
an
entity
owned
by
the
Company
and
GVK.
The
purpose
of
GBO
is
to
collaborate
on
and
develop
twoprograms
through
filing
of
an
investigational
new
drug
application
and/or
conducting
proof
of
concept
studies
using
the
Company's
technology
platform.
If
aprogram
failure
occurs
for
one
or
both
programs,
the
Company
may
contribute
additional
assets
to
GBO
to
establish
a
replacement
program
or
programs.







During
2013,
GVK
made
an
initial
capital
contribution
of
$500,000
in
exchange
for
a
10%
interest
in
GBO,
and
the
Company
made
an
initial
capitalcontribution
of
a
sublicense
to
all
the
intellectual
property
controlled
by
the
Company
related
to
the
two
specified
programs
in
exchange
for
a
90%
interest.
Underthe
terms
of
the
agreement,
GVK
may
make
additional
capital
contributions.
The
GVK
percentage
interest
in
GBO
may
change
from
the
initial
10%
to
up
to
50%,depending
on
the
amount
of
its
total
capital
contributions.
During
November
2014,
GVK
made
an
additional
capital
contribution
of
$500,000
which
increased
itsinterest
in
GBO
to
17.5%.
The
Company
evaluates
its
variable
interests
in
GBO
on
a
quarterly
basis
and
has
determined
that
it
is
the
primary
beneficiary.F-32Table
of
ContentsOnconova
Therapeutics,
Inc.Notes
to
Consolidated
Financial
Statements
(Continued)13.
Preclinical
Collaboration
(Continued)







For
thirty
days
following
the
15-month
anniversary
of
the
commencement
of
either
of
the
two
programs,
the
Company
will
have
an
option
to
(i)
cancel
thelicense
and
(ii)
purchase
all
rights
in
and
to
that
program.
There
are
three
of
these
buy-back
scenarios
depending
on
the
stage
of
development
of
the
underlyingassets.
In
addition,
upon
the
occurrence
of
certain
events,
namely
termination
of
the
Company's
participation
in
the
programs
either
with
or
without
a
change
incontrol,
GVK
will
be
entitled
to
purchase
or
obtain
the
Company's
interest
in
GBO.
GVK
will
have
operational
control
of
GBO
and
the
Company
will
havestrategic
and
scientific
control.







The
two
preclinical
programs
sublicensed
to
GBO
have
not
been
developed
to
clinical
stage
as
initially
hoped,
and
the
Company
is
in
discussions
with
GVKregarding
the
future
of
GBO.14.
Related-Party
Transactions







The
Company
has
entered
into
a
research
agreement,
as
subsequently
amended,
with
the
Mount
Sinai
School
of
Medicine
("Mount
Sinai"),
with
which
amember
of
its
board
of
directors
and
a
significant
stockholder
is
affiliated.
Mount
Sinai
is
undertaking
research
on
behalf
of
the
Company
on
the
terms
set
forth
inthe
agreements.
Mount
Sinai,
in
connection
with
the
Company,
will
prepare
applications
for
patents
generated
from
the
research.
Results
from
all
projects
willbelong
exclusively
to
Mount
Sinai,
but
the
Company
will
have
an
exclusive
option
to
license
any
inventions.
Payments
to
Mount
Sinai
under
this
researchagreement
for
the
years
ended
December
31,
2015
and
2014
were
$1,089,000
and
$1,215,000,
respectively.
At
December
31,
2015
and
2014,
the
Company
had
nooutstanding
amounts
payable
to
Mount
Sinai.







