Outlook Therapeutics
Annual Report 2018

Plain-text annual report

☒☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934☐☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934ITEM 1.BusinessITEM 1A.Risk FactorsITEM 1B.Unresolved Staff CommentsITEM 2.PropertiesITEM 3.Legal ProceedingsITEM 4.Mine Safety DisclosuresTABLE OF CONTENTSUNITED STATES SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549FORM 10-KANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended September 30, 2018ORFor the transition period from             to            Commission File Number: 001-37759OUTLOOK THERAPEUTICS, INC.(Exact name of registrant as specified in its charter)​Delaware​38-3982704​​(State or other jurisdiction of incorporation or organization)​(I.R.S. Employer Identification No.)​7 Clarke Drive Cranbury, New Jersey 08512 (609) 619-3990(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)Securities registered pursuant to Section 12(b) of the Act:​Title of Each ClassName of Each Exchange on Which Registered​​Common Stock, $0.01 par value per shareThe Nasdaq Capital Market​​Series A warrants to purchase Common StockThe Nasdaq Capital Market​Securities Registered Pursuant to Section 12(g) of the Act: NoneIndicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of theAct. Yes ☐ No ☒Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of theSecurities Exchange Act of 1934 during the preceding 12 months (or for such shorter period than the registrant wasrequired to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒ No ☐Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to besubmitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for suchshorter period that the registrant was required to submit such files).  Yes ☒ No ☐Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, andwill not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated byreference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, asmaller reporting company, or an emerging growth company. See the definition of  “large accelerated filer,” “acceleratedfiler,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.Large accelerated filer ☐Accelerated filer ☐Non-accelerated filer ☐Smaller reporting company ☒Emerging growth company ☒If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transitionperiod for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of theExchange Act. ☒Indicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☐ No ☒The aggregate market value of the registrant’s common stock, held by non-affiliates of the registrant as of March 30, 2018(which is the last business day of registrant’s most recently completed second fiscal quarter) based upon the closingmarket price of such stock on The Nasdaq Capital Market on that date, was approximately $15.6 million.As of December 14, 2018, the registrant had outstanding 85,091,062 shares of common stock, par value $0.01 per share.DOCUMENTS INCORPORATED BY REFERENCENone.TABLE OF CONTENTSOUTLOOK THERAPEUTICS, INC. ANNUAL REPORT ON FORM 10-K TABLE OF CONTENTSPageCautionary Note Regarding Forward-Looking Statements and Industry DataiiPART I11959595959PART IIITEM 5.Market for Registrant’s Common Equity, Related Stockholder Matters, and IssuerPurchases of Equity SecuritiesITEM 6.Selected Financial DataITEM 7.Management’s Discussion and Analysis of Financial Condition and Results ofOperationsITEM 7A.Quantitative and Qualitative Disclosures about Market RiskITEM 8.Consolidated Financial Statements and Supplementary DataITEM 9.Changes in and Disagreements with Accountants on Accounting and FinancialDisclosureITEM 9A.Controls and ProceduresITEM 9B.Other InformationITEM 10.Directors, Executive Officers and Corporate GovernanceITEM 11.Executive CompensationITEM 12.Security Ownership of Certain Beneficial Owners and Management and RelatedStockholder MattersITEM 13.Certain Relationships and Related Transactions, and Director IndependenceITEM 14.Principal Accounting Fees and ServicesITEM 15.Exhibits and Financial Statement SchedulesITEM 16.Form 10-K Summary6061627879110110110PART III111115122124131PART IV132136In this report, unless otherwise stated or as the context otherwise requires, references to “OutlookTherapeutics,” “Outlook,” “the Company,” “we,” “us,” “our” and similar references refer to OutlookTherapeutics, Inc. (formerly known as Oncobiologics, Inc.) and its consolidated subsidiaries. The Outlooklogo, Oncobiologics logo and other trademarks or service marks of Outlook Therapeutics, Inc. appearing inthis report are the property of Outlook Therapeutics, Inc. This report also contains registered marks,trademarks and trade names of other companies. All other trademarks, registered marks and trade namesappearing in this report are the property of their respective holders.Convenience translations between Swiss Francs, or CHF, and U.S. dollars provided herein are based on thenoon buying rate in New York City for cable transfers in foreign currencies as certified for customspurposes by the Federal Reserve Bank of New York on September 28, 2018, or CHF 0.9813 = $1.00. Wedo not represent that CHF were, could have been, or could be, converted into U.S. dollars at such rate or atany other rate.iTABLE OF CONTENTSCAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRYDATAThis Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27Aof the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, asamended. Forward-looking statements are based on our management’s beliefs and assumptions and oninformation currently available to our management. All statements other than statements of historical factsare “forward-looking statements” for purposes of these provisions, including those relating to future eventsor our future financial performance and financial guidance. In some cases, you can identify forward-looking statements by terminology such as “may,” “might,” “will,” “should,” “expect,” “plan,” “anticipate,”“project,” “believe,” “estimate,” “predict,” “potential,” “intend,” “continue,” the negative of terms like theseor other comparable terminology, in connection with any discussion of future operating or financialperformance. These statements are only predictions. All forward-looking statements included in this AnnualReport on Form 10-K are based on information available to us on the date hereof, and we assume noobligation to update any such forward-looking statements. Any or all of our forward-looking statements inthis document may turn out to be wrong. Actual events or results may differ materially. Our forward-looking statements can be affected by inaccurate assumptions we might make or by known or unknownrisks, uncertainties and other factors. We discuss many of these risks, uncertainties and other factors in thisAnnual Report on Form 10-K in greater detail under the heading “Item 1A — Risk Factors.” We cautioninvestors that our business and financial performance are subject to substantial risks and uncertainties.This Annual Report on Form 10-K also contains estimates, projections and other information concerningour industry, our business, and the markets for certain diseases, including data regarding the estimated sizeof those markets, and the incidence and prevalence of certain medical conditions. Information that is basedon estimates, forecasts, projections, market research or similar methodologies is inherently subject touncertainties and actual events or circumstances may differ materially from events and circumstancesreflected in this information. Unless otherwise expressly stated, we obtained this industry, business, marketand other data from reports, research surveys, studies and similar data prepared by market research firmsand other third parties, industry, medical and general publications, government data and similar sources.ii•Leveraging the recently added ophthalmic drug development and commercialization expertise ofour leadership team. We recently appointed a Chief Operating Officer and a Chief CommercialOfficer with extensive expertise in developing and commercializing treatments for retinal diseases,such as wet AMD. We intend to leverage their collective experience to further the development of,and develop an optimal commercial strategy for, ONS-5010.•Engaging with regulatory agencies to establish clear guidelines for potential approval. We havecontinued our approach to work closely with regulatory authorities to develop and conductclinical trials that we believe will appropriately support approval of our product candidates if ourclinical trials are successful. We conducted a successful end of Phase 2 meeting with the FDA forONS-5010, and expect to submit an IND in the first quarter of 2019. As an ophthalmicformulation of Avastin, we believe ONS-5010 has a well defined regulatory pathway.•Conducting and efficiently executing adequate and well-controlled clinical trials inside andoutside of the United States to support potential approval. We have designed our ONS-5010clinical programTABLE OF CONTENTSPART IItem 1. BusinessOverviewWe are a late clinical-stage biopharmaceutical company focused on developing and commercializing ONS-5010, a complex, technically challenging and commercially attractive monoclonal antibody, or mAb, forvarious ophthalmic indications. Our goal is to launch ONS-5010 as the first, and only, approvedbevacizumab in the United States, Europe, Japan and other markets for the treatment of wet age relatedmacular degeneration, or wet AMD, diabetic macular edema, or DME, and branch retinal vein occlusion, orBRVO.ONS-5010 is an innovative mAb therapeutic product candidate currently enrolling patients in a clinical trialoutside the United States designed to serve as the first of two adequate and well controlled studiesevaluating ONS-5010 as a treatment for wet AMD. We plan to submit an investigational new drug, or IND,application with the U.S. Food and Drug Administration, or FDA, in the first quarter of calendar 2019. TheU.S. portion of the second study is also expected to begin at that time. Our ONS-5010 wet AMD clinicalprogram was reviewed at a successful end of Phase 2 meeting with the FDA conducted in 2018. If theprogram is successful, it will support our plans to submit for regulatory approval in multiple markets in2020, including the United States, Europe and Japan. Because there are no approved bevacizumab productsfor the treatment of retinal diseases in such major markets, we are developing ONS-5010 as an innovativetherapy and not using the biosimilar drug development pathway. If approved, we believe ONS-5010 haspotential to mitigate risks associated with off-label compounding of Avastin or other drugs. Off-labelcompounding of Avastin is currently estimated to account for approximately 50% of all wet AMDprescriptions in the United States.Separately, we have advanced two biosimilar product candidates through Phase 1 clinical trials and intopreparations for Phase 3 clinical trials: ONS-3010, a biosimilar to adalimumab (Humira), and ONS-1045, abiosimilar to bevacizumab (Avastin). We only plan to further advance ONS-3010 and ONS-1045 in majormarkets, including the United States, upon entering into a license or co-development agreement with apartner in the major markets. The emerging markets rights to these product candidates have been licensedto third parties for development in those markets. At this time, ONS-5010 is our only product candidate inactive development.Our StrategyOur goal is to launch ONS-5010 as the first, and only, approved bevacizumab for ophthalmic use in theUnited States, Europe, Japan and other markets. In order to achieve this goal, we have adopted astreamlined clinical and regulatory strategy to quickly and efficiently complete the process required tosubmit a Biologics License Application, or BLA, with the FDA at the earliest opportunity. The key elementsof our strategy include:1•Reducing and managing costs to minimize additional investment to complete our developmentprograms. We have made the strategic decision to outsource the commercial manufacturing andfuture clinical trial supply manufacturing for our product candidates. This decision is expected tosignificantly reduce future overhead costs not directly related to our ONS-5010 program.TABLE OF CONTENTSto take advantage of reduced costs for clinical trials conducted outside of the United States. Weintend to further this strategy, as appropriate, in a manner that will support a BLA submission inthe United States at the earliest opportunity for ONS-5010.Our Product Candidate PortfolioOur product candidate portfolio includes our lead product candidate, ONS-5010, which we are activelydeveloping, as well as our biosimilar product candidates, which we only plan to further advance, uponentering into a license or co-development agreement with a partner in the major markets. We refer to theselegacy biosimilar product candidates as our inactive development portfolio.Active Development PortfolioONS-5010 — Bevacizumab for Ophthalmic UseONS-5010 is a proprietary ophthalmic formulation of bevacizumab to be administered as an intravitreal, orIVT, injection for the treatment of wet AMD and other retina diseases. Bevacizumab is a full lengthhumanized anti- vascular endothelial growth factor, or VEGF, antibody that inhibits VEGF and associatedangiogenic activity. Our proprietary ophthalmic bevacizumab product candidate, ONS-5010, is an anti-VEGF recombinant humanized mAb formulated as a single use vial for IVT injection. By inhibiting theVEGF receptor from binding, bevacizumab prevents the growth of abnormal tumor blood vessels beneaththe retina.Previously, ONS-5010 was being developed by us as a biosimilar (ONS-1045) of the cancer drug Avastinfor use in oncology indications. In the ONS-1045 program, our bevacizumab met the primary andsecondary endpoints in a three-arm single-dose pharmacokinetic, or PK, Phase 1 clinical trial (see “— Inactive Development Portfolio — ONS-1045 — Bevacizumab (Avastin) Biosimilar”). All of the PKendpoints met the bioequivalency criteria of the geometric mean ratios within 90% confidence interval of80-125% when compared to both U.S.- and E.U.-sourced Avastin reference products. We are developingONS-5010 as an innovative therapy and not using the biosimilar drug development pathway. Thefollowing figure demonstrates the concentration-time profile of ONS-1045, U.S.-licensed Avastin, andE.U.-licensed Avastin as the mean. The vertical line at time zero denotes dosing. These results suggest ahigh degree of similarity among the three products.2TABLE OF CONTENTSComparative Potency of ONS-1045 versus Avastin (U.S. and E.U.)Market OpportunityAge related macular degeneration, or AMD, is a common eye condition and a leading cause of vision lossamong people age 50 and older. Wet AMD is a form of  “late stage” AMD, and is also called neovascularAMD. In wet AMD, abnormal blood vessels grow underneath the retina. These vessels can leak fluid andblood, which may lead to swelling and damage of the macula causing vision loss. With wet AMD,abnormally high levels of VEGF are secreted in the eyes. VEGF is a protein that promotes the growth ofnew abnormal blood vessels. Anti-VEGF injection therapy blocks this growth. Since the advent of anti-VEGF therapy, it has become the standard of care treatment option within the retina community, globally.Wet AMD is a significant disease worldwide, with an estimated prevalence of over 2.8 million patientsdiagnosed in the United States, top five European countries and Japan alone in 2018 (GlobalData). Annualrevenue from anti-VEGFs (Avastin, Lucentis, Eylea and Macugen) is estimated to exceed $9.1 billion inwet AMD, DME and BRVO in 2018 (GlobalData). Although bevacizumab is not currently approved by theFDA for use in treating wet AMD, it is believed that bevacizumab currently accounts for approximately50% of all wet AMD prescriptions in the United States. If approved, we believe ONS-5010 has potential tomitigate risks associated with off-label compounding of Avastin or other drugs. Off-label compounding ofAvastin is currently estimated to account for approximately 50% of all wet AMD prescriptions in the UnitedStates. If approved, we anticipate seeking to promote use of ONS-5010 rather than compounded Avastin orother drugs.DME is caused by a complication of diabetes called diabetic retinopathy. Diabetic retinopathy is the mostcommon diabetic eye disease and the leading cause of irreversible blindness in working age Americans.Diabetic retinopathy usually affects both eyes and is caused by ongoing damage to the small blood vesselsof the retina. The leakage of fluid into the retina may lead to swelling of the surrounding tissue, includingthe macula. DME is the most common cause of vision loss in people with diabetic retinopathy. DME canoccur at any stage of diabetic retinopathy, although it is more likely to occur in later stages of the disease.There were approximately 1.0 million patients with DME in the United States, top five European countriesand Japan alone in 2018 (GlobalData).In BRVO, retinal vein occlusions occur when there is a blockage of veins carrying blood with neededoxygen and nutrients away from the nerve cells in the retina. A blockage in the main vein of the retina isreferred to as a central retinal vein occlusion, or CRVO, while a blockage in a smaller vein is called abranch retinal vein3TABLE OF CONTENTSocclusion, or BRVO. Per the American Academy of Ophthalmology, retinal vein occlusions are the secondmost common retinal vascular disorder after diabetic retinopathy. There were an estimated 0.3 millionpatients with BRVO in the United States, top five European countries and Japan alone in 2018(GlobalData).Clinical Development StatusONS-5010 is currently enrolling patients in an ex-U.S. clinical trial for wet AMD. This first clinical studyfor ONS-5010 is designed to serve as the first of two adequate and well controlled studies for wet AMD.The second adequate and well controlled study is currently being planned and is expected to beginenrolling patients in the United States in the first quarter of 2019 upon the submission of an INDapplication with the FDA. Our wet AMD clinical program was reviewed at a successful end of Phase 2meeting held with the FDA earlier in 2018. If the program is successful, it will support our plans to submitfor regulatory approval in multiple markets in 2020, including the United States, Europe and Japan. Wecurrently expect to report top line data from the first study in the first quarter of 2020, and top line datafrom the second study in the third quarter of 2020, and submit a BLA in the fourth quarter of 2020.In addition to the wet AMD clinical program for ONS-5010, we are also planning to begin enrollingpatients in clinical trials for both DME and BRVO in the second half of 2019.Inactive Development PortfolioONS-3010 — Adalimumab (Humira) BiosimilarHumira, the reference product for ONS-3010, is a subcutaneous injectable mAb that binds to tumornecrosis factor alpha, or TNFα. TNFα belongs to a family of pro-inflammatory cytokines, or solubleprotein mediators, that are key initiators of immune-mediated inflammation in many different diseases, suchas rheumatoid arthritis, psoriatic arthritis, psoriasis, ankylosing spondylitis, Crohn’s disease and ulcerativecolitis. Several biologic agents, including Humira, have been developed to inhibit the inflammatory activityof TNFs in the context of these diseases and are collectively referred to as the anti-TNF class of therapeutics.We have successfully completed a randomized, double-blind, single-dose and single-center Phase 1 clinicaltrial comparing ONS-3010 to Humira in 198 subjects receiving a 40 mg dose in three treatment arms: ONS-3010, U.S.-Humira and E.U.-Humira. This Phase 1 clinical trial was performed at the Center for HumanDrug Research in Leiden, The Netherlands under the auspices of the Stichting Beoordeling EthiekBiomedisch Onderzoek. In this trial, ONS-3010 met its primary and secondary endpoints, demonstrating asimilar PK profile, as well as an immunogenicity profile equivalent to both U.S.- and E.U.-Humira acrossall three treatment arms. ONS-3010 was well tolerated and demonstrated a favorable safety profile, whichwas similar to the safety profile for both U.S.- and E.U.-Humira, and demonstrated a lower injection sitereaction rate than both U.S.- and E.U.-Humira.Regulatory Status and Development PlanPrior to commencement of our Phase 1 clinical trial in 2014, we received feedback from both FDA and theEuropean Medicines Agency, or EMA, which provided guidance for the design of the clinical trial and oursimilarity testing approach. Since completion of the Phase 1 clinical trial, we had additional regulatorymeetings with the FDA and the EMA, as well as other national regulatory agencies such as the Medicinesand Healthcare Products Regulatory Agency, or MHRA, the Swedish Medical Products Agency, and theCanadian regulatory agency, Health Canada to obtain further guidance on the Phase 3 clinical trial design inplaque psoriasis and the general similarity development plan for registration. We have out-licensed all ofthe emerging markets development rights to third parties. Future development of ONS-3010 as a biosimilarfor Humira in the United States and other developed markets will only occur if we secure a developmentpartner or sell those development rights completely.ONS-1045 — Bevacizumab (Avastin) BiosimilarAvastin, the reference product for ONS-1045, is a mAb administered by infusion that interferes with tumorgrowth by binding to VEGF, a protein that stimulates the formation of new blood vessels and is approvedfor use in the United States, Europe and elsewhere for the treatment of various forms of cancer.4TABLE OF CONTENTSWe have completed a randomized, double-blind, single-dose and single-center Phase 1 clinical trialcomparing ONS-1045 to U.S.-licensed Avastin and E.U.-licensed Avastin in 135 subjects. This Phase 1 trialwas performed at the Center for Human Drug Research in Leiden, The Netherlands under the auspices ofthe Stichting Beoordeling Ethiek Biomedisch Onderzoek. PK data, safety and immunogenicity werecollected for a total of 98 days after a single 2.0 mg/kg dose. In this trial, ONS-1045 met its primary andsecondary endpoints demonstrating a similar PK profile, as well as an immunogenicity profile equivalent toboth U.S.- and E.U.-Avastin. Safety was comparable across all three groups. Immunogenicity was low withonly one subject in the E.U.-licensed Avastin arm developing an anti-drug antibody, or ADA, at day 98.No neutralizing antibodies were detected in any arm. The results of the Phase 1 trial (shown in the figureincluded under “— Active Development Portfolio — ONS-5010 — Bevacizumab for Ophthalmic Use”)suggest a high degree of similarity between the three products.Regulatory Status and Development PlanPrior to the commencement of the Phase 1 clinical trial in 2015, we received feedback from both the FDAand the EMA, which provided guidance for the clinical trial design and similarity testing approach. Wehave completed the next series of our regulatory interactions to obtain further guidance on ourconfirmatory trial design. Based on input from the FDA, EMA, MHRA and the Danish Health andMedicines Agency, we believe we have designed the appropriate confirmatory trial. We have out-licensedall of the emerging markets development rights to third parties. Future development of ONS-1045 as abiosimilar for Avastin in the United States and other developed markets will only occur if we secure adevelopment partner or sell those development rights completely.Commercialization, Sales and MarketingWe currently own all of the development and commercialization rights to ONS-5010. Ourcommercialization strategy is to maximize the revenue potential of ONS-5010, which could potentiallyinclude marketing it ourselves if approved, as well as seeking and securing licensing opportunities to fundits continued development. If approved, we believe that ONS-5010 will be entitled to 12 years marketingexclusivity against biosimilar competition.To provide additional resources to fund the ONS-5010 program, we intend to continue to pursue potentialstrategic collaborations, and partnerships with biotechnology and pharmaceutical companies in the UnitedStates and other regions for our clinical stage biosimilar assets, or even the outright sale of the developmentrights of those assets outside of the emerging markets territories previously licensed. Currently, we have ajoint participation agreement in place for ONS-3010 with Zhejiang Huahai Pharmaceutical Co., Ltd., orHuahai, whereby we share post-Phase 1 development costs with Huahai, and proportionately share therevenues from commercialization of ONS-3010 in the United States, Canada, European Union, or E.U.,Japan, Australia and New Zealand. We could also be required to form a joint venture to further develop andcommercialize ONS-3010 with Huahai in the agreed countries, if so requested by Huahai. However, we donot have any other development and commercialization agreements for the United States or for major ex-U.S. markets, such as the E.U. and Japan.For emerging markets opportunities, in 2012 and 2013, we established early country-specific partnershipsfor ONS-3010 and ONS-1045 in China with Huahai, in India with IPCA Laboratories Limited, or IPCA,and in Mexico with Laboratories Liomont, S.A. de C.V., or Liomont, and in September 2017 we enteredinto an agreement with BioLexis Pte. Ltd., or BioLexis (formerly GMS Tenshi Holdings Pte. Limited), ourcontrolling stockholder, providing for the license of rights to ONS-3010 and ONS-1045 in emergingmarkets excluding China, India and Mexico. In each of these smaller ex-U.S. markets, we have identifiedpotential synergies between our partner’s strategy to enter the biologics marketplace and access to ourbiosimilar development platform. For many of these emerging market opportunities, our partners may beable to take advantage of differing regulatory requirements that could allow us to begin generating sales asearly as 2020, before we begin to generate commercial revenue in regions like the United States, the E.U.and Japan. To date, these agreements have collectively provided an aggregate of  $29.0 million in paymentsas of September 30, 2018.Collaboration and License AgreementsWe enter into collaboration and license agreements in the ordinary course of our business. We have in-licensed certain technology from Selexis SA, or Selexis, that we used to research and develop our product5TABLE OF CONTENTScandidates. For product candidates developed using the Selexis technology, we enter into commerciallicense agreements with Selexis that give us rights to commercialize, file investigational new drugs, or INDsand enter into collaborative arrangements with third parties for the further development andcommercialization of such biosimilar product candidates.MTTR — Strategic Partnership Agreement (ONS-5010)We entered into a strategic partnership agreement with MTTR, LLC, or MTTR, effective February 15,2018, to advise on regulatory, clinical and commercial strategy and assist in obtaining approval of ONS-5010, our bevacizumab therapeutic product candidate for ophthalmic indications. Under the terms of theagreement, we currently pay MTTR a $58,333 monthly consulting fee. In March 2018, we amended theMTTR agreement and agreed to pay a one-time fee of  $268,553 to MTTR by September 2020 if certainregulatory milestones are achieved earlier than anticipated. Beginning January 2019, the monthly feeincreases to $105,208 per month, and then, after launch of ONS-5010 in the United States, to $170,833 permonth (the amount of which is reduced by 50% in the event net sales of ONS-5010 are below a certainthreshold million per year). We also agreed to pay MTTR a tiered percentage of the net profits of ONS-5010 ranging in the low- to mid-teens, with the ability to credit monthly fees paid to MTTR. Unless earlierterminated, the MTTR Agreement expires, on a country-by-country basis, upon the later of expiration ofany regulatory exclusivity in such country and, in certain major market countries, ten years after launch ofONS-5010 in such major market country, and in all other countries in the territory, ten years after launch ofONS-5010 in any country in the territory. Either party may terminate the MTTR Agreement upon theuncured material breach of the agreement by the other party or upon a bankruptcy or insolvency of theother party. Additionally, we are permitted to terminate the MTTR Agreement in the event of certainspecified development or commercial failures of ONS-5010 and may terminate either the entire MTTRAgreement or with respect to certain consultants in the event that certain consultants are not able to performtheir obligations under the MTTR Agreement and a suitable replacement consultant is not found.Additionally, in the event of a change of control of our company or sale of our rights to ONS-5010, MTTRwill be entitled to additional consideration equal to its profit sharing percentage multiplied by the value ofthe applicable transaction that relates to ONS-5010 (subject to certain adjustments). Our recently appointedChief Operating Officer has a 16.66% ownership interest in MTTR. For the year ended September 30,2018, MTTR earned an aggregate of $602,629, which includes monthly consulting fees, expensereimbursement and an initial upfront payment of  $75,000.Selexis — Humira (ONS-3010), Avastin (ONS-1045) and Herceptin (ONS-1050)In October 2011, we entered into a research license agreement with Selexis pursuant to which we acquired anon-exclusive license to conduct research internally or in collaboration with third parties to developrecombinant proteins from mammalian cells lines created using the Selexis expression technology, or theSelexis Technology. The original research license had a three-year term, but on October 9, 2014, wasextended for an additional three-year term through October 9, 2017. A limited scope license was extendedfor one more year through October 9, 2018, following which, the research license terminated. As such, weare no longer using the Selexis Technology in our research. We may sublicense our rights with Selexis’prior written consent but are prohibited from making commercial use of the Selexis Technology or theresultant recombinant proteins comprising our biosimilars in humans, or from filing an IND, absent acommercial license agreement with Selexis covering the particular biosimilar product candidate developedunder the research license.In connection with the entry into the research license, we paid Selexis an initial fee of CHF 100,000(approximately $0.1 million) and agreed to make additional annual maintenance payments of the sameamount for each of the three years that the research license agreement term was extended. As ofSeptember 30, 2018, we have paid Selexis an aggregate of approximately $0.6 million under the researchlicense agreement.Selexis also granted us a non-transferrable option to obtain a perpetual, non-exclusive, worldwidecommercial license under the Selexis Technology to manufacture, or have manufactured, a recombinantprotein produced by a cell line developed using the Selexis Technology for clinical testing and commercialsale. We exercised this option in April 2013 and entered into three commercial license agreements asdescribed more fully below.6TABLE OF CONTENTSCommercial License AgreementsOn April 11, 2013, following the exercise of our option to enter a commercial license under the Selexisresearch license, we entered into commercial license agreements with Selexis for each of the ONS-3010,ONS-1045 and ONS-1050 (a biosimilar to Herceptin that we are no longer developing) biosimilar productcandidates that were developed under the research license (which agreements were subsequently amendedon May 21, 2014). Under the terms of each commercial license agreement, we acquired a non-exclusiveworldwide license under the Selexis Technology to use the cell lines developed under the research licenseand related materials, to manufacture and commercialize licensed and final products, with a limited right tosublicense.We were required to pay an upfront licensing fee of CHF 65,000 (approximately $0.1 million) to Selexisfor each commercial license and also agreed to pay up to CHF 365,000 (approximately $0.4 million) inmilestone payments for each licensed product. In addition, we are required to pay a single-digit royalty ona final product-by-final product and country-by-country basis, based on worldwide net sales of such finalproducts by us or any of our affiliates or sublicensees during the royalty term. The royalty term for eachfinal product in each country is the period commencing from the first commercial sale of the applicablefinal product in the applicable country and ending on the expiration of the specified patent coverage. Atany time during the term, we have the right to terminate our royalty payment obligation by providingwritten notice to Selexis and paying Selexis a royalty termination fee of CHF 1,750,000 (approximately$1.8 million). As of September 30, 2018, we have paid Selexis an aggregate of approximately $0.4 millionunder the commercial license agreements.Each of our commercial agreements with Selexis will expire in its entirety upon the expiration of allapplicable Selexis patent rights. The licensed patent rights consist of two patent families. The first patentfamily relates to methods of transferring cells, and is filed in the United States, Australia, Canada, Europe,Japan and Singapore. This patent family will begin to expire worldwide in 2022. The second patent familyclaims DNA compositions of matter useful for having protein production increasing activity. This patentfamily is filed in the United States, Australia, Canada, China, Europe, Hong Kong, Israel, India, Japan,South Korea, Russia, Singapore and South Africa. This patent family will begin to expire worldwide in2025. Either party may terminate the related agreement in the event of an uncured material breach by theother party or in the event the other party becomes subject to specified bankruptcy, winding up or similarcircumstances.Either party may also terminate the related agreement under designated circumstances if the SelexisTechnology infringes third-party intellectual property rights. In addition, we have the right to terminateeach of the commercial agreements at any time for our convenience; however, with respect to theagreements relating to ONS-3010 and ONS-1045, this right is subject to Liomont’s consent pursuant to acorresponding letter we executed in conjunction with the standby agreement entered into between Selexisand Liomont on November 11, 2014. The standby agreement permits Liomont to assume the license underthe applicable commercial agreement for Mexico upon specified triggering events involving ourbankruptcy, insolvency or similar circumstances.Ex-U.S. Collaboration and License AgreementsAside from our joint participation agreement in place for ONS-3010 with Huahai, whereby we agreed toshare post-Phase 1 clinical development costs, and proportionately share the revenues fromcommercialization of ONS-3010 in the United States, Canada, E.U. and Japan, among other markets, andunder which we could be required to form a joint venture with Huahai for ONS-3010 if so requested byHuahai, we do not have any commercial license or development agreements for the United States or formajor ex-U.S. markets, such as the E.U. or Japan. We currently have collaboration and license agreementsfor smaller ex-U.S. markets and, collectively, such agreements have provided an aggregate of $29.0 million in payments as of September 30, 2018 for our most advanced biosimilar product candidates.Our contracts include agreements with IPCA (for ONS-3010, ONS-1045 and ONS-1050 in India and otherregional markets), Liomont (for ONS-3010 and ONS-1045 in Mexico), Huahai (for ONS-3010 and ONS-1045 in China) and BioLexis (for ONS-3010 and ONS-1045 in emerging markets excluding China, Indiaand Mexico). Our arrangements with these partners generally include a strategic license for a definedterritory for agreed biosimilar product candidates, and may also include agreements to assist with researchand7TABLE OF CONTENTSdevelopment to assist our contract counterparty in establishing their own mAb research, development andmanufacturing capabilities. Under our existing strategic licensing agreements, we generally received anupfront payment upon execution, and have the ability to earn additional regular milestone payments andthe right to receive royalties (generally a mid-single digit to low-teens percentage rate) based on net sales inthe agreed territory. Our existing agreements to assist with research and development also included anupfront payment upon execution, and we have the ability to earn additional regular milestone payments,and the right to receive royalties (generally a mid-single digit to low-teens percentage rate) based on netsales in the agreed territory.Generally, our agreements expire on a product-by-product basis on the date of the expiration of the royaltyrevenue term for all products in the territory. The royalty revenue term is 10 years from the date of firstcommercial sale and any renewal is subject to good faith negotiation. The license term for the agreedterritory is perpetual. Either party may terminate the agreement in its entirety or with respect to a particularproduct if the other party materially breaches the agreement, subject to specified notice and cure periods. Inaddition, we have the right to terminate the agreement in connection with any interference, opposition orchallenge of our patent rights. If the agreement is terminated due to our breach, our contract counterparty isgenerally free to use all applicable technology and know-how that we have provided under the agreement.As noted above, our collaboration agreements with Huahai also includes a joint participation agreement,which provides for the co-funding of development of ONS-3010 in the United States, Canada, E.U., Japan,Australia and New Zealand and the proportionate sharing of the revenues from commercialization of ONS-3010 in the agreed countries, and also provides for the formation of a joint venture with Huahai to furtherdevelop and commercialize ONS-3010 with Huahai in the agreed countries, if so requested by Huahai.In the event Huahai funds its proportionate share of development costs incurred after completion of the“Phase-3 Ready Package,” Huahai would be entitled to retain its 51% value ownership, with us entitled toretain our 49% value ownership, of ONS-3010 in the agreed countries. Similarly, revenues from thecommercialization of ONS-3010 in the agreed countries (including major markets such as the United Statesand the E.U., among others), would also be shared based on such proportional ownership interests. In theevent that Huahai does not fund its proportionate share of such development costs, the joint participationagreement provides for a proportionate adjustment to our respective value ownership interests based on ourrespective investments in such development costs, which would increase our value ownership interest inONS-3010.Throughout the term of the joint participation agreement, we and our affiliates are prohibited from, directlyor indirectly, conducting or having conducted or funding any discovery, research, development,regulatory, manufacturing or commercialization activity, alone or in collaboration with a third party, of anybiosimilar product having the same reference product as the ONS-3010 compound or correspondingproducts, for use in the United States, Canada, E.U., Japan, Australia and New Zealand, other than ONS-3010 with Huahai pursuant to the joint participation agreement.Unless terminated early upon mutual agreement of the parties, or due to a material breach of either partythat is uncured, the joint participation agreement will terminate upon entry into a mutually acceptablecollaboration agreement between us and Huahai for ongoing development and commercialization of ONS-3010 in the agreed countries, or we and Huahai enter into an agreed license with a third party for suchongoing development and commercialization of ONS-3010 in the agreed countries. If the jointparticipation agreement is terminated for cause due to our breach, we could be required to refund Huahaiany amounts funded by Huahai to develop ONS-3010, as well as pay Huahai a 6% royalty on net salesmade by us or an affiliate, as well as 25% of revenues we receive from a sublicensee for commercial salesof ONS-3010 until the aggregate of such payments is equal to 10 times the amount Huahai funded for thedevelopment of ONS-3010.Furthermore, if we were to file a voluntary petition in bankruptcy, or have an involuntary petition filed thatwe could not dismiss within 120 days, then Huahai would be granted an exclusive license to continue thedevelopment and commercialization of ONS-3010 in the agreed countries.As of September 30, 2018, we have received an aggregate of  $5.0 million of payments from IPCA underour various agreements, an aggregate of  $3.0 million of payments from Liomont under our variousagreements,8•Abicipar Pegol, a VEGF targeting DARPin molecule being developed by Allergan plc;•RTH258, an anti-VEGF agent being developed by Novartis International AG;TABLE OF CONTENTSan aggregate of  $16.0 million of payments from Huahai under our various agreements, $10.0 million ofwhich were pursuant to the joint participation agreement and an aggregate of  $5.0 million from BioLexisunder our joint development and licensing agreement.CompetitionCompetition in the area of pharmaceutical research and development is intense and significantly depends onscientific and technological factors. These factors include the availability of patent and other protection fortechnology and products, the ability to commercialize technological developments and the ability to obtainregulatory approval for testing, manufacturing and marketing. Our competitors include majorpharmaceutical and specialized biotechnology companies, many of which have financial, technical andmarketing resources significantly greater than ours. In addition, many biotechnology companies haveformed collaborations with large, established companies to support research, development andcommercialization of products that may be competitive with ours. Academic institutions, governmentalagencies and other public and private research organizations are also conducting research activities andseeking patent protection and may commercialize products on their own or through joint ventures. We areaware of certain other products manufactured or under development by competitors that are used for thetreatment of the health conditions that we have targeted for product development. We can provide noassurance that developments by others will not render our technology obsolete, noncompetitive or harmour development strategy, that we will be able to keep pace with new technological developments or thatour technology will be able to supplant established products and methodologies in the therapeutic areas thatare targeted by us. The foregoing factors could have a material adverse effect on our business, prospects,financial condition and results of operations. These companies, as well as academic institutions,governmental agencies and private research organizations, also compete with us in recruiting and retaininghighly qualified scientific personnel and consultants.We will encounter competition from existing firms that offer competitive solutions in ocular diseases. Thesecompetitive companies could develop products that are superior to, or have greater market acceptance, thanthe products being developed by us. We will have to compete against other biotechnology andpharmaceutical companies with greater market recognition and greater financial, marketing and otherresources.Wet AMD MarketAMD is a medical condition that usually affects older adults and generally results in a loss of vision. AMDoccurs in “dry” (non-exudative) and “wet” (exudative) forms. Wet AMD is the advanced form of maculardegeneration that involves the formation of abnormal and leaky blood vessels in the back of the eye behindthe retina, through a process known as choroidal neovascularization. While the wet form accounts forapproximately 15% of all AMD cases, according to NEI, it is responsible for 90% of severe vision lossassociated with AMD. NEI also claims that the prevalence of wet AMD among adults 40 years or older inthe United States is estimated at approximately 1.75 million people. In addition, more than 200,000 newcases are diagnosed annually in North America.Competitive Landscape in Wet AMDThe current FDA approved market leaders for the treatment of wet AMD are VEGF inhibitors, includingLucentis, Eylea and off-label Avastin. Annual revenue (worldwide) is estimated to be approximately$9.1 billion in 2018 for anti-VEGF therapeutics (GlobalData). Off-label use of Avastin is estimated to beapproximately 50% of the overall market in the United States. Avastin, Lucentis, and Eylea areadministered via frequent intravitreal injections directly into the eye. We are developing ONS-5010 as areplacement for the use of off-label Avastin in the treatment of wet AMD, as well as DME and BRVO.In addition to the other treatments used in patients with wet AMD, there are various other companies withproduct candidates in Phase 1, 2 and 3 clinical trials for the treatment of wet AMD. Programs currently inPhase 2 or Phase 3 clinical trials include, but are not limited to:9•X-82, an oral tyrosine kinase inhibitor being developed by Tyrogenex, Inc.;•ALG-1001, an integrin targeting peptide being developed by Allegro Ophthalmics LLC;•Zimura, a C-3 inhibitor being developed by Ophthotech Corporation;•RG7716, a bispecific antibody to both VEGF-A and Ang2 being developed by F. Hoffman-LaRoche AG;•OPT-302, an inhibitor of VEGF-C and VEGF-D being developed by Opthea Limited; and•PAN-90806, a selective inhibitor of VEGF being developed by PanOptica Inc.TABLE OF CONTENTSAll of these product candidates in clinical development, with the exception of X-82 and PAN-90806, use anintravitreal route of administration much like the current standards of care. We believe that ONS-5010 haspotential competitive advantages through the familiarity of patients and physicians in using off-labelAvastin. We also believe we have reduced the risk in our clinical program by leveraging our prior work indeveloping a biosmilar drug product candidate for Avastin as a treatment for cancer. However, clinical trialdata from other clinical programs may negatively impact our ability to garner future financing or businesscollaborations, combinations or transactions with other pharmaceutical and biotechnology companies.Intellectual PropertyOur commercial success depends in part on our ability to avoid infringing the proprietary rights of thirdparties, our ability to obtain and maintain proprietary protection for our technologies where applicable andto prevent others from infringing our proprietary rights. We seek to protect our proprietary technologiesby, among other methods, evaluating relevant patents, establishing defensive positions, monitoring E.U.oppositions and pending intellectual property rights, preparing litigation strategies in view of the U.S.legislative framework and filing U.S. and international patent applications on technologies, inventions andimprovements that are important to our business. As of September 30, 2018, we own eight pending U.S.non-provisional applications, and 51 pending international applications that were nationalized from eightPatent Cooperation Treaty, or PCT, applications, and one pending U.S. provisional application, which relateto formulations developed for ONS-3010, ONS-5010/ONS-1045 and ONS-1050, methods of antibodypurification, methods for purifying antibodies to separate isoforms, methods of use, methods of reducinghigh molecular weight species, and modulating afucosylated species as well as efficiently determining theamino acid sequence of antibodies. Our first PCT application was nationalized in April 2016 in Australia,Canada, China, Europe, Hong Kong, India, Japan, Mexico and the United States. If granted, patents issuingfrom these nine applications are expected to expire in 2034, absent any adjustments or extensions. Oursecond PCT application was nationalized in July 2017 in Europe and the United States. If granted, patentsissuing from these two applications are expected to expire in 2036, absent any adjustments or extensions.Our third PCT application was nationalized in June 2018 in Australia, Canada, China, Europe, India, Japan,Mexico and the United States. If granted, patents issuing from these eight applications are expected toexpire in 2036, absent any adjustments or extensions. Our fourth PCT application was nationalized inJuly 2018 in Australia, Canada, China, Europe, India, Japan, Mexico and the United States. If granted,patents issuing from these eight applications are expected to expire in 2037, absent any adjustments orextensions. Our fifth PCT application was nationalized in July 2018 in Australia, Canada, China, Europe,India, Japan, Mexico and the United States. If granted, patents issuing from these eight applications areexpected to expire in 2037, absent any adjustments or extensions. Our sixth PCT application wasnationalized in July 2018 in Australia, Canada, China, Europe, India, Japan, Mexico and the United States.If granted, patents issuing from these eight applications are expected to expire in 2037, absent anyadjustments or extensions. Our seventh PCT application was nationalized in August 2018 in Australia,Canada, China, Europe, India, Japan, Mexico and the United States. If granted, patents issuing from theseeight applications are expected to expire in 2037, absent any adjustments or extensions. Our eighth PCTapplication was nationalized in August 2018 in Australia, Canada, China, Europe, India, Japan, Mexico andthe United States. If granted, patents issuing from these eight applications are expected to expire in 2037,absent any adjustments or extensions. Any patents that may eventually issue claiming priority to ourprovisional patent application are expected to expire in 2039. We also rely on trade secrets, know-how andcontinuing technological innovation to develop and maintain our proprietary position.10•completion of preclinical laboratory tests and animal studies performed in accordance with theFDA’s current Good Laboratory Practices, or GLP, regulation;•submission to the FDA of an IND, which must become effective before clinical trials may beginand must be updated annually or when significant changes are made;•approval by an independent Institutional Review Board, or IRB, or ethics committee at eachclinical site before the trial is commenced;•performance of adequate and well-controlled human clinical trials to establish the safety, purityand potency of the proposed biologic product candidate for its intended purpose;•preparation of and submission to the FDA of a BLA after completion of all pivotal clinical trials;•satisfactory completion of an FDA Advisory Committee review, if applicable;•a determination by the FDA within 60 days of its receipt of a BLA to file the application forreview;•satisfactory completion of an FDA pre-approval inspection of the manufacturing facility orfacilities at which the proposed product is produced to assess compliance with cGMP and to assurethat the facilities, methods and controls are adequate to preserve the biological product’scontinued safety, purity and potency, and of selected clinical investigation sites to assesscompliance with Good Clinical Practices, or GCP; and•FDA review and approval of the BLA to permit commercial marketing of the product forparticular indications for use in the United States.TABLE OF CONTENTSThe term of individual patents depends upon the legal term of the patents in countries in which they areobtained. In most countries, including the United States, the patent term is generally 20 years from theearliest date of filing a non-provisional patent application in the applicable country. In the United States, apatent’s term may, in certain cases, be lengthened by patent term adjustment, which compensates a patenteefor administrative delays by the United States Patent and Trademark Office in examining and granting apatent or may be shortened if a patent is terminally disclaimed over a commonly owned patent or a patentnaming a common inventor and having an earlier expiration date.RegulatoryGovernment Regulation and Product ApprovalThe FDA and other regulatory authorities at federal, state, and local levels, as well as in foreign countries,extensively regulate, among other things, the research, development, testing, manufacture, quality control,import, export, safety, effectiveness, labeling, packaging, storage, distribution, record keeping, approval,advertising, promotion, marketing, post-approval monitoring, and post-approval reporting of biologicssuch as those we are developing. We, along with third-party contractors, will be required to navigate thevarious preclinical, clinical and commercial approval requirements of the governing regulatory agencies ofthe countries in which we wish to conduct studies or seek approval or licensure of our product candidates.The process required by the FDA before biologic product candidates may be marketed in the United Statesgenerally involves the following:Preclinical and Clinical DevelopmentPrior to beginning the first clinical trial with a product candidate in the United States, we must submit anIND to the FDA. An IND is a request for authorization from the FDA to administer an investigational newdrug product to humans. The central focus of an IND submission is on the general investigational plan andthe protocol(s) for clinical studies. The IND also includes results of animal and in vitro studies assessing thetoxicology, pharmacokinetics, pharmacology, and pharmacodynamic characteristics of the product;chemistry, manufacturing, and controls information; and any available human data or literature to supportthe use of the investigational product. An IND must become effective before human clinical trials maybegin. The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA,11•Phase 1 — The investigational product is initially introduced into healthy human subjects orpatients with the target disease or condition. These studies are designed to test the safety, dosagetolerance, absorption, metabolism and distribution of the investigational product in humans, theside effects associated with increasing doses, and, if possible, to gain early evidence oneffectiveness.•Phase 2 — The investigational product is administered to a limited patient population with aspecified disease or condition to evaluate the preliminary efficacy, optimal dosages and dosingschedule and to identify possible adverse side effects and safety risks. Multiple Phase 2 clinicaltrials may be conducted to obtain information prior to beginning larger and more expensivePhase 3 clinical trials.•Phase 3 — The investigational product is administered to an expanded patient population tofurther evaluate dosage, to provide statistically significant evidence of clinical efficacy and tofurther test for safety, generally at multiple geographically dispersed clinical trial sites. Theseclinical trials are intended to establish the overall risk/benefit ratio of the investigational productand to provide an adequate basis for product approval.TABLE OF CONTENTSwithin the 30-day time period, raises safety concerns or questions about the proposed clinical trial. In such acase, the IND may be placed on clinical hold and the IND sponsor and the FDA must resolve anyoutstanding concerns or questions before the clinical trial can begin. Submission of an IND therefore mayor may not result in FDA authorization to begin a clinical trial.Clinical trials involve the administration of the investigational product to human subjects under thesupervision of qualified investigators in accordance with GCPs, which include the requirement that allresearch subjects provide their informed consent for their participation in any clinical study. Clinical trialsare conducted under protocols detailing, among other things, the objectives of the study, the parameters tobe used in monitoring safety and the effectiveness criteria to be evaluated. A separate submission to theexisting IND must be made for each successive clinical trial conducted during product development and forany subsequent protocol amendments. Furthermore, an independent IRB for each site proposing to conductthe clinical trial must review and approve the plan for any clinical trial and its informed consent formbefore the clinical trial begins at that site, and must monitor the study until completed. Regulatoryauthorities, the IRB or the sponsor may suspend a clinical trial at any time on various grounds, including afinding that the subjects are being exposed to an unacceptable health risk or that the trial is unlikely to meetits stated objectives. Some studies also include oversight by an independent group of qualified expertsorganized by the clinical study sponsor, known as a data safety monitoring board, which providesauthorization for whether or not a study may move forward at designated check points based on access tocertain data from the study and may halt the clinical trial if it determines that there is an unacceptable safetyrisk for subjects or other grounds, such as no demonstration of efficacy. There are also requirementsgoverning the reporting of ongoing clinical studies and clinical study results to public registries.For purposes of BLA approval, human clinical trials are typically conducted in three sequential phases thatmay overlap.In some cases, the FDA may require, or companies may voluntarily pursue, additional clinical trials after aproduct is approved to gain more information about the product. These so- called Phase 4 studies may bemade a condition to approval of the BLA. Concurrent with clinical trials, companies may completeadditional animal studies and develop additional information about the biological characteristics of theproduct candidate, and must finalize a process for manufacturing the product in commercial quantities inaccordance with cGMP requirements. The manufacturing process must be capable of consistentlyproducing quality batches of the product candidate and, among other things, must develop methods fortesting the identity, strength, quality and purity of the final product, or for biologics, the safety, purity andpotency. Additionally, appropriate packaging must be selected and tested and stability studies must beconducted to demonstrate that the product candidate does not undergo unacceptable deterioration over itsshelf life.BLA Submission and ReviewAssuming successful completion of all required testing in accordance with all applicable regulatoryrequirements, the results of product development, nonclinical studies and clinical trials are submitted to the12TABLE OF CONTENTSFDA as part of a BLA requesting approval to market the product for one or more indications. The BLAmust include all relevant data available from pertinent preclinical and clinical studies, including negative orambiguous results as well as positive findings, together with detailed information relating to the product’schemistry, manufacturing, controls, and proposed labeling, among other things. The submission of a BLArequires payment of a substantial application user fee to FDA, unless a waiver or exemption applies.Once a BLA has been submitted, the FDA’s goal is to review standard applications within ten months after itaccepts the application for filing, or, if the application qualifies for priority review, six months after theFDA accepts the application for filing. In both standard and priority reviews, the review process is oftensignificantly extended by FDA requests for additional information or clarification. The FDA reviews a BLAto determine, among other things, whether a product is safe, pure and potent and the facility in which it ismanufactured, processed, packed, or held meets standards designed to assure the product’s continuedsafety, purity and potency. The FDA may convene an advisory committee to provide clinical insight onapplication review questions. Before approving a BLA, the FDA will typically inspect the facility orfacilities where the product is manufactured. The FDA will not approve an application unless it determinesthat the manufacturing processes and facilities are in compliance with cGMP requirements and adequate toassure consistent production of the product within required specifications. Additionally, before approving aBLA, the FDA will typically inspect one or more clinical sites to assure compliance with GCP. If the FDAdetermines that the application, manufacturing process or manufacturing facilities are not acceptable, it willoutline the deficiencies in the submission and often will request additional testing or information.Notwithstanding the submission of any requested additional information, the FDA ultimately may decidethat the application does not satisfy the regulatory criteria for approval.After the FDA evaluates a BLA and conducts inspections of manufacturing facilities where theinvestigational product and/or its drug substance will be produced, the FDA may issue an approval letter ora Complete Response letter. An approval letter authorizes commercial marketing of the product withspecific prescribing information for specific indications. A Complete Response letter will describe all of thedeficiencies that the FDA has identified in the BLA, except that where the FDA determines that the datasupporting the application are inadequate to support approval, the FDA may issue the Complete Responseletter without first conducting required inspections, testing submitted product lots, and/or reviewingproposed labeling. In issuing the Complete Response letter, the FDA may recommend actions that theapplicant might take to place the BLA in condition for approval, including requests for additionalinformation or clarification. The FDA may delay or refuse approval of a BLA if applicable regulatorycriteria are not satisfied, require additional testing or information and/or require post-marketing testing andsurveillance to monitor safety or efficacy of a product.If regulatory approval of a product is granted, such approval will be granted for particular indications andmay entail limitations on the indicated uses for which such product may be marketed. For example, theFDA may approve the BLA with a Risk Evaluation and Mitigation Strategy, or REMS, to ensure thebenefits of the product outweigh its risks. A REMS is a safety strategy to manage a known or potentialserious risk associated with a product and to enable patients to have continued access to such medicines bymanaging their safe use, and could include medication guides, physician communication plans, or elementsto assure safe use, such as restricted distribution methods, patient registries and other risk minimizationtools. The FDA also may condition approval on, among other things, changes to proposed labeling or thedevelopment of adequate controls and specifications. Once approved, the FDA may withdraw the productapproval if compliance with pre- and post-marketing requirements is not maintained or if problems occurafter the product reaches the marketplace. The FDA may require one or more Phase 4 post-market trials andsurveillance to further assess and monitor the product’s safety and effectiveness after commercialization,and may limit further marketing of the product based on the results of these post-marketing studies.Post-Approval RequirementsAny products manufactured or distributed by us pursuant to FDA approvals are subject to pervasive andcontinuing regulation by the FDA, including, among other things, requirements relating to record-keeping,reporting of adverse experiences, periodic reporting, product sampling and distribution, and advertisingand promotion of the product. After approval, most changes to the approved product, such as adding new13•restrictions on the marketing or manufacturing of a product, complete withdrawal of the productfrom the market or product recalls;•fines, warning letters or holds on post-approval clinical studies;•refusal of the FDA to approve pending applications or supplements to approved applications, orsuspension or revocation of existing product approvals;•product seizure or detention, or refusal of the FDA to permit the import or export of products; or•injunctions or the imposition of civil or criminal penalties.TABLE OF CONTENTSindications or other labeling claims, are subject to prior FDA review and approval. There also arecontinuing user fee requirements, under which FDA assesses an annual program fee for each productidentified in an approved BLA. Biologic manufacturers and their subcontractors are required to registertheir establishments with the FDA and certain state agencies, and are subject to periodic unannouncedinspections by the FDA and certain state agencies for compliance with cGMP, which impose certainprocedural and documentation requirements upon us and our third-party manufacturers. Changes to themanufacturing process are strictly regulated, and, depending on the significance of the change, may requireprior FDA approval before being implemented. FDA regulations also require investigation and correctionof any deviations from cGMP and impose reporting requirements upon us and any third-partymanufacturers that we 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.The FDA may withdraw approval if compliance with regulatory requirements and standards is notmaintained or if problems occur after the product reaches the market. Later discovery of previouslyunknown problems with a product, including adverse events of unanticipated severity or frequency, or withmanufacturing processes, or failure to comply with regulatory requirements, may result in revisions to theapproved labeling to add new safety information; imposition of post-market studies or clinical studies toassess new safety risks; or imposition of distribution restrictions or other restrictions under a REMSprogram. Other potential consequences include, among other things:The FDA closely regulates the marketing, labeling, advertising and promotion of biologics. A company canmake only those claims relating to safety and efficacy, purity and potency that are approved by the FDAand in accordance with the provisions of the approved label. The FDA and other agencies actively enforcethe laws and regulations prohibiting the promotion of off-label uses. Failure to comply with theserequirements can result in, among other things, adverse publicity, warning letters, corrective advertisingand potential civil and criminal penalties. Physicians may prescribe legally available products for uses thatare not described in the product’s labeling and that differ from those tested by us and approved by theFDA. Such off-label uses are common across medical specialties. Physicians may believe that such off-labeluses are the best treatment for many patients in varied circumstances. The FDA does not regulate thebehavior of physicians in their choice of treatments. The FDA does, however, restrict manufacturer’scommunications on the subject of off-label use of their products.Biosimilars and Reference Product ExclusivityThe Patient Protection and Affordable Care Act, as amended by the Health Care and EducationReconciliation Act, or collectively, the ACA, signed into law in 2010, includes a subtitle called the BiologicsPrice Competition and Innovation Act of 2009, or BPCIA, which created an abbreviated approval pathwayfor biological products that are biosimilar to or interchangeable with an FDA-approved reference biologicalproduct. To date, a number of biosimilars have been licensed under the BPCIA, and numerous biosimilarshave been approved in Europe. The FDA has issued several guidance documents outlining an approach toreview and approval of biosimilars.Biosimilarity, which requires that there be no clinically meaningful differences between the biologicalproduct and the reference product in terms of safety, purity, and potency, can be shown through analyticalstudies, animal studies, and a clinical study or studies. Interchangeability requires that a product isbiosimilar to the reference product and the product must demonstrate that it can be expected to produce thesame clinical results as the reference product in any given patient and, for products that are administered14TABLE OF CONTENTSmultiple times to an individual, the biologic and the reference biologic may be alternated or switched afterone has been previously administered without increasing safety risks or risks of diminished efficacy relativeto exclusive use of the reference biologic. Complexities associated with the larger, and often more complex,structures of biological products, as well as the processes by which such products are manufactured, posesignificant hurdles to implementation of the abbreviated approval pathway that are still being worked outby the FDA.Under the BPCIA, an application for a biosimilar product may not be submitted to the FDA until four yearsfollowing the date that the reference product was first licensed by the FDA. In addition, the approval of abiosimilar product may not be made effective by the FDA until 12 years from the date on which thereference product was first licensed. During this 12-year period of exclusivity, another company may stillmarket a competing version of the reference product if the FDA approves a full BLA for the competingproduct containing that applicant’s own preclinical data and data from adequate and well-controlled clinicaltrials to demonstrate the safety, purity and potency of its product. The BPCIA also created certainexclusivity periods for biosimilars approved as interchangeable products.Other U.S. Healthcare Laws and Compliance RequirementsAlthough we currently do not have any products on the market, our current and future arrangements withhealthcare professionals, principal investigators, consultants, customers and third-party payors expose us tobroadly applicable healthcare regulation and enforcement by the federal government and the states andforeign governments in which we conduct our business. These laws include, without limitation, state andfederal anti-kickback, fraud and abuse, false claims, privacy and security and physician sunshine laws andregulations.The federal Anti-Kickback Statute prohibits, among other things, any person or entity from knowingly andwillfully offering, soliciting, receiving or providing remuneration, directly or indirectly, in cash or in kind,either to induce or award the referral of an individual, for an item or service or the purchasing,recommending or ordering of a good or service, for which payment may be made under federal healthcareprograms such as the Medicare and Medicaid programs. The federal Anti-Kickback Statute is subject toevolving interpretations. In the past, the government has enforced the federal Anti-Kickback Statute toreach large settlements with healthcare companies based on, in certain cases, sham consulting and otherfinancial arrangements with physicians. Further, the Patient Protection and Affordable Care Act, asamended by the Health Care and Education Reconciliation Act, or collectively, the Affordable Care Act,among other things, amends the intent requirement of the federal Anti-Kickback Statute and the criminalstatutes governing healthcare fraud. A person or entity no longer needs to have actual knowledge of thesestatutes or specific intent to violate them in order to commit a violation. In addition, the Affordable CareAct 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 thecivil False Claims Act or federal civil monetary penalties statute.Additionally, the federal false claims and civil monetary penalties laws, including the civil False Claims Actprohibit, among other things, knowingly presenting or causing the presentation of a false, fictitious orfraudulent claim for payment to the U.S. government, or making a false statement to avoid, decrease, orconceal an obligation to pay money to the federal government. Actions under the civil False Claims Actmay be brought by the Attorney General or as a qui tam action by a private individual in the name of thegovernment. The federal government has used the civil False Claims Act, and the accompanying threat ofsignificant liability, in its investigation and prosecution of pharmaceutical and biotechnology companiesthroughout the country, for example, in connection with the promotion of products for unapproved usesand other illegal sales and marketing practices.The federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, created additionalfederal criminal statutes that prohibit, among other actions, knowingly and willfully executing, orattempting to execute, a scheme to defraud any healthcare benefit program, including private third-partypayors, knowingly and willfully embezzling or stealing from a healthcare benefit program, willfullyobstructing a criminal investigation of a healthcare offense, and knowingly and willfully falsifying,concealing or covering up a material fact or making any materially false, fictitious or fraudulent statementin connection with the delivery of or payment for healthcare benefits, items or services.15TABLE OF CONTENTSHIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, orHITECH, and their implementing regulations, imposes requirements regarding the privacy and security ofindividually identifiable health information, including mandatory contractual terms, for covered entities, orcertain healthcare providers, health plans, and healthcare clearinghouses, and their business associates thatprovide services to the covered entity that involve individually identifiable health information. HITECHalso increased the civil and criminal penalties that may be imposed against covered entities and businessassociates, and gave state attorneys general new authority to file civil actions for damages or injunctions infederal courts to enforce HIPAA.In addition, there has been a recent trend of increased federal and state regulation of payments made tophysicians and other healthcare providers. The Affordable Care Act, among other things, via the PhysicianPayments Sunshine Act, imposes annual reporting requirements on certain manufacturers of drugs, devices,biologics, and medical supplies for which payment is available under Medicare, Medicaid, or the Children’sHealth Insurance Program, with specific exceptions, for payments made by them to physicians and teachinghospitals, as well as ownership and investment interests held by physicians and their immediate familymembers.Certain states also impose restrictions on pharmaceutical manufacturer marketing practices and/or requirethe tracking and reporting of gifts, compensation and other remuneration to physicians. Certain states andlocal governments require the registration of pharmaceutical sales representatives. Additionally, analogousstate and foreign laws and regulations, such as state anti-kickback and false claims laws, may apply to salesor marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third party payors, including private insurers. State laws may also apply that requirepharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelinesand the relevant compliance guidance promulgated by the federal government, as well as state and foreignlaws governing the privacy and security of health information, many of which differ from each other insignificant ways and often are not preempted by HIPAA, thus complicating compliance efforts.The shifting commercial compliance environment and the need to build and maintain robust systems tocomply with different compliance and/or reporting requirements in multiple jurisdictions increase thepossibility that a healthcare company may violate one or more of the requirements. If our operations arefound to be in violation of any of such laws or any other governmental regulations that apply to us, wemay be subject to significant penalties, including, without limitation, civil, criminal and administrativepenalties, damages, fines, disgorgement, additional reporting requirements and oversight if we becomesubject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliancewith these laws, the curtailment or restructuring of our operations, exclusion from participation in federaland state healthcare programs and individual imprisonment, any of which could adversely affect our abilityto operate our business and our financial results.Healthcare ReformThe Affordable Care Act has had, and is expected to continue to have, a significant impact on thehealthcare industry. The Affordable Care Act was designed to expand coverage for the uninsured while atthe same time containing overall healthcare costs. With regard to pharmaceutical products, among otherthings, the Affordable Care Act expanded and increased industry rebates for drugs covered under Medicaidprograms and made changes to the coverage requirements under the Medicare prescription drug benefit.There have been judicial, Congressional and executive branch challenges to certain aspects of theAffordable Care Act, and we expect there will be additional challenges and amendments to the AffordableCare Act in the future. While Congress has not passed comprehensive repeal legislation, it has enacted lawsthat modify certain provisions of the Affordable Care Act such as removing or delaying penalties, startingJanuary 1, 2019, for not complying with the Affordable Care Act’s individual mandate to carry healthinsurance, delaying the implementation of certain Affordable Care Act-mandated fees, and increasing thepoint-of-sale discount that is owed by pharmaceutical manufacturers who participate in Medicare Part D.We continue to evaluate the effect that the Affordable Care Act has on our business. Other legislativechanges have been proposed and adopted in the United States since the Affordable Care Act was enacted.For example, through the process created by the Budget Control Act of 2011, there are automaticreductions of Medicare payments to providers up to 2% per fiscal year, which went into effect inApril 201316TABLE OF CONTENTSand, due to subsequent legislative amendments, will remain in effect through 2027 unless additionalCongressional action is taken. In January 2013, President Obama signed into law the American TaxpayerRelief Act of 2012, which, among other things, further reduced Medicare payments to several providers. Inaddition, there has been heightened governmental scrutiny recently over the manner in which drugmanufacturers set prices for their marketed products, which have resulted in several Congressional inquiriesand proposed and enacted federal and state legislation designed to, among other things, bring moretransparency to product pricing, review the relationship between pricing and manufacturer patientprograms, and reform government program reimbursement methodologies for drug products. For example,the current presidential administration released a “Blueprint” to lower drug prices and reduce out of pocketcosts of drugs that contains additional proposals to increase manufacturer competition, increase thenegotiating power of certain federal healthcare programs, incentivize manufacturers to lower the list priceof their products and reduce the out of pocket costs of drug products paid by consumers. Although anumber of these, and other proposed measures will require authorization through additional legislation tobecome effective, Congress and the executive branch have each indicated that it will continue to seek newlegislative and/or administrative measures to control drug costs. In the coming years, additional legislativeand regulatory changes could be made to governmental health programs that could significantly impactpharmaceutical companies and the success of our product candidates. The Affordable Care Act, as well asother federal, state and foreign healthcare reform measures that have been and may be adopted in thefuture, could harm our future revenues.International RegulationIn addition to regulations in the United States, foreign regulations also govern clinical trials, commercialsales and distribution of product candidates within their jurisdiction. The regulatory approval process variesfrom country to country and the time to approval may be longer or shorter than that required for FDAapproval. In the European Union, the approval of a biosimilar for marketing is based on an opinion issuedby the European Medicines Agency and a decision issued by the European Commission. However,substitution of a biosimilar for the innovator is a decision that is made at the local (national) level on acountry-by-country basis. Additionally, a number of European countries do not permit the automaticsubstitution of biosimilars for the reference product. Many countries also have published their ownlegislation outlining a regulatory pathway for the development and approval of biosimilars. In some cases,countries have either adopted European guidance or are following guidance issued by the World HealthOrganization. Although similarities are apparent across these various regulatory guidance, there is also thepotential for additional country-specific requirements.Pharmaceutical Coverage, Pricing and ReimbursementIn the United States and other countries, sales of any products for which we receive regulatory approval forcommercial sale will depend in part on the availability of coverage and the adequacy of reimbursementfrom third-party payors, including government health administrative authorities, managed careorganizations, private health insurers and other organizations. Third-party payors are increasinglyexamining the medical necessity and cost effectiveness of drug products and services in addition to safetyand efficacy and, accordingly, significant uncertainty exists as to the reimbursement status of newly drugproducts. A payor’s decision to provide coverage for a drug product does not imply that an adequatereimbursement rate will be approved. Further, there is no uniform policy for coverage and reimbursementin the United States. Third-party payors often rely upon Medicare coverage policy and payment limitationsin setting their own reimbursement rates, but also have their own methods and approval process apart fromMedicare determinations. As such, one payor’s determination to provide coverage for a drug product doesnot assure that other payors will also provide coverage for the drug product. Adequate third-partyreimbursement may not be available to enable us to realize an appropriate return on our investment inproduct development. Obtaining and maintaining adequate reimbursement for our product candidates, onceapproved, may be difficult. We may be required to conduct expensive pharmacoeconomic studies to justifycoverage and reimbursement or the level of reimbursement compared to existing approved biologics andother therapies. There may be significant delays in obtaining coverage and reimbursement for newlyapproved drugs in the United States, and coverage may be more limited than the indications for which theproduct is approved by the FDA or similar regulatory authorities outside the United States. In addition, the17TABLE OF CONTENTSU.S. government, state legislatures and foreign governments have continued implementing cost-containment programs, including price controls, restrictions on coverage and reimbursement andrequirements for substitution of generic products. Adoption of price controls and cost-containmentmeasures and adoption of more restrictive policies in jurisdictions with existing controls and measures couldfurther limit our net revenue and results. Decreases in third-party reimbursement for our product candidatesor a decision by a third-party payor to not cover our product candidates could reduce physician utilizationof our products and have a material adverse effect on our sales, results of operations and financialcondition.EmployeesAs of November 30, 2018, we had 56 full-time employees, 37 of whom were primarily engaged inresearch and development activities and seven of whom had an M.D. or Ph.D. degree. None of ouremployees are represented by a labor union or covered by a collective bargaining agreement.FacilitiesWe occupy approximately 66,000 square feet of office, manufacturing and laboratory space in Cranbury,New Jersey, under a lease, as amended, that expires in February 2028. In September 2018, we terminatedthe lease for approximately 82,000 square feet of additional office and laboratory space in Cranbury, NewJersey, for approximately $5.8 million in the aggregate.Corporate InformationWe initially incorporated in January 2010 in New Jersey as Oncobiologics, Inc., and in October 2015, wereincorporated in Delaware by merging with and into a Delaware corporation. In November 2018, wechanged our name to Outlook Therapeutics, Inc. Our headquarters are located at 7 Clarke Drive, Cranbury,New Jersey, 08512, and our telephone number at that location is (609) 619-3990. Our website address iswww.outlooktherapeutics.com. The information contained on, or that can be accessed through, our websiteis not part of, and is not incorporated by reference into this Annual Report on Form 10-K.18•continue the clinical development of our lead product candidate, ONS-5010;•advance ONS-5010 into additional clinical trials;•change or add contract manufacturing providers, clinical research service providers, testinglaboratories, device suppliers, legal service providers or other vendors or suppliers;•seek regulatory and marketing approvals for ONS-5010 in the United States and other markets ifwe successfully complete clinical trials;•establish a sales, marketing and distribution infrastructure to commercialize any products forwhich we may obtain marketing approval;•seek to identify, assess, acquire or develop other product candidates that may be complementaryto ONS-5010;•make upfront, milestone, royalty or other payments under any license agreements;•seek to create, maintain, protect and expand our intellectual property portfolio;•engage in litigation, including patent litigation, with respect to our product candidates;•seek to attract and retain skilled personnel;•create additional infrastructure to support our operations as a public company and any futurecommercialization efforts; andTABLE OF CONTENTSItem 1A. Risk FactorsYou should consider carefully the risks and uncertainties described below, together with all of the otherinformation in this Annual Report on Form 10-K. If any of the following risks are realized, our business,financial condition, results of operations and prospects could be adversely affected. The risks describedbelow are not the only risks facing the Company. Risks and uncertainties not currently known to us or thatwe currently deem to be immaterial also may adversely affect our business, financial condition, results ofoperations and/or prospects.Risks Related to Our Financial Condition and Capital RequirementsWe have a limited operating history, have incurred significant losses and negative cash flows fromoperations since our inception and expect to continue to incur significant losses and negative cash flowsfrom operations for at least the next 12 months.We are a clinical-stage biopharmaceutical company with a limited operating history and we have incurrednet losses in each year since our inception in January 5, 2010, including net losses of  $30.1 million and$38.8 million for the years ended September 30, 2018 and 2017, respectively.We have devoted substantially all of our financial resources to identify, develop and manufacture ourproduct candidates, including conducting, among other things, analytical characterization, processdevelopment and manufacture, formulation and clinical trials, regulatory filing and communicationactivities and providing general and administrative support for these operations. To date, we have financedour operations primarily through the sale of equity securities and debt financings, as well as to a limiteddegree, payments under our co-development and license agreements with Zhejiang Huahai PharmaceuticalCo., Ltd., or Huahai, Laboratorios Liomont, S.A. de C.V., or Liomont, IPCA Laboratories Limited, orIPCA, and BioLexis Pte. Ltd., or BioLexis (formerly GMS Tenshi Holdings Pte, Limited). The amount ofour future net losses will depend, in part, on our ability to generate revenue from the rate of our futureexpenditures and our ability to obtain funding through equity or debt financing or strategic licensing or co-development collaborations.We expect to continue to incur significant expenses and operating losses for at least the next 12 months. Weanticipate that our expenses may increase substantially if and as we:19•experience any delays or encounter issues with any of the above, including but not limited tofailed clinical trials, conflicting results, safety issues or regulatory challenges that may requirelonger follow-up of existing studies, additional major studies or additional supportive studies inorder to pursue marketing approval.