Synlogic
Annual Report 2015

Plain-text annual report

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549FORM 10-K ☑ Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934For the year ended December 31, 2015 or Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934Commission File Number: 001-37566Mirna Therapeutics, Inc.(Exact name of registrant as specified in its charter) Delaware 26-1824804(State or other jurisdiction ofincorporation or organization) (I.R.S. EmployerIdentification No.) 2150 Woodward Street, Suite 100Austin, TX 78744(Address of principal executive offices and zip code)(512) 901-0900(Registrant’s telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of exchange on which registeredCommon Stock, par value $0.001 per share NASDAQ Stock Market LLC Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No ☑Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act of 1934 (the “ExchangeAct”). Yes No ☑ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past90 days. Yes ☑ No Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required tobe submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the Registrant wasrequired to submit and post such files). Yes No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to thebest of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment tothis Form 10-K. ☑ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See thedefinitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer ☑ Smaller reporting company Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ☑ The registrant was not a public company as of the last business day of its most recently completed second fiscal quarter, and therefore cannot calculate theaggregate market value of its voting and non-voting common equity held by non-affiliates as of such date. As of March 15, 2016, there were 20,830,555 shares of the registrant’s Common Stock outstanding. DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant’s Proxy Statement for the registrant’s 2015 Annual Meeting of Stockholders are incorporated by reference into Part III of thisForm 10-K to the extent stated herein. The Proxy Statement will be filed within 120 days of the registrant’s fiscal year ended December 31, 2015. Table of ContentsMIRNA THERAPEUTICS, INC.TABLE OF CONTENTS Page No.PART I Item 1. Business 2 Item 1A. Risk Factors 32 Item 1B. Unresolved Staff Comments 79 Item 2. Properties 79 Item 3. Legal Proceedings 79 Item 4. Mine Safety Disclosures 79 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases ofEquity Securities 79 Item 6. Selected Financial Data 82 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 84 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 92 Item 8. Financial Statements and Supplementary Data 92 Item 9. Changes in and Disagreements with Accountants On Accounting and Financial Disclosure 114 Item 9A. Controls and Procedures 114 Item 9B. Other Information 114 PART III Item 10. Directors, Executive Officers, and Corporate Governance 115 Item 11. Executive Compensation 115 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related StockholderMatters 115 Item 13. Certain Relationships and Related Transactions, and Director Independence 115 Item 14. Principal Accountant Fees and Services 115 PART IV Item 15. Exhibits and Financial Statement Schedules 116 Signatures 117 Table of ContentsForward-Looking Statements This Annual Report on Form 10-K contains forward-looking statements concerning our business, operations andfinancial performance and condition, as well as our plans, objectives and expectations for our business operations andfinancial performance and condition. Any statements contained herein that are not statements of historical facts may bedeemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terminology suchas “aim,” “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “due,” “estimate,” “expect,” “goal,”“intend,” “may,” “objective,” “plan,” “predict,” “potential,” “positioned,” “seek,” “should,” “target,” “will,” “would,” andother similar expressions that are predictions or indicate future events and future trends, or the negative of these terms orother comparable terminology. These forward-looking statements include, but are not limited to, statements regarding: ·the initiation, cost, timing, progress and results of our research and development activities, preclinicaland nonclinical studies and future clinical trials; ·our ability to obtain and maintain regulatory approval of our future product candidates, and any relatedrestrictions, limitations and/or warnings in the label of an approved product candidate; ·our ability to obtain funding for our operations; ·our plans to research, develop and commercialize our future product candidates; ·our ability to attract collaborators with development, regulatory and/or commercialization expertise; ·our ability to obtain and maintain intellectual property protection for our current and future productcandidates; ·the size and growth potential of the markets for our future product candidates, and our ability to servethose markets; ·our ability to successfully commercialize our product candidates; ·the rate and degree of market acceptance of our product candidates; ·our ability to develop sales and marketing capabilities, whether alone or with potential futurecollaborators; ·regulatory developments in the United States and foreign countries; ·the performance of our third-party suppliers and manufacturers; ·the success of competing therapies that are or become available; ·our ability to retain key scientific or management personnel; ·our expectations regarding the time during which we will be an emerging growth company under theJOBS Act; and ·the accuracy of our estimates regarding expenses, future revenues, capital requirements and need foradditional financing. These forward-looking statements are based on management’s current expectations, estimates, forecasts, andprojections about our business and the industry in which we operate and management’s beliefs and assumptions and are notguarantees of future performance or development and involve known and unknown risks, uncertainties, and other1 Table of Contentsfactors that are in some cases beyond our control. As a result, any or all of our forward-looking statements in this AnnualReport on Form 10-K may turn out to be inaccurate. Factors that may cause actual results to differ materially from currentexpectations include, among other things, those listed under Item 1A. “Risk Factors” and elsewhere in this Annual Report onForm 10-K. These forward-looking statements speak only as of the date of this Annual Report on Form 10-K. Except asrequired by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if newinformation becomes available in the future. Given these risks and uncertainties, you are cautioned not to place unduereliance on such forward-looking statements. PART