The
Company
purchases
chemical
compounds
and
sources
development
services
from
corporations
owned
by
a
former
member
of
its
board
of
directors.
TheCompany's
aggregate
payments
to
these
suppliers
for
the
years
ended
December
31,
2015
and
2014
were
$8,000
and
$446,000,
respectively.
At
December
31,2015
and
2014,
the
Company
owed
this
supplier
$0
and
$8,000,
respectively,
which
is
included
in
accounts
payable
on
the
consolidated
balance
sheets.
Presently,the
Company
has
consolidated
its
operations
to
its
Newtown,
Pennsylvania
headquarters.
Previously
the
Company
also
occupied
office
space
in
Pennington,
NewJersey
pursuant
to
a
lease
which
ran
through
May
2015,
from
a
corporation
related
to
this
supplier
and
affiliated
with
the
former
member
of
its
board
of
directors.







The
Company
has
entered
into
a
consulting
agreement
with
a
member
of
its
board
of
directors,
who
is
also
a
significant
stockholder.
The
board
memberprovides
consulting
services
to
the
Company
on
the
terms
set
forth
in
the
agreement.
Payments
to
this
board
member
for
the
years
ended
December
31,
2015
and2014
were
$197,000
and
$194,000,
respectively.
At
December
31,
2015
and
December
31,
2014,
the
Company
had
no
outstanding
amounts
payable
under
thisagreement.15.
Securities
Registrations
and
Sales
Agreements







In
October
2014,
the
Company
entered
into
a
sales
agreement
with
Cantor
Fitzgerald
&
Co.
("Cantor")
to
create
an
at-the-market
equity
program
under
whichthe
Company
from
time
to
time
was
able
to
offer
and
sell
shares
of
its
Common
Stock
through
Cantor.
A
registration
statement
(Form
S-3
No.
333-199219),relating
to
the
shares,
which
was
filed
with
the
SEC
became
effective
on
November
20,
2014.
During
the
year
ended
December
31,
2015,
2,715,165
shares
weresold
under
the
Cantor
sales
agreement
for
net
proceeds
of
$6,018,000.
The
Cantor
sales
agreement
was
terminated
on
January
5,
2016.F-33Table
of
ContentsOnconova
Therapeutics,
Inc.Notes
to
Consolidated
Financial
Statements
(Continued)15.
Securities
Registrations
and
Sales
Agreements
(Continued)







On
October
8,
2015,
the
Company
entered
into
a
Purchase
Agreement,
and
a
registration
rights
agreement
(the
"Registration
Rights
Agreement")
with
LincolnPark.
A
registration
statement
(Form
S-1
No.
333-207533),
relating
to
the
shares,
which
was
filed
with
the
SEC
became
effective
on
November
3,
2015.







Upon
signing
of
the
Purchase
Agreement,
Lincoln
Park
made
an
initial
purchase
of
846,755
shares
of
the
Company's
Common
Stock
for
$1,500,000.
Underthe
terms
and
subject
to
the
conditions
of
the
Purchase
Agreement,
the
Company
has
the
right
to
sell
to
and
Lincoln
Park
is
obligated
to
purchase
up
to
anadditional
$15,000,000
in
amounts
of
shares
of
Common
Stock,
subject
to
certain
limitations,
from
time
to
time,
over
the
36-month
period
commencing
onNovember
3,
2015,
the
effective
date
of
the
registration
statement
filed
with
the
SEC
(the
"Commencement
Date").
The
Company
may
direct
Lincoln
Park,
at
itssole
discretion
and
subject
to
certain
conditions,
to
purchase
up
to
100,000
shares
of
Common
Stock
on
any
business
day,
increasing
to
up
to
250,000
sharesdepending
upon
the
closing
sale
price
of
the
Common
Stock
(such
purchases,
"Regular
Purchases").
However,
in
no
event
shall
a
Regular
Purchase
be
more
than$1,000,000.
The
purchase
price
of
shares
of
Common
Stock
related
to
the
future
funding
will
be
based
on
the
prevailing
market
prices
of
such
shares
at
the
time
ofsales.
In
addition,
the
Company
may
direct
Lincoln
Park
to
purchase
additional
amounts
as
accelerated
purchases
if
on
the
date
of
a
Regular
Purchase
the
closingsale
price
of
the
Common
Stock
is
not
below
the
threshold
price
as
set
forth
in
the
Purchase
Agreement.
The
Company's
sales
of
shares
of
Common
Stock
toLincoln
Park
under
the
Purchase
Agreement
are
limited
to
no
more
than
the
number
of
shares
that
would
result
in
the
beneficial
ownership
by
Lincoln
Park
and
itsaffiliates,
at
any
single
point
in
time,
of
more
than
4.99%
of
the
then-outstanding
shares
of
the
Common
Stock,
which
limit
will
increase
to
9.99%
180
days
afterthe
Commencement
Date.