•completing clinical development of ONS-5010 for the treatment of wet AMD and the othertargeted indications, and any other product candidates we may develop in the future;•obtaining regulatory and marketing approvals for ONS-5010 and any other product candidatesfor which we or our partners complete clinical trials;•securing a manufacturing partner for ONS-5010 and any approved product candidates to supportclinical development, regulatory requirements and the market demand for any such approvedproduct candidates;•launching and commercializing ONS-5010 and any other product candidates for which we or ourpartners obtain regulatory and marketing approval;•obtaining third-party coverage and adequate reimbursements for our products;•obtaining market acceptance of ONS-5010 and any other product candidates for which we obtainregulatory and marketing approval as viable treatment options;•negotiating favorable terms in any collaboration, licensing or other arrangements into which wemay enter;•maintaining, protecting and expanding our portfolio of intellectual property rights, includingpatents, trade secrets and know-how; and•attracting, hiring and retaining qualified personnel.TABLE OF CONTENTSOur failure to become and remain profitable would decrease the value of the company and could impairour ability to raise capital, maintain our research and development efforts, expand our business or continueour operations. A decline in the value of our company could also cause you to lose all or part of yourinvestment.Our independent registered public accounting firm has expressed substantial doubt about our ability tocontinue as a going concern.As described in their audit report, our auditors have included an explanatory paragraph that states that wehave incurred recurring losses and negative cash flows from operations since inception and have anaccumulated deficit at September 30, 2018 of $216.3 million, $13.5 million of senior secured notes thatmay become due in fiscal 2019 and $4.6 million of unsecured indebtedness, $1.0 million of which is dueon demand, and $3.6 million of which matures December 22, 2018. These matters raise substantial doubtabout our ability to continue as a going concern. Our consolidated financial statements do not include anyadjustments that might result from the outcome of this uncertainty. If we cannot continue as a viable entity,our securityholders may lose some or all of their investment in our company.We have never generated any revenue from product sales and may never be profitable.Although we have received upfront and milestone payments from our license and collaborationagreements, we have no products approved for commercialization and have never generated any revenuefrom product sales. Our ability to generate revenue and achieve profitability depends on our ability, aloneor with strategic collaboration partners, to successfully complete the development of, and obtain theregulatory and marketing approvals necessary to commercialize, ONS-5010 for the treatment of wet agerelated macular degeneration, or wet AMD, and our other targeted indications, and as appropriate, any ofour other product candidates. We cannot predict when we will begin generating revenue from productsales, as this depends heavily on our success in many areas, including but not limited to:Even if ONS-5010 or one or more of our other product candidates is approved for commercialization, weanticipate incurring significant costs to commercialize any such product. Our expenses could increasebeyond our expectations if we are required by the U.S. Food and Drug Administration, or the FDA, the20•the size of the markets in the territories for which we gain regulatory approval;•the number of competitors in such markets;•the market acceptance of our products;•the accepted price for the product;•the ability to obtain coverage and adequate reimbursement for the product;•the quality and performance of our products, including the relative safety and efficacy; and•whether we own, or have partnered, the commercial rights for that territory.TABLE OF CONTENTSEuropean Medicines Agency, or the EMA, other regulatory agencies, domestic or foreign, or by anyunfavorable outcomes in intellectual property litigation filed against us, to change our manufacturingprocesses or assays or to perform clinical, preclinical or other types of studies in addition to those that wecurrently anticipate. In cases where we are successful in obtaining regulatory approvals to market one ormore of our product candidates, our revenue will be dependent, in part, upon:If the market for ONS-5010 or any other product candidates we may develop in the future, or our share ofthat market, is not as large as we expect, the number of indications approved by regulatory authorities isnarrower than we expect or the target population for treatment is narrowed by competition, physicianchoice or treatment guidelines, we may not generate significant revenue from sales of such products tobecome profitable. If we are unable to successfully complete development and obtain regulatory approvalfor ONS-5010, our business will be harmed.We will need to raise substantial additional funding to complete the development of our product candidatepipeline. This additional funding may not be available on acceptable terms or at all. Failure to obtain thisnecessary capital when needed may force us to delay, limit or terminate our product development efforts orother operations.Developing product candidates is an expensive, risky and lengthy process. We are currently advancingONS-5010 through clinical development, but have decided to secure additional development partnersbefore advancing our biosimilar product candidates into and through clinical trials. Our expenses mayincrease in connection with our ongoing activities, particularly as we continue the research anddevelopment of, continue and initiate clinical trials of, and seek marketing approval for, ONS-5010.As of September 30, 2018, our cash balance was $1.7 million. We expect that our current cash resourcesalong with the additional funds from our November 2018 private placement and anticipated proceeds fromthe sale of New Jersey net operating losses, or NOLs and research and development credits, will besufficient to fund our operations into June 2019, excluding any unscheduled repayment of debt. We willrequire substantial additional capital to complete the clinical development of, obtain regulatory approvalsfor, and commercialize ONS-5010. However, our operating plan may change as a result of many factorscurrently unknown to us, and we may need to seek additional funds sooner than planned, through public orprivate equity or debt financings, third-party funding, marketing and distribution arrangements, as well asother collaborations, strategic alliances and licensing arrangements, or a combination of these approaches.Even if we believe we have sufficient funds for our current or future operating plans, we may seekadditional capital if market conditions are favorable or if we have specific strategic considerations.Any additional fundraising efforts may divert our management from their day-to-day activities, which mayadversely affect our ability to develop and commercialize our product candidates. In addition, we cannotguarantee that future financing will be available in sufficient amounts or on terms acceptable to us, if at all.Moreover, the terms of any financing may negatively impact the holdings or the rights of our stockholders,and the issuance of additional securities, whether equity or debt, by us or the possibility of such issuancemay cause the market price of our securities to decline. The incurrence of indebtedness could result inincreased fixed payment obligations and we may be required to agree to certain restrictive covenants, suchas limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or licenseintellectual property rights and other operating restrictions that could adversely impact our ability toconduct our business. For example, our senior secured notes issued between December 2016 and May 2017include restrictions on our ability to incur additional indebtedness and pay stockholder dividends, among21TABLE OF CONTENTSother restrictions. We could also be required to seek funds through arrangements with collaborative partnersor otherwise at an earlier stage than would be desirable and we may be required to relinquish rights to someof our technologies or product candidates or otherwise agree to terms unfavorable to us, any of which mayharm our business, operating results and prospects. Even if we believe we have sufficient funds for ourcurrent or future operating plans, we may seek additional capital if market conditions are favorable or forspecific strategic considerations. If we are unable to obtain funding on a timely basis, we may be requiredto significantly curtail, delay or discontinue one or more of our development programs or thecommercialization of any product candidates. We may also be unable to expand our operations orotherwise capitalize on our business opportunities, as desired, which could harm our business, financialcondition and results of operations.Raising additional capital may cause dilution to our securityholders, restrict our operations or require us torelinquish rights to our technologies or product candidates.Until such time, if ever, as we can generate product revenues, we expect to finance our cash needs througha combination of equity and debt financings, as well as selectively continuing to enter into collaborations,strategic alliances and licensing arrangements. We do not currently have any committed external source offunds. To the extent that we raise additional capital through the sale of equity or convertible debt securities,your ownership interest will be diluted, and the terms of these securities may include liquidation or otherpreferences that adversely affect your rights as a securityholder. Debt financing, if available, may involveagreements that include covenants limiting or restricting our ability to take specific actions, such asincurring additional debt, making capital expenditures or declaring dividends, and may be secured by all ora portion of our assets.If we raise funds by selectively continuing to enter into collaborations, strategic alliances or licensingarrangements with third parties, we may have to relinquish additional valuable rights to our technologies,future revenue streams, research programs or product candidates or to grant licenses on terms that may notbe favorable to us. If we are unable to raise additional funds through equity or debt financings whenneeded, we may be required to delay, limit, reduce or terminate our product development or futurecommercialization efforts or grant rights to develop and market product candidates that we would otherwiseprefer to develop and market ourselves. If we are unable to raise additional funds through collaborations,strategic alliances or licensing arrangements, we may be required to terminate product development orfuture commercialization efforts or to cease operations altogether.Risks Related to the Discovery and Development of Our Product CandidatesWe are highly dependent on the success of ONS-5010, our only product candidate in active development,and if ONS-5010 does not successfully complete clinical development or receive regulatory approval, or isnot successfully commercialized, our business may be harmed.We currently have no products that are approved for commercial sale and may never be able to developmarketable products. We expect that a substantial portion of our efforts and expenditures in the foreseeablefuture will be devoted to the advancement of ONS-5010, our only product candidate in activedevelopment, through clinical trials and the regulatory approval process, as well as the commercializationof ONS-5010 following regulatory approval, if received. We cannot assure you that we will be able tosuccessfully complete the necessary clinical trials and/or obtain regulatory approval and develop sufficientcommercial capabilities for ONS-5010. Accordingly, our business currently depends heavily on thesuccessful completion of clinical development and subsequent regulatory approval and commercializationof ONS-5010.We cannot be certain that ONS-5010 will receive regulatory approval, or be successfully commercializedeven if we receive regulatory approval in our targeted markets. The research, testing, manufacturing,labeling, approval, sale, marketing and distribution of products are, and will remain, subject to extensiveregulation by the FDA and other regulatory authorities in the United States and other countries that eachhave differing regulations. We are not permitted to market ONS-5010 in the United States until we receiveapproval from the FDA, or in any foreign country until we receive the requisite approvals from theappropriate authorities in such countries for marketing authorization.22•we may not be able to demonstrate that ONS-5010 is effective as a treatment for any of ourcurrently targeted indications to the satisfaction of the FDA or other relevant regulatoryauthorities;•the relevant regulatory authorities may require additional pre-approval studies or clinical trials,which would increase our costs and prolong our development timelines;•the results of our clinical trials may not meet the level of statistical or clinical significance requiredby the FDA or other relevant regulatory authorities for marketing approval;•the FDA or other relevant regulatory authorities may disagree with the number, design, size,conduct or implementation of our clinical trials;•the FDA or other relevant regulatory authorities may not find the data from nonclinical studies orclinical trials sufficient to demonstrate that the clinical and other benefits of these productsoutweigh their safety risks;•the FDA or other relevant regulatory authorities may disagree with our interpretation of data orsignificance of results from the nonclinical studies and clinical trials of ONS-5010 and any futureproduct candidate, or may require that we conduct additional trials;•the FDA or other relevant regulatory authorities may require development of a risk evaluation andmitigation strategy, or REMS, or its equivalent, as a condition of approval;•the FDA or other relevant regulatory authorities may require additional post-marketing studies,which would be costly;•the FDA or other relevant regulatory authorities may identify deficiencies in the manufacturingprocesses or facilities of our third-party manufacturers; or•the FDA or other relevant regulatory authorities may change their approval policies or adopt newregulations.TABLE OF CONTENTSThere can be no assurance that our ongoing clinical trial of ONS-5010 for wet AMD will produce resultssufficient for us to receive regulatory approval. We have not submitted a biologics license application, orBLA, for any product candidate to the FDA or any comparable application to any other regulatoryauthority. Obtaining approval from the FDA or similar regulatory approval is an extensive, lengthy,expensive and inherently uncertain process, and the FDA or other foreign regulatory authorities may delay,limit or deny approval of ONS-5010 for many reasons, including:Due to our limited resources and access to capital, we have, and will continue to need to, prioritizedevelopment of certain product candidates; and these decisions may prove to have been wrong and mayharm our business.Because we have limited resources and access to capital to fund our operations, we must decide whichproduct candidates to pursue and the amount of resources to allocate to each. We are currently focusingonly on one active development program, ONS-5010, and are no longer actively developing ONS-3010,ONS-1045 or the other biosimilar product candidates in our pipeline. We currently do not intend to activelydevelop such biosimilar product candidates absent additional development or licensing partners. Ourdecisions concerning the allocation of research, collaboration, management and financial resources towardparticular product candidates or therapeutic areas may not lead to the development of viable commercialproducts and may divert resources away from better opportunities. Similarly, our potential decisions todelay, terminate or collaborate with third parties in respect to certain product development programs mayalso prove not to be optimal and could cause us to miss valuable opportunities. If we make incorrectdeterminations regarding the market potential of our product candidates or misread trends in thepharmaceutical industry, our business, financial condition and results of operations could be harmed.Clinical drug development is a lengthy and expensive process and we may encounter substantial delays inour clinical trials or may fail to demonstrate safety and efficacy to the satisfaction of applicable regulatoryauthorities.ONS-5010, our only product candidate in active development, will require extensive clinical testing beforewe are prepared to submit an application for regulatory approval. Before obtaining marketing approval23•inability to generate sufficient preclinical, toxicology or other in vivo or in vitro data to supportthe initiation of human clinical trials;•delays in reaching a consensus with regulatory agencies on study design;•delays in reaching agreement on acceptable terms with prospective contract researchorganizations, or CROs, and clinical trial sites, the terms of which can be subject to extensivenegotiation and may vary significantly among different CROs and clinical trial sites;•delays in obtaining required IRB approval at each clinical trial site;•imposition of a clinical hold by regulatory agencies, after review of an investigational new drug,or IND, application or amendment or equivalent filing, or an inspection of our clinical trialoperations or trial sites, or as a result of adverse events reported during a clinical trial;•delays in recruiting suitable patients to participate in our clinical trials;•difficulty collaborating with patient groups and investigators;•failure by our CROs, other third parties or us to adhere to clinical trial requirements;•failure to perform in accordance with the FDA’s good clinical practice, or GCP, requirements orapplicable regulatory guidelines in other countries;•delays in having subjects complete participation in a study or return for post-treatment follow-up,or subjects dropping out of a study;•occurrence of adverse events associated with the product candidate that are viewed to outweigh itspotential benefits;•changes in regulatory requirements and guidance that require amending or submitting newclinical protocols;•the cost of clinical trials of our product candidates being greater than we anticipate;•clinical trials of our product candidates producing negative or inconclusive results, which mayresult in us deciding or regulators requiring us to conduct additional clinical trials or abandonproduct development programs; and•delays in manufacturing, testing, releasing, validating or importing/exporting and/or distributingsufficient stable quantities of our product candidates for use in clinical trials or the inability to doany of the foregoing.TABLE OF CONTENTSfrom regulatory authorities for the sale of our product candidates, we and our collaboration partners mustconduct clinical trials to demonstrate the safety and efficacy of the product candidates in humans.We cannot guarantee that any clinical trials will be conducted as planned or completed on schedule, if at all.A failure of one or more clinical trials can occur at any stage of testing, and our future clinical trials maynot be successful. Events that may prevent successful or timely completion of clinical development includebut are not limited to:Any inability to successfully complete preclinical studies and clinical development could result in additionalcosts to us or impair our ability to generate revenue. In addition, if we make manufacturing or formulationchanges to our product candidates, we may need to conduct additional clinical trials to bridge our modifiedproduct candidates to earlier versions.The results of previous clinical trials may not be predictive of future results, and the results of our currentand planned clinical trials may not satisfy the requirements of the FDA, EMA or other foreign regulatoryagencies.Clinical failure can occur at any stage of clinical development. Clinical trials may produce negative orinconclusive results, and we or any of our current and future collaborators may decide, or regulators mayrequire us, to conduct additional clinical or preclinical testing. We will be required to demonstrate withsubstantial evidence through well controlled clinical trials that our product candidates are as safe andeffective for use in a specific patient population before we can seek regulatory approvals for their24•regulatory authorities may withdraw approvals of such product;TABLE OF CONTENTScommercial sale. Success in early clinical trials does not mean that future larger registration clinical trialswill be successful because product candidates in later-stage clinical trials may fail to demonstrate equivalentsafety and efficacy to the satisfaction of the FDA, EMA and other foreign regulatory agencies despitehaving progressed through initial clinical trials. Product candidates that have shown promising results inearly clinical trials may still fail in subsequent confirmatory clinical trials. Similarly, the outcome ofpreclinical testing and early clinical trials may not be predictive of the success of later clinical trials, andinterim results of a clinical trial do not necessarily predict final results. A number of companies in thepharmaceutical industry, including those with greater resources and experience than us, have sufferedsignificant setbacks in advanced clinical trials, even after obtaining promising results in earlier clinical trials.In addition, the design of a clinical trial can determine whether its results will support approval of a productand flaws in the design of a clinical trial may not become apparent until the clinical trial is well advanced.We may be unable to design and execute a clinical trial to support regulatory approval. In some instances,there can be significant variability in safety or efficacy results between different trials of the same productcandidate due to numerous factors, including but not limited to changes in trial protocols, differences insize and type of the patient populations, adherence to the dosing regimen and the rate of dropout amongclinical trial participants.Further, our product candidates may not be approved even if they achieve their primary endpoints inPhase 3 clinical trials or registration trials. The FDA, EMA and other foreign regulatory agencies maydisagree with our trial design and our interpretation of data from preclinical studies and clinical trials. Inaddition, any of these regulatory authorities may change the requirements for the approval of a productcandidate even after reviewing and providing comments or advice on a protocol for a Phase 3 clinical trialthat has the potential to result in FDA or other agencies’ approval. We initially intend to seek approval forONS-5010 for the treatment of wet AMD. Any of the regulatory authorities may approve a productcandidate for fewer indications than we request or may grant approval contingent on the performance ofcostly post-marketing clinical trials.Our product candidates may cause undesirable side effects or have other properties that could delay orprevent their regulatory approval, limit the commercial profile of an approved label or result in significantnegative consequences following marketing approval, if granted.As with most pharmaceutical products, use of our product candidates could be associated with side effectsor adverse events, which can vary in severity and frequency. Side effects or adverse events associated withthe use of our product candidates may be observed at any time, including in clinical trials or when aproduct is commercialized. Undesirable side effects caused by our product candidates could cause us orregulatory authorities to interrupt, delay or halt clinical trials and could result in a more restrictive label orthe delay or denial of regulatory approval by the FDA or other foreign authorities. Results of our trialscould reveal a high and unacceptable severity and prevalence of side effects, toxicity or other safety issues,and could require us to perform additional studies or halt development or sale of these product candidatesor expose us to product liability lawsuits that will harm our business. In such an event, we may be requiredby regulatory agencies to conduct additional animal or human studies regarding the safety and efficacy ofour product candidates that we have not planned or anticipated or our studies could be suspended orterminated, and the FDA or comparable foreign regulatory authorities could order us to cease furtherdevelopment of or deny or withdraw approval of our product candidates for any or all targeted indications.There can be no assurance that we will resolve any issues related to any product-related adverse events tothe satisfaction of the FDA or any other regulatory agency in a timely manner, if ever, which could harmour business, prospects and financial condition.Additionally, product quality characteristics have been shown to be sensitive to changes in processconditions, manufacturing techniques, equipment or sites and other related considerations, and as such, anymanufacturing process changes we implement prior to or after regulatory approval could impact productsafety.Additionally, if one or more of our product candidates receives marketing approval, and we or others lateridentify undesirable side effects caused by such products, a number of potentially significant negativeconsequences could result, including but not limited to:25•regulatory authorities may require additional warnings on the label;•we may be required to create a Risk Evaluation and Mitigation Strategy plan, which could includea medication guide outlining the risks of such side effects for distribution to patients, acommunication plan for healthcare providers and/or other elements to assure safe use;•we could be sued and held liable for harm caused to patients; and•our reputation may suffer.TABLE OF CONTENTSAny of these events could prevent us from achieving or maintaining market acceptance of the particularproduct candidate, if approved, and could significantly harm our business, results of operations andprospects.If we receive approval, regulatory agencies including the FDA, EMA and other foreign regulatory agencyregulations require that we report certain information about adverse medical events if those products mayhave caused or contributed to those adverse events. The timing of our obligation to report would betriggered by the date we become aware of the adverse event as well as the nature of the event. We may failto report adverse events we become aware of within the prescribed timeframe. We may also fail toappreciate that we have become aware of a reportable adverse event, especially if it is not reported to us asan adverse event or if it is an adverse event that is unexpected or removed in time from the use of ourproducts. If we fail to comply with our reporting obligations, the FDA, EMA or other foreign regulatoryagencies could take action including but not limited to criminal prosecution, the imposition of civilmonetary penalties, seizure of our products or delay in approval or clearance of future products.If product liability lawsuits are brought against us, we may incur substantial liabilities and may be requiredto limit commercialization of our current or future product candidates, and our existing insurancecoverage may not be sufficient to satisfy any liability that may arise.Drug-related side effects could affect patient recruitment for clinical trials, the ability of enrolled patients tocomplete our studies or result in potential product liability claims. We currently carry product liabilityinsurance in the amount of $10.0 million per product candidate and we are required to maintain productliability insurance pursuant to certain of our license agreements. We may not be able to maintain insurancecoverage at a reasonable cost or in sufficient amounts to protect us against losses due to liability. Asuccessful product liability claim or series of claims brought against us could negatively impact our resultsof operations and business. In addition, regardless of merit or eventual outcome, product liability claimsmay result in impairment of our business reputation, withdrawal of clinical trial participants, costs due torelated litigation, distraction of management’s attention from our primary business, initiation ofinvestigations by regulators, substantial monetary awards to patients or other claimants, the inability tocommercialize our product candidates and decreased demand for our product candidates, if approved forcommercial sale. Furthermore, we may also not be able to take advantage of limitations on product liabilitylawsuits that apply to generic drug products, which could increase our exposure to liability for productsdeemed to be dangerous or defective.Failure to obtain regulatory approval in any targeted jurisdiction would prevent us from marketing ourproducts to a larger patient population and reduce our commercial opportunities.We and our collaboration partners have not initiated marketing efforts in any jurisdiction. In order tomarket our products in Europe, the United States and other jurisdictions, we and our collaboration partnersmust obtain separate regulatory approvals and comply with numerous and varying regulatory requirements.The EMA is responsible for the regulation and recommendation for approval of human medicines in theE.U. This procedure results in a single marketing authorization that is valid in all E.U. countries, as well asin Iceland, Liechtenstein and Norway. The time required to obtain approval abroad may differ from thatrequired to obtain FDA approval. The foreign regulatory approval process may include all of the risksassociated with obtaining FDA approval and we may not obtain foreign regulatory approvals on a timelybasis, if at all. Approval by the FDA does not ensure approval by regulatory authorities in other countries,and approval by one foreign regulatory authority does not ensure approval by regulatory authorities inother foreign countries or by the FDA. We or our collaboration partners may not be able to26•issue untitled and warning letters;•impose civil or criminal penalties;•suspend or withdraw regulatory approval;•suspend any of our ongoing clinical trials;•refuse to approve pending applications or supplements to approved applications submitted by us;•impose restrictions on our operations, including closing our manufacturing facilities; or•seize or detain products or require a product recall.TABLE OF CONTENTSfile for regulatory approvals and may not receive necessary approvals to commercialize our products withinEurope, the United States or in other jurisdictions. Failure to obtain these approvals would harm ourbusiness, financial condition and results of operations.Even if we obtain regulatory approval for a product candidate, our products will remain subject toregulatory scrutiny.If ONS-5010, or any other product candidates we may pursue, are approved, they will be subject toongoing regulatory requirements for manufacturing, labeling, packaging, storage, advertising, promotion,sampling, record-keeping, conduct of post-marketing studies and submission of safety, efficacy and otherpost-market information, including both federal and state requirements in the United States andrequirements of comparable foreign regulatory authorities.Manufacturers and manufacturing facilities are required to comply with extensive FDA, and comparableforeign regulatory authority, requirements, including ensuring that quality control and manufacturingprocedures conform to current Good Manufacturing Practices, or cGMP, regulations. As such, our currentand future manufacturing partners will be subject to continual review and inspections to assess compliancewith cGMP and adherence to commitments made in any non-disclosure agreement, BLA or marketingauthorization application. Accordingly, we and our collaborators and suppliers must continue to expendtime, money and effort in all areas of regulatory compliance, including manufacturing, production andquality control.Any regulatory approvals that we or our collaboration partners receive for our product candidates may besubject to limitations on the approved indicated uses for which the product may be marketed or to theconditions of approval or may contain requirements for potentially costly additional clinical trials andsurveillance to monitor the safety and efficacy of the product candidate. We will be required to reportcertain adverse reactions and production problems, if any, to the FDA and comparable foreign regulatoryauthorities. Any new legislation addressing drug safety issues could result in delays in product developmentor commercialization or increased costs to assure compliance. We will have to comply with requirementsconcerning advertising and promotion for our products. Promotional communications with respect toprescription drugs are subject to a variety of legal and regulatory restrictions and must be consistent withthe information in the product’s approved label. As such, we are not allowed to promote our products forindications or uses for which they do not have approval. If our product candidates are approved, we mustsubmit new or supplemental applications and obtain approval for certain changes to the approved products,product labeling or manufacturing process. We could also be asked to conduct post-marketing clinical trialsto verify the safety and efficacy of our products in general or in specific patient subsets. An unsuccessfulpost-marketing study or failure to complete such a study could result in the withdrawal of marketingapproval.If a regulatory agency discovers previously unknown problems with an approved product, such as adverseevents of unanticipated severity or frequency or problems with our manufacturing facilities or disagreeswith the promotion, marketing or labeling of a product, such regulatory agency may impose restrictions onthat product or us, including requiring withdrawal of the product from the market. If we fail to complywith applicable regulatory requirements, a regulatory agency or enforcement authority may, among otherthings:27•may not deem our product candidate to be adequately safe and effective;•may not agree that the data collected from clinical trials are acceptable or sufficient to support thesubmission of a BLA or other submission or to obtain regulatory approval, and may imposerequirements for additional preclinical studies or clinical trials;•may determine that adverse events experienced by participants in our clinical trials represents anunacceptable level of risk;•may determine that population studied in the clinical trial may not be sufficiently broad orrepresentative to assure safety in the full population for which we seek approval;•may not accept clinical data from trials which are conducted at clinical facilities or in countrieswhere the standard of care is potentially different from that of the United States;•may disagree regarding the formulation, labeling and/or the specifications;•may not approve the manufacturing processes or facilities associated with our product candidate;•may change approval policies or adopt new regulations; orTABLE OF CONTENTSAny government investigation of alleged violations of law could require us to expend significant time andresources in response and could generate negative publicity. Any failure to comply with ongoingregulatory requirements may significantly and adversely affect our ability to commercialize and generaterevenue from our products. If regulatory sanctions are applied or if regulatory approval is withdrawn, thevalue of our company and our operating results will be negatively impacted.The development and commercialization of pharmaceutical products is subject to extensive regulation, andwe may not obtain regulatory approvals for ONS-5010 in any of the indications for which we plan todevelop it, or any future product candidates, on a timely basis or at all.The clinical development, manufacturing, labeling, packaging, storage, recordkeeping, advertising,promotion, export, import, marketing, distribution, adverse event reporting, including the submission ofsafety and other post-marketing information and reports, and other possible activities relating to ONS-5010,as well as any other product candidate that we may develop in the future, are subject to extensiveregulation. Marketing approval of biologics in the United States requires the submission of a BLA to theFDA and we are not permitted to market any product candidate in the United States until we obtainapproval from the FDA of the BLA for that product. A BLA must be supported by extensive clinical andpreclinical data, as well as extensive information regarding pharmacology, chemistry, manufacturing andcontrols.FDA approval of a BLA is not guaranteed, and the review and approval process is an expensive anduncertain process that may take several years. The FDA also has substantial discretion in the approvalprocess. The number and types of preclinical studies and clinical trials that will be required for BLAapproval varies depending on the product candidate, the disease or the condition that the product candidateis designed to treat and the regulations applicable to any particular product candidate. Despite the time andexpense associated with preclinical studies and clinical trials, failure can occur at any stage. The results ofpreclinical and early clinical trials of ONS-5010 or any future product candidates may not be predictive ofthe results of our later-stage clinical trials.Clinical trial failure may result from a multitude of factors including flaws in trial design, dose selection,placebo effect, patient enrollment criteria and failure to demonstrate favorable safety or efficacy traits, andfailure in clinical trials can occur at any stage. Companies in the biopharmaceutical industry frequentlysuffer setbacks in the advancement of clinical trials due to lack of efficacy or adverse safety profiles,notwithstanding promising results in earlier trials. Based upon negative or inconclusive results, we maydecide, or regulators may require us, to conduct additional clinical trials or preclinical studies. In addition,data obtained from clinical trials are susceptible to varying interpretations, and regulators may not interpretour data as favorably as we do, which may further delay, limit or prevent marketing approval.The FDA could delay, limit or deny approval of a product candidate for many reasons, including becausethey:28•may not accept a submission due to, among other reasons, the content or formatting of thesubmission.•the FDA disagreeing as to the design or implementation of our clinical studies;•obtaining FDA authorizations to commence a trial or reaching a consensus with the FDA on trialdesign;•any failure or delay in reaching an agreement with CROs and clinical trial sites, the terms of whichcan be subject to extensive negotiation and may vary significantly among different CROs and trialsites;•obtaining approval from one or more IRBs;•IRBs refusing to approve, suspending or terminating the trial at an investigational site, precludingenrollment of additional subjects, or withdrawing their approval of the trial;•changes to clinical trial protocol;•clinical sites deviating from trial protocol or dropping out of a trial;•manufacturing sufficient quantities of product candidate or obtaining sufficient quantities ofcombination therapies for use in clinical trials;TABLE OF CONTENTSGenerally, public concern regarding the safety of pharmaceutical products could delay or limit our abilityto obtain regulatory approval, result in the inclusion of unfavorable information in our labeling, or requireus to undertake other activities that may entail additional costs. We have not obtained FDA approval for anyproduct. This lack of experience may impede our ability to obtain FDA approval in a timely manner, if atall, for ONS-5010.If we experience delays in obtaining approval or if we fail to obtain approval of ONS-5010, ourcommercial prospects will be harmed and our ability to generate revenues will be materially impaired whichwould adversely affect our business, prospects, financial condition and results of operations.Any delays in the commencement or completion, or termination or suspension, of our planned or futureclinical trials could result in increased costs to us, delay or limit our ability to generate revenue andadversely affect our commercial prospects.Any delays in the commencement or completion, or termination or suspension, of our planned or futureclinical trials could result in increased costs to us, delay or limit our ability to generate revenue andadversely affect our commercial prospects. Before we can initiate clinical trials of ONS-5010 in the UnitedStates in any distinct indication, we must submit the results of preclinical and/or other studies to the FDAalong with other information, including information about ONS-5010 chemistry, manufacturing andcontrols and our proposed clinical trial protocol, as part of an IND or similar regulatory filing.Before obtaining marketing approval from the FDA for the sale of ONS-5010 in any indication, we mustconduct extensive clinical studies to demonstrate the safety and efficacy of ONS-5010. Clinical testing isexpensive, time consuming and uncertain as to outcome. In addition, we expect to rely in part onpreclinical, clinical and quality data generated by clinical research organizations, or CROs, and other thirdparties for regulatory submissions for ONS-5010. While we have or will have agreements governing thesethird parties’ services, we have limited influence over their actual performance. If these third parties do notmake data available to us, or, if applicable, make regulatory submissions in a timely manner, in each casepursuant to our agreements with them, our development programs may be significantly delayed and wemay need to conduct additional studies or collect additional data independently. In either case, ourdevelopment costs would increase.The FDA may require us to conduct additional studies for ONS-5010 or any future product candidatebefore it allows us to initiate clinical trials under any IND, which may lead to additional delays and increasethe costs of our development programs. Any such delays in the commencement or completion of ourplanned or future clinical trials could significantly affect our product development costs. We do not knowwhether our planned trials will begin on time or be completed on schedule, if at all. The commencementand completion of clinical trials can be delayed for a number of reasons, including delays related to:29•subjects failing to enroll or remain in our trial at the rate we expect, or failing to return for post-treatment follow-up;•subjects choosing an alternative treatment, or participating in competing clinical trials;•lack of adequate funding to continue the clinical trial;•subjects experiencing severe or unexpected drug-related adverse effects;•occurrence of serious adverse events in trials of the same class of agents conducted by othercompanies;•selection of clinical end points that require prolonged periods of clinical observation or analysis ofthe resulting data;•a facility manufacturing our product candidates or any of their components being ordered by theFDA to temporarily or permanently shut down due to violations of current good manufacturingpractice, or cGMP, regulations or other applicable requirements, or infections or cross-contaminations of product candidates in the manufacturing process;•any changes to our manufacturing process that may be necessary or desired;•third-party clinical investigators losing the licenses or permits necessary to perform our clinicaltrials, not performing our clinical trials on our anticipated schedule or consistent with the clinicaltrial protocol, good clinical practices, or GCP, or other regulatory requirements;•third-party contractors not performing data collection or analysis in a timely or accurate manner;or•third-party contractors becoming debarred or suspended or otherwise penalized by the FDA orother government or regulatory authorities for violations of regulatory requirements, in whichcase we may need to find a substitute contractor, and we may not be able to use some or all of thedata produced by such contractors in support of our marketing applications.•severity of the disease under investigation;•our ability to recruit clinical trial investigators of appropriate competencies and experience;TABLE OF CONTENTSWe could also encounter delays if a clinical trial is suspended or terminated by us, by the IRBs of theinstitutions in which such trials are being conducted, by a Data Safety Monitoring Board for such trial or bythe FDA. Such authorities may impose such a suspension or termination due to a number of factors,including failure to conduct the clinical trial in accordance with regulatory requirements or our clinicalprotocols, inspection of the clinical trial operations or trial site by the FDA resulting in the imposition of aclinical hold, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using apharmaceutical, changes in governmental regulations or administrative actions or lack of adequate fundingto continue the clinical trial. In addition, changes in regulatory requirements and policies may occur, andwe may need to amend clinical trial protocols to comply with these changes. Amendments may require usto resubmit our clinical trial protocols to IRBs for reexamination, which may impact the costs, timing orsuccessful completion of a clinical trial.Any delays in completing our clinical trials will increase our costs, slow down our development andapproval process and jeopardize our ability to commence product sales and generate revenues which mayharm our business, financial condition and prospects significantly.If we experience delays or difficulties in enrolling patients in our planned clinical trials, our receipt ofnecessary regulatory approval could be delayed or prevented.We may not be able to initiate or continue our planned clinical trials for ONS-5010 if we are unable toidentify and enroll a sufficient number of eligible patients to participate in these trials as required by theFDA. Some of our competitors may have ongoing clinical trials for product candidates that would treat thesame indications as ONS-5010, and patients who would otherwise be eligible for our clinical trials mayinstead enroll in clinical trials of our competitors’ product candidates. Patient enrollment is also affected byother factors, including:30•invasive procedures required to obtain evidence of the product candidate’s performance duringthe clinical trial;•availability and efficacy of approved medications for the disease under investigation;•eligibility criteria defined in the protocol for the trial in question;•the size of the patient population required for analysis of the trial’s primary endpoints;•perceived risks and benefits;•efforts to facilitate timely enrollment in clinical trials;•reluctance of physicians to encourage patient participation in clinical trials;•the ability to monitor patients adequately during and after treatment;•our ability to obtain and maintain patient consents; and•proximity and availability of clinical trial sites for prospective patients.•regulatory authorities may withdraw approval of ONS-5010;•we may be required to recall a product or change the way ONS-5010 is administered to patients;TABLE OF CONTENTSOur inability to enroll a sufficient number of patients for our clinical trials would result in significant delaysor may require us to abandon one or more clinical trials altogether. Enrollment delays in our clinical trialsmay result in increased development costs, which would cause the value of our company to decline andlimit our ability to obtain additional financing.Adverse side effects or other safety risks associated with ONS-5010 could delay or preclude approval,cause us to suspend or discontinue clinical trials, abandon further development, limit the commercialprofile of an approved label, or result in significant negative consequences following marketing approval,if any.As is the case with pharmaceuticals generally, it is likely that there may be side effects and adverse eventsassociated with ONS-5010 in our planned clinical trials. Results of our clinical trials could reveal a high andunacceptable severity and prevalence of side effects or unexpected characteristics. Undesirable side effectscaused by ONS-5010 could result in the delay, suspension or termination of clinical trials by us or the FDAfor a number of reasons. If we elect or are required to delay, suspend or terminate any clinical trial, thecommercial prospects of ONS-5010 will be harmed and our ability to generate product revenues from thisproduct candidate will be delayed or eliminated. Serious adverse events observed in clinical trials couldhinder or prevent market acceptance of ONS-5010. Any of these occurrences may harm our business,prospects, financial condition and results of operations significantly.Moreover, if ONS-5010 is associated with undesirable side effects in clinical trials or have characteristicsthat are unexpected, we may elect to abandon or limit its development to more narrow uses orsubpopulations in which the undesirable side effects or other characteristics are less prevalent, less severe ormore acceptable from a risk-benefit perspective, which may limit the commercial expectations for ONS-5010, if approved. We may also be required to modify our study plans based on findings in our clinicaltrials. Many biologics that initially showed promise in early stage testing have later been found to cause sideeffects that prevented further development. In addition, regulatory authorities may draw differentconclusions or require additional testing to confirm these determinations.It is possible that as we test ONS-5010 in larger, longer and more extensive clinical trials including foradditional indications, or as the use of ONS-5010 become more widespread if it receives regulatoryapproval, illnesses, injuries, discomforts and other adverse events that were observed in earlier trials, as wellas conditions that did not occur or went undetected in previous trials, will be reported by patients. If suchside effects become known later in development or upon approval, if any, such findings may harm ourbusiness, financial condition and prospects significantly.In addition, if ONS-5010 receives marketing approval, and we or others later identify undesirable sideeffects caused by ONS-5010, a number of potentially significant negative consequences could result,including:31•regulatory authorities may require additional warnings on the label, such as a “black box”warning or a contraindication, or issue safety alerts, Dear Healthcare Provider letters, press releasesor other communications containing warnings or other safety information about the product;•we may be required to implement a REMS, or create a medication guide outlining the risks ofsuch side effects for distribution to patients;•additional restrictions may be imposed on the marketing or promotion of the particular product orthe manufacturing processes for the product or any component thereof;•we could be sued and held liable for harm caused to patients;•ONS-5010 could become less competitive; and•our reputation may suffer.TABLE OF CONTENTSAny of these events could prevent us from achieving or maintaining market acceptance of ONS-5010, ifapproved, and could significantly harm our business, results of operations and prospects.Risks Related to Commercialization of Our Product CandidatesWe face intense competition and rapid technological change and the possibility that our competitors maydevelop therapies that are similar, more advanced or more effective than ours. Other products may beapproved and successfully commercialized before ours, which may adversely affect our financial conditionand our ability to successfully commercialize our product candidates.We expect to enter highly competitive pharmaceutical markets. Successful competitors in thepharmaceutical markets have demonstrated the ability to effectively discover, obtain patents, develop, testand obtain regulatory approvals for products, as well as an ability to effectively commercialize, market andpromote approved products. Numerous companies, universities and other research institutions are engagedin developing, patenting, manufacturing and marketing of products competitive with those that we aredeveloping. Many of these potential competitors are large, experienced pharmaceutical companies thatenjoy significant competitive advantages, such as substantially greater financial, research and development,manufacturing, personnel and marketing resources. These companies also have greater brand recognitionand more experience in conducting preclinical testing and clinical trials of product candidates and obtainingFDA and other regulatory approvals of products.We have competitors both in the United States and internationally, including major multinationalpharmaceutical companies, specialty pharmaceutical companies and biotechnology companies. Some of thepharmaceutical and biotechnology companies we expect to compete with include, for example, Novartis,which currently markets Lucentis and Regeneron, with their product Eylea, both of which have beenapproved for use in patients with wet AMD. Furthermore, the cancer drug Avastin, sold by Roche is used inwet AMD patients although it has not been approved for use in these patients. Our ONS-5010 is beingdeveloped to replace the use of off-label Avastin. In addition, these companies and other, smaller,biotechnology and pharmaceutical companies are also developing new treatments for wet AMD and are atvarious stages of pre-clinical and clinical development.Many of our competitors have substantially greater financial, technical and other resources, such as largerresearch and development staff and experienced marketing and manufacturing organizations. Additionalmergers and acquisitions in the pharmaceutical industry may result in even more resources beingconcentrated in our competitors. As a result, these companies may obtain regulatory approval more rapidlythan we are able to and may be more effective in selling and marketing their products. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborativearrangements with large, established companies. Our competitors may succeed in developing, acquiring orlicensing on an exclusive basis, products that are more effective or less costly than any product candidatethat we may develop; they may also obtain patent protection that could block our products; and they mayobtain regulatory approval, product commercialization and market penetration earlier than we do. Productcandidates developed by our competitors may render ONS-5010 and any of our other potential productcandidates uneconomical, less desirable or obsolete, and we may not be successful in marketing our productcandidates against competitors.32•the safety and efficacy of the product in clinical trials, and potential advantages over competingtreatments;•the publication of unfavorable safety or efficacy data concerning our product by third-parties;•the prevalence and severity of any side effects, including any limitations or warnings contained ina product’s approved labeling;•the clinical indications for which approval is granted;•recognition and acceptance of our product candidates over our competitors’ products;•prevalence of the disease or condition for which the product is approved;•the cost of treatment, particularly in relation to competing treatments;•the willingness of the target patient population to try our therapies and of physicians to prescribethese therapies;•the strength of marketing and distribution support and timing of market introduction ofcompetitive products;•the extent to which the product is approved for inclusion on formularies of hospitals and managedcare organizations;•publicity concerning our products or competing products and treatments;•the extent to which third-party payors provide coverage and adequate reimbursement for ONS-5010, or any other product candidates we may pursue, if approved;•our ability to maintain compliance with regulatory requirements; and•labeling or naming imposed by FDA or other regulatory agencies.TABLE OF CONTENTSWe expect additional companies to seek approval to manufacture and market anti-VEGF therapies forophthalmic indications. If other anti-VEGF therapies are approved and successfully commercialized beforeONS-5010, we may never achieve significant market share for this product, our revenue would be reducedand, as a result, our business, prospects and financial condition could be harmed.The commercial success of any current or future product candidate will depend upon the degree of marketacceptance by physicians, patients, third-party payors and others in the medical community.Even with the requisite approvals from the FDA and comparable foreign regulatory authorities, thecommercial success of ONS-5010, or any other product candidates we may pursue, will depend in part onthe medical community, patients and third-party payors accepting our product candidates as medicallyuseful, cost-effective and safe. Any product that we bring to the market may not gain market acceptance byphysicians, patients, third-party payors and others in the medical community. The degree of marketacceptance of any of our product candidates, if approved for commercial sale, will depend on a number offactors, including but not limited to:Even if ONS-5010, or any other product candidate we may develop in the future, displays an equivalent ormore favorable efficacy and safety profile in preclinical and clinical trials, market acceptance of the productcandidate will not be fully known until after it is launched and may be negatively affected by a potentialpoor safety experience and the track record of other product candidates. Our efforts to educate the medicalcommunity and third-party payors on the benefits of our product candidates may require significantresources, may be under-resourced compared to large well-funded pharmaceutical entities and may neverbe successful. If ONS-5010, or any other product candidates we may develop in the future, are approvedbut fail to achieve an adequate level of acceptance by physicians, patients, third-party payors and others inthe medical community, we will not be able to generate sufficient revenue to become or remain profitable.33TABLE OF CONTENTSEven if ONS-5010 is approved, off-label compounding of Avastin and other drugs may continue, whichcould have a material adverse effect on our business and financial condition.It is currently estimated that Avastin accounts for approximately 50% of wet AMD prescriptions in theUnited States, notwithstanding that such use is off-label and requires preparation at a compoundingpharmacy. Even if ONS-5010 is approved for use as a treatment for wet AMD, there is no guarantee thatwe will be effective in reducing, or stopping, the off-label compounding of Avastin and other drugs in theUnited States or other major markets where we plan to seek regulatory approval and market ONS-5010 ifapproved. If we are not successful in replacing off-label compounding of Avastin or other drugs with ONS-5010, our business and financial condition could be adversely affected.We currently have no marketing and sales organization. If we are unable to establish sales and marketingcapabilities in jurisdictions for which we choose to retain commercialization rights, we may be unable togenerate any revenue.We currently have no marketing or sales organization. We do not yet have any products approved for sale,and we, as a company, have no experience selling and marketing any pharmaceutical products. Tosuccessfully commercialize any products, we will need to develop these capabilities, either on our own orwith others. If ONS-5010 receives regulatory approval, we may intend to establish a sales and marketingorganization with technical expertise and supporting distribution capabilities to commercialize our productcandidates in major markets where we may choose to retain commercialization rights. Doing so will beexpensive, difficult and time-consuming. Any failure or delay in the development of our internal sales,marketing and distribution capabilities would adversely impact the commercialization of our products.Further, given our lack of prior experience in marketing and selling our products, our initial estimate of thesize of the required sales force may be materially more or less than the size of the sales force actuallyrequired to effectively commercialize our product candidates. As such, we may be required to hiresubstantially more sales representatives and medical support liaisons to adequately support thecommercialization of ONS-5010 or we may incur excess costs as a result of hiring more salesrepresentatives than necessary. With respect to certain geographical markets, we may enter intocollaborations with other entities to utilize their local marketing and distribution capabilities, but we may beunable to enter into such agreements on favorable terms, if at all. If our future collaboration partners do notcommit sufficient resources to commercialize our future products, if any, and we are unable to develop thenecessary marketing capabilities on our own, we will be unable to generate sufficient product revenue tosustain our business. If we are unable to establish sales and marketing capabilities for any approvedproduct, whether on our own or through collaborations, our results of operations will be negativelyimpacted.We may need to enter into alliances with other companies that can provide capabilities and funds for thedevelopment and commercialization of our product candidates. If we are unsuccessful in forming ormaintaining these alliances on favorable terms, our business could be harmed.Because we are a late clinical stage biopharmaceutical company, we have found it necessary to enter intoalliances with other companies. For example, we entered into a strategic partnership agreement forconsulting services for ONS-5010, pursuant to which we pay a monthly fee and may have to share aportion of net profits, if any. We have also entered into service agreements for clinical trials, and co-development and license agreements for our biosimilar product candidates. In the future, we may also findit necessary to form other alliances or joint ventures with major pharmaceutical companies to jointlydevelop and/or commercialize specific the inactive biosimilar product candidates in our pipeline and anyother product candidates that we may develop. In such alliances, we would expect our collaborationpartners to provide substantial capabilities in regulatory affairs, as well as sales and marketing. We may notbe successful in entering into any such alliances. Even if we do succeed in securing such alliances, we maynot be able to maintain them if, for example, development or approval of a product candidate is delayed orsales of an approved product are disappointing. If we are unable to secure or maintain such alliances wemay not have the capabilities necessary to continue or complete development of our product candidates andbring them to market, which may have an adverse effect on our business.In addition to commercialization capabilities, we may depend on our alliances with other companies toprovide substantial additional funding for development and potential commercialization of our productcandidates. We may not be able to obtain funding on favorable terms from these alliances, and if we are not34TABLE OF CONTENTSsuccessful in doing so, we may not have sufficient funds to develop a particular product candidateinternally or to bring product candidates to market. Failure to bring ONS-5010, or any other productcandidates we may develop in the future, to market will prevent us from generating sales revenue, and thiswill substantially harm our business. Furthermore, any delay in entering into these alliances could delay thedevelopment and commercialization of our product candidates and reduce their competitiveness even ifthey reach the market. As a result, our business and operating results may be harmed.The third-party coverage and reimbursement status of newly approved products is uncertain. Failure toobtain or maintain adequate coverage and reimbursement for new or current products could limit ourability to market those products and decrease our ability to generate revenue.Pricing, coverage and reimbursement of ONS-5010, or any other product candidates we may develop inthe future,, if approved, may not be adequate to support our commercial infrastructure. Our per-patientprices may not be sufficient to recover our development costs and potentially achieve profitability. Theavailability of coverage and adequacy of reimbursement by governmental and private payors are essentialfor most patients to be able to afford expensive treatments such as ours, if approved. Accordingly, sales ofour product candidates will depend substantially, both domestically and abroad, on the extent to which thecosts of ONS-5010 and any of our other product candidates will be paid for by third-party payors such ashealth maintenance, managed care organizations, pharmacy benefit and similar healthcare managementorganizations private health insurers and other third-party payors. If coverage and reimbursement are notavailable, or are available only at insufficient levels, we may not be able to successfully commercialize ourproduct candidates. Coverage decisions may depend upon clinical and economic standards that disfavornew drug products when more established or lower cost therapeutic alternatives are already available orsubsequently become available. Even if coverage is provided, the approved reimbursement amount maynot be adequate to allow us to realize a return on our investment.There is significant uncertainty related to third-party payor coverage and reimbursement of newlyapproved products. In the United States, third-party payors play an important role in determining the extentto which new drugs and biologics will be covered and reimbursed. The Medicare program covers certainindividuals aged 65 or older or those who are disabled or suffering from end-stage renal disease. TheMedicaid program, which varies from state to state, covers certain individuals and families who havelimited financial means and/or certain disabilities. The Medicare and Medicaid programs increasingly areused as models for how third-party payors develop their coverage and reimbursement policies for drugsand biologics. It is difficult to predict at this time what third-party payors will decide with respect to thecoverage and reimbursement for our biosimilar product candidates, if approved. In addition, in the UnitedStates, no uniform policy of coverage and reimbursement for biologics exists among third-party payors.Therefore, coverage and reimbursement for biologics can differ significantly from payor to payor. As aresult, the process for seeking favorable coverage determinations often is time-consuming and costly andmay require us to provide scientific and clinical support for the use of our products to each payorseparately, with no assurance that coverage and adequate reimbursement will be obtained. Our inability topromptly obtain coverage and profitable reimbursement rates from third-party payors for any approvedproducts that we develop could have an adverse effect on our operating results, our ability to raise capitalneeded to commercialize products and our overall financial condition.Outside the United States, pharmaceutical businesses are generally subject to extensive governmental pricecontrols and other market regulations. We believe the increasing emphasis on cost-containment initiatives inthe E.U., Canada and other countries has and will continue to put pressure on the pricing and usage of ourproduct candidates. In many countries, the prices of medical products are subject to varying price controlmechanisms as part of national health systems. Other countries allow companies to fix their own prices formedical products, but monitor and control company profits. Additional foreign price controls or otherchanges in pricing regulation could restrict the amount that we are able to charge for our productcandidates. Accordingly, in markets outside the United States, the reimbursement for our products may bereduced compared with the United States and may be insufficient to generate commercially reasonablerevenue and profits.Moreover, increasing efforts by governmental and third-party payors in the United States and abroad tocontrol healthcare costs may cause such organizations to limit both coverage and the level ofreimbursement for new products approved and, as a result, they may not cover or provide adequate35TABLE OF CONTENTSpayment for ONS-5010, or any other product candidates we may develop in the future,. We expect toexperience pricing pressures in connection with the sale of ONS-5010, or any other product candidates wemay develop in the future, if approved, due to the trend toward managed healthcare, the increasinginfluence of health maintenance organizations and additional legislative changes.Risks Related to Our Reliance on Third PartiesWe rely on third parties to conduct our preclinical and clinical trials and perform other tasks for us. Ifthese third parties do not successfully carry out their contractual duties, meet expected deadlines or complywith regulatory requirements, we may not be able to obtain regulatory approval for or commercialize ourproduct candidates and our business could be harmed.We have relied upon and plan to continue to rely upon CROs to monitor and manage data for our ongoingclinical development programs. We rely on these parties for execution of our preclinical and clinical trialsand we can only control certain aspects of their activities. Nevertheless, we are responsible for ensuring thateach of our studies is conducted in accordance with the applicable protocol, legal, regulatory and scientificrequirements and standards and our reliance on the CROs does not relieve us of our regulatoryresponsibilities. We and our CROs and other vendors are required to comply with cGMP, GCP, and GoodLaboratory Practices, or GLP, which are regulations and guidelines enforced by the FDA, the CompetentAuthorities of the Member States of the EEA and comparable foreign regulatory authorities for all of ourproduct candidates in clinical development. Regulatory authorities enforce these regulations throughperiodic inspections of study sponsors, principal investigators, study sites and other contractors. If we, anyof our CROs, service providers or investigators fail to comply with applicable regulations or GCPs, the datagenerated in our preclinical and clinical trials may be deemed unreliable and the FDA, EMA or comparableforeign regulatory authorities may require us to perform additional preclinical and clinical trials beforeapproving our marketing applications. We cannot assure you that upon inspection by a given regulatoryauthority, such regulatory authority will determine that any of our clinical trials comply with GCPrequirements. In addition, our clinical trials must be conducted with products produced under cGMPregulations. Failure to comply by any of the participating parties or ourselves with these regulations mayrequire us to repeat clinical trials, which would delay the regulatory approval process. Moreover, ourbusiness may be implicated if our CROs or any other participating parties violate federal or state fraud andabuse or false claims laws and regulations or healthcare privacy and security laws.If any of our relationships with any of these third-party CROs terminate, we may not be able to enter intoarrangements with alternative CROs or do so on commercially reasonable terms. In addition, our CROs arenot our employees, and except for remedies available to us under our agreements with such CROs, wecannot control whether or not they devote sufficient time and resources to our on-going preclinical andclinical programs. If CROs do not successfully carry out their contractual duties or obligations or meetexpected deadlines, if they need to be replaced or if the quality or accuracy of the data they obtain iscompromised due to the failure to adhere to our protocols, regulatory requirements or for other reasons,our clinical trials may be extended, delayed or terminated and we may not be able to obtain regulatoryapproval for or successfully commercialize our product candidates. CROs may also generate higher coststhan anticipated. As a result, our results of operations and the commercial prospects for our productcandidates would be harmed, our costs could increase and our ability to generate revenue could be delayed.Changing or adding additional CROs involves additional cost and requires management time and focus. Inaddition, there is a natural transition period when a new CRO commences work. As a result, delays mayoccur, which can negatively impact our ability to meet our desired clinical development timelines. We mayencounter challenges or delays in the future and these delays or challenges may have an adverse effect onour business, financial condition and prospects.Previously, we manufactured bulk drug substance for preclinical and clinical supplies of our productcandidates in our in-house facility. Our business could be harmed if we are not able to find a suitablecontract manufacturer or we otherwise fail to manufacture our product candidates at the necessaryquantity or quality levels.We no longer have the infrastructure or capability internally to manufacture supplies of ONS-5010, or anyother product candidate, for use in clinical development, and we lack the resources and the capability tomanufacture any product candidates on a clinical or commercial scale. If we are unable to manufacture or36•failure to establish contracts with contract manufacturing organization, or CMOs, and devicevendors where applicable;•product loss due to contamination, equipment failure or improper installation or operation ofequipment or vendor or operator error;•infringing intellectual property rights of third parties relating to manufacturing and quality testing;•failure to achieve or maintain compliance with FDA’s requirements for acceptance of theapplicable manufacturing facilities; and•labor shortages, natural disasters and power failures.TABLE OF CONTENTShave manufactured sufficient supplies of ONS-5010 or any other product candidates, our developmentefforts would be delayed, which would adversely affect our business and prospects. We will rely on third-party manufacturers to manufacture and supply us with our product candidates for clinical development, aswell as to establish commercial supplies of our product candidates. Successfully transferring complicatedmanufacturing techniques to contract manufacturing organizations and scaling up these techniques forcommercial quantities is time consuming and we may not be able to achieve such transfer or do so in atimely manner. If our need for contract manufacturing services increases during a period of industry-wideproduction capacity shortage, we may not be able to produce our product candidates on a timely basis oron commercially viable terms. Any significant delay or discontinuation in the supply of a product candidatefor an ongoing clinical trial due to the need to replace a third-party manufacturer could considerably delaycompletion of our clinical trials, product testing and potential regulatory approval of our productcandidates, which could harm our business and results of operations.Reliance on third-party manufacturers entails additional risks, including reliance on the third party forregulatory compliance and quality assurance, the possible breach of the manufacturing agreement by thethird party and the possible termination or nonrenewal of the agreement by the third party at a time that iscostly or inconvenient for us. In addition, third-party manufacturers may not be able to comply with cGMPor similar regulatory requirements outside the United States. Our failure or the failure of our third-partymanufacturers to comply with applicable regulations could result in sanctions being imposed on us,including fines, injunctions, civil penalties, delays, suspension or withdrawal of approvals, licenserevocation, seizures or recalls of products, operating restrictions and criminal prosecutions, any of whichcould adversely affect supplies of ONS-5010 or any other product candidates that we may develop. Anyfailure or refusal to supply the components for our product candidates that we may develop could delay,prevent or impair our clinical development or commercialization efforts. If our contract manufacturerswere to breach or terminate their manufacturing arrangements with us, the development orcommercialization of the affected products or product candidates could be delayed, which could have anadverse effect on our business. Any change in our manufacturers could be costly because the commercialterms of any new arrangement could be less favorable and because the expenses relating to the transfer ofnecessary technology and processes could be significant.If ONS-5010 or any of our product candidates are approved, we will need to enter into agreements with athird party for contract manufacturing in order to produce the quantities necessary to meet anticipatedmarket demand. If we are unable to build and stock our product candidates in sufficient quantities to meetthe requirements for the launch of these candidates or to meet future demand, our revenue and grossmargins could be adversely affected. Although we believe that we will not have any material supply issues,we cannot be certain that we will be able to obtain long-term supply arrangements for our productcandidates or materials used to produce them on acceptable terms, if at all. If we are unable to arrange forthird-party manufacturing, or to do so on commercially reasonable terms, we may not be able to completedevelopment of our product candidates or market them.Any adverse developments affecting the manufacture of ONS-5010 could substantially increase our costsand limit supply for such product candidate.The process of manufacturing our ONS-5010 and our other mAb product candidates is complex, highlyregulated and subject to several risks, including but not limited to:37TABLE OF CONTENTSEven minor deviations from normal manufacturing processes for any of our product candidates couldresult in reduced production yields, product defects and other supply disruptions. In addition, if we requirea change in CMO, this will add time along with financial and personnel resources to change manufacturingsites. If microbial, viral or other contaminations are discovered in our product candidates or in ourmanufacturing facilities, our facilities may need to be closed for an extended period of time to investigateand remedy the contamination.Any adverse developments affecting manufacturing operations for our product candidates may result inshipment delays, inventory shortages, lot failures, withdrawals or recalls or other interruptions in the supplyof our product candidates. We may also have to take inventory write-offs and incur other charges andexpenses for product candidates that fail to meet specifications, undertake costly remediation efforts or seekmore costly manufacturing alternatives.We may depend on third parties for the commercialization of ONS-5010, and failure to commercialize inthose markets could harm our business and operating results.We may need to identify third-parties and then negotiate the terms of the development andcommercialization agreements for the United States and major ex-U.S. markets, such as the E.U. and Japan.We may not be successful in identifying contract counterparties, and we may not be able to reachagreements with such parties on terms that are as favorable to our company as we would anticipate. We donot have in place any licensing agreements for commercialization of ONS-5010. Our current arrangementsare for our inactive biosimilar product candidates, and aside from one U.S. arrangement for ONS-3010, arefor smaller ex-U.S. markets where we would not otherwise intend to commercialize our biosimilar productcandidates, such as China, Mexico and India, among others. If any entity with whom we enter into acommercialization arrangement fails to exercise commercially reasonable efforts to market and sell ourapproved products in their respective licensed jurisdictions or are otherwise ineffective in doing so, ourbusiness will be harmed and we may not be able to adequately remedy the harm through negotiation,litigation, arbitration or termination of the license agreements.Moreover, any disputes with our collaboration partners concerning the adequacy of their commercializationefforts will substantially divert the attention of our senior management from other business activities andwill require us to incur substantial legal costs to fund litigation or arbitration proceedings.In the event that any of our license agreements terminate, we may need to find another partner in thosemarkets to commercialize and in certain instances, manufacture any product candidates. Further, upon anysuch termination, our contract counterparties may still have the right to commercialize these productcandidates in such markets, which may affect our ability to commercialize in the same markets.Our reliance on third parties requires us to share our trade secrets, which increases the possibility that acompetitor will discover them or that our trade secrets will be misappropriated or disclosed.Because we expect to rely on third parties to manufacture our current and any future product candidates,and we expect to continue to collaborate with third parties on the development of our current and anyfuture product candidates, we must, at times, share trade secrets with them. We also conduct joint researchand development programs that may require us to share trade secrets under the terms of our collaborationor similar agreements. For example, under our joint participation arrangement with Huahai, we areobligated to share with Huahai certain information relating to the development of ONS-3010, includingreports from nonclinical studies and clinical trials. We seek to protect our proprietary technology in part byentering into confidentiality agreements and, if applicable, material transfer agreements, consultingagreements or other similar agreements with our advisors, employees, CROs, third-party contractors andconsultants prior to beginning research or disclosing proprietary information. These agreements typicallylimit the rights of the third parties to use or disclose our confidential information, including our tradesecrets. Despite the contractual provisions employed when working with third parties, the need to sharetrade secrets and other confidential information increases the risk that such trade secrets become known byour competitors, are inadvertently incorporated into the technology of others, or are disclosed or used inviolation of these agreements. Any disclosure, either intentional or unintentional, by our employees, theemployees of third parties with whom we share our facilities or third-party consultants and vendors that we38TABLE OF CONTENTSengage to perform research, clinical trials or manufacturing activities, or misappropriation by third parties(such as through a cybersecurity breach) of our trade secrets or proprietary information could enablecompetitors to duplicate or surpass our technological achievements, thus eroding our competitive positionin our market. Further, adequate remedies may not exist in the event of unauthorized use or disclosure.Given that our proprietary position is based, in part, on our know-how and trade secrets, a competitor’sdiscovery of our trade secrets or other unauthorized use or disclosure would impair our competitiveposition and may have an adverse effect on our business and results of operations.In addition, these agreements typically restrict the ability of our advisors, employees, third-party contractorsand consultants to publish data potentially relating to our trade secrets, although our agreements maycontain certain limited publication rights. Policing unauthorized use of our or our licensors’ intellectualproperty is difficult, expensive and time-consuming, and we may be unable to determine the extent of anyunauthorized use. Moreover, enforcing a claim that a party illegally disclosed or misappropriated a tradesecret is difficult, expensive and time-consuming, and the outcome is unpredictable. In addition, somecourts inside and outside the United States are less willing or unwilling to protect trade secrets. Despite ourefforts to protect our trade secrets, our competitors may discover our trade secrets, either through breach ofour agreements with third parties, independent development or publication of information by any of ourthird-party collaborators. A competitor’s discovery of our trade secrets would impair our competitiveposition and have an adverse impact on our business.We are required to co-fund the development of, and proportionately share in the revenue from, thecommercialization of ONS-3010 in the United States, Canada, E.U., Japan, Australia and New Zealandunder a joint participation agreement with Huahai. We may also be required to form a joint venture tofurther co-develop and commercialize ONS-3010 with Huahai in the agreed countries, if so requested byHuahai.We currently have a joint participation arrangement with Huahai that provides for the co-funding of thedevelopment of ONS-3010 in the United States, Canada, E.U., Japan, Australia and New Zealand and theproportionate sharing of the revenue from commercialization of ONS-3010 in such countries, in the eventwe were to restart the active development of this program. If so, we could also be required to further co-develop and commercialize ONS-3010 with Huahai in the agreed countries pursuant to a joint venture, if sorequested by Huahai, as contemplated by our joint participation agreement. Under the joint participationagreement, assuming Huahai funds its proportionate share of development costs incurred after completionof the “Phase-3 Ready Package” for ONS-3010, we will have a 49% value ownership interest with Huahaihaving a 51% value ownership interest in ONS-3010. Accordingly, our share of any potential revenuesfrom the successful commercialization of ONS-3010 in the agreed countries, including major markets suchas the United States and E.U., would also be in proportion to such ownership interests. While we anticipatethat we will each act in accordance with the terms of our agreement for the joint development andcommercialization of ONS-3010, we cannot control Huahai, nor can we predict with any certainty that ourinterests will be aligned and that we will successfully collaborate.We currently engage single source suppliers for clinical trial services and multiple source suppliers for fill-finish manufacturing and product testing of ONS-5010. The loss of any of these suppliers, or any futuresingle source suppliers, could harm our business.Our ONS-5010 product candidate is fill-finished by Ajinomoto Althea, Inc., or Althea. As such, we areheavily dependent on Althea for supplying us with sufficient supply of ONS-5010. Although we believethat there are alternate sources for this service, we cannot assure you that identifying and establishing newrelationships would not result in significant delay in the development of ONS-5010. Additionally, we maynot be able to enter into arrangements with alternative vendors on commercially reasonable terms, or at all.A delay in the development of ONS-5010 or having to enter into a new agreement with a different thirdparty on less favorable terms than we have with our current suppliers could negatively impact our business.Risks Related to Intellectual PropertyIf we infringe or are alleged to infringe intellectual property rights of third parties, our business could beharmed. Third-party claims of intellectual property infringement may prevent or delay our developmentand commercialization efforts.Our commercial success depends in large part on avoiding infringement of the patents and proprietaryrights of third parties. There have been many lawsuits and other proceedings involving patent and other39TABLE OF CONTENTSintellectual property rights in the pharmaceutical industry, including patent infringement lawsuits,interferences, oppositions and reexamination proceedings before the U.S. Patent and Trademark Office, orUSPTO, and corresponding foreign patent offices. Numerous U.S. and foreign issued patents and pendingpatent applications, which are owned by third parties, exist in the fields in which we are developing productcandidates. As the pharmaceutical industry expands and more patents are issued, the risk increases that ourproduct candidates may be subject to claims of infringement of the patent rights of third parties.Our research, development and commercialization activities may infringe or otherwise violate or be claimedto infringe or otherwise violate patents owned or controlled by other parties.Third parties may assert that we are employing their proprietary technology without authorization. Theremay be third-party patents or patent applications with claims to compositions, formulations, methods ofmanufacture or methods for treatment related to the use or manufacture of our product candidates. We haveconducted patent searches for third-party patents with respect to each of our lead product candidates, andare aware of third-party patent families with claims that, if valid and enforceable, could be construed tocover such product candidates or their respective methods of manufacture or use. Some of these patentshave expiration dates that could extend reference product exclusivity past our anticipated product launchdates. We cannot guarantee that any of our analyses are complete and thorough, nor can we be sure that wehave identified each and every patent and pending application in the United States and abroad that isrelevant or necessary to the commercialization of our product candidates. Moreover, because patentapplications can take many years to issue, there may be currently pending patent applications that may laterresult in issued patents covering our product candidates. The existence of any patent with valid andenforceable claims covering one or more of our product candidates could cause substantial delays in ourability to introduce a candidate into the U.S. market if the term of such patent extends beyond our desiredproduct launch date.There may also be patent applications that have been filed but not published and if such applications issueas patents, they could be asserted against us. For example, in most cases, a patent filed today would notbecome known to industry participants for at least 18 months given patent rules applicable in mostjurisdictions that do not require publication of patent applications until 18 months after filing. Moreover,we may face claims from non-practicing third-party entities that have no relevant product revenue andagainst whom our own patent portfolio may have no deterrent effect. In addition, the scope of patent claimsis subject to interpretation by the courts, and the interpretation is not always uniform. If we are sued forpatent infringement, we would need to demonstrate that our product candidates, products or methods eitherdo not infringe the asserted patent claims or that the claims are invalid and/or unenforceable, and we maynot be successful.Proving that a patent is invalid or unenforceable is difficult. For example, in the United States, provinginvalidity requires a showing of clear and convincing evidence to overcome the presumption of validityenjoyed by issued patents. In proceedings before courts in the E.U., the burden of proving invalidity of apatent also usually rests on the party alleging invalidity. Even if we are successful in litigation, we mayincur substantial costs and the time and attention of our management and scientific personnel could bediverted, which could harm our business. In addition, we may not have sufficient resources to bring theseactions to a successful conclusion.Third parties could bring claims against us that would cause us to incur substantial expenses and, ifsuccessful against us, could cause us to pay substantial monetary damages. The outcome of intellectualproperty litigation is subject to uncertainties that cannot be adequately quantified in advance. If a patentinfringement suit were brought against us, we could be forced to stop or delay research, development,manufacturing or sales of the product or product candidate that is the subject of the suit. Ultimately, wecould be prevented from commercializing a product or be forced to cease some aspect of our businessoperations if, as a result of actual or threatened patent infringement claims, we are unable to enter intolicenses on commercially acceptable terms or at all. If, as a result of patent infringement claims or to avoidpotential claims, we choose or are required to seek licenses from third parties, these licenses may not beavailable on acceptable terms or at all. Even if we are able to obtain a license, the license may obligate us topay substantial license fees or royalties or both, and the rights granted to us might be nonexclusive, whichcould result in our competitors gaining access to the same intellectual property.40TABLE OF CONTENTSParties making claims against us may obtain injunctive or other equitable relief, which could effectivelyblock our ability to further develop and commercialize one or more of our product candidates. Defense ofthese claims, regardless of their merit, would likely involve substantial litigation expense and would likelybe a substantial diversion of employee resources from our business. In the event of a successful claim ofinfringement against us, we may, in addition to being blocked from the market, have to pay substantialmonetary damages, including treble damages and attorneys’ fees for willful infringement, pay royalties,redesign our infringing products or obtain one or more licenses from third parties, which may beimpossible or require substantial time and monetary expenditure.In addition to infringement claims against us, we may become a party to other patent litigation and otherproceedings, including interference, derivation or post-grant proceedings declared or granted by theUSPTO and similar proceedings in foreign countries, regarding intellectual property rights with respect toour current or future products. An unfavorable outcome in any such proceedings could require us to ceaseusing the related technology or to attempt to license rights to it from the prevailing party or could cause usto lose valuable intellectual property rights. Our business could be harmed if the prevailing party does notoffer us a license on commercially reasonable terms, if any license is offered at all. Litigation or otherproceedings may fail and, even if successful, may result in substantial costs and distract our managementand other employees. We may also become involved in disputes with others regarding the ownership ofintellectual property rights.Third parties may submit applications for patent term extensions in the United States or other jurisdictionswhere similar extensions are available and/or Supplementary Protection Certificates in the E.U. states(including Switzerland) seeking to extend certain patent protection that, if approved, may interfere with ordelay the launch of one or more of our product candidates.The cost to us of any patent litigation or other proceeding, even if resolved in our favor, could besubstantial. Patent litigation and other proceedings may fail, and even if successful, may result in substantialcosts and distract our management and other employees. Uncertainties resulting from the initiation andcontinuation of patent litigation or other proceedings could impair our ability to compete in themarketplace.So called “submarine” patents may be granted to our competitors that may significantly alter our launchtiming expectations, reduce our projected market size, cause us to modify our product or process or blockus from the market altogether.The term “submarine” patent has been used in the pharmaceutical industry and in other industries to denotea patent issuing from a U.S. application with an effective filing date prior to June 8, 1995 that was notpublished, publically known or available prior to its grant. Submarine patents add substantial risk anduncertainty to our business. Submarine patents may be issued to our competitors covering our productcandidates and thereby cause significant market entry delay, defeat our ability to market our productcandidates or cause us to abandon development and/or commercialization of a product candidate.The issuance of one or more submarine patents may harm our business by causing substantial delays in ourability to introduce a candidate into the U.S. market.We may not identify relevant patents or may incorrectly interpret the relevance, scope or expiration of apatent, which might adversely affect our ability to develop and market our products.We cannot guarantee that any of our patent searches or analyses, including but not limited to theidentification of relevant patents, the scope of patent claims or the expiration of relevant patents, arecomplete and thorough, nor can we be certain that we have identified each and every patent and pendingapplication in the United States and abroad that is relevant to or necessary for the commercialization of ourproduct candidates in any jurisdiction.The scope of a patent claim is determined by an interpretation of the law, the written disclosure in a patentand the patent’s prosecution history. Our interpretation of the relevance or the scope of a patent or apending application may be incorrect, which may negatively impact our ability to market our products orpipeline candidates. We may incorrectly determine that our products are not covered by a third party41TABLE OF CONTENTSpatent. Further, we may conclude that a well-informed court or other tribunal would find the claims of arelevant third-party patent to be invalid based on prior art, enablement, written description, or otherground, and that conclusion may be incorrect, which may negatively impact our ability to market ourproducts or pipeline molecules.Many patents may cover a marketed product, including but not limited to the composition of the product,methods of use, formulations, cell line constructs, vectors, growth media, production processes andpurification processes. The identification of all patents and their expiration dates relevant to the productionand sale of a reference product is extraordinarily complex and requires sophisticated legal knowledge in therelevant jurisdiction. It may be impossible to identify all patents in all jurisdictions relevant to a marketedproduct. We may not identify all relevant patents, or incorrectly determine their expiration dates, whichmay negatively impact our ability to develop and market our products.Our failure to identify and correctly interpret relevant patents may negatively impact our ability to develop,market and commercialize our products.We may become involved in lawsuits to protect or enforce any future patents, which could be expensive,time-consuming and unsuccessful.Although we have no issued patents, when and if we do obtain issued patents, we may discover thatcompetitors are infringing those patents. Expensive and time-consuming litigation may be required toenforce our patents. If we or one of our collaboration partners were to initiate legal proceedings against athird party to enforce a patent covering one of our product candidates, the defendant could counterclaimthat the patent covering our product candidate is invalid and/or unenforceable. In patent litigation in theUnited States, defendant counterclaims alleging invalidity and/or unenforceability are commonplace.Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements,including but not limited to lack of novelty, obviousness or non-enablement. Grounds for anunenforceability assertion could include an allegation that someone involved in the prosecution of thepatent withheld relevant or material information related to the patentability of the invention from theUSPTO or made a misleading statement during prosecution. The outcome following legal assertions ofinvalidity and unenforceability is unpredictable, and there is a risk that a court will decide that a patent ofours is invalid or unenforceable, in whole or in part, and that we do not have the right to stop the otherparty from using the invention at issue. There is also a risk that, even if the validity of such patents isupheld, the court will construe the patent’s claims narrowly and decide that we do not have the right to stopthe other party from using the invention at issue on the grounds that our patent claims do not cover theinvention. An adverse outcome in a litigation or proceeding involving our patents could limit our ability toassert our patents against those parties or other competitors, and may curtail or preclude our ability toexclude third parties from making and selling similar or competitive products. Any of these occurrencescould adversely affect our competitive business position, business prospects and financial condition. Even ifwe establish infringement, the court may decide not to grant an injunction against further infringing activityand instead award only monetary damages, which may or may not be an adequate remedy.Similarly, if we assert trademark infringement claims, a court may determine that the marks we haveasserted are invalid or unenforceable, or that the party against whom we have asserted trademarkinfringement has superior rights to the marks in question. In this case, we could ultimately be forced tocease use of such trademarks.Furthermore, because of the substantial amount of discovery required in connection with intellectualproperty litigation, there is a risk that some of our confidential information could be compromised bydisclosure during any litigation we initiate to enforce our patents. There could also be publicannouncements of the results of hearings, motions or other interim proceedings or developments. Ifsecurities analysts or investors perceive these results to be negative, it could have a negative impact on themarket price of our securities. Moreover, there can be no assurance that we will have sufficient financial orother resources to file and pursue such infringement claims, which typically last for years before they areconcluded. Even if we ultimately prevail in such claims, the monetary cost of such litigation and thediversion of the attention of our management and scientific personnel could outweigh any benefit wereceive as a result of the proceedings.42TABLE OF CONTENTSWe may be subject to claims that our employees, consultants or independent contractors have wrongfullyused or disclosed confidential information of third parties or that our employees have wrongfully used ordisclosed alleged trade secrets of their former employers.We employ individuals and retain independent contractors and consultants and members on our board ofdirectors who were previously employed at universities or other pharmaceutical companies, including ourcompetitors or potential competitors. For example, our Chief Medical Officer, Kenneth M. Bahrt, M.D. is aformer employee of Genentech, which is the reference product sponsor of bevacizumab (Avastin), forwhich we are developing our own bevacizumab, ONS-5010, for ophthalmic diseases, for which Avastin iscurrently widely used off label. Although we try to ensure that our employees, consultants and independentcontractors do not use the proprietary information or know-how of others in their work for us and we arenot currently subject to any claims that they have done so, we may in the future be subject to such claims.Litigation may be necessary to defend against these claims. If we fail in defending any such claims, inaddition to paying monetary damages, we may lose valuable intellectual property rights or personnel,which could adversely impact our business. Even if we are successful in defending against such claims,litigation could result in substantial costs and be a distraction to management and other employees.In addition, while we typically require our employees, consultants and contractors who may be involved inthe development of intellectual property to execute agreements assigning such intellectual property to us,we may be unsuccessful in executing such an agreement with each party who in fact develops intellectualproperty that we regard as our own, which may result in claims by or against us asserting ownership of suchintellectual property. If we fail in prosecuting or defending any such claims, in addition to paying monetarydamages, we may lose valuable intellectual property rights. Even if we are successful in prosecuting ordefending against such claims, litigation could result in substantial costs and be a distraction to our seniormanagement and scientific personnel.We currently have no issued patents. If we are unable to obtain and maintain effective patent rights for ourproduct candidates or any future product candidates, we may not be able to prevent competitors fromusing technologies we consider important in our successful development and commercialization of ourproduct candidates, resulting in loss of any potential competitive advantage our patents may haveotherwise afforded us.While our principal focus in matters relating to intellectual property is to avoid infringing the valid andenforceable rights of third parties, we also rely upon a combination of patents, trade secret protection andconfidentiality agreements to protect our own intellectual property related to our product candidates anddevelopment programs. Our ability to enjoy any competitive advantages afforded by our own intellectualproperty depends in large part on our ability to obtain and maintain patents and other intellectual propertyprotection in the United States and in other countries with respect to various proprietary elements of ourproduct candidates, such as, for example, our product formulations and processes for manufacturing ourproducts and our ability to maintain and control the confidentiality of our trade secrets and confidentialinformation critical to our business.We have sought to protect our proprietary position by filing patent applications in the United States andabroad related to our products that are important to our business. This process is expensive and time-consuming, and we may not be able to file and prosecute all necessary or desirable patent applications at areasonable cost or in a timely manner. It is also possible that we will fail to identify patentable aspects of ourresearch and development output before it is too late to obtain patent protection. There is no guarantee thatany patent application we file will result in an issued patent having claims that protect our products; and, asa result, we may not be able to effectively prevent others from commercializing competitive products.Additionally, while the basic requirements for patentability are similar across jurisdictions, each jurisdictionhas its own specific requirements for patentability. We cannot guarantee that we will obtain identical orsimilar patent protection covering our products in all jurisdictions where we file patent applications.The patent positions of biopharmaceutical companies generally are highly uncertain and involve complexlegal and factual questions for which legal principles remain unresolved. As a result, the patent applicationsthat we own or license may fail to result in issued patents with claims that cover our product candidates inthe United States or in other foreign countries for many reasons. There is no assurance that all potentially43TABLE OF CONTENTSrelevant prior art relating to our patents and patent applications has been found, considered or cited duringpatent prosecution, which can be used to invalidate a patent or prevent a patent from issuing from apending patent application. Even if patents do successfully issue, and even if such patents cover ourproduct candidates, third parties may challenge their validity, enforceability or scope, which may result insuch patent claims being narrowed, found unenforceable or invalidated. Furthermore, even if they areunchallenged, our patents and patent applications may not adequately protect our intellectual property,provide exclusivity for our product candidates or prevent others from designing around our claims. Any ofthese outcomes could impair our ability to prevent competitors from using the technologies claimed in anypatents issued to us, which may have an adverse impact on our business.Patents granted by the European Patent Office may be opposed by any person within nine months from thepublication of their grant and, in addition, may be challenged before national courts at any time.Furthermore, even if they are unchallenged, our patents and patent applications may not adequately protectour intellectual property or prevent others from designing around our claims. If the breadth or strength ofprotection provided by the patents and patent applications we hold, license or pursue with respect to ourproduct candidates is threatened, it could threaten our ability to prevent third parties from using the sametechnologies that we use in our product candidates. In addition, recent changes to the patent laws of theUnited States provide additional procedures for third parties to challenge the validity of issued patents basedon patent applications filed after March 15, 2013. If the breadth or strength of protection provided by thepatents and patent applications we hold or pursue with respect to our current or future product candidates ischallenged, then it could threaten our ability to prevent competitive products from using our proprietarytechnology. Further, because patent applications in the United States and most other countries areconfidential for a period of time, typically for 18 months after filing, we cannot be certain that we were thefirst to either (i) file any patent application related to our product candidates or (ii) invent any of theinventions claimed in our patents or patent applications. Furthermore, for applications filed beforeMarch 16, 2013 or patents issuing from such applications, an interference proceeding can be provoked bya third party or instituted by the USPTO to determine who was the first to invent any of the subject mattercovered by the patent claims of our applications and patents. If third parties have filed such applicationsafter March 15, 2013, a derivation proceeding in the United States can be initiated by such third parties todetermine whether our invention was derived from theirs.We do not have any issued patents, but we have filed patent applications, which are currently pending,directed to various aspects of our product candidates. We cannot offer any assurances about which, if any,patents will be issued, the breadth of any such patent or whether any issued patents will be found invalidand unenforceable or will be threatened or infringed by third parties. Any successful actions by third partiesto challenge the validity or enforceability of any patents that may be issued to us could deprive us of theability to prevent others from using the technologies claimed in such issued patents.Further, if we encounter delays in regulatory approvals, the period of time during which we could market aproduct candidate under patent protection could be reduced.We have filed patent applications directed to our own proprietary formulations and processes for ourproduct candidates when we have believed securing such patents may afford a competitive advantage. Forexample, the companies that originated Humira and Avastin (AbbVie and Genentech, respectively) ownpatents directed to formulations for these products. Rather than wait for the expiration of these formulationpatents, we have developed our own proprietary formulations for these products that we believe are notcovered by valid claims of third party patents, including AbbVie or Genentech’s formulation patents; andwe have filed patent applications directed to our formulations. We cannot guarantee that our proprietaryformulations will avoid infringement of third party patents. Moreover, because competitors may be able todevelop their own proprietary product formulations, it is uncertain whether issuance of any of our pendingpatent applications directed to formulations of adalimumab (Humira) and bevacizumab (Avastin) wouldcover the formulations of any competitors. For example, we are aware that Sandoz is developing biosimilarversions of adalimumab (Humira) and has filed patent applications directed to formulations of adalimumab(Humira). We are also aware that Boehringer is developing a biosimilar version of adalimumab (Humira)and has filed a patent application directed to formulations of adalimumab (Humira). We have also filedpatent applications, none of which have yet issued, directed to aspects of our downstream manufacturing44TABLE OF CONTENTSprocesses for various biosimilars, including ONS-3010. In contrast to our patent applications directed toformulations of ONS-3010, the proprietary technologies embodied in our process-related patent filings,while directed to inventions we believe may provide us with competitive advantage, were not developed byus to avoid third-party patents. As in the case of our formulation patent filings, it is highly uncertain and wecannot predict whether our patent filings on process enhancements will afford us a competitive advantageagainst third parties.Obtaining and maintaining our patent protection depends on compliance with various proceduralrequirements, document submissions, fee payment and other requirements imposed by governmental patentagencies. Our patent protection could be reduced or eliminated for non-compliance with theserequirements.The USPTO and various foreign governmental patent agencies require compliance with a number ofprocedural, documentary, fee payment and other provisions during the patent process. In many cases, aninadvertent lapse can be cured by payment of a late fee or by other means in accordance with the applicablerules. However, there are situations in which noncompliance can result in abandonment or lapse of a patentor patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. Insuch an event, competitors might be able to enter the market earlier than would otherwise have been thecase.We may not be able to protect our intellectual property rights throughout the world.Filing, prosecuting, defending and enforcing patents on product candidates in all countries throughout theworld would be prohibitively expensive, and our intellectual property rights in some countries outside theUnited States can be less extensive than those in the United States. In addition, the laws of some foreigncountries do not protect intellectual property rights to the same extent as federal and state laws in the UnitedStates. Further, licensing partners may choose not to file patent applications in certain jurisdictions in whichwe may obtain commercial rights, thereby precluding the possibility of later obtaining patent protection inthese countries. Consequently, we may not be able to prevent third parties from practicing our inventions inall countries outside the United States or importing products made using our inventions into the UnitedStates or other jurisdictions. Competitors may use our technologies in jurisdictions where we have notobtained patent protection to develop their own products and may also export infringing products toterritories where we have patent protection, but the ability to enforce our patents is not as strong as that inthe United States. These products may compete with our products and our patents or other intellectualproperty rights may not be effective or sufficient to prevent them from competing.Many companies have encountered significant problems in protecting and defending intellectual propertyrights in foreign jurisdictions. The legal systems of certain countries, particularly certain developingcountries, do not favor the enforcement of patents, trade secrets and other intellectual property protection,which could make it difficult for us to stop the infringement of our patents or marketing of competingproducts in violation of our proprietary rights generally. Proceedings to enforce our patent rights in foreignjurisdictions, whether or not successful, could result in substantial costs and divert our efforts and attentionfrom other aspects of our business, could put our patents at risk of being invalidated or interpretednarrowly and our patent applications at risk of not being approved, and could provoke third parties toassert claims against us. We may not prevail in any lawsuits that we initiate and the damages or otherremedies awarded, if any, may not be commercially meaningful. Governments of some foreign countriesmay force us to license our patents to third parties on terms that are not commercially reasonable oracceptable to us. Accordingly, our efforts to enforce our intellectual property rights around the world maybe inadequate to obtain a significant commercial advantage from the intellectual property that we developor license.Changes in U.S. patent law could diminish the value of patents in general, thereby impairing our ability toprotect our product candidates.As is the case with other biopharmaceutical companies, our success is heavily dependent on intellectualproperty, particularly patents. Obtaining and enforcing patents in the biopharmaceutical industry involvesboth technological and legal complexity. Therefore, obtaining and enforcing biopharmaceutical patents iscostly, time-consuming and inherently uncertain. In addition, the United States has recently enacted and iscurrently implementing wide-ranging patent reform legislation, including the Leahy-Smith America InventsAct, or the America Invents Act, signed into law on September 16, 2011.45TABLE OF CONTENTSAs of March 16, 2013, the United States transitioned to a “first-to-file” system for deciding which partyshould be granted a patent when two or more patent applications claiming the same invention are filed bydifferent parties. A third party that files a patent application in the USPTO before us could therefore beawarded a patent covering an invention of ours even if we had made the invention before it was made bythe third party. The change to “first-to-file” from “first-to-invent” is one of the changes to the patent lawsof the United States resulting from the America Invents Act. Among some of the other significant changesto the patent laws are changes that limit where a patentee may file a patent infringement suit and provideopportunities for third parties to challenge any issued patent in the USPTO via procedures including post-grant and inter partes review. These adversarial actions at the USPTO review patent claims without thepresumption of validity afforded to U.S. patents in lawsuits in U.S. federal courts, and use a lower burdenof proof than used in litigation in U.S. federal courts. Therefore, it is generally considered easier for acompetitor or third party to have a patent invalidated in a Patent Office post-grant review or inter partesreview proceeding than invalidated in a litigation in a U.S. federal court. If any of our patents arechallenged by a third party in such a USPTO proceeding, there is no guarantee that we or our licensors orcollaborators will be successful in defending the patent, which would result in a loss of the challengedpatent right. It is not yet clear what, if any, impact the America Invents Act will have on the operation ofour business. However, the America Invents Act and its implementation could increase the uncertainties andcosts surrounding the prosecution of our patent applications and the enforcement or defense of any issuedpatents, all of which could harm our business and financial condition.Further, recent court rulings in cases such as Association for Molecular Pathology v. Myriad Genetics, Inc.(Myriad I); BRCA1- & BRCA2-Based Hereditary Cancer Test Patent Litig., (Myriad II); and Promega Corp.v. Life Technologies Corp. have narrowed the scope of patent protection available in certain circumstancesand weakened the rights of patent owners in certain situations.In addition to increasing uncertainty with regard to our ability to obtain patents in the future, thiscombination of events has created uncertainty with respect to the value of patents, once obtained.Depending on future actions by the United States Congress, the Federal Courts and the USPTO, the lawsand regulations governing patents could change in unpredictable ways that would weaken our ability toobtain new patents or to enforce existing patents and patents that we might obtain in the future.If we are unable to maintain effective proprietary rights for our product candidates or any future productcandidates, we may not be able to compete effectively in our markets.While we have filed patent applications to protect certain aspects of our own proprietary formulation andprocess developments, we also rely on trade secret protection and confidentiality agreements to protectproprietary scientific, business and technical information and know-how that is not or may not bepatentable or that we elect not to patent. However, confidential information and trade secrets can bedifficult to protect. Moreover, the information embodied in our trade secrets and confidential informationmay be independently and legitimately developed or discovered by third parties without any improper useof or reference to information or trade secrets. We seek to protect the scientific, technical and businessinformation supporting our operations, as well as the confidential information relating specifically to ourproduct candidates by entering into confidentiality agreements with parties to whom we need to discloseour confidential information, such as, our employees, consultants, board members, contractors, potentialcollaborators and financial investors. However we cannot be certain that such agreements have been enteredinto with all relevant parties. We also seek to preserve the integrity and confidentiality of our data and tradesecrets by maintaining physical security of our premises and physical and electronic security of ourinformation technology systems, but it is possible that these security measures could be breached. While wehave confidence in these individuals, organizations and systems, agreements or security measures may bebreached and we may not have adequate remedies for any breach. Our confidential information and tradesecrets thus may become known by our competitors in ways we cannot prove or remedy.Although we expect all of our employees and consultants to assign their inventions to us, and all of ouremployees, consultants, advisors and any third parties who have access to our proprietary know-how,information or technology to enter into confidentiality agreements, we cannot provide any assurances thatall such agreements have been duly executed. We cannot guarantee that our trade secrets and otherconfidential proprietary information will not be disclosed or that competitors will not otherwise gain access46•the scope of rights granted under the license agreement and other interpretation-related issues;•the extent to which our technology and processes infringe on intellectual property of the licensorthat is not subject to the licensing agreement;•the sublicensing of patents and other rights;•our diligence obligations under the license agreement and what activities satisfy those diligenceobligations;•the ownership of inventions and know-how resulting from the joint creation or use of intellectualproperty by our licensors and us and our collaborators; and•the priority of invention of patented technology.TABLE OF CONTENTSto our trade secrets or independently develop substantially equivalent information and techniques. Forexample, any of these parties may breach the agreements and disclose our proprietary information,including our trade secrets, and we may not be able to obtain adequate remedies for such breaches.Misappropriation or unauthorized disclosure of our trade secrets could impair our competitive position andmay harm our business. Additionally, if the steps taken to maintain our trade secrets are deemed inadequate,we may have insufficient recourse against third parties for misappropriating any trade secret. We cannotguarantee that our employees, former employees or consultants will not file patent applications claimingour inventions. Because of the “first-to-file” laws in the United States, such unauthorized patent applicationfilings may defeat our attempts to obtain patents on our own inventions.We may be subject to claims challenging the inventorship of our patent filings and other intellectualproperty.We may in the future be subject to claims that former employees, collaborators or other third parties havean interest in our patent applications or patents we may be granted or other intellectual property as aninventor or co-inventor. For example, we may have inventorship or ownership disputes arise fromconflicting obligations of consultants or others who are involved in developing our product candidates.Litigation may be necessary to defend against these and other claims challenging inventorship orownership. If we fail in defending any such claims, in addition to paying monetary damages, we may losevaluable intellectual property rights, such as exclusive ownership of or right to use valuable intellectualproperty. Such an outcome could harm our business. Even if we are successful in defending against suchclaims, litigation could result in substantial costs and be a distraction to management and other employees.If we fail to comply with our obligations in the agreements under which we license intellectual property andother rights from third parties or otherwise experience disruptions to our business relationships with ourlicensors, we could lose license rights that are important to our business.We are party to a non-exclusive worldwide commercial license agreements with Selexis SA, or Selexis,pertaining to clinical testing and sale of its cell line expression technology and we may enter into additionallicense agreements in the future. Our commercial license agreements with Selexis impose, and we expectthat future license agreements will impose, various milestone payments, royalty payments and otherobligations on us. If we fail to comply with our obligations under these agreements or if we are subject to abankruptcy, we may be required to make certain payments to the licensor of our license or the licensor mayhave the right to terminate the license, in which event we would not be able to develop or market productscovered by the license. Additionally, the milestone and other payments associated with these licenses willmake it less profitable for us to develop our product candidates.In the event we breach any of our obligations under these agreements, we may incur significant liability toour licensing partners. Disputes may arise regarding intellectual property subject to a licensing agreement,including but not limited to:If disputes over intellectual property and other rights that we have licensed prevent or impair our ability tomaintain our current licensing arrangements on acceptable terms, we may be unable to successfully developand commercialize the affected product candidates and that could harm our business.47•we may not be successful in identifying potential product candidates that pass our strict screeningcriteria;•we may not be able to overcome technological hurdles to development or a product candidatemay not be capable of producing commercial quantities at an acceptable cost, or at all;•we may not be able to assemble sufficient resources to acquire or discover additional productcandidates;•our product candidates may not succeed in preclinical or clinical testing;•competitors may develop alternatives that render our product candidates obsolete or less attractiveor the market for a product candidate may change such that a product candidate may not justifyfurther development.TABLE OF CONTENTSWe may not be successful in obtaining or maintaining necessary rights to our product candidates throughacquisitions and in-licenses.We currently have rights to certain intellectual property through licenses from third parties, includingSelexis, to develop ONS-5010/ONS-1045 and ONS-3010. Because we may find that our programs requirethe use of proprietary rights held by third parties, the growth of our business may depend in part on ourability to acquire, in-license or use these proprietary rights. We may be unable to acquire or in-licensecompositions, methods of use, processes or other third party intellectual property rights from third partiesthat we identify as necessary for our product candidates. The licensing and acquisition of third-partyintellectual property rights is a competitive area, and a number of more established companies are alsopursuing strategies to license or acquire third-party intellectual property rights that we may considerattractive. These established companies may have a competitive advantage over us due to their size,financial resources and greater clinical development and commercialization capabilities. In addition,companies that perceive us to be a competitor may be unwilling to assign or license rights to us. We alsomay be unable to license or acquire third-party intellectual property rights on terms that would allow us tomake an appropriate return on our investment.If we are unable to successfully obtain rights to required third party intellectual property rights or maintainthe existing intellectual property rights we have, we may have to abandon development of that programand our business and financial condition could suffer.Risks Related to Our Business OperationsWe may not be successful in our efforts to identify, develop or commercialize additional productcandidates.Although a substantial amount of our current effort will focus on the continued clinical testing, potentialapproval and commercialization of ONS-5010, the long term success of our business also depends uponour ability to identify, develop and commercialize additional product candidates. Research programs toidentify new product candidates require substantial technical, financial and human resources. We may focusour efforts and resources on potential programs or product candidates that ultimately prove to beunsuccessful. Our development efforts may fail to yield additional product candidates suitable for clinicaldevelopment and commercialization for a number of reasons, including but not limited to the following:If any of these events occur, we may be forced to abandon our development efforts for a program orprograms or we may not be able to identify, develop or commercialize additional product candidates,which would harm our business and could potentially cause us to cease operations.We incur significant increased costs as a result of operating as a public company, and our management isrequired to devote substantial time to new compliance initiatives.As a public company, we expect to continue to incur significant legal, accounting and other expenses. TheSarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, as well as rules subsequently implemented by theSecurities and Exchange Commission, or SEC, and The Nasdaq Stock Market LLC, or Nasdaq, haveimposed various requirements on public companies. Although legislation permits “emerging growthcompanies” and “smaller reporting companies” such as our company to postpone compliance with certain48TABLE OF CONTENTSrequirements for a transition period or for so long as we remain a “smaller reporting company,” we cannotguarantee that we will not be required to implement these requirements sooner than budgeted or plannedand thereby incur unexpected expenses. Stockholder activism, the current political environment and thecurrent high level of government intervention and regulatory reform may lead to substantial newregulations and disclosure obligations, which may lead to additional compliance costs and impact themanner in which we operate our business in ways we cannot currently anticipate. Our management andother personnel will need to devote a substantial amount of time to these compliance initiatives. Moreover,these rules and add to our legal and financial compliance costs and make some activities more time-consuming and costly.The Sarbanes-Oxley Act requires, among other things, that we maintain effective internal controls forfinancial reporting and disclosure controls and procedures. In particular, we are required to perform systemand process evaluation and testing of our internal control over financial reporting to allow management toreport, on the effectiveness of our internal control over financial reporting by Section 404 of the Sarbanes-Oxley Act, or Section 404. Our testing may reveal deficiencies in our internal control over financialreporting that are deemed to be material weaknesses. Our compliance with Section 404 requires us to incursubstantial accounting expense and expend significant management efforts. We currently do not have aninternal audit group and rely on independent contractors for control monitoring and for the preparationand review of our consolidated financial statements. If we are not able to comply with the requirements ofSection 404 in a timely manner or if we identify or our independent registered public accounting firmidentifies deficiencies in our internal control over financial reporting that are deemed to be materialweaknesses, the market price of our stock could decline and we could be subject to sanctions orinvestigations by Nasdaq, the SEC or other regulatory authorities, which would require additional financialand management resources.New laws and regulations as well as changes to existing laws and regulations affecting public companies,including the provisions of the Sarbanes-Oxley Act and rules adopted by the SEC and by Nasdaq, wouldlikely result in increased costs to us as we respond to their requirements.We are highly dependent on the services of our key executives and personnel, and if we are not able toretain these members of our management or recruit additional management, clinical and scientificpersonnel, our business will suffer.We are highly dependent on the principal members of our management and scientific and technical staff.The loss of service of any of our management or key scientific and technical staff could harm our business.In addition, we are dependent on our continued ability to attract, retain and motivate highly qualifiedadditional management, clinical and scientific personnel. If we are not able to retain our management andto attract, on acceptable terms, additional qualified personnel necessary for the continued development ofour business, we may not be able to sustain our operations or grow.We may not be able to attract or retain qualified personnel in the future due to the intense competition forqualified personnel among biotechnology, pharmaceutical and other businesses. Our industry hasexperienced a high rate of turnover of management personnel in recent years. If we are not able to attract,retain and motivate necessary personnel to accomplish our business objectives, we may experienceconstraints that will significantly impede the achievement of our development objectives, our ability to raiseadditional capital and our ability to implement our business strategy.Our future performance will also depend, in part, on our ability to successfully integrate newly hiredexecutive officers into our management team and our ability to develop an effective working relationshipamong senior management. Our failure to integrate these individuals and create effective workingrelationships among them and other members of management could result in inefficiencies in thedevelopment and commercialization of our product candidates, harming future regulatory approvals, salesof our product candidates and our results of operations. Additionally, we do not currently maintain “keyperson” life insurance on the lives of our executives or any of our employees.Healthcare legislative reform measures may harm our business and results of operations.In the United States, there have been and continue to be a number of legislative initiatives to improve theaccess to and quality of healthcare, and to contain healthcare costs. For example, in March 2010, the49TABLE OF CONTENTSPatient Protection and Affordable Care Act, as amended by the Health Care and Education ReconciliationAct of 2010, or together, the Affordable Care Act, was passed, which substantially changes the way healthcare is financed by both governmental and private insurers and significantly impacts the U.S.pharmaceutical industry. The Affordable Care Act, among other things, imposes a new methodology bywhich rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugsthat are inhaled, infused, instilled, implanted or injected, increases the minimum Medicaid rebates owed bymanufacturers under the Medicaid Drug Rebate Program, extends the rebate program to individualsenrolled in Medicaid managed care organizations, adds a provision to increase the Medicaid rebate for lineextensions or reformulated drugs, establishes annual fees on manufacturers and importers of certainbranded prescription drugs and biologic agents, and promotes a new Medicare Part D coverage gapdiscount program. The Affordable Care Act also expands eligibility for Medicaid programs and introduceda new Patient Centered Outcomes Research Institute to oversee, identify priorities in, and conductcomparative clinical effectiveness research, along with funding for such research. There have been judicial,Congressional and executive branch challenges to certain aspects of the Affordable Care Act, and we expectthere will be additional challenges and amendments to the Affordable Care Act in the future. WhileCongress has not passed comprehensive repeal legislation, it has enacted laws that modify certain provisionsof the Affordable Care Act such as removing or delaying penalties, starting January 1, 2019, for notcomplying with the Affordable Care Act’s individual mandate to carry health insurance, delaying theimplementation of certain Affordable Care Act-mandated fees, and increasing the point-of-sale discountthat is owed by pharmaceutical manufacturers who participate in Medicare Part D. We continue to evaluatethe potential impact of the Affordable Care Act and its possible repeal or replacement on our business.In addition, other legislative changes have been proposed and adopted in the United States since theAffordable Care Act was enacted. For example, on August 2, 2011, the Budget Control Act of 2011,among other things, created measures for spending reductions by Congress. A Joint Select Committee onDeficit Reduction, tasked with recommending a targeted deficit reduction of at least $1.2 trillion forthe years 2012 through 2021, was unable to reach required goals, thereby triggering the legislation’sautomatic reduction to several government programs. This includes aggregate reductions of Medicarepayments to providers up to 2% per fiscal year, which went into effect on April 1, 2013 and, due tosubsequent legislative amendments, will stay in effect through 2027 unless additional Congressional actionis taken. Additionally, on January 2, 2013, President Obama signed into law the American Taxpayer ReliefAct of 2012, which among other things, further reduced Medicare payments to certain providers, includingphysicians, hospitals and cancer treatment centers. In addition, there has been heightened governmentalscrutiny recently over the manner in which drug manufacturers set prices for their marketed products,which have resulted in several Congressional inquiries and proposed and enacted federal and statelegislation designed to, among other things, bring more transparency to product pricing, review therelationship between pricing and manufacturer patient programs, and reform government programreimbursement methodologies for drug products. For example, the current presidential administrationreleased a “Blueprint” to lower drug prices and reduce out of pocket costs of drugs that contains additionalproposals to increase manufacturer competition, increase the negotiating power of certain federal healthcareprograms, incentivize manufacturers to lower the list price of their products and reduce the out of pocketcosts of drug products paid by consumers. Although a number of these, and other proposed measures willrequire authorization through additional legislation to become effective, Congress and the executive branchhave each indicated that it will continue to seek new legislative and/or administrative measures to controldrug product costs.We expect that the Affordable Care Act, as well as other healthcare reform measures that may be adopted inthe future, may result in more rigorous coverage criteria and lower reimbursement, and additionaldownward pressure on the price that we receive for any approved product. Any reduction inreimbursement from Medicare or other government-funded programs may result in a similar reduction inpayments from private payors. The implementation of cost containment measures or other healthcarereforms could result in reduced demand for our product candidates or additional pricing pressures, andmay prevent us from being able to generate revenue, attain profitability or commercialize our drugs.50•the federal Anti-Kickback Statute, which prohibits, among other things, persons and entities fromknowingly and willfully soliciting, receiving, offering or paying remuneration, directly orindirectly, in cash or in kind, to induce, reward, or in return for either the referral of an individualfor, or the purchase, recommendation, order or furnishing of an item or service reimbursable, inwhole or in part, under a federal healthcare program, such as the Medicare and Medicaidprograms;•federal civil and criminal false claims laws and civil monetary penalty laws, including the civilFalse Claims Act, which can be enforced by private individuals through civil whistleblower or quitam actions, which prohibit, among other things, individuals or entities from knowinglypresenting or causing to be presented claims for payment from Medicare, Medicaid or othergovernment health programs that are false or fraudulent and which may apply to entities thatprovide coding and billing advice to customers;•the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which createdadditional federal criminal statutes that prohibit, among other things, executing a scheme todefraud any healthcare benefit program and making false statements relating to healthcare matters;•HIPAA, as amended by the Health Information Technology for Economic and Clinical HealthAct, and their implementing regulations, which imposes certain requirements, includingmandatory contractual terms, relating to the privacy, security and transmission of individuallyidentifiable health information on health plans, certain healthcare providers, and healthcareclearinghouses, known as covered entities, and their business associates that provide services to thecovered entity that involve individually identifiable health information;•the federal legislation commonly referred to as the Physician Payments Sunshine Act under theAffordable Care Act, which requires certain manufacturers of drugs, devices, biologics andmedical supplies for which payment is available under Medicare, Medicaid, or the Children’sHealth Insurance Program, with specific exceptions, to report annually to the Centers for Medicare& Medicaid Services information related to payments and other transfers of value made by suchmanufacturers to physicians and teaching hospitals and ownership and investment interests heldby physicians and their immediate family members and applicable group purchasingorganizations; and•analogous state and foreign laws and regulations, such as anti-kickback and false claims laws thatmay apply to items or services reimbursed by any third-party payor, including commercialinsurers; state laws that require pharmaceutical companies to comply with the pharmaceuticalindustry’s voluntary compliance guidelines and the relevant compliance guidance promulgated bythe federal government or otherwise restrict payments that may be made to healthcare providersand other potential referral sources; state laws that require drug manufacturers to reportinformation related to payments and other transfers of value to physicians and other healthcareproviders or marketing expenditures; state and local laws that require the registration ofpharmaceutical sales representatives; and state and foreign laws governing the privacy andsecurity of health information in certain circumstances, many of which differ from each other insignificant ways and may not have the same effect, thus complicating compliance efforts.TABLE OF CONTENTSWe are subject, directly and indirectly, to federal and state healthcare laws and regulations, includingfraud and abuse, false claims, physician payment transparency and health information privacy andsecurity laws. If we are unable to comply or have not fully complied with such laws, we could facesubstantial penalties.Our operations are directly and indirectly through our current and future arrangements with healthcareprofessionals, principal investigators, consultants, customers and third-party payors subject to variousfederal and state fraud and abuse laws, including without limitation, the federal Anti-Kickback Statute, thecivil False Claims Act and physician sunshine laws and regulations. These laws may impact, among otherthings, our clinical research, proposed sales, marketing and education programs. In addition, we may besubject to patient data privacy and security regulation by both the federal government and the states inwhich we conduct our business. The healthcare laws that may affect our ability to operate include but arenot limited to:51•multiple, conflicting and changing laws and regulations such as privacy regulations, tax laws,export and import restrictions, employment laws, regulatory requirements and other governmentalapprovals, permits and licenses;•failure by us or our collaboration partners to obtain and maintain regulatory approvals for the useof our products in various countries;•additional potentially relevant third-party patent rights;•complexities and difficulties in obtaining protection and enforcing our intellectual property;•difficulties in staffing and managing foreign operations by us or our collaboration partners;•complexities associated with managing multiple payor reimbursement regimes, governmentpayors or patient self-pay systems by our collaboration partners;•limits in our or our collaboration partners’ ability to penetrate international markets;•financial risks, such as longer payment cycles, difficulty collecting accounts receivable, the impactof local and regional financial crises on demand and payment for our products and exposure toforeign currency exchange rate fluctuations;•natural disasters, political and economic instability, including wars, terrorism and political unrest,outbreak of disease, boycotts, curtailment of trade and other business restrictions;•certain expenses including, among others, expenses for travel, translation and insurance; and•regulatory and compliance risks that relate to maintaining accurate information and control oversales and activities that may fall within the purview of the U.S. Foreign Corrupt Practices Act, itsbooks and records provisions or its anti-bribery provisions.TABLE OF CONTENTSBecause of the breadth of these laws and the narrowness of the statutory exceptions and regulatory safeharbors available, it is possible that some of our business activities could be subject to challenge under oneor more of such laws. In addition, recent healthcare reform legislation has strengthened these laws. Forexample, the Affordable Care Act, among other things, amends the intent requirement of the federal anti-kickback and criminal healthcare fraud statutes. A person or entity no longer needs to have actualknowledge of these statutes or specific intent to violate them in order to commit a violation. Moreover, theAffordable Care Act provides that the government may assert that a claim including items or servicesresulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim forpurposes of the civil False Claims Act.If our operations are found to be in violation of any of the laws described above or any other governmentalregulations that apply to us, we may be subject to significant penalties, including civil, criminal andadministrative penalties, damages, fines, exclusion from participation in government healthcare programs,such as Medicare and Medicaid, individual imprisonment, disgorgement, contractual damages, reputationalharm, diminished profits and future earnings, additional reporting requirements and oversight if we becomesubject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliancewith these laws, and the curtailment or restructuring of our operations, any of which could adversely affectour ability to operate our business and our results of operations. Defending against any such actions can becostly, time-consuming and may require significant financial and personnel resources.Therefore, even if we are successful in defending against any such actions that may be brought against us,our business may be impaired.The international aspects of our business expose us to business, regulatory, political, operational, financialand economic risks associated with doing business outside of the United States.We currently have limited international operations of our own and have a number of internationalcollaborations. Doing business internationally involves a number of risks, including but not limited to:52•the requirement to redeem the Series A-1 Convertible at (x) 600% of the stated value plus(y) 600% of any unpaid but accrued preferred dividends plus (z) any unpaid participatingdividends;TABLE OF CONTENTSIf we fail to comply with environmental, health and safety laws and regulations, we could become subjectto fines or penalties or incur costs that could harm our business.Our research, development and manufacturing activities and our third-party suppliers’ activities involve thecontrolled storage, use and disposal of hazardous materials, including the components of our productcandidates and other hazardous compounds. We and our suppliers are subject to laws and regulationsgoverning the use, manufacture, storage, handling and disposal of these hazardous materials. In some cases,these hazardous materials and various wastes resulting from their use are stored at our facilities pendingtheir use and disposal. We cannot eliminate the risk of contamination, which could cause an interruption ofour commercialization efforts, research, development and manufacturing efforts and business operations,and environmental damage resulting in costly clean-up and liabilities under applicable laws and regulationsgoverning the use, storage, handling and disposal of these materials and specified waste products. Althoughwe believe that the safety procedures utilized by us for handling and disposing of these materials generallycomply with the standards prescribed by these laws and regulations, we cannot guarantee that this is the caseor eliminate the risk of accidental contamination or injury from these materials. In such an event, we maybe held liable for any resulting damages and such liability could exceed our resources and state or federalor other applicable authorities may curtail our use of certain materials and/or interrupt our businessoperations. Furthermore, environmental laws and regulations are complex, change frequently and havetended to become more stringent. We cannot predict the impact of such changes and cannot be certain ofour future compliance. We do not currently carry biological or hazardous waste insurance coverage.Risks Related to Ownership of Our SecuritiesOur common stock may be delisted from the Nasdaq and begin trading in the over-the-counter markets ifwe are not successful in regaining compliance with the Nasdaq’s continued listing standards, which maynegatively impact the price of our common stock and our ability to access the capital markets.On October 24, 2018, we received written notification from Staff of the Listing Qualifications Departmentof Nasdaq, indicating that based upon our continued non-compliance with the minimum $1.00 bid pricerequirement for continued listing on The Nasdaq Capital Market required to maintain continued listingunder its rules and regulations, or the Nasdaq Rules, as of October 23, 2018, the Staff determined to delistour securities from Nasdaq unless we timely request a hearing before the Nasdaq Hearing Panel. We timelyrequested a hearing, which was held on December 6, 2018, at which we requested an extension withinwhich to evidence compliance with all applicable requirements for continued listing on Nasdaq inaccordance with Nasdaq Rules. On December 17, 2018, we received formal notification from The Nasdaqthat the Nasdaq Hearings Panel had determined to grant our request to extend through April 22, 2019 theperiod within which we need to evidence compliance with all applicable requirements for continued listingon Nasdaq, including the applicable $1.00 minimum bid price for a period of at least ten consecutive days.We also intend to take definitive steps to evidence compliance with the Nasdaq Rules, including through theimplementation of a reverse stock split if deemed advisable by our board of directors. Our securityholdersapproved the potential action at our 2018 Annual Meeting of Stockholders, which was held onSeptember 21, 2018.The closing bid price of our securities must be at least $1.00 per share for a minimum of 10 consecutivebusiness days to regain compliance. If we are not successful, or choose not to implement a reverse stocksplit we anticipate that our securities would begin trading on the over-the-counter market. Delisting fromNasdaq and trading on the over-the-counter market could adversely affect the liquidity of our securities andresult in a deemed liquidation event under the terms of our Series A-1 Convertible Preferred Stock, parvalue $0.01 per share, or Series A-1 Convertible. Securities traded on the over-the-counter marketgenerally have limited trading volume and exhibit a wider spread between the bid/ask quotation, ascompared to securities listed on a national securities exchange. Consequently, you may not be able toliquidate your investment in the event of an emergency or for any other reason.If our securities are delisted from Nasdaq, we could face significant material adverse consequences,including:53•a limited availability of market quotations for our common stock;•a reduced amount of news and analyst coverage for us;•a decreased ability to issue additional securities or obtain additional financing in the future;•reduced liquidity for our stockholders;•potential loss of confidence by partners and employees; and•loss of institutional investor interest and fewer business development opportunities.•the success of competitive services, products or technologies;•adverse results or delays in preclinical or clinical trials;•any inability to obtain additional funding;•any delay in filing an IND, BLA or other regulatory submission for ONS-5010, or any of ourproduct candidates when planned, and any adverse development or perceived adversedevelopment with respect to the applicable regulatory agency’s review of that IND, BLA or otherregulatory submission;•the perception of limited market sizes or pricing for ONS-5010 or any of our other productcandidates;•failure to successfully develop and commercialize ONS-5010 or any of our other productcandidates;•post-marketing safety issues relating to our product candidates generally;•failure to maintain our existing strategic collaborations or enter into new collaborations;•failure by us or our licensors and strategic collaboration partners to prosecute, maintain or enforceour intellectual property rights;•changes in laws or regulations applicable to our products;•any inability to obtain adequate product supply for our product candidates or the inability to doso at acceptable prices;•adverse regulatory decisions;•introduction of new products, services or technologies by our competitors;•failure to meet or exceed financial projections we may provide to the public;•failure to meet or exceed the financial projections of the investment community;•the perception of the pharmaceutical industry by the public, legislatures, regulators and theinvestment community;•announcements of significant acquisitions, strategic partnerships, joint ventures or capitalcommitments by us, our strategic collaboration partners or our competitors;•disputes or other developments relating to proprietary rights, including patents, litigation mattersand our ability to obtain patent protection for our technologies;•additions or departures of key scientific or management personnel;•significant lawsuits, including stockholder litigation and litigation filed by us or filed against uspertaining to patent infringement or other violations of intellectual property rights;•the outcomes of any citizens petitions filed by parties seeking to restrict or limit the approval ofour product candidates;TABLE OF CONTENTSThe trading price of our securities is likely to be volatile, and purchasers of our securities could incursubstantial losses.The market price of our securities is likely to be volatile. The stock market in general and the market inwhich we operate have experienced extreme volatility that has often been unrelated to the operatingperformance of particular companies. As a result of this volatility, investors may not be able to sell theirsecurities at a profit. The market price of our securities could be subject to wide fluctuations in response to avariety of factors, including but not limited to:54•if securities or industry analysts do not publish research or reports about our business or if theyissue an adverse or misleading opinion regarding our stock;•changes in the market valuations of similar companies;•general economic, industry or market conditions;•sales of our securities by us or our stockholders in the future;•trading volume of our securities;•issuance of patents to third parties that could prevent our ability to commercialize our productcandidates;•the loss of one or more employees constituting our leadership team;•changes in regulatory requirements that could make it more difficult for us to develop ourproduct candidates; and•the other factors described in this “Risk Factors” section.•our ability to successfully develop, market and sell ONS-5010 and any other product candidates;•the cost of clinical development for ONS-5010 and any other product candidates;•the success of competitive products or technologies;•results of clinical trials of our product candidates or those of our competitors;•developments or disputes concerning patent applications, issued patents or other proprietaryrights;•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 discover, develop, manufacture, acquire or in-license additionalproduct candidates;•actual or anticipated changes in estimates as to financial results, development timelines orrecommendations by securities analysts;TABLE OF CONTENTSIn addition, biopharmaceutical companies in particular have experienced extreme price and volumefluctuations that have often been unrelated or disproportionate to the operating performance of thesecompanies. Broad market and industry factors may negatively affect the market price of our securities,regardless of our actual operating performance.BioLexis has beneficial ownership of a significant percentage of our common stock, has the right todesignate a majority of our board of directors, and is able to exert significant control over matters subjectto stockholder approval, preventing new investors from influencing significant corporate decisions.As of November 30, 2018, BioLexis beneficially owns 99,269,168 shares of our common stock, whichincludes 9,101,717 shares of common stock issuable upon conversion of 60,203 shares of Series A-1Convertible and 37,262,820 shares of common stock issuable upon exercise of warrants outstanding.Accordingly, BioLexis currently beneficially owns approximately 78.1% of our common stock andcontrols 69.0% of our outstanding voting power. BioLexis has also agreed to acquire additional shares ofour common stock under a November 2018 purchase agreement, which would further increase itsownership and control of our company. Under an investor rights agreement, as amended, with BioLexis,BioLexis also currently has the power to designate a majority of our board of directors, and four of oureight board members were designated by BioLexis. BioLexis’ interests may not coincide with the interestsof other securityholders. BioLexis has the ability to influence our company through both its ownershipposition and control of our board of directors, which may prevent or discourage unsolicited acquisitionproposals or offers for our capital stock that you may believe are in your best interest as one of oursecurityholders.Our quarterly operating results may fluctuate significantly or may fall below the expectations of investorsor securities analysts, each of which may cause our stock price to fluctuate or decline.Our quarterly operating results may fluctuate significantly, which makes it difficult for us to predict ourfuture operating results. These fluctuations may occur due to a variety of factors, many of which are out ofour control and may be difficult to predict, including but not limited to:55•variations in our financial results or those of companies that are perceived to be similar to us;•market conditions in the pharmaceutical and biotechnology sectors;•general economic, industry and market conditions; and•the other factors described in this “Risk Factors” section.TABLE OF CONTENTSIf our quarterly operating results fall below the expectations of investors or securities analysts, the marketprice of our securities could decline substantially. Furthermore, any quarterly fluctuations in our operatingresults may, in turn, cause the price of our securities to fluctuate substantially. We believe that quarterlycomparisons of our financial results are not necessarily meaningful and should not be relied upon as anindication of our future performance.If securities or industry analysts do not publish research, or publish unfavorable research, about ourbusiness, the market price of our securities and trading volume could decline.The trading market for our securities will depend in part on the research and reports that securities orindustry analysts publish about us or our business, our market and our competitors. We do not have anycontrol over these analysts. If any analysts who cover us in the future downgrade our securities or changetheir opinion of our securities, the market price of our securities would likely decline. If one or more ofthese analysts cease coverage of our company or fail to regularly publish reports on us, we could losevisibility in the financial markets, which could cause the market price of our securities or trading volume todecline.We are an “emerging growth company” and, due to the reduced reporting requirements applicable toemerging growth companies, certain investors may find investing in our securities less attractive.We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012, orthe JOBS Act. For as long as we continue to be an emerging growth company, we may take advantage ofexemptions from various reporting requirements that are applicable to other public companies that are notemerging growth companies, including not being required to comply with the auditor attestationrequirements of Section 404, reduced disclosure obligations regarding executive compensation in thisprospectus and our periodic reports and proxy statements and exemptions from the requirements of holdinga nonbinding advisory vote on executive compensation and stockholder approval of any golden parachutepayments not previously approved. We could be an emerging growth company for up to five years fromour IPO, although circumstances could cause us to lose that status earlier, including if the market value ofour common stock held by non-affiliates exceeds $700 million as of March 31 (the end of our second fiscalquarter) of any fiscal year before that time or if we have total annual gross revenue of $1.07 billion ormore during any fiscal year before that time, in which cases we would no longer be an emerging growthcompany as of the following September 30 (the last day of our fiscal year) or, if we issue more than$1.0 billion in non-convertible debt during any three-year period before that time, we would cease to be anemerging growth company immediately. We cannot predict if investors will find our securities lessattractive because we may rely on this exemption. If some investors find our securities less attractive as aresult, there may be a less active trading market for our securities and the market price of our securities maybe more volatile.We have and will continue to incur significant costs and demands upon management as a result ofcomplying with the laws and regulations affecting public companies in the United States, which may harmour operating results.As a public company listed in the United States, we have and will continue to incur significant additionallegal, accounting and other expenses. In addition, changing laws, regulations and standards relating tocorporate governance and public disclosure, including regulations implemented by the SEC and Nasdaq,may increase legal and financial compliance costs and make some activities more time-consuming. Theselaws, regulations and standards are subject to varying interpretations, and as a result, their application inpractice may evolve over time as new guidance is provided by regulatory and governing bodies. We intendto invest resources to comply with evolving laws, regulations and standards, and this investment may resultin56TABLE OF CONTENTSincreased general and administrative expenses and a diversion of management’s time and attention fromrevenue-generating activities to compliance activities. If, notwithstanding our efforts to comply with newlaws, regulations and standards, we fail to comply, regulatory authorities may initiate legal proceedingsagainst us, and our business may be harmed.Further, failure to comply with these laws, regulations and standards might also make it more difficult forus to obtain certain types of insurance, including director and officer liability insurance, and we might beforced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same orsimilar coverage. The impact of these events could also make it more difficult for us to attract and retainqualified persons to serve on our board of directors, on committees of our board of directors or as membersof senior management.Due to the speculative nature of warrants, there is no guarantee that it will ever be profitable for holders ofthe Series A warrants to exercise such warrants.The Series A warrants represent the right to acquire shares of our common stock at a fixed price for alimited period of time. If not exercised prior to their expiration dates, such warrants expire and have nofurther value. In the event the price of a share of our common stock price does not exceed the exerciseprice of the warrants, such warrants may not have any value. Moreover, the market value of the warrants isuncertain and there can be no assurance that the market value of the warrants will equal or exceed theirinitial public offering price. There can be no assurance that the market price of our common stock will everequal or exceed the exercise price of the warrants, and, consequently, whether it will ever be profitable forholders of the Series A warrants to exercise such warrants.Future sales and issuances of our common stock or rights to purchase securities, including pursuant to ourequity incentive plans, exercise of warrants or conversion of outstanding convertible preferred securities,could result in additional dilution of the percentage ownership of our stockholders and could cause themarket price of our securities to fall.We will need additional capital in the future to continue our planned operations. To the extent we raiseadditional capital by issuing equity securities, our stockholders may experience substantial dilution. We maysell common stock, convertible securities or other equity securities in one or more transactions at prices andin a manner we determine from time to time. If we sell common stock, convertible securities or other equitysecurities in more than one transaction, investors may be materially diluted by subsequent sales. These salesmay also result in material dilution to our existing stockholders, and new investors could gain rightssuperior to our existing stockholders.Pursuant to the 2015 Equity Incentive Plan, or the 2015 Plan, our management is authorized to grant stockoptions and other equity-based awards to our employees, directors and consultants. Under the 2015 Plan,the number of shares of our common stock reserved for issuance as of September 30, 2018 was 5,558,678shares. The number of shares available for future grant under the 2015 Plan will be increased by (i) thenumber of shares pursuant to outstanding awards under the 2015 Plan that are forfeited or lapseunexercised and which following the effective date are not issued under the 2015 Plan and (ii) an annualincrease on January 1 (which began in 2017 and will end in 2025), equal to 3% of the shares of stockoutstanding as of December 31st of the immediately preceding year, or such smaller number of shares asdetermined by our board of directors. Pursuant to the 2016 Employee Stock Purchase Plan, or the ESPP,upon implementation of an offering under the ESPP, eligible employees will be able to acquire shares ofour common stock at a discount to the prevailing market price, and an aggregate of 545,162 shares wereavailable for issuance under the ESPP as of September 30, 2018. The number of shares available forissuance under the ESPP will automatically increase on the first day of each fiscal year beginning in 2016and ending in 2025, equal to the lesser of  (i) 1% of the shares of common stock outstanding onDecember 31st of the immediately preceding calendar year, (ii) 510,145 shares of common stock, subjectto adjustments as provided in the ESPP or (iii) such smaller number of shares as determined by our boardof directors. If our board of directors does not elect to reduce the annual increases in the number of sharesavailable for future grant under the 2015 Plan or the ESPP, our stockholders may experience additionaldilution, which could cause the market price of our securities to fall.57•establishing a classified board of directors so that not all members of our board of directors areelected at one time;•permitting the board of directors to establish the number of directors and fill any vacancies andnewly created directorships;•providing that directors may only be removed for cause;•prohibiting cumulative voting for directors;•requiring super-majority voting to amend some provisions in our amended and restated certificateof incorporation and amended and restated bylaws;•authorizing the issuance of  “blank check” preferred stock that our board of directors could use toimplement a stockholder rights plan;•eliminating the ability of stockholders to call special meetings of stockholders; andTABLE OF CONTENTSWe also currently have issued and outstanding a number of warrants to purchase an aggregate of45,292,494 shares of our common stock, at prices ranging from $0.01 to $6.60 per share, as well as sharesof our convertible preferred stock, which are currently convertible into an aggregate 9,101,717 shares ofour common stock.Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.We have incurred substantial losses during our history and do not expect to become profitable in the nearfuture, and we may never achieve profitability. To the extent that we continue to generate taxable losses,unused losses will carry forward to offset future taxable income, if any, until such unused losses expire.Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, if a corporationundergoes an “ownership change,” generally defined as a greater than 50 percentage point change (byvalue) in its equity ownership by certain stockholders over a three-year period, the corporation’s ability touse its pre-change net operating loss carryforwards, or NOLs, and other pre-change tax attributes (such asresearch tax credits) to offset its post-change income or taxes may be limited. We may have experiencedownership changes in the past and may experience ownership changes in the future as a result ofsubsequent shifts in our stock ownership (some of which shifts are outside our control). As a result, if weearn net taxable income, our ability to use our pre-change NOLs to offset such taxable income will besubject to limitations. Similar provisions of state tax law may also apply to limit our use of accumulatedstate tax attributes. In addition, at the state level, there may be periods during which the use of NOLs issuspended or otherwise limited, which could accelerate or permanently increase state taxes owed. As aresult, even if we attain profitability, we may be unable to use a material portion of our NOLs and other taxattributes, which could adversely affect our future cash flows.We do not intend to pay dividends on our capital stock, and as such any returns will be limited to the valueof our securities.We have never declared or paid any cash dividends on our capital stock. We currently anticipate that wewill retain future earnings for the development, operation and expansion of our business and do notanticipate declaring or paying any cash dividends for the foreseeable future. Any return to securityholderswill therefore be limited to the appreciation of their securities. In addition, our senior secured notes issuedDecember 2016 through May 2017 restrict our ability to pay dividends, and the terms of our Series A-1Convertible may also act to limit our ability to pay dividends as we may not declare or pay any dividendson our common stock unless we also concurrently declare and set aside for payment or distribution, asapplicable, participating dividends for our Series A-1 Convertible.Provisions in our amended and restated certificate of incorporation and amended and restated bylaws, aswell as provisions of Delaware law, could make it more difficult for a third party to acquire us or increasethe cost of acquiring us, even if doing so would benefit our securityholders or remove our currentmanagement.Our amended and restated certificate of incorporation, amended and restated bylaws, as amended andDelaware law contain provisions that may have the effect of delaying or preventing a change in control ofus or changes in our management. Our charter documents also contain other provisions that could have ananti-takeover effect, such as:58•prohibiting stockholder action by written consent, which requires all stockholder actions to betaken at a meeting of our stockholders.Item 1B.Unresolved Staff CommentsItem 2.PropertiesItem 3.Legal ProceedingsItem 4.Mine Safety DisclosuresTABLE OF CONTENTSThese provisions, alone or together, could delay, deter or prevent hostile takeovers and changes in controlor changes in our management.In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 ofthe Delaware General Corporation Law, which limits the ability of stockholders owning in excess of 15% ofour outstanding voting stock to merge or combine with us.Any provision of our amended and restated certificate of incorporation or amended and restated bylaws, asamended or Delaware law that has the effect of delaying or deterring a change in control could limit theopportunity for our securityholders to receive a premium for their securities and could also affect the pricethat some investors are willing to pay for our securities.Our amended and restated certificate of incorporation and our amended and restated bylaws, as amended,provide that the Court of Chancery of the State of Delaware will be the exclusive forum for substantially alldisputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorablejudicial forum for disputes with us or our directors, officers or employees.Our amended and restated certificate of incorporation and our amended and restated bylaws, as amended,provide that the Court of Chancery of the State of Delaware is the exclusive forum for any derivative actionor proceeding brought on our behalf; any action asserting a breach of fiduciary duty; any action asserting aclaim against us arising pursuant to the Delaware General Corporation Law, our amended and restatedcertificate of incorporation or our amended and restated bylaws, as amended; or any action asserting aclaim against us that is governed by the internal affairs doctrine. The choice of forum provision may limit astockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or ourdirectors, officers or other employees, which may discourage such lawsuits against us and our directors,officers and other employees. If a court were to find the choice of forum provision contained in ouramended and restated certificate of incorporation or in our amended and restated bylaws, as amended, to beinapplicable or unenforceable in an action, we may incur additional costs associated with resolving suchaction in other jurisdictions, which could harm our business and financial condition.Not applicable.Our headquarters are located in Cranbury, New Jersey where we occupy approximately 66,000 square feetof office, manufacturing and laboratory space under a lease that expires in February 2028. Additionally, in2015, we leased approximately 82,000 square feet of unfinished office and laboratory space in Cranbury,New Jersey, with lease payments that commenced in March 2016 and expire in March 2026. However, inAugust 2018, we entered in to a lease termination agreement effective September 1, 2018, whichterminated the 82,000 square feet lease for approximately $5.8 million in the aggregate.We believe that our existing facilities are adequate for our current needs. When our lease expires, or if weneed to hire more employees, we may exercise our renewal option or look for additional or alternate spacefor our operations and we believe that suitable additional or alternative space will be available in the futureon commercially reasonable terms.From time to time, we may become involved in litigation relating to claims arising from the ordinary courseof business. Our management believes that there are currently no claims or actions pending against us, theultimate disposition of which would have a material adverse effect on our results of operations, financialcondition or cash flows. We are not currently party to any legal proceedings.Not applicable.59Item 5.Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchasesof Equity SecuritiesTABLE OF CONTENTSPART IIMarket InformationOur units, which comprised one share of our common stock, one-half of a Series A warrant and one-half ofa Series B warrant began trading under the symbol “ONSIU” on The Nasdaq Global Market on May 13,2016 in connection with our initial public offering. Following separation of the units, on June 13, 2016,our shares of common stock and the Series A warrants and Series B warrants began trading under thesymbols “ONS,” “ONSIW” and “ONSIZ,” respectively, and our units were delisted. On February 13, 2018,the listing of our common stock and the Series A Warrants was transferred to The Nasdaq Capital Market.On February 18, 2018, the Series B warrants expired and were delisted on May 16, 2018. Following ourname change to “Outlook Therapeutics, Inc.,” effective December 4, 2018, our common stock and theSeries A warrants began trading under the symbols “OTLK” and “OTLKW,” respectively. Prior to ourinitial public offering, there was no public market for our securities.On December 14, 2018, the closing sale price of our common stock was $0.44, and of our Series Awarrants was $0.12.Common StockholdersAs of December 14, 2018, there were approximately 124 stockholders of record of our common stock. Theactual number of stockholders is greater than this number of record holders, and includes stockholders whoare beneficial owners, but whose shares are held in street name by brokers and other nominees. Thisnumber of holders of record also does not include stockholders whose shares may be held in trust by otherentities.Preferred StockholdersAs of December 14, 2018, there were 60,203 shares of our Series A-1 Convertible Preferred Stock, parvalue $0.01 per share, or the Series A-1 Convertible, issued and outstanding, all of which were held by onerecord holder, BioLexis.Series A Warrant HoldersAs of December 14, 2018, there was one holder of record of our Series A warrants. The actual number ofwarrantholders is greater than this number of record holders, and includes warrantholders who arebeneficial owners, but whose warrants are held in street name by brokers and other nominees. This numberof holders of record also does not include warrantholders whose shares may be held in trust by otherentities.Dividend PolicyWe have never declared or paid any cash dividends on our capital stock and do not anticipate paying anycash dividends in the foreseeable future. Payment of cash dividends, if any, in the future will be at thediscretion of our board of directors and will depend on then-existing conditions, including our financialcondition, operating results, contractual restrictions, capital requirements, business prospects and otherfactors our board of directors may deem relevant. Our outstanding senior secured notes issued inDecember 2016 restrict our ability to pay dividends. The terms of our Series A-1 Convertible may also actto limit our ability to pay dividends as we may not declare or pay any dividends on our common stockunless we also concurrently declare and set aside for payment or distribution, as applicable, participatingdividends for our Series A-1 Convertible.Securities Authorized for Issuance Under Equity Compensation PlansThe information required by this Item regarding equity compensation plans is incorporated by reference tothe information set forth in Item 12 of this Annual Report on Form 10-K.60Item 6.Selected Financial DataTABLE OF CONTENTSRecent Sales of Unregistered Equity SecuritiesNone.Issuer Purchases of Equity SecuritiesWe did not repurchase any of our equity securities during fiscal year ended September 30, 2018.Not applicable.61Item 7.Management’s Discussion and Analysis of Financial Condition and Results of OperationsTABLE OF CONTENTSThe following discussion should be read in conjunction with the consolidated financial statements and notesthereto included elsewhere in this Annual Report on Form 10-K. This Annual Report on Form 10-K,including the following sections, contains forward-looking statements within the meaning of the federalsecurities laws. These statements are subject to risks and uncertainties that could cause actual results andevents to differ materially from those expressed or implied by such forward-looking statements. For adetailed discussion of these risks and uncertainties, see the “Risk Factors” section in Item 1A of this AnnualReport on Form 10-K. We caution the reader not to place undue reliance on these forward-lookingstatements, which reflect management’s analysis only as of the date of this Form 10-K. We undertake noobligation to update forward-looking statements, which reflect events or circumstances occurring after thedate of this Form 10-K.OverviewWe are a late clinical-stage biopharmaceutical company focused on developing and commercializing ONS-5010, a complex, technically challenging and commercially attractive monoclonal antibody, or mAb, forvarious ophthalmic indications. Our goal is to launch ONS-5010 as the first, and only, approvedbevacizumab in the United States, Europe, Japan and other markets for the treatment of wet age relatedmacular degeneration, or wet AMD, diabetic macular edema, or DME, and branch retinal vein occlusion, orBRVO.ONS-5010 is an innovative mAb therapeutic product candidate currently enrolling patients in a clinical trialoutside the United States designed to serve as the first of two adequate and well controlled studiesevaluating ONS-5010 for wet AMD. We plan to submit an investigational new drug, or IND, applicationwith the U.S. Food and Drug Administration, or FDA, in the first quarter of calendar 2019. The U.S.portion of the second study is also expected to begin at that time. Our ONS-5010 wet AMD clinicalprogram was reviewed at a successful end of Phase 2 meeting with the FDA conducted in 2018. If theprogram is successful, it will support our plans to submit for regulatory approval in multiple markets in2020 including the United States, Europe and Japan. Because there are no approved bevacizumab productsfor the treatment of retinal diseases in such major markets, we are developing ONS-5010 as an innovativetherapy and not using the biosimilar drug development pathway. If approved, we believe ONS-5010 haspotential to mitigate risks associated with off-label compounding of Avastin or other drugs. Off labelcompounding of Avastin is currently estimated to account for approximately 50% of all wet AMDprescriptions in the United States.Separately, we have advanced two biosimilar product candidates through Phase 1 clinical trials and intopreparations for Phase 3 clinical trials: ONS-3010, a biosimilar to adalimumab (Humira), and ONS-1045, abiosimilar to bevacizumab (Avastin). We do not plan to further advance ONS-3010 and ONS-1045 inmajor markets, including the United States, upon entering into a license or co-development agreement witha partner in one or more of the major markets. The emerging markets rights to these drug productcandidates have been licensed to third parties for development in those markets. At this time, ONS-5010 isour only product candidate in active development.Through September 30, 2018, we have funded substantially all of our operations with $195.3 million inproceeds from the sale and issuance of our equity and debt securities. We have also received $29.0 millionpursuant to our collaboration and licensing agreements. In September 2017, we closed on the initial sale of32,628 shares of our newly-created Series A Convertible Preferred Stock, or the Series A Convertible, toBioLexis Holdings Pte. Ltd., or BioLexis (formerly GMS Tenshi Holdings Pte. Limited), our controllingstockholder and strategic partner, for $3.3 million of cash, and entered into an investor rights agreement inconnection therewith. In October 2017, following receipt of necessary stockholder approval, we issued anadditional 217,372 shares of our Series A Convertible and warrants to acquire 16,750,000 shares of ourcommon stock to BioLexis for $21.7 million of cash. Concurrent with such second closing, we alsoexchanged an aggregate $1.5 million of outstanding senior secured notes into 1,500,000 shares of ournewly-created Series B Convertible Preferred Stock, or the Series B Convertible.Additionally, as part of the BioLexis transaction, in September 2017, we entered into a joint developmentand licensing agreement for ONS-3010 and ONS-1045 in all emerging market territories not previouslylicensed to other development partners.62TABLE OF CONTENTSOn May 11, 2018, we entered into a purchase agreement with BioLexis pursuant to which we agreed to sellto BioLexis, and BioLexis agreed to purchase, in a private placement, $15.0 million of our common stockand warrants to acquire that number of shares of common stock having an aggregate exercise price ofapproximately $20.0 million, to close in two tranches. On May 14, 2018, we closed the sale of the firsttranche of the common stock and warrants for aggregate cash proceeds of  $7.5 million, issuing to BioLexisan aggregate of 6,377,383 shares of our common stock and warrants to acquire up to 10,256,410additional shares of our common stock at an exercise price of  $0.975 per share, which warrants have aterm of eight years from their issuance date. On June 8, 2018, we closed the sale of the second tranche ofthe common stock and warrants for aggregate cash proceeds of  $7.5 million, issuing to BioLexis anaggregate of 6,377,383 shares of our common stock and warrants to acquire up to 10,256,410 additionalshares of our common stock at an exercise price of  $0.975 per share, which warrants have a term ofeight years from their issuance date.On June 20, 2018, BioLexis converted 208,836 shares of its Series A Convertible into 31,572,617 shares ofour common stock. In connection therewith, we agreed in principle to exchange BioLexis’s remainingshares of Series A Convertible (along with accrued but unpaid dividends) into a newly created class ofpreferred stock that was intended to have the same conversion and dividend features as the Series AConvertible, but reflect an increased redemption premium and increased liquidation preference thatprovides BioLexis with similar redemption premium and liquidation preference as before the June 20, 2018conversion into common stock. Accordingly, on July 18, 2018, we entered into an exchange agreementwith BioLexis pursuant to which we exchanged an aggregate of 58,735 shares of Series A Convertible thenheld by BioLexis for 58,735 shares of our newly created voting Series A-1 Convertible Preferred Stock, parvalue $0.01 per share, or the Series A-1 Convertible. Accordingly, all of the issued Series A Convertiblehave been retired and cancelled and may not be reissued as shares of such series in accordance with theirterms.The Series A-1 Convertible has the same conversion and dividend features as the Series A Convertible (10%per annum, compounded quarterly, payable quarterly at our option in cash or in kind in additional sharesof Series A-1 Convertible), but reflects an increased redemption premium (110% to 550%) and increasedliquidation preference (120% to 600%) that provides BioLexis with similar redemption premium andliquidation preference for its aggregate Series A Convertible holdings before the conversion.On November 5, 2018, we entered into a purchase agreement with BioLexis providing for the privateplacement of  $20.0 million of shares of our common stock at $0.9327 per share. The closing of the sale ofthe first two tranches of this private placement for an aggregate of 12,865,867 shares of our common stockfor aggregate cash proceeds of  $12.0 million occurred in November and December 2018. The remaining$8.0 million will be funded in two equal tranches on January 3, 2019 and February 1, 2019, subject tocustomary conditions and achieving certain funding milestones as set forth in the purchase agreement. Weintend to use the net proceeds from the private placement primarily for clinical trials for our lead productcandidate, ONS-5010, and for working capital and general corporate purposes, including the agreedrepayments on the senior secured notes discussed below.Also on November 5, 2018, we reached an agreement with the holders of our $13.5 million senior securednotes to extend the maturity of the senior secured notes, up to 12 months, or until December 22, 2019, inexchange for making several payments of principal and interest through August 31, 2019, subject tomeeting additional capital raising commitments, with an initial payment of  $2.2 million paid onNovember 7, 2018. In addition, we agreed to make the senior secured notes convertible into common stockat a price of $1.11924 per share (120% of the price per share paid by BioLexis under the purchaseagreement) and reduced the exercise price of the warrants held by such holders to $1.50 and extended theexpiration of these warrants by three years. We also agreed to take such steps as reasonably necessary toamend the outstanding Series A warrants that were issued in our initial public offering, or IPO, to reducethe exercise price to $1.50 and extend the expiration of these warrants by three years.On November 30, 2018, we received approval from the New Jersey Economic Development Authority’sTechnology Business Tax Certificate Transfer Program to sell approximately $3.7 million of our unusedNew Jersey net operating losses, or NOLs, and research and development tax credits, or R&D credits. Weexpect to receive approximately $3.4 million of proceeds from the sale of the New Jersey NOLs and R&Dcredits.63TABLE OF CONTENTSAs described in their audit report included elsewhere in this Annual Report on Form 10-K, our auditorshave included an explanatory paragraph that states that we have incurred recurring losses and negative cashflows from operations since inception and have an accumulated deficit at September 30, 2018 of$216.3 million, $13.5 million of senior secured notes that may become due in fiscal 2019; and $4.6 millionof unsecured indebtedness, $1.0 million of which is due on demand, and $3.6 million of which maturesDecember 22, 2018. We will need to raise substantial additional capital to fund our planned futureoperations, commence clinical trials, receive approval for and commercialize ONS-5010, reactivate thedevelopment of ONS-3010 and ONS-1045, or continue to develop our product candidates. We plan tofinance our future operations with a combination of proceeds from the issuance of equity securities, and theissuance of additional debt, potential collaborations and revenues from potential future product sales, ifany. There are no assurances that we will be successful in obtaining an adequate level of financing for thedevelopment and commercialization of ONS-5010 or any other current or future product candidates. If weare unable to secure adequate additional funding, our business, operating results, financial condition andcash flows may be materially and adversely affected. These matters raise substantial doubt about our abilityto continue as a going concern. Our consolidated financial statements do not include any adjustments thatmight be necessary if we are unable to continue as a going concern.Our current cash resources of  $1.7 million as of September 30, 2018, additional $20.0 million fundingfrom our November BioLexis private placement and anticipated proceeds from the sale of New JerseyNOLs, are expected to fund our operations into June 2019, excluding any unscheduled repayment of debt.To provide additional working capital, we continue to engage in active discussions with global and regionalpharmaceutical companies for licensing and/or co-development rights to our late- and early-stage pipelineproduct candidates. If we are not successful in raising additional capital or entering into one or morelicensing and/or co-development rights agreements, we may be required to, among other things, makereductions in our workforce, discontinue our development programs, liquidate all or a portion of our assets,and/or seek protection under the provisions of the U.S. Bankruptcy Code.We do not have any products approved for sale and we have only generated revenue from ourcollaboration agreements. We have incurred operating losses and negative operating cash flows sinceinception and there is no assurance that we will ever achieve profitable operations, and if achieved, thatprofitable operations will be sustained. Our net loss for the year ended September 30, 2018 was$30.1 million. We also had a net loss of  $38.8 million for the year ended September 30, 2017. In addition,development activities, clinical and preclinical testing and commercialization of our product candidates willrequire significant additional financing.Collaboration and License AgreementsFrom time to time, we enter into collaboration and license agreements for the research and development,manufacture and/or commercialization of our products and/or product candidates. These agreementsgenerally provide for non-refundable upfront license fees, development and commercial performancemilestone payments, cost sharing, royalty payments and/or profit sharing.MTTR, LLC — ONS 5010In February 2018, we entered into a strategic partnership agreement with MTTR, LLC, or MTTR, to adviseon regulatory, clinical and commercial strategy and assist in obtaining approval of ONS-5010, ourbevacizumab therapeutic product candidate for ophthalmic indications. Under the terms of the agreement,we currently pay MTTR a $58,333 monthly consulting fee. In March 2018, we amended the MTTRagreement and agreed to pay a one-time fee of  $268,553 to MTTR by September 2020 if certainregulatory milestones are achieved earlier than anticipated. Beginning January 2019, the monthly feeincreases to $105,208 per month, and then, after launch of ONS-5010 in the United States, to $170,833 permonth (the amount of which is reduced by 50% in the event net sales of ONS-5010 are below a certainthreshold million per year). We also agreed to pay MTTR a tiered percentage of the net profits of ONS-5010 ranging in the low- to mid-teens, with the ability to credit monthly fees paid to MTTR. For the yearended September 30, 2018, MTTR earned an aggregate of $602,629, which includes monthly consultingfees, expense reimbursement and an initial upfront payment of  $75,000.64TABLE OF CONTENTSSelexis SAIn October 2011, we entered into a research license agreement with Selexis SA, or Selexis, whereby weacquired a non-exclusive license to conduct research internally or in collaboration with third parties todevelop recombinant proteins from cell lines created in mammalian cells using the Selexis expressiontechnology, or the Selexis Technology. The original research license had a three-year term, but onOctober 9, 2014, it was extended for an additional three-year term through October 9, 2017, and then alimited scope license was extended for one more year through October 9, 2018. We may sublicense ourrights with Selexis’ prior written consent but are prohibited from making commercial use of the SelexisTechnology or the resultant recombinant proteins comprising our product candidates in humans, or fromfiling an investigational new drug, absent a commercial license agreement with Selexis covering theparticular product candidate developed under the research license. In connection with the entry into theresearch license, we paid Selexis an initial fee and agreed to make additional annual license maintenancepayments of the same amount for each of the three years that the research license agreement term wasextended and for a pro rata amount for the most current one-year license extension that expired onOctober 9, 2018. As such, we are no longer using the Selexis Technology in our research.Selexis also granted us a non-transferrable option to obtain a perpetual, non-exclusive, worldwidecommercial license under the Selexis Technology to manufacture, or have manufactured, a recombinantprotein produced by a cell line developed using the Selexis Technology for clinical testing and commercialsale. We exercised this option in April 2013 and entered into three commercial license agreements withSelexis for our ONS-3010, ONS-1045 (which covers ONS-5010) and ONS-1050 product candidates. Wepaid an upfront licensing fee to Selexis for each commercial license and also agreed to pay a fixedmilestone payment for each licensed product. In addition, we are required to pay a single-digit royalty on afinal product-by-final product and country-by-country basis, based on worldwide net sales of such finalproducts by us or any of our affiliates or sub-licensees during the royalty term. At any time during theterm, we have the right to terminate our royalty payment obligation by providing written notice to Selexisand paying Selexis a royalty termination fee.As of September 30, 2018, we have paid Selexis an aggregate of approximately $0.4 million under thecommercial license agreements.IPCA Laboratories Limited — Humira (ONS-3010), Avastin (ONS-1045) and Herceptin (ONS-1050)In August 2013, we entered into a strategic license agreement with IPCA Laboratories Limited, or IPCA,under which we granted IPCA and its affiliates a license for the research, development, manufacture, use orsale of ONS-3010 and, by amendment in May 2014, ONS-1045. The license is exclusive with respect toIndia, Sri Lanka and Myanmar, and non-exclusive with respect to Nepal and Bhutan. Under the terms ofthe August 2013 agreement, we received an upfront payment from IPCA, and are eligible to earn additionalregulatory milestone payments for each of ONS-3010 and ONS-1045. In addition, we are eligible toreceive royalties at a low teens percentage rate of annual net sales of products by IPCA and its affiliates inthe agreed territory.In January 2014, we entered into an agreement with IPCA to assist IPCA in establishing its research,development and manufacturing capabilities for mAbs and biologics, including, in part, throughcollaborative development, manufacture and commercialization of ONS-1050 (our Herceptin biosimilar),in the agreed territory (as specified below). The agreed territory for ONS-1050 includes the Republics ofIndia, Sri Lanka, Myanmar, Nepal and Bhutan, while the agreed territory for any product candidatesdeveloped independent of our involvement is global without geographical restriction. We also agreed toassist IPCA with its research and development program. Under the terms of the January 2014 agreement,we are eligible to receive development payments and commercialization fees. In addition, we are eligible toreceive royalties from IPCA at a mid-single digit rate on annual net sales of ONS-1050 commercialized byIPCA and its affiliates in the agreed territory.As of September 30, 2018, we have received an aggregate of  $5.0 million of payments from IPCA underour various agreements.Liomont — Humira (ONS-3010) and Avastin (ONS-1045)In June 2014, we entered into a strategic license agreement with Laboratories Liomont, S.A. de C.V., orLiomont, under which we granted Liomont and its affiliates an exclusive, sublicenseable license in Mexico65TABLE OF CONTENTSfor the research, development, manufacture, use or sale of the ONS-3010 and ONS-1045 biosimilarproduct candidates in Mexico. Under the terms of the agreement, we received an upfront payment fromLiomont, and we are eligible to earn milestone payments for each of ONS-3010 and ONS-1045. Inaddition, we are eligible to receive tiered royalties at upper single-digit to low teens percentage rates ofannual net sales of products by Liomont and its affiliates in Mexico. As of September 30, 2018, we havereceived an aggregate of  $3.0 million of upfront and milestone payments from Liomont.Huahai — Humira (ONS-3010) and Avastin (ONS-1045)In May 2013, we entered into a series of agreements with Zhejiang Huahai Pharmaceutical Co., Ltd., orHuahai, to form an alliance for the purpose of developing and obtaining regulatory approval for, andcommercial launch and marketing of licensed products in an agreed territory, as described below. Theagreements include a strategic alliance agreement, which sets out the governance framework for therelationship, along with a joint participation agreement regarding joint development and commercializationof ONS-3010, and a co-development and license agreement for each of ONS-3010 and ONS-1045. As ofSeptember 30, 2018, we have received an aggregate of  $16.0 million of upfront and milestone paymentsfrom Huahai.As contemplated by the strategic alliance agreement, we entered into a joint participation agreement withHuahai where we agreed to co-fund the development and share the value ownership interest of ONS-3010in the United States, Canada, European Union, Japan, Australia and New Zealand. Under the agreement asamended, we are responsible for completing a defined “Phase-3 Ready Package” at our expense, for whichthe portion of the funds received from Huahai to date under this joint participation agreement was used.In the event Huahai funds its proportionate share of development costs incurred after completion of the“Phase-3 Ready Packages,” Huahai would be entitled to retain its 51% value ownership, with us entitled toretain our 49% value ownership, of ONS-3010 in the agreed territories. Similarly, revenues fromcommercialization of ONS-3010 in the agreed countries (including major markets such as the United Statesand the European Union, among others), would also be shared based on such proportional ownershipinterests. In the event that Huahai does not fund its proportionate share of such development costs, the jointparticipation agreement provides for a proportionate adjustment to our respective value ownership interestsbased on our respective investments in such development costs, which would increase our value ownershipinterest in ONS-3010. Under the joint participation agreement, we could also be required to form a jointventure to further develop and commercialize ONS-3010 with Huahai in the agreed countries, if sorequested by Huahai.In conjunction with the strategic alliance agreement, we also entered into a co-development and licenseagreement with Huahai, under which we granted Huahai and its affiliates an exclusive license, in theterritory (as specified below) for the research, development, manufacture, use or sale of ONS-3010 orONS-1045 in China, including, the People’s Republic of China, Hong Kong, Macau and Taiwan. We willeach bear our respective costs under the development plans. Huahai agreed to carry out all clinical,manufacturing and regulatory requirements necessary for approval of the products in the agreed territory.Under the terms of the agreement, we received an upfront payment from Huahai for ONS-3010, and havereceived regulatory milestone payments for each of ONS-3010 and ONS-1045.BioLexis — Humira (ONS-3010) and Avastin (ONS-1045)On September 7, 2017, in connection with the entry into the BioLexis purchase agreement for the Series AConvertible and warrants, we also entered into a joint development and license agreement providing for thelicense of rights to ONS-3010 and ONS-1045 in emerging markets, excluding China, India and Mexico,which superseded and replaced a previous strategic licensing agreement dated July 25, 2017. As ofSeptember 30, 2018, we have received an aggregate of  $5.0 million of payments from BioLexis under ourjoint development and license agreement.Components of Our Results of OperationsCollaboration RevenueTo date, we have derived revenue only from activities pursuant to our collaboration and licensingagreements. We have not generated any revenue from commercial product sales. For the foreseeable future,66•expenses incurred under agreements with contract research organizations, or CROs, as well asinvestigative sites and consultants that conduct our preclinical studies and clinical trials;•manufacturing scale-up expenses and the cost of acquiring and manufacturing preclinical andclinical trial materials and commercial materials, including manufacturing validation batches;•outsourced professional scientific development services;•employee-related expenses, which include salaries, benefits and stock-based compensation;•payments made under a third-party assignment agreement, under which we acquired intellectualproperty;•expenses relating to regulatory activities, including filing fees paid to regulatory agencies;•laboratory materials and supplies used to support our research activities; and•allocated expenses, utilities and other facility-related costs.•the number of clinical sites included in the trials;•the length of time required to enroll suitable patients;•the number of patients that ultimately participate in the trials;•the number of doses patients receive;•the duration of patient follow-up;•the results of our clinical trials;•the establishment of commercial manufacturing capabilities;•the receipt of marketing approvals; and•the commercialization of product candidates.TABLE OF CONTENTSwe expect all of our revenue, if any, will be generated from our collaboration and licensing agreements. Ifany of our product candidates currently under development are approved for commercial sale, we maygenerate revenue from product sales, or alternatively, we may choose to select a collaborator tocommercialize our product candidates.Each of our collaboration and licensing agreements is considered to be a multiple-element arrangement foraccounting purposes. We determined that there are two deliverables; specifically, the license to our productcandidate and the related research and development services that we are obligated to provide. Weconcluded that these deliverables should be accounted for as a single unit of accounting. We determinedthat the upfront license payments received should be deferred and recognized as revenue on a straight-linebasis through the estimated period of completion of our obligations under the agreement. We recognizerevenues from the achievement of milestones if the milestone event is substantive and achievability of themilestone was not reasonably assured at the inception of the agreement. During the three months endedDecember 31, 2016, we revised our estimate of the period of completion from December 2019 toDecember 2021.Research and Development ExpensesResearch and development expense consists of expenses incurred in connection with the discovery anddevelopment of our product candidates. We expense research and development costs as incurred. Theseexpenses include:The successful development of our product candidates is highly uncertain. At this time, we cannotreasonably estimate or know the nature, timing and costs of the efforts that will be necessary to completethe remainder of the development of, or when, if ever, material net cash inflows may commence from anyof our other product candidates. This uncertainty is due to the numerous risks and uncertainties associatedwith the duration and cost of clinical trials, which vary significantly over the life of a project as a result ofmany factors, including:67TABLE OF CONTENTSOur expenditures are subject to additional uncertainties, including the terms and timing of regulatoryapprovals. We may never succeed in achieving regulatory approval for any of our biosimilar productcandidates. We may obtain unexpected results from our clinical trials. We may elect to discontinue, delay ormodify clinical trials of some product candidates or focus on others. A change in the outcome of any ofthese variables with respect to the development of a product candidate could mean a significant change inthe costs and timing associated with the development of that product candidate. For example, if the U.S.Food and Drug Administration, or FDA, or other regulatory authorities were to require us to conductclinical trials beyond those that we currently anticipate, or if we experience significant delays in enrollmentin any of our clinical trials, we could be required to expend significant additional financial resources andtime on the completion of clinical development. Product commercialization will take several years andmillions of dollars in development costs.Research and development activities are central to our business model. Product candidates in later stages ofclinical development generally have higher development costs than those in earlier stages of clinicaldevelopment, primarily due to the increased size, complexity and duration of later-stage clinical trials.General and Administrative ExpensesGeneral and administrative expenses consist principally of salaries and related costs for personnel inexecutive, administrative, finance and legal functions, including stock-based compensation, travel expensesand recruiting expenses. Other general and administrative expenses include facility related costs, patentfiling and prosecution costs and professional fees for business development, legal, auditing and tax servicesand insurance costs.We anticipate that our general and administrative expenses will increase if and when we believe a regulatoryapproval of a product candidate appears likely, and we anticipate an increase in payroll and expense as aresult of our preparation for commercial operations, particularly as it relates to the sales and marketing ofour product.Interest ExpenseInterest expense consists of cash paid and non-cash interest expense related to our senior secured notes,former bank loans, and notes with current and former stockholders, equipment loans, capital lease andother finance obligations.Income TaxesDuring the year ended September 30, 2018, we sold New Jersey NOLs in the amount of $38.5 millionresulting in the recognition of income tax benefits of  $3.2 million, recorded in our consolidated statementof operations.Since inception, we have not recorded any U.S. federal or state income tax benefits (excluding the sale ofNew Jersey NOLs and research credits) for the net losses we have incurred in each year or on our earnedresearch and development tax credits, due to our uncertainty of realizing a benefit from those items. As ofSeptember 30, 2018, we had federal and state NOL carryforwards of  $164.2 million and $67.6 million,respectively, that will begin to expire in 2030 and 2036, respectively. As of September 30, 2018, we hadfederal foreign tax credit carryforwards of  $2.4 million available to reduce future tax liabilities, whichbegin to expire starting in 2023. As of September 30, 2018, we also had federal research and developmenttax credit carryforwards of  $8.5 million that begin to expire in 2032.In general, under Section 382 of the Internal Revenue Code of 1986, as amended, or the Code, acorporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its NOLsto offset future taxable income. We have not completed a study to assess whether an ownership change hasoccurred in the past. Our existing NOLs may be subject to limitations arising from previous ownershipchanges, and if we undergo an ownership change in connection with or after our IPO, our ability to utilizeNOLs could be further limited by Section 382 of the Code. Future changes in our stock ownership, some ofwhich are outside of our control, could result in an ownership change under Section 382 of the Code. OurNOLs are also subject to international regulations, which could restrict our ability to utilize our NOLs.68TABLE OF CONTENTSFurthermore, our ability to utilize NOLs of companies that we may acquire in the future may be subject tolimitations. There is also a risk that due to regulatory changes, such as suspensions on the use of NOLs, orother unforeseen reasons, our existing NOLs could expire or otherwise be unavailable to offset futureincome tax liabilities.Loss on Extinguishment of DebtWe recorded a loss on the extinguishment of debt of  $1.3 million during the year ended September 30,2018 related to the exchange of our senior secured notes for shares of our Series B Convertible.Change in Fair Value of Warrant LiabilityWarrants to purchase our common stock that have been issued in conjunction with our senior secured notesare classified as liabilities and recorded at fair value. The warrants are subject to re-measurement at eachbalance sheet date and we recognize any change in fair value in our statements of operation.Results of OperationsComparison of Years Ended September 30, 2018 and 2017Year ended September 30,​​2018​​2017​​Change​Collaboration revenues$3,087,560$3,811,519$(723,959Operating expenses:Research and development18,504,03523,809,749(5,305,714General and administrative14,227,82815,882,033(1,654,20532,731,86339,691,782(6,959,919Loss from operations(29,644,303(35,880,2636,235,960Interest expense, net3,891,2505,625,833(1,734,583Loss on extinguishment of debt1,252,353—1,252,353Change in fair value of warrant liability(1,047,729(3,158,4692,110,740Loss before income taxes(33,740,177(38,347,6274,607,450Income tax (benefit) expense(3,648,216501,500(4,149,716Net loss$(30,091,961$(38,849,127$8,757,166Collaboration RevenuesThe following table sets forth a summary of revenue recognized from our collaboration and licensingagreements for the years ended September 30, 2018 and 2017:Year ended September 30,20182017​IPCA Collaboration$261,072$261,072Liomont Collaboration236,641236,641Huahai Collaboration714,848714,848BioLexis1,874,9992,598,958$3,087,560$3,811,519The following table summarizes the milestone payments and recognition of deferred revenues from ourcollaboration and licensing agreements during the years ended September 30, 2018 and 2017:Year ended September 30,20182017​Milestone payments$—$2,500,000Recognition of deferred revenues3,087,5601,311,519$3,087,560$3,811,51969)))))))))))))))TABLE OF CONTENTSCollaboration revenues decreased $0.7 million for the year ended September 30, 2018 compared to theyear ended September 30, 2017 due to a $2.5 million decrease in milestone payments offset by a$1.8 million increase in the amortization of deferred revenue as compared to the prior year. There were nomilestone payments in 2018 compared to $2.5 million payments received in 2017 under our jointdevelopment and licensing agreement with BioLexis. The increase in deferred revenue recognized wasprimarily due to a full year of amortization of collaboration revenue from BioLexis.Research and Development ExpensesThe following table summarizes our research and development expenses by functional area for the yearsended September 30, 2018 and 2017:Year ended September 30,20182017​Preclinical and clinical development$7,403,015$9,674,633Settlement of clinical development contract(3,228,613—Compensation and related benefits6,911,9107,460,814Stock-based compensation19,4501,001,022Other research and development7,398,2735,673,280Total research and development expenses$18,504,035$23,809,749The following table summarizes our research and development expenses by compound for the years endedSeptember 30, 2018 and 2017:Year ended September 30,20182017​ONS-3010$573,518$5,195,278ONS-1045348,5962,931,414ONS-50106,315,937—Early-stage compounds164,9641,547,941Settlement of clinical development contract(3,228,613—Personnel related and stock-based compensation6,931,3608,461,836Other research and development7,398,2735,673,280Total research and development expenses$18,504,035$23,809,749Research and development expenses for the year ended September 30, 2018 decreased by $5.3 millioncompared to the year ended September 30, 2017 due to reductions in preclinical and clinical developmentspending, a related contract settlement and lower personnel related costs as we shifted our focus from ourbiosimilar product candidates ONS-3010 and ONS-1045 to our innovative therapeutic, ONS-5010. Overallpre-clinical and clinical research and development expenses decreased due to the deprioritization of ourbiosimilar product candidate development program in favor of the ONS-5010 program. This resulted in areduction in expenses for ONS-3010, ONS-1045 and our early stage development program of $8.6 million, which was partially offset by $6.3 million in development costs incurred related to our ONS-5010 program as we prepared for the initiation of the ONS-5010 clinical programs in 2018. During theyear ended September 30, 2018, we also terminated an agreement related to ONS-3010 and ONS-1045 andwere able to favorably settle amounts previously owed under the contract resulting in a reduction to ourresearch and development expenses of  $3.2 million. Additionally, we experienced a reduction of $1.5 million in personnel related costs for the year ended September 30, 2018 due to a combination oflower salaries and benefits from reduced employee headcount in the current period as a result of attrition inlate 2017 and lower stock-based compensation due to the related forfeitures of equity awards by departingemployees and the completion of the vesting period of most pre-IPO equity grants earlier in fiscal 2018.70))TABLE OF CONTENTSGeneral and Administrative ExpensesThe following table summarizes our general and administrative expenses by type for the years endedSeptember 30, 2018 and 2017:Year ended September 30,20182017​Professional fees$3,155,658$3,263,523Compensation and related benefits2,451,7962,695,751Stock-based compensation1,966,4207,570,635Facilities, fees and other related costs6,653,9542,352,123Total general and administrative expenses$14,227,828$15,882,033General and administrative expenses for the year ended September 30, 2018 decreased by $1.7 millioncompared to the year ended September 30, 2017. The decrease was primarily a result of a decrease instock-based compensation expenses of  $5.6 million related to the completion of the vesting period of mostpre-IPO equity grants earlier in fiscal 2018 and a $0.2 million decrease in compensation and relatedbenefits. This was partially offset by an increase in facilities, fees and related costs primarily due to a$4.2 million lease termination charge incurred during the fourth quarter of fiscal 2018.Interest ExpenseInterest expense decreased by $1.7 million to $3.9 million for the year ended September 30, 2018 ascompared to $5.6 million for the year ended September 30, 2017 primarily due a $2.4 million decrease inamortization of debt discount and interest expense on the senior secured notes issued December 2016through May 2017 offset by a $0.8 million increase in interest expense from equipment loans, and capitallease obligations.Change in Fair Value of Warrant LiabilityDuring the year ended September 30, 2018, we recorded income of  $1.0 million related to the decrease inthe fair value of our common stock warrant liability as a result of the decrease in the price of our commonstock during the period. During the year ended September 30, 2017, we recorded income of  $3.2 millionrelated to the decrease in the fair value of our common stock warrant liability as a result of the decrease inthe price of our common stock during the period.Liquidity and Capital ResourcesWe have not generated any revenue from product sales. Since inception, we have incurred net losses andnegative cash flows from our operations. Through September 30, 2018, we have funded substantially all ofour operations through the sale and issuance of  $195.3 million net proceeds of our equity securities, debtsecurities and borrowings under debt facilities. We have also received an aggregate of  $29.0 millionpursuant to our collaboration and licensing agreements.In September 2017, we closed on the initial sale of 32,628 shares of Series A Convertible to BioLexis for$3.3 million of cash, and entered into an investor rights agreement and joint development and licensingagreement. In October 2017, following receipt of stockholder approval, we issued an additional 217,372shares of our Series A Convertible and warrants to acquire an aggregate of 16,750,000 shares of ourcommon stock to BioLexis for $21.7 million of cash. All of the issued Series A Convertible was exchangedfor Series A-1 Convertible in July 2018. We also converted $1.5 million aggregate principal amount of oursenior secured notes into 1,500,000 shares of our Series B Convertible, all of which shares converted intoan aggregate of 2,112,675 shares of our common stock in the quarter ended June 30, 2018.In May 2018 and June 2018, we sold an aggregate of 12,754,766 shares of our common stock andwarrants to acquire an aggregate of 20,512,820 shares of our common stock to BioLexis for aggregate cashproceeds of  $15.0 million. The warrants have an exercise price of  $0.975 per share and a term ofeight years from their issuance date.71TABLE OF CONTENTSIn November and December 2018, we issued 12,865,872 shares of the common stock to BioLexis in aplacement arrangement for an aggregate cash proceeds of  $12.0 million. We expect to receive anadditional $8.0 in two equal tranches on January 3, 2019 and February 1, 2019, subject to customaryclosing conditions and meeting certain funding milestones. On November 5, 2018, we reached anagreement with the holders of our $13.5 million senior secured notes to extend the maturity of the seniorsecured notes, up to 12 months, or until December 22, 2019, in exchange for making several payments ofprincipal and interest through August 31, 2019, subject to meeting additional capital raising commitments,with an initial payment of  $2.2 million paid on November 7, 2018.On November 30, 2018, we received approval from the New Jersey Economic Development Authority’sTechnology Business Tax Certificate Transfer Program to sell approximately $3.7 million of our unusedNew Jersey NOLs and R&D credits. We expect to receive approximately $3.4 million of proceeds from thesale of the New Jersey NOLs and R&D credits.Our current cash resources of  $1.7 million as of September 30, 2018, additional $20.0 million fundingfrom our November BioLexis private placement and anticipated proceeds from the sale of New JerseyNOLs and R&D credits are expected to fund our operations into June 2019, excluding any unscheduledrepayment of debt. Alternatively, we will be required to, among other things, make reductions in ourworkforce, scale back our plans and place certain activities on hold, discontinue our developmentprograms, liquidate all or a portion of our assets, and/or seek protection under the provisions of the U.S.Bankruptcy Code.As of September 30, 2018, we had an accumulated deficit of  $216.3 million and a cash balance of$1.7 million. In addition, we have $13.5 million of senior secured notes whose maturity was extended onNovember 5, 2018 up to 12 months, or until December 22, 2019, in exchange for making severalpayments of principal and interest through August 31, 2019, subject to customary conditions and achievingcertain funding milestones, with an initial payment of  $2.2 million paid on November 7, 2018. We alsohave $4.6 million of unsecured indebtedness, $1.0 million of which is due on demand, and $3.6 million ofwhich matures December 22, 2018. These matters raise substantial doubt about our ability to continue as agoing concern. Our consolidated financial statements do not include any adjustments related to therecoverability and classification of recorded asset amounts or the amounts and classification of liabilitiesthat might result from the outcome of this uncertainty. We anticipate incurring additional losses until suchtime, if ever, that we can generate significant sales of our product candidates currently in development orfrom receiving fees for contract development and manufacturing services that we plan to provide for otherbiopharmaceutical companies. We will need substantial additional financing to fund our operations and tocommercially develop our product candidates. Management is currently evaluating various strategicopportunities to obtain the required funding for future operations. These strategies may include, but are notlimited to private placements of equity and/or debt, payments from potential strategic research anddevelopment, licensing and/or marketing arrangements with pharmaceutical companies, and publicofferings of equity and/or debt securities. Additionally, we continue to engage in active discussions withglobal and regional pharmaceutical companies for licensing and/or co-development rights to our late- andearly-stage pipeline candidates. There can be no assurance that these future funding efforts will besuccessful.Our future operations are highly dependent on a combination of factors, including (i) the timely andsuccessful completion of additional financing discussed above, (ii) our ability to complete revenue-generating partnerships with pharmaceutical companies, (iii) the success of our research and development,(iv) the development of competitive therapies by other biotechnology and pharmaceutical companies, and,ultimately, (v) regulatory approval and market acceptance of our proposed future products.72TABLE OF CONTENTSCash FlowsThe following table summarizes our cash flows for each of the years presented:Year ended September 30,20182017​Net cash used in operating activities$(33,039,523$(15,505,054Net cash used in investing activities(2,781,125(292,086Net cash provided by financing activities34,352,52016,630,772Net (decrease) increase in cash$(1,468,128$833,632Operating ActivitiesDuring the year ended September 30, 2018, we used $33.0 million of cash in operating activities resultingprimarily from our net loss of  $30.1 million, as well as an increase in cash outflows from working capitalchanges primarily due to payments of our outstanding accounts payable and accrued expenses fromSeptember 30, 2017 as well as the prepayment of certain research and development expenses. During theyear ended September 30, 2017, we used $15.5 million of cash in operating activities, primarily resultingfrom our net loss of  $38.8 million. This use of cash was partially offset by changes in our operating assetsand liabilities. Our cash flows are impacted by our underlying results from operations and related timing ofcash receipts and cash disbursements.Investing ActivitiesDuring the years ended September 30, 2018 and 2017, we used cash of  $2.8 million and $0.3 million,respectively, in investing activities for the purchase of property and equipment.Financing ActivitiesDuring the year ended September 30, 2018, net cash provided by financing activities was $34.4 million,primarily attributable to $20.6 million in net proceeds from our second closing of our Series A Convertiblein October 2017 and $14.7 million in net proceeds from the sale of common stock and warrants toBioLexis in May and June 2018. We also had $0.9 million in debt payments.During the year ended September 30, 2017, net cash provided by financing activities was $16.6 million,primarily attributable to $15.0 million in proceeds from the sale and issuance of our senior secured notesand warrants, $3.3 million from the initial sale and issuance of our Series A Convertible and $1.9 millionfrom the sale and issuance of common stock and exercise of warrants, net of offering costs. These inflowswere offset by $3.7 million in debt payments, $2.4 million of which was used to repay senior bank loans inDecember 2016.Funding RequirementsWe plan to focus in the near term on advancing ONS-5010 through clinical trials to support the filing of aBLA with the FDA to support the generation of commercial revenues. We anticipate we will incur net lossesand negative cash flow from operations for the foreseeable future. We may not be able to complete thedevelopment and initiate commercialization of ONS-5010 if, among other things, our clinical trials are notsuccessful or if the FDA does not approve our application arising out of our current clinical trials when weexpect, or at all.Our primary uses of capital are, and we expect will continue to be, compensation and related expenses,manufacturing and facility costs, external research and development services, laboratory and relatedsupplies, legal and other regulatory expenses, and administrative and overhead costs. Our future fundingrequirements will be heavily determined by the resources needed to support development of our productcandidates.We believe our existing cash as of September 30, 2018, together with the $20.0 million proceeds from thesale and issuance of our common stock to BioLexis in November 2018 and anticipated proceeds from thesale of New Jersey NOLs and R&D credits will provide adequate financial resources to fund our operations73)))))•the number and characteristics of the product candidates we pursue;•the scope, progress, results and costs of researching and developing ONS-5010, and any otherproduct candidates we pursue, and conducting preclinical studies and clinical trials;•the timing of, and the costs involved in, obtaining regulatory approvals for ONS-5010, and anyother product candidates we pursue;•the cost of manufacturing ONS-5010, and any other product candidates we pursue, and anyproducts we successfully commercialize;•our ability to establish and maintain strategic collaborations, licensing or other arrangements andthe financial terms of such agreements;•the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patentclaims, including litigation costs and the outcome of such litigation; and•the timing, receipt and amount of sales of, or milestone payments related to, or royalties on, ourcurrent or future product candidates, if any.(1)Operating lease commitments reflect our obligation to make payments in connection with a lease for our warehouse facilitylocated in Monmouth, New Jersey. See Note 9 to our consolidated financial statements.(2)Debt obligations reflect outstanding principal and interest obligations due to investors on senior secured debt, stockholdernotes payable and institutions and equipment loans.(3)Capital lease obligations reflect our outstanding principal and interest payment obligations in connection with ourcorporate offices and manufacturing facility and leased equipment used in our manufacturing facility.TABLE OF CONTENTSinto June 2019, excluding any unscheduled repayment of debt. We have based this estimate on assumptionsthat may prove to be wrong, and we could utilize our available capital resources sooner than we expect. Wewill need to raise substantial additional capital in order to complete our planned ONS-5010 developmentprogram. We plan to finance our future operations with a combination of proceeds from the issuance ofequity securities, the issuance of additional debt, potential strategic collaborations, sale of the developmentand commercial rights to our drug product candidates and revenues from potential future product sales, ifany. If we raise additional capital through the sale of equity or convertible debt securities, your ownershipwill be diluted, and the terms of these securities may include liquidation or other preferences that adverselyaffect your rights as a holder of our common stock. There are no assurances that we will be successful inobtaining an adequate level of financing for the development and commercialization of ONS-5010 or anyother current or future product candidates. If we are unable to secure adequate additional funding, ourbusiness, operating results, financial condition and cash flows may be materially and adversely affected.Because of the numerous risks and uncertainties associated with research, development andcommercialization of pharmaceutical products, we are unable to estimate the exact amount of our workingcapital requirements. Our future funding requirements will depend on many factors, including:See “Risk Factors” for additional risks associated with our substantial capital requirements.Contractual Obligations and CommitmentsOur future contractual obligations as of September 30, 2018 were as follows:Payments Due by PeriodTotalLess Than 1 Year1 – 3 Years3 – 5 Years​More Than 5 Years​Operating lease commitments$562,500$180,000$382,500$—$—Debt obligations19,942,48715,587,1494,355,338——Capital leases15,389,4961,947,1993,088,3593,073,5387,280,400Lease termination obligation5,275,750425,7504,850,000——Total$41,170,233$18,140,098$12,676,197$3,073,538$7,280,40074(1)(2)(3)(4)(5)(4)Lease termination obligation reflects our obligation for future lease termination payments.(5)This table does not include (a) any milestone payments that may become payable to third parties under license agreements asthe timing and likelihood of such payments are not known with certainty, (b) any royalty payments to third parties as theamounts, timing and likelihood of such payments are not known, and (c) contracts that are entered into in the ordinarycourse of business that are not material in the aggregate in any period presented above.•the delivered item has value to the customer on a stand-alone basis; and•if the arrangement includes a general right of return relative to the delivered item, delivery orperformance of the undelivered item is considered probable and substantially in our control.TABLE OF CONTENTSUnder our commercial license agreements with Selexis, we are obligated to pay milestone payments, as wellas a royalty at a single-digit percentage of net sales of any covered product we successfully commercialize.Under our third-party agreement for ONS-5010, we are obligated to pay briefly describe royaltyobligation.We also have employment agreements with certain employees, which require the funding of a specific levelof payments if certain events, such as a change in control or termination without cause, occur.In addition, in the course of normal business operations, we have agreements with contract serviceproviders to assist in the performance of our research and development and manufacturing activities.Expenditures to CROs represent a significant cost in clinical development. We can elect to discontinue thework under these agreements at any time. We could also enter into additional collaborative research andlicensing, contract research, manufacturing, and supplier agreements in the future, which may requireupfront payments and even long-term commitments of cash.Off-Balance Sheet ArrangementsWe did not have during the periods presented, and we do not currently have, any off-balance sheetarrangements, as defined in the rules and regulations of the SEC.Critical Accounting Policies and Significant Judgments and EstimatesOur consolidated financial statements are prepared in accordance with U.S. generally accepted accountingprinciples, or GAAP. The preparation of our consolidated financial statements and related disclosuresrequires us to make estimates and judgments that affect the reported amounts of assets and liabilities,disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and thereported amounts of revenues and expenses during the reported period. We base our estimates on historicalexperience, known trends and events and various other factors that we believe to be reasonable under thecircumstances, the results of which form the basis for making judgments about the carrying values of assetsand liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptionson an ongoing basis. Our actual results may differ from these estimates under different assumptions andconditions.While our significant accounting policies are described in more detail in the notes to our auditedconsolidated financial statements appearing elsewhere in this Annual Report on Form 10-K we believe thatthe following accounting policies are those most critical to the judgments and estimates used in thepreparation of our consolidated financial statements.Revenue RecognitionWe generate revenue primarily through collaboration and licensing agreements that contain multipledeliverables, generally a license and research and development services. Revenue recognition forarrangements with multiple elements requires the determination of whether an arrangement involvingmultiple deliverables contains more than one unit of accounting. A delivered item within an arrangement isconsidered a separate unit of accounting only if both of the following criteria are met:If both of the criteria above are not met, then separate accounting for the individual deliverables is notappropriate. Revenue recognition for arrangements with multiple deliverables constituting a single unit ofaccounting is recognized generally over the greater of the term of the arrangement or the expected periodof performance, either on a straight-line basis or on a modified proportional performance method. Werecord amounts received prior to satisfying the revenue recognition criteria as deferred revenue on ourbalance75•vendors in connection with preclinical development activities•the production of preclinical and clinical trial materials;•CROs in connection with clinical trials; and•investigative sites in connection with clinical trials.TABLE OF CONTENTSsheet. We classify amounts expected to be recognized as revenue in the next twelve months following thebalance sheet date as current liabilities. We recognize revenues from the achievement of milestones if themilestone event is substantive and achievability of the milestone was not reasonably assured at the inceptionof the agreement.Research and Development ExpensesAs part of the process of preparing our consolidated financial statements, we are required to estimate ouraccrued research and development expenses. This process involves reviewing open contracts and purchaseorders, communicating with our applicable personnel to identify services that have been performed on ourbehalf and estimating the level of service performed and the associated cost incurred for the service whenwe have not yet been invoiced or otherwise notified of actual costs. The majority of our service providersrequire advance payments; however, some invoice us in arrears for services performed, on a pre-determined schedule or when contractual milestones are met. We make estimates of our accrued expenses asof each balance sheet date in the consolidated financial statements based on facts and circumstances knownto us at that time. We periodically confirm the accuracy of the estimates with the service providers andmakes adjustments if necessary. Examples of estimated accrued research and development expenses includefees paid to:We base our expenses related to preclinical studies and clinical trials on our estimates of the servicesreceived and efforts expended pursuant to quotes and contracts with multiple research institutions and CROsthat conduct and manage preclinical studies and clinical trials on our behalf. The financial terms of theseagreements are subject to negotiation, vary from contract to contract and may result in uneven paymentflows. There may be instances in which payments made to our vendors will exceed the level of servicesprovided and result in a prepayment of the expense. Payments under some of these contracts depend onfactors such as the successful enrollment of patients and the completion of clinical trial milestones. Inaccruing service fees, we estimate the time period over which services will be performed and the level ofeffort to be expended in each period. If the actual timing of the performance of services or the level ofeffort varies from the estimate, we adjust the accrual or prepaid accordingly. Although we do not expectour estimates to be materially different from amounts actually incurred, our understanding of the status andtiming of services performed relative to the actual status and timing of services performed may vary andmay result in reporting amounts that are too high or too low in any particular period. To date, we have notmade any material adjustments to our prior estimates of accrued research and development expenses.JOBS Act Accounting ElectionThe JOBS Act permits an “emerging growth company” such as our company to take advantage of anextended transition period to comply with new or revised accounting standards applicable to publiccompanies until those standards would otherwise apply to private companies. We have irrevocably electedto “opt out” of this provision and, as a result, we will comply with new or revised accounting standardswhen they are required to be adopted by public companies that are not emerging growth companies.Recently Issued Accounting PronouncementsIn May 2014, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, orASU, No. 2014-09, Revenue from Contracts with Customers, or ASU 2014-09, and has subsequently issueda number of amendments to ASU 2014-09. The new standard, as amended, provides a singlecomprehensive model to be used in the accounting for revenue arising from contracts with customers andsupersedes current revenue recognition guidance, including industry-specific guidance. The standard’sstated core principle is that an entity should recognize revenue to depict the transfer of promised goods or76TABLE OF CONTENTSservices to customers in an amount that reflects the consideration to which the entity expects to be entitledin exchange for those goods or services. To achieve this core principle, ASU 2014-09 includes provisionswithin a five-step model that includes identifying the contract with a customer, identifying the performanceobligations in the contract, determining the transaction price, allocating the transaction price to theperformance obligations, and recognizing revenue when, or as, an entity satisfies a performance obligation.In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue andcash flows arising from contracts with customers.The new standard will be effective for us beginning October 1, 2018 and permits two methods of adoption:the full retrospective method, which requires the standard to be applied to each prior period presented, orthe modified retrospective method, which requires the cumulative effect of adoption to be recognized as anadjustment to opening retained earnings in the period of adoption. We will adopt the standard using themodified retrospective method.Our arrangements fall under Accounting Standards Codification, or ASC, 808, Collaborations, and ASC808 does not address recognition or measurement matters but prescribes that entities look to other GAAP byanalogy, namely ASU 2014-09. As such, we have completed an analysis of existing contracts with ourcollaboration partners and assessed the differences in accounting for such contracts under ASU 2014-09compared with current revenue accounting standards. Based on our review of current contracts, we expectan adjustment to increase accumulated deficit related to substantive milestones that were previouslyrecognized under current revenue guidance in the period the milestone was achieved. ASU 2014-09prescribes that those milestones are a form of variable consideration and should be recognized when theperformance obligation is satisfied. Although we are still finalizing the impact to the consolidated financialstatements as of October 1, 2018, we expect the adjustment to be an increase to accumulated deficit ofapproximately $3.6 million.In February 2016, the FASB issued ASU No. 2016-02, Leases, or ASC 842. The FASB issued subsequentamendments to the initial guidance in July 2018 with ASU 2018-10 and in August 2018 with ASU 2018-11. ASC 842 supersedes the current accounting for leases. The new standard requires lessees to record aright of use asset and a related liability for the rights and obligations associated with a lease, regardless oflease classification, and eliminates the required use of bright-line tests in current U.S. GAAP fordetermining lease classification. This ASU is effective for annual periods beginning after December 15,2018 (i.e., calendar periods beginning on January 1, 2019), and interim periods thereafter. Earlierapplication is permitted for all entities, however we do not plan to early adopt. The new standard must beadopted using either the modified retrospective approach, which requires application of the new guidanceat the beginning of the earliest comparative period presented or the optional alternative approach, whichrequires application of the new guidance at the beginning of the standard’s effective date. We havearrangements currently classified as operating leases, which will be recorded as a right of use asset andcorresponding liability on the balance sheet and we are currently evaluating the impact these changes willhave on our consolidated financial statements.In May 2017, the FASB issued ASU No. 2017-09, Compensation — Stock Compensation (Topic 718):Scope of Modification Accounting. This new ASU is intended provide clarity and reduce both the diversityin practice of and cost and complexity of applying the guidance in Topic 718, Compensation — StockCompensation, to a change to the terms or conditions of a share-based payment award. This ASU providesguidance about which changes to the terms or conditions of a share-based payment award require an entityto apply modification accounting in Topic 718. This ASU is effective for all entities for annual periods, andinterim periods within those annual periods, beginning after December 15, 2017. Early adoption ispermitted. This ASU is not expected to have a material impact on our consolidated financial statements.In June 2018, the FASB issued ASU No. 2018-07, Compensation — Stock Compensation (Topic 718):Improvements to Nonemployee Share-Based Payment Accounting, or Topic 718, which simplifies theaccounting for nonemployee share-based payment transactions. The amendments specify that Topic 718applies to all share-based payment transactions in which a grantor acquires goods or services to be used orconsumed in a grantor’s own operations by issuing share-based payment awards. The standard will beeffective for fiscal years beginning after December 15, 2018, although early adoption is permitted (but nosooner than the adoption of Topic 606). This ASU is not expected to have a material impact on ourconsolidated financial statements.77Item 7A.Quantitative and Qualitative Disclosures about Market RiskTABLE OF CONTENTSIn August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): DisclosureFramework — Changes to the Disclosure Requirements for Fair Value Measurement, which removes andmodifies some existing disclosure requirements and adds others. The ASU is effective for all entities forfiscal years beginning after December 15, 2019, including interim periods therein. Early adoption ispermitted for any eliminated or modified disclosures upon issuance of this ASU. We are currentlyevaluating when to adopt this standard.Not applicable.78TABLE OF CONTENTSItem 8. Consolidated Financial Statements and Supplementary DataOUTLOOK THERAPEUTICS, INC.ANNUAL REPORT ON FORM 10-K  INDEX TO AUDITED CONSOLIDATED FINANCIAL STATEMENTSPageReport of Independent Registered Public Accounting Firm80Consolidated Balance Sheets81Consolidated Statements of Operations82Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)83Consolidated Statements of Cash Flows84Notes to Consolidated Financial Statements8579TABLE OF CONTENTSReport of Independent Registered Public Accounting FirmTo the Stockholders and Board of Directors Outlook Therapeutics, Inc.:Opinion on the Consolidated Financial StatementsWe have audited the accompanying consolidated balance sheets of Outlook Therapeutics, Inc. andsubsidiaries (the Company) as of September 30, 2018 and 2017, the related consolidated statements ofoperations, convertible preferred stock and stockholders’ equity (deficit), and cash flows for the years thenended and the related notes (collectively, the consolidated financial statements). In our opinion, theconsolidated financial statements present fairly, in all material respects, the financial position of theCompany as of September 30, 2018 and 2017, and the results of its operations and its cash flows forthe years then ended, in conformity with U.S. generally accepted accounting principles.Going ConcernThe accompanying consolidated financial statements have been prepared assuming that the Company willcontinue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Companyhas incurred recurring losses and negative cash flows from operations and has a stockholders’ deficit of$216.3 million, $13.5 million of senior secured notes that may become due in fiscal 2019 and $4.6 millionof unsecured indebtedness, $1.0 million of which is due on demand, and $3.6 million of which maturesDecember 22, 2018, that raise substantial doubt about its ability to continue as a going concern.Management’s plans in regard to these matters are also described in Note 2. The consolidated financialstatements do not include any adjustments that might result from the outcome of this uncertainty.Basis for OpinionThese consolidated financial statements are the responsibility of the Company’s management. Ourresponsibility is to express an opinion on these consolidated financial statements based on our audits.We are a public accounting firm registered with the Public Company Accounting Oversight Board(United States) (PCAOB) and are required to be independent with respect to the Company in accordancewith the U.S. federal securities laws and the applicable rules and regulations of the Securities and ExchangeCommission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that weplan and perform the audit to obtain reasonable assurance about whether the consolidated financialstatements are free of material misstatement, whether due to error or fraud. The Company is not required tohave, nor were we engaged to perform, an audit of its internal control over financial reporting. As part ofour audits, we are required to obtain an understanding of internal control over financial reporting but notfor the purpose of expressing an opinion on the effectiveness of the Company’s internal control overfinancial reporting. Accordingly, we express no such opinion.Our audits included performing procedures to assess the risks of material misstatement of the consolidatedfinancial statements, whether due to error or fraud, and performing procedures that respond to those risks.Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in theconsolidated financial statements. Our audits also included evaluating the accounting principles used andsignificant estimates made by management, as well as evaluating the overall presentation of the consolidatedfinancial statements. We believe that our audits provide a reasonable basis for our opinion./s/ KPMG LLP  We have served as the Company’s auditor since 2015 Philadelphia, PennsylvaniaDecember 18, 201880TABLE OF CONTENTSOutlook Therapeutics, Inc.  Consolidated Balance SheetsSeptember 30,​​2018​​2017​​​AssetsCurrent assets:Cash$1,717,391$3,185,519Prepaid and other current assets1,585,089719,087Total current assets3,302,4803,904,606Property and equipment, net18,489,97616,088,902Other assets491,039740,362Total assets$22,283,495$20,733,870Liabilities, convertible preferred stock and stockholders’ equity (deficit)Current liabilities:Senior secured notes$13,179,449$—Current portion of long-term debt66,48052,600Current portion of capital lease obligations520,794341,120Stockholder notes4,612,5004,612,500Accounts payable3,609,60710,954,358Accrued expenses6,458,4717,337,469Income taxes payable1,856,1292,352,129Deferred revenue1,738,6033,087,561Total current liabilities32,042,03328,737,737Senior secured notes—13,231,700Long-term debt98,487151,110Capital lease obligations3,453,25628,067Warrant liability1,227,2252,274,954Deferred revenue2,758,2624,466,865Other liabilities3,514,7382,569,971Total liabilities43,094,00151,460,404Commitments (Note 9)Convertible preferred stock:Series A convertible preferred stock, par value $0.01 per share: 1,000,000 shares authorized, no shares issued and outstanding at September 30, 2018 and 32,628 shares issued and outstanding at September 30, 2017—2,924,441Series A-1 convertible preferred stock, par value $100.00 per share: 200,000shares authorized, 60,203 shares issued and outstanding at September 30, 2018and no shares issued and outstanding at September 30, 20174,734,416—Total convertible preferred stock4,734,4162,924,441Stockholders’ equity (deficit):Series A preferred stock, par value $0.01 per share: 10,000,000 shares authorized,no shares issued and outstanding——Common stock, par value $0.01 per share; 200,000,000 shares authorized;72,220,351 and 24,933,944 shares issued and outstanding at September 30,2018 and 2017, respectively722,204249,339Additional paid-in capital190,040,237152,315,088Accumulated deficit(216,307,363(186,215,402Total stockholders’ equity (deficit)(25,544,922(33,650,975Total liabilities, convertible preferred stock and stockholders’ equity (deficit) $22,283,495$20,733,870See accompanying notes to consolidated financial statements.81))))TABLE OF CONTENTSOutlook Therapeutics, Inc. Consolidated Statements of OperationsYear Ended September 30,20182017​Collaboration revenues$3,087,560$3,811,519Operating expenses:Research and development18,504,03523,809,749General and administrative14,227,82815,882,03332,731,86339,691,782Loss from operations(29,644,303(35,880,263Interest expense, net3,891,2505,625,833Loss on extinguishment of debt1,252,353—Change in fair value of warrant liability(1,047,729(3,158,469Loss before income taxes(33,740,177(38,347,627Income tax (benefit) expense(3,648,216501,500Net loss(30,091,961(38,849,127Recognition of beneficial conversion feature upon issuance of Series Aand A-1 convertible preferred stock(16,022,963(1,176,743Series A and A-1 convertible preferred stock dividends and relatedsettlement(1,903,930—Net loss attributable to common stockholders$(48,018,854$(40,025,870Per share information:Net loss per share of common stock, basic$(1.22$(1.67Net loss per share of common stock, diluted$(1.22$(1.80Weighted average shares outstanding, basic39,457,66424,022,371Weighted average shares outstanding, diluted39,457,66424,041,789See accompanying notes to consolidated financial statements.82))))))))))))))))))TABLE OF CONTENTSOutlook Therapeutics, Inc. Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)​​Convertible Preferred StockStockholders’ Equity (Deficit)​​Series A​​Series A-1Series B Convertible Preferred StockCommon StockAdditional Paid-in CapitalAccumulated DeficitTotal Stockholders’ Equity (Deficit)​​Shares​​Amount​​SharesAmountSharesAmountSharesAmountBalance at October 1, 2016—$——$——$—22,802,778$228,028$141,965,342$(147,366,275$(5,172,905Proceeds from exercise of common stock warrants——————787,0187,869305,616—313,485Issuance of vested restricted stock units——————483,9134,840(4,840——Issuance of common stock in connection with equity facility——————122,4181,224(1,224——Sale of common stock, net of issuance costs——————737,8177,3781,495,749—1,503,127Sale of Series A convertible preferred, net of costs32,6282,924,441—————————Series A convertible preferred stock dividends————————(16,985—(16,985Stock-based compensation expense————————8,571,430—8,571,430Net loss—————————(38,849,127(38,849,127Balance at September 30, 201732,6282,924,441————24,933,944249,339152,315,088(186,215,402(33,650,975Proceeds from exercise of common stock warrants——————3,46035(35——Issuance of vested restricted stock units——————842,8898,429(8,429——Private placement sale of common stock and common stock warrants, net of costs——————12,754,766127,54814,567,572—14,695,120Sale of Series A convertible preferred stock and commonstock warrants, net of costs217,37214,265,861——————6,382,181—6,382,181Series A convertible preferred stock dividends and relatedsettlement17,5711,757,093——————(1,740,108—(1,740,108Conversion of Series A convertible preferred stock intocommon stock(208,836(14,359,816————31,572,617315,72614,044,090—14,359,816Conversion of Series A convertible preferred stock intoSeries A-1 convertible preferred stock(58,735(4,587,57958,7354,587,579———————Series A-1 convertible preferred stock dividends and related settlement——1,468146,837————(146,837—(146,837Conversion of senior secured notes into Series B convertible preferred stock————1,500,0002,661,972————2,661,972Conversion of Series B convertible preferred stock intocommon stock————(1,500,000(2,661,9722,112,67521,1272,640,845——Stock-based compensation expense————————1,985,870—1,985,870Net loss—————————(30,091,961(30,091,961Balance at September 30, 2018—$—60,203$4,734,416—$—72,220,351$722,204$190,040,237$(216,307,363$(25,544,922See accompanying notes to consolidated financial statements.83))))))))))))))))))))))))))TABLE OF CONTENTSOutlook Therapeutics, Inc.  Consolidated Statements of Cash FlowsYear Ended September 30,​​2018​​2017​OPERATING ACTIVITIESNet loss$(30,091,961$(38,849,127Adjustments to reconcile net loss to net cash used in operating activities:Depreciation and amortization3,054,3522,692,100Loss on extinguishment of debt1,252,353—Non-cash interest expense1,315,8614,014,633Stock-based compensation1,985,8708,571,430Change in fair value of warrant liability(1,047,729(3,158,469Loss on disposal of fixed assets—61,867Loss on lease termination4,173,682—Changes in operating assets and liabilities:Prepaid expenses and other current assets(1,419,5512,607,520Other assets1,554112,439Accounts payable(6,714,1375,727,136Accrued expenses(1,664,843893,526Income taxes payable(496,000497,500Deferred revenue(3,057,5611,188,481Other liabilities(331,413135,910Net cash used in operating activities(33,039,523(15,505,054INVESTING ACTIVITIESPurchase of property and equipment(2,781,125(292,086Net cash used in investing activities(2,781,125(292,086FINANCING ACTIVITIESProceeds from the sale of common stock, net of offering costs14,695,1201,607,396Payment of debt issuance costs—(40,000Proceeds from issuance of Series A convertible preferred stock21,737,2003,262,800Proceeds from the sale of senior secured notes and detachable warrants—15,000,000Proceeds from exercise of common stock warrants—253,289Change in restricted cash—216,086Payments of capital leases obligations(862,906(991,028Repayment of debt(127,736(2,677,771Payment of financing costs(1,089,158—Net cash provided by financing activities34,352,52016,630,772Net (decrease) increase in cash(1,468,128833,632Cash at beginning of year3,185,5192,351,887Cash at end of year$1,717,391$3,185,519Supplemental disclosure of cash flow informationCash paid for interest$109,979$1,339,644Cash paid for income taxes$—$1,500Supplemental schedule of noncash investing activities:Purchases of property and equipment in accounts payable and accrued expenses$816,501$68,507Supplemental schedule of noncash financing activities:Issuance of Series B convertible preferred stock upon conversion of senior secured notes,net of unamortized debt discount$1,409,619$—Issuance of capital lease obligations and debt in connection with purchase of property and equipment$4,444,095$62,230Series A and A-1 convertible preferred stock dividends$1,886,945$16,985Settlement of Series A and A-1 convertible preferred stock dividends upon issuance ofSeries A and A-1 convertible preferred stock$1,903,930$—Deferred offering costs and common stock issuance costs in accounts payable and accruedexpenses$—$630,717See accompanying notes to consolidated financial statements.84)))))))))))))))))))))))1.Organization and Operations2.LiquidityTABLE OF CONTENTSOUTLOOK THERAPEUTICS, INC.Notes to Consolidated Financial StatementsDescription of the BusinessOncobiologics, Inc. was incorporated in New Jersey on January 5, 2010, started operations in July 2011,reincorporated in Delaware by merging with an into a Delaware corporation in October 2015, and inNovember 2018, changed its name to Outlook Therapeutics, Inc. (“Outlook” or the “Company”). TheCompany is a late clinical-stage biopharmaceutical company focused on developing and commercializingONS-5010, a complex monoclonal antibody (“mAb”) therapeutic for various ophthalmic indications. TheCompany is based in Cranbury, New Jersey.The Company has incurred substantial losses and negative cash flows from operations since its inceptionand has an accumulated deficit of  $216.3 million as of September 30, 2018. The Company has substantialindebtedness that includes $13.5 million of senior secured notes that may become due in fiscal 2019 and$4.6 million of unsecured indebtedness, $1.0 million of which is due on demand, and $3.6 million ofwhich matures December 22, 2018. There can be no assurance that the holders of the stockholder notes willnot exercise their right to demand repayment. These factors raise substantial doubt about the Company’sability to continue as a going concern. The accompanying consolidated financial statements have beenprepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilitiesin the normal course of business. The consolidated financial statements do not include any adjustmentsrelated to the recoverability and classification of recorded asset amounts or the amounts and classification ofliabilities that might result from the outcome of this uncertainty.On November 5, 2018, the Company entered into a purchase agreement with BioLexis Pte. Ltd.