I ITEM 1. BUSINESS Overview We are a clinical-stage biopharmaceutical company developing a broad pipeline of microRNA-based oncologytherapeutics. microRNAs are naturally occurring, short ribonucleic acid, or RNA, molecules, or oligonucleotides, that play acritical role in regulating key biological pathways. Misexpression of even a single microRNA can contribute to diseasedevelopment and tumor suppressor microRNAs are commonly reduced in cancer. Our scientists and others at leadingacademic institutions have identified numerous tumor suppressor microRNAs that play key roles in preventing normal cellsfrom becoming cancerous and facilitating proper cancer immunosurveillance. We are developing mimics of naturallyoccurring microRNAs that are designed to restore this tumor suppressor activity and aid appropriate anti- tumor immuneresponse. This approach is known as microRNA replacement therapy. Our lead product candidate, MRX34, a mimic of naturally occurring microRNA-34 (miR-34) encapsulated in a liposomalnanoparticle formulation, is the first microRNA mimic to enter clinical development and has demonstrated clinical proof ofconcept as a single agent in our ongoing Phase 1 clinical trial. As a result of observations in the Phase 1 study, we plan toadvance into two Phase 2 clinical studies by the end of 2016, one in patients with advanced malignant melanoma, the otherin patients with advanced renal cell carcinoma (RCC). We also plan to initiate, in the second half of 2016, an additionalPhase 1b translational medicine trial to deepen our insights into the mechanism of action of miR-34 in melanoma patientsand to define biomarkers that would aid in furthering the development of MRX34. We believe that microRNA mimics may represent a new paradigm in cancer therapy and have the potential to create anew, important class of effective cancer drugs that can potentially be used alone or in combination with other cancertherapeutics. Over the past two decades, cancer drug development has moved from systemic cytotoxic chemotherapy to moretargeted therapies. First‑generation targeted therapies have generally produced lower levels of toxicity than systemiccytotoxic therapies; however, they have done so with variable efficacy outcomes. The recent discoveries of checkpointinhibitors and other immuno‑oncology products have resulted in marked improvements in efficacy. However, only a subsetof patients achieve responses to these products when used as a single agent and the development of combinations of theseagents has been limited by toxicities. For the next wave of cancer therapies to produce a measurable improvement overcurrent approaches, we believe it will need to yield drugs that can disrupt multiple oncogenic and immuno‑oncologypathways. We believe the microRNA field represents a highly promising area for the development of these drugs. Our Strategy Our corporate strategy includes the following: ·Advance our lead product candidate, MRX34, through clinical development. MRX34 is potentially the firstin a new class of promising cancer drugs. Mirna is the first to establish clinical proof‑of‑concept for amicroRNA‑based replacement therapy for cancer. In our Phase 1 clinical trial we have achieved confirmedpartial responses by Response Evaluation Criteria in Solid Tumors (RECIST) in a patient with metastasizedhepatocellular carcinoma, a patient with advanced acral melanoma and a patient with advanced RCC. We havealso observed a number of patients with long term stable disease during MRX342 Table of Contentstreatment. Based on the observed clinical activity, we intend to initiate two Phase 2 clinical studies in patientswith melanoma and RCC by the end of 2016. ·Identify biomarkers to support therapeutic product candidates. We believe that biomarkers may be used tomonitor microRNA activity and potentially aid in the selection of optimal patient segments in clinical trials.We are analyzing clinical samples supplemented with cell and animal model studies to identify predictivebiomarkers that may assist in both demonstrating delivery into and biological activity of miRNA mimics inpatient cells. These studies may also assist in selecting patients most likely to benefit from treatment withMRX34 or other product candidates. We also intend to initiate, in late 2017, a dedicated Phase 1b translationalmedicine study in melanoma patients to further study the mechanism of action and therapeutic activity ofMRX34. ·Expand our clinical development program to additional microRNAs. Our R&D team’s discoveries of tumorsuppressor microRNAs critical for controlling various cancer processes, have allowed us to build a broadpipeline of promising tumor suppressor microRNA mimics. Furthermore, any additional Investigational NewDrug (IND), applications that we file may create new development, commercialization and partneringopportunities. With additional insights on microRNA-based drug characteristics from our translational medicineclinical trial, we aim to complete selection of a second product candidate by the end of 2016, which we intendto move into IND-enabling preclinical studies in 2017. ·Expand our intellectual property position. We intend to continue building on our technology platform,comprised of intellectual property, proprietary methods and know‑how in the microRNA field. We are pursuingor have been granted therapeutic use patent claims related to several tumor suppressor microRNAs, as well ascomposition of matter claims for multiple chemistries and structures that are actually or potentially used withmiR-34 and our other therapeutic microRNA mimics. We believe our strong intellectual property position canbe used to support internal development as well as partnering opportunities. ·Leverage partnership and collaboration opportunities. To date, we have focused on establishingproof‑of‑concept for MRX34, but we anticipate exploring certain partnership opportunities in the future. Thesemay include certain ex‑U.S. territories where we do not expect to establish a commercial presence and R&Dpartnerships to further expand our pipeline or our MRX34 combination therapy development program. In thesecases, we anticipate retaining or sharing U.S. commercialization rights. We may also pursue partnerships for ouradditional product candidates as they progress toward clinical development. Biology of microRNAs: A Unique Class in the RNA Therapeutics SpaceRNA plays an essential role in the process used by cells to encode and translate genetic information from DNA toproteins. RNA is comprised of subunits called nucleotides and is synthesized from a DNA template by a process known astranscription. Transcription generates different types of RNA, including messenger RNAs that carry the information forproteins in the sequence of their nucleotides. In contrast, microRNAs are short RNAs, or oligonucleotides, that do not codefor proteins, but