Pursuant
to
the
terms
of
the
Purchase
Agreement
and
to
comply
with
the
listing
rules
of
the
NASDAQ
Stock
Market,
the
number
of
shares
issued
to
LincolnPark
thereunder
shall
not
exceed
19.99%
of
the
Company's
shares
outstanding
on
October
8,
2015
unless
the
approval
of
the
Company's
stockholders
is
obtained.This
limitation
shall
not
apply
if
the
average
price
paid
for
all
shares
issued
and
sold
under
the
Purchase
Agreement
is
equal
to
or
greater
than
$1.556.
TheCompany
is
not
required
or
permitted
to
issue
any
shares
of
Common
Stock
under
the
Purchase
Agreement
if
such
issuance
would
breach
the
Company'sobligations
under
the
listing
rules
of
the
NASDAQ
Stock
Market.







As
consideration
for
entering
into
the
Purchase
Agreement,
the
Company
issued
to
Lincoln
Park
200,000
shares
of
Common
Stock.
Lincoln
Park
representedto
the
Company,
among
other
things,
that
it
was
an
"accredited
investor"
(as
such
term
is
defined
in
Rule
501(a)
of
Regulation
D
under
the
Securities
Act
of
1933,as
amended
(the
"Securities
Act"),
and
the
Company
sold
the
securities
in
reliance
upon
an
exemption
from
registration
contained
in
Section
4(2)
under
theSecurities
Act.
The
securities
sold
may
not
be
offered
or
sold
in
the
United
States
absent
registration
or
an
applicable
exemption
from
registration
requirements.







The
net
proceeds
under
the
Purchase
Agreement
to
the
Company
will
depend
on
the
frequency
and
prices
at
which
the
Company
sells
shares
of
its
stock
toLincoln
Park.
The
Company
expects
that
the
proceeds
received
by
the
Company
and
any
additional
proceeds
from
future
sales
to
Lincoln
Park
under
the
PurchaseAgreement
will
be
used
for
general
corporate
purposes
and
working
capital
requirements.F-34Table
of
ContentsOnconova
Therapeutics,
Inc.Notes
to
Consolidated
Financial
Statements
(Continued)16.
Subsequent
EventsSale
of
Securities








On
January
5,
2016,
the
Company
entered
into
a
Securities
Purchase
Agreement
(the
"Securities
Purchase
Agreement")
with
an
institutional
investor
(the"Investor")
providing
for
the
issuance
and
sale
by
the
Company
of
1,936,842
shares
of
the
Company's
common
stock,
at
a
purchase
price
of
$0.95
per
share
(the"Common
Shares")
and
warrants
to
purchase
968,421
shares
of
the
Company's
common
stock
(the
"Warrants")
for
aggregate
gross
proceeds
of
$1,840,000.
EachWarrant
is
initially
exercisable
on
the
six
(6)
month
anniversary
of
the
issuance
date
at
an
exercise
price
equal
to
$1.15
per
share
of
common
stock,
subject
tocustomary
adjustments,
and
has
a
term
of
exercise
of
five
(5)
years
from
the
initial
exercise
date.
Net
proceeds
from
the
transactions
were
approximately$1,646,000
after
deducting
certain
fees
due
to
the
placement
agent
and
the
Company's
estimated
transaction
expenses.
The
net
proceeds
received
by
the
Companyfrom
the
transactions
will
be
used
to
fund
the
development
of
the
Company's
clinical
and
preclinical
programs,
for
other
research
and
development
activities
andfor
general
corporate
purposes.