(“BioLexis”), formerly known as GMS Tenshi Holdings Pte. Limited, a Singapore private limited company,and the Company’s controlling stockholder and strategic partner, providing for the private placement of$20.0 million of shares of its common stock at $0.9327 per share. The closing of the sale of the first twotranches of this private placement for an aggregate of 12,865,872 shares of the Company’s common stockfor aggregate cash proceeds of  $12.0 million occurred in November and December 2018. The remaining$8.0 is expected to be funded in two equal tranches on January 3, 2019 and February 1, 2019, subject tocustomary conditions and achieving certain funding milestones as set forth in the purchase agreement. TheCompany intends to use the net proceeds from the private placement primarily for clinical trials for its leadproduct candidate, ONS-5010, and for working capital and general corporate purposes, including theagreed repayments on the senior secured notes.Also on November 5, 2018, the Company reached an agreement with the holders of its $13.5 million seniorsecured notes to extend the maturity of the senior secured notes, up to 12 months, or until December 22,2019, in exchange for making several payments of principal and interest through August 31, 2019, subjectto meeting additional capital raising commitments, with an initial payment of  $2.2 million paid onNovember 7, 2018. As of September 30, 2018, the senior secured notes remain classified as a currentliability because raising additional capital is outside the Company’s control. In addition, the Companyagreed to make the senior secured notes convertible into common stock at a price of  $1.11924 per share(120% of the price per share paid by BioLexis under the purchase agreement) and reduced the exerciseprice of the warrants held by such holders to $1.50 and extended the expiration of these warrants bythree years.On November 30, 2018, the Company received approval from the New Jersey Economic DevelopmentAuthority’s Technology Business Tax Certificate Transfer Program to sell approximately $3.7 million of itsunused New Jersey net operating losses (“NOLs”) and research and development tax credits (“R&Dcredits”). The Company expects to receive approximately $3.4 million of proceeds from the sale of theNew Jersey NOLs and R&D credits.Management believes that the Company’s existing cash as of September 30, 2018, additional $20.0 millionfunding from the November BioLexis private placement and anticipated proceeds from the sale of NewJersey NOLs and R&D credits will be sufficient to fund its operations into June 2019, excluding any853.Basis of Presentation and Summary of Significant Accounting PoliciesTABLE OF CONTENTSOUTLOOK THERAPEUTICS, INC.Notes to Consolidated Financial Statements unscheduled repayment of debt. Substantial additional financing will be needed by the Company to fund itsoperations in the future and to commercially develop its product candidates. Management is currentlyevaluating different strategies to obtain the required funding for future operations. These strategies mayinclude, but are not limited to: private placements of equity and/or debt, payments from potential strategicresearch and development partners, licensing and/or marketing arrangements with pharmaceuticalcompanies, sale of its development stage product candidates to third parties and public or private offeringsof equity and/or debt securities. There can be no assurance that these future funding efforts will besuccessful.The Company’s future operations are highly dependent on a combination of factors, including (i) thetimely and successful completion of additional financing discussed above; (ii) the Company’s ability tocomplete revenue-generating partnerships with pharmaceutical companies; (iii) the success of its researchand development; (iv) the development of competitive therapies by other biotechnology andpharmaceutical companies, and, ultimately; (v) regulatory approval and market acceptance of theCompany’s proposed future products.Basis of presentationThe accompanying consolidated financial statements have been prepared in conformity with U.S. generallyaccepted accounting principles (“GAAP”). Any reference in these notes to applicable guidance is meant torefer to GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting StandardsUpdates (“ASU”) of the Financial Accounting Standards Board (“FASB”). The accompanying consolidatedfinancial statements include the accounts of the Company and Outlook Therapeutics Pty Ltd, its wholly-owned subsidiary incorporated in Australia (the “Subsidiary”). All intercompany accounts and transactionshave been eliminated in consolidation. The Company has determined the functional currency of theSubsidiary to be the U.S. dollar. The Company translates assets and liabilities of its foreign operations atexchange rates in effect at the balance sheet date. The Company records remeasurement gains and losses onmonetary assets and liabilities, such as incentive and tax receivables and accounts payables, which are not inthe functional currency of the operation. These remeasurement gains and losses are recorded in theconsolidated statement of operations as they occur.Use of estimatesThe preparation of the consolidated financial statements in conformity with GAAP requires management tomake estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure ofcontingent assets and liabilities at the date of the financial statements and reported amounts of revenues andexpenses during the reporting period. Actual results could differ from those estimates. Due to theuncertainty of factors surrounding the estimates or judgments used in the preparation of the consolidatedfinancial statements, actual results may materially vary from these estimates. Estimates and assumptions areperiodically reviewed and the effects of revisions are reflected in the consolidated financial statements in theperiod they are determined to be necessary.Fair value of financial instrumentsAt September 30, 2018 and 2017, the Company’s financial instruments included accounts payable, accruedexpenses, equipment loans, stockholder notes and senior secured notes. The carrying amount of accountspayable and accrued expenses approximates fair value due to the short-term maturities of these instruments.Property and equipmentProperty and equipment are recorded at cost. Depreciation and amortization is determined using thestraight-line method over the estimated useful lives ranging from 3 to 10 years. Leasehold improvementsare amortized over the life of the lease or the estimated useful life of the assets, whichever is shorter.86TABLE OF CONTENTSOUTLOOK THERAPEUTICS, INC.Notes to Consolidated Financial Statements Expenditures for maintenance and repairs are expensed as incurred while renewals and betterments arecapitalized. When property and equipment is sold or otherwise disposed of, the cost and relatedaccumulated depreciation are eliminated from the accounts and any resulting gain or loss is reflected inoperations.Long-lived assetsLong-lived assets are reviewed for impairment whenever events or changes in circumstances indicate thatthe carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used ismeasured by a comparison of the carrying amount of an asset to future net cash flows expected to begenerated. Impairment charges are recognized at the amount by which the carrying amount of an assetexceeds the fair value of the asset. Assets to be disposed of are reported at the lower of the carrying amountor the fair value less costs to sell. The Company has not recognized any impairment of long-lived assets forthe years ended September 30, 2018 and 2017.Stock-based compensationThe Company measures equity classified stock-based awards granted to employees and directors based onthe estimated fair value on the date of grant and recognizes compensation expense of those awards, on astraight-line basis over the requisite service period, which is generally the vesting period of the respectiveaward.The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes optionpricing model, which is described more fully in Note 12. The fair value of each restricted stock award ismeasured as the fair value per share of the Company’s common stock on the date of grant.Stock-based awards granted to consultants and non-employees are measured based on the fair value of theaward on the date on which the related services are completed. Compensation expense is recognized overthe period during which services are rendered by such consultants and non-employees until completed. Atthe end of each financial reporting period prior to completion of the service, the fair value of these awardsis remeasured using the then-current fair value of the Company’s common stock and updated assumptioninputs in the Black-Scholes option-pricing model.Revenue recognitionThe Company’s revenue is generated primarily through collaboration research and license agreements. Theterms of these agreements generally contain multiple deliverables which may include (i) licenses,(ii) research and development activities, (iii) clinical manufacturing and (iv) product supply. The paymentterms of these agreements may include nonrefundable upfront fees, payments for research anddevelopment activities, payments based upon the achievement of certain milestones, royalty paymentsbased on product sales derived from the collaboration, and payments for supplying product.The Company considers whether the deliverables under the arrangement represent separate units ofaccounting. In determining the units of accounting, management evaluates certain criteria, includingwhether the deliverables have stand-alone value. The consideration received is allocated to theseparate units of accounting using the relative selling price method, and the applicable revenue recognitioncriteria are applied to each of the separate units.The Company typically receives upfront, nonrefundable payments when licensing its intellectual property.For intellectual property licenses that do not have stand-alone value from the other deliverables to beprovided, the upfront fee is deferred and revenue is recognized over the contractual or estimatedperformance period, which is typically the term of the research and development obligations. The periodsover which revenue is recognized are subject to estimates by management and may change over the courseof the research and development agreement. Such a change could have a material impact on the amount of87TABLE OF CONTENTSOUTLOOK THERAPEUTICS, INC.Notes to Consolidated Financial Statements revenue the Company records in future periods. Payments or reimbursements resulting from theCompany’s research and development efforts are recognized as the services are performed. Amountsreceived prior to satisfying the above revenue recognition criteria are recorded as deferred revenue.The Company recognizes revenue from milestone payments when: (i) the milestone event is substantive andits achievability was not reasonably assured at the inception of the agreement, and (ii) the Company doesnot have ongoing performance obligations related to the achievement of the milestone earned. Milestonepayments are considered substantive if all of the following conditions are met: the milestone payment (a) iscommensurate with either the Company’s performance to achieve the milestone or the enhancement of thevalue of the delivered item or items as a result of a specific outcome resulting from the Company’sperformance to achieve the milestone, (b) relates solely to past performance, and (c) is reasonable relativeto all of the deliverables and payment terms (including other potential milestone consideration) within thearrangement.Incentive and tax receivablesThe Subsidiary is eligible to participate in an Australian research and development tax incentive program.As part of this program, the Subsidiary is eligible to receive a cash refund from the Australian TaxationOffice for a percentage of the research and development costs expended by the Subsidiary in Australia. Thecash refund is available to eligible companies with annual aggregate revenues of less than $20.0 million(Australian) during the reimbursable period. The Company’s estimate of the amount of cash refund itexpects to receive related to the Australian research and development tax incentive program is included inprepaid and other current assets in the accompanying consolidated balance sheet. As of September 30,2018, the Company’s estimate of the amount of cash refund it expects to receive in 2019 for 2018 eligiblespending as part of this incentive program was $0.3 million.In addition, the Subsidiary incurs Goods and Services Tax (“GST”) on services provided by Australianvendors. As an Australian entity, the Subsidiary is entitled to a refund of the GST paid. The Company’sestimate of the amount of cash refund it expects to receive related to GST incurred is included in prepaidand other current assets in the accompanying consolidated balance sheet. As of September 30, 2018,prepaid and other current assets included $0.1 million for refundable GST on expenses incurred withAustralian vendors.Research and developmentResearch and development costs are expensed as incurred and consist primarily of funds paid to thirdparties for the provision of services for product candidate development, clinical and preclinicaldevelopment and related supply and manufacturing costs, and regulatory compliance costs. At the end ofthe reporting period, the Company compares payments made to third-party service providers to theestimated progress toward completion of the research or development objectives. Such estimates are subjectto change as additional information becomes available. Depending on the timing of payments to the serviceproviders and the progress that the Company estimates has been made as a result of the service provided,the Company may record net prepaid or accrued expense relating to these costs.Upfront milestone payments made to third parties who perform research and development services on theCompany’s behalf are expensed as services are rendered. Costs incurred in obtaining technology licensesare charged to research and development expense as acquired in-process research and development if thetechnology licensed has not reached technological feasibility and has no alternative future use. Researchand development expenses are recorded net of expected refunds of eligible research and development costspaid to Australian vendors pursuant to the Australian research and development tax incentive program andGST incurred on services provided by Australian vendors. During the year ended September 30, 2018, theCompany recorded $0.3 million in its consolidated results of operations related to the cash refund it expectsto receive from the Australian research and development tax incentive program.88TABLE OF CONTENTSOUTLOOK THERAPEUTICS, INC.Notes to Consolidated Financial Statements Income taxesThe Company accounts for income taxes using the asset and liability method. Under the asset and liabilitymethod, deferred tax assets and liabilities are recognized for the future tax consequences attributable todifferences between the financial statement carrying amounts of existing assets and liabilities and theirrespective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected toapply to taxable income in the years in which those temporary differences are expected to be recovered orsettled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income inthe period that includes the enactment date. A valuation allowance is recorded to the extent it is more likelythan not that some portion or all of the deferred tax assets will not be realized.Net loss per shareBasic net loss per common share is determined by dividing net loss applicable to common stockholders bythe weighted-average common shares outstanding during the period.For purposes of calculating diluted net loss per common share, the denominator includes both theweighted-average common shares outstanding and the number of common stock equivalents if theinclusion of such common stock equivalents would be dilutive. Dilutive common stock equivalentspotentially include warrants, stock options and non-vested restricted stock awards using the treasury stockmethod. The diluted net loss per common share calculation is further affected by an add-back of change infair value of warrant liability to the numerator under the assumption that the change in fair value of warrantliability would not have been incurred if the warrants had been converted into common stock.The following table sets forth the computation of basic earnings per share and diluted earnings per share:Year Ended September 30,20182017​Basic Earnings Per ShareNet loss attributable to common stockholders$(48,018,854$(40,025,870Common stock outstanding (weighted average)39,457,66424,022,371Basic net loss per share$(1.22$(1.67Diluted Earnings Per ShareNet loss attributable to common stockholders$(48,018,854$(40,025,870Add change in fair value of warrant liability—(3,158,469Diluted net loss(48,018,854(43,184,339Common stock outstanding (weighted average)39,457,66424,022,371Add shares from dilutive warrants—19,418Common stock equivalents39,457,66424,041,789Diluted net loss per share$(1.22$(1.80The following potentially dilutive securities have been excluded from the computation of diluted weighted-average shares outstanding as of September 30, 2018 and 2017, as they would be antidilutive:As of September 30,20182017​Series A-1 convertible preferred stock9,101,717—Performance-based stock units129,095175,530Restricted stock units61,109939,879Stock options1,557,145—Common stock warrants45,292,5327,484,50489)))))))))))TABLE OF CONTENTSOUTLOOK THERAPEUTICS, INC.Notes to Consolidated Financial Statements Recently issued accounting pronouncementsIn May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (ASU 2014-09)and has subsequently issued a number of amendments to ASU 2014-09. The new standard, as amended,provides a single comprehensive model to be used in the accounting for revenue arising from contractswith customers and supersedes current revenue recognition guidance, including industry-specific guidance.The standard’s stated core principle is that an entity should recognize revenue to depict the transfer ofpromised goods or services to customers in an amount that reflects the consideration to which the entityexpects to be entitled in exchange for those goods or services. To achieve this core principle, ASU 2014-09includes provisions within a five-step model that includes identifying the contract with a customer,identifying the performance obligations in the contract, determining the transaction price, allocating thetransaction price to the performance obligations, and recognizing revenue when, or as, an entity satisfies aperformance obligation. In addition, the standard requires disclosure of the nature, amount, timing, anduncertainty of revenue and cash flows arising from contracts with customers.The new standard will be effective for the Company beginning October 1, 2018 and permits two methodsof adoption: the full retrospective method, which requires the standard to be applied to each prior periodpresented, or the modified retrospective method, which requires the cumulative effect of adoption to berecognized as an adjustment to opening retained earnings in the period of adoption. The Company willadopt the standard using the modified retrospective method.The Company’s arrangements fall under ASC 808, Collaborations, (“ASC 808”). ASC 808 does notaddress recognition or measurement matters but prescribes that entities look to other GAAP by analogy,namely ASU 2014-09. As such, the Company has completed an analysis of existing contracts with theCompany’s collaboration partners and assessed the differences in accounting for such contracts under ASU2014-09 compared with current revenue accounting standards. Based on the review of current contracts,the Company expects an adjustment to increase accumulated deficit related to substantive milestones thatwere previously recognized under current revenue guidance in the period the milestone was achieved.ASU 2014-09 prescribes that those milestones are a form of variable consideration and should berecognized when the performance obligation is satisfied. Although the Company is still finalizing theimpact to the consolidated financial statements as of October 1, 2018, the Company expects the adjustmentto be an increase to accumulated deficit of approximately $3.6 million.In February 2016, the FASB issued ASU No. 2016-02, Leases (“ASC 842”). The FASB issued subsequentamendments to the initial guidance in July 2018 with ASU 2018-10 and in August 2018 with ASU 2018-11. ASC 842 supersedes the current accounting for leases. The new standard requires lessees to record aright of use asset and a related liability for the rights and obligations associated with a lease, regardless oflease classification, and eliminates the required use of bright-line tests in current U.S. GAAP fordetermining lease classification. This ASU is effective for annual periods beginning after December 15,2018 (i.e., calendar periods beginning on January 1, 2019), and interim periods thereafter. Earlierapplication is permitted for all entities, however the Company does not plan to early adopt. The newstandard must be adopted using either the modified retrospective approach, which requires application ofthe new guidance at the beginning of the earliest comparative period presented or the optional alternativeapproach, which requires application of the new guidance at the beginning of the standard’s effective date.The Company has arrangements currently classified as operating leases which will be recorded as a right ofuse asset and corresponding liability on the balance sheet and is currently evaluating the impact thesechanges will have on the consolidated financial statements.In May 2017, the FASB issued ASU No. 2017-09, Compensation — Stock Compensation (Topic 718):Scope of Modification Accounting. This new ASU is intended provide clarity and reduce both the diversityin practice of and cost and complexity of applying the guidance in Topic 718, Compensation — StockCompensation, to a change to the terms or conditions of a share-based payment award. This ASU providesguidance about which changes to the terms or conditions of a share-based payment award require an entity904.Fair Value Measurements•Level 1 — Quoted prices in active markets for identical assets or liabilities.•Level 2 — Observable inputs (other than Level 1 quoted prices), such as quoted prices in activemarkets for similar assets or liabilities, quoted prices in markets that are not active for identical orsimilar assets or liabilities, or other inputs that are observable or can be corroborated byobservable market data.•Level 3 — Unobservable inputs that are supported by little or no market activity and that aresignificant to determining the fair value of the assets or liabilities, including pricing models,discounted cash flow methodologies and similar techniques.TABLE OF CONTENTSOUTLOOK THERAPEUTICS, INC.Notes to Consolidated Financial Statements to apply modification accounting in Topic 718. This ASU is effective for all entities for annual periods, andinterim periods within those annual periods, beginning after December 15, 2017. Early adoption ispermitted. This ASU is not expected to have a material impact on the Company’s consolidated financialstatements.In June 2018, the FASB issued ASU No. 2018-07, Compensation — Stock Compensation (Topic 718):Improvements to Nonemployee Share-Based Payment Accounting (“Topic 718”), which simplifies theaccounting for nonemployee share-based payment transactions. The amendments specify that Topic 718applies to all share-based payment transactions in which a grantor acquires goods or services to be used orconsumed in a grantor’s own operations by issuing share-based payment awards. The standard will beeffective for fiscal years beginning after December 15, 2018, although early adoption is permitted (but nosooner than the adoption of Topic 606). This ASU is not expected to have a material impact on theCompany’s consolidated financial statements.In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): DisclosureFramework — Changes to the Disclosure Requirements for Fair Value Measurement, which removes andmodifies some existing disclosure requirements and adds others. The ASU is effective for all entities forfiscal years beginning after December 15, 2019, including interim periods therein. Early adoption ispermitted for any eliminated or modified disclosures upon issuance of this ASU. The Company is currentlyevaluating when to adopt this standard.Certain assets and liabilities are carried at fair value under GAAP. Fair value is defined as the exchangeprice that would be received for an asset or paid to transfer a liability (an exit price) in the principal or mostadvantageous market for the asset or liability in an orderly transaction between market participants on themeasurement date. Valuation techniques used to measure fair value must maximize the use of observableinputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value areto be classified and disclosed in one of the following three levels of the fair value hierarchy, of which thefirst two are considered observable and the last is considered unobservable:The asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowestlevel of any input that is significant to the fair value measurement. Valuation techniques used need tomaximize the use of observable inputs and minimize the use of unobservable inputs.91TABLE OF CONTENTSOUTLOOK THERAPEUTICS, INC.Notes to Consolidated Financial Statements The following table presents the Company’s assets and liabilities that are measured at fair value on arecurring basis:September 30, 2018(Level 1)(Level 2)(Level 3)LiabilitiesWarrant liability$ —$ —$1,227,225September 30, 2017(Level 1)(Level 2)(Level 3)LiabilitiesWarrant liability$ —$ —$2,274,954The table presented below is a summary of changes in the fair value of the Company’s Level 3 valuationfor the warrant liability for the years ended September 30, 2018 and 2017:Balance at October 1, 2016$—Issuance of warrants5,493,619Exercise of warrants(60,196Change in fair value(3,158,469Balance at September 30, 20172,274,954Change in fair value(1,047,729Balance at September 30, 2018$1,227,225The Senior Note Warrants issued in connection with the Notes (see Note 8) are classified as liabilities on theaccompanying consolidated balance sheet as the Senior Note Warrants include cash settlement features atthe option of the holders under certain circumstances. The warrant liability is revalued each reportingperiod with the change in fair value recorded in the accompanying consolidated statements of operationsuntil the warrants are exercised or expire. The fair value of the warrant liability is estimated using the Black-Scholes option pricing model using the following assumptions:September 30,20182017​Risk-free interest rate2.90%1.77%​Remaining contractual life of warrant3.39 years4.67 years​Expected volatility82%82%​Annual dividend yield0%0%​Fair value of common stock$0.98 per share$1.37 per share​92)))5.Property and EquipmentTABLE OF CONTENTSOUTLOOK THERAPEUTICS, INC.Notes to Consolidated Financial Statements Property and equipment, net, consists of:September 30,20182017​Laboratory equipment$14,333,624$11,574,473Leasehold improvements10,095,10010,032,640Computer software and hardware483,807472,054Land and building3,000,000—Construction in progress2,276,7372,654,67530,189,26824,733,842Less: accumulated depreciation and amortization(11,699,292(8,644,940$18,489,976$16,088,902Depreciation and amortization expense for the years ended September 30, 2018 and 2017 was $3,054,352and $2,692,100, respectively.At September 30, 2018, $7,953,856 represents laboratory equipment under capital leases and theCompany’s corporate office that is classified as a capital lease. At September 30, 2017, $3,692,913represents laboratory equipment under capital leases. At September 30, 2018 and 2017, $1,619,741 and$1,061,901, respectively, of accumulated amortization related to capital leases. The term of the equipmentleases are between 12 and 36 months and qualify as capital leases. The equipment leases bear interestbetween 4.0% and 19.4% and the effective interest rate on the corporate office lease is 43.9%.In February 2018, the Company entered into a sixth amendment to its lease for its corporate offices.Pursuant to the amended terms, the Company is now occupying 100% of the corporate facility and hasextended the term through February 2028 with two five year renewal options. As a result of thisamendment, the lease is now classified as a capital lease. The Company initially recorded the leaseobligation and corresponding building asset based on its estimated fair value of  $3,000,000. The buildingis being depreciated over the lease term. Future lease payments will be allocated to interest expense and apay-down of the lease obligation.The following is a schedule of future minimum lease payments under capital leases as of September 30,2018 for the years ending September 30:2019$1,947,19920201,594,91720211,493,44220221,522,66020231,550,878Thereafter7,280,40015,389,496Less: amounts representing interest(11,415,446Less: current portion(520,794Capital lease obligations, excluding current portion$3,453,25693))))6.Accrued Expenses7.Stockholder Notes8.DebtTABLE OF CONTENTSOUTLOOK THERAPEUTICS, INC.Notes to Consolidated Financial Statements Accrued expenses consists of:September 30,20182017​Compensation$2,231,122$3,688,592Severance and related costs396,138—Lease termination obligation395,071—Research and development1,065,1691,637,657Interest payable1,991,0441,047,122Professional fees313,585521,973Director fees59,122376,695Other accrued expenses7,22065,430$6,458,471$7,337,469September 30,20182017​Restricted stock repurchase notes$800,000$800,000Common stock repurchase note2,812,5002,812,500Working capital notes1,000,0001,000,0004,612,5004,612,500Less: current portion(4,612,500(4,612,500$—$—The Company previously repurchased shares of its restricted stock in exchange for notes which bear interestat rates ranging from 0% to 4% per annum.The Company has a $2,812,500 note payable related to the previous repurchase of common stock that doesnot bear interest.The Company also borrowed from stockholders for working capital purposes. The notes bear interest from0% to 30% per annum. One of the notes is collateralized by 0.3 million common shares of the Company’sfounding stockholder and former chief executive officer. Of the $4.6 million outstanding under thesenotes, $1.0 million is due on demand, and $3.6 million matures December 22, 2018.During the years ended September 30, 2018 and 2017, the Company recognized interest expense related tothe stockholder notes of  $300,000 and $320,000, respectively.Senior secured notesSeptember 30,20182017​Senior secured notes$13,500,000$15,000,000Unamortized debt discount(320,551(1,768,300$13,179,449$13,231,70094))))TABLE OF CONTENTSOUTLOOK THERAPEUTICS, INC.Notes to Consolidated Financial Statements In October, November and December 2016, the Company issued $1.85 million aggregate principal amountof unsecured bridge notes to accredited investors. These unsecured notes bore interest at a rate of 15% peryear and had a one-year maturity date from the date of issuance. The unsecured notes were exchanged forsenior secured promissory notes in December 2016 as described below.In December 2016, the Company entered into a Note and Warrant Purchase Agreement (the “NWPA”) withaccredited investors providing for the issuance and sale of up to $10.0 million of senior secured promissorynotes (the “Notes”), which bear interest at a rate of 5% per year and mature December 22, 2017 andwarrants (the “Senior Note Warrants”) to acquire an aggregate 2.3 million shares of the Company’scommon stock at an exercise price of  $3.00 per share, which have a five-year term. The Company closedthe initial sale and purchase of the Notes and Senior Note Warrants in December 2016, issuing$8.35 million aggregate principal amount of Notes and Senior Note Warrants to acquire up to 1,920,500shares of the Company’s common stock in exchange for $6.5 million of cash and an aggregate of $1.85 million of existing unsecured bridge notes issued by the Company in October, November andDecember 2016. The proceeds were first allocated to the warrant liability based on an initial fair value of $3.3 million with a corresponding amount recorded as a debt discount. In addition, the Company incurred$40,000 of debt issuance costs that have been recorded as a debt discount. The debt discount is beingamortized into interest expense over the term of the Notes using the effective interest method.In January 2017, the Company issued additional Notes and Senior Note Warrants for $1.65 million of cash.In April 2017, the Company entered into the First Amendment to the NWPA (the “Amendment”) with therequired holders of its Notes named therein, to amend certain terms of the NWPA. The primary purpose ofthe Amendment was to increase the aggregate principal amount of Notes that may be sold under the NWPAfrom $10.0 million to $15.0 million, and permit the issuance of additional Senior Note Warrants to acquirean aggregate 1,665,000 shares of the Company’s common stock and extend the time that the Companymay issue additional Notes and Senior Note Warrants without approval of the holders of existing notes from90 days to 180 days. Notes sold under the Amendment bear interest at a rate of 5% per annum and weredue to mature in December 2017. In September 2017, in connection with the Private Placement, thematurity date of the Notes was extended by one year to December 2018.During April and May 2017, the Company issued an additional $5.0 million of Notes and Senior NoteWarrants to acquire an aggregate of 1,304,500 shares of its common stock. The proceeds were firstallocated to the warrant liability based on an initial fair value of  $1.4 million with a corresponding amountrecorded as a debt discount. In addition, the Company incurred $3,635 of debt issuance costs that havebeen recorded as a debt discount. The debt discount is being amortized into interest expense over the termof the Notes using effective interest rate method.Under the NWPA and the Amendment, the Company agreed to customary negative covenants restricting itsability to repay indebtedness to officers, pay dividends to stockholders, repay or incur other indebtednessother than as permitted, grant or suffer to exist a security interest in any of the Company’s assets, other thanas permitted, or enter into any transactions with affiliates. In addition to the negative covenants in theNWPA, the Notes include customary events of default. In connection with the closing of the initial sale ofthe Notes and Senior Note Warrants, the Company entered into a Security Agreement and an IntellectualProperty Security Agreement, each dated December 22, 2016, granting the holders of the Notes a securityinterest in all of its assets, as well as a Registration Rights Agreement dated February 3, 2017.In September 2017, the Company entered into a purchase and exchange agreement (the “ExchangeAgreement”) with two existing investors and holders of its senior secured notes (the “Noteholders”),pursuant to which the Noteholders exchanged $1.5 million aggregate principal amount of senior securednotes for 1,500,000 shares of Series B convertible preferred stock (“Series B Convertible”) and $41,507 ofaccrued interest on such exchanged senior secured notes in October 2017. The Company recognized a losson extinguishment of  $1,252,353 in connection with the exchange and represents the excess fair value ofthe Series B Convertible issued over the net carrying amount of the debt and accrued interest. The1,500,000 shares of Series B Convertible were converted into an aggregate of 2,112,675 shares of commonstock in June 2018 and there are no longer any shares of Series B Convertible issued and outstanding.959.CommitmentsTABLE OF CONTENTSOUTLOOK THERAPEUTICS, INC.Notes to Consolidated Financial Statements In connection with the November 2018 purchase agreement with BioLexis providing for the privateplacement of  $20.0 million of shares of the Company’s common stock, the Company reached anagreement with the holders of the Notes to further extend the maturity of the Notes up to 12 months, oruntil December 22, 2019, in exchange for making several payments of principal and interest throughAugust 31, 2019, subject to meeting additional capital raising commitments, of which $2.2 million was paidin November 2018 and $1.17 million was paid in December 2018. At September 30, 2018, the Notesremained classified as a current liability because raising additional capital is outside the Company’s control.In addition, the Company agreed to make the Notes convertible into common stock at a price of  $1.11924per share and reduced the exercise price of the Senior Note Warrants to $1.50 and extended the expirationof the Senior Note Warrants by three years.Interest expense on the Notes for the years ended September 30, 2018 and 2017 was $1,997,231 and$4,441,886, respectively.Other indebtednessIn addition to the Notes, the Company has other outstanding debt consisting of equipment loans andunsecured notes. Refer to Note 7 for additional information on unsecured notes.September 30,20182017​Equipment loans$164,967$203,710Less: current portion(66,480(52,600Long-term debt$98,487$151,110The equipment loans bear interest at rates ranging from 12% to 16% with the original term of the loansranging from 1 to 5 years. Minimum monthly payments of principal and interest under the equipment loansare collateralized by the related equipment purchased and an unconditional personal guarantee by thefounding stockholder and former chief executive officer.Interest expense on the above loans for the years ended September 30, 2018 and 2017 was $27,660 and$35,608, respectively.Future maturities of other indebtedness at September 30, 2018 are as follows for the years endingSeptember 30:2019$66,480202048,204202150,283$164,967Selexis Commercial License AgreementsIn April 2013, the Company entered into commercial license agreements with Selexis for each of the ONS-3010, ONS-1045 and ONS-1050 biosimilar product candidates (which agreements were subsequentlyamended on May 21, 2014). Under the terms of each commercial license agreement, the Companyacquired a non-exclusive worldwide license under the Selexis Technology to use the applicable Selexisexpression technology along with the resulting Selexis materials/cell lines, each developed under theresearch license, to manufacture and commercialize licensed and final products, with a limited right tosublicense.The Company paid an upfront licensing fee to Selexis for each commercial license and also agreed to pay afixed milestone payment for each licensed product. In addition, the Company is required to pay a lowsingle-digit royalty on a final product-by-final product and country-by-country basis, based on worldwide96))TABLE OF CONTENTSOUTLOOK THERAPEUTICS, INC.Notes to Consolidated Financial Statements net sales of such final products by the Company or any of the Company’s affiliates or sublicensees duringthe royalty term. The royalty term for each final product in each country is the period commencing fromthe first commercial sale of the applicable final product in the applicable country and ending on theexpiration of the specified patent coverage. At any time during the term, the Company has the right toterminate its royalty payment obligation by providing written notice to Selexis and paying Selexis a royaltytermination fee.Each of the Company’s commercial agreements with Selexis will expire upon the expiration of allapplicable Selexis patent rights. Either party may terminate the related agreement in the event of an uncuredmaterial breach by the other party or in the event the other party becomes subject to specified bankruptcy,winding up or similar circumstances. Either party may also terminate the related agreement underdesignated circumstances if the Selexis Technology infringes third-party intellectual property rights. Inaddition, the Company has the right to terminate each of the commercial agreements at any time at itsconvenience; however, with respect to the agreements relating to ONS-3010 and ONS-1045, this right issubject to the licensee’s consent pursuant to a corresponding letter the Company executed in conjunctionwith the standby agreement entered into between Selexis and Laboratories Liomont, S.A. de C.V.(“Liomont”) in November 2014.The standby agreement permits Liomont to assume the license under the applicable commercial agreementfor Mexico upon specified triggering events involving the Company’s bankruptcy, insolvency or similarcircumstances.MTTR — Strategic partnership agreement (ONS-5010)In February 2018, the Company entered into a strategic partnership agreement with MTTR, LLC, orMTTR, to advise on regulatory, clinical and commercial strategy and assist in obtaining approval of ONS-5010, the Company’s bevacizumab therapeutic product candidate for ophthalmic indications. Under theterms of the agreement, the Company currently pays MTTR a $58,333 monthly consulting fee. BeginningJanuary 2019, the monthly fee increases to $105,208 per month, and then, after launch of ONS-5010 in theUnited States, to $170,833 per month (the amount of which is reduced by 50% in the event net sales ofONS-5010 are below a certain threshold million per year). The Company also agreed to pay MTTR a tieredpercentage of the net profits of ONS-5010 ranging in the low- to mid-teens, with the ability to creditmonthly fees paid to MTTR. In March 2018, the Company amended the MTTR agreement and agreed topay a one-time fee of  $268,553 to MTTR by September 2020 if certain regulatory milestones are achievedearlier than anticipated. For the year ended September 30, 2018, MTTR earned an aggregate of  $602,629,which includes monthly consulting fees, expense reimbursement and an initial upfront payment of $75,000.Technology licenseThe Company entered into a technology license agreement with Selexis that will require milestonepayments of  $353,600 (based on an exchange rate on September 30, 2018 for converting Swiss Francs toU.S. dollars) to the licensor by the Company upon achievement of certain clinical milestones and pay asingle digit royalty on net sales by the Company utilizing such technology. The Company also has thecontractual right to buy out the royalty payments at a future date.LeasesIn August 2015, the Company entered into a lease for approximately 82,000 square feet of office andlaboratory space in Cranbury, New Jersey, with lease payments that commenced in March 2016 and wasdue to expire in March 2026. Due to the Company’s involvement in the construction required to completethe leased facility, the lease was accounted for as a financing arrangement to which the Company recordedthe fair value of the asset in property and equipment and a corresponding liability was recorded andamortized over the lease term down to the expected asset value at the end of the lease. During the yearsended September 30, 2018 and 2017, the Company recorded interest expense of  $390,793 and $421,028,respectively.9710.Stockholders’ Equity (Deficit)TABLE OF CONTENTSOUTLOOK THERAPEUTICS, INC.Notes to Consolidated Financial Statements In August 2018, the Company entered into a lease termination agreement effective September 1, 2018, toterminate the lease for office and laboratory space in Cranbury, New Jersey. In consideration for thetermination of the lease, the Company agreed to make payments to the landlord totaling up to $5.8 million,which includes (i) $287,615 upon execution of the termination agreement, (ii) $50,000 per month for upto 30 months, commencing September 1, 2018, and (iii) a $4.0 million payment, in any event, on or beforeFebruary 1, 2021. The Company and landlord agreed that the $174,250 security deposit will be used to paythe 7, 8, 9 and a portion of the 10 monthly payments. The Company may pay the final $4.0 millionpayment at any time, whereupon the Company’s obligation to make the remaining monthly paymentsterminates.In connection with the lease termination, the Company recorded a $4.2 million liability at September 1,2018, the cease-use date, that represents the present value of the future termination payments. TheCompany derecognized the assets and liabilities associated with the financing lease and recorded a chargeof  $4.2 million to general and administrative expense. At September 30, 2018, the current portion of thelease termination obligation of  $395,071 is included in accrued expenses and $3,455,010 is included inother liabilities on the consolidated balance sheets. A rollforward of the charges incurred to general andadministrative expense for the year ended September 30, 2018 is as follows:Balance October 1, 2017​​Expensed/​Accrued Expense​​Cash Payments​​Non-Cash Items​​Balance September 30, 2018​Lease termination payments$—$4,187,696$(337,615$—$3,850,081Derecognition of assets andliabilities—(14,014—14.014—$ —$4,173,682$(337,615$14,014$3,850,081Rent expense under operating leases was $854,487 and $1,352,708 for the years ended September 30,2018 and 2017, respectively. The Company recognizes rent expense on a straight-line basis over the leaseperiod and has accrued for rent expense incurred but not yet paid. Landlord allowances for tenantimprovements are deferred and recognized as a reduction to rent expense on a straight line basis and overthe remaining lease term.Future minimum payments under noncancelable operating leases at September 30, 2018 are as follows forthe years ending September 30:Operating Leases2019$180,0002020187,5002021195,000$562,500Employee Benefit PlanThe Company maintains a defined contribution 401(k) plan in which employees may contribute up to100% of their salary and bonus, subject to statutory maximum contribution amounts. The Companymatches 100% of the first 3% of employee contributions. The Company assumes all administrative costs ofthe Plan. For the years ended September 30, 2018 and 2017, the expense relating to the matchingcontribution was $175,693 and $209,782, respectively.Lincoln Park Capital, LLC transactionIn March 2017, the Company entered into a Purchase Agreement and a registration rights agreement withan accredited investor, Lincoln Park Capital, LLC (“Lincoln Park”), providing for the purchase of up to$15.4 million of the Company’s common stock over the 30-month term of the purchase agreement.98thththth)))TABLE OF CONTENTSOUTLOOK THERAPEUTICS, INC.Notes to Consolidated Financial Statements In connection with the purchase agreement, the Company issued 113,205 shares of its common stock asinitial commitment shares, to Lincoln Park and the Company will issue, pro rata, up to an additional113,206 shares of its common stock as additional commitment shares to Lincoln Park in connection withany additional purchases.Under the terms and subject to the conditions of the purchase agreement, the Company has the right, butnot the obligation, to sell to Lincoln Park, and Lincoln Park is obligated to purchase, up to an additional$15.0 million of shares of the Company’s common stock. As contemplated by the purchase agreement, andso long as the closing price of the Company’s common stock exceeds $1.50 per share, the Company maydirect Lincoln Park, at the Company’s sole discretion to purchase up to 30,000 shares of its common stockon any business day. The price per share for such purchases will be equal to the lower of: (i) the lowest saleprice on the applicable purchase date and (ii) the arithmetic average of the three (3) lowest closing saleprices for the Company’s common stock during the ten (10) consecutive business days ending on thebusiness day immediately preceding such purchase date (in each case, to be appropriately adjusted for anyreorganization, recapitalization, non-cash dividend, stock split or other similar transaction that occurs on orafter the date of the purchase agreement). The maximum amount of shares subject to any single regularpurchase increases as the Company’s share price increases, subject to a maximum of  $1.0 million.In addition to regular purchases, the Company may also direct Lincoln Park to purchase other amounts asaccelerated purchases or as additional purchases if the closing sale price of the common stock exceedscertain threshold prices as set forth in the purchase agreement. In all instances, the Company may not sellshares of its common stock to Lincoln Park under the purchase agreement if it would result in Lincoln Parkbeneficially owning more than 4.99% of its common stock. There are neither trading volume requirementsnor restrictions under the purchase agreement nor upper limits on the price per share that Lincoln Park mustpay for shares of common stock.The purchase agreement and the registration rights agreement contain customary representations,warranties, agreements and conditions to completing future sale transactions, indemnification rights andobligations of the parties. The Company has the right to terminate the purchase agreement at any time, at nocost or penalty. During any “event of default” under the purchase agreement, all of which are outside ofLincoln Park’s control, Lincoln Park does not have the right to terminate the purchase agreement; however,the Company may not initiate any regular or other purchase of shares by Lincoln Park, until such event ofdefault is cured. In addition, in the event of bankruptcy proceedings by or against the Company thepurchase agreement will automatically terminate.During the year ended September 30, 2017, the Company sold 737,817 shares of common stock to LincolnPark for $1,620,931, and incurred $147,540 of issuance costs. In addition, the Company issued 122,418shares of common stock to Lincoln Park as commitment shares pursuant to the purchase agreement. Therewere no shares sold to Lincoln Park during the year ended September 30, 2018.Common stockIn May 2018, the Company entered into a purchase agreement with BioLexis, pursuant to which BioLexispurchased, in a private placement, 12,754,766 shares of common stock and common stock warrants topurchase 20,512,820 shares of common stock for cash proceeds of  $15.0 million. The transaction closed intwo tranches in May and June 2018. The warrants have an exercise price of  $0.975 per share and a term ofeight years from their issuance date.During the years ended September 30, 2018 and 2017, the Company issued 842,889 and 483,913 shares ofcommon stock upon the vesting of RSUs, respectively.Each share of common stock entitles the holder to one vote on all matters submitted to a vote of theCompany’s stockholders. Subject to preferences that may apply to any outstanding preferred stock, holdersof common stock are entitled to receive ratably any dividends that the Company’s board of directors maydeclare out of funds legally available for that purpose on a non-cumulative basis. No dividends had beendeclared through September 30, 2018.99(i)In connection with the November 2018 purchase agreement with BioLexis providing for the privateplacement of  $20.0 million of shares of the Company’s common stock, the Company undertook totake such action as necessary to reduce the exercise price of the Series A warrants to $1.50 and extendthe expiration date of such Series A warrants by three years.(ii)In November 2018, the Company reduced the exercise price of the Senior Note Warrants to $1.50 andextended the expiration of the Senior Note warrants by three years. Such Senior Note Warrants nowexpire eight years from their initial issuance date.11.Convertible Preferred StockTABLE OF CONTENTSOUTLOOK THERAPEUTICS, INC.Notes to Consolidated Financial Statements Common stock warrantsAs of September 30, 2018, the Company had the following warrants outstanding to acquire shares of itscommon stock:​Outstanding​​Exercise Price Per Share​Expiration Date​3,333,333​$6.60February 18, 2019​814,378​$0.01November 11, 2019  ​3,882,001​$3.00December 22, 2021​16,750,000​$0.90October 31, 2025  ​10,256,410​$0.975May 10, 2026  ​10,256,410​$0.975June 8, 2026  ​45,292,532​During the year ended September 30, 2018, warrants to purchase 3,460 shares with an exercise price of$0.01 were exercised. During the year ended September 30, 2017, warrants to purchase 704,019 and82,999 shares with exercise prices of  $0.01 and $3.00 per share respectively, were exercised.Series A Convertible Preferred StockIn September 2017, the Company entered into a purchase agreement with BioLexis, pursuant to whichBioLexis agreed to purchase, in a private placement (the “Initial Private Placement”), $25.0 million of theCompany’s newly-created voting Series A Convertible Preferred Stock (the “Series A Convertible”), andwarrants (the “BioLexis Warrants” and together with the Series A Convertible, the “Securities”) to acquire16,750,000 shares of common stock. In September 2017, the Company completed the initial sale of 32,628shares of Series A Convertible to BioLexis for $3,262,800 in cash. In October 2017, the Companycompleted the sale of the remaining 217,372 shares of Series A Convertible and the BioLexis Warrants toBioLexis in the Initial Private Placement, for $21,737,200 in cash.The Series A Convertible was initially convertible into 37,795,948 shares of the Company’s common stock,representing an effective conversion rate of $0.66 per share, which represented a discount to the marketvalue of the Company’s common stock as of September 7, 2017 and October 31, 2017 (on which dates, theclosing price of the Company’s common stock was $0.90 and $1.26 per share, respectively). In connectionwith the second closing of the Series A Convertible in October 2017, the Company issued the BioLexisWarrants, which have a term of 8-years and an initial exercise price of  $0.90 per share. The proceeds fromthe second closing of the Series A Convertible were allocated among the Series A Convertible and theBioLexis Warrants based on their relative fair values. As a result of the discount to the market value and theallocation of a portion of the proceeds to the BioLexis Warrants, the Company recognized a beneficialconversion charge of  $15,355,019, which represents the in-the-money value of the conversion rate as ofthe date of sale.100(i)(ii)TABLE OF CONTENTSOUTLOOK THERAPEUTICS, INC.Notes to Consolidated Financial Statements The Series A Convertible accrued dividends at a rate of 10% per annum, compounded quarterly, payablequarterly at the Company’s option in cash or in kind in additional shares of Series A Convertible, althoughthe initial dividends payable on the shares of Series A Convertible issued in September 2017, whileaccruing from issuance, was payable in December 2017. The Series A Convertible was also entitled todividends on an as-if-converted basis in the same form as any dividends actually paid on shares of commonstock or other securities. The initial conversion rate was subject to appropriate adjustment in the event of astock split, stock dividend, combination, reclassification or other recapitalization affecting the commonstock.During the year ended September 30, 2018, the Company issued an additional 17,571 shares of Series AConvertible to settle the related dividends that were due on a quarterly basis. The Company recognized abeneficial conversion charge of  $597,255 during the year ended September 30, 2018, which represents thein-the-money value of the conversion rate as of the date of issuance.In June 2018, BioLexis converted 208,836 shares of Series A Convertible into 31,572,617 shares ofcommon stock, and in July 2018 exchanged its remaining shares of Series A Convertible for newly createdSeries A-1 (as defined below). As of such exchange, there were no longer any shares of Series AConvertible issued and outstanding.Series A-1 Convertible Preferred StockIn July 2018, the Company entered into an exchange agreement (the “Exchange Agreement”) withBiolexis, pursuant to which the Company exchanged 58,735 shares of voting Series A Convertible held byBioLexis for 58,735 shares of its newly created series of voting convertible preferred stock, votingSeries A-1 Convertible Preferred Stock, (the “Series A-1”). Accordingly, all of the issued Series AConvertible have been retired and cancelled and may not be reissued as shares of such series in accordancewith their terms. In connection with the entry into the Exchange Agreement, the Company and BioLexisamended the Investor Rights Agreement dated September 11, 2017, as amended, (the “Second Amendmentto Investor Rights Agreement”) in order to provide the Investor certain registration and other rights withrespect to the shares of Common Stock to be acquired upon conversion of the Series A-1 issued pursuant tothe Exchange Agreement.A total of 200,000 shares of Series A-1 have been authorized for issuance under the Certificate ofDesignation of Series A-1 Convertible Preferred Stock of the Company. The shares of Series A-1 have astated value of  $100.00 per share, are initially convertible into 8,879,780 shares of the Common Stock andrank senior to all junior securities (as defined in the Certificate of Designation).The Series A-1 accrue dividends at a rate of 10% per annum, compounded quarterly, payable quarterly atthe Company’s option in cash or in kind in additional shares of Series A-1. The Series A-1 is also entitled todividends on an as-if-converted basis in the same form as any dividends actually paid on shares ofCommon Stock or other securities. The initial conversion rate is subject to appropriate adjustment in theevent of a stock split, stock dividend, combination, reclassification or other recapitalization affecting theCommon Stock. The holders of the Series A-1 have the right to vote on matters submitted to a vote of theCompany’s stockholders on an as-converted basis, voting with the Company’s other stockholders as asingle class. In addition, without the prior written consent of a majority of the outstanding shares ofSeries A-1, the Company may not take certain actions, including amending its certificate of incorporationor bylaws, or issuing securities ranking pari passu or senior to the Series A-1. During the year endedSeptember 30, 2018, the Company issued 1,468 shares of Series A-1 Convertible to settle the relateddividends that are due on a quarterly basis. The Company recognized a beneficial conversion charge of $70,662 during the year ended September 30, 2018, which represents the in-the-money value of theconversion rate as of the date of issuance.The terms of the Series A-1 distinguish between certain liquidation events (such as a voluntary orinvoluntary liquidation, dissolution or winding up of the Company) and “deemed” liquidation events (suchas a sale of all or substantially all of the Company’s assets, various merger and reorganization transactions,being delisted from Nasdaq, and the occurrence of an event of default under the terms of the senior10112.Stock-Based CompensationTABLE OF CONTENTSOUTLOOK THERAPEUTICS, INC.Notes to Consolidated Financial Statements secured notes), in each case as defined in the Certificate of Designation. In the event of a liquidation (asdefined in the Certificate of Designation), the liquidation preference payable equals the sum of  (A) 550%of the Series A-1 stated value per share plus (B) an amount equal to (x) 550% of any accrued, but unpaid,preferred dividends (as defined in the Certificate of Designation) plus (y) any unpaid participatingdividends (as defined in the Certificate of Designation). In the case of a deemed liquidation event (asdefined in the Certificate of Designation), the multiplier is increased to 600%.The Series A-1 is convertible at any time at the option of the holder based on the then applicableconversion rate. If conversion is in connection with a liquidation, the holder is entitled to receive 550% ofthe number of shares of common stock issuable based upon the then applicable conversion rate. In theevent of a deemed liquidation event, the multiplier is increased to 600%.Additionally, the holder may irrevocably require the Company to redeem the Series A-1 in the event of adeemed liquidation event for the sum of  (A) 600% of the Series A-1 stated value per share plus (B) anamount equal to (x) 600% of any accrued, but unpaid, preferred dividends plus (y) any unpaidparticipating dividends, although such redemption may not be made without the consent of the seniorsecured noteholders if such notes are outstanding at the time of any such redemption.The shares of Series A-1 have not been registered under the Securities Act of 1933, as amended (the“Securities Act”), and may not be offered or sold in the United States without registration or an applicableexemption from the registration requirements of the Securities Act. The exchange of the Series A-1 for theshares of Series A held by the Investor was made in reliance on Sections 3(a)(9) and 4(a)(2) under theSecurities Act, without general solicitation or advertising.Series B Convertible Preferred StockConcurrent with completing the sale of Series A Convertible in October 2017, the Noteholders exchanged$1,500,000 in aggregate principal borrowings and $41,507 in accrued interest for 1,500,000 shares ofSeries B Convertible. The Series B Convertible were convertible into 2,112,675 shares of common stock.The exchange was accounted for as an extinguishment of debt, See Note 8. During May and June 2018, theNoteholders converted all 1,500,000 shares of Series B Convertible into 2,112,675 shares of commonstock. Accordingly, there are no longer any shares of Series B Convertible issued and outstanding.2011 Equity Incentive PlanThe Company’s 2011 Equity Compensation Plan (the “2011 Plan”) provided for the Company to sell orissue restricted common stock, restricted stock units (“RSUs”), performance-based awards, cash-basedawards or to grant stock options for the purchase of common stock to officers, employees, consultants anddirectors of the Company. The 2011 Plan was administered by the board of directors or, at the discretion ofthe board of directors, by a committee of the board. The number of shares of common stock reserved forissuance under the 2011 Plan is 1,159,420. As of September 30, 2018, performance-based stock unitawards (“PSUs”) representing 129,095 shares of the Company’s common stock were outstanding under the2011 Plan. In light of the December 2015 adoption of the 2015 Equity Incentive Plan, no future awardsunder the 2011 Plan will be granted.2015 Equity Incentive PlanIn December 2015, the Company adopted the 2015 Equity Incentive Plan (the “2015 Plan”). The 2015Plan provides for the grant of stock options, stock appreciation rights, restricted stock awards, restrictedstock unit awards, performance stock awards and other forms of equity compensation to Companyemployees, directors and consultants. As of September 30, 2018, the maximum number of shares ofcommon stock that may be issued under the 2015 Plan is 8,404,023 shares and 5,558,678 shares remainedavailable for grant under the 2015 Plan.102TABLE OF CONTENTSOUTLOOK THERAPEUTICS, INC.Notes to Consolidated Financial Statements The Company recognizes the grant date fair value of each stock-based award over the vesting period of theaward. The Company recorded stock-based compensation expense in the following expense categories ofits consolidated statements of operations for the years ended September 30, 2018 and 2017:Year Ended Ended September 30,20182017​Research and development$19,450$1,001,022General and administrative1,966,4207,570,408$1,985,870$8,571,430Stock optionsThe following table summarizes all of the Company’s stock option activity for the year endedSeptember 30, 2018:​​Number of Shares​Weighted Average Exercise PriceWeighted Average Remaining Contractual Term (Years)​Balance at October 1, 2017—$—Granted1,667,0750.93Expired/forfeited/cancelled(209,9301.10Balance at September 30, 20181,457,1450.939.7Vested and exercisable30,0001.320.1Vested and expected to vest at September 30, 20181,457,145$0.909.7As of September 30, 2018, the aggregate intrinsic value of the stock options was $131,442. The aggregateintrinsic value represents the total amount by which the fair value of the common stock subject to optionsexceeds the exercise price of the related options.The Company estimated the fair value of each stock option award on the grant date using the Black-Scholesoption pricing model, wherein expected volatility is based on historical volatility of the publicly tradedcommon stock of a peer group of companies. The expected term calculation is based on the “simplified”method described in Staff Accounting Bulletin (“SAB”) No. 107, Share-Based Payment, and SAB No. 110,Share-Based Payment, since the simplified method provides a reasonable estimate in comparison to actualexperience. The risk-free interest rate is based on the U.S. Treasury yield at the date of grant for aninstrument with a maturity that is commensurate with the expected term of the stock options. The dividendyield is zero since the Company has never paid cash dividends on its common stock, and has no presentintention to pay cash dividends. Options granted under the 2015 Plan generally vest over two to four yearsand have a term of 10 years.The weighted-average grant date fair value of the options awarded to employees for the year endedSeptember 30, 2018 was $0.56 per share. The following table presents the weighted-average assumptionsused in the option pricing model for stock options:Year Ended September 30, 2018Risk-free interest rate2.80%Expected life6.0 yearsExpected volatility71%Expected dividend yield—103)TABLE OF CONTENTSOUTLOOK THERAPEUTICS, INC.Notes to Consolidated Financial Statements As of September 30, 2018, there was $726,930 of unrecognized compensation expense that is expected tobe recognized over a weighted-average period of 3.1 years.Performance-Based stock unitsThe Company has issued PSUs, which generally have a ten year life from the date of grant and vest 50%after the third anniversary from issuance and the remaining 50% on the fourth anniversary. The PSUs areexercisable upon the earlier of  (i) a change in control, (ii) consummation of an initial public offering, or(iii) a corporate valuation in excess of  $400 million. Upon exercise, the PSU holder receives common stockor cash at the Company’s discretion.The following table summarizes the activity related to PSUs during the years ended September 30, 2018and 2017:Number of PSUsBase Price Per PSU​Balance at October 1, 2016247,309$6.33Forfeitures(71,7796.46Balance at October 1, 2017175,5306.27Forfeitures(46,4356.43Balance at September 30, 2018129,0956.25Vested and exercisable128,6606.23Vested and expected to vest at September 30, 2018129,095$6.25As of September 30, 2018, there was $1,552 of unamortized expense that will be recognized over aweighted-average period of 0.4 years.Restricted stock unitsThe Company has granted RSUs that generally vest over a period of two to four years from the date ofgrant. The following table summarizes the activity related to RSUs during the years ended September 30,2018 and 2017:Number of RSUsWeighted Average Grant Date Fair Value​Balance at October 1, 20161,094,351$28.61Granted615,0002.11Vested and settled(483,91329.05Forfeitures(285,5593.14Balance at October 1, 2017939,87918.78Granted20,0001.16Vested and settled(842,88918.40Forfeitures(55,88117.67Balance at September 30, 201861,109$19.23As of September 30, 2018, there was $544,691 of unamortized expense that will be recognized over aweighted-average period of 0.95 years.104))))))13.Collaboration ArrangementsTABLE OF CONTENTSOUTLOOK THERAPEUTICS, INC.Notes to Consolidated Financial Statements Huahai AgreementIn May 2013, the Company entered into strategic license and collaboration arrangement with ZhejiangHuahai Pharmaceutical Co., Ltd (“Huahai”) under which the Company granted Huahai and its affiliates anexclusive license for the research, development, manufacture, use or sale of ONS-3010 or ONS-1045 inChina, including, the People’s Republic of China, Hong Kong, Macau and Taiwan. In addition, theCompany granted Huahai a right and license under the Selexis Technology agreement to establish aproduction process for the products in the agreed territory and to market the products in the agreedterritory pursuant to the relevant terms and conditions of the Company’s commercial license agreementwith Selexis.Under the terms of the arrangement, the Company has received $7,500,000 in upfront payments and non-substantive milestones and received $8,500,000 in substantive milestones. The Company determined thatthe deliverables under the Huahai arrangement were the exclusive license and the research and developmentservices to be completed by the Company. Since the license did not have standalone value, the upfront andnon-substantive milestones payments received have been deferred and are being recognized ratably on astraight line basis through December 2021, the expected date in which the research and development willbe completed. Substantive milestones received under the Huahai arrangement are recognized uponachievement.During each of the years ended September 30, 2018 and 2017, the Company recognized $714,848 ofdeferred revenues. As of September 30, 2018 and 2017, deferred revenue included in the Company’sconsolidated balance sheet related to the Huahai arrangement was $2,323,254 and $3,038,102,respectively.IPCA License and Collaboration AgreementIn August 2013, the Company entered into a strategic license agreement with IPCA Laboratories Limitedand its affiliates (“IPCA”) under which the Company granted IPCA a license for the research, development,manufacture, use or sale of the ONS-3010 and, by amendment in May 2014, the ONS-1045 biosimilarproduct candidates with respect to India, Sri-Lanka, and Myanmar, and non-exclusive with respect to Nepaland Bhutan, or collectively, the agreed territory. In addition, the Company granted IPCA a right and licenseunder the Selexis Technology to enable IPCA to establish an exclusive production process for the productsin its agreed territory and to exclusively market the products in the agreed territory. The Company alsoagreed not to amend or terminate its rights under its commercial license agreement with Selexis withoutIPCA’s prior written consent.Pursuant to the agreement, the Company agreed to continue the non-clinical and clinical development ofeach of ONS-3010 and ONS-1045 and corresponding products around the world and to develop andcommercialize such products through Phase 3 clinical trials and regulatory approval in the United Statesand European Union. These obligations continue until termination of the agreement or the individualdevelopment programs or upon final regulatory approval of the last product for such biosimilars in theUnited States or European Union. The Company agreed to provide IPCA with a pre-IND package assubmitted to EMEA and FDA, as well as perform preclinical development and characterization of ONS-3010 and ONS-1045 so as to enable IPCA to file an IND to conduct clinical trials and to perform clinicaltrials.Under the terms of the agreement, the Company has received upfront and non-substantive milestonepayments of  $2,400,000, and received $1,000,000 in regulatory milestone payments. In addition, theCompany is eligible to receive royalties at a low double-digit percentage rate of annual net sales of productsby IPCA and its affiliates in the agreed territory. For each of ONS-3010 and ONS-1045, IPCA agreed tofund a portion of the global costs associated with the Phase 3 clinical trials.The Company determined that the deliverables under the IPCA arrangement were the exclusive license andthe research and development services to be completed by the Company. Since the license did not have105TABLE OF CONTENTSOUTLOOK THERAPEUTICS, INC.Notes to Consolidated Financial Statements standalone value, the upfront and non-substantive milestones payments received have been deferred andare being recognized ratably on a straight line basis through December 2019, the expected date in whichthe research and development will be completed. Substantive milestone payments received under the IPCAarrangement are recognized upon achievement. Cost reimbursements from IPCA related to the global costsassociated with the Phase 3 clinical trials are recorded as a reduction in research and development expense.As of September 30, 2018, the Company has received an aggregate of  $5.0 million of payments fromIPCA under its various agreements. During each of the years ended September 30, 2018 and 2017, theCompany recognized deferred revenues of  $261,072. As of September 30, 2018 and 2017, deferredrevenue included in the Company’s consolidated balance sheets was $848,486 and $1,109,558,respectively.Liomont AgreementIn June 2014, the Company entered into a strategic license agreement with Liomont, under which theCompany granted Liomont and its affiliates an exclusive, sublicenseable license in Mexico for the research,development, manufacture, use or sale of the ONS-3010 and ONS-1045 biosimilar product candidates inMexico. In addition, the Company granted Liomont a non-exclusive right and license under the SelexisTechnology and related intellectual property to enable Liomont to distribute, market and commercialize theproducts in Mexico. The Company also agreed not to amend or terminate its rights under the commercialagreement with Selexis without Liomont’s prior written consent.Under the terms of the agreement, the Company has received upfront payments and non-substantivemilestone payments of  $2,000,000 and received $1,000,000 in regulatory milestone payments. In addition,the Company is eligible to receive up to $2,000,000 in future substantive milestone payments. For each ofONS-3010 and ONS-1045, Liomont agreed to fund a portion of the global costs for Phase 3 clinical trials.The Company is eligible to receive tiered royalties at upper single-digit to low double-digit percentage ratesof annual net sales of products by Liomont and its affiliates in Mexico.The Company determined that the deliverables under the Liomont arrangement were the exclusive licenseand the research and development services to be completed by the Company. Since the license did not havestandalone value, the upfront payments received have been deferred and are being recognized ratably on astraight line basis through December 2019, the expected date in which the research and development willbe completed. Cost reimbursements from Liomont related to the global costs associated with the Phase 3clinical trials are recorded as a reduction in research and development expense.As of September 30, 2018, the Company has received an aggregate of  $3.0 million of upfront andmilestone payments from Liomont. During the years ended September 30, 2018 and 2017, the Companyrecognized deferred revenue of  $236,641 for both periods, respectively. As of September 30, 2018 and2017, deferred revenue included in the Company’s consolidated balance sheets was $769,083 and$1,005,724.BioLexis AgreementIn July 2017, the Company entered into a strategic licensing agreement with BioLexis, under which itgranted BioLexis and its affiliates a perpetual, irrevocable, exclusives sublicensable license in the agreedterritory for the research, development, manufacture, use or sale of the ONS-1045 biosimilar productcandidate in the agreed territory. The agreed territory includes all emerging markets, but specificallyexcludes major developed markets, such as the United States, Canada, Europe, Japan, Australia andNew Zealand, and smaller markets where the Company has existing licensing arrangements, such asMexico, greater China and India. The Company received an initial upfront payment from BioLexis of$1.25 million, and an additional $1.25 million upon meeting a notice and acknowledgment milestone.In September 2017 the Company and BioLexis superseded and replaced the strategic license agreementwith a Joint Development and License Agreement (the “JDLA”) providing for the development andcommercialization of the Company’s ONS-3010 and ONS-1045 biosimilar product candidates in the samegeographic territories. In exchange for granting BioLexis a perpetual, irrevocable, exclusive, sublicensable10614.Related-Party Transactions15.Income TaxesTABLE OF CONTENTSOUTLOOK THERAPEUTICS, INC.Notes to Consolidated Financial Statements license in the agreed territory for the research, development, manufacture, use or sale of the ONS-3010 andONS-1045 biosimilar product candidates in the agreed territory, BioLexis made an additional payment of$2.5 million in connection with the JDLA. The Company may receive up to an additional $2.5 millionmilestone payments under the JDLA for each licensed product upon achievement of certain net profitthresholds. The parties agreed to share net profits based on sales of licensed products in the agreed territory,in proportions weighed in BioLexis’ favor, subject to adjustment as provided in the agreement.During the years ended September 30, 2018 and 2017, the Company recognized revenue of  $1,874,999and $2,598,958, respectively, under the BioLexis agreements. As of September 30, 2018 and 2017,deferred revenue included in the Company’s consolidated balance sheet was $526,042 and $2,401,042,respectively.In May 2018, the Company negotiated a contract with Sonnet Biotherapeutics, Inc. (“Sonnet”) to providecontract development and manufacturing (“CDMO”) services. The maximum contract value is estimated tobe approximately $5.1 million, if all milestones are met. Additionally, in order to provide services toSonnet and other potential CDMO customers, in November 2017, the Company acquired laboratory andoffice equipment from Sonnet with a value of  $115,000 and during the year ended September 30, 2018,assumed leases of  $201,000 for equipment necessary for the planned expansion of the Company’sdevelopment and manufacturing facilities. Such leases were personally guaranteed by Pankaj Mohan,Ph.D., the Company’s former chairman and chief executive officer, and current Class III director.Dr. Mohan and Mr. Donald Griffith, Class II Director, are members of the board of directors of Sonnet,with Dr. Mohan serving as executive chairman of Sonnet. In addition, Dr. Mohan is a significantstockholder of Sonnet and Mr. Griffith is the president, chief executive officer and chief financial officer,of Sonnet.For other related party transactions during the year ended September 30, 2018 and 2017, refer to theStockholder Notes (Note 7), Debt (Note 8) and the BioLexis Agreement (Note 13).Income tax (benefit) expense for the years ended September 30, 2018 and 2017 consists of the following:Year Ended September 30,20182017​State tax$(3,148,216$1,500Foreign tax(500,000500,000$(3,648,216$501,500During the year ended September 30, 2018, the Company sold New Jersey NOLs in the amount of$38,470,278 resulting in the recognition of income tax benefits of  $3,150,716.107)))TABLE OF CONTENTSOUTLOOK THERAPEUTICS, INC.Notes to Consolidated Financial Statements A reconciliation of income tax expense (benefit) at the statutory federal income tax rate and income taxes asreflected in the financial statements is as follows:Year Ended September 30,20182017​U.S. federal statutory rate(24.3(34.0State taxes, net of federal benefit(6.9(6.4Sale of New Jersey net operating losses(7.1—Net operating loss8.0—Change in tax rates66.6—Foreign witholding tax(1.51.3Permanent differences(0.6(2.8Foreign tax credits1.5(1.6Research and development credit(22.9—Change in valuation allowance(23.744.8Other0.1—Effective income tax rate(10.81.3The tax effects of the temporary differences that gave rise to deferred taxes were as follows:September 30,20182017​Deferred tax assets:Net operating loss carryforwards$39,532,689$48,828,141Stock-based compensation10,227,51414,098,985Deferred revenue1,264,0693,017,238Research and development credit carryforward8,491,452757,701Foreign tax credits2,357,3092,857,309Accruals and others605,1731,539,943Gross deferred tax assets62,478,20671,099,317Less: valuation allowance(61,893,959(69,902,446584,2471,196,871Deferred tax liability:Fixed assets(584,247(1,196,871Net deferred tax assets$—$—As of September 30, 2018, the Company has approximately $164.7 million and $68.1 million of federaland New Jersey NOLs that will begin to expire in 2030 and 2036, respectively. As of September 30, 2018,the Company has approximately $0.4 million of foreign net operating losses with no expiration. As ofSeptember 30, 2018, the Company has federal and state research and development tax credit carryforwardsof  $6.6 million and $1.9 million available, respectively, to reduce future tax liabilities which will begin toexpire in 2032 and 2023 respectively. As of September 30, 2018, the Company has Federal foreign taxcredit carryforwards of  $2.4 million available to reduce future tax liabilities that will begin to expirestarting in 2023, which is included in the balance of unrecognized tax benefits. Realization of the deferredtax asset is contingent on future taxable income and based upon the level of historical losses, managementhas concluded that the deferred tax asset does not meet the more-likely-than-not threshold for realizability.Accordingly, a full valuation allowance continues to be recorded against the Company’s deferred tax assetsas of September 30, 2018 and 2017. The valuation allowance decreased $8.0 million during the year endedSeptember 30, 2018 and increased $17.2 million during the year ended September 30, 2017.108)%)%))))))))))%%))))TABLE OF CONTENTSOUTLOOK THERAPEUTICS, INC.Notes to Consolidated Financial Statements When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extentthat the benefit will more likely-than-not be realized. The determination as to whether the tax benefit willmore-likely-than-not be realized is based upon the technical merits of the tax position as well asconsideration of the available facts and circumstances. The Company recognizes interest and penaltiesaccrued on any unrecognized tax benefits within the provision for income taxes in its consolidatedstatements of operations.The 2017 Tax Cuts and Jobs Act, which was signed into law on December 22, 2017, has resulted insignificant changes to the U.S. corporate income tax system. These changes include a federal statutory ratereduction from 34% to 21%, the elimination or reduction of certain domestic deductions and credits andlimitations on the deductibility of interest expense and executive compensation. For the fiscal year endingSeptember 30, 2018, the federal tax rate is 24.3%. The 2017 Tax Cuts and Jobs Act also transitionsinternational taxation from a worldwide system to a modified territorial system and includes base erosionprevention measures on non-U.S. earnings, which has the effect of subjecting certain earnings of theCompany’s foreign subsidiaries to U.S. taxation as global intangible low-taxed income. These changes areeffective beginning in 2018. In regard to the change in the federal tax rate as it relates to the Company’sdeferred tax assets and liabilities, the Company has decreased its related deferred tax assets by $22.4 millionalong with a corresponding offset against the valuation allowance for these deferred tax assets.A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:Year Ended September 30,20182017​Balance at beginning of year$2,352,129$1,854,629Changes based on tax positions related to the current year(496,000497,500Balance at end of year$1,856,129$2,352,129The Company does not anticipate material change in the unrecognized tax benefits in the next 12 months.These unrecognized tax benefits, if recognized, would affect the annual effective tax rate. The Company’sincome tax returns for the years from 2011 through 2017 remain open for examination by the InternalRevenue Service as well as various states and municipalities.Due to the change in ownership provisions of the Internal Revenue Code, the availability of the Company’snet operating loss carryforwards may be subject to annual limitations against taxable income in futureperiods, which could substantially limit the eventual utilization of such carryforwards. The Company hasnot analyzed the historical or potential impact of its equity financings on beneficial ownership and thereforeno determination has been made whether the net operating loss carryforward is subject to any InternalRevenue Code Section 382 limitation. To the extent there is a limitation, there would be a reduction in thedeferred tax assets with an offsetting reduction in the valuation allowance.109)Item 9.Changes in and Disagreements with Accountants on Accounting and Financial DisclosureItem 9A.Controls and ProceduresItem 9B.Other InformationTABLE OF CONTENTSNoneEvaluation of Disclosure Controls and ProceduresOur management, with the participation of our Chief Executive Officer and Chief Financial Officer, haveevaluated our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under theSecurities Exchange Act of 1934, as amended) prior to the filing of this Annual Report on Form 10-K.Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of theend of the period covered by this Annual Report on Form 10-K, our disclosure controls and procedureswere, in design and operation, effective as of September 30, 2018.Internal Control over Financial ReportingOur management is responsible for establishing and maintaining adequate internal control over financialreporting, as such term is defined in Rule 13a-15(f) of the Exchange Act. Our internal control system isdesigned to provide reasonable assurance regarding the preparation and fair presentation of financialstatements for external purposes in accordance with generally accepted account principles. All internalcontrol systems, no matter how well designed, have inherent limitations and can provide only reasonableassurance that the objectives of the internal control system are met.Under the supervision and with the participation of our management, including our Chief Executive Officerand Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control overfinancial reporting, based on criteria established by the Committee of Sponsoring Organizations of theTreadway Commission (COSO) in its 2013 Internal Control-Integrated Framework. Based on ourevaluation, we concluded that our internal control over financial reporting was effective as ofSeptember 30, 2018.As an emerging growth company, as defined under the Terms of the JOBS Act of 2012, the Company’sindependent registered accounting firm is not required to issue an attestation report on our internal controlover financial reporting.Changes in Internal Control over Financial ReportingThere were no changes in our internal control over financial reporting during the quarter endedSeptember 30, 2018 that have materially affected, or are reasonably likely to materially affect, our internalcontrol over financial reporting.Inherent Limitation on the Effectiveness of Internal ControlThe effectiveness of any system of internal control over financial reporting, including ours, is subject toinherent limitations, including the exercise of judgment in designing, implementing, operating, andevaluating the controls and procedures, and the inability to eliminate misconduct completely. Accordingly,any system of internal control over financial reporting, including ours, no matter how well designed andoperated, can only provide reasonable, not absolute assurances. In addition, projections of any evaluationof effectiveness to future periods are subject to the risk that controls may become inadequate because ofchanges in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Weintend to continue to monitor and upgrade our internal controls as necessary or appropriate for ourbusiness, but cannot assure you that such improvements will be sufficient to provide us with effectiveinternal control over financial reporting.Not applicable.110Item 10.Directors, Executive Officers and Corporate GovernanceTABLE OF CONTENTSPART IIIDirectors and Executive OfficersThe following table sets forth information concerning our current directors and executive officers,including their ages as of November 30, 2018. There are no family relationships among any of ourdirectors or executive officers.NameAgePosition(s)​Executive OfficersLawrence A. Kenyon53President, Chief Executive Officer, Chief Financial Officer,Treasurer, Corporate Secretary and DirectorKenneth M. Bahrt, M.D.65Chief Medical OfficerTerry Dagnon57Chief Operating OfficerJeff Evanson50Chief Commercial OfficerNon-Employee DirectorsRalph H. “Randy” Thurman69Executive ChairmanYezan Haddadin43DirectorKurt J. Hilzinger58DirectorPankaj Mohan, Ph.D.54DirectorFaisal G. Sukhtian34DirectorJoe Thomas61DirectorJoerg Windisch, Ph.D.48DirectorExecutive OfficersLawrence A. Kenyon. Mr. Kenyon has served as a member of our board of directors, Chief ExecutiveOfficer and President since August 2018, as Interim Chief Executive Officer from June 2018 toAugust 2018, and as our Chief Financial Officer, Treasurer and Corporate Secretary since September 2015.Prior to that, from February 2014 to September 2015, Mr. Kenyon served as the Chief Financial Officer ofArno Therapeutics, Inc., a biopharmaceutical company focused on the development of therapeutics forcancer and other life threatening diseases, and also as Chief Operating Officer from July 2014 toSeptember 2015. From December 2011 to March 2013, Mr. Kenyon served as the Interim President &Chief Executive Officer, Chief Financial Officer and Secretary of Tamir Biotechnology, Inc., a publiclyheld biopharmaceutical company engaged in the development of oncology and anti-infective therapeutics.Prior to that, from December 2008 to July 2010, Mr. Kenyon was the Executive Vice President, Financeand, commencing in March 2009, the Chief Financial Officer of, Par Pharmaceutical Companies, Inc., apublicly held generic and branded specialty pharmaceutical company, or Par. Prior to joining Par,Mr. Kenyon was the Chief Financial Officer and Secretary of Alfacell Corporation, or Alfacell, fromJanuary 2007 through February 2009 and also served at various times during this period as Alfacell’sExecutive Vice President, Chief Operating Officer and President, and was a member of Alfacell’s board ofdirectors from November 2007 to April 2009. Prior to joining Alfacell, Mr. Kenyon served as theExecutive Vice President, Chief Financial Officer and Corporate Secretary at NeoPharm, Inc., a publiclytraded biopharmaceutical company, from 2000 to 2006. Mr. Kenyon received a B.A. in Accounting fromthe University of Wisconsin — Whitewater and is a Certified Public Accountant in Illinois. The Boardbelieves Mr. Kenyon’s experience as our Chief Executive Officer and Chief Financial Officer, combinedwith his experience in the biopharmaceutical industry qualifies him to serve on our Board.Kenneth M. Bahrt, M.D. Dr. Bahrt has served as our Chief Medical Officer since June 2015. Prior to joiningus, from February 2014 to May 2015, Dr. Bahrt served as the Vice President of U.S. Medical Affairs at NPSPharmaceuticals, Inc., a biopharmaceutical company. From August 2011 to January 2014, Dr. Bahrt served111TABLE OF CONTENTSas Senior Vice President and Chief Medical Officer at Savient Pharmaceuticals, Inc., a biopharmaceuticalcompany. Prior to that, from September 2009 to August 2011, Dr. Bahrt served as the Therapeutic Head ofImmunology Medical Affairs at Genentech, Inc. From July 2007 to September 2009, Dr. Bahrt served asthe Global Medical Director for Immunology at Hoffman-La Roche, a Swiss healthcare company. Prior tothis, Dr. Bahrt held positions of increasing responsibility at Bristol Myers Squibb, Pfizer, and Daiichi. Priorto joining the pharmaceutical industry, Dr. Bahrt was in clinical practice. Dr. Bahrt is a board-certifiedInternist and Rheumatologist and a Fellow of the American College of Rheumatology. Dr. Bahrt receivedan M.D. from Hahnemann University and a Bachelor’s degree in Biology from Muhlenberg College.Terry Dagnon. Mr. Dagnon has served as our Chief Operating Officer since November 2018. FromMarch 2015 through November 2018, Mr. Dagnon was Senior Vice President of Operations at DohmenLife Science Services, and from March 2014 to March 2015 acted as its Vice President, Regulatory Affairs.From April 2013 through March 2014, Mr. Dagnon provided consulting services through a proprietarycompany, and prior thereto, held various positions at Alcon, a Novartis Company, where he last servedHead of Regulatory Affairs, North America, from October 2012 through April 2013, and prior theretoserved a variety of roles with increasing responsibility in regulatory affairs from December 1999 throughOctober 2012. Prior to a career in the life sciences industry, Mr. Dagnon served 11 years on active dutywith the United States Army and was a SFC/E-7 Special Forces Green Beret 18D Senior Non-CommissionedOfficer. Mr. Dagnon received his Master of Science Regulatory Affairs from San Diego State University,and a B.S. in Health Care Administration from Wayland Baptist University.Jeff Evanson. Mr. Evanson has served as our Chief Commercial Officer since November 2018.Mr. Evanson has led Scott Three Consulting, LLC as Founder and President since April of 2018, and fromSeptember 2014 through April 2018, served as a Managing Director in the Life Science Practice ofNavigant. Prior to joining Navigant, Mr. Evanson was a Global Director and then the Vice President andGlobal Commercial Head of the Pharmaceutical Franchise at Alcon, a Novartis Company from April 2010to September 2014. Mr. Evanson serves on the Board of Directors of Children’s HeartLink and wasformerly a two-term Board Member of Gillette Children’s Hospital in St. Paul, Minnesota, from 2008 to2014. Mr. Evanson received his M.B.A. from the University of Minnesota, and a B.A. in Chemistry fromthe University of St. Thomas in St. Paul Minnesota.Non-Employee DirectorsRalph H. “Randy” Thurman. Mr. Thurman has served as the Executive Chairman of our board of directorssince June 2018 and served as a member of our Board since April 2018. He also currently serves as a senioradvisor at BC Partners, a private equity firm, and as the Executive Chairman of the board of directors ofZest Dental, Inc. Mr. Thurman was previously a member of the board of directors of Allscripts, Inc. and theExecutive Chairman of Presbia PLC (an Orchard Capital Corporation company), a publicly-traded medicaldevice company. From 2008 until 2011, Mr. Thurman served as Executive Chairman of CardioNet Inc.(now known as BioTelemetry, Inc.), and as its interim Chief Executive Officer from 2008 until 2010. From2001 until 2007, Mr. Thurman was Founder, Chairman and Chief Executive Officer of VIASYS HealthcareInc., a diversified healthcare technology company, which was acquired by Cardinal Healthcare Inc. in2007. Mr. Thurman served as a consultant to Cardinal Healthcare Inc. from the date of acquisition until2008. From 1997 until 2001, Mr. Thurman served as Chairman and Chief Executive Officer of StrategicReserves LLC, which provided advisory services to bio-pharmaceutical, genomic, and medical devicecompanies. From 1993 until 1997, Mr. Thurman was Chairman and Chief Executive Officer of CorningLife Sciences, Inc., and from 1984 until 1993, Mr. Thurman held various positions at Rhone-Poulenc RorerPharmaceuticals, Inc., a global pharmaceutical company, ultimately as its President. The Board believesMr. Thurman’s expertise in corporate governance, operating and investing as well as extensive expertise inthe healthcare industry qualifies him to serve on our Board.Yezan Haddadin. Mr. Haddadin has served as a member of our board of directors since October 2017.Since July 2017, Mr. Haddadin has served as chief executive officer of GMS Capital Partners LLC, aninvestment company focused on making direct private equity investments in North America. GMS CapitalPartners LLC is a subsidiary of GMS Holdings. From 2014 to 2017, Mr. Haddadin served as the ChiefExecutive Officer and a member of the board of directors of a regional investment bank based in Amman,Jordan and Dubai, United Arab Emirates. From 2013 to 2014, Mr. Haddadin served as an Advisor at112TABLE OF CONTENTSRipplewood Holdings LLC, a New York-based private equity firm. Mr. Haddadin also served as aManaging Director at Perella Weinberg Partners in New York from 2007 to 2013 and an ExecutiveDirector with J.P. Morgan in its mergers and acquisitions group from 2000 to 2007. Mr. Haddadincurrently serves as a member of the board of directors at Sixth of October Development & InvestmentCompany, a publicly listed Egyptian real estate development company. Mr. Haddadin holds a J.D. fromNorthwestern University Law School and a B.S. in Foreign Service from Georgetown University. TheBoard believes Mr. Haddadin’s managerial and capital raising experience qualifies him to serve on ourBoard.Kurt J. Hilzinger. Mr. Hilzinger has served as a member of our board of directors since December 2015.Since 2007, Mr. Hilzinger has served as a partner at Court Square Capital Partners L.P., an independentprivate equity firm, where he is responsible for investing in the healthcare sector. Since July 2003,Mr. Hilzinger also has served in various capacities as a member of the board of directors at Humana, Inc., amanaged care company, including serving as Lead Director from August 2010 to January 2014, and asChairman since January 2014. In addition, Mr. Hilzinger also has served in several roles atAmerisourceBergen Corporation, a healthcare company, including as a member of the board of directorsfrom March 2004 to November 2007, as the President and Chief Operating Officer from October 2002 toNovember 2007 and as the Executive Vice President and Chief Operating Officer from August 2001 toOctober 2002. Mr. Hilzinger also serves on the Visiting Committee at the Ross School of Business at theUniversity of Michigan. Mr. Hilzinger received a B.B.A. in Accounting from the University of Michiganand is a Certified Public Accountant in Michigan. The Board believes Mr. Hilzinger’s experience andfinancial expertise in the healthcare sector qualifies him to serve on our Board.Pankaj Mohan, Ph.D. Dr. Mohan has served as a member of our board of directors since January 2011.From January 2011 to June 2018, he served as our Chairman, President and Chief Executive Officer. Priorto founding our company, from May 2008 to December 2010, Dr. Mohan served as head of BusinessOperations and Portfolio Management of Biologics Process and Product Development at Bristol-MyersSquibb Company, a biopharmaceutical company. From June 2006 to May 2008, Dr. Mohan served as aDirector of Bioprocess Engineering at Genentech, Inc., a biotechnology company. Prior to that, fromMay 1996 to May 2006, Dr. Mohan served as a senior manager at Eli Lilly and Company, a pharmaceuticalcompany. From May 1993 to April 1996, Dr. Mohan served as Assistant Professor (Lecturer/Fellow) at theAdvanced Centre for Biochemical Engineering, University College London, London, United Kingdom.From August 1987 to December 1989, Dr. Mohan served as a Scientific Officer for the Department ofAtomic Energy for the Government of India. Dr. Mohan has served as a member of the board of directorsof Sonnet Biotherapeutics, Inc., a privately held biopharmaceutical company, since its inception inApril 2015, and as its Executive Chairman since July 2018. Dr. Mohan received a Ph.D. in BiochemicalEngineering from the School of Chemical Engineering, University of Birmingham, Birmingham, UnitedKingdom, a Masters in Financial Management from Middlesex University Business School, London, UnitedKingdom, an Executive Management Program (AMP) from Fuqua School of Business at Duke Universityand a Bachelor of Chemical Engineering from the Indian Institute of Technology in Roorkee, India. TheBoard believes Dr. Mohan’s experience as our founder, former Chairman and Chief Executive Officer,combined with his experience in the biopharmaceutical industry qualifies him to serve on our Board.Faisal G. Sukhtian. Mr. Sukhtian has served as a member of our board of directors since September 2017.Mr. Sukhtian has served as a Director of BioLexis Private Limited since 2011, and an Executive Director ofGMS Holdings, a diversified investment company, since 2008. In addition to managing operations of GMSHoldings, Mr. Sukhtian oversees a number of investments within the GMS Holdings portfolio and serves asa director of GMS Holdings’ board of directors. From 2008 to 2011, Mr. Sukhtian served as ExecutiveDirector of Munir Sukhtian International. From 2010 to 2011, he served as Managing Director of AgriSciences Ltd., an agrochemicals manufacturing business based in Turkey. Mr. Sukhtian has served as amember of the board of directors of Expert Petroleum, an oilfield services company based in Romania,since 2008, Agri Sciences since 2010, MS Pharma, a leading MENA based branded pharmaceuticalgenerics company, since 2011 and Stelis Biopharma Private Limited, a biotherapeutic and biosimilardeveloper and manufacturer based in India, since 2015. Mr. Sukhtian previously served as a member of theboard of directors of Alvogen, a multinational generics pharmaceutical company based in the United States,from 2008 to 2014 and Waterloo Industries, Inc., a manufacturer of tool storage based in the United States,from 2015 to 2017. Prior to joining GMS Holdings, Mr. Sukhtian worked at JP Morgan, in New York,where he113TABLE OF CONTENTSworked primarily on mergers and acquisitions, debt and equity transactions serving clients in the industrialsand transportation industries. Mr. Sukhtian received an M.B.A. from Columbia Business School and a B.S.in International Economics from Georgetown University’s School of Foreign Service. The Board believesMr. Sukhtian’s managerial and pharmaceutical industry experience qualifies him to serve on our Board.Joe Thomas. Mr. Thomas has served as a member of our board of directors since September 2017. SinceApril 2015, Mr. Thomas has served as the Chief Executive Officer and Executive Director of StelisBiopharma Private Limited, a biotherapeutic and biosimilar developer and manufacturer based in India, andis responsible for managing an integrated organization comprising research and development,manufacturing and commercialization of recombinant biotherapeutics in global markets. FromJanuary 2012 until March 2015, Mr. Thomas served as Chief Corporate Development Officer for StridesShasun Limited, a listed pharmaceutical company based in India, and was responsible for development anddeployment of growth strategies across group companies and business of Strides Shasun Limited.Mr. Thomas received both a B.Sc. and M.Sc. in Chemistry from Delhi University and has over 30 years ofexperience in the pharmaceutical and consumer healthcare industry. Mr. Thomas was appointed to fill avacancy on the Board, and was designated for such vacancy by BioLexis Private Limited Holdings Pte.Limited pursuant to the Investor Rights Agreement by and between our company and BioLexis PrivateLimited Holdings Pte. Limited dated September 11, 2017. The Board believes Mr. Thomas’s managerialand pharmaceutical industry experience qualifies him to serve on our board of directors.Joerg Windisch, Ph.D. Dr. Windisch has served as a member of our Board since March 2018. SinceJuly 2017, Dr. Windisch has served as the Chief Operating Officer of Polpharma Biologics (Poland), adivision of Polpharma Group. From February 2016 to June 2017, he served as Chief Operating Officer ofAffimed N.V., a Nasdaq-listed biotechnology company, which develops novel immune cell engagers forthe treatment of cancer. Prior thereto, Dr. Windisch spent 20 years in various managerial roles at SandozBiopharmaceuticals, or Sandoz (now part of Novartis AG). While at Sandoz, Dr. Windisch focused onresearch and development, manufacturing and developed Sandoz’s biosimilars program. Dr. Windisch alsoled the development of Sandoz’s Somatropin (Omnitrope ®), the first ever biosimilar, as well as thecompany’s Epoetinalfa (Binocrit ®) and Filgrastim (Zarzio ®) products. Dr. Windisch was educated inAustria, Germany and the United States and received his Ph.D. in Biochemistry and Molecular Biologyfrom the University of Innsbruck. The Board believes Dr. Windisch’s managerial and pharmaceuticalindustry experience qualifies him to serve on our board of directors.Family RelationshipsThere are no family relationships among our directors, executive officers or persons nominated to becomeexecutive officers or directors.Section 16(A) Beneficial Ownership Reporting ComplianceSection 16(a) of the Exchange Act requires our directors and executive officers, and persons who ownmore than 10% of a registered class of our equity securities, to file with the SEC initial reports of ownershipand reports of changes in ownership of our common stock and other equity securities. Officers, directorsand greater than 10% stockholders are required by SEC regulation to furnish us with copies of allSection 16(a) forms they file.To our knowledge, based solely on a review of the copies of such reports furnished to us and writtenrepresentations that no other reports were required, during the fiscal year ended September 30, 2018, allSection 16(a) filing requirements applicable to our officers, directors and greater than 10% beneficialowners of our capital stock were complied with except that BioLexis failed to timely file five Form 4sduring our fiscal year ended September 30, 2018 to report the issuance of quarterly dividends on itsSeries A Convertible on each of December 31, 2017 and March 31, 2018, the purchase of common stockand warrants on each of May 14, 2018 and June 8, 2018, and the conversion of Series A Convertible onJune 20, 2018, all of which were reported on the same Form 4 filed on June 25, 2018.Certain Corporate Governance MattersCode of EthicsWe have adopted a Code of Business Conduct and Ethics that applies to all officers, directorsand employees. The Code of Business Conduct and Ethics is available on our website at114Item 11.Executive Compensation•Pankaj A. Mohan, our former President and Chief Executive Officer and current Director;•Lawrence A. Kenyon, our President, Chief Executive Officer, Chief Financial Officer, Treasurer,Corporate Secretary and Director;•Kenneth M. Bahrt, M.D., our Chief Medical Officer; and•Stephen J. McAndrew, Ph.D., our former Senior Vice President, Business Strategy &Development.TABLE OF CONTENTShttps://ir.outlooktherapeutics.com/static-files/a7b472e8-e20b-4c13-ac7a-7d879143598d. If we make anysubstantive amendments to the Code of Business Conduct and Ethics or grant any waiver from a provisionof the Code of Business Conduct and Ethics to any executive officer or director, we will promptly disclosethe nature of the amendment or waiver on our website.Identification of Audit Committee and Financial ExpertOur board of directors has a standing Audit Committee that operates under a written charter approved byour board of directors, which charter reflects the applicable standards and requirements adopted by the SECand The Nasdaq Stock Market, LLC, or Nasdaq. A copy of the charter can be found on our website athttps://ir.outlooktherapeutics.com/static-files/e556395b-ad8e-4bd1-9bc0-1bf2276612e7. Informationfound on our website is not incorporated by reference into this report.The Audit Committee is chaired by Kurt J. Hilzinger and also includes Faisal Sukhtian and Joe Thomas. OurNominating and Corporate Governance Committee will review the Nasdaq listing standards definition ofindependence for Audit Committee members on an annual basis and our board of directors has determinedthat all members of our Audit Committee are independent (as independence is currently defined inRule 5605(c)(2)(A)(i) and (ii) of the Nasdaq listing standards). Our board of directors has also determinedthat Mr. Hilzinger qualifies as an “audit committee financial expert,” as defined in applicable SEC rules.For the year ended September 30, 2018, our named executive officers are:We refer to these executive officers herein as our named executive officers.Summary Compensation TableThe following table sets forth the information as to compensation awarded to, paid to or earned by ournamed executive officers. We did not pay any non-equity incentive plan compensation or have any non-qualified deferred compensation earnings and have omitted those columns from the table.Name and Principal PositionYearSalary ($)​Bonus ($)​​Stock Awards ($)​​Option Awards ($)​​All Other Compensation ($)​​Total ($)​Pankaj Mohan, Ph.D.2018350,538———875,1721,225,710Director, former Chairman,President and Chief ExecutiveOfficer2017490,000—555,942—31,6101,077,551Lawrence A. Kenyon2018371,635——326,19218,305716,132Director, Chief ExecutiveOfficer, President, ChiefFinancial Officer, Treasurerand Corporate Secretary2017350,000100,000128,065—16,940595,005Kenneth M. Bahrt, M.D.2018400,000———29,082429,082Chief Medical Officer2017400,000100,000108,20921,469629,678Stephen J. McAndrew, Ph.D.2018300,000——14,06012,011326,071Former Senior Vice President,Business Strategy &Development115(1)(2)(3)(4)(5)(6)(7)(1)Discretionary bonus amounts for fiscal year ended September 30, 2018 have not yet been determined.(2)In accordance with SEC rules, this column reflects the aggregate grant date fair value of the restricted stock unit, or RSU,awards granted computed in accordance with Financial Accounting Standard Board Accounting Standards CodificationTopic 718, or ASC 718, for stock-based compensation transactions. These amounts do not reflect the actual economic valuethat would be realized by the named executive officer upon the vesting and settlement of the RSUs. For a discussion of theassumptions used in determining the fair value of awards of RSUs in the above table and other additional information on theRSUs granted, refer to “Item 8. Financial Statements and Supplementary Data — Notes to the Consolidated FinancialStatements — Note 12. Stock-Based Compensation.(3)In accordance with SEC rules, this column reflects the aggregate grant date fair value of the stock option awards grantedcomputed in accordance with ASC 718, for stock-based compensation transactions. These amounts do not reflect the actualeconomic value that would be realized by the named executive officer upon the exercise of the stock options. For adiscussion of the assumptions used in determining the fair value of stock option awards in the above table and otheradditional information on the stock options granted, refer to “Item 8. Financial Statements and Supplementary Data — Notesto the Consolidated Financial Statements — Note 12. Stock-Based Compensation(4)Amounts in this column reflect the payment of term life and disability insurance premiums, along with 401(k) matchingcontributions. All of these benefits are provided to the named executive officers on the same terms as provided to all of ourregular full-time employees. We also reimbursed Dr. Mohan for cell phone expenses. For Dr. Mohan, all other compensationalso includes benefits to which Dr. Mohan became entitled under his employment agreement in connection with hiscessation of service as President and Chief Executive Officer in June 2018 comprised of  (i) $735,000 of cash severance(including $490,000 of salary and $245,000 of cash bonus) and (ii) $25,428 of projected COBRA coverage costs for himselfand his eligible dependents for which he is entitled to reimbursement for up to a 12-month period beginning July 1, 2018.(5)Dr. Mohan resigned as Chairman, President and Chief Executive Officer in June 2018.(6)Mr. Kenyon was appointed Interim Chief Executive Officer in June 2018 and later appointed Director, Chief ExecutiveOfficer and President in August 2018. Salary reflects Mr. Kenyon’s salary adjustment approved in August 2018, which wasretroactive to June 2018 when he began acting as Interim Chief Executive Officer.(7)Dr. McAndrew was terminated as Senior Vice President, Business Strategy & Development in November 2018 when weeliminated his position.TABLE OF CONTENTSAgreements with our Named Executive OfficersBelow are written descriptions of our employment arrangements with our named executive officers.Dr. Mohan. In February 2016, we entered into a new employment agreement with Dr. Mohan that tookeffect in connection with our initial public offering, or IPO. Under Dr. Mohan’s new employmentagreement, Dr. Mohan was entitled to an initial annual base salary of $490,000, was eligible to receive anannual performance bonus of up to 50% of his annual base salary as determined by our board of directors,and was also eligible for reimbursement for an automobile down payment and expenses. Dr. Mohan wasalso entitled to a one-time lump sum performance bonus of $990,000, which was contingent upon theclosing of our initial public offering. Dr. Mohan was employed by and performing services for us on a full-time basis through his June 2018 resignation. His employment agreement did not have a specified term andhis employment could have been terminated by us or by Dr. Mohan at any time, with or without cause.Dr. Mohan was also entitled to certain severance and change in control benefits pursuant to his employmentagreement, the terms of which are described below under “— Potential Payments upon Termination orChange of Control.” Dr. Mohan resigned as Chairman and Chief Executive Officer in June 2018, andentered into a separation and release agreement and a consulting agreement in July 2018 in connectiontherewith. The terms of his separation and release agreement are described below under “— PotentialPayments upon Termination or Change of Control.” The terms of his consulting agreement are describedunder “Transactions with Related Persons — Certain Related-Person Transactions.”Mr. Kenyon. In February 2016, we entered into a new employment agreement with Mr. Kenyon that tookeffect in connection with our IPO. Under Mr. Kenyon’s February 2016 employment agreement,Mr. Kenyon was entitled to an annual base salary and was eligible to receive an annual performance bonusas determined by our board of directors. These amounts were initially $350,000 and 40%, however, inconnection with his August 2018 appointment as our Chief Executive Officer and President, ourCompensation Committee increased his base salary to $425,000 and set his annual performance bonus at upto 50% of his base salary as determined by our board, with such increases having retroactive effect toJune 18, 2018 when he was appointed Interim Chief Executive Officer. Mr. Kenyon was also granted stock116TABLE OF CONTENTSoptions to acquire 500,000 shares of our common stock under our 2015 Equity Incentive Plan, or the 2015Plan, which options are non-qualified stock options that vest annually over four years, and may beaccelerated in the event of a “change in control” (as defined in the 2015 Plan) and achievement of a pre-defined objective. Mr. Kenyon is also eligible for additional stock option grants under the 2015 Plan for upto an aggregate of 1.7 million shares of our common stock, which grants are subject to, and will be madeeffective upon, achievement of certain pre-defined corporate objectives, with four-year vesting and subjectto acceleration in the event of a “change in control.”In October 2018, following review of Mr. Kenyon’s severance and change in control benefits, which werenot modified in August 2018, the Compensation Committee recommended, and our board of directorsapproved, the amendment of Mr. Kenyon’s executive employment agreement to reflect the priorcompensation determinations regarding his salary, target bonus and equity incentives, as well as reflectcertain modifications to his severance and change in control benefits.Mr. Kenyon is currently employed by and performing services for us on a full-time basis. His employmentagreement does not have a specified term and his employment may be terminated by us or by Mr. Kenyonat any time, with or without cause. Mr. Kenyon is additionally entitled to certain severance and change incontrol benefits pursuant to his employment agreement, the terms of which are described below under “— Potential Payments upon Termination or Change of Control.”Dr. Bahrt. In February 2016, we entered into a new employment agreement with Dr. Bahrt that took effectin connection with our IPO. Under Dr. Bahrt’s new employment agreement, Dr. Bahrt is entitled to aninitial annual base salary of  $400,000 and is eligible to receive an annual performance bonus of up to 40%of his annual base salary as determined by our board of directors. Dr. Bahrt is currently employed by andperforming services for us on a full-time basis. His employment agreement does not have a specified termand his employment may be terminated by us or by Dr. Bahrt at any time, with or without cause. Dr. Bahrtis also entitled to certain severance and change in control benefits pursuant to his employment agreement,the terms of which are described below under “— Potential Payments upon Termination or Change ofControl.”Dr. McAndrew. In February 2016, we entered into a new employment agreement with Dr. McAndrew thattook effect in connection with our IPO. Under Dr. McAndrew’s new employment agreement,Dr. McAndrew was entitled to an initial annual base salary of $300,000, was eligible to receive an annualperformance bonus of up to 40% of his annual base salary as determined by our board of directors.Dr. McAndrew was employed by and performing services for us on a full-time basis throughNovember 2018, when we eliminated his position in connection with our change in focus to ophthalmicindications. His employment agreement did not have a specified term and his employment could have beenterminated by us or by Dr. McAndrew at any time, with or without cause. Dr. McAndrew was also entitledto certain severance and change in control benefits pursuant to his employment agreement, the terms ofwhich are described below under “— Potential Payments upon Termination or Change of Control.” Inconnection with the elimination of Dr. McAndrew’s position as Senior Vice President, Business Strategy &Development in November 2018, we entered into a separation and release agreement in November 2018.The terms of his separation and release agreement are described below under “— Potential Payments uponTermination or Change of Control.”Potential Payments Upon Termination or Change of ControlRegardless of the manner in which a named executive officer’s service terminates, the named executiveofficer is entitled to receive amounts earned during his or her term of service, including salary and unusedvacation pay.Dr. Mohan. Pursuant to Dr. Mohan’s employment agreement that took effect in connection with our IPO, ifhe had been terminated without cause or if he resigned for good reason, subject to his execution of aseparation agreement with an effective release of claims in favor of us and continued compliance withcertain restrictive covenants set forth in such employment agreement and a proprietary information,inventions, non-solicitation and non-competition agreement, or PIIA, he would have been entitled to117TABLE OF CONTENTScontinued payment of his base salary for 12 months following the termination, 100% of his target bonusfor the calendar year of termination paid in a lump sum, employee benefit coverage for up to 12 months,full vesting of 50% of his then unvested equity awards, and reimbursement of expenses owed to himthrough the date of his termination.Pursuant to the employment agreement, if Dr. Mohan’s employment was terminated by us or any successorentity (provided such successor entity either assumes Dr. Mohan’s equity awards or substitutes similarequity awards) without cause or if he resigned for good reason within two months prior to or within12 months following a change in control (as defined in the 2015 Plan), subject to his execution of aseparation agreement with an effective release of claims in favor of us and continued compliance withcertain restrictive covenants set forth in such employment agreement and the PIIA, he would have beenentitled to continued payment of his base salary for 18 months, 150% of his annual target bonus for thecalendar year of termination paid in a lump sum, employee benefit coverage for up to 18 months, andreimbursement of expenses owed to him through the date of his termination. Additionally, 100% of histhen unvested equity awards would have become fully vested.Dr. Mohan resigned in June 2018 and in connection therewith, he entered into a separation and releaseagreement, effective on July 10, 2018, providing for, as severance, his current base salary ($490,000).Pursuant to the agreement, he will also receive a target cash bonus of $245,000, payable in two installments,50% within 10 business days of effectiveness of the agreement and 50% no later than January 4, 2019.Dr. Mohan will receive 12 months of COBRA reimbursement. He also agreed to non-solicit and non-compete covenants, as well as executed a general release of claims in connection therewith. In July 2018,Dr. Mohan received the first installment related to his separation and release agreement totaling $367,500.Mr. Kenyon. Pursuant to Mr. Kenyon’s current executive employment agreement, if he is terminatedwithout cause or if he resigns for good reason, subject to his execution of a separation agreement with aneffective release of claims in favor of us and continued compliance with certain restrictive covenants setforth in such employment agreement and the PIIA, he is entitled to continued payment of his base salaryfor 12 months following the termination, 100% of his target bonus for the calendar year of terminationpaid in a lump sum, employee benefit coverage for up to 12 months, full vesting of 50% of his thenunvested equity awards, and reimbursement of expenses owed to him through the date of his termination.Pursuant to his current executive employment agreement, if Mr. Kenyon’s employment is terminated by usor any successor entity (provided such successor entity either assumes Mr. Kenyon’s equity awards orsubstitutes similar equity awards) without cause or if he resigns for good reason within two months prior toor within 12 months following a change in control (as defined in the 2015 Plan), subject to his execution ofa separation agreement with an effective release of claims in favor of us and continued compliance withcertain restrictive covenants set forth in such employment agreement and the PIIA, he is entitled tocontinued payment of his base salary for 18 months, 150% of his annual target bonus for the calendar yearof termination paid in a lump sum, employee benefit coverage for up to 18 months, and reimbursement ofexpenses owed to him through the date of his termination. Additionally, 100% of his then unvested equityawards shall become fully vested.Dr. Bahrt. Pursuant to Dr. Bahrt’s employment agreement, if he is terminated without cause or if he resignsfor good reason, subject to his execution of a separation agreement with an effective release of claims infavor of us and continued compliance with certain restrictive covenants set forth in such employmentagreement and the PIIA, he is entitled to continued payment of his base salary for 12 months following thetermination, employee benefit coverage for up to 12 months, full vesting of 50% of his then unvestedequity awards, and reimbursement of expenses owed to him through the date of his termination.Pursuant to the employment agreement, if Dr. Bahrt’s employment is terminated by us or any successorentity (provided such successor entity either assumes Dr. Bahrt’s equity awards or substitutes similar equityawards) without cause or if he resigns for good reason within two months prior to or within 12 monthsfollowing a change in control (as defined in the 2015 Plan), subject to his execution of a separationagreement with an effective release of claims in favor of us and continued compliance with certainrestrictive covenants set forth in such employment agreement and the PIIA, he is entitled to continued118•“cause” generally means, (i) a material breach of any covenant or condition under theemployment agreement or any other agreement between us and the named executive; (ii) any actconstituting dishonesty, fraud, immoral or disreputable conduct; (iii) any conduct whichconstitutes a felony under applicable law; (iv) material violation of any of our policies or any actof misconduct; (v) refusal to follow or implement a clear and reasonable directive from us; (vi)negligence or incompetence in the performance of the named executive’s duties or failure toperform such duties in a manner satisfactory to us after the expiration of 10 days without cureafter written notice of such failure; or (vii) breach of fiduciary duty.•“good reason” means the occurrence, without the named executive’s consent, of any of thefollowing events: (i) a material reduction in the named executive’s base salary under theemployment agreement of at least 25%; (ii) a material breach of the employment agreement by us;(iii) a material reduction in the named executive’s duties, authority and responsibilities relative tohis or her duties, authority, and responsibilities in effect immediately prior to such reduction; or(iv) the relocation of the named executive’s principal place of employment in a manner thatlengthens his or her one-way commute distance by 50 or more miles from his or her then-currentprincipal place of employment immediately prior to such relocation; provided, however, that noneof the events described in this sentence will constitute good reason unless and until (x) the namedexecutive first notifies us in writing describing in reasonable detail the condition(s) that constitutesgood reason within 30 days of its occurrence, (y) we fail to cure the condition(s) within 30 daysafter our receipt of written notice, and (z) the named executive voluntarily terminates his or heremployment within 30 days after the end of 30-day cure period.TABLE OF CONTENTSpayment of his base salary for 12 months, 100% of his annual target bonus for the calendar year oftermination paid in a lump sum, employee benefit coverage for up to 12 months, and reimbursement ofexpenses owed to him through the date of his termination. Additionally, 100% of his then unvested equityawards shall become fully vested.Dr. McAndrew. We eliminated Dr. McAndrew’s position in November 2018 in connection with our changein focus to ophthalmic indications. In connection therewith, he entered into a separation and releaseagreement, effective on November 9, 2018, providing for, as severance, his current base salary for theequivalent of nine months, or a total of  $225,000. Dr. McAndrew will receive nine months of COBRAreimbursement. He also agreed to non-solicit and non-compete covenants, as well as executed a generalrelease of claims in connection therewith.For purposes of our named executive officers’ employment agreements:Outstanding Equity Awards at Fiscal Year EndThe following table sets forth certain information regarding equity awards granted to our named executiveofficers that remain outstanding as of September 30, 2018.​​Option awardsStock awards​NameGrant dateNumber of securities underlying unexercised options (#) exercisableNumber of securities underlying unexercised options (#) unexercisableEquity incentive plan awards: Number of securities underlying unexercised unearned options (#)Option exercise price ($)Option expiration dateNumber of shares or units of stock that have not vested (#)Market value of shares or units of stock that have not vested ($)Equity incentive plan awards: Number of unearned shares, units or other rights that have not vested (#)Equity incentive plan awards: Market or payout value of unearned shares, units or other rights that have not vested ($)​Lawrence A. Kenyon8/1/2018—500,000—0.868/1/2028————Lawrence A. Kenyon12/31/2015—————21,73921,304——Kenneth M. Bahrt, M.D.06/22/2015—————14,49314,203——Stephen J. McAndrew, Ph.D.06/15/2018—30,000—0.9006/15/2028————119(1)(1)(2)(3)(4)(5)(1)The outstanding equity awards as of September 30, 2018 are RSUs and stock options that were granted under and subject tothe terms of the 2015 Equity Incentive Plan, or the 2015 Plan. Except as otherwise indicated, each RSU or stock option issubject to vesting, subject to the executive’s continuous service with us through the vesting dates and the potential vestingacceleration of the time-based vesting conditions upon a change in control and certain terminations of employment. EachRSU represents the right to receive, at settlement one share of our common stock.(2)The shares underlying the option shall vest in four equal installments beginning on August 1, 2019 such that the optionshall be vested in full on August 1, 2022, subject to Mr. Kenyon providing continuous service on each such date. Vestingmay be accelerated in the event of  (a) a change in control as defined in the 2015 Plan and (b) the achievement of certainpredefined corporate objectives, in each case subject to Mr. Kenyon providing continuous service through such event.(3)The RSUs satisfied the performance-based vesting restrictions on the date that was six months following the effective dateof the registration statement on Form S-1 (File No. 333-209011). Of these RSUs, 50% of the time-based vesting restrictionswas satisfied on September 15, 2018 and the remaining 50% will vest on September 15, 2019, subject to Mr. Kenyon’scontinuous service with us through such dates; provided that 100% of the shares underlying the RSU will satisfy the time-based vesting restrictions upon the occurrence of a change in control, subject to Mr. Kenyon’s continuous service with usthrough such date.(4)The RSUs satisfied the performance-based vesting restrictions on the date that was six months following the effective dateof the registration statement on Form S-1 (File No. 333-209011). Of these RSUs, 50% of the time-based vesting restrictionswas satisfied on June 22, 2018 and the remaining 50% will vest on June 22, 2019, subject to Dr. Bahrt’s continuous servicewith us through such dates; provided that 100% of the shares underlying the RSU will satisfy the time-based vestingrestrictions upon the occurrence of a change in control, subject to Dr. Bahrt’s continuous service with us through such date.(5)15,000 shares, or 50% of the underlying the option vested as of November 9, 2018, upon Dr. McAndrew’s termination asSenior Vice President, Business Strategy & Development. Dr. McAndrew forfeited the remaining 15,000 shares underlyingthe grant.(1)Represents the annual cash fees pursuant to our non-employee director compensation policy, which took effect inconnection with IPO.(2)Reflects the aggregate grant date fair value of the stock option awards granted computed in accordance with ASC 718, forstock-based compensation transactions. These amounts do not reflect the actual economic value that would be realized bythe director upon exercise of the stock options. For a discussion of the assumptions used in determining the fair value ofawards of stock options in the above table and other additional information on stock options granted, refer to “Item 8.Financial Statements and Supplementary Data — Notes to the Consolidated Financial Statements — Note 12. Stock-BasedCompensation.(3)Represents consulting fees paid to Dr. Mohan pursuant to a six-month consulting arrangement effective July 2, 2018focused on the ONS-5010 development program.(4)Messrs. Albrecht and Canute resigned from our Board effective April 13, 2018.TABLE OF CONTENTSDirector CompensationThe following table sets forth information concerning the compensation earned for service on our board ofdirectors by our directors during the year ended September 30, 2018. Mr. Kenyon’s and Dr. Mohan’scompensation as executive officers is set forth under “Executive Compensation — Summary CompensationTable.” Mr. Kenyon does not receive any additional compensation for service as a director. None of ourdirectors received any compensation other than cash fees or stock option awards under the 2015 Planduring the fiscal year ended September 30, 2018, accordingly, we have omitted all other columns from thetable below.Name​​Fees Earned or Paid in Cash ($)​Option Awards ($)All Other Compensation ($)Total ($)​Claudio Albrecht————Todd C. Brady, M.D., Ph.D6,3395,292—11,631Scott Canute28,447——28,447Albert Dyrness4,1985,292—9,490Yezan Haddadin————Kurt Hilzinger62,50021,421—83,921Pankaj Mohan, Ph.D.9,9979,83761,25081,084Faisal G. Sukhtian————Joe Thomas————Randy Thurman59,49473,454—132,948Joerg Windisch, Ph.D.20,98623,327—44,313120(1)(2)(3)(4).(5)(4)(5)(6)(7)(6)(6)(8)(5)Dr. Brady and Mr. Dyrness each resigned from our Board effective October 30, 2017.(6)Board service commenced effective September 11, 2017, and no fees were paid during the fiscal year ended September 30,2018. Messrs. Sukhtian and Thomas have waived their right to cash and equity compensation for their services as directorsof our company. Both Messrs. Albrecht and Haddadin, who joined our Board effective October 30, 2017, did not receive anyfees during the fiscal year ended September 30, 2018 and have similarly waived their right to cash and equity compensationfor services as directors of our company. Mr. Haddadin resigned from our Board in March 2018 and was reappointed to ourBoard in April 2018.(7)Dr. Mohan resigned as Chairman, President and Chief Executive Officer effective June 18, 2018, but remains a director.While employed, Dr. Mohan did not receive any additional compensation for service as a director.(8)Mr. Thurman was appointed Executive Chairman of the Board in June 2018.TABLE OF CONTENTSNon-Employee Director Compensation PolicyWe have adopted a non-employee director compensation policy pursuant to which our non-employeedirectors are eligible to receive compensation for service on our board of directors and committees of ourboard of directors, which took effect in connection with our IPO.Equity CompensationInitial GrantUnder the non-employee director compensation policy, each new non-employee director who joins ourboard of directors is granted a non-statutory stock option to purchase 25,000 shares of common stockunder the 2015 Plan, which option vests annually over three years from the grant date, subject to continuedservice as a director through the applicable vesting date. Messrs. Albrecht, Haddadin, Sukhtian and Thomaswaived their initial equity grants. In addition, in connection with his appointment as Executive Chairman,Mr. Thurman received a one-time grant of a non-statutory stock option to purchase 100,000 shares ofcommon stock under the 2015 Plan, which vests annually in three equal installments.Annual GrantUnder the non-employee director compensation policy, on the date of each annual meeting of ourstockholders, each current non-employee director is granted an annual non-statutory stock option topurchase 15,000 shares of common stock under the 2015 Plan, which option vests on the first anniversaryof the grant date, subject to continued service as a director though the applicable vesting date. Messrs.Haddadin, Sukhtian and Thomas have waived their annual equity grants.Cash CompensationUnder the non-employee director compensation policy, each non-employee director will receive an annualcash retainer of  $35,000 for serving on our board of directors. The chairperson of our board of directorswill receive an additional annual cash retainer of $30,000. In the event that the chairperson is an employeeand the board of directors appoints a Lead Independent Director, that person will receive the additionalannual cash retainer otherwise payable to the chairperson. In addition, as Executive Chairman,Mr. Thurman is entitled to an annual retainer of  $120,000 payable in equal monthly installments.The chairperson and members of the three principal standing committees of our board of directors aregenerally entitled to the following annual cash retainers under our non-employee director compensationpolicy:Board CommitteeChairperson FeeMember FeeAudit Committee$15,000$7,500Compensation Committee10,0005,000Nominating and Corporate Governance Committee8,0004,000All annual cash compensation amounts will be payable in equal quarterly installments in arrears, on the lastday of each fiscal quarter for which the service occurred, pro-rated based on the days served in theapplicable fiscal quarter.121Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters•each person, or group of affiliated persons, known by us to beneficially own more than 5% of ouroutstanding shares of common stock;•each of our directors;•each of our named executive officers; and•all of our directors and executive officers as a group.TABLE OF CONTENTSIn November 2018, to reduce cash expenses, the Compensation Committee of our Board revised our non-employee director compensation policy and suspended cash payments and authorized a one-time equitygrant of immediately vested options equal in value to two-years of cash fees. Accordingly, effectiveNovember 9, 2018, all non-employee directors who did not previously waive their cash fees received thefollowing equity grants.The following reflects the stock options that were granted to non-employee directors on November 9,2018.​​​Option awards​Name​Grant dateNumber of securities underlying unexercised options (#) exercisableNumber of securities underlying unexercised options (#) unexercisableEquity incentive plan awards: Number of securities underlying unexercised unearned options (#)Option exercise price ($)Option expiration date​Randy Thurman11/09/2018567,522——0.8911/09/2018Kurt Hilzinger11/09/2018203,851——0.8911/09/2018Joerg Windisch, Ph.D.11/09/2018130,465——0.8911/09/2018Pankaj Mohan, Ph.D.11/09/2018114,157——0.8911/09/2018SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENTThe following table sets forth certain information relating to the beneficial ownership of our common stockas of November 30, 2018, by:Beneficial ownership determined in accordance with the rules of the SEC and includes any shares overwhich a person exercises sole or shared voting or investment power. Applicable percentage ownership andtotal voting power are based on 80,798,031 shares of our common stock and 60,203 shares of our votingSeries A-1 convertible preferred stock outstanding as of November 30, 2018. Unless otherwise indicated,the persons or entities identified in this, or Series A-1 Convertible, table have sole voting and investmentpower with respect to all shares shown beneficially owned by them, subject to applicable communityproperty laws. Shares of common stock issuable upon vesting, exercise or conversion of outstanding equityawards or preferred stock that are exercisable, subject to vesting or convertible within 60 days afterNovember 30, 2018 are deemed beneficially owned and such shares are used in computing the percentageownership of the person holding the awards, but are not deemed outstanding for the purpose of computingthe percentage ownership of any other person. The information contained in the following table is notnecessarily indicative of beneficial ownership for any other purpose, and the inclusion of any shares in thetable does not constitute an admission of beneficial ownership of those shares.As otherwise noted below, the address for persons listed in the table is c/o Outlook Therapeutics, Inc., 7Clarke Drive, Cranbury, New Jersey 08512.​​Common Stock​​Series A-1 Convertible​Name of Beneficial Owner​​Number of Shares Beneficially Owned​​%​​Number of Shares Beneficially Owned​​%​​% of Total Voting Power​Five Percent Stockholders (other than directors and officers):BioLexis Pte. Ltd99,269,16878.160,203100.069.0122(1)%%%*Represents beneficial ownership of less than one percent (1%) of the outstanding common stock.†Represents voting power of less than one percent (1%) of the outstanding common stock.(1)Includes (a) 9,101,717 shares of common stock issuable upon conversion of 60,203 shares of Series A-1 Convertible and(b) 37,262820 shares of common stock issuable upon exercise of warrants. The Series A-1 Convertible (which votes on anas-converted basis) and warrants are held directly by BioLexis Pte. Ltd. (formerly known as GMS Tenshi Private LimitedHoldings Pte. Limited), or BioLexis. Tenshi Life Sciences Private Limited, or Tenshi, a private investment vehiclecontrolled by Arun Kumar Pillai, or Kumar, and GMS Pharma (Singapore) Pte. Limited, or GMS Pharma, a private investmentcompany and wholly-owned subsidiary of GMS Holdings, a private investment company, or GMS Holdings, are the 50:50beneficial owners of BioLexis, in which each of Tenshi and GMS Pharma owns 50% of the outstanding voting shares.Kumar, a natural person, is the holder of a controlling interest in Tenshi. Ghiath M. Sukhtian, or Sukhtian, a natural person,is the holder of a controlling interest in GMS Holdings, which is the holder of a controlling interest in GMS Pharma. Theprincipal office address of Kumar is #30, “Galaxy”, 1st Main, J.P. Nagar, 3rd Phase, Bangalore, India 560078. The principaloffice address of Sukhtian is Zahran Street, 7th Circle Zahran Plaza Building, 4th Floor P.O. Box 142904, Amman, Jordan11844.(2)Includes warrants to acquire 1,000 shares held by Dr. Bahrt.(4)Includes (i) 39,405 shares held directly by Dr. Mohan’s child, (ii) 492,753 shares held directly by Dr. Mohan’s spouse, (iii)86,956 shares held in a family trust for which Dr. Mohan’s spouse serves as trustee, and (iv) 114,157 vested options.(5)Includes (i) 218,851 vested options and (ii) 2,416 RSUs held directly by Mr. Hilzinger.(6)Represents vested options held directly by Dr. Windisch.(1)Represents the base price per outstanding performance stock unit, or PSU, awards at September 30, 2018.TABLE OF CONTENTS​​Common StockSeries A-1 Convertible​Name of Beneficial Owner​​Number of SharesBeneficially Owned%Number of SharesBeneficially Owned%% of TotalVoting Power​Named Executive Officers and Directors:Lawrence A. Kenyon, Director, Chief Executive Officer, Chief Financial Officer, Treasurer and Corporate Secretary35,474*——†Kenneth M. Bahrt, Chief Medical Office33,627*——†Ralph H. “Randy” Thurman, Executive Chairman576,522*——†Yezan Haddadin, Director—————Pankaj Mohan, Ph.D., Director8,383,71410.4Kurt J. Hilzinger, Director256,621*——†Faisal G. Sukhtian, Director—————Joe Thomas, Director—————Joerg Windisch, Ph.D., Director130,465*†All executive officers and directors as a group (11 persons)9,416,42311.5——9.3(3)Represents vested options held by Mr. Thurman.Equity Compensation Plan InformationThe following table provides certain information with respect to all of our equity compensation plans ineffect as of September 30, 2018.Plan Category​​Number of securities to be issued upon exercise of outstanding options, warrants and rights​​Weighted-average exercise price of outstanding options, warrants and rights​​Number of securities remaining available for future issuance under equity compensation plans​Equity compensation plans approved by security holders:2011 Stock Incentive Plan129,095$6.25—2015 Equity Incentive Plan1,518,2545,558,6782016 Employee Stock Purchase Plan——545,162Equity compensation plans not approved bysecurity holders:None———Total1,647,3496,103,840123(2)(3)(4)%(5)(6)%%(1)(2) (3)(4)(5)(2)Effective upon approval of the 2015 Equity Incentive Plan, no additional options or awards may be granted under the 2011Stock Incentive Plan; all outstanding stock awards will continue to be governed by their existing terms.(3)Number of securities to be issued upon exercise of outstanding options, warrants and rights outstanding at September 30,2018 is comprised of 1,457,145 option awards with a weighted average exercise price of  $0.90, and 61,109 restrictedstock units with a weighted average grant date fair value of  $19.23.(4)The number of shares of our common stock reserved for issuance under the 2015 Equity Incentive Plan automaticallyincreases on January 1st of each year continuing through January 1, 2026, in an amount equal to the lesser of  (A) 3% of thetotal number of shares of our common stock outstanding on December 31st of the immediately preceding calendar year and(B) a number determined by our board of directors.(5)The number of shares of our common stock reserved for issuance under the 2016 Employee Stock Purchase Planautomatically increases on January 1st each year continuing through January 1, 2026, by the lesser of  (i) one percent (1%)of the total number of shares of our common stock outstanding on December 31st of the preceding calendar year, (ii)1,760,000 shares of our common stock and (iii) a number determined by our board of directors.Item 13.Certain Relationships and Related Transactions, and Director IndependenceTABLE OF CONTENTSCertain Related-Person TransactionsThe following is a summary of transactions since October 1, 2015 to which we have been a party, in whichthe amount involved exceeded or will exceed the lesser of  (x) $120,000 or (y) 1% of our total assets atSeptember 30, 2017 or 2018, and in which any of our directors, executive officers or holders of more than5% of our capital stock, or an affiliate or immediate family member thereof, had or will have a direct orindirect material interest other than compensation and other arrangements that are described in the sectionstitled “Executive Compensation” and “Director Compensation.” We also describe below certain othertransactions with our directors, executive officers and stockholders.FinancingsCommon StockMezzanine FinancingsIn December 2015 and January 2016, we issued and sold an aggregate of 573,388 shares of our commonstock to 19 accredited investors at a purchase price of  $29.05 per share, for aggregate net proceeds ofapproximately $16.6 million. These investors became party to an investors’ rights agreement, as amended,and a co-sale agreement, as amended, which have since terminated.The foregoing mezzanine financings included the issuance and sale to Proximare Lifesciences Fund LLC, aNew Jersey single purpose fund, of an aggregate of 197,003 shares of our common stock at a purchaseprice of  $25.79 per share, for aggregate gross proceeds of approximately $5.1 million, and the issuanceand sale to Proximare Lifesciences Fund 2 LLC, a New Jersey single purpose fund, an aggregate of172,121 shares of our common stock at a purchase price of  $29.05 per share, for aggregate gross proceedsof approximately $5.0 million. Three members of our board, current director, Mr. Hilzinger, and formerdirectors, Mr. Canute and Ms. Hoke, invested an aggregate of  $2.0 million in our company throughinvestments in these funds. Following the completion of our IPO and pursuant to the documents governingsuch funds, these individuals received shares of our common stock and warrants pro rata to theirinvestments in such funds upon distribution of all of the shares of our common stock and warrants held bysuch funds as follows: Mr. Canute, 57,408 shares, 37,315 warrants; Mr. Hilzinger, 18,518 shares, 12,036warrants; Ms. Hoke, 1,939 shares, 1,260 warrants.Series A Redeemable Preferred StockIn October 2015, upon our reincorporation in Delaware, each outstanding share of our Series A redeemablepreferred stock held by holders that did not elect to participate in a share buyback conducted in June 2014converted into and became approximately 289 shares of common stock and approximately 1.4035 sharesof Series A preferred stock. Accordingly, the following related parties received such shares uponconversion of the following amounts of our Series A redeemable preferred stock held by them:124TABLE OF CONTENTSRelated Party# of Shares of Series A Redeemable Preferred Stock Converted# of Shares of Common Stock Received Upon Conversion# of Shares of DE Series A Preferred Stock Received Upon Conversion​Mr. Canute250 shares72,463 shares351 shares​Dr. Brady100 shares28,985 shares141 shares​Dr. Mohan’s immediate family150 shares43,478 shares212 shares​Mr. Gangloff’s immediate family55 shares15,942 shares79 shares​Mr. Griffith’s immediate family35 shares10,144 shares50 shares​At the time of the above transactions, Mr. Canute and Dr. Brady were on our board of directors,Mr. Gangloff was an executive officer, and Mr. Griffith was on our board of directors and an executiveofficer.Loans and GuaranteesIn March 2015, Mr. Canute, a former member of our board of directors, extended a short-term loan to ourcompany of  $1,000,000. Accordingly, we issued a promissory note to Mr. Canute for the principal amountof   $1,000,000, which note bore the stated interest at a rate of 2% per month, with a stated maturity date ofJune 20, 2015. This note was repaid in full in October 2015 and is no longer outstanding.Our former Chairman, President and Chief Executive Officer, current director, Dr. Mohan, personallyguaranteed our outstanding bank loans, as well as one of our equipment financing leases. In addition, sincefounding our company, Dr. Mohan has regularly extended short-term interest-free loans to our company,and deferred payment of his compensation (both salary and bonuses) in order to address our liquidityneeds. As of September 30, 2015, amounts owed to Dr. Mohan amounted to $117,506. We did not accrueany interest on amounts owed to Dr. Mohan with respect to the loans and all outstanding amounts havebeen repaid in full.In October, November and December 2016, we issued an aggregate of   $1.85 million of unsecuredpromissory notes to various accredited investors. These notes had a stated interest rate of 15% per year, anda one-year maturity. Former directors, Messrs. Canute and Dyrness and one of our, at the time, significantstockholders, Sabby Healthcare Master Fund, Ltd., or Sabby, acquired such notes, which had an aggregateprincipal amount of   $350,000, $50,000 and $500,000, respectively. All of these notes were exchanged inour December 2016 financing described below.On December 22, 2016, we entered into a Note and Warrant Purchase Agreement with the accreditedinvestors named therein, which included former directors, Messrs. Canute and Dyrness, and Sabby and itsaffiliates, providing for the issuance and sale of up to $10.0 million of senior secured promissory notes,which bear interest at a rate of 5.0% per year and initially matured December 22, 2017 and warrants toacquire an aggregate 2.3 million shares of our common stock. The warrants initially had a five-year termand an exercise price of   $3.00 per share. We closed the initial sale and purchase of the notes and warrantson December 22, 2016, issuing $8.35 million aggregate principal amount of notes and warrants to acquirean aggregate 1,920,500 shares of our common stock in exchange for $6.5 million of cash and an aggregateof   $1.85 million of existing unsecured bridge notes issued in October, November and December 2016.These included the $900,000 aggregate principal amount of notes held by Messrs. Canute and Dyrness andSabby. We closed the sale of the remaining $1.65 million of additional notes and warrants to acquire up toan additional 379,500 shares of our common stock in January 2017. Under the agreement, we agreed tocustomary negative covenants restricting our ability to repay indebtedness to officers, pay dividends tostockholders, repay or incur other indebtedness other than as permitted, grant or suffer to exist a securityinterest in any of our assets, other than as permitted, or enter into any transactions with affiliates. In additionto the negative covenants in the agreement, the notes include customary events of default. In connectionwith the closing of the initial sale of the notes and warrants, we entered into a Security Agreement and anIntellectual Property Security Agreement, each dated December 22, 2016, granting the holders of the notesa security interest in all of our assets.On April 13, 2017, we entered into the First Amendment to the Note and Warrant Purchase Agreement, orthe Amendment, with the required holders of our outstanding senior secured promissory notes named125TABLE OF CONTENTStherein. The primary purpose of the Amendment was to increase the amount of notes, which bear interest ata rate of 5% per annum and mature on December 22, 2017, from $10.0 million to $15.0 million, permitthe issuance of additional warrants (which have a five-year term and an exercise price of  $3.00 per share)to acquire an aggregate 1,665,000 shares of its common stock in connection therewith. In connection withthe Amendment, we issued an additional $3.5 million in note principal and warrants to acquire an aggregate1,165,000 shares of common stock. On May 31, 2017, we issued the remaining $1.5 million in noteprincipal and warrants to acquire 499,500 shares of common stock.In connection with the September 2017 private placement to BioLexis, described in more detail below, onSeptember 11, 2017, we entered into a Note, Warrant and Registration Rights Amendment and Waiver,pursuant to which the senior secured noteholders agreed to, among other items, waive certain events ofdefault that may be deemed to have occurred and waive past non-compliance with certain registration rightsof the senior secured noteholders, as well as extend the maturity date of the senior secured notes to the laterto occur of  (x) December 22, 2018 and (y) one year following the second closing under the BioLexisPurchase Agreement, as defined below.In connection with the November 2018 private placement to BioLexis, described in more detail below, weentered into a Second Note and Warrant Amendment and Waiver, pursuant to which the senior securednoteholders agreed to, among other items, further extend the maturity date of the senior secured notes andprovide that such notes may be converted into common stock at an initial conversion price of  $1.11924per share (120% of the price per share paid by BioLexis in the private placement). Under this amendment,the maturity date of such senior secured notes may be extended up to December 22, 2019 in exchange forus making several payments of principal and interest through August 31, 2019, and raising no less than$20.0 million of additional equity capital on or prior to June 30, 2019.In November 2018, following the initial sale to BioLexis, we paid the holders an aggregate ofapproximately $2.2 million of principal and interest. We agreed to make additional scheduled payments ofan aggregate of $3.7 million of principal and interest on these senior secured notes as follows:(i) approximately $1.2 million of principal and interest on or prior to December 7, 2018; (ii) approximately$1.0 million of interest on or prior to December 22, 2018; and (iii) approximately $1.5 million of principaland interest on or prior to February 15, 2019. Additionally, we have raised $20.0 million of additionalequity capital on or prior to June 30, 2019, then we agreed to (i) pay an additional aggregate of $3.0 million of principal and interest; and (ii) make additional payments of  $1.0 million of principal andinterest on or prior to each of July 31, 2019 and August 31, 2019. If we make the payments of anaggregate of  $4.4 million on or prior to December 22, 2018 as contemplated, then the maturity date of thesenior notes will be automatically extended to June 30, 2019. If we raise no less than $20.0 million ofadditional equity capital on or prior to June 30, 2019, and pays the additional aggregate of  $3.0 million ofprincipal and interest, then the maturity date will be automatically extended to December 22, 2019.In addition, we and the holders mutually agreed to reduce the exercise price of the warrants held by them toacquire an aggregate of 3,792,500 shares of our common stock to $1.50 per share, and extend theexpiration of such warrants by three years.We also agreed to take such steps as may be reasonably necessary to amend the exercise price to $1.50 andfurther extend the expiration date of our outstanding Series A warrants (Nasdaq: OTLKW) by three years.Such Series A warrants currently have an exercise price of  $6.60 per share and expire on the earlier tooccur of  (a) the date that is 20 business days after the date on which the closing sales price of our commonstock is greater than or equal to $7.25 per share and (b) February 18, 2019.Employment and Other Compensation Arrangements and Equity Plan AwardsWe have entered into employment agreements with certain of our executive officers in connection withtheir employment. For more information regarding the executives’ existing offer letters, see the sectiontitled “Executive Compensation — Agreements with our Named Executive Officers.”We also have established certain equity plans, pursuant to which we grant equity awards to our employeesand directors.126TABLE OF CONTENTSPerformance Stock UnitsWe previously granted our employees PSUs. The PSUs as issued were subject to time-based vesting, with50% of the award vesting three-years after the original grant date, and the remaining 50% vesting four-years after the grant date and were to be settled in cash. The PSUs may only be exercised during their 10-year term on or following the achievement of specified performance conditions, including the occurrenceof a change in control, or, subject to the discretion of our board of directors, our achieving an enterprisevalue of at least $400 million. In addition, PSUs may be subject to additional acceleration of time-basedvesting restrictions upon certain termination and change in control events. On June 22, 2015, in connectionwith his employment with us, we granted Dr. Bahrt, our Chief Medical Officer, 28,985 PSUs on the termsnoted above.In December 2015, current officers, Drs. Bahrt and McAndrew, and former officers, Ms. Yamashita andMr. Gangloff and our former director, Mr. Griffith, forfeited their PSUs and were granted RSUs under our2015 Plan. The RSUs granted to Messrs. Gangloff and Griffith satisfied the performance-based vestingrestrictions six months following the effective date of the registration statement for our initial publicoffering. The RSUs granted to Drs. Bahrt and McAndrew and Ms. Yamashita are subject to the sameperformance-based vesting restrictions but are also subject to additional time-based vesting restrictions, with50% of their RSUs satisfying the time-based vesting restrictions on each of the third and fourthanniversaries of their original hire dates, subject to their continuous service with us through the applicabledates. The time-based vesting restrictions will be satisfied upon a change in control of our company,provided the executive remains in continuous service with us through such date.Mohan Consulting AgreementFollowing Dr. Mohan’s resignation as Chairman of our board of directors and as our Company’s ChiefExecutive Officer, on July 2, 2018, we entered into a consultant agreement with Dr. Mohan. Under theagreement, Dr. Mohan agreed to a six-month consulting arrangement, pursuant to which he will be paid at50% of his base salary prior to his resignation, and will be focused on the ONS-5010 developmentprogram. Such consultant arrangement may be extended as mutually agreed between us and Dr. Mohan orterminated early in accordance with the terms.Parilis Biopharmaceuticals, LLCIn September 2015, we terminated the license and business development agreements with our formersubsidiary, Parilis Biopharmaceuticals, LLC, or Parilis, of which we were the sole member, and reachedagreement with the remaining holders of outstanding Series A and Series A Hybrid Units of Parilis toexchange their securities for securities in our company. These holders included Dr. Brady, a former directorof our company. Accordingly, in September 2015, we entered into an exchange and release agreementpursuant to which they received an aggregate of 226,663 shares of our common stock and an aggregate of1,626 shares of our Series A preferred stock effective upon our reincorporation in Delaware inOctober 2015. Accordingly, in October 2015, Dr. Brady received an aggregate of 28,985 shares of ourcommon stock and 257 shares of our Series A preferred stock in exchange for his 200 Series A Units ofParilis.Sonnet Biotherapeutics, Inc.In April 2015, we spun-off certain assets unrelated to our biosimilar business through a pro ratadistribution to our stockholders. Accordingly, we entered into a contribution agreement with a newly-formed entity, Sonnet Biotherapeutics, Inc., or Sonnet, pursuant to which we contributed certain assetsrelating to our innovation business to Sonnet in exchange for these assets. We then immediately distributedall the issued and outstanding shares of Sonnet common stock to our stockholders on a pro rata basis,which stockholders included our executive officers, directors and holders of more than 5% of ouroutstanding capital stock. Accordingly, immediately following the distribution, the stockholders of Sonnetwere identical to our stockholders as of April 6, 2015.In October 2015, our former subsidiary that we spun-off in April 2015, Sonnet Biotherapeutics, Inc., orSonnet, issued us a promissory note for the principal amount of $826,561, which reflects the funding wehave provided them through September 30, 2015. This note bore interest at the annual rate of 3%. Duringthe year ended September 30, 2016, Sonnet repaid the full balance of the promissory note.127TABLE OF CONTENTSDuring the three months ended June 30, 2018, we negotiated a contract with Sonnet to provide contractdevelopment and manufacturing, or CDMO, services for a fee. The gross contract value is estimated to beapproximately $5.14 million, if all milestones are met. Additionally, in order to provide services to Sonnetand other potential CDMO customers, in November 2017, we acquired additional laboratory and officeequipment from Sonnet with a value of approximately $115,000 and during the nine months endedJune 30, 2018, assumed leases of approximately $201,000 for equipment necessary for the then plannedexpansion of our development and manufacturing facilities. Such leases were personally guaranteed byDr. Mohan, our former Chairman and Chief Executive Officer and current Class III director.Dr. Mohan and Mr. Griffith, our former director and Chief Financial Officer, are members of the board ofdirectors of Sonnet. In addition, Dr. Mohan is Executive Chairman and Mr. Griffith is the President, ChiefExecutive Officer and Chief Financial Officer of Sonnet.Concurrent Private PlacementSabby, a then significant stockholder, purchased approximately $5.0 million of our units at the initialpublic offering price (or 833,332 units based on the initial public offering price of $6.00 per unit) in aprivate placement that closed concurrently with our initial public offering. The units sold in the proposedconcurrent private placement were not registered under the Securities Act. We paid the underwriters asplacement agents in the private placement an aggregate cash fee equal to 7.0% of the gross sales price ofthe units sold. The closing of the private placement was contingent upon, and occurred concurrently with,the closing of our initial public offering.Pre-IPO Investors’ Rights AgreementIn connection with our common stock financings, we entered into a pre-IPO investors’ rights agreementcontaining registration rights, among other things, with certain holders of our common stock. On April 26,2016, we amended the pre-IPO investors’ rights agreement and agreed, under certain circumstances, toissue certain of the investors, upon the closing of our IPO, three-year warrants to purchase an aggregate of1,520,268 shares of our common stock at $0.01 per share. The registration rights granted under the pre-IPO investors’ rights agreement will terminate upon the closing of a qualified liquidation event and at suchtime as a particular stockholder is able to sell all of its shares pursuant to Rule 144 of the Securities Act.BioLexis Private PlacementPrivate Placement — September 2017In September 2017, we entered into a purchase agreement with BioLexis pursuant to which BioLexisagreed to purchase, in a private placement, 250,000 shares of our newly created Series A ConvertiblePreferred Stock, or the Series A Convertible, for $25.0 million and warrants to acquire an aggregate16,750,000 shares of our common stock. The Series A Convertible was initially convertible into37,795,948 shares of our common stock. We completed the initial sale of 32,628 shares of Series AConvertible for $3.3 million in September 2017, and in October 2017, we consummated the sale of theremaining 217,372 shares of Series A Convertible for $21.7 million.In connection with the September 2017 private placement to BioLexis, we entered into an investor rightsagreement with BioLexis pursuant to which BioLexis received certain demand and piggyback registrationrights with respect to the shares of our common stock issuable upon the conversion of the Series AConvertible and the warrants. Additionally, we agreed to appoint up to four new directors to be designatedby BioLexis, such that BioLexis’s designees represent a majority of our board of directors. So long asBioLexis maintains beneficial ownership of at least 5% of our company’s outstanding common stock, itshall be entitled to nominate directors to our board of directors in proportion its ownership stake in ourcompany. So long as BioLexis maintains beneficial ownership of at least 50% but less than or equal to 57%of our company, it shall be entitled to nominate a majority of the directors for election to our board ofdirectors.Also in connection with the September 2017 private placement to BioLexis, we entered into a jointdevelopment and licensing agreement with BioLexis providing for the development and commercializationof ONS-3010 and ONS-1045 biosimilar product candidates in emerging markets, but explicitly excluding128TABLE OF CONTENTSmajor developed markets, such as the United States, Canada, Europe, Japan, Australia and New Zealand andsmaller markets where we have existing licensing agreements, including Mexico, greater China and India.In exchange for granting BioLexis a perpetual, irrevocable, exclusive, sublicensable license in the agreedterritory for research, development, manufacture, use or sale of ONS-3010 and ONS-1045 biosimilarproduct candidates, BioLexis made a signing payment of  $50,000, and an additional payment of $2.45 million upon the initial sale of the Series A Convertible under the purchase agreement. We mayreceive up to an additional $2.5 million milestone payments under the agreement for each licensed productupon achievement of certain net profit thresholds. We agreed with BioLexis to share net profits based onsales of licensed products in the agreed territory, in proportions weighed in BioLexis’ favor, subject toadjustment as provided in the agreement. The agreement superseded and replaced a strategic licensingagreement dated July 25, 2017 by and between our company and BioLexis pursuant to which we receivedan aggregate $2.5 million in payments.May 2018 Private Placement OfferingIn May 2018, we entered into a purchase agreement with BioLexis pursuant to which BioLexis agreed topurchase, in a private placement, 12,754,767 shares of common stock and warrants to acquire an aggregate20,512,820 shares of our common stock for $15.0 million in two tranches. We completed the sale of thefirst tranche of 6,377,383 shares of common stock and warrants to acquire an aggregate 10,256,410 sharesof our common stock for $7.5 million in May 2018. In June 2018, we consummated the sale of theremaining 6,377,383 shares of common stock and warrants to acquire an aggregate 10,256,410 shares ofour common stock for $7.5 million. We also amended the BioLexis investor rights agreement to clarify thatthe securities issued in this private placement had the same rights as shares issued in the initialSeptember 2017 investment.Conversion of Series A Convertible and Exchange for Series A-1 ConvertibleIn June 2018, BioLexis converted 208,836 shares of its Series A Convertible into 31,572,617 shares ofcommon stock. In connection therewith, we reached an agreement in principle with BioLexis to exchangethe remaining 52,209 shares of Series A Convertible held by BioLexis (along with accrued but unpaiddividends) for shares of our newly-created Series A-1 Convertible.In July 2018, our Board declared a dividend-in-kind on the Series A Convertible, issuing BioLexis 6,526additional shares of Series A Convertible. Thereafter, we entered into an exchange agreement with BioLexispursuant to which we exchanged 58,735 shares of Series A Convertible held by BioLexis for 58,735 sharesof newly created Series A-1 Convertible. The Series A-1 Convertible has the same conversion and dividendfeatures as the Series A Convertible (10% per annum, compounded quarterly, payable quarterly at ouroption in cash or in kind in additional shares of Series A-1 Convertible), but reflects an increasedredemption premium (110% to 550%) and increased liquidation preference (120% to 600%) that providesBioLexis with similar redemption premium and liquidation preference for its aggregate Series AConvertible holdings before the conversion. Accordingly, there are no longer any shares of Series AConvertible outstanding.In connection with the exchange, we amended the BioLexis investor rights agreement to clarify that theshares of Series A-1 Convertible issued in the exchange had the same rights as shares issued in the initialSeptember 2017 investment.November 2018 Private Placement OfferingIn November 2018, we entered into a purchase agreement with BioLexis pursuant to which BioLexisagreed to purchase, in a private placement, up to $20.0 million of shares of common stock in four tranches,subject to customary closing conditions and meeting certain pre-agreed funding milestones. We completedthe sale of the first tranche of 8,577,248 shares of common stock for $8.0 million in November 2018, andthe second tranche of 4,288,624 shares of common stock for $4.0 million in December 2018. We agreed toclose the remaining two tranches of  $4.0 million each (or 4,288,624 shares each) in January 2019 andFebruary 2019, subject, in each case, to customary closing conditions and achievement of certain fundingmilestones. We also amended the BioLexis investor rights agreement to clarify that the shares issued in thisprivate placement had the same rights as shares issued in the initial September 2017 investment.129TABLE OF CONTENTSSabby Senior Secured Note ExchangeIn connection with the September 2017 private placement to BioLexis, we entered into a purchase andexchange agreement with Sabby pursuant to which Sabby exchanged $1.5 million in aggregate principalamount of senior secured notes for 1,500,000 shares of our newly-created Series B Convertible PreferredStock, or the Series B Convertible. The Series B Convertible was initially convertible into 2,112,676 sharesof our common stock. We closed the exchange on October 30, 2017. The Series B Convertible was not ableto be converted into shares of our common stock if conversion would result in Sabby (together with itsaffiliates and any other persons acting as a group together) beneficially owning in excess of 9.99% (or, ifduring the 6-month period immediately following the exchange, 7.5%).In June 2018, following the conversion of the Series A Convertible by BioLexis, the Series B Convertiblewas converted into an aggregate into 2,112,676 shares of our common stock in accordance with its terms.Accordingly, there are no longer any shares of Series B Convertible outstanding.MTTR, LLC — ONS-5010 Strategic Partnership AgreementIn February 2018, we entered into a strategic partnership agreement with MTTR, LLC, or MTTR, to adviseon regulatory, clinical and commercial strategy and assist in obtaining approval of ONS-5010, ourbevacizumab therapeutic product candidate for ophthalmic indications. Under the terms of the agreement,we currently pay MTTR a $58,333 monthly consulting fee. Beginning January 2019, the monthly feeincreases to $105,208 per month, and then, after launch of ONS-5010 in the United States, to $170,833 permonth (the amount of which is reduced by 50% in the event net sales of ONS-5010 are below a certainthreshold million per year). We also agreed to pay MTTR a tiered percentage of the net profits of ONS-5010 ranging in the low- to mid-teens, with the ability to credit monthly fees paid to MTTR. In March2018, we amended the MTTR agreement and agreed to pay a one-time fee of  $268,553 to MTTR bySeptember 2020 if certain regulatory milestones are achieved earlier than anticipated. For the year endedSeptember 30, 2018, MTTR earned an aggregate of  $602,629, which includes such monthly consultingfees, expense reimbursement and an initial upfront payment of  $75,000.Indemnification AgreementsOur amended and restated certificate of incorporation, as amended, contains provisions limiting the liabilityof directors, and our amended and restated bylaws, as amended, provide that we will indemnify each of ourdirectors and officers to the fullest extent permitted under Delaware law. Our amended and restatedcertificate of incorporation and amended and restated bylaws, each as amended, also provide our board ofdirectors with discretion to indemnify our employees and other agents when determined appropriate by ourboard of directors. In addition, we have entered into an indemnification agreement with each of ourdirectors and executive officers that requires us to indemnify our directors and executive officers.Related-Party Transaction PolicyIn 2016, we adopted a formal written policy that our executive officers, directors, holders of more than 5%of any class of our voting securities, and any member of the immediate family of and any entity affiliatedwith any of the foregoing persons, are not permitted to enter into a related-party transaction with us withoutthe prior consent of our Audit Committee, or other independent members of our board of directors in theevent it is inappropriate for our Audit Committee to review such transaction due to a conflict of interest.Any request for us to enter into a transaction with an executive officer, director, principal stockholder orany of their immediate family members or affiliates, in which the amount involved exceeds $120,000 mustfirst be presented to our Audit Committee for review, consideration and approval. In approving or rejectingany such proposal, our Audit Committee will consider the relevant facts and circumstances available anddeemed relevant to our Audit Committee, including, but not limited to, whether the transaction will be onterms no less favorable than terms generally available to an unaffiliated third-party under the same orsimilar circumstances and the extent of the related-party’s interest in the transaction.Independence of the Board of DirectorsAs required under The Nasdaq Stock Market, LLC, or Nasdaq, listing standards, a majority of the membersof a listed company’s board of directors must qualify as “independent,” as affirmatively130Item 14.Principal Accounting Fees and ServicesTABLE OF CONTENTSdetermined by the board. Our board of directors consults with our counsel to ensure that its determinationsare consistent with relevant securities and other laws and regulations regarding the definition of“independent,” including those set forth in pertinent listing standards of Nasdaq, as in effect from time totime.Consistent with these considerations, after review of all relevant identified transactions or relationshipsbetween each director, or any of his or her family members, and us, our senior management and ourindependent auditors, our board of directors has affirmatively determined that the following six directorsare independent directors within the meaning of the applicable Nasdaq listing standards: Messrs. Thurman,Haddadin, Hilzinger, Sukhtian, Thomas and Dr. Windisch. In making this determination, our board ofdirectors found that none of these directors had a material or other disqualifying relationship with ourcompany.In making those independence determinations, our board of directors took into account certainrelationships and transactions that occurred in the ordinary course of business between us and entities withwhich some of our directors are or have been affiliated, including the relationships and transactionsdescribed in the section of this report captioned “Certain Related-Person Transactions,” and all other factsand circumstances that our board of directors deemed relevant in determining their independence,including the beneficial ownership of our capital stock by each director.The following table represents aggregate fees billed to us for the fiscal years ended September 30, 2018 and2017 by KPMG LLP, our principal accountant.Fiscal Year Ended20182017​Audit Fees$350,000$350,000Audit-related Fees32,50027,500Tax Fees139,98631,504Total Fees$522,486$409,004Audit Fees. This category consists of the annual audit of our consolidated financial statements and theinterim reviews of the quarterly consolidated financial statements.Audit-Related Fees. This category consists of fees related to our initial public offering and servicesrendered in connection with our registration statements.Tax Fees. This category includes all fees associated with tax compliance, tax advice and tax planning work.All Other Fees. None.Pre-Approval Policies and Procedures.Our Audit Committee charter provides that the Audit Committee will approve the fees and other significantcompensation to be paid to our independent auditors, and pre-approve all audit services and all non-auditservices of independent auditors permitted under applicable law. The charter also provides that the AuditCommittee may establish other pre-approval policies and procedures for the engagement of independentauditors to render services to us, including without limitation policies that would allow the delegation ofpre-approval authority to one or more members of the Audit Committee, provided that any pre-approvaldecision is reported to the Audit Committee at its next scheduled meeting. The Audit Committee hasapproved all audit and audit-related work covered by the audit fees, audit-related fees, and tax fees.131Item 15.Exhibits and Financial Statement SchedulesTABLE OF CONTENTSPART IV(a)(1)The financial statements required by Item 15(a) are filed in Item 8 of this Annual Report onForm10-K.