rather ensure that the over 20,000 human protein‑encoding genes are produced in the proper cells and at theproper levels by coordinating the production of proteins from messenger RNAs that are produced in each cell, a processknown as translation.In humans, each microRNA binds to and regulates the translation of up to several hundred target messenger RNAs.Coordinating the translation of multiple, related genes allows a microRNA to regulate gene networks involved in keybiological pathways. Given the importance of microRNAs in coordinating gene expression, it is not surprising that thealtered expression of even a single microRNA appears to contribute to a variety of human diseases, including cancer.We believe that microRNA‑based therapies have the potential to become a new class of drugs with broad therapeuticapplication based on the following:3 Table of Contents·microRNAs are misexpressed in a broad range of diseases. Comparing the microRNA profiles of diseasedand normal adjacent tissues from patients with cancer, obesity, cardiovascular diseases, neurodegenerativediseases, viral infections and a variety of other conditions has revealed consistent alterations in the expressionof several microRNAs for each disease. Animal model studies have further revealed that the altered expressionof many of these microRNAs contributes to the development of the disease.·microRNA therapeutics have the potential to modulate multiple disease pathways. microRNAs are known toregulate gene networks involved in key biological pathways. Because of this unique attribute, the use ofmicroRNA therapeutics may allow for more effective treatment of complex, multi‑factorial diseases, such ascancer, in which multiple disease pathways are affected.·Synergies with other therapies. In complex therapeutic areas, such as cancer, physicians typically treatpatients with combination therapies, and we believe microRNA‑based replacement therapy has the potential tobecome part of that treatment paradigm. Nonclinical data suggest that microRNA therapeutics and differenttherapeutic modalities, such as chemotherapy, radiation therapy, targeted therapies or potentially alsoimmuno‑oncology agents, may work synergistically to treat cancer.Our microRNA PlatformMore than 10 years ago, while working at Ambion , our scientists discovered through extensive microRNAexpression and functional assay work that microRNAs are expressed differently in cancer tissue compared to normal adjacenttissue and that several naturally occurring microRNAs function as tumor suppressors by regulating the expression of keyoncogenes and preventing the development, progression and dissemination of cancer.To enable therapeutic application of these tumor suppressor microRNAs, we pioneered technologies for creatingRNA molecules that function as natural microRNAs when they enter human cells. These RNA molecules, which we callmicroRNA mimics, may be used to replace those tumor suppressor microRNAs that are lost, or under‑expressed, in cancercells. We pioneered the development of therapeutic miRNA mimics that feature two complementary RNA strands that arehybridized to produce a double‑stranded RNA. The active strand has a sequence that is identical to a microRNA normallyexpressed in a cell, while the second, passenger strand is modified to facilitate proper loading of the active strand onto thecytoplasmic protein complex necessary for microRNA function inside the cells. While similar in structure, microRNA mimicsare clearly differentiated from small interfering RNAs (siRNAs) through their biological heritage and activity. In contrast tothe man‑made sequences of siRNAs that target a single gene, microRNA mimics function like naturally occurring microRNAsto orchestrate the expression of many different genes to enable normal cell development and function. We believe ourmicroRNA mimics have the mechanistic flexibility to be used as:·first‑line agents in combination with current standards of care, including targeted therapies, immuno‑oncologytherapies, chemotherapies and/or radiation therapies;·monotherapies in advanced or refractory patient settings;·monotherapies in patients who would be intolerant of current standards of care; and·monotherapies in tumor settings that do not have any approved therapies. Delivery of microRNA Mimics to Target Tissues Systemic delivery of oligonucleotides, including microRNAs, has been a major challenge, principally due to thefact that after intravenous administration these molecules have to overcome multiple barriers before reaching their ultimateplace of action, which is the RNA‑induced silencing complex (RISC) in the cytoplasm of cells. 4 ®Table of ContentsWe have evaluated a wide variety of proprietary delivery systems with our microRNA compounds for in vivo and exvivo testing. As a result of our testing, we selected SMARTICLES formulation technology, licensed from MarinaBiotech, Inc. as our delivery technology for miR‑34, based on high therapeutic activity of formulated miR‑34 in mousemodels of cancer. We remain confident in our selection of SMARTICLES for our lead therapeutic candidate. However, we continue toevaluate new delivery technologies for potential use in conjunction with miR-34 and the other microRNA mimics in ourpipeline for the purposes of optimizing delivery of our drug candidates to a broader group of tissues and organs. Selection of miR‑34 as Lead Therapeutic TargetmiR‑34 is one of the most widely published tumor suppressor microRNAs. Studies have revealed that the levels ofmiR‑34 are reduced in the tumors of patients with a wide variety of cancers, as set forth in the graph below.A number of factors could lead to under-expression of miR-34 in cancers, including mutation or methylation of thegene that encodes for miR-34, or mutation or reduced activity of p53, a well-known tumor suppressor protein. miR-34 wasinitially discovered as a part of the p53 DNA-repair pathway, and functions similarly to the tumor suppressor function ofp53, controlling many genes and pathways that are also associated with p53.Based on published reports from microRNA scientists at numerous research institutions, miR‑34 plays a key role incontrolling the expression of more than 30 oncogenes as well as genes involved in tumor immune evasion, as shown in thefigure below. This includes targets that are the focus of currently‑marketed and investigational cancer drugs.5 ®Table of ContentsThe considerable reduction of miR‑34 levels observed in cancer stem cells suggests that the microRNA might play afunctional role in preventing normal cells from acquiring stem‑like properties, such as cell self‑renewal, which can contributeto the development of cancer. In partnership with an academic collaborator, we successfully demonstrated that introducingmiR‑34 into prostate cancer stem cell populations can significantly reduce their stem‑like properties and limit