The
Common
Shares
were
offered
by
the
Company
pursuant
to
an
effective
shelf
registration
statement
on
Form
S-3,
which
was
initially
filed
with
the
SECon
October
8,
2014
and
subsequently
declared
effective
on
November
20,
2014
(File
No.
333-
199219)
(the
"Registration
Statement").







The
Warrants
were
issued
and
sold
without
registration
under
the
Securities
Act
in
reliance
on
the
exemptions
provided
by
Section
4(a)(2)
of
the
SecuritiesAct
and/or
Regulation
D
promulgated
thereunder
and
in
reliance
on
similar
exemptions
under
applicable
state
laws.
Accordingly,
the
Investor
may
exercise
theWarrants
and
sell
the
underlying
shares
only
pursuant
to
an
effective
registration
statement
under
the
Securities
Act
covering
the
resale
of
those
shares,
anexemption
under
Rule
144
under
the
Securities
Act
or
another
applicable
exemption
under
the
Securities
Act.Workforce
Reduction








In
February
2016,
the
Company,
as
part
of
its
ongoing
commitment
to
reduce
costs
and
conserve
cash
implemented
a
workforce
reduction
of
6
employees,which
represented
approximately
17
percent
of
its
workforce.
Affected
employees
were
offered
severance
pay
in
accordance
with
Company
policy
or,
ifapplicable,
their
employment
agreements.







As
part
of
the
workforce
reduction,
Ajay
Bansal,
the
Company's
Chief
Financial
Officer,
and
Thomas
McKearn,
M.D.,
Ph.D.,
the
Company's
President,Research
&
Development,
were
notified
that
their
employment
with
the
Company
was
terminated.
Mr.
Bansal
and
Dr.
McKearn
each
depart
in
good
standing
withthe
Company.
Each
of
Mr.
Bansal
and
Dr.
McKearn
will
receive
severance
benefits
consistent
with
a
termination
"without
cause"
pursuant
to
his
employmentagreement
and
the
Company
has
agreed
to
extend
the
post-termination
exercise
period
of
their
outstanding
option
awards
until
February
12,
2018,
in
considerationfor
a
customary
general
release.







As
a
result
of
the
workforce
reduction,
the
Company
estimates
that
it
will
record
in
the
first
quarter
of
2016,
a
one-time
severance-related
charge
totalingapproximately
$2.8
million,
which
includes
a
non-cash
charge
of
approximately
$1.6
million
related
to
the
accelerated
vesting
of
the
outstanding
stock
options
forcertain
of
the
affected
employees.F-35Table
of
ContentsOnconova
Therapeutics,
Inc.Notes
to
Consolidated
Financial
Statements
(Continued)16.
Subsequent
Events
(Continued)Baxalta
Development
and
License
Agreement








On
March
3,
2016,
the
Company
received
a
notice
from
Baxalta
notifying
the
Company
of
Baxalta's
election
to
terminate
the
development
and
licenseagreement
between
the
Company
and
Baxalta
(as
successor
to
Baxter
Healthcare
SA)
based
on
a
strategic
reprioritization
review,
effective
August
30,
2016.
Thistermination
notice
was
received
after
commencement
of
the
INSPIRE
trial,
which
was
designed
in
consultation
with
Baxalta.