(2)The financial statement schedules required by Item 15(a) are omitted because they are notapplicable, not required or the required information is included in the financial statements ornotes thereto as filed in Item 8 of this Annual Report on Form 10-K.EXHIBITSExhibit NumberDescription3.1​Amended and Restated Certificate of Incorporation (incorporated by reference toExhibit 3.1 to the Registrant’s current report on Form 8-K filed with the SEC on May 19,2016).​3.2​Certificate of Designation of Series A-1 Convertible Preferred Stock (incorporated byreference to Exhibit 3.1 to the Registrant’s current report on Form 8-K filed with the SECon July 19, 2018).​3.3​Certificate of Amendment to the Amended and Restated Certificate of Incorporation(incorporated by reference to Exhibit 3.1 to the Registrant’s current report on Form 8-Kfiled with the SEC on December 6, 2018).​3.4​Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to the Registrant’scurrent report on Form 8-K filed with the SEC on May 19, 2016).​3.5​Amendment to the Amended and Restated Bylaws (incorporated by reference toExhibit 3.1 to the Registrant’s current report on Form 8-K filed with the SEC onNovember 29, 2016).​10.1#​2011 Stock Incentive Plan (incorporated by reference to Exhibit 10.2 to the Registrant’sregistration statement on Form S-1 (File No. 333-209011) filed with the SEC onJanuary 15, 2016).​10.2#​Form of Amended and Restated Performance Stock Unit Agreement for 2011 StockIncentive Plan (incorporated by reference to Exhibit 10.29 to the Registrant’s registrationstatement on Form S-1 (File No. 333-209011) filed with the SEC on April 27, 2016).​10.3#​2015 Equity Incentive Plan, as amended (incorporated by reference to Exhibit 99.1 to theRegistrant’s current report on Form 8-K filed with the SEC on September 24, 2018).​10.4#​Forms of agreements and award grant notices for 2015 Equity Incentive Plan(incorporated by reference to Exhibit 10.4 to the Registrant’s registration statement onForm S-1 (File No. 333-209011) filed with the SEC on January 15, 2016).​10.5#​2016 Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.5 to theRegistrant’s registration statement on Form S-1 (File No. 333-209011) filed with the SECon February 12, 2016).​10.6#​Form of Indemnity Agreement, by and between the Registrant and each of its directors andexecutive officers (incorporated by reference to Exhibit 10.12 to the Registrant’sregistration statement on Form S-1 (File No. 333-209011) filed with the SEC onJanuary 15, 2016).​10.7#​Employment Agreement between the Registrant and Pankaj Mohan, Ph.D. datedFebruary 22, 2016 (incorporated by reference to Exhibit 10.25 to the Registrant’sregistration statement on Form S-1 (File No. 333-209011) filed with the SEC on April 27,2016).​10.8#​Separation Agreement and Release by and between the Registrant and Pankaj Mohan,Ph.D., dated July 2, 2018 (incorporated by reference to Exhibit 10.5 to the Registrant’squarterly report on Form 10-Q filed with the SEC on August 14, 2018).​132TABLE OF CONTENTSExhibit NumberDescription10.9#​Consulting Agreement and Release by and between the Registrant and Pankaj Mohan,Ph.D., dated July 2, 2018 (incorporated by reference to Exhibit 10.6 to the Registrant’squarterly report on Form 10-Q filed with the SEC on August 14, 2018).​10.10#​Executive Employment Agreement between the Registrant and Lawrence A. Kenyon,dated October 22, 2018 (incorporated by reference to Exhibit 10.1 to the Registrant’scurrent report on Form 8-K filed with the SEC on October 26, 2018).​10.11#​Employment Agreement between the Registrant and Kenneth Bahrt, M.D., datedFebruary 22, 2016 (incorporated by reference to Exhibit 10.26 to the Registrant’sregistration statement on Form S-1 (File No. 333-209011) filed with the SEC on April 27,2016).​10.12#+​Separation Agreement and Release by and between the Registrant and Stephen J.McAndrew, Ph.D., effective as of November 26, 2018.​10.13†​Research License Agreement by and between the Registrant and Selexis SA, effective as ofOctober 3, 2011, as amended by Amendment No. 1 dated as of October 9, 2014(incorporated by reference to Exhibit 10.13 to the Registrant’s registration statement onForm S-1 (File No. 333-209011) filed with the SEC on February 26, 2016).​10.14†​ONS-3010 Commercial License Agreement by and between the Registrant and Selexis SAeffective as of April 11, 2013, as amended effective as of May 21, 2014 (incorporated byreference to Exhibit 10.14 to the Registrant’s registration statement on Form S-1 (FileNo. 333-209011) filed with the SEC on January 15, 2016).​10.15†​ONS-1045 Commercial License Agreement by and between the Registrant and Selexis SAeffective as of April 11, 2013, as amended effective as of May 21, 2014 (incorporated byreference to Exhibit 10.15 to the Registrant’s registration statement on Form S-1 (FileNo. 333-209011) filed with the SEC on January 15, 2016).​10.16†​ONS-1050 Commercial License Agreement by and between the Registrant and Selexis SAeffective as of April 11, 2013, as amended effective as of May 21, 2014 (incorporated byreference to Exhibit 10.16 to the Registrant’s registration statement on Form S-1 (File No.333-209011) filed with the SEC on January 15, 2016).​10.17​Joint Participation Agreement by and between the Registrant and Zhejiang HuahaiPharmaceutical Co., Ltd., effective as of May 6, 2013, as amended by that AmendmentNo. 1 and Mutual Termination Agreement re: Joint Participation Agreement, datedDecember 23, 2014 (incorporated by reference to Exhibit 10.17 to the Registrant’sregistration statement on Form S-1 (File No. 333-209011) filed with the SEC onJanuary 15, 2016).​10.18*+​Strategic Partnership Agreement by and between the Registrant and MTTR, LLC, effectiveas of February 15, 2018, as amended by the Letter Addendum dated March 2, 2018.​10.19​Lease Agreement by and between the Registrant and Cedar Brook 7 Corporate Center, LP,dated as of March 18, 2011 (incorporated by reference to Exhibit 10.18 to the Registrant’sregistration statement on Form S-1 (File No. 333-209011) filed with the SEC onJanuary 15, 2016).​10.20​First Amendment to Lease Agreement by and between the Registrant and Cedar Brook 7Corporate Center, LP, dated as of December 2013 (incorporated by reference toExhibit 10.19 to the Registrant’s registration statement on Form S-1 (File No. 333-209011)filed with the SEC on January 15, 2016).​10.21​Second Amendment to Lease Agreement by and between the Registrant and Cedar Brook 7Corporate Center, LP, dated as of July 18, 2014 (incorporated by reference toExhibit 10.20 to the Registrant’s registration statement on Form S-1 (File No. 333-209011)filed with the SEC on January 15, 2016).​133TABLE OF CONTENTSExhibit NumberDescription10.22​Third Amendment to Lease Agreement by and between the Registrant and Cedar Brook 7Corporate Center, LP, dated as of January 16, 2015 (incorporated by reference toExhibit 10.21 to the Registrant’s registration statement on Form S-1 (File No. 333-209011)filed with the SEC on January 15, 2016).​10.23​Fourth Amendment to Lease Agreement by and between the Registrant and Cedar Brook 7Corporate Center, LP, dated as of February 9, 2015 (incorporated by reference toExhibit 10.22 to the Registrant’s registration statement on Form S-1 (File No. 333-209011)filed with the SEC on January 15, 2016).​10.24​Fifth Amendment to Lease Agreement by and between the Registrant and Cedar Brook 7Corporate Center, LP, dated as of September 26, 2015 (incorporated by reference toExhibit 10.23 to the Registrant’s registration statement on Form S-1 (File No. 333-209011)filed with the SEC on January 15, 2016).​10.25​Sixth Amendment to Lease Agreement by and between the Registrant and Cedar Brook 7Corporate Center, LP, dated as of February 1, 2018 (incorporated by reference toExhibit 10.1 to the Registrant’s current report on Form 8-K filed with the SEC onFebruary 7, 2018).​10.26+​Lease Termination Agreement by and between the Registrant and Cedar Brook EastCorporate Center, LP, dated as of August 28, 2018.​10.27​Form of Warrant to Purchase Common Stock (incorporated by reference to Exhibit 10.30to the Registrant’s registration statement on Form S-1 (File No. 333-209011) filed with theSEC on May 11, 2016).​10.28​Securities Purchase Agreement between the Registrant and Sabby Healthcare MasterFund Ltd., dated May 11, 2016 (incorporated by reference to Exhibit 10.1 to theRegistrant’s current report on Form 8-K filed with the SEC on May 19, 2016).​10.29​Warrant Agreement by and between the Registrant and American Stock Transfer & TrustCompany LLC, as Warrant Agent dated May 18, 2016 (incorporated by reference toExhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC onJune 27, 2016).​10.30​Amendment to the Warrant Agreement dated May 18, 2016 by the Registrant andAmerican Stock Transfer & Trust Company LLC, as Warrant Agent, dated February 6,2017 (incorporated by reference to Exhibit 10.1 to the Registrant’s current report on Form8-K filed with the SEC on February 6, 2017).​10.31​Amendment #2 to the Warrant Agreement dated May 18, 2016 by and between theRegistrant and American Stock Transfer & Trust Company LLC, as Warrant Agent, datedFebruary 9, 2018 (incorporated by reference to Exhibit 10.1 to the Registrant’s currentreport on Form 8-K filed with the SEC on February 9, 2018).​10.32​Form of Series A warrant certificate (included in Exhibit A to Exhibit 10.29).​10.33​Note and Warrant Purchase Agreement by and between the Registrant and the Purchasersnamed therein dated December 22, 2016 (incorporated by reference to Exhibit 10.1 to theRegistrant’s current report on Form 8-K filed with the SEC on December 23, 2016).​10.34​First Amendment to Note and Warrant Purchase Agreement by and the Registrant and theNoteholders named therein, dated April 13, 2017 (incorporated by reference toExhibit 10.1 to the Registrant’s current report on Form 8-K filed with the SEC on April 17,2017).​10.35​Note, Warrant and Registration Rights Amendment and Waiver, dated September 7, 2017(incorporated by reference to Exhibit 10.9 to the Registrant’s current report on Form 8-Kfiled with the SEC on September 11, 2017).​134TABLE OF CONTENTSExhibit NumberDescription10.36​Second Note and Warrant Amendment and Waiver, dated November 5, 2018(incorporated by reference to Exhibit 10.3 to the Registrant’s current report on Form 8-Kfiled with the SEC on November 9, 2018).​10.37​Form of Senior Secured Promissory Note (included as Exhibit A to the Note and WarrantPurchase Agreement filed as Exhibit 10.33).​10.38​Form of Warrant (included as Exhibit B to the Note and Warrant Purchase Agreement filedas Exhibit 10.33).​10.39​Security Agreement by and between the Registrant and the Secured Parties named thereindated December 22, 2016 (incorporated by reference to Exhibit 10.4 to the Registrant’scurrent report on Form 8-K filed with the SEC on December 23, 2016).​10.40​Intellectual Property Security Agreement by and between the Registrant and the SecuredParties named therein dated December 22, 2016 (incorporated by reference to Exhibit 10.5to the Registrant’s current report on Form 8-K filed with the SEC on December 23, 2016).​10.41​Registration Rights Agreement by and among the Registrant and the Investors namedtherein, dated February 3, 2017 (incorporated by reference to Exhibit 10.1 to theRegistrant’s current report on Form 8-K filed with the SEC on February 3, 2017).​10.42​Purchase and Exchange Agreement by and between the Registrant and the Noteholdersnamed therein, dated September 7, 2017 (incorporated by reference to Exhibit 10.2 to theRegistrant’s current report on Form 8-K filed with the SEC on September 11, 2017).​10.43​Purchase Agreement by and between the Registrant. and Lincoln Park Capital Fund, LLC,dated March 8, 2017 (incorporated by reference to Exhibit 10.1 to the Registrant’s currentreport on Form 8-K filed with the SEC on March 9, 2017).​10.44​Registration Rights Agreement by and between the Registrant and Lincoln Park CapitalFund, LLC, dated March 8, 2017 (incorporated by reference to Exhibit 10.2 to theRegistrant’s current report on Form 8-K filed with the SEC on March 9, 2017).​10.45​Purchase Agreement by and between the Registrant and BioLexis Pte. Ltd. (formerly GMSTenshi Holdings Pte. Limited), dated September 7, 2017 (incorporated by reference toExhibit 10.1 to the Registrant’s current report on Form 8-K filed with the SEC onSeptember 11, 2017).​10.46​Form of Warrant to Purchase Common Stock of the Registrant (incorporated by referenceto Exhibit 4.1 to the Registrant’s current report on Form 8-K filed with the SEC onSeptember 11, 2017).​10.47​Investor Rights Agreement by and between the Registrant and BioLexis Pte. Ltd. (formerlyGMS Tenshi Holdings Pte. Limited), dated September 11, 2017 (incorporated by referenceto Exhibit 10.3 to the Registrant’s current report on Form 8-K filed with the SEC onSeptember 11, 2017).​10.48​Amendment to Investor Rights Agreement by and between the Registrant and BioLexis Pte.Ltd. (formerly GMS Tenshi Holdings Pte. Limited), dated May 11, 2018 (incorporated byreference to Exhibit 10.2 to the Registrant’s current report on Form 8-K filed with the SECon May 15, 2018).​10.49​Second Amendment to Investor Rights Agreement by and between the Registrant, andBioLexis Pte. Ltd. (formerly GMS Tenshi Holdings Pte. Limited), dated July 18, 2018(incorporated by reference to Exhibit 10.2 to the Registrant’s current report on Form 8-Kfiled with the SEC on July 19, 2018).​10.50​Third Amendment to Investor Rights Agreement by and between the Registrant andBioLexis Pte. Ltd., dated November 5, 2018 (incorporated by reference to Exhibit 10.2 tothe Registrant’s current report on Form 8-K filed with the SEC on November 9, 2018).​135+Filed herewith.†Confidential treatment has been granted for certain information contained in this document pursuant toan order of the SEC. Such information (indicated by asterisks) has been omitted and been filedseparately with the SEC.*Portions of this exhibit (indicated by asterisks) have been omitted pursuant to a request for confidentialtreatment and this exhibit has been filed separately with the SEC.#Indicates management contract or compensatory plan.Item 16.Form 10-K SummaryTABLE OF CONTENTSExhibit NumberDescription10.51​Purchase Agreement by and between the Registrant and BioLexis Pte. Ltd. (formerly GMSTenshi Holdings Pte. Limited), dated May 11, 2018 (incorporated by reference toExhibit 10.1 to the Registrant’s current report on Form 8-K filed with the SEC on May 15,2018).​10.52​Form of Warrant to Purchase Common Stock of the Registrant (incorporated by referenceto Exhibit 4.1 to the Registrant’s current report on Form 8-K filed with the SEC onMay 15, 2018).​10.53​Term Sheet, Convertible Preferred Equity Investment in the Registrant by and between theRegistrant and BioLexis Pte. Ltd. (formerly GMS Tenshi Holdings Pte. Limited), datedJune 20, 2018 (incorporated by reference to Exhibit 10.4 to the Registrant’s quarterlyreport on Form 10-Q filed with the SEC on August 14, 2018).​10.54​Exchange Agreement by and between the Registrant and BioLexis Pte. Ltd. (formerlyGMS Tenshi Holdings Pte. Limited), dated July 18, 2018 (incorporated by reference toExhibit 10.1 to the Registrant’s current report on Form 8-K filed with the SEC on July 19,2018).​10.55​Purchase Agreement by and between the Registrant and BioLexis Pte. Ltd. (formerly GMSTenshi Holdings Pte. Limited), dated November 5, 2018 (incorporated by reference toExhibit 10.1 to the Registrant’s current report on Form 8-K filed with the SEC onNovember 9, 2018).​23.1+​Consent of independent registered public accounting firm.​31.1+​Certification of Principal Executive Officer and Principal Financial Officer pursuant toRules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934,as amended.​32.1+​Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of2002.​101.INS​XBRL Instance Document​101.SCH​XBRL Taxonomy Extension Schema Document​101.CAL​XBRL Taxonomy Extension Calculation Linkbase Document​101.DEF​XBRL Definition Linkbase Document​101.LAB​XBRL Taxonomy Extension Labels Linkbase Document​101.PRE​XBRL Taxonomy Extension Presentation Linkbase Document​None.136TABLE OF CONTENTSSIGNATURESPursuant to the requirements of Section 13 or 15(d) the Securities Exchange Act of 1934, the registrant hasduly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.Date: December 18, 2018By:/s/ Lawrence A. KenyonName:Lawrence A. KenyonTitle:President, Chief Executive Officer and ChiefFinancial OfficerSIGNATURESPursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K hasbeen signed below by the following persons on behalf of the registrant and in the capacities and on thedates indicated.​/s/ Ralph H. ThurmanRalph H. ThurmanExecutive ChairmanDecember 18, 2018​/s/ Lawrence A. KenyonLawrence A. KenyonPresident, Chief Executive Officer, ChiefFinancial Officer, Treasurer, Secretary andDirector (Principal Executive, Financial andAccounting Officer)December 18, 2018​/s/ Yezan HaddadinYezan HaddadinDirectorDecember 18, 2018​/s/ Kurt J. HilzingerKurt J. HilzingerDirectorDecember 18, 2018​/s/ Pankaj Mohan, Ph.D.Pankaj Mohan, Ph.D.DirectorDecember 18, 2018​/s/ Faisal G. SukhtianFaisal G. SukhtianDirectorDecember 18, 2018​/s/ Joe ThomasJoe ThomasDirectorDecember 18, 2018​/s/ Joerg Windisch, Ph.D.Joerg Windisch, Ph.D.DirectorDecember 18, 2018137Exhibit 10.12 SEPARATION AGREEMENT AND RELEASE This Separation Agreement and Release (“Agreement”) is made by and between Stephen J. McAndrew, Ph.D. (“Employee”) and Oncobiologics, Inc.(the “Company”) (collectively referred to as the “Parties” or individually referred to as a “Party”). RECITALS WHEREAS, Employee was employed by the Company; WHEREAS, Employee signed an Executive Employment Agreement with the Company on or about February 19, 2016 (the “EmploymentAgreement”); WHEREAS, Employee signed an Employee Proprietary Information, Inventions, Non-Competition and Non-Solicitation Agreement with theCompany on February 26, 2016 (the “Confidentiality Agreement”); WHEREAS, Employee is separating from employment with the Company effective November 9, 2018 (the “Separation Date”); WHEREAS, the Parties wish to resolve any and all disputes, claims, complaints, grievances, charges, actions, petitions, and demands that theEmployee may have against the Company and any of the Releasees as defined below, including, but not limited to, any and all claims arising out of or in anyway related to Employee’s employment with or separation from the Company; NOW, THEREFORE, in consideration of the mutual promises made herein, the Company and Employee hereby agree as follows: COVENANTS 1. Consideration. In consideration of Employee’s execution of this Agreement and Employee’s fulfillment of all of its terms and conditions,and provided that Employee does not revoke the Agreement under Section 5 below, the Company agrees as follows: a. Cash Consideration. The Company will make severance payments to Employee in the form of continuation of Employee’s base salaryin effect on the Separation Date for the equivalent of nine (9) months following the Separation Date (the “Salary Continuation”). These payments will besubject to standard payroll deductions and withholdings and will be made on the Company’s ordinary payroll dates, provided that the first payment shall bemade on the date that is sixty (60) days following the Separation Date (the “Severance Pay Commencement Date”), provided the Company has received theexecuted Agreement from Employee on or before that date. On the Severance Pay Commencement Date, the Company will pay in a lump sum the aggregateamount of the Salary Continuation under this Section 1(a) that the Company would have paid Employee through such date had the payments commenced onthe Separation Date through the Severance Pay Commencement Date, with the balance paid thereafter on the applicable schedule described above. b. COBRA. If Employee timely elects continued coverage under COBRA for himself and his covered dependents under the Company’sgroup health plans following the Separation Date, then the Company will pay, as and when due to the insurance carrier or COBRA administrator (asapplicable), Employee’s COBRA premiums until the earliest of (A) nine (9) months after the Separation Date (B) the expiration of Employee’s eligibility forthe continuation coverage under COBRA, or (C) the date when Employee becomes eligible for substantially equivalent health insurance coverage inconnection with new employment or self-employment (such period from the termination date through the earliest of (A) through (C), the “COBRA PaymentPeriod”). Notwithstanding the foregoing, if at any time the Company determines, in its sole discretion, that the payment of the COBRA premiums wouldresult in a violation of the nondiscrimination rules of Section 105(h)(2) of the Code or any statute or regulation of similar effect (including but not limited tothe 2010 Patient Protection and Affordable Care Act, as amended by the 2010 Health Care and Education Reconciliation Act), then provided Employeeremains eligible for reimbursement in accordance with this Section 1(b), in lieu of providing the COBRA premiums, the Company will instead pay Employeeon the last day of each remaining month of the COBRA Payment Period, a fully taxable cash payment equal to the COBRA premiums for that month, subjectto applicable tax withholdings for the remainder of the COBRA Payment Period. If Employee becomes eligible for coverage under another employer's grouphealth plan through self-employment or otherwise ceases to be eligible for COBRA during the period provided in this clause, Employee must immediatelynotify the Company of such event, and all payments and obligations under this clause will cease. Page 1 of 7  c. Equity Award Acceleration. You were issued stock options with respect to common stock of the Company pursuant to the Company’s2015 Equity Incentive Plan (the “Plan”) and stock option grant notices and agreements (the “Grant Agreements”) that remain outstanding as of theSeparation Date as set forth on Exhibit A (the “Equity Awards”). Fifty percent (50%) of the shares of Company common stock subject to the Equity Awardsoutstanding as of the Separation Date that were subject to time-based vesting requirements that have not otherwise vested as of the Separation Date will bedeemed vested as of the Separation Date as set forth on Exhibit A. Vesting of the Equity Awards will otherwise cease as of the Separation Date, and you willforfeit the Equity Awards with respect to any unvested shares. The Equity Awards will continue to be governed by the terms of the Plan and the GrantAgreements governing the Equity Awards. d. General. Employee acknowledges and agrees that without this Agreement, Employee is otherwise not entitled to the considerationlisted in this Section 1. 2. Benefits. Employee’s health insurance benefits shall cease on the Separation Date, unless otherwise stated in the Company’s healthinsurance plan documents and subject to Employee’s right to continue Employee’s health insurance under COBRA. Employee’s participation in all benefitsand incidents of employment, including, but not limited to, vesting in equity awards, and the accrual of bonuses, vacation, and paid time off, ceased as of theSeparation Date. 3. Payment of Salary and Receipt of All Benefits. Employee acknowledges and represents that, other than the consideration set forth in thisAgreement, the Company and its agents have paid or provided all salary, wages, bonuses, accrued vacation/paid time off, notice periods, premiums, leaves,housing allowances, relocation costs, interest, severance, outplacement costs, fees, reimbursable expenses, commissions, stock, stock options, vesting, andany and all other benefits and compensation due to Employee. 4. Release of Claims. Employee agrees that the foregoing consideration represents settlement in full of all outstanding obligations owed toEmployee by the Company and its current and former officers, directors, employees, agents, investors, attorneys, shareholders, administrators, affiliates,benefit plans, plan administrators, professional employer organization or co-employer, insurers, trustees, divisions, and subsidiaries, and predecessor andsuccessor corporations and assigns (collectively, the “Releasees”). Employee, on Employee’s own behalf and on behalf of Employee’s respective heirs,family members, executors, agents, and assigns, hereby and forever releases the Releasees from, and agrees not to sue concerning, or in any manner toinstitute, prosecute, or pursue, any claim, complaint, charge, duty, obligation, demand, or cause of action relating to any matters of any kind, whetherpresently known or unknown, suspected or unsuspected, that Employee may possess against any of the Releasees arising from any omissions, acts, facts, ordamages that have occurred up until and including the Effective Date of this Agreement, including, without limitation: a. any and all claims relating to or arising from Employee’s employment relationship with the Company and the termination of thatrelationship; b. any and all claims relating to, or arising from, Employee’s right to purchase, or actual purchase of equity in the Company, including,without limitation, any claims for fraud, misrepresentation, breach of fiduciary duty, breach of duty under applicable state corporate law, and securities fraudunder any state or federal law; c. any and all claims for wrongful discharge of employment; termination in violation of public policy; discrimination; harassment;retaliation; breach of contract, both express and implied; breach of covenant of good faith and fair dealing, both express and implied; promissory estoppel;negligent or intentional infliction of emotional distress; fraud; negligent or intentional misrepresentation; negligent or intentional interference with contractor prospective economic advantage; unfair business practices; defamation; libel; slander; negligence; personal injury; assault; battery; invasion of privacy;false imprisonment; conversion; and disability benefits; Page 2 of 7  d. any and all claims for violation of any federal, state, or municipal statute, including, but not limited to, Title VII of the Civil RightsAct of 1964; the Civil Rights Act of 1991; the Rehabilitation Act of 1973; the Americans with Disabilities Act of 1990; the Equal Pay Act; the Fair LaborStandards Act; the Fair Credit Reporting Act; the Age Discrimination in Employment Act of 1967; the Older Workers Benefit Protection Act; the EmployeeRetirement Income Security Act of 1974; the Worker Adjustment and Retraining Notification Act; the Family and Medical Leave Act; the UniformedServices Employment and Reemployment Rights Act; the New Jersey Law Against Discrimination; the New Jersey Equal Pay Act; the New JerseyConscientious Employee Protection Act; the New Jersey Civil Rights Act; the New Jersey Family Leave Act; the New Jersey State Wage and Hour Law; andthe New Jersey Wage Withholding Protection Law. e. any and all claims for violation of the federal or any state constitution; f. any and all claims arising out of any other laws and regulations relating to employment or employment discrimination; g. any claim for any loss, cost, damage, or expense arising out of any dispute over the nonwithholding or other tax treatment of any ofthe proceeds received by Employee as a result of this Agreement; and h. any and all claims for attorneys’ fees and costs. Employee agrees that the release set forth in this section shall be and remain in effect in all respects as a complete general release as to the matters released.This release does not extend to any obligations incurred under this Agreement. This release does not release claims that cannot be released as a matter of law,including any Protected Activity (as defined below). This release does not extend to any right Employee may have to unemployment compensation benefitsor workers’ compensation benefits. Employee represents that Employee has made no assignment or transfer of any right, claim, complaint, charge, duty,obligation, demand, cause of action, or other matter waived or released by this Section. 5. Acknowledgment of Waiver of Claims under ADEA. Employee acknowledges that Employee is waiving and releasing any rights Employeemay have under the Age Discrimination in Employment Act of 1967 ("ADEA"), and that this waiver and release is knowing and voluntary. Employee agreesthat this waiver and release does not apply to any rights or claims that may arise under the ADEA after the Effective Date of this Agreement. Employeeacknowledges that the consideration given for this waiver and release is in addition to anything of value to which Employee was already entitled. Employeefurther acknowledges that Employee has been advised by this writing that: (a) Employee should consult with an attorney prior to executing this Agreement;(b) Employee has forty-five (45) days within which to consider this Agreement; (c) Employee has seven (7) days following Employee’s execution of thisAgreement to revoke this Agreement; (d) this Agreement shall not be effective until after the revocation period has expired; and (e) nothing in this Agreementprevents or precludes Employee from challenging or seeking a determination in good faith of the validity of this waiver under the ADEA, nor does it imposeany condition precedent, penalties, or costs for doing so, unless specifically authorized by federal law. In the event Employee signs this Agreement andreturns it to the Company in less than the 45-day period identified above, Employee hereby acknowledges that Employee has freely and voluntarily chosento waive the time period allotted for considering this Agreement. Employee acknowledges and understands that revocation must be accomplished by awritten notification to the undersigned Company representative that is received prior to the Effective Date. The Parties agree that changes, whether materialor immaterial, do not restart the running of the 45-day period. You further acknowledge that you have received (as Exhibit B hereto) the disclosure statementrequired under the ADEA which provides you with additional information regarding the group layoff of which you are a part (the “ADEA DisclosureSchedule”). 6. No Pending or Future Lawsuits. Employee represents that Employee has no lawsuits, claims, or actions pending in Employee’s name, or onbehalf of any other person or entity, against the Company or any of the other Releasees. Employee also represents that Employee does not intend to bring anyclaims on Employee’s own behalf or on behalf of any other person or entity against the Company or any of the other Releasees. 7. Application for Employment. Employee understands and agrees that, as a condition of this Agreement, Employee shall not be entitled toany employment with the Company, and Employee hereby waives any right, or alleged right, of employment or re-employment with the Company. Employeefurther agrees not to apply for employment with the Company and not otherwise pursue an independent contractor or vendor relationship with the Company. Page 3 of 7  8. Confidentiality. Employee agrees to maintain in complete confidence the existence of this Agreement, the contents and terms of thisAgreement, and the consideration for this Agreement (hereinafter collectively referred to as “Separation Information”). Except as required by law, Employeemay disclose Separation Information only to Employee’s immediate family members, the Court in any proceedings to enforce the terms of this Agreement,Employee’s counsel, and Employee’s accountant and any professional tax advisor to the extent that they need to know the Separation Information in order toprovide advice on tax treatment or to prepare tax returns, and must prevent disclosure of any Separation Information to all other third parties. Employeeagrees that Employee will not publicize, directly or indirectly, any Separation Information. 9. Trade Secrets and Confidential Information/Company Property. Employee reaffirms and agrees to observe and abide by the terms of theConfidentiality Agreement, specifically including the provisions therein regarding nondisclosure of the Company’s trade secrets and confidential andproprietary information and certain restrictions on solicitations and competitive activity. Employee agrees that the above reaffirmation and agreement withthe Confidentiality Agreement shall constitute a new and separately enforceable agreement to abide by the terms of the Confidentiality Agreement, enteredand effective as of the Effective Date. Employee specifically acknowledges and agrees that any violation of the restrictive covenants in the ConfidentialityAgreement and/or this Agreement shall constitute a material breach of this Agreement. Employee’s signature below constitutes Employee’s certificationunder penalty of perjury that Employee has returned all documents and other items provided to Employee by the Company, developed or obtained byEmployee in connection with Employee’s employment with the Company, or otherwise belonging to the Company, including, but not limited to, allpasswords to any software or other programs or data that Employee used in performing services for the Company. 10. No Cooperation. Employee agrees that Employee will not knowingly encourage, counsel, or assist any attorneys or their clients in thepresentation or prosecution of any disputes, differences, grievances, claims, charges, or complaints by any third party against any of the Releasees, unlessunder a subpoena or other court order to do so or as related directly to the ADEA waiver in this Agreement. Employee agrees both to immediately notify theCompany upon receipt of any such subpoena or court order, and to furnish, within three (3) business days of its receipt, a copy of such subpoena or othercourt order. If approached by anyone for counsel or assistance in the presentation or prosecution of any disputes, differences, grievances, claims, charges, orcomplaints against any of the Releasees, Employee shall state no more than that Employee cannot provide counsel or assistance. 11. Nondisparagement. Employee agrees to refrain from any disparagement, defamation, libel, or slander of any of the Releasees, and agrees torefrain from any tortious interference with the contracts and relationships of any of the Releasees. The Company agrees to refrain from any disparagement,defamation, libel, or slander of Employee, and agrees to refrain from any tortious interference with the contracts and relationships of Employee. The Partiesunderstand and agree that the Company’s obligations under this Agreement apply to its officers and only for so long as each remains employed by theCompany. Employee shall direct any inquiries by potential future employers to the Company’s human resources department, which shall provide only theEmployee’s last position and dates of employment. Employee’s violation of this provision shall be a material breach of this Agreement. 12. Breach. In addition to the rights provided in the “Attorneys’ Fees” section below, Employee acknowledges and agrees that any materialbreach of this Agreement, unless such breach constitutes a legal action by Employee challenging or seeking a determination in good faith of the validity ofthe waiver herein under the ADEA, or of any provision of the Confidentiality Agreement shall entitle the Company immediately to recover and/or ceaseproviding the consideration provided to Employee under this Agreement and to obtain damages, except as provided by law, provided, however, that theCompany shall not recover One Hundred Dollars ($100.00) of the consideration already paid pursuant to this Agreement and such amount shall serve as fulland complete consideration for the promises and obligations assumed by Employee under this Agreement and the Confidentiality Agreement. 13. No Admission of Liability. Employee understands and acknowledges that this Agreement constitutes a compromise and settlement of anyand all actual or potential disputed claims by Employee. No action taken by the Company hereto, either previously or in connection with this Agreement,shall be deemed or construed to be (a) an admission of the truth or falsity of any actual or potential claims or (b) an acknowledgment or admission by theCompany of any fault or liability whatsoever to Employee or to any third party. 14. Costs. The Parties shall each bear their own costs, attorneys’ fees, and other fees incurred in connection with the preparation of thisAgreement. Page 4 of 7  15. ARBITRATION. THE PARTIES AGREE THAT ANY AND ALL DISPUTES ARISING OUT OF THE TERMS OF THIS AGREEMENT,THEIR INTERPRETATION, AND ANY OF THE MATTERS HEREIN RELEASED, SHALL BE SUBJECT TO ARBITRATION IN MIDDLESEX COUNTY,BEFORE THE JUDICIAL ARBITRATION AND MEDIATION SERVICE (“JAMS”) UNDER ITS COMPREHENSIVE ARBITRATION RULES (“JAMSRULES”) AND NEW JERSEY LAW. THE ARBITRATOR MAY GRANT INJUNCTIONS AND OTHER RELIEF IN SUCH DISPUTES. THE ARBITRATORSHALL ADMINISTER AND CONDUCT ANY ARBITRATION IN ACCORDANCE WITH NEW JERSEY LAW, AND THE ARBITRATOR SHALL APPLYSUBSTANTIVE AND PROCEDURAL NEW JERSEY LAW TO ANY DISPUTE OR CLAIM, WITHOUT REFERENCE TO ANY CONFLICT-OF-LAWPROVISIONS OF ANY JURISDICTION. TO THE EXTENT THAT THE JAMS RULES CONFLICT WITH NEW JERSEY LAW, NEW JERSEY LAW SHALLTAKE PRECEDENCE. THE DECISION OF THE ARBITRATOR SHALL BE FINAL, CONCLUSIVE, AND BINDING ON THE PARTIES TO THEARBITRATION. THE PARTIES AGREE THAT THE PREVAILING PARTY IN ANY ARBITRATION SHALL BE ENTITLED TO INJUNCTIVE RELIEF INANY COURT OF COMPETENT JURISDICTION TO ENFORCE THE ARBITRATION AWARD. THE PARTIES TO THE ARBITRATION SHALL EACH PAYHALF THE COSTS AND EXPENSES OF SUCH ARBITRATION, AND EACH PARTY SHALL SEPARATELY PAY FOR ITS RESPECTIVE COUNSEL FEESAND EXPENSES; PROVIDED, HOWEVER, THAT THE ARBITRATOR SHALL AWARD ATTORNEYS’ FEES AND COSTS TO THE PREVAILING PARTY,EXCEPT AS PROHIBITED BY LAW. THE PARTIES AGREE THAT PUNITIVE DAMAGES SHALL BE UNAVAILABLE IN ARBITRATION. THE PARTIESHEREBY AGREE TO WAIVE THEIR RIGHT TO HAVE ANY DISPUTE BETWEEN THEM RESOLVED IN A COURT OF LAW BY A JUDGE OR JURY.NOTWITHSTANDING THE FOREGOING, THIS SECTION WILL NOT PREVENT EITHER PARTY FROM SEEKING INJUNCTIVE RELIEF (OR ANYOTHER PROVISIONAL REMEDY) FROM ANY COURT HAVING JURISDICTION OVER THE PARTIES AND THE SUBJECT MATTER OF THEIRDISPUTE RELATING TO THIS AGREEMENT AND THE AGREEMENTS INCORPORATED HEREIN BY REFERENCE. SHOULD ANY PART OF THEARBITRATION AGREEMENT CONTAINED IN THIS PARAGRAPH CONFLICT WITH ANY OTHER ARBITRATION AGREEMENT BETWEEN THEPARTIES, THE PARTIES AGREE THAT THIS ARBITRATION AGREEMENT SHALL GOVERN. 16. Authority. The Company represents and warrants that the undersigned has the authority to act on behalf of the Company and to bind theCompany and all who may claim through it to the terms and conditions of this Agreement. Employee represents and warrants that Employee has the capacityto act on Employee’s own behalf and on behalf of all who might claim through Employee to bind them to the terms and conditions of this Agreement. EachParty warrants and represents that there are no liens or claims of lien or assignments in law or equity or otherwise of or against any of the claims or causes ofaction released herein. 17. Protected Activity. Employee understands that nothing in this Agreement shall in any way limit or prohibit Employee from engaging for alawful purpose in any Protected Activity, provided, however, that Employee agrees not to seek or accept any monetary award from such a proceeding (exceptwith respect to proceedings before the Securities and Exchange Commission). For purposes of this Agreement, “Protected Activity” shall mean filing acharge, complaint, or report with, or otherwise communicating with, cooperating with or participating in any investigation or proceeding that may beconducted by, any federal, state or local government agency or commission, including the Securities and Exchange Commission, the Equal EmploymentOpportunity Commission, the Occupational Safety and Health Administration, and the National Labor Relations Board (“Government Agencies”). Employeeunderstands that in connection with such Protected Activity, Employee is permitted to disclose documents or other information as permitted by law, andwithout giving notice to, or receiving authorization from, the Company. Notwithstanding the foregoing, Employee agrees to take all reasonable precautionsto prevent any unauthorized use or disclosure of any information that may constitute Company confidential information under the ConfidentialityAgreement to any parties other than the relevant Government Agencies. Employee further understands that “Protected Activity” does not include thedisclosure of any Company attorney-client privileged communications, and that any such disclosure without the Company’s written consent shall constitutea material breach of this Agreement. In addition, pursuant to the Defend Trade Secrets Act of 2016, Employee is notified that an individual will not be heldcriminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that (i) is made in confidence to a federal, state, orlocal government official (directly or indirectly) or to an attorney solely for the purpose of reporting or investigating a suspected violation of law, or (ii) ismade in a complaint or other document filed in a lawsuit or other proceeding, if (and only if) such filing is made under seal. In addition, an individual whofiles a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the individual’s attorney and use thetrade secret information in the court proceeding, if the individual files any document containing the trade secret under seal and does not disclose the tradesecret, except pursuant to court order. Page 5 of 7  18. No Representations. Employee represents that Employee has had an opportunity to consult with an attorney, and has carefully read andunderstands the scope and effect of the provisions of this Agreement. Employee has not relied upon any representations or statements made by the Companythat are not specifically set forth in this Agreement. 19. Severability. In the event that any provision or any portion of any provision hereof or any surviving agreement made a part hereof becomesor is declared by a court of competent jurisdiction or arbitrator to be illegal, unenforceable, or void, this Agreement shall continue in full force and effectwithout said provision or portion of provision. 20. Attorneys’ Fees. Except with regard to a legal action challenging or seeking a determination in good faith of the validity of the waiverherein under the ADEA, in the event that either Party brings an action to enforce or effect its rights under this Agreement, the prevailing Party shall beentitled to recover its costs and expenses, including the costs of mediation, arbitration, litigation, court fees, and reasonable attorneys’ fees incurred inconnection with such an action. 21. Entire Agreement. This Agreement represents the entire agreement and understanding between the Company and Employee concerning thesubject matter of this Agreement and Employee’s employment with and separation from the Company and the events leading thereto and associatedtherewith, and supersedes and replaces any and all prior agreements and understandings concerning the subject matter of this Agreement and Employee’srelationship with the Company, including the Employment Agreement, with the exception of the dispute resolution and cooperation provisions in theEmployment Agreement, the Confidentiality Agreement, and any agreements between the Company and Employee relating to stock, stock options, orrestricted stock units. 22. No Oral Modification. This Agreement may only be amended in a writing signed by Employee and the Company’s Chief Executive Officer. 23. Governing Law. This Agreement shall be governed by the laws of the State of New Jersey, without regard for choice-of-law provisions.Employee consents to personal and exclusive jurisdiction and venue in the State of New Jersey. 24. Effective Date. Employee understands that this Agreement shall be null and void if not executed by Employee, and returned to theCompany, within the forty-five (45) day period set forth above. Each Party has seven (7) days after that Party signs this Agreement to revoke it. ThisAgreement will become effective on the eighth (8th) day after Employee signed this Agreement, so long as it has been signed by the Parties and has not beenrevoked by either Party before that date (the “Effective Date”). 25. Counterparts. This Agreement may be executed in counterparts and each counterpart shall be deemed an original and all of whichcounterparts taken together shall have the same force and effect as an original and shall constitute an effective, binding agreement on the part of each of theundersigned. The counterparts of this Agreement may be executed and delivered by facsimile, photo, email PDF, Docusign/Echosign or a similarly accreditedsecure signature service, or other electronic transmission or signature. This Agreement may be executed in one or more counterparts, and counterparts may beexchanged by electronic transmission (including by email), each of which will be deemed an original, but all of which together constitute one and the sameinstrument. 26. Voluntary Execution of Agreement. Employee understands and agrees that Employee executed this Agreement voluntarily, without anyduress or undue influence on the part or behalf of the Company or any third party, with the full intent of releasing all of Employee’s claims against theCompany and any of the other Releasees. Employee acknowledges that: (a)Employee has read this Agreement; (b)Employee has been represented in the preparation, negotiation, and execution of this Agreement by legal counsel of Employee’sown choice or has elected not to retain legal counsel; (c)Employee understands the terms and consequences of this Agreement and of the releases it contains; and (d)Employee is fully aware of the legal and binding effect of this Agreement. Page 6 of 7  IN WITNESS WHEREOF, the Parties have executed this Agreement on the respective dates set forth below. STEPHEN J. MCANDREW, an individual Dated: November 18, 2018/s/ Stephen J. McAndrew, Ph.D. Stephen J. McAndrew, Ph.D. ONCOBIOLOGICS, INC. Dated: November 9, 2018By/s/ Lawrence A. Kenyon Lawrence A. Kenyon President, Chief Executive Officer & Chief Financial Officer Exhibit A – Equity Interests Exhibit B – ADEA Disclosure Schedule Page 7 of 7  Exhibit A Equity Awards Outstanding as of Separation Date Type of Equity Award Date of Issuance Number of Shares subject to Equity Award Outstanding as of Separation Date Number of SharesVested as of Separation Date(inclusive of accelerated vestingunder Section 1(c) of the Agreement) Number of SharesUnvested as of Separation Date Stock Option 6/15/2018 30,000 15,000 15,000 Stock Option 10/22/2018 200,000 100,000 100,000 A-1  Exhibit BADE Disclosure Schedule B-1  Exhibit 10.18 [***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIESAND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. CONFIDENTIALExecution Version STRATEGIC PARTNERSHIP AGREEMENT THIS STRATEGIC PARTNERSHIP AGREEMENT (the “Agreement”) by and between Oncobiologics, Inc., a Delaware corporation with a principal place ofbusiness at 7 Clarke Drive, Cranbury, New Jersey 08512 USA (“Oncobiologics”), and MTTR, LLC, a Delaware limited liability company, with a principalplace of business at [***] (“MTTR”), is effective as of February 15, 2018 (the “Effective Date”). Oncobiologics and MTTR are sometimes referred to hereinindividually as a “Party” and collectively as the “Parties”. RECITALS WHEREAS, Oncobiologics is a clinical-stage biopharmaceutical company focused on identifying, developing, manufacturing, and commercializingcomplex biosimilar therapeutics in immunology and oncology disease areas; WHEREAS, MTTR is controlled by a group of Consultants (as defined below) that are physicians and/or executives with professional expertise inophthalmology, including scientific, medical and regulatory affairs, as well as commercial operations and strategic planning; WHEREAS, Oncobiologics is developing a biosimilar product of bevacizumab; and WHEREAS, the Parties desire for Oncobiologics to engage MTTR as a consulting company to perform, through its Consultants, the Services (asdefined below), and for MTTR to provide such Services; all on the terms and conditions described herein. NOW THEREFORE, in consideration of the promises and mutual agreements contained herein, the Parties hereto, intending to be legally bound,agree as follows: 1.Definitions 1.1 “Actual Deductible Costs” means the aggregate amount of the following costs incurred after the Effective Date: (a) the aggregate amount of all costs and expenses incurred by Oncobiologics or its Affiliates for the pre-clinical or clinicalDevelopment of Products [***], including all costs identified in Exhibit D as “Development Costs”, in each case, [***], (“Development Costs”); (b) the aggregate amount of all costs and expenses incurred by Oncobiologics or its Affiliates in connection with the manufacture orCommercialization of Products [***]; 1[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIESAND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.(c) the aggregate amount of all costs and expenses incurred by Oncobiologics or its Affiliates in bringing an appropriate suit or otheraction against any person or entity engaged in any existing or threatened infringement of any patent right owned or controlled by Oncobiologics or itsAffiliates that Covers the Development, Commercialization, manufacture, making, having made, use, offering for sale, sale, having sold, importation orexportation of a Product in the Field in the Territory [***]; and (d) to the extent Oncobiologics reasonably believes that it is required to obtain a license or similar right under any Third Party IP tomake, have made, use, offer for sale, sell, have sold, import or export any Product in the Field in the Territory, the aggregate amount of all any royalties,milestones, upfront fees or other payments payable by Oncobiologics or its Affiliates during the Term for such license or similar right pursuant to anagreement with a Third Party (and including, for clarity, any such licenses or similar rights obtained by Oncobiologics prior to the Effective Date for theexercise of similar rights during the Term [***]) (each such agreement with a Third Party, a “THIRD PARTY IP AGREEMENT”). For the purposes of thisAgreement, “THIRD PARTY IP” means any patent right that is owned or controlled by a Third Party and to the extent it Covers the making, having made,using, offering for sale, selling, having sold, importing or exporting a Product in the Field in the Territory. Notwithstanding the foregoing, Actual Deductible Costs shall not include any such costs, expenses or other amounts for which Oncobiologics or itsAffiliates have received prepayment or reimbursement from any Third Party, including in connection with the grant of a license or other right with respect toProduct(s) for the Field in the Territory. For clarity, any amounts excluded from the definition of Other Income under subsections (a) – (c) of Section 1.33shall not be Actual Deductible Costs. 1.2 “ADJUSTED DEDUCTIBLE COST” means, for purposes of the calculation of Net Profits for a Calendar Year, the cumulative Actual DeductibleCosts for a given Product that do not exceed (i) [***] percent ([***]%) of the gross revenues received by Oncobiologics or its Affiliates in such CalendarYear, for the [***] period after First Commercial Sale of such Product, and (ii) [***] ([***]%) of the gross revenues received by Oncobiologics or its Affiliatesin such Calendar Year, for any other Calendar Year. 1.3 “AFFILIATE” means, with respect to a Party, any entity which controls, is controlled by or is under common control with such Party. Forpurposes of this definition only, “control” means the actual power, either directly or indirectly through one or more intermediaries, to direct or cause thedirection of the management and policies of such entity, whether by the ownership of fifty percent (50%) or more of the securities entitled to be votedgenerally or in the election of directors of such entity, or by contract or otherwise. For clarity, once an entity ceases to be an Affiliate of a Party, then, withoutany further action, such entity shall cease to have any rights under this Agreement by reason of being an Affiliate of such Party. 1.4 “Anti-Corruption Laws” means laws, regulations, or orders prohibiting the provision of a financial or other advantage for a corrupt purposeor otherwise in connection with the improper performance of a relevant function, including without limitation, the US Foreign Corrupt Practices Act (FCPA),and similar laws governing corruption and bribery, whether public, commercial or both, to the extent applicable. 2[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIESAND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.1.5 “APPLICABLE LAWS” means, individually and collectively, any federal, state, local, national and supra-national laws, treaties, statutes,ordinances, rules and regulations, that are in effect from time to time during the Term and applicable to a particular activity hereunder. 1.6 “APPROVED INDICATION(S)” means any Indication for which a Product has received Regulatory Approval (whether in the United States or inany other country in the Territory). 1.7 “Biosimilar” means a biological product that: [***] . 1.8 “BPCI ACT” means the Biologics Price Competition and Innovation Act of 2009 within the Patient Protection and Affordable Care Act, asset forth in Section 351(k) of the PHS Act (42 U.S.C. 262), which was signed into law in the United States in March 2010, and as may be subsequentlyamended. 1.9 “Business Day” means a day other than Saturday, Sunday or any day that banks in the U.S. are required or permitted to be closed. 1.10 “CALENDAR QUARTER” means the period beginning on the Effective Date and ending on the last day of the calendar quarter in which theEffective Date falls, and thereafter each successive period of three (3) consecutive calendar months ending on March 31, June 30, September 30 andDecember 31; provided, that, the final Calendar Quarter shall end on the last day of the Term. 1.11 “Calendar Year” means the period beginning on the Effective Date and ending on December 31 of the calendar year in which the EffectiveDate falls, and thereafter each successive period of twelve (12) months commencing on January 1 and ending on December 31; provided, that, the finalCalendar Year shall end on the last day of the Term. 1.12 “Change of Control” means, with respect to Oncobiologics: (a) the sale of all or substantially all of Oncobiologics’s assets or business; (b) amerger, reorganization or consolidation involving Oncobiologics in which the voting securities of Oncobiologics outstanding immediately prior theretocease to represent at least fifty percent (50%) of the combined voting power of the surviving entity immediately after such merger, reorganization orconsolidation; or (c) a person or entity, or group of persons or entities, acting in concert acquire more than fifty percent (50%) of the voting equity securitiesor management control of Oncobiologics. 1.13 “COST OF GOODS SOLD” or “COGS” means the fully burdened costs incurred by Oncobiologics or its Affiliates, in U.S. Dollars (as defined byOncobiologics’s consistent application of GAAP), in manufacturing or having manufactured Products. 3[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIESAND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.1.14 “COMMERCIALLY REASONABLE EFFORTS” means, with respect to a Party’s obligations under this Agreement, the carrying out of suchobligations with a level of efforts and resources consistent with the commercially reasonable practices of a similarly situated company in the pharmaceuticalindustry for developing or seeking Regulatory Approval of a similarly situated branded pharmaceutical product as the Product at a similar stage ofdevelopment, taking into account efficacy, safety, patent and regulatory exclusivity, anticipated or approved labeling, present and future market potential,competitive market conditions, the profitability of the product in light of pricing and reimbursement issues, and all other relevant factors. 1.15 “COMMERCIALIZATION” or “Commercialize” means all activities directed to marketing, promotion, distribution, detailing or selling aProduct (including supply chain, importing and exporting activities in connection therewith). 1.16 “CONFIDENTIAL INFORMATION” of a Party means any and all Information of a Party (the “Disclosing Party”) that is disclosed to the other Party(the “RECEIVING PARTY”) related to activities conducted pursuant to this Agreement, whether in oral, written, graphic, or electronic form, provided that anyinformation that is disclosed in writing shall be marked as “Confidential” and any information not disclosed in writing shall be designated by the DisclosingParty as confidential at the time of its initial disclosure and reduced to a written summary by the Disclosing Party that is marked in a manner to indicate itsconfidential nature and delivered to the Receiving Party within [***] after its initial disclosure (provided, however, that such requirement to summarize inwriting non-written disclosures shall not apply to information that pertains to the Product that the Receiving Party knew, or reasonably should have known,was the Confidential Information of the Disclosing Party). In addition all Information disclosed by a Party pursuant to the Confidentiality Agreementbetween the Parties dated February 2, 2018 (the “CONFIDENTIALITY AGREEMENT”) shall be deemed to be Confidential Information of such Party disclosedhereunder; provided, however, that any use or disclosure of any such Information that is authorized under Article 13 shall not be restricted by, or be deemed aviolation of, the Confidentiality Agreement. 1.17 “CONSULTANT” (or, collectively, “Consultants”) means each of (a) [***], an individual and citizen of the U.S. residing, as of the EffectiveDate, in the state of [***] (“[***]”); (b) [***], an individual and citizen of the U.S. residing, as of the Effective Date, in the state of [***] (“[***]”); (c) Mr.Terry Dagnon, an individual and citizen of the U.S. residing, as of the Effective Date, in the state of [***] (“Mr. Dagnon”); and (d) [***], an individual andcitizen of the U.S. residing, as of the Effective Date, in the state of [***] (“[***]”). 1.18 “COVER,” “COVERING” OR “COVERED” means, with respect to any Product, that the manufacture, use, offer for sale, sale, import or export ofsuch Product in the Field in a particular country in the Territory by a party who has not been granted a license or similar right under patent rights owned orcontrolled by another party would infringe a valid claim of such other party’s patent rights. 1.19 “DEVELOPMENT” (with a correlative meaning for “Develop” and “Developing”) means all activities relating to preclinical and clinical trials,toxicology testing, statistical analysis, publication and presentation of study results and reporting, preparation and submission of applications for obtainingand maintaining Regulatory Approval of Products. 4[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIESAND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.1.20 “FDA” means the United States Food and Drug Administration or any successor entity thereto. 1.21 “FIELD” means the treatment, prevention or cure of any ophthalmic indication, including wet macular degeneration (“Wet AMD”), diabeticmacular edema (“DME”) or diabetic retinopathy (“DR”) (together with retinal vein occlusions, myopic choroidal neovascularization and all otherophthalmic indication, collectively, “Indications”). 1.22 “FIRST COMMERCIAL SALE” means, with respect to each country in the Territory, the first sale for end use or consumption of the Product insuch country in the Territory after Marketing Approval has been granted in such country in the Territory. 1.23 “GAAP” means the then-current generally accepted accounting principles in the United States as established by the Financial AccountingStandards Board or any successor entity or other entity generally recognized as having the right to establish such principles in the United States, in each caseconsistently applied. 1.24 “GOVERNMENTAL AUTHORITY” means any multi-national, national, federal, state, local, municipal, provincial or other governmental authorityof any nature (including any governmental division, prefecture, subdivision, department, agency, bureau, branch, office, commission, council, court or othertribunal). 1.25 “IND” means an Investigational New Drug application filed with the FDA, or an equivalent filing outside of the U.S. 1.26 “INFORMATION” means any data, results, technology, business or financial information or information of any type whatsoever, in anytangible or intangible form, including know-how, trade secrets, practices, techniques, methods, processes, inventions, developments, specifications, formulae,software, algorithms, marketing reports, expertise, technology, test data (including pharmacological, biological, chemical, biochemical, clinical test data anddata resulting from non-clinical studies), CMC information, stability data or other study data and procedures. 1.27 [***]. 1.28 [***]. 1.29 “Marketing Authorization Application” or “MAA” means an application to the appropriate Regulatory Authority for approval to market aProduct in any particular jurisdiction and all amendments and supplements thereto. 1.30 “MARKETING APPROVAL” means an approval for a Product from a Regulatory Authority necessary for the distribution, marketing and sale ofsuch Product, including where necessary to initiate marketing and sales, pricing and reimbursement approval(s). 5[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIESAND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.1.31 “Net Profits” means, with respect to a given Calendar Year, the Other Income and Net Revenue received by Oncobiologics and its Affiliatesin the Field in the Territory, minus Adjusted Deductible Costs, accounted for in accordance with Oncobiologics’s standard accounting practices consistentwith GAAP. Any Actual Deductible Costs that are not accounted for in the definition of “Net Profits” due to the limitations set forth in the definition of“ADJUSTED DEDUCTIBLE COSTS”, below, may be carried forward to the calculation of Net Profits in subsequent Calendar Years until such Actual DeductibleCosts have been fully offset. [***]. Additionally, in calculating Net Profits with respect to sales of Products to Third Parties in the Field in the Territory by aThird Party sublicensee of Oncobiologics only the cash consideration received by the Oncobiologics or its Affiliates in connection with such sale from suchThird Party sublicensee will be included in the calculation of Net Revenues, provided that no other material consideration is received by Oncobiologics inconnection therewith. 1.32 “NET REVENUES” means, with respect to any Product, the gross sales price of such Product sold by Oncobiologics or its Affiliates (the“Selling Party”) to Third Parties, less: [***] Net Revenues will be determined in accordance with GAAP, consistently applied throughout the organization and across all products of the SellingParty whose sales of Products are giving rise to Net Revenues. [***] Where a Product is sold in combination with other pharmaceutical products, diagnostic products, or active ingredients (collectively, “CombinationComponents”) the Net Revenues applicable to such transaction shall be calculated by multiplying the total Net Revenues of such combined productby the fraction A/(A+B), where A is the actual price of the Product in the same formulation and dosage amount or quantities in the applicablecountry during the applicable quarter if sold separately, and B is the sum of the actual prices of all Combination Components with which theProduct is combined, in the same formulation and dosage amount or quantities in the applicable country during the applicable quarter if soldseparately. If A or B cannot be determined because values for the Product or Combination Components with which the Product is combined are notavailable separately in a particular country, then [***]. Sales of Product(s) between or among Oncobiologics and its Affiliates shall be excluded from the computation of Net Revenues and no paymentsshall be payable on such sales except where such Affiliates are end users. 6[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIESAND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.1.33 “Other Income” means any consideration received by Oncobiologics or its Affiliates from a Third Party that is attributable to Product(s) forthe Field in the Territory, including any consideration received in connection with the grant of a license or other right with respect to Product(s) for the Fieldin the Territory, including the grant of an option to obtain such license or other right, but excluding in all cases: (a) payments received from such Third Partyfor the purposes of funding and/or reimbursing expenses incurred by Oncobiologics or any of its Affiliates for [***] research and development activitiesrelated to Products in the Field in the Territory, (b) payments and reimbursements by such Third Party of patent costs incurred by Oncobiologics or itsAffiliates in connection with Products in the Field in the Territory, (c) payments received from such Third Party for the supply of Products by Oncobiologicsor its Affiliates (to the extent not in excess of Oncobiologics’s COGS for such Products), and (d) payments made by such Third Party as consideration for theissuance of equity or debt securities of Oncobiologics or its Affiliates at fair market value (excluding amounts in excess of the fair market value of suchsecurities). 1.34 “PDUFA Fees” means any fees owed to the FDA pursuant to the Prescription Drug User Fee Act. 1.35 “PHASE 3 CLINICAL STUDY” means a human clinical trial that would satisfy the requirements for a Phase 3 study as defined in 21 CFR§ 312.21(c) (or any amended or successor regulations), regardless of where such clinical trial is conducted. 1.36 “PILOT STUDY” means a human clinical experience study (as defined in FDA guidance) of a Product for use in the Field in the Territory,which study shall initially be designed for [***]. 1.37 “PIVOTAL STUDY” means: (a) a Phase 3 Clinical Study; or (b) any other human clinical study that the applicable Regulatory Authority hasagreed is sufficient to form the primary basis of an efficacy claim in an MAA submission, including any such study that is determined to have become pivotalafter its commencement, in each case of (a) and (b), which clinical study shall initially be designed for approximately [***]. 1.38 “Primary End Point” means the primary end points set forth in Exhibit F attached hereto. 1.39 “PRODUCT” means any Biosimilar of bevacizumab controlled by Oncobiologics, as such compound shall be developed by the Parties underthis Agreement (including all pharmaceutical products and formulations thereof), sold alone or in combination with one or more other therapeutically activeingredients. 1.40 “REGULATORY APPROVAL” means an approval, clearance or authorization for the Product from a Regulatory Authority necessary for theresearch, Development, manufacture, distribution, pricing, reimbursement, marketing or sale of the Product, including any Marketing Approval. 1.41 “REGULATORY AUTHORITY(IES)” means any Governmental Authority or other authority responsible for granting Regulatory Approvals for theProduct, including the FDA and any corresponding national or regional regulatory authorities. 1.42 “REGULATORY EXCLUSIVITY” means, with respect to a Product and country, the rights conferred by any Regulatory Authority in such countrywith respect to such Product, including the rights conferred in the United States under 42 U.S.C. §262 or comparable rights outside of the United States. 7[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIESAND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.1.43 “SUCCESSFUL FIRST FDA INTERACTION” means written approval by the FDA (after discussions with the FDA) to conduct a Pilot Study requiringno more than [***], and written guidance from the FDA that a Pivotal Study will not require more than [***]. 1.44 “Territory” means all countries or territories in the world, excluding Mexico. 1.45 “Third Party” means any Person that is not a Party, or an Affiliate of a Party. 1.46 “United States” or “U.S.” means the United States of America and its territories and possessions. 2. Performance of Services; Records; Deliverables 2.1 SERVICES. The Parties agree that, among other things, MTTR will provide to Oncobiologics strategic advice for the Development, seekingand obtaining Regulatory Approval and Commercialization, of the Product in the Field in the Territory as agreed upon in writing by the Parties during theTerm, including such services set forth in Exhibit A, attached hereto (the “Services”; the description and/or list of such Services, the “SERVICES SCHEDULE”).The Services Schedule can only be amended in a writing signed by the Parties. MTTR agrees to exercise the professionalism consistent with industrystandard for the performance of similar services and utilize its collective expertise and creative talents in performing the Services. In addition to any JSC (asdefined below) meetings agreed upon by the Parties, MTTR agrees to make the Consultants reasonably available to meet with Oncobiologics (in person or byteleconference), as reasonably requested by Oncobiologics from time to time, consistent with such Consultant’s time commitment set forth in Section 2.2(b).This Agreement will take precedence over any contrary or inconsistent terms or conditions appearing in or referred to in any exhibit, unless the exhibitexpressly refers to the Parties’ intent to alter the terms of this Agreement with respect to such exhibit. 2.2 Expertise; Time Commitments; Replacement. (a) The Consultants have the respective expertise ascribed to their names in Exhibit B. MTTR agrees to inform Oncobiologics in theevent that any of the Consultants is no longer qualified to represent itself as an expert in accordance with Exhibit B. (b) MTTR shall ensure that each Consultant commits to dedicate a percentage of his time on a full-time equivalent basis, which shallconstitute [***] hours (“FTE”), to the performance of Services under this Agreement, in accordance with the respective Development Stage (as definedbelow) of the Product and determined on a Calendar Quarter basis, pursuant to the schedule set forth in Exhibit B. 8[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIESAND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.(c) MTTR shall not replace [***] with any person during the Term; provided that, if [***] dies, becomes incapacitated or voluntarilyresigns from employment at MTTR (through no fault of MTTR), MTTR shall have the right to suggest a replacement consultant by notifying Oncobiologicspromptly (but in any event no later than [***]) after the occurrence of such trigger event; provided that, Oncobiologics may withhold consent to suchreplacement consultant, in Oncobiologics’s sole discretion; provided further, that if Oncobiologics does not approve of such replacement consultant, thenthis Agreement will terminate in its entirety in accordance with Section 15.5(a). (d) MTTR shall have the right to replace each of [***] with another person with similar qualifications, solely with the prior writtenapproval of Oncobiologics ([***]). If Oncobiologics does not approve any such replacement consultant for [***], then Oncobiologics shall provide its basisfor non-approval. Notwithstanding the foregoing, if Oncobiologics does not approve of such replacement consultant after good faith consideration, then thisAgreement will terminate with respect to such Consultant in accordance with Section 15.5(b). (e) Upon any approval of a replacement consultant in accordance with subsection (c) or (d) above, any and all references in thisAgreement to the applicable replaced Consultant shall be deemed to refer to the replacement consultant, without any further modification of the terms andconditions of this Agreement, unless otherwise agreed by the Parties in writing. 2.3 Records. (a) MTTR shall ensure that the Consultants shall maintain complete and accurate records of the status and progress of the Services, andall materials, information, data or other know-how generated, authored, conceived or reduced to practice by the Consultants in the course of performing theServices, in accordance with Applicable Law (collectively, the “Records”). MTTR shall maintain the Records in sufficient detail to properly reflect, in areasonable manner, all significant Services performed and the results of such Services, at a level of detail appropriate for patent and regulatory purposes. (b) Upon expiration or termination of this Agreement, and upon such other times as requested by Oncobiologics during the Term,MTTR shall (i) provide to Oncobiologics copies of the Records and (ii) allow Oncobiologics to access, review and copy the Records (including access torelevant databases). At no time shall MTTR dispose of any Records without first giving Oncobiologics [***] prior written notice of its intent to dispose suchRecords. 2.4 DELIVERABLES. MTTR will deliver to Oncobiologics all Records, reasonable descriptions of Inventions, reports, documentation, data,information or materials as set forth in the Services Schedule or otherwise generated in the course of performing the Services (collectively, “Deliverables”),within [***] of the completion of the Services, or as otherwise set forth in the Services Schedule. Any failure by MTTR to deliver such Deliverables toOncobiologics within such time period [***]. The Parties acknowledge that (a) all information regarding regulatory pathway and strategy with respect to theProduct for the Field in the Territory disclosed by MTTR to Oncobiologics (“MTTR REGULATORY STRATEGY”) shall be MTTR’s Confidential Information(which, for avoidance of doubt, may be used by Oncobiologics in accordance with the license grant to Oncobiologics under Section 10.3 and the non-use andnon-confidentiality obligations under Article 13) and (b) all Deliverables, other than MTTR Regulatory Strategy, shall be deemed Oncobiologics’sConfidential Information. 9[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIESAND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.3. Governance 3.1 JSC FORMATION AND ROLE. The Parties hereby establish a joint steering committee (the “JOINT STEERING COMMITTEE” or “JSC”). The JSCshall have the following responsibilities: (a) to serve as a forum for the Consultants to discuss and share updates with respect to their performance of the Services, includingstrategies for the Development and/or Commercialization of the Product (including presentation of the then-current Development Plan and/orCommercialization Plan), regulatory updates and marketing materials; (b) to serve as a forum for Oncobiologics to discuss and share updates with respect to its Development, regulatory andCommercialization efforts under this Agreement and/or to review and approve any material updates to the Development Plan, the Commercialization Plan(including any material updates thereto), drafts of regulatory filings or communications and marketing materials, with respect to Products for the Field in theTerritory; (c) to discuss the Development of Products for use in the Field in the Territory in the First Indication, Second Indication and anyAdditional Indications, including the order and prioritization of such Development activities in the respective Indications in accordance with Section 4.3(a); (d) to discuss, coordinate and share updates and information with respect to the Parties’ respective interactions with RegulatoryAuthorities, with respect to Products for the Field in the Territory; and (e) to perform such other functions as appropriate to further the purposes of this Agreement, as expressly set forth in this Agreement oras agreed by the Parties in writing. 3.2 MEMBERS. The JSC shall be comprised of (a) at least two (2) of the Consultants (provided that, at all times after commencement ofDevelopment Stage 2 with respect to a Product in the Field in the Territory, all four (4) Consultants shall be present at the JSC); and (b) four (4)representatives from Oncobiologics (with each representative of Oncobiologics being an officer, employee or consultant of Oncobiologics or its Affiliatehaving sufficient seniority to make decisions arising within the scope of the JSC’s responsibilities). The initial members of the JSC from Oncobiologics andMTTR are as set forth on Exhibit G attached hereto; provided that, Oncobiologics may replace its representatives with an officer, employee or consultant ofOncobiologics or its Affiliates at any time upon written notice to MTTR. For purposes of any particular JSC meeting, MTTR may substitute an “Initial JSCMember” with an “Initial Alternate JSC Member”, each as described in Exhibit G attached hereto. The JSC may change its size from time to time by mutualconsent of the Parties. Oncobiologics shall appoint one (1) of its representatives to act as the chairperson of the JSC. The role of the chairperson shall be toconvene and preside at the JSC meeting, to ensure the circulation of meeting agendas in advance of JSC meetings and to prepare meeting minutes andcirculate to all of the JSC members such minutes that reflect all material decisions made at such meetings. 10[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIESAND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.3.3 MEETINGS. The JSC shall meet at least once per calendar month during the Term, unless the Parties mutually agree in writing to a differentfrequency for such meetings. Either Party may also call a special meeting of the JSC (by videoconference or teleconference) upon at least [***] prior writtennotice to the other Party in the event such Party reasonably believes that a significant matter must be addressed prior to the next regularly scheduled meeting.The JSC may meet in person, by videoconference or by teleconference (provided, however, that, unless the Parties otherwise mutually agree, at least [***]JSC meetings per [***] shall be in person until commencement of Development Stage 3 with respect to a Product in the Field in the Territory, after which atleast [***] JSC meeting per [***] shall be in person, and MTTR shall have the right to select the location of the first in-person meeting (and, thereafter, thelocation shall be selected by the Parties on an alternating basis). [***]. The participation at JSC meetings by the Consultants, in accordance with Section3.2(a), shall be mandatory. Oncobiologics may have additional employee representatives and consultants of Oncobiologics attend JSC meetings as non-voting participants, including one employee to act as secretary of the meeting. MTTR may have additional employee representatives and consultants ofMTTR attend JSC meetings as non-voting participants. All JSC meetings shall be conducted in English and all communications under this Agreement shallbe in English. The chairperson shall send draft meeting minutes to each representative of the JSC for review and approval within [***] after the applicablemeeting. Such minutes shall be deemed approved when signed by the chairperson from Oncobiologics and a JSC member from MTTR; such sign off shouldnot be delayed and be provided within [***] after receipt thereof unless one or more JSC representatives object to the accuracy of such minutes within said[***] period. 3.4 DECISION MAKING. The JSC shall be primarily a forum for information exchange and discussion; provided that, to the extent that anydecisions need to be made pursuant to this Agreement, the JSC shall strive to seek consensus in its actions and decision making process, with each Partyhaving collectively one (1) vote in all decisions. If after reasonable discussion and good faith consideration of each Party’s view on a particular matter beforethe JSC, the representatives of the Parties cannot reach an agreement as to such matter within the course of such JSC meeting, then, and subject to Section 3.5,Oncobiologics shall have the final decision-making authority with respect to such matter, including with respect to matters regarding the Development,manufacture, seeking Regulatory Approval or Commercialization of Products under this Agreement; [***]. 3.5 LIMITATION OF JSC AUTHORITY. The JSC shall only have the powers expressly assigned to it in this Article 3 and elsewhere in this Agreementand shall not have the authority to: (a) modify or amend the terms and conditions of this Agreement (including any material alteration to the terms of theServices or time commitments of any Consultant); (b) waive or determine either Party’s compliance with the terms and conditions of under this Agreement; or(c) decide any issue in a manner that would conflict with the express terms and conditions of this Agreement. 11[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIESAND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.4. Development Program 4.1 CONDUCT OF DEVELOPMENT ACTIVITIES. Except as expressly set forth in Exhibit A or otherwise in this Agreement with respect to Development-related Services to be conducted by MTTR, Oncobiologics shall have the sole right and responsibility, at its sole cost and expense, in each case inaccordance with the Development Plan, for the conduct of all Development activities applicable to Products in the Field in the Territory. At all times duringthe Term, MTTR shall, through the Consultants, provide Services to Oncobiologics with respect to the Development of Products in the Field for allIndications for which Oncobiologics intends to pursue Regulatory Approval in the Territory. 4.2 PREPARATION OF DEVELOPMENT PLANS. MTTR will prepare the non-clinical safety and clinical development plan for the Development ofProducts in the Field in the Territory (which plan shall include, for clarity, any MTTR Regulatory Strategy existing as of such date with respect to theDevelopment of such Products in the Field in the Territory) (collectively, the “Development Plan”), including any updates thereto, in accordance with thisSection 4.2. The Development Plan shall reflect at least the use of Commercially Reasonable Efforts to obtain Regulatory Approval of the Product in theField for [***]. The initial Development timeline is attached hereto as Exhibit E. Subject to the remainder of this Section 4.2, MTTR shall submit any non-material updates to the Development Plan to Oncobiologics for review and approval by Oncobiologics. MTTR will incorporate all feedback provided byOncobiologics (after any reasonable discussion requested by MTTR) with respect to the Development Plan, and the Parties will communicate, cooperate andshare information with each other on an ongoing basis during the Term in order to keep each other informed as to the Development of the Product and enableMTTR to revise the Development Plan to reflect the then-current plans for Oncobiologics’s Development of Products in the Field in the Territory. MTTRshall provide any material updates to the Development Plan to the JSC at least [***] for review and approval by the JSC in accordance with Article 3. TheDevelopment Plan and updates thereto shall contain a reasonably detailed summary of (a) all major Development activities (including all clinical studies)conducted under this Agreement since the last Development Plan and (b) all major Development activities proposed to be conducted under this Agreement,including the anticipated timelines for achieving such activities. 4.3 Initial Development Activities. (a) Oncobiologics will initially Develop and submit for Regulatory Approval Products in the following Indications: (i) intravitrealinjection of Product for the treatment of Wet AMD (the “First Indication”), and (ii) intravitreal injection of Product for the treatment of DME (the “SecondIndication”). The Parties shall jointly discuss and evaluate, through the JSC, the Development of Products for treatment of Indications other than the FirstIndication and Second Indication (each, an “ADDITIONAL INDICATION”). For clarity, the terms “First Indication”, “Second Indication” and “AdditionalIndications” may not track the actual temporal order of Development of the Product (i.e., Oncobiologics may Develop the Product in the Field for the SecondIndication or an Additional Indication prior to the First Indication), as discussed by the Parties through the JSC and without limiting Section 4.3(b). 12[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIESAND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.(b) Oncobiologics will use Commercially Reasonable Efforts to Develop and seek Marketing Approval of a Product in the Field for theFirst Indication, the Second Indication, or an Additional Indication (whichever Indication is the lead Indication at such time). Oncobiologics will not delayfiling for Marketing Approval in the U.S. of a Product in the Field for the lead Indication by more than one (1) Calendar Quarter as a result of insufficientfunding of the program. For clarity, in the event that Development Costs incurred specifically for (i) conducting the Pilot Study and Pivotal Study (butexcluding costs incurred in manufacturing and/or supplying Products for use in such studies), and (ii) obtaining Regulatory Approval of Products in the Fieldin the U.S. (but excluding any PDUFA Fees and all other Development or Commercialization costs incurred by Oncobiologics) either exceed or arereasonably likely to exceed [***] U.S. Dollars ($[***]) ([***]), then Oncobiologics termination of the Development of Products shall not be considered afailure to use Commercially Reasonable Efforts. 4.4 DEVELOPMENT STAGES. The development stages for Development of the Products under this Agreement shall be as set forth below (each, a“Development Stage”). (a) Development Stage 1A: commences on the Effective Date and ends upon the first Successful First FDA Interaction; (b) Development Stage 1B: commences upon the first Successful First FDA Interaction and ends upon the first completion (i.e., lastpatient completion of follow-up) of a Pilot Study; (c) Development Stage 2: commences upon the first completion of a Pilot Study and ends upon the first achievement of the PrimaryEnd Point in a Pivotal Study; (d) Development Stage 3: commences upon the first achievement of the Primary End Point in a Pivotal Study and ends upon the FirstCommercial Sale of a Product for use in any Approved Indication in the U.S.; and (e) Development Stage 4: commences upon the First Commercial Sale of a Product for use in any Approved Indication in the U.S. 5. Exclusivity; ROFN; Limitations 5.1 EXCLUSIVITY. During the Term, MTTR shall cause each Consultant not to work for, assist or enable in any way, directly or indirectly, anyThird Party with respect to the development or commercialization of any Biosimilar of bevacizumab in the Field; so long as Oncobiologics is usingCommercially Reasonable Efforts to Develop and/or Commercialize a Product in the Field in the Territory and making all undisputed payments owed toMTTR in connection therewith, in accordance with Article 9. MTTR shall ensure that each Consultant acknowledges and abides by the obligations ofexclusivity owed to Oncobiologics pursuant to this Section 5.1. 