their capacityto form tumors. Similar results have been obtained from studies using pancreatic and gastric cancer stem cells. We believe theability of miR‑34 to inhibit cancer stem cells has significant implications for cancer therapy since the cancer stem cellspresent in tumors are thought to be the primary drivers of tumor growth, metastasis and resistance to therapy.Recent data generated with an academic collaborator showed that miR‑34 directly represses the checkpointsignaling molecule PD‑L1. PD‑L1 protein present on tumor and immune cells can silence anti‑tumor immune responses andhas become a promising drug target in immuno‑oncology therapies. The introduction of miR‑34 mimics into cultured lungcancer cells led to a decline of PD‑L1 protein expression. In a syngeneic mouse model of lung cancer, we successfullydemonstrated that MRX34 treatment led to repression of the PD‑L1 protein in tumor tissue and an increase in activetumor‑infiltrating immune cells (CD8+) and a decrease in so‑called exhausted tumor‑infiltrating immune cells (CD8+PD1+).We believe the ability of miR‑34 to block PD‑L1 expression may broaden the therapeutic application of MRX34 as amonotherapy as well as in combination with other immuno‑oncology therapies.Product PipelineWe are developing a pipeline of tumor suppressor microRNA mimics. Each microRNA mimic in our pipeline isdesigned to replicate the activity of a single tumor suppressor miRNA and regulate the expression of key oncogenes acrossmultiple oncogenic pathways which can prevent proliferation and induce apoptosis in cancer cells. The potential capacity tosimultaneously affect multiple pathways and processes that are critical to cancer cell viability may make mircroRNA mimicspotent anti-cancer agents, which may also be less susceptible to developing drug resistance. We are pursuing or have beengranted therapeutic use patent claims related to several tumor suppressor microRNAs as well as composition of matter claimsfor multiple chemistries and structures that are, or may be used in or are contemplated for use with, our6 Table of Contentstherapeutic microRNA mimics, including miR-34. The following chart lists the most advanced microRNA mimics in ourpipeline as well as their current stage of research and development: MRX34: Our Lead Clinical Product Candidate MRX34 is a double‑stranded RNA mimic of the tumor suppressor microRNA, miR‑34, encapsulated in a liposomalnanoparticle formulation called SMARTICLES. miR‑34 inhibits multiple oncogenic pathways and stimulates anti‑tumorimmune response to induce cancer cell death. During preclinical development, we demonstrated that a double-strandedmimic of miR-34 has the ability to: ·reduce the proliferation of cultured cancer cells derived from patients with a wide range of malignancies,including liver, lung, colon, pancreatic and breast cancer; ·cause significant tumor regression in multiple mouse models of liver cancer and inhibit tumor growth in mousemodels of other cancers; ·reduce the tumor-forming capacity of cancer stem cell populations; ·work in a synergistic manner with different approved cancer therapies to reduce proliferation of cultured cancercells and cause significant tumor regression in combination with an approved cancer therapy in an aggressivemouse model of liver cancer; and ·repress programmed death-ligand 1 (PD-L1) protein expression in tumor tissue in a syngeneic mouse model oflung cancer, leading to an increase in active tumor-infiltrating immune cells (CD8+) and a decrease in so-calledexhausted tumor-infiltrating immune cells (CD8+PD1+). Based on strong preclinical data and a potential compelling new mechanism for the treatment of cancer, we openedIND applications in the United States and Korea and initiated our first-in-human Phase 1 clinical trial, titled MRX34-101. 7 Table of Contents MRX34-101 Our Phase 1 Clinical Trial Trial Design MRX34-101 is a multi-center, open label Phase 1 clinical trial to evaluate MRX34 as a single agent in multipleadvanced solid tumors and various hematological malignancies (leukemia, lymphoma, myelodysplastic syndrome andmultiple myeloma). Primary objectives of the Phase 1 clinical trial are to establish the maximum tolerated dose (MTD) and anappropriate dose for expansion cohorts and future Phase 2 clinical trials. Secondary objectives of the clinical trial are toassess the safety, tolerability and pharmacokinetic profile of MRX34 after intravenous dosing as well as to assess anybiological and clinical activity to determine next clinical development steps. The Phase 1 clinical trial design consists of an initial dose-escalation phase, followed by an expansion phase after aMTD and recommended Phase 2 doses (RP2D) are identified. During the expansion phase of the trial, patients being treatedat the RP2D may undergo tumor biopsies to identify potential biomarkers for assessing delivery and activity of miR-34,and/or predicting response to MRX34. The Phase 1 clinical trial is not designed to show statistical significance of the studyendpoints. The trial was initiated in April 2013 and as of December 31, 2015, 122 patients in total have been enrolled across allpatient cohorts and all dose levels at five sites in the United States and three sites in Korea, including 99 patients withvarious advanced solid tumors and 23 patients with hematological malignancies. Two dosing schedules have been studied in the clinical trial. The first consisted of treatment twice weekly or BIW,for three weeks in 28-day cycles (the BIW schedule). The second includes treatment daily for five consecutive days, or QD ×5, in 21-day cycles (the QD × 5 schedule). Safety Profile As of December 31, 2015: ·47 advanced solid tumor patients have been treated on the BIW schedule, The MTD of MRX34 was found to be110 mg/m among patients with advanced solid tumors with liver involvement. ·The other 52 advanced solid tumor patients and the 23 patients with hematological malignancies have been orare being treated on the QD × 5 schedule. The MTD and RP2D of MRX34 with this dosing schedule have beenestablished at 70 mg/m for primary liver cancer (hepatocellular carcinoma, or HCC) patients and 93 mg/m fornon-HCC solid tumor patients. Patients treated on the QD × 5 dosing schedule demonstrated higher drug exposure based on pharmacokineticparameters, and better treatment tolerability. Based on these observations, we have selected the QD × 5 dosing as thepreferred dosing schedule for all new patients enrolled in our clinical trials. In the dose escalation portion of our Phase 1 trial of MRX34, patients were treated starting at the 10 mg/m BIW andthe 33 mg/m QD x 5 dose level, respectively. During and after intravenous drug infusion, nearly all patients experienced atleast one adverse event, with fever, chills, back pain, abdominal