Under
the
terms
of
the
development
and
license
agreement,
Baxalta
is
making
cost-sharing
payments
to
the
Company
equal
to
fifty
percent
of
the
costs
of
theCompany's
INSPIRE
trial,
up
to
$15.0
million.
The
development
and
license
agreement
granted
Baxalta
an
exclusive,
royalty-bearing
license
for
the
research,development
and
commercialization
of
the
Company's
lead
product
candidate,
rigosertib,
in
all
therapeutic
indications
in
specified
countries
comprising
most
ofEurope.
In
accordance
with
the
terms
of
the
development
and
license
agreement,
upon
termination,
the
rights
that
the
Company
had
licensed
to
Baxalta
will
revertto
the
Company
at
no
cost
to
the
Company.
Additionally,
prior
to
the
effective
date
of
the
termination,
Baxalta
will
transition
material
to
the
Company
and
willcontinue
to
fund
its
share
of
the
costs
of
the
INSPIRE
trial.F-36QuickLinks
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Click
here
to
rapidly
navigate
through
this
documentExhibit
21.1
Subsidiary
Jurisdiction
of
IncorporationOnconova
Europe
GmbH
GermanyGBO,
LLC
DelawareQuickLinks
Exhibit
21.1
QuickLinks
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Click
here
to
rapidly
navigate
through
this
documentExhibit
23.1
Consent
of
Independent
Registered
Public
Accounting
Firm








We
consent
to
the
incorporation
by
reference
in
the
Registration
Statements
(Form
S-8
No.
333-191161,
Form
S-8
No.
333-194228,
Form
S-8
No.
333-204210
and
Form
S-3
No.
333-199219)
of
our
report
dated
March
28,
2016,
with
respect
to
the
consolidated
financial
statements
of
Onconova
Therapeutics,
Inc.included
in
this
Annual
Report
(Form
10-K)
for
the
year
ended
December
31,
2015.Philadelphia,
Pennsylvania
March
28,
2016

/s/
Ernst
&
Young
LLPQuickLinks
Exhibit
23.1
Consent
of
Independent
Registered
Public
Accounting
Firm
QuickLinks
--
Click
here
to
rapidly
navigate
through
this
documentExhibit
31.1
CERTIFICATIONS
I,
Ramesh
Kumar,
certify
that:1.I
have
reviewed
this
Annual
Report
on
Form
10-K
of
Onconova
Therapeutics,
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
and
I
are
responsible
for
establishing
and
maintaining
disclosure
controls
and
procedures
(as
defined
in
ExchangeAct
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
thoseentities,
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
externalpurposes
in
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
the
effectivenessof
the
disclosure
controls
and
procedures,
as
of
the
end
of
the
period
covered
by
this
report
based
on
such
evaluation;
and
(d)Disclosed
in
this
report
any
change
in
the
registrant's
internal
control
over
financial
reporting
that
occurred
during
the
registrant's
most
recent
fiscalquarter
(the
registrant's
fourth
fiscal
quarter
in
the
case
of
an
annual
report)
that
has
materially
affected,
or
is
reasonably
likely
to
materially
affect,the
registrant's
internal
control
over
financial
reporting;
and
5.The
registrant's
other
certifying
officer
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
other
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;
and
(b)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/
RAMESH
KUMAR,
PH.D.
Ramesh
Kumar,
Ph.D.
President and Chief Executive Officer (Principal Executive Officer and Principal Operating Officer)

Dated:
March
28,
2016

QuickLinks
Exhibit
31.1
CERTIFICATIONS
QuickLinks
--
Click
here
to
rapidly
navigate
through
this
documentExhibit
31.2
CERTIFICATIONS
I,
Mark
Guerin,
certify
that:1.I
have
reviewed
this
Annual
Report
on
Form
10-K
of
Onconova
Therapeutics,
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
and
I
are
responsible
for
establishing
and
maintaining
disclosure
controls
and
procedures
(as
defined
in
ExchangeAct
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
thoseentities,
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
externalpurposes
in
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
the
effectivenessof
the
disclosure
controls
and
procedures,
as
of
the
end
of
the
period
covered
by
this
report
based
on
such
evaluation;
and
(d)Disclosed
in
this
report
any
change
in
the
registrant's
internal
control
over
financial
reporting
that
occurred
during
the
registrant's
most
recent
fiscalquarter
(the
registrant's
fourth
fiscal
quarter
in
the
case
of
an
annual
report)
that
has
materially
affected,
or
is
reasonably
likely
to
materially
affect,the
registrant's
internal
control
over
financial
reporting;
and
5.The
registrant's
other
certifying
officer
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
other
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;
and
(b)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/
MARK
GUERIN
Mark
Guerin
Vice President, Financial Planning and Accounting and Chief Accounting Officer (Principal Financial Officer and Principal Accounting Officer)