5.2 Right of First Negotiation. [***] 13[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIESAND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.5.3 Limitations. (a) Except as expressly set forth in Section 5.2, Oncobiologics reserves the right to engage other Third Party contractors to perform anyof its Development, manufacturing, regulatory or Commercialization activities under this Agreement (“ONCOBIOLOGICS SERVICE PROVIDERS”), subject tobinding such Third Party contractor to confidentiality and non-use restrictions that are consistent with the provisions of Article 13 with respect to anyConfidential Information of MTTR disclosed to such Third Party contractor. Oncobiologics shall permit Oncobiologics Service Providers to discloseConfidential Information of Oncobiologics to MTTR for the sole purpose of MTTR performing its obligations under this Agreement, including theperformance of Services, and shall, at MTTR’s request, promptly inform such Third Party contractor of such permission. Notwithstanding anything to thecontrary herein, with respect to any such Confidential Information of Oncobiologics disclosed to MTTR by an Oncobiologics Service Provider,Oncobiologics shall be deemed the “Disclosing Party” of such Confidential Information and the provisions of Article 13 shall apply with equal force andeffect to protect the confidentiality, non-use and non-disclosure of such Confidential Information by MTTR. Subject to the terms and conditions of thisAgreement, MTTR shall have the right to discuss with any Oncobiologics Service Provider the performance of any of its obligations under this Agreementbut not to engage or solicit any Oncobiologics Service Provider to work directly for MTTR to perform such obligations without obtaining prior writtenconsent from Oncobiologics (which consent may not be unreasonably withheld, conditioned or delayed). For clarity, as long as MTTR is complying with itsobligations under this Agreement, Oncobiologics shall not prohibit any Oncobiologics Service Provider from working with MTTR pursuant to theimmediately preceding sentence. For avoidance of doubt, MTTR may discuss, engage or solicit any Oncobiologics Service Provider for the performance ofany activities outside the scope of this Agreement that are not in violation of MTTR’s obligations under Section 5.1. Upon termination or expiration of thisAgreement, MTTR shall not require Oncobiologics’s approval in order to work with any Oncobiologics Service Provider. (b) Subject to Section 5.1, MTTR and each Consultant reserves the right to perform services for other persons, provided that theperformance of such services do not conflict or interfere with the Services or MTTR’s obligations under this Agreement. 6. Regulatory Responsibilities 6.1 REGULATORY ACTIVITIES. Except as expressly set forth in Exhibit A or otherwise in this Agreement with respect to regulatory-related Servicesto be conducted by MTTR, Oncobiologics will have the sole right and responsibility, at its sole cost and expense, for all regulatory activities with respect toProducts in the Field in the Territory, and Oncobiologics shall have final decision-making authority with respect thereto, taking into good faith considerationMTTR’s perspective as provided through the JSC and provided that Oncobiologics shall exercise such final decision-making authority in a manner that doesnot delay, and is consistent with the exercise of Commercially Reasonable Efforts with respect to, the conduct of regulatory activities with respect to Productsin the Field in the Territory. 14[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIESAND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.6.2 RESPONSIBILITY FOR REGULATORY FILINGS. Oncobiologics shall have the sole right and responsibility, at its sole expense, to prepare, file,prosecute and maintain all regulatory filings for Products in the Territory in Oncobiologics’s own name; provided that, MTTR shall provide such regulatory-related Services as set forth in Exhibit A, including providing Oncobiologics with drafts of all regulatory filings as provided therein within a reasonable timeprior to submission for Oncobiologics’s review, comment and approval, and timely incorporating any feedback provided by Oncobiologics with respect tosuch regulatory filings. The Parties will communicate, cooperate and share information with each other on an ongoing basis during the Term in order toenable MTTR to prepare and update all applicable regulatory filings. 6.3 Interactions with Regulatory Authorities. Oncobiologics will oversee, monitor and manage all regulatory interactions and communicationswith Regulatory Authorities with respect to Products in the Territory; provided that, MTTR shall assist Oncobiologics as reasonably requested byOncobiologics in drafting (including any amendments or revisions to such drafts) or responding to any such regulatory communications and providing suchother regulatory-related Services as set forth in Exhibit A. As between the Parties, Oncobiologics shall be responsible for all reporting to RegulatoryAuthorities with respect to any adverse events occurring with respect to any Product in the Field in the Territory, in accordance with Applicable Law. MTTRshall, through the JSC, keep Oncobiologics reasonably informed of regulatory developments related to Products in the Field in the Territory for which MTTRis responsible pursuant to this Agreement and shall notify Oncobiologics in writing of any decision by any Regulatory Authority in the Territory regardingProducts in the Field of which it is aware. Oncobiologics shall keep MTTR reasonably informed of regulatory developments and regulatory activitiesconducted by or on behalf of Oncobiologics with respect to the Product (in and outside the Field) that are relevant to the Field, including with respect to thebiosimilar approval process and the biosimilar patent dance for the Product, and shall notify MTTR in writing of any decision by any Regulatory Authorityin the Territory regarding Products that is relevant to the Field of which it is aware. 6.4 REGULATORY MEETINGS. Oncobiologics shall provide MTTR with at least [***] prior written notice (or, to the extent such meeting ordiscussion is scheduled in less than [***], immediate notice) of any material meeting or discussion with any Regulatory Authority in the Territory related toProducts in the Field. One (1) or more of the Consultants shall attend such meetings; provided that, with respect to meetings for which Oncobiologics hasgiven less than [***] prior written notice, the Consultants shall, upon Oncobiologics’s request, attend such meeting by teleconference if in-person attendanceis not practicable. Oncobiologics shall reimburse Consultants for reasonable, documented travel, meal and lodging costs for such attendance to the extent inaccordance with the MTTR Travel Policy in Exhibit H attached hereto. 6.5 REMEDIAL ACTIONS. Each Party shall notify the other immediately, and promptly confirm such notice in writing, if it obtains informationindicating that any Product may be subject to any recall, corrective action or other regulatory action by any Governmental Authority or Regulatory Authority(a “REMEDIAL ACTION”). The Parties shall assist each other in gathering and evaluating such information as is necessary to determine the necessity ofconducting a Remedial Action. Oncobiologics shall have sole discretion with respect to any matters relating to any Remedial Action in the Territory,including the decision to commence such Remedial Action and the control over such Remedial Action. The cost and expenses of any Remedial Action in theTerritory shall be borne solely by Oncobiologics. 15[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIESAND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.7. Commercialization 7.1 RESPONSIBILITY FOR COMMERCIALIZATION OF PRODUCTS. Except as expressly set forth in Exhibit A or otherwise in this Agreement with respectto Commercialization-related Services to be conducted by MTTR, Oncobiologics will have the sole right and responsibility for, and final decision-makingauthority with respect to, the Commercialization of Products in the Field in the Territory, including (a) the conduct of all pre-marketing, marketing,promotion, sales, distribution, import and export activities (including the securing of reimbursement, sales and marketing and any post-marketing trials ordatabases and post-marketing safety surveillance); (b) the submission of applications for reimbursement with respect to any Product in any country in theTerritory; (c) the identification and registration of all tradenames for any Product in the Field in the Territory; (d) the out-licensing of intellectual propertyowned or controlled by Oncobiologics that Covers any Product in the Field in the Territory; and (e) the booking of all sales of Products in the Field in theTerritory, in each case in accordance with the Commercialization Plan. During the Term, MTTR shall, through the Consultants, provide Services toOncobiologics with respect to the Commercialization of Products in the Field in the Territory for all Approved Indications. Any promotion of the Product byany Active HCP shall be subject to the prior approval of Oncobiologics. [***]. 7.2 PREPARATION OF COMMERCIALIZATION PLAN. MTTR will prepare the plan for the Commercialization of each Product in the Field in theTerritory (“Commercialization Plan”) and any updates thereto, in accordance with this Section 7.2. MTTR shall submit the initial Commercialization Planto the JSC for review and approval by the JSC, no later than [***] prior to the expected date of First Commercial Sale of such Product. MTTR will incorporateall feedback provided by Oncobiologics (after any reasonable discussion requested by MTTR) with respect to such Commercialization Plan, and the Partieswill communicate, cooperate and share information with each other on an ongoing basis through the Term to keep each other informed as to theCommercialization of the Product and in order to enable MTTR to revise the Commercialization Plan to reflect Oncobiologics’s then-current plans forCommercialization of Products in the Field in the Territory. The Commercialization Plan shall reflect at least the use of Commercially Reasonable Efforts tomarket and sell the Product in the Field [***]. MTTR shall provide any material updates to the Commercialization Plan to the JSC at least [***] each [***]for review and approval by the JSC in accordance with Article 3. The Commercialization Plan and updates thereto shall contain a reasonably detailedsummary of (a) all major Commercialization activities conducted with respect to Products in the Field in the Territory since the last Commercialization Planand (b) and all major Commercialization activities proposed to be conducted with respect to Products in the Feld in the Territory, including the anticipatedtimelines for achieving such activities. Subject to Section 4.3(b), Oncobiologics will use Commercially Reasonable Efforts to execute the CommercializationPlan and maximize sales of Products for the Field in the Territory. 16[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIESAND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.8. Manufacturing 8.1 RESPONSIBILITY. Oncobiologics will have the sole right and responsibility, at its sole cost and expense, to manufacture clinical andcommercial supply of Products to support the Development and Commercialization of the Products for the Field in the Territory, and shall have finaldecision-making authority with respect thereto, taking into good faith consideration MTTR’s perspective as provided through the JSC and provided thatOncobiologics shall exercise such final decision-making authority in a manner that does not materially delay, and is consistent with the exercise ofCommercially Reasonable Efforts with respect to, the manufacture of Products for Development and Commercialization. Oncobiologics shall keep MTTRreasonably informed of the manufacturing activities for the Products (in and outside the Field) by or on behalf of Oncobiologics that are relevant tomanufacture of the Products for the Field. 9. Compensation 9.1 Retainer Fees. (a) MONTHLY RETAINER FEE. In partial consideration for the Services rendered pursuant to this Agreement and for the assignment ofMTTR’s right, title and interest in Inventions pursuant to this Agreement, Oncobiologics will pay MTTR a monthly retainer fee (“Monthly Retainer Fee”) inthe amount and pursuant to the schedule set forth in the table below (subject to Section 9.3). For clarity, MTTR shall provide a single invoice per monthsetting forth in an itemized fashion the costs attributable to work performed by each Consultant and the aggregate amount payable for such month.Oncobiologics shall pay all undisputed amounts of such invoice monthly, in arrears, within [***] after receipt of such invoice from MTTR. MTTR shall besolely responsible for all payments to be made to the Consultants. TimeframeConsulting Fee ($)(i) Commencing on the Effective Date, until one year after theEffective Datemonthly installments of US$58,333(ii) Commencing one year after the Effective Date until the FirstCommercial Sale of a Product in the Field in the U.S.monthly installments of $105,208(iii) Commencing after First Commercial Sale of a Product in theField in the U.S.monthly installments of $170,833 (b) OFFSET OF RETAINER FEE; REDUCTION IN RETAINER FEE. The payment of the Monthly Retainer Fee set forth in Section 9.1(a)(iii) shallbe offset against any Profit Share payable to MTTR under Section 9.2. In any Calendar Year (commencing one year after a J code has been obtained pursuantto the Health Care Procedure Coding System processes for a Product in the U.S. in an Approved Indication, a “J CODE”)) in which the Net Revenues forProducts in the U.S. in all Approved Indications is less than [***] Dollars ([***]), the Monthly Retainer Fee set forth in Section 9.1(a)(iii) shall be reduced byfifty percent (50%). 17[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIESAND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.(c) Reconciliation of Payments. Within [***] after the end of each Calendar Quarter, Oncobiologics shall conduct a reconciliation anddetermine if any reconciliation payment is due from one Party to another for Monthly Retainer Fees paid by Oncobiologics to MTTR in the prior CalendarQuarter and, if so, the amount of such reconciliation payment period. If any such payment is owed, the applicable Party shall make such payment to the otherParty within [***] after the reconciliation. 9.2 Profit Share. (a) Profit Sharing. Subject to Section 9.3, following the First Commercial Sale of any Product in the Field in the U.S., Oncobiologicsshall pay to MTTR an initial percentage of the Net Profits (if any), in accordance with Exhibit C (“Profit Sharing Percentage”; such profit share, the “ProfitShare”); [***]. For clarity, the Profit Sharing Percentage shall reset to the initial Profit Sharing Percentage on a Calendar Year-by-Calendar Year basis. (b) PROFIT REPORTS. Within [***] after the end of each [***] following the First Commercial Sale of a Product in the Field in theTerritory, Oncobiologics shall submit to MTTR a report setting forth, with respect to the previous [***]: (i) an itemized calculation of the Net Profits for eachProduct, (ii) the amount of each Actual Deductible Cost deducted from such Net Profits, along with a reasonable basis and explanation for the inclusion ofany such costs and expenses that are not specific to use of Products in the Field, the sum of the aggregate Actual Deductible Costs and the calculation for theAdjusted Deductible Cost (if different from the Actual Deductible Cost) and (iii) a calculation of the amount of Net Profits, if any (the “NET PROFIT REPORT”).MTTR shall have the right to review and submit any reasonable objection to the calculation of Net Profits within [***] following its receipt of the Net ProfitReport from Oncobiologics. Reasonably prior to the delivery of the first Net Profit Report, the Parties, along with their respective accountants, shall discussand agree on financial accounting matters with respect to the determination and reporting of Net Profits, Actual Deductible Costs and Adjusted DeductibleCosts, including any procedures, allocation mechanisms and reporting requirements. In the event that the Parties are not able to agree on such financialaccounting matters (after good faith discussions of at least [***]), then such disagreement shall be referred to an independent certified public accounting firmfor binding resolution (the cost of which shall be shared by the Parties). (c) Payments. Oncobiologics shall pay all undisputed amounts owed to MTTR pursuant to this Section 9.2, if any, at the time ofsubmission of the Net Profit Report. 9.3 Limitations. (a) The payment of Monthly Retainer Fees and Net Profits to MTTR shall be contingent upon the performance by each Consultant ofthe obligations assigned to such Consultant under the Services Schedule or otherwise under this Agreement in accordance with the terms and conditions ofthis Agreement. 18[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIESAND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.(b) In the event that a Consultant performs fewer hours of work, on an FTE basis (as described in Section 2.2(b)) for a particularCalendar Quarter than such Consultant should perform pursuant to the agreed-upon time commitment for such Consultant for the relevant DevelopmentStage of the Product, as set forth in Exhibit B (e.g., if, during a given Calendar Quarter, [***] performs work at a [***]% FTE level rather than [***]% duringDevelopment Stage 1), then Oncobiologics shall have the right to offset future payments owed to MTTR under Sections 9.1 and 9.2 by the pro rata amountoverpaid to MTTR for such Consultant (on the basis of an hourly rate for such Consultant determined by the anticipated total of Monthly Retainer Fees forthe Calendar Quarter, the hours required to be performed by such Consultant during the applicable Calendar Quarter and such Consultant’s share of the ProfitSharing Percentage specified in Exhibit C). In the event that there is no possibility of a future payment owed to MTTR, MTTR shall refund the amount ofsuch overpayment within [***] after receipt of any invoice from Oncobiologics. If a Consultant needs to perform more hours of work during any CalendarQuarter than agreed upon in Exhibit B, then MTTR will notify Oncobiologics in writing and shall obtain written approval of Oncobiologics prior toincurring any expenses. In the event that Oncobiologics approves of such overtime expenses, Oncobiologics shall pay a pro rata amount for such hours (onthe basis of an hourly rate determined as set forth above in this Section 9.3(b)). Notwithstanding anything to the contrary in this Agreement, unless any suchadditional hours are pre-approved by Oncobiologics, no Consultant shall, with respect to a given Calendar Quarter, be obligated to perform more hours ofwork under this Agreement than as set forth in Exhibit B. 9.4 CHANGE OF CONTROL. In the event of (x) a Change of Control of Oncobiologics; (y) an acquisition by a Third Party of Oncobiologics’s rightsto the Product in its entirety, through the sale and/or exclusive out-license by Oncobiologics of all or substantially all of Oncobiologics’s assets relating tothe Product, including all intellectual property owned or controlled by Oncobiologics that Covers the Product, for use in all fields on a worldwide basis; or(z) an acquisition by a Third Party of Oncobiologics’s rights to the Product for use in the Field on a worldwide basis, through the sale and/or exclusive out-license by Oncobiologics of all or substantially all of Oncobiologics’s assets primarily relating to the Product, including all intellectual property owned orcontrolled by Oncobiologics that Covers the Product, for use in the Field on a worldwide basis, (each of (x)-(z), an “Acquisition Event”) the following willapply: (a) Oncobiologics will have the right to assign this Agreement in connection with such Acquisition Event in accordance with the termsof Section 16.1; (b) In each case of (x), (y) and (z), MTTR shall be entitled to receive, within [***] after Oncobiologics’s receipt thereof, an amount asfollows (such amount as described below, the “Shared Acquisition Consideration”): (1) in each case of (x), MTTR shall be entitled to receive an amount equal to [***]; (2) in each case of (y), MTTR shall be entitled to receive an amount equal to [***]; 19[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIESAND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.(3) in the case of (z), MTTR shall be entitled to receive an amount equal to [***]; and (4) in the event that an Acquisition Event occurs prior to the first effective IND filing for the Product in the Field, then in eachof (x), (y) and (z), [***]. (c) Following such Acquisition Event, [***]. (d) [***], the terms of this Agreement shall continue as between MTTR and Oncobiologics’s assignee on the same terms as betweenMTTR and Oncobiologics, provided that if this Agreement is terminated in its entirety pursuant to Sections 15.5(a) or for any termination with respect to anyConsultant pursuant to Section 15.5(b), then MTTR shall pay to Oncobiologics a percentage of the Shared Acquisition Consideration received by MTTRthat is allocated to the applicable terminated Consultant as follows: Date of Applicable TerminationApplicable Percentage[***][***][***][***][***][***][***][***] In no event shall Oncobiologics structure the acquisition consideration received pursuant to subsections (x), (y) or (z) above with the intent to evade paymentobligations owed to MTTR. Any dispute with respect to payments owed to MTTR pursuant to this Section 9.4 [***] shall be resolved by referring suchdispute to an independent valuation firm mutually selected by the Parties; each Party shall provide the valuation firm with all information and materials in itspossession or control as requested by the valuation firm in connection with such valuation. 9.5 Payments; Withholding Tax. (a) PAYMENTS IN DOLLARS. All payments owed by Oncobiologics under this Agreement shall be made by wire transfer in immediatelyavailable funds to a bank and account designated in writing by MTTR. For clarity, all payments made pursuant to this Agreement shall be in U.S. dollars. (b) Withholding Taxes. If Applicable Law requires withholding of income or other taxes due by Oncobiologics and imposed upon anypayments made by Oncobiologics to MTTR under this Agreement, Oncobiologics shall (i) make such withholding payments as may be required, (ii) subtractsuch withholding payments from such payments, (iii) submit appropriate proof of payment of the withholding taxes to MTTR within a reasonable period oftime, and (iv) promptly provide MTTR with all official receipts with respect thereto. 20[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIESAND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.(c) FOREIGN CURRENCY EXCHANGE. If, in any Calendar Quarter, Net Profits are received by Oncobiologics in any currency other thanU.S. dollars, such Net Profits shall be converted into U.S. dollars as follows: (A/B), where: “A” = foreign “Net Profits” in such Calendar Quarter expressed insuch foreign currency; and “B” = the applicable foreign exchange conversion rate, expressed in local currency of the foreign country per U.S. dollar (using, asthe applicable foreign exchange rate, the average of the daily closing rates published in the eastern edition of The Wall Street Journal under the heading“Money Rates,” or any other mutually agreed upon source, for such Calendar Quarter). (d) Disputes. If, following the applicable due date for a payment owed under this Agreement by one Party to the other Party, the Partiesdisagree with respect to the calculation of such payment, any undisputed portion shall be paid within [***] of the Parties’ agreement with respect to suchundisputed portion and the remaining, disputed portion shall be paid within [***] after the date on which the Parties resolve the dispute in accordance withSection 16.4. 9.6 INTEREST ON LATE PAYMENTS. If either Party does not receive payment of any sum due to it on or before the due date, interest shall thereafteraccrue on the sum due to the such Party until the date of payment at the per annum rate of [***] percent ([***]%) over the then-current [***] reported in TheWall Street Journal or the maximum rate allowable by Applicable Law, whichever is lower. 9.7 AUDIT RIGHTS. Each Party shall maintain complete and accurate records in sufficient detail to permit the other Party to verify the accuracy ofthe payment obligations hereunder. For clarity, (a) with respect to Oncobiologics as the auditing Party, MTTR shall maintain records of the number of hoursworked by each Consultant during the Term in order for Oncobiologics to verify payment amounts due under Sections 9.1 and 9.2, and (b) with respect toMTTR as the auditing Party, Oncobiologics shall maintain records of Actual Deductible Costs, Adjusted Deductible Costs, Net Revenues and Net Profits inorder for MTTR to verify the accuracy of the Net Profit Report furnished by Oncobiologics pursuant to Section 9.2(b) and the amount of Profit Share andother payments due under this Agreement. All payments and other amounts under this Agreement shall be accounted for in accordance with GAAP. Uponreasonable prior notice, such records shall be available for examination during regular business hours for a period of [***] to which they pertain, and notmore often than once each Calendar Year, by an independent certified public accountant selected by the auditing Party and reasonably acceptable to theother Party. Any such auditor shall not disclose Confidential Information of the Party being audited, except to the extent such disclosure is necessary toverify the accuracy of the payment obligations hereunder. Any amounts shown to be owed but unpaid shall be paid within [***] from the accountant’s report,plus interest (as set forth in Section 9.6) from the original due date. Oncobiologics shall bear the full cost of any audit conducted by or on behalf ofOncobiologics unless such audit discloses an overpayment by Oncobiologics of more than [***] percent ([***]%) of the amount due for the audited period,in which case MTTR shall bear the full cost of such audit. MTTR shall bear the full cost of any audit conducted by or on behalf of MTTR unless such auditdiscloses an underpayment by Oncobiologics of more than [***] percent ([***]%) of the amount due for the audited period, in which case Oncobiologicsshall bear the full cost of such audit. 21[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIESAND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.10. Intellectual Property 10.1 OWNERSHIP OF INVENTIONS. Other than with respect to MTTR Regulatory Strategy, MTTR and each of the Consultants hereby irrevocablyassigns, grants and conveys to Oncobiologics all of its right, title and interest now existing or that may exist in the future in and to any Deliverable,document, development, invention, know-how, design, process, technique, trade secret, or idea, and all intellectual property rights related thereto, that iscreated, generated, authored, conceived or reduced to practice by each Consultant, in the course of performing Services and to the extent related to a Productunder this Agreement (the “Inventions”), including all copyrights, trademarks, patents or other intellectual property rights relating thereto. MTTR agrees thatany and all Inventions shall be and remain the property of Oncobiologics. MTTR will use Commercially Reasonable Efforts to promptly disclose toOncobiologics all Inventions, and in any event will promptly disclose to Oncobiologics any material Inventions. MTTR agrees to execute, atOncobiologics’s request and expense, all documents and other instruments necessary or desirable to confirm such assignment with respect to the Inventions.In the event that MTTR does not, for any reason, execute such documents within a reasonable time of Oncobiologics’s request, MTTR and each of theConsultants hereby irrevocably appoints Oncobiologics as MTTR’s or such Consultant’s attorney-in-fact solely for the purpose of executing such documentson MTTR’s (or such Consultant’s) behalf, which appointment is coupled with an interest. MTTR shall not attempt to register any works created by MTTRpursuant to this Agreement that pertain to Products at the U.S. Copyright Office, the U.S. Patent & Trademark Office, or any foreign copyright, patent, ortrademark registry. MTTR retains no rights in the Inventions and agrees not to challenge Oncobiologics’s ownership of the rights embodied in theInventions. MTTR and each of the Consultants further agrees, at Oncobiologics request and expense, to assist Oncobiologics in every proper way to enforceOncobiologics’s rights relating to the Inventions in any and all countries, including, but not limited to, executing, verifying and delivering such documentsand performing such other acts (including appearing as a witness) as Oncobiologics may reasonably request for use in obtaining, perfecting, evidencing,sustaining and enforcing Oncobiologics’s rights to the Inventions. 10.2 ARTIST’S, MORAL, AND OTHER RIGHTS. If MTTR has any rights, including without limitation “artist’s rights” or “moral rights,” in any Inventionwhich cannot be assigned (the “Non-Assignable Rights”), MTTR agrees to waive enforcement worldwide of such rights against Oncobiologics. In the eventthat MTTR has any such rights that cannot be assigned or waived, MTTR, on behalf of itself and each of the Consultants, hereby grants to Oncobiologics aroyalty-free, paid-up, exclusive, worldwide, irrevocable, sublicenseable, transferable perpetual license under the Non-Assignable Rights to (a) use, make,have made, sell, have sold, offer to sell, import, export or otherwise exploit and (b) reproduce, distribute, create derivative works of, publicly perform andpublicly display, the Invention in any medium or format, whether now known or later developed. 22[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIESAND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.10.3 License to MTTR Regulatory Strategy. Effective upon termination or expiration of this Agreement and subject to the terms of Section 15.7,MTTR hereby grants, and agrees to grant, to Oncobiologics a non-exclusive sublicenseable, transferable (in accordance with Section 16.1) license, under theMTTR Regulatory Strategy, to use, make, have made, sell, have sold, offer for sale, import, export or otherwise exploit Products in the Field in the Territory. 10.4 No Conflicts. MTTR represents that [***] is, as of the Effective Date, a full time employee and faculty member of the [***] and may become,in the future, employed by another academic or research institution (such academic or research institution, an “Institution”). Nothing in this Agreement shallbe construed to conflict with his obligations and duties as such, including his duties (a) to protect information that is confidential and/or proprietary to [***]or any Institution, (b) to not disclose such protected information to either MTTR or Oncobiologics, or any Third Party, or (c) to fully comply with [***] orany Institution’s patent policy and other applicable policies and regulations, including with respect to conflicts of interest and disclosure of this Agreementto [***] or any Institution as required to comply with such policies and regulations. 11. Representations, Warranties and Covenants 11.1 MUTUAL REPRESENTATIONS, WARRANTIES AND COVENANTS. Each Party hereby represents, warrants and covenants, as applicable, to the otherParty as follows: (a) CORPORATE EXISTENCE. As of the Effective Date, it is a company or corporation duly organized, validly existing, and in goodstanding under the Applicable Laws of the jurisdiction in which it is incorporated. (b) Corporate Power, Authority and Binding Agreement. As of the Effective Date, (i) it has the corporate power and authority and thelegal right to enter into this Agreement and perform its obligations hereunder; (ii) it has taken all necessary corporate action on its part required to authorizethe execution and delivery of this Agreement and the performance of its obligations hereunder; (iii) this Agreement has been duly executed and delivered onbehalf of such Party, and constitutes a legal, valid, and binding obligation of such Party that is enforceable against it in accordance with its terms, subject toapplicable bankruptcy, insolvency, reorganization, moratorium and similar Applicable Laws affecting creditors' rights and remedies generally; and (iv) theexecution, delivery and performance of this Agreement by such Party does not conflict with any agreement, instrument or understanding, oral or written, towhich it is a party or by which it may be bound, nor violate any Applicable Laws. (c) Compliance. (i) In the performance of its obligations under this Agreement, each Party shall comply, and shall cause its and its Affiliates’employees and contractors to comply, with Anti-Corruption Laws and all Applicable Laws. Without limiting the foregoing, each Party, and its and itsAffiliates’ employees and contractors, shall not, in connection with the performance of this Agreement, directly or indirectly through Third Parties, pay,promise, or offer to pay, or authorize the payment of, any money or give any promise or offer to give, or authorize the giving of anything of value to anypublic official or other person or entity for the purpose of obtaining or retaining business for or with, or directing business to, any person, including, withoutlimitation, either Party. 23[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIESAND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.(ii) Each Party shall immediately notify the other Party if it has any information or suspicion that there may be a violation ofany Applicable Laws (including Anti-Corruption Laws) in connection with its performance under this Agreement. In the event that either Party has violatedor been suspected of violating any of its obligations, representations, warranties or covenants in this Section 11.1(c), such Party will take reasonable actionsto remedy such breach and to prevent further such breaches from occurring. (iii) Notwithstanding the foregoing, each Party will have the right, upon reasonable prior written notice and during the otherParty’s regular business hours, to audit the other Party’s books and records in the event that a suspected violation of any Anti-Corruption Law needs to beinvestigated (in such Party’s reasonable, good-faith discretion). Such audit shall be conducted by such Party’s audit team comprised of qualified auditors whohave received anticorruption training. For clarity, a credible finding, after a reasonable investigation, of any breach of subsections (i) or (ii) above withrespect to any Anti-Corruption Law, shall be deemed a material breach of this Agreement and allow the non-breaching Party to terminate this Agreement inaccordance with Section 15.2. 11.2 MTTR Representations and Warranties. MTTR hereby represents, warrants and covenants to Oncobiologics that: (a) MTTR has the right and unrestricted ability to assign all Inventions to Oncobiologics in accordance with Article 10, and each ofthe Consultants is bound by an enforceable written agreement pursuant to which such Consultant assigns to MTTR all of its right, title and interest in allInventions; (b) MTTR shall (and shall ensure that each of its Consultants shall) use Commercially Reasonable Efforts, and shall devote the timenecessary on an ongoing basis, to perform the Services in accordance with the Services Schedule and all other terms of this Agreement. MTTR shall (and shallensure that each of its Consultants shall) use Commercially Reasonable Efforts to complete the Services in a timely manner and in accordance with timelinesmutually agreed by Oncobiologics and MTTR, including as set forth in the Services Schedule. The Services, and the results thereof, will be performed with,and be the product of, the professional skill and expertise consistent with industry standards for the performance of similar services; and (c) [***]. 11.3 Oncobiologics Representations and Warranties. (a) Oncobiologics hereby represents, warrants and covenants to MTTR that, as of the Effective Date, there are no Third Party IPAgreements [***]. 24[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIESAND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.(b) [***]. 11.4 NO OTHER REPRESENTATIONS OR WARRANTIES. EXCEPT AS EXPRESSLY STATED IN THIS AGREEMENT, NO REPRESENTATIONS ORWARRANTIES WHATSOEVER, WHETHER EXPRESS OR IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY, FITNESS FOR APARTICULAR PURPOSE, NON-INFRINGEMENT OR NON-MISAPPROPRIATION OF THIRD PARTY INTELLECTUAL PROPERTY RIGHTS, ARE MADEOR GIVEN BY OR ON BEHALF OF A PARTY OR ITS AFFILIATE, AND ALL REPRESENTATIONS AND WARRANTIES, WHETHER ARISING BYOPERATION OF LAW OR OTHERWISE, ARE HEREBY EXPRESSLY EXCLUDED. For avoidance of doubt, neither Party guarantees any outcome withrespect to the activities conducted under this Agreement. 12. Independent Contractor Relationship 12.1 Independent Contractor. MTTR (and each Consultant) is an independent contractor and not an employee of the Oncobiologics. Nothing inthis Agreement is intended to, or should be construed to, create a partnership, agency, joint venture or employment relationship. MTTR is not authorized torepresent that it or any Consultant is an agent, employee, or legal representative of Oncobiologics. MTTR is not authorized to make any representation,contract, or commitment on behalf of Oncobiologics or incur any liabilities or obligations of any kind in the name of or on behalf of the Oncobiologics. 12.2 TAX TREATMENT. MTTR and Oncobiologics agree that Oncobiologics will treat MTTR as an independent contractor for purposes of all taxlaws (local, state and federal) and file forms consistent with that status. MTTR agrees, as an independent contractor, that neither it nor its employees areentitled to unemployment benefits in the event this Agreement terminates, or workers’ compensation benefits in the event that MTTR, or any employee ofMTTR, is injured in any manner while performing obligations under this Agreement. MTTR will be solely responsible to pay any and all local, state, and/orfederal income, social security and unemployment taxes for MTTR and its employees. Oncobiologics will not withhold any taxes or prepare W-2 Forms forMTTR, but will provide MTTR with a Form 1099, if required by Applicable Law. MTTR is solely responsible for, and will timely file all tax returns andpayments required to be filed with, or made to, any Governmental Authority with respect to the performance of Services and receipt of fees under thisAgreement. MTTR is solely responsible for, and must maintain adequate records of, expenses incurred in the course of performing Services under thisAgreement, except as provided herein. No part of MTTR’s compensation will be subject to withholding by Oncobiologics for the payment of any socialsecurity, federal, state or any other employee payroll taxes. Oncobiologics will regularly report amounts paid to MTTR with the appropriate taxingauthorities, as required by Applicable Law. 12.3 NO EMPLOYEE BENEFITS. MTTR acknowledges and agrees that neither it nor anyone acting on its behalf shall receive any employee benefitsof any kind from Oncobiologics. MTTR (and MTTR’s agents, employees, and subcontractors) is excluded from participating in any fringe benefit plans orprograms as a result of the performance of Services under this Agreement, without regard to MTTR’s independent contractor status. In addition, MTTR (andMTTR’s agents, employees, and contractors) waives any and all rights, if any, to participation in any of Oncobiologics’s fringe benefit plans or programsincluding, but not limited to, health, sickness, accident or dental coverage, life insurance, disability benefits, severance, accidental death and dismembermentcoverage, unemployment insurance coverage, workers’ compensation coverage, and pension or 401(k) benefit(s) provided by Oncobiologics to itsemployees. 25[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIESAND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.12.4 EXPENSES AND LIABILITIES. MTTR agrees that as an independent contractor, it is solely responsible for all expenses (and profits/losses) itincurs in connection with the performance of Services. MTTR understands that it will not be reimbursed for any supplies, equipment, or operating costs, norwill the costs of doing business be defrayed in any way by Oncobiologics except as set forth in this Agreement; provided however, that MTTR will bereimbursed for reasonable travel and other business expenses in accordance with the travel policy attached hereto as Exhibit H, to the extent pre-approved bya senior executive of Oncobiologics. 13. Confidentiality 13.1 CONFIDENTIALITY OBLIGATIONS. Each of Oncobiologics and MTTR, as a Receiving Party, hereby agrees that, during the Term and for anadditional [***] after termination or expiration of this Agreement, it will (and in the case of MTTR, will ensure that Consultants will): (a) maintain inconfidence such Confidential Information of the Disclosing Party using not less than the efforts such Receiving Party uses to maintain in confidence its ownproprietary information of similar kind and value, but in no event less than a reasonable degree of efforts, (b) not disclose such Confidential Information ofthe Disclosing Party to any Third Party without the prior written consent of the Disclosing Party, except for disclosures expressly permitted under this Article13; and (c) it will not use any Confidential Information of the Disclosing Party, except as expressly permitted in this Agreement, including in connectionwith the exercise of any rights or licenses granted hereunder. Notwithstanding the foregoing, with respect to any Confidential Information that constitutes atrade secret, the foregoing obligations of confidentiality, non-use and non-disclosure shall continue for as long as such Confidential Information remains atrade secret. Notwithstanding the definition of Confidential Information in Section 1.16, Confidential Information of a Receiving Party will not be deemed toinclude: (a) any information that is or becomes generally available to the public other than as a direct or indirect result of the disclosure of anyof such information by the Receiving Party in violation of this Agreement; (b) any information that was in the Receiving Party’s possession without obligations of confidentiality with respect thereto prior to thetime it was first made available to the Receiving Party by the Disclosing Party, provided that the source of such information was not and is not known to theReceiving Party to be bound by any contractual or other obligation of confidentiality to the Disclosing Party or to any other entity with respect to any ofsuch information; 26[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIESAND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.(c) any information that becomes available to the Receiving Party on a non-confidential basis from a source other than the DisclosingParty, provided that such source is not known to the Receiving Party to be bound by any contractual or other obligation of confidentiality to the DisclosingParty or to any other entity with respect to any of such information; or (d) any information that is developed by or on behalf of the Receiving Party independently of the Disclosing Party’s ConfidentialInformation and without reference to or use of such Confidential Information. 13.2 Permitted Disclosures. (a) MTTR hereby agrees, as a Disclosing Party, that Oncobiologics, as a Receiving Party, may disclose MTTR’s ConfidentialInformation: (i) to any Affiliate, or to its or its Affiliate’s employee, consultant, contractor, subcontractor, agent or sublicensee on a need-to-know basis inorder to enable such person to exercise its rights, or to carry out its responsibilities, under this Agreement; (ii) on a need-to-know basis to Oncobiologics’sprofessional, legal or financial advisors; (iii) as reasonably necessary to any bona fide actual or potential (A) permitted sublicensee of Oncobiologics’s rightshereunder, or (B) investor, financer or commercial partner of Oncobiologics for purposes of evaluating or carrying out an actual or potential investment,merger, acquisition, consolidation, share exchange or other similar transaction involving Oncobiologics and such Third Party; (iv) as reasonably necessary tofile, prosecute or maintain patent rights, or to file, prosecute or defend litigation related to patent rights, in accordance with this Agreement; (v) as reasonablyrequired to obtain Regulatory Approvals; or (vi) as required by Applicable Laws, including regulations promulgated by court orders, administrativesubpoenas and security exchanges; provided, that, in the case of any disclosure under subsections (iv)-(vi), Oncobiologics shall (x) if practicable, provideMTTR with reasonable advance notice of and an opportunity to comment on any such required disclosure and (y) if requested by MTTR, cooperate in allreasonable respects with the MTTR’s efforts to obtain confidential treatment or a protective order with respect to any such disclosure, at MTTR’s expense.Notwithstanding the foregoing in this Section 13.2(a), Oncobiologics shall not disclose any of MTTR’s Confidential Information that is MTTR RegulatoryStrategy to any Third Party during the Term and for an additional [***] after the termination or expiration of this Agreement without the prior written consentof MTTR, not to be unreasonably withheld, conditioned or delayed, provided that Oncobiologics may disclose such MTTR Regulatory Strategy withoutMTTR’s prior consent (AA) as reasonably required to be disclosed to regulatory authorities for the purpose of obtaining or maintaining Regulatory Approvalof a Product in the Field in the Territory, in which case the foregoing provisions of subsections (x) and (y) shall apply to such disclosure and (BB) to asublicensee of Oncobiologics under the license granted to Oncobiologics under Section 10.3, to the extent reasonably necessary for such sublicensee toexercise such sublicense. (b) Oncobiologics hereby agrees, as a Disclosing Party, that MTTR, as a Receiving Party, may disclose Oncobiologics’s ConfidentialInformation (i) to any of its or Oncobiologics’s or Oncobiologics’s Affiliates’ consultants, contractors, subcontractors, agents or sublicensees on a need-to-know basis in order to exercise its rights or carry out its responsibilities under this Agreement, including the performance of the Services; or (ii) to the extentrequired by Applicable Laws, including regulations promulgated by court orders, administrative subpoenas and security exchanges; provided, that, in thecase of any such disclosure, MTTR shall (x) if practicable, provide Oncobiologics with reasonable advance notice of and an opportunity to comment on anysuch required disclosure and (y) if requested by Oncobiologics, cooperate in all reasonable respects with the Oncobiologics’s efforts to obtain confidentialtreatment or a protective order with respect to any such disclosure, at Oncobiologics’s expense. 27[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIESAND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.13.3 COVENANTS OF RECEIVING PARTY. Each of Oncobiologics and MTTR hereby covenants and agrees, as a Receiving Party that any person orentity who is granted access by such Receiving Party to Confidential Information of the Disclosing Party will, prior to having such access, be bound bywritten obligations of confidentiality and non-use no less stringent than the obligations set forth in Section 13.1. Each Receiving Party will be liable to theother Party for any disclosure or misuse by such person or entity of Confidential Information of the Disclosing Party. 14. Indemnification; Insurance; Liability Limitations 14.1 INDEMNIFICATION BY MTTR. MTTR shall defend (solely upon Oncobiologics’s request), indemnify, and hold Oncobiologics and itsAffiliates and their respective officers, directors, employees, and agents (the “Oncobiologics Indemnitees”) harmless from and against any and all Third Partyclaims, suits, proceedings, damages, expenses (including court costs and reasonable attorneys’ fees and expenses) and recoveries (collectively, “Claims”)arising out of, based on, or resulting from (a) gross negligence or willful misconduct of any MTTR Indemnitee in the performance of Services under thisAgreement; or (b) the breach of any of MTTR’s obligations under this Agreement, including MTTR’s representations, warranties or covenants set forthherein. The foregoing indemnity obligation shall not apply to the extent that (i) the Oncobiologics Indemnitees fail to comply with the indemnificationprocedures set forth in Section 14.3 and MTTR’s defense of the relevant Claim is prejudiced by such failure, or (ii) any Claim arises from, is based on, orresults from any activity or occurrence for which Oncobiologics is obligated to indemnify the MTTR Indemnitees under Section 14.2. Notwithstandinganything to the contrary herein, the foregoing indemnification obligations of MTTR shall not apply to any Claims that are based on, or resulting from,activities by MTTR Indemnitees that were expressly authorized in writing by Oncobiologics. 14.2 INDEMNIFICATION BY ONCOBIOLOGICS. Oncobiologics shall defend, indemnify, and hold MTTR and each of the Consultants (the “MTTRIndemnitees”) harmless from and against any and all Third Party Claims arising out of, based on, or resulting from (a) the Development, manufacture orCommercialization of the Product in the Field in the Territory by or on behalf of Oncobiologics or any of its Affiliates; (b) the breach of any ofOncobiologics’s obligations under this Agreement, including Oncobiologics’s representations, warranties or covenants set forth herein; or (c) the negligenceor willful misconduct of any Oncobiologics Indemnitee. The foregoing indemnity obligation shall not apply to the extent that (i) the MTTR Indemnitees failto comply with the indemnification procedures set forth in Section 14.3 and Oncobiologics’s defense of the relevant Claim is prejudiced by such failure, or(ii) any Claim arises from, is based on, or results from any activity or occurrence for which MTTR is obligated to indemnify the Oncobiologics Indemniteesunder Section 14.1. 28[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIESAND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.14.3 INDEMNIFICATION PROCEDURES. The Party claiming indemnity under this Article 14 (the “Indemnified Party”) shall give written notice to theParty from whom indemnity is being sought (the “Indemnifying Party”) promptly after learning of such Claim and shall offer control of the defense of suchClaim to the Indemnifying Party. The Indemnified Party shall provide the Indemnifying Party with reasonable assistance, at the Indemnifying Party’sexpense, in connection with the defense of the Claim for which indemnity is being sought. The Indemnified Party may participate in and monitor suchdefense with counsel of its own choosing at its sole expense; provided, however, the Indemnifying Party shall have the right to assume and conduct thedefense of the Claim with counsel of its choice. The Indemnifying Party shall not settle any Claim without the prior written consent of the Indemnified Party,not to be unreasonably withheld, unless the settlement involves only the payment of money. So long as the Indemnifying Party is actively defending theClaim in good faith, the Indemnified Party shall not settle or compromise any such Claim without the prior written consent of the Indemnifying Party. If theIndemnifying Party does not assume and conduct the defense of the Claim as provided above, (a) the Indemnified Party may defend against, consent to theentry of any judgment, or enter into any settlement with respect to such Claim in any manner the Indemnified Party may deem reasonably appropriate (andthe Indemnified Party need not consult with, or obtain any consent from, the Indemnifying Party in connection therewith), and (b) the Indemnifying Partyshall remain responsible to indemnify the Indemnified Party as provided in this Article 14. 14.4 INSURANCE. Each Party shall procure and maintain insurance, including product liability insurance, adequate to cover its obligationshereunder and consistent with normal business practices of prudent companies similarly situated; provided that, MTTR shall have no obligation to obtainproduct liability insurance. It is understood that such insurance shall not be construed to create a limit of either Party’s liability with respect to itsindemnification obligations under this Article 14. Each Party shall provide the other Party with written evidence of such insurance upon request. Each Partyshall provide the other Party with written notice at least [***] prior to the cancellation, non-renewal or material change in such insurance. 15. Term and Termination 15.1 TERM. The term of this Agreement is from the Effective Date until the later of (a) (i) for each country in the Major Market Countries on acountry-by-country basis, ten (10) years after the First Commercial Sale of a Product in the Field for an Approved Indication in such country and (ii) for eachcountry in the Territory outside of the Major Market Countries, ten (10) years after the First Commercial Sale of a Product in the Field for an ApprovedIndication in the Territory and (b) on a country-by-country basis, the expiration of any Regulatory Exclusivity associated with the applicable Product in suchcountry, unless earlier terminated as provided in this Agreement (the “Term”). 29[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIESAND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.15.2 Termination for Material Breach. (a) Each Party shall have the right to terminate this Agreement in its entirety immediately upon written notice to the other Party if theother Party materially breaches its obligations under this Agreement and, after receiving written notice identifying such material breach in reasonable detail,fails to cure such material breach within [***] from the date of such notice. For clarity, the failure of [***] to materially perform his obligations under thisAgreement in accordance with the terms herein shall be deemed to be a material breach of this Agreement by MTTR. (b) Oncobiologics shall have the right to terminate this Agreement on a Consultant-by-Consultant basis, immediately upon writtennotice to MTTR if (i) the applicable Consultant materially breaches his obligations under this Agreement and, after receiving written notice identifying suchmaterial breach in reasonable detail, fails to cure such material breach within [***] from the date of such notice, or (ii) the applicable Consultant materiallyfails to meet the time commitment for such Consultant for the relevant Development Stage of the Product, as set forth in Exhibit B and determined on aCalendar Quarter basis and fails to materially perform the underlying Service, as applicable, within [***] of the date of notice thereof. 15.3 TERMINATION DUE TO BANKRUPTCY. Either Party may terminate this Agreement if, at any time, the other Party files in any court or agencypursuant to any statute or regulation of any state, country or jurisdiction, a petition in bankruptcy or insolvency or for reorganization or for an arrangement orfor the appointment of a receiver or trustee of that Party or of its assets, or if the other Party proposes a written agreement of composition or extension of itsdebts, or if the other Party is served with an involuntary petition against it, filed in any insolvency proceeding, and such petition is not dismissed within[***] after the filing thereof, or if the other Party proposes or becomes a Party to any dissolution or liquidation, or if the other Party makes an assignment forthe benefit of its creditors. 15.4 TERMINATION FOR DEVELOPMENT FAILURE. Oncobiologics shall have the right to terminate this Agreement immediately, upon [***] priorwritten notice to MTTR, in the event that: (i) Oncobiologics fails to achieve any of the milestones set forth for the Development Stages in Section 4.4 (assuch Development Stages may be modified by mutual written agreement of the Parties) in the timeframe outlined in the initial Development timeline;provided that, Oncobiologics has exercised Commercially Reasonable Efforts to achieve such milestones, to the extent set forth in Section 4.3(b); or (ii) afterthe [***] after obtaining the first J Code for a Product in the U.S., the annual revenue in the U.S. from sales of Products in the Field in the Territory is less than[***] Dollars ($[***]). For avoidance of doubt, any such failure to achieve such milestones within such timeframes shall not in and of itself provide the basisfor termination by Oncobiologics under Section 15.2 of this Agreement. 15.5 Termination for Failure to Replace Consultant. (a) If Oncobiologics does not approve any replacement consultant for [***] pursuant to Section 2.2(c) within [***] of MTTR’sproposal of such replacement, then, unless the Parties agree otherwise in writing, this Agreement will terminate in its entirety immediately. For avoidance ofdoubt, any failure to approve any replacement consultant for [***] pursuant to Section 2.2(c) shall not provide basis for termination by Oncobiologics underSection 15.2 of this Agreement. 30[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIESAND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.(b) If Oncobiologics does not approve any replacement consultant for [***] pursuant to Section 2.2(d) within [***] of MTTR’sproposal of such replacement, then, unless the Parties agree otherwise in writing, this Agreement shall terminate with respect to such Consultant immediately.For avoidance of doubt, any failure to approve any replacement consultant for the foregoing Consultants pursuant to Section 2.2(d) shall not provide basisfor termination by Oncobiologics under Section 15.2 of this Agreement. 15.6 [***]. 15.7 Effects of Termination. (a) Upon any termination or expiration of this Agreement in its entirety, each Party shall return to the other Party, or at such otherParty’s option, destroy, all copies of such Confidential Information then in such Party’s possession; provided that, each Party may retain a copy of the otherParty’s Confidential Information for legal archival purposes; provided, however, that with respect to a termination by Oncobiologics pursuant to Section15.2(b), the foregoing shall apply only with respect to such terminated Consultant. (b) Upon any termination or expiration of this Agreement in its entirety, MTTR shall promptly furnish to Oncobiologics all Inventionsin MTTR’s possession as of the date of termination or expiration. Oncobiologics shall not perform any additional Services or incur any additional expenseswith respect to this Agreement without Oncobiologics’s prior written approval; provided, however, that with respect to a termination by Oncobiologicspursuant to Section 15.2(b), the foregoing shall apply only with respect to such terminated Consultant. (c) [***] (d) [***] (e) With respect to a termination of this Agreement with respect to a Consultant by Oncobiologics pursuant to Section 15.2(b) or as setforth in Section 15.5(b), the Monthly Retainer Fee and Profit Sharing Percentage shall be reduced in accordance with the applicable Consultant’s share of theProfit Sharing Percentage specified in Exhibit C as of the date of delivery of written notice of termination. 15.8 SURVIVAL. Termination or expiration of this Agreement shall not affect rights or obligations of the Parties under this Agreement that haveaccrued prior to the date of termination or expiration. Such termination or expiration shall not relieve a Party from obligations that are expressly indicated tosurvive the termination or expiration of this Agreement. Notwithstanding anything to the contrary, the following provisions shall survive any expiration ortermination of this Agreement: [***], together with any other provisions needed to effectuate the intent of the foregoing. If this Agreement is terminated withrespect to a Consultant but not in its entirety, then the foregoing provisions of this Agreement shall remain in effect with respect to the terminated Consultant(to the extent such provisions would survive and apply in the event this Agreement expires or is terminated in its entirety), and all provisions not surviving inaccordance with the foregoing to the extent applicable to the terminated Consultant shall terminate upon termination of this Agreement and be of no furtherforce and effect (and, for purposes of clarity, all provisions of this Agreement shall remain in effect with respect to the remaining Consultants that are notterminated). 31[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIESAND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.16. Miscellaneous 16.1 SUCCESSORS AND ASSIGNS. MTTR may not assign, transfer or delegate this Agreement or any of its obligations hereunder withoutOncobiologics’s prior written consent (which may be withheld, conditioned or delayed, in Oncobiologics’s sole discretion). Oncobiologics may not assign,transfer or delegate this Agreement or any of its obligations hereunder without MTTR’s prior written consent (which may be withheld, conditioned ordelayed, in MTTR’s sole discretion), except that Oncobiologics may assign this Agreement without MTTR’s prior written consent (a) to an Affiliate ofOncobiologics, so long as Oncobiologics remains responsible for the activities of such Affiliate and all of such Affiliate’s obligations under this Agreement,(b) to a successor of Oncobiologics in the event of a Change of Control of Oncobiologics or (c) to an exclusive sublicensee of all of Oncobiologics’s rights tothe Products for use (i) in the Field in the Territory or (ii) in all fields on a worldwide basis. 16.2 NOTICES. Any notice required or permitted by this Agreement shall be in writing and shall be delivered as follows with notice deemed givenas indicated: (a) by overnight courier upon written verification of receipt; or (b) by email or facsimile transmission with confirmation of receipt oftransmission. Notice shall be sent to the addresses set forth below or such other address as either Party may specify in writing. If to Oncobiologics:7 Clarke DriveCranbury, New Jersey 08512Attn: [***]Tel: [***]Email: [***]Facsimile: [***] If to MTTR:[***]Attn: [***]Tel: [***]Email: [***]Facsimile: [***] 16.3 GOVERNING LAW. This Agreement shall be governed in all respects by the laws of the State of Delaware, without regard to the application ofprinciples of conflicts of law. 32[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIESAND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.16.4 ARBITRATION. Either Party may submit any dispute arising hereunder to binding arbitration pursuant to the [***]. The arbitration shall beconducted in [***]. In any arbitration under this Section 16.4, the arbitrator and the Parties shall use their best efforts to resolve such dispute within [***]after the selection of the arbitrator, or as soon thereafter as is practicable. The decision of the arbitrator or shall be final and binding upon the Parties and shallbe enforceable by any court of competent jurisdiction. By agreeing to arbitration, the Parties do not intend to deprive any competent court of such court’sjurisdiction to issue a pre-arbitral injunction, pre-arbitral attachment or other order in aid of the arbitration proceedings and the enforcement of any award orjudgment. Without prejudice to such provisional remedies in aid of arbitration as may be available under the jurisdiction of a national court, the arbitratorshall have full authority to grant provisional remedies and to award damages for failure of any Party to respect the court of arbitration’s order to that effect.The expenses of any arbitration shall be borne equally by the Parties, except as otherwise allocated by the arbitrator. Each Party shall bear the expenses of itscounsel and other experts in connection with any arbitration proceedings. 16.5 Severability. Should any provisions of this Agreement be held by a court of law to be illegal, invalid or unenforceable, the legality, validityand enforceability of the remaining provisions of this Agreement shall not be affected or impaired thereby. 16.6 WAIVER. The waiver by either Party of a breach of any provision of this Agreement by the other Party shall not operate or be construed as awaiver of any other or subsequent breach by such other Party. 16.7 ENTIRE AGREEMENT. This Agreement constitutes the entire understanding of the Parties relating to the subject matter and supersedes anyprevious oral or written communications, representations, understanding, or agreement between the Parties concerning such subject matter, including theConfidentiality Agreement. This Agreement may not be changed, modified, supplemented or amended except by express written agreement signed by anauthorized representative of each of the Parties. 16.8 CONSTRUCTION. Except where the context otherwise requires, (a) wherever used, the singular shall include the plural, the plural shall includethe singular; (b) the terms “including,” “include,” “includes” or “e.g.,” shall be deemed to mean “including, without limitation”; (c) the word “or” has theinclusive meaning that is typically associated with the phrase “and/or”; and (d) the word “will” means “shall”; (f) “Dollar” or “$” means U.S. Dollars. EachParty represents that it has been represented by legal counsel in connection with this Agreement and acknowledges that it has participated in the draftinghereof. 16.9 EQUITABLE RELIEF. Each Party acknowledges that its breach of Article 13 (and in the case of MTTR, its breach of Section 5.1) may causeirreparable harm to the other Party, which cannot be reasonably or adequately compensated in damages in an action at law. By reasons thereof, each Partyagrees that the other Party shall be entitled, in addition to any other remedies it may have under this Agreement or otherwise, to seek preliminary andpermanent injunctive and other equitable relief to prevent or curtail any actual or threatened breach of such obligations. 33[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIESAND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.16.10 Force Majeure. A Party shall be excused from the performance of its obligations under this Agreement to the extent that such performance isprevented by force majeure and the nonperforming Party promptly provides notice of the prevention to the other Party. Such excuse shall be continued solong as the condition constituting force majeure continues and the nonperforming Party takes reasonable efforts to remove the condition. For purposes of thisAgreement, force majeure shall include conditions beyond the reasonable control of the applicable Party, including an act of God, war, civil commotion,terrorist act, labor strike or lock-out, epidemic, failure or default of public utilities or common carriers, destruction of production facilities or materials by fire,earthquake, storm or like catastrophe, and failure of plant or machinery. Notwithstanding the foregoing, a Party shall not be excused from making paymentsowed hereunder because of a force majeure affecting such Party. If a force majeure persists for more than [***], then the Parties will discuss in good faith themodification of the Parties’ obligations under this Agreement in order to mitigate the delays caused by such force majeure. If a force majeure persists for morethan [***], then either Party shall have the right to terminate this Agreement in its entirety upon written notice to the other Party. 16.11 LIMITATION OF LIABILITY. NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL,PUNITIVE, OR INDIRECT DAMAGES ARISING FROM OR RELATING TO ANY BREACH OF THIS AGREEMENT, REGARDLESS OF ANY NOTICE OFTHE POSSIBILITY OF SUCH DAMAGES. NOTWITHSTANDING THE FOREGOING, NOTHING IN THIS SECTION 16.11 IS INTENDED TO OR SHALLLIMIT OR RESTRICT THE INDEMNIFICATION RIGHTS OR OBLIGATIONS OF ANY PARTY UNDER SECTION 14.1 OR 14.2, OR DAMAGESAVAILABLE FOR A PARTY’S BREACH OF CONFIDENTIALITY OBLIGATIONS IN ARTICLE 13 OR ITS OBLIGATIONS UNDER SECTIONS 5.1 AND5.2 OR THAT RESULT FROM THE INTENTIONAL BREACH OF THIS AGREEMENT. 34[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIESAND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written above. ONCOBIOLOGICS, INC. MTTR, LLC By:/s/ Pankaj Mohan By:/s/ [***]Pankaj Mohan, Ph.D. Name: [***]Chairman and CEO Title: [***] 35[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIESAND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.EXHIBIT AServices Schedule Description of Services (including applicable Deliverables and timelines for completion) The following activities and deliverables with respect to the Product in the Field in the Territory:[***] AGREED TO:MTTR, LLC Date: AGREED TO:Oncobiologics, Inc. Date: 36[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIESAND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.EXHIBIT BConsultant Expertise & Time Commitments A.Consultant Expertise (1)[***] (2)[***] (3)Mr. Dagnon is a senior executive with regulatory, operations, quality and compliance experience. (4)[***] B.CONSULTANT TIME COMMITMENTS (AS A PERCENTAGE OF FTE AND PRO-RATED BASED ON THE ACTUAL NUMBER OF DAYS DURING THE APPLICABLE DEVELOPMENTStage) (1)Development Stage 1: (a)[***](b)[***](c)Mr. Dagnon – 25%(d)[***] (2)Development Stage 2: (a)[***](b)[***](c)Mr. Dagnon – 75%(d)[***] (3)Development Stage 3: (a)[***](b)[***](c)Mr. Dagnon – 100%(d)[***] (4)Development Stage 4: (a)[***](b)[***](c)Mr. Dagnon – 100%(d)[***] 37[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIESAND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.EXHIBIT CProfit Sharing Percentage Subject to the terms and conditions of this Agreement, including the adjustment pursuant to Section 9.2(a), Oncobiologics shall pay MTTR [***] of NetProfits. [***] share of such amount paid to MTTR shall be [***] and each of the other three (3) Consultants share of such amount shall be [***]. 38[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIESAND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.EXHIBIT DDevelopment Costs [***] 39[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIESAND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.EXHIBIT EInitial Development Timelines [***] 40[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIESAND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.EXHIBIT FPrimary End Points [***] 41[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIESAND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.EXHIBIT GOncobiologics’s Initial JSC Members [***] MTTR’s Initial JSC Members [***] MTTR’s Initial Alternate JSC Members [***] 42[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIESAND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.EXHIBIT HTravel Policy [***] 43[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIESAND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. EXHIBIT I[***][***] 44[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIESAND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. MTTR, LLC[***]Attention: [***]Email: [***] March 2, 2018 Oncobiologics, Inc.7 Clarke DriveCranbury, NJ 08512Attention: Pankaj Mohan, Ph.D.Email: [***] Re:Monthly retainer payment schedule adjustment, additional one-time fee, and MTTR consultant time commitment Dear Pankaj: This letter is to confirm our understanding with respect to certain changes to the Strategic Partnership Agreement between Oncobiologics, Inc.(“Oncobiologics”) and MTTR, LLC (“MTTR”) dated February 15, 2018 (the “Agreement”). Such changes are as set forth below: 1. The table set forth in Section 9.1(a) of the Agreement is not changed in terms of monthly retainer installments but hereby is amended in terms of timingby the following table: Timeframe Consulting Fee ($) (prorated as needed)(i) Commencing on the Effective Date until December 31, 2018 monthly installments of US$58,333(ii) Commencing January 1, 2019 until First Commercial Sale ofa Product in the Field in the U.S. monthly installments of $105,208(iii) Commencing after First Commercial Sale of a Product in theField in the U.S. monthly installments of $170,833 2. In consideration of [***], as reflected by the [***] within [***] (as compared to [***] listed in Exhibit E), Oncobiologics agrees to pay a one-time [***]fee of $268,553 to MTTR by September 11, 2020. The amount paid by Oncobiologics to MTTR pursuant to this Paragraph 2 as well as all and any retainerpayments shall be excluded from the determination of Development Costs under Section 4.3(b) of the Agreement. 45  3. Subsection B of Exhibit B is hereby also amended as follows: B.Consultant Time Commitments (as a percentage of FTE and pro-rated based on the actual number of days during the applicable period) (1)Effective Date until December 31, 2018:(a)[***](b)[***](c)Mr. Dagnon – 25%(d)[***] (2)January 1, 2019 until December 31, 2019:(a)[***](b)[***](c)Mr. Dagnon – 70%(d)[***] (3)January 1, 2020 until First Commercial Sale of a Product in the Field in the U.S.:(a)[***](b)[***](c)Mr. Dagnon – 70%(d)[***] (4)After First Commercial Sale of a Product in the Field in the U.S.:(a)[***](b)[***](c)Mr. Dagnon – 100%(d)[***] Please confirm Oncobiologics’s agreement with the changes as set forth in this letter by signing this letter and returning a countersigned copy to me at [***].I look forward to receiving your agreement, and thank you for your assistance in this matter. Sincerely, MTTR, LLC By:/s/ [***] [***] Agreed by Oncobiologics, Inc.: By:/s/ Pankaj Mohan, Ph.D. Name:Pankaj Mohan, Ph.D. Title: Chairman and CEO 46  Exhibit 10.26 LEASE TERMINATION AGREEMENT THIS LEASE TERMINATION AGREEMENT is made as of the 28th day of August, 2018, by and between CEDAR BROOK EAST CORPORATECENTER, LP, a New Jersey limited partnership, whose address is 4A Cedar Brook Drive, Cranbury, New Jersey 08512 (hereinafter referred to as "Landlord");and ONCOBIOLOGICS, INC., a Delaware corporation, whose address is 7 Clarke Drive, Cranbury, New Jersey 08512 (hereinafter referred to as "Tenant"). RECITALS: A. Landlord and Tenant have entered into that certain Lease for certain real property and improvements located at 9 Cedar Brook Drive,Cranbury, New Jersey, constituting a portion of the office/industrial park known as Cedar Brook Corporate Center, dated August 31, 2015 (the "Lease")· B. Landlord and Tenant have agreed to terminate the Lease subject to the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants and conditions herein contained and for good andvaluable consideration, the receipt and sufficiency of which are hereby acknowledged, the Landlord and Tenant hereby agree as follows: 1. Recitals. The Recitals set forth above are incorporated and shall be deemed a part of this Agreement. 2. Defined Terms. All defined terms not defined herein shall have the same meaning herein as set forth in the Lease. 3. Termination. Landlord and Tenant agree that the Lease is hereby terminated as of September 1, 2018 ("Lease Termination Date")and, as of such date, Tenant shall have no further rights to occupancy or possession of the Demised Premises under the Lease and, except as expresslyprovided in this Agreement, each party hereby releases each other, their respective successors and assigns of and from any and all claims, damages,obligations, liabilities, actions and causes of action, of every kind and nature whatsoever arising out of the Lease from and after the Lease Termination Date.Except as expressly set forth herein, from and after the Lease Termination Date, neither Landlord nor Tenant shall have any further rights or obligations underthe Lease. Landlord and Tenant shall execute a separate certificate (the “Lease Termination Certificate”, attached hereto and made a part hereof as ExhibitA) evidencing the termination of the Lease which shall be subject to the terms set forth herein. 4. Representations. Landlord and Tenant each represent and warrant to the other that (i) Tenant has vacated the Demised Premises infull compliance with all the terms and provisions of the Lease, and (ii) each has the full power and authority to enter into this Agreement and to perform itsobligations hereunder without the consent or approval of any other person or entity which has not already been obtained. Tenant represents and warrants thatit has not assigned the Lease or sublet its interest in the Lease. 5. Releases. (a) Effective as of the Lease Termination Date, Landlord does hereby remise, release and forever discharge Tenant, itssuccessors and assigns, from all obligations and liability under the Lease except as expressly set forth in this Agreement and Landlord hereby agrees that, asof the Lease Termination Date, the Lease is hereby cancelled, null and void and of no further force or effect.  (b) Effective as of the Lease Termination Date, Tenant does hereby remise, release and forever discharge Landlord, itssuccessors and assigns, from all obligations and liability under the Lease, and Tenant hereby agrees that, as of the Lease Termination Date, the Lease ishereby cancelled, null and void and of no further force or effect. The foregoing releases shall not affect the terms and provisions of this Agreement which shall remain in full force and effect in accordance with the terms setforth herein. 6. Consideration Payable to Landlord for Lease Termination. In consideration of and as a condition to Landlord's agreement toterminate the Lease and all obligations thereunder other than as provided herein, Tenant shall, and covenants and agrees to, pay to Landlord: (i) uponexecution of this Lease Termination Agreement, the sum of Two Hundred Eighty Seven Thousand Six Hundred Fifteen Dollars ($287,615.00), constitutingthe unamortized balance of the broker fee paid by the Landlord for the Lease, as indicated on Exhibit B attached hereto and made a part hereof, (ii) on amonthly basis, commencing on September 1, 2018 and on the first day of each of the twenty-nine (29) months thereafter, the sum of Fifty Thousand Dollars($50,000) (the "Monthly Lease Termination Payments") and, together with the thirtieth (30th) Monthly Lease Termination Payment, and, in any event, onor before February 1, 2021, the sum of Four Million Dollars ($4,000,000.00) (the "Final Lease Termination Payment"). Landlord and Tenant agree that theamount of the security deposit held by the Landlord under the Lease is One Hundred Seventy Four Thousand Two Hundred Fifty Dollars ($174,250.00), andthat such amount shall be retained by the Landlord as payment of the seventh, eighth and ninth Monthly Lease Termination Payments and partial payment ofthe tenth Monthly Lease Termination Payment (leaving a balance of $25,750). Notwithstanding the foregoing, Tenant shall have the right, at any time, topay the Final Lease Termination Payment, whereupon Tenant's obligation to make any further Monthly Lease Termination Payments shall terminate. Allpayments hereunder shall be paid to Landlord by wire transfer of immediately available funds in accordance with Landlord's wire transfer instructions. Thereshall be no further payments or adjustments between the parties. In the event Tenant shall fail to pay any Monthly Lease Termination Payment, or the FinalLease Termination Payment, within ten (10) days of receiving notice from Landlord of such failure to make any such payment when due, Landlord shall havethe right, in addition to all other rights available at law or in equity for such breach, to accelerate the remaining balance of payments hereunder, whereuponthe same shall immediately become due and payable in full. 7. No Subsequent Adjustments. Landlord and Tenant acknowledge that Tenant's payment of the Monthly Lease TerminationPayments and the Final Lease Termination Fee shall be made without offset or claim and the same shall satisfy all of Tenant's obligations to pay FixedAnnual Rent, Additional Rent and all other charges accrued and outstanding for the period up to and including the Expiration Date. 8. Captions. The captions preceding the various paragraphs of this Agreement have been inserted solely for convenience of referenceand shall not be used in construing this Agreement. 9. Choice of Law. This Agreement shall be governed by the laws of the State of New Jersey.  10. Successors and Assigns. This Agreement shall be binding upon the parties hereto, their successors and permitted assigns, and maynot be altered, amended, terminated or modified except by written instrument executed by the parties hereto. 11. Counterparts. This Agreement may be executed in several counterparts, which shall constitute one and the same instrument.Execution of this Agreement by PDF or facsimile shall bind the parties. 12. Construction. This Termination Agreement has been drafted by Landlord as a matter of convenience and shall not, on such account,be interpreted against or for either party, it being understood that each of the parties has had an opportunity to submit revisions to the text hereof. [SIGNATURES APPEAR ON THE FOLLOWING PAGE]  IN WITNESS WHEREOF the parties have hereunto set their hands and seal the day and year first above written. Cedar Brook East Corporate Center, LP, Landlord By:/s/ Joe Stern Name: Joe Stern Title: OncoBiologics, Inc., Tenant By:/s/ Lawrence A. Kenyon Name: Lawrence A. Kenyon Title: President and CEO  EXHIBIT A LEASE TERMINATION CERTIFICATE THIS LEASE TERMINATION CERTIFICATE is made as of the 28th day of August, 2018, by and between CEDAR BROOK EAST CORPORATECENTER, LP, a New Jersey limited partnership, whose address is 4A Cedar Brook Drive, Cranbury, New Jersey 08512 (hereinafter referred to as "Landlord");and ONCOBIOLOGICS, INC., a Delaware corporation, whose address is 7 Clarke Drive, Cranbury, New Jersey 08512 (hereinafter referred to as "Tenant"). Landlord and Tenant have entered into that certain Lease for certain real property and improvements located at 9 Cedar Brook Drive, Cranbury, NewJersey, (the “Demised Premises”) constituting a portion of the office/industrial park known as Cedar Brook Corporate Center, dated August 31, 2015 (the"Lease")· NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenanthereby agree that, pursuant to the Lease Termination Agreement executed simultaneously herewith, the Lease is hereby terminated as of September 1, 2018(the “Lease Termination Date”) and, as of such date, Tenant shall have no further rights to occupancy or possession of the Demised Premises under the Leaseand, except as provided in the Lease Termination Agreement, the parties to the Lease release each other, their respective successors and assigns of and fromany and all claims, damages, obligations, liabilities, actions and causes of action, of every kind and nature whatsoever arising out of the Lease from and afterthe Lease Termination Date. This Certificate may be executed in several PDF counterparts, which shall constitute one and the same instrument. [SIGNATURES APPEAR ON THE FOLLOWING PAGE]  IN WITNESS WHEREOF the parties have hereunto set their hands and seal the day and year first above written. Cedar Brook East Corporate Center, LP, Landlord By:/s/ Joe Stern Name: Joe Stern Title: OncoBiologics, Inc., Tenant By:/s/ Lawrence A. Kenyon Name: Lawrence A. Kenyon Title: President and CEO  EXHIBIT B UNAMORTIZED COMMISSION FROM 9/1/2018 9/1/18-2/28/21 30 months’ rent: month is $58,083.33 Rent for 30 months: $1,742,500 3/1/21-2/28/26 60 months’ rent: per month is $66,830 Rent for 60 months: $4,009,800 Total rent: $5,752,300 Commission at 5% $287,615.00 Exhibit 23.1​Consent of Independent Registered Public Accounting FirmThe Board of DirectorsOutlook Therapeutics, Inc.:We consent to the incorporation by reference in the Registration Statements (Nos. 333-211362, 333-216081 and333-223064) on Form S-8, (Nos. 333-223063 and 333-212351) on Form S-3 and (No. 333-216610) on Form S-1of Outlook Therapeutics, Inc. of our report dated December 18, 2018, with respect to the consolidated balancesheets of Outlook Therapeutics, Inc. as of September 30, 2018 and 2017, and the related consolidated statementsof operations, convertible preferred stock and stockholders’ equity (deficit), and cash flows for the years thenended and related notes (collectively, the consolidated financial statements), which report appears in theSeptember 30, 2018 annual report on Form 10-K of Outlook Therapeutics, Inc.Our report dated December 18, 2018 contains an explanatory paragraph that states that Outlook Therapeutics,Inc. has incurred recurring losses and negative cash flows from operations since inception and has anaccumulated deficit at September 30, 2018 of  $216.3 million, $13.5 million of senior secured notes that maybecome due in fiscal 2019 and $4.6 million of unsecured indebtedness, $1.0 million of which is due on demand,and $3.6 million of which matures December 22, 2018, which raises substantial doubt about its ability tocontinue as a going concern. The consolidated financial statements do not include any adjustments that mightresult from the outcome of this uncertainty./s/ KPMG LLPPhiladelphia, PennsylvaniaDecember 18, 20181.I have reviewed this Annual Report on Form 10-K of Outlook Therapeutics, Inc. (the “registrant”); and2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit tostate a material fact necessary to make the statements made, in light of the circumstances under whichsuch 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 thisreport, fairly present in all material respects the financial condition, results of operations and cashflows of the registrant as of, and for, the periods presented in this report;4.I am responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as definedin Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:(a)Designed such disclosure controls and procedures, or caused such disclosure controls andprocedures to be designed under my supervision, to ensure that material information relating tothe registrant, including its consolidated subsidiaries, is made known to me by others withinthose entities, particularly during the period in which this report is being prepared;(b)Designed such internal control over financial reporting or caused such internal control overfinancial reporting to be designed under my supervision, to provide reasonable assuranceregarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented inthis report my conclusions about the effectiveness of the disclosure controls and procedures, as ofthe 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 reportingthat occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarterin the case of an annual report) that has materially affected, or is reasonably likely to materiallyaffect, the registrant’s internal control over financial reporting; and5.I have disclosed, based on my most recent evaluation of internal control over financial reporting, tothe registrant’s auditors and the audit committee of the registrant’s board of directors (or personsperforming the equivalent functions):(a)All significant deficiencies and material weaknesses in the design or operation of internal controlover financial reporting which are reasonably likely to adversely affect the registrant’s ability torecord, process, summarize and report financial information; and(b)Any fraud, whether or not material, that involves management or other employees who have asignificant role in the registrant’s internal control over financial reporting.Exhibit 31.1​CERTIFICATIONSI, Lawrence A. Kenyon, certify that:Date: December 18, 2018/s/ Lawrence A. KenyonLawrence A. KenyonChief Executive Officer and Chief Financial Officer(Principal Executive, Financial and Accounting Officer)Exhibit 32.1​CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, theundersigned officer of Outlook Therapeutics, Inc. (the “Registrant”) certifies that the Annual Report of OutlookTherapeutics, Inc. on Form 10-K for the year ended September 30, 2018 (the “ Report”) fully complies with therequirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended, andthat information contained in the Report fairly presents in all material respects the financial condition andresults of operations of the Registrant.Date: December 18, 2018By:/s/ Lawrence A. KenyonName:Lawrence A. KenyonTitle:Chief Executive Officer and Chief Financial Officer(Principal Executive, Financial and Accounting Officer)A signed original of this written statement required by Rule 13a-14(b) of the Securities Exchange Act of 1934,as amended, and 18 U.S.C. Section 1350 has been provided to the Registrant and will be retained by theRegistrant and furnished to the Securities and Exchange Commission or its staff upon request.This certification accompanies the Form 10-K to which it relates, is not deemed filed with the Securities andExchange Commission and is not to be incorporated by reference into any filing of the Registrant under theSecurities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, (whether made beforeor after the date of the Report), irrespective of any general incorporation language contained in such filing.

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