pain, nausea, diarrhea, vomiting, dehydration, anorexia,dyspnea, fatigue, headache, cough, insomnia, dysgeusia, tachycardia, anemia, neutropenia, lymphopenia, leukopenia,thrombocytopenia, elevation of liver enzymes, hyperglycemia and hyponatremia being the most commonly reported adverseevents. Many of the most common adverse events associated with MRX34 are similar to those reported with other liposomaldrug formulations and are generally manageable or preventable with standard interventions or tests used by oncologists, suchas administering other medications that prevent or reduce side effects,8 22222Table of Contentsincluding high dose dexamethasone before, during, and shortly after MRX34 infusions, temporary slowing of infusions,delaying or stopping dosing, or using magnetic resonance imaging, or MRI, to detect silent brain metastases. Through December 31, 2015, two deaths have occurred in the Phase 1 study, which were considered possibly orprobably related to the study drug by the investigators. One treatment‑related death occurred in a 77‑year old patient withkidney cancer metastasized to the lungs. We believe that the patient experienced immune‑mediated pneumonitis and colitis,which have been observed with immuno‑oncology drugs and are included in FDA‑approved drug labels. The secondtreatment-related death that was considered possibly related to drug occurred in a 73-year old patient with advancedmetastatic small cell lung cancer (SCLC) who expired from sepsis. The treatment‑related serious adverse events occurring in more than one patient were as follows (as of December 31,2015): ·Among the 47 patients in the BIW dosing cohort, fever, fatigue, dehydration and elevation of liver enzymes,each occurred in two patients. ·For the 75 patients in the QD × 5 dosing cohort, capillary leak syndrome, delirium or altered mental status, andbleeding in silent or asymptomatic HCC brain metastasis each occurred in two patients; elevation of liverenzymes, fever, and thrombocytopenia each occurred in four patients. In both cases of capillary leak syndromethe patients were receiving low-dose dexamethasone (4 mg BID). Following these safety events theinvestigators were instructed to use high-dose dexamethasone (10 mg BID) as premedication for all patients andto administer high-dose corticosteroids for grade 2 or greater capillary leak syndrome. Pharmacokinetics and Pharmacodynamics Both maximum blood concentrations (Cmax) of, and drug exposure (area under the curve, or AUC) to, miR‑34showed a non‑linear, non‑dose proportional increase with increasing doses in both the BIW and QD × 5 schedules in bloodsamples analyzed as of December 31, 2015. We believe that the higher exposure with 5 days of consecutive daily dosing is abenefit of the QD × 5 schedule as compared to the BIW schedule. We demonstrated a dose dependent repression of miR34 target oncogenes in patients treated with MRX34 usingindependent, quantitative Polymerase Chain Reaction (qPCR) and Next Generation Sequencing (NGS) analyses in whiteblood cells from patients treated with MRX34 in the QD × 5 dosing schedule. In addition, we confirmed that miR34 isdelivered to the liver tumors in MRX34 treated patients, using chromogenic miR-34a in situ hybridization (CISH). Based onavailable liver core biopsies to date, we have been able to demonstrate delivery of MRX34 to normal hepatocytes, Kupffercells, and polygonal-shaped melanoma tumor cells. We are now determining the local activity of the miR-34a mimic in theseliver and tumor tissues. Based on these data, we believe that the systemic administration of MRX34 to patients with differentcancer types increased the levels of active miR‑34 in white blood cells and reduced the levels of biological targets of themiRNA. Efficacy Observations In the BIW cohort, 47 patients were treated, including 14 patients with advanced primary liver cancer and 33 withother solid tumors. Within this cohort, 38 patients were evaluable for response, based on availability of baseline and follow-up scans or clinical disease progression as determined by the study investigators. ·One primary liver cancer patient achieved a confirmed partial response after six cycles of treatment perindependent radiology review using Response Evaluation Criteria in Solid Tumors (RECIST) criteria. RECISTcriteria are the standard method for evaluating solid tumor response in oncology clinical trials. This patient hada history of hepatitis-B infection and metastases to the lungs. After initial liver tumor resection, the patient wasenrolled into the 70 mg/m dose cohort of MRX34 on the BIT schedule. As of December 31, 2015, the patientshowed continued confirmed partial response after 13 cycles and stable disease after 15 cycles (more than oneyear). 9 2Table of Contents·In addition, six of the 38 evaluable patients showed stable disease varying between two and eight cycles inlength as determined by the study investigators, and at various dose levels. In the QD × 5 cohort, 52 patients with advanced solid tumors were enrolled as of December 31, 2015. Within thiscohort, 28 patients had primary liver cancer, two had RCC, two had acral melanoma and 20 had other types of solid tumors.Dosing in the QD × 5 cohort is ongoing. ·One of two acral melanoma patients achieved a confirmed partial response per independent radiology reviewusing RECIST criteria after receiving four cycles of MRX34 treatment in the 110 mg/m dose cohort. Thispatient entered our MRX34-101 trial with metastatic disease that had progressed after multiple previoustreatments, including thumb amputation, therapy with Tumor Infiltrating Lymphocytes (TIL) infusion and IL-2,ipilimumab (Yervoy) and pembrolizumab (Keytruda). Despite a confirmed partial response the patient decidedto discontinue study participation due to study fatigue after 7 cycles of MRX34 treatment. However, as ofDecember 31, 2015 and after more than four months of no treatment with MRX34 or any other agents, thepatient remained in confirmed partial response. ·One of the two metastatic RCC patients also achieved a confirmed partial response per independent radiologyreview using RECIST criteria after receiving three cycles of MRX34 treatment in the 110 mg/m dose cohort.This patient entered our trial with advanced metastatic RCC that had progressed after kidney resection, previoustreatment with sunitinib (Sutent), and subsequently progressed on temsirolimus (Torisel) and bevacizumab(Avastin). After three cycles of therapy with MRX34, treatment was discontinued due to rising liver enzymes,later shown on biopsy to be due to immune hepatitis. As of December 31, 2015, including more than fourmonths of no treatment with MRX34 or any other agent, the patient remained in confirmed partial response. ·The long-term responses observed in the two patients who achieved confirmed partial responses in the QD × 5schedule may indicate an immune-mediated effect, which we intend to study further in the ongoing