Dated:
March
28,
2016

QuickLinks
Exhibit
31.2
CERTIFICATIONS
QuickLinks
--
Click
here
to
rapidly
navigate
through
this
documentExhibit
32.1
CERTIFICATION
PURSUANT
TO
18
U.S.C.
SECTION
1350,
AS
ADOPTED
PURSUANT
TO
SECTION
906
OF
THE
SARBANES-OXLEY
ACT
OF
2002








In
connection
with
the
Annual
Report
on
Form
10-K
of
Onconova
Therapeutics,
Inc.
(the
"Company")
for
the
year
ended
December
31,
2015
as
filed
with
theSecurities
and
Exchange
Commission
on
the
date
hereof
(the
"Report"),
the
undersigned,
Ramesh
Kumar,
Chief
Executive
Officer
of
the
Company,
herebycertifies,
pursuant
to
18
U.S.C.
Section
1350,
that:(1)The
Report
fully
complies
with
the
requirements
of
Section
13(a)
or
15(d)
of
the
Securities
Exchange
Act
of
1934,
as
amended;
and
(2)The
information
contained
in
the
Report
fairly
presents,
in
all
material
respects,
the
financial
condition
and
results
of
operations
of
the
Company.Dated:
March
28,
2016/s/
RAMESH
KUMAR,
PH.D.
Ramesh
Kumar,
Ph.D.
President and Chief Executive Officer (Principal Executive Officer and Principal Operating Officer)

QuickLinks
Exhibit
32.1
CERTIFICATION
PURSUANT
TO
18
U.S.C.
SECTION
1350,
AS
ADOPTED
PURSUANT
TO
SECTION
906
OF
THE
SARBANES-OXLEY
ACT
OF
2002
QuickLinks
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Click
here
to
rapidly
navigate
through
this
documentExhibit
32.2
CERTIFICATION
PURSUANT
TO
18
U.S.C.
SECTION
1350,
AS
ADOPTED
PURSUANT
TO
SECTION
906
OF
THE
SARBANES-OXLEY
ACT
OF
2002








In
connection
with
the
Annual
Report
on
Form
10-K
of
Onconova
Therapeutics,
Inc.
(the
"Company")
for
the
year
ended
December
31,
2015
as
filed
with
theSecurities
and
Exchange
Commission
on
the
date
hereof
(the
"Report"),
the
undersigned,
Mark
Guerin,
Vice
President,
Financial
Planning
and
Accounting
of
theCompany,
hereby
certifies,
pursuant
to
18
U.S.C.
Section
1350,
that:(1)The
Report
fully
complies
with
the
requirements
of
Section
13(a)
or
15(d)
of
the
Securities
Exchange
Act
of
1934,
as
amended;
and
(2)The
information
contained
in
the
Report
fairly
presents,
in
all
material
respects,
the
financial
condition
and
results
of
operations
of
the
Company.Dated:
March
28,
2016/s/
MARK
GUERIN
Mark
Guerin
Vice President, Financial Planning and Accounting and Chief Accounting Officer (Principal Financial Officer and Principal Accounting Officer)

QuickLinks
Exhibit
32.2
CERTIFICATION
PURSUANT
TO
18
U.S.C.
SECTION
1350,
AS
ADOPTED
PURSUANT
TO
SECTION
906
OF
THE
SARBANES-OXLEY
ACT
OF
2002