expansioncohorts, and the planned Phase 1b translational medicine trial and two Phase 2 studies. ·Furthermore, 13 of the 52 patients have shown stable disease with durations between two and 16 cycles oftreatment, and at various dose levels. This includes 10 HCC patients with stable disease varying between 2 and7 months, and one SCLC patient who started MRX34 on the QD × 5 schedule in the 50 mg/m dose cohort as afourth line therapy and who achieved long term stable disease for 16 cycles before disease progression. Aside from several patients who achieved stable disease, no meaningful clinical response was observed in the 23patients enrolled with hematological malignancies. Expansion Phase (Ongoing) After completion of the dose-escalation phase in the QD × 5 dosing schedule in late 2015, we initiated severaltumor-specific expansion cohorts in our ongoing Phase 1 study, including primary liver cancer, melanoma, small cell andnon-small cell lung cancer, lymphoma and multiple myeloma. Objectives of the expansion cohorts are to gain furtherclinical Phase 1 experience with MRX34 and where possible obtain additional tumor biopsy samples for pharmacodynamicevaluations. Although we initially planned to enroll approximately 80 to 100 patients in the Phase 1 expansion cohort, wenow expect to enroll approximately 33 patients across these cohorts prior to initiating our Phase 1b translational medicinestudy and the Phase 2 studies in melanoma and RCC (to be discussed below). We plan to provide a clinical update on the Phase 1 clinical trial mid-2016 and top-line data mid-2017. 10 2®®2®®®2Table of ContentsMRX34 Development PlanFollowing review of available clinical data from the MRX34-101 trial to date as well as consultation with oncologyexperts, our MRX34 development plan is set forth below. We plan to advance two Phase 2 clinical studies by the end of 2016, one study in patients with advanced malignantmelanoma, and the other in patients with advanced RCC. We intend for the design of the two studies to be based on theSimon's two-stage Minimax design (Simon, R. minimax two-stage designs for phase II clinical trials, Control Clin Trials,1989, 10:1). For the Phase 2 study in melanoma, the Company intends to submit the study protocol to its open IND forMRX34 at the Food and Drug Administration (FDA) as part of the normal course of study start up. For the renal cellcarcinoma study, which will be reviewed by a separate group within the Oncology Drug Review division at the FDA, weintend to request a pre-IND meeting with this division and incorporate any advice the FDA might provide in a new IND thatwe expect to submit to the FDA for MRX34 in that indication later in 2016. We anticipate enrolling approximately 30patients in each study and we plan to provide a clinical update on these studies in the second half of 2017. We further intend to initiate a translational medicine trial in late 2016 with serial patient tumor biopsies. Generalstudy objectives will be to develop deeper insights into the mechanism of action of MRX34 in melanoma patients, includingpharmacodynamic biomarkers related to therapeutic activity and clinical response. Although we have observed a prolonged confirmed partial response and several prolonged stable diseases in 42patients with HCC enrolled as of December 31, 2015, we do not plan to pursue HCC as monotherapy at this point in time.This decision was based on both encouraging responses observed in acral melanoma and RCC as well as the rapidlychanging treatment paradigm, including the development of immune-oncology agents for HCC.11 Table of ContentsCombination Therapy for MRX34 Use of combination therapy is common practice in the treatment of many different cancer types. Based onencouraging in vitro data, which demonstrate significant synergy between a mimic of miR-34 and either targeted therapies orstandard chemotherapies. We have initiated a program to evaluate MRX34 in combination with various standard of care andinvestigational cancer drugs. In September 2015 we entered into a grant contract with CPRIT pursuant to which we agreed toconduct preclinical and clinical testing of certain combination therapies. We chose tumor models and chemotherapeuticagents based on the predicted patient profile in our future expanded clinical development program for MRX34. Theseincluded patients with primary liver cancer or advanced lung and pancreatic cancers that have metastasized to the liver. The key insights developed from these introductory studies on the synergistic effects of drug combination form thebasis for our ongoing and planned in vivo studies. We are testing the therapeutic benefit of combining MRX34 witherlotonib and the chemotoxic drug cisplatin in relevant mouse models of NSCLC. We expect that positive results from thesepreclinical studies, if any, may inform progression toward clinical testing. Given our recent preclinical data suggesting thatMRX34 may also inhibit PD‑L1 and tumor immune evasion, we also intend to explore the utility of miR‑34 mimics incombination with other immuno‑oncology therapies. Other Preclinical Product Candidates Through execution of our in silico, in vitro and in vivo analysis of multiple tumor suppressor microRNAs we haveprioritized a pipeline of candidate molecules for further validation toward clinical candidate nomination. Each of thesecandidates is being studied for therapeutic potential in specific cancer indications to expand our oncology portfolio, as setforth in the table below: 12 Table of ContentsMicroRNAPROGRAMKEY ONCOGENE TARGETSPATHWAYSCANCER INDICATIONmiR-215BCL2, BMI1, DHFR, IGF,IGFR1, MDM2, PIM1, WNK1,XIAP, ZEB1/2Cell Cycle, Apoptosis, DNARepair, EMTEsophageal, Kidney,Multiple MyelomamiR-101MYCN, EZH2, ERK2, FOS,MCL1, COX2, DNMT3A,VEGF, MET, ZEB1/2Angiogenesis, Cell Cycle,Apoptosis, EMT, InflammationBladder, Gastric, Lung,OvarianmiR-16BCL2, VEGF-A, Cyclin-D1, HMGA1, FGFR1, CDK6,BMI1Apoptosis, Autophagy,Angiogenesis, EMT, CellCycleChronic LymphocyticLeukemia, Lymphomalet-7RAS, MYC, HMGA2,TGFBR1,MYCN, Cyclin D2,IL6, ITGB3Cell Cycle, Angiogenesis,Cancer Stem Cell, EMTProstate, Pancreatic,Melanoma We are continuing preclinical in vitro and in vivo studies in 2016 to support selection of a second microRNA fromour pipeline for therapeutic development. We expect to complete IND‑enabling toxicology studies and submit an INDapplication late 2017. Intellectual Property We strive to protect and enhance the proprietary technologies that we believe are important to our business,including seeking and maintaining patents intended to cover our products and compositions, their methods of use and anyother inventions that are important to the development of our business. We also rely on trade secrets to protect aspects of ourbusiness that are not amenable to, or that we do not consider appropriate for, patent protection. Our success will depend in part on our ability to obtain and maintain patent and other proprietary protection forcommercially important technology, inventions and know‑how related to our business, defend and enforce our patents,maintain our licenses, preserve our trade secrets and operate without infringing valid and enforceable patents and otherproprietary rights of third parties. We also rely on continuing technological innovation and in‑licensing opportunities todevelop, strengthen and maintain our proprietary position in the field of microRNA therapeutics. Our objective is to continueto expand our intellectual property portfolio to protect and bolster our position as a leader in the field of microRNAtherapeutics. Our Patent Portfolio We own or in‑license a portfolio of patents and patent applications that protects various aspects of our business. Thepatents and patent applications that make up our patent portfolio are primarily focused on various aspects of microRNAtherapeutics, including various microRNA mimics, such as our lead product candidate MRX34, and therapeutic methods ofuse of microRNAs, including MRX34. As of December 31, 2015, we own or in‑license over 10 issued U.S. patents and over42 pending U.S. and ex‑U.S. patent applications. The expiration dates of the currently issued patents range from 2025 to2032. We also have multiple pending patent applications that, if issued, will expire between 2025 and 2035. We are the sole owner of multiple U.S. and foreign patents and patent applications that relate to various aspects ofmicroRNA therapies, including miR‑34 therapies. Some of these patents and patent applications relate to chemicallymodified versions of miR‑34 not currently used in MRX34 and other proprietary compounds that are possible candidates forfuture product development as microRNA therapeutics. For example, one of our owned patents (U.S. Patent No. 8,586,727)claims miR‑34 mimics with certain nucleotide modifications. This patent is projected to expire in 2032. 13 Table of ContentsWe in‑license a significant portion of our patent portfolio from our founding company, Asuragen, under a fullypaid‑up, royalty‑free, fully sublicensable and irrevocable license granting us exclusive rights to these patents and patentapplications in the field of therapeutics. Asuragen retains exclusive rights in these patents in fields outside therapeutics,including diagnostics. To date, the license from Asuragen has resulted in at least seven issued U.S. patents, and there aremultiple applications pending within the United States and outside the United States, including Europe, Canada, Australiaand Japan. These patents include U.S. Patent 7,960,359, which is related to the use of miR‑34a for reducing the cell viabilityof lung cancer cells, cancerous T cells, prostate cancer cells, or skin cancer cells and is projected to expire in 2025. They alsoinclude U.S. Patent 8,563,708, which claims multiple chemistries and structures used in therapeutic microRNA mimics and isprojected to expire in 2025. The patents and patent applications licensed from Asuragen are also included within the patentslicensed under our agreement with Yale, and are therefore subject to the terms of the February 2014 amended and restatedagreement as described below in “Strategic Partnerships and Collaborations—Yale University.” We are the exclusive licensee under a patent family owned by the University of Zurich relating to treatment ofcertain types of B‑cell lymphoma with certain microRNA mimics, including miR‑34. The patent family includes one grantedU.S. patent related to use of a miR‑34 microRNA for the treatment of diffuse large B‑cell lymphoma, one pending U.S. patentapplication and one pending European patent application. This patent and any patents that issue from the pending patentapplications are expected to expire in 2031. We are a licensee under a patent family controlled by Rosetta Genomics covering certain therapeutic applicationsfor microRNA 34a, such license being exclusive for MRX34. The licensed patents are jointly owned by YEDA Research andDevelopment Company Ltd., the commercial arm of the Weizmann Institute of Science, and Rosetta. The license includesboth U.S. and European patents and patent applications, all of which are expected to expire in approximately 2028. We are also the exclusive licensee of two U.S. patents owned by Yale relating to uses of let‑7 microRNAs. Thesepatents are expected to expire in 2025. Patent Term The term of individual patents and patent applications in our portfolio will depend upon the legal term of thepatents in the countries in which they are obtained. In most countries, the patent term is 20 years from the date of filing of thepatent application (or parent application, if applicable). For example, if an international Patent Cooperation Treaty, or PCT,application is filed, any patent issuing from the PCT application in a specific country expires 20 years from the filing date ofthe PCT application. In the United States, however, if a patent was in force on June 8, 1995, or issued on an application thatwas filed before June 8, 1995, that patent will generally have a term that is the greater of twenty years from the filing date or17 years from the date of issue. Under the Hatch‑Waxman Act, the term of a patent that covers an FDA‑approved drug or biological product mayalso be eligible for patent term extension, or PTE. PTE permits restoration of a portion of the patent term of a U.S. patent ascompensation for the patent term lost during product development and the FDA regulatory review process if approval of theapplication for the product is the first permitted commercial marketing of a drug or biological product containing the activeingredient. The patent term restoration period is generally one‑half the time between the effective date of an IND and thesubmission date of a new drug application, or NDA, plus the time between the submission date of an NDA and the approvalof that application. The Hatch‑Waxman Act permits the owner of a patent to apply for a PTE for only one patent applicable toan approved drug, and the maximum period of restoration is five years beyond the expiration of the patent. A PTE cannotextend the remaining term of a patent beyond a total of 14 years from the date of product approval, and a patent can only beextended once, and thus, even if a single patent is applicable to multiple products, it can only be extended based on oneproduct. Similar provisions may be available in Europe and certain other foreign jurisdictions to extend the term of a patentthat covers an approved drug. When possible, depending upon the length of clinical trials and other factors involved in thefiling of an NDA, we expect to apply for PTEs for patents covering our product candidates and their methods of use, or towork with our licensors, as owners of such patents, to obtain such extensions, if available. 14 Table of ContentsStrategic Partnerships and Licenses Asuragen, Inc. In 2009, we in‑licensed or acquired certain patents and applications relating to certain aspects of microRNAcompounds, targets for microRNAs and methods of use of such compounds from our founding company, Asuragen, andentered into a cross license with Asuragen, under which Asuragen granted us an exclusive, fully sublicensable, fully paid‑up,royalty‑free, perpetual and irrevocable license in the field of therapeutics, under patents and applications retained by itrelating to microRNAs and their uses. Asuragen retains all rights in the fields outside therapeutics under the patents andapplications that it retained and licensed to us, and we have granted to Asuragen an exclusive (even as to us), fullysublicensable, royalty‑free, perpetual and irrevocable license in the field of diagnostics under the patents and applicationsrelating to microRNA that we solely own as a result of the acquisition, while we retain all rights in therapeutics and all otherfields outside diagnostics. Under our cross license agreement with Asuragen, as amended in 2012, we have the right tocontrol the prosecution and maintenance of our owned patent families as well as certain patent families owned by Asuragen.Each party retains the right to enforce the patents that it owns against third parties, with the exception of certain foundationalpatents that are owned by Asuragen. Additionally, certain of these Asuragen patents are included within the patents licensedunder our agreement with Yale, and are therefore subject to the terms of the February 2014 amended and restated agreementas described below in “Yale University.” Marina Biotech, Inc. In December 2011, we entered into a license agreement with Marina Biotech, Inc. (Marina), pursuant to whichMarina granted us an exclusive license under its proprietary liposomal delivery technology, NOV340, known under thebrand name “SMARTICLES,” to develop and commercialize drug products incorporating SMARTICLES in combinationwith our lead therapeutic product, MRX34, for the prevention and treatment of cancer and any other disease in humans andanimals, with the exception of DNA interference human therapeutic use. Our license agreement with Marina has beenamended twice. In December 2013, the license agreement was amended to modify certain payment obligations with respectto MRX34, and to include within the scope of our exclusive license three additional specific microRNAs selected by us, andin May 2015 we amended the license agreement to reduce the amount of a specific milestone payment and to provide for theprepayment of such milestone payment. In August 2015, we also entered into a side letter to the license agreement, underwhich we exercised our right to select an additional specific microRNA, in exchange for the payment of a specified selectionfee payment. We are required to use commercially reasonable efforts to commercialize licensed products in specified majormarkets, and in other markets where we consider it is commercially reasonable to do so. We are responsible, at our cost, for alldevelopment of manufacturing processes and scale‑up for the licensed technology in connection with our licensed products. We have paid Marina approximately $2.1 million in the aggregate to date in up‑front and milestone payments andas consideration for the inclusion within the license of the four additional compounds. As we progress development andcommercialization of products covered by the license, we will be required to make payments to Marina based upon theachievement of certain development and regulatory milestones, totaling up to $6 million in the aggregate for each licensedproduct. We are also required to pay up to an additional $4 million per licensed product upon the achievement of certainregulatory milestones for a specified number of additional indications, leading to a maximum cap on all milestone paymentsof $10 million per product. The exception to this is for our lead therapeutic product, MRX34, where the aggregate of allremaining development and regulatory milestone payments due to Marina, including for all additional indications, is $4.0million. In addition to milestone payments, we will be required to pay low single digit royalties on net sales of licensedproducts other than MRX34, subject to customary reductions and offsets. As a result of our 2013 amendment to ouragreement with Marina, we are no longer required to pay a royalty to Marina with respect to sales of our lead therapeuticproduct, MRX34. For licensed products other than MRX34, our obligation to pay royalties to Marina will expire on acountry‑by‑country and licensed product‑by‑licensed product basis upon the later of the expiration of all patents coveringsuch licensed product in such country, or 10 years from the first commercial sale of such product in such country. If wesublicense the rights granted to us under the Marina license for each optioned microRNA compound covered by suchsublicense, we are required to pay a specific lump‑sum payment representing the remainder of the selection fee for theinclusion of such microRNA compound within the scope of the license agreement,15 Table of Contentsas well as a portion of any revenue we receive from such sublicensees at a tiered percentage between the very low singledigits and the mid‑teens, depending on the circumstances in which the sublicense is entered into. We may terminate our agreement with Marina for any reason by giving 60 days’ notice to Marina. Either party mayterminate the agreement upon the insolvency of the other party or upon 90 days’ notice to the other party for the uncuredmaterial breach of the agreement, with the exception of non‑payment which permits Marina to terminate the agreement upon30 days’ notice to us. Absent earlier termination, our agreement with Marina will remain in force on a licensedproduct‑by‑licensed product and country‑by‑country basis until the earlier of the expiration of our obligation to payroyalties with respect to such licensed product in such country, or the end of the calendar quarter in which sales of a genericversion of such licensed product exceed a specified proportion of the aggregate sales of such licensed product in suchcountry. Yale University In 2006, Asuragen entered into an exclusive license agreement with Yale University (Yale) that granted to Asuragenan exclusive, worldwide, fully sublicenseable license for all human therapeutic and diagnostic uses under certain patentrights relating to microRNAs arising from the laboratory of Dr. Frank Slack at Yale. This agreement was assigned to us byAsuragen in connection with our acquisition of certain assets, including patent rights, in 2009. In addition, some of thepatent filings in our intellectual property portfolio that are licensed to us by Asuragen are also included in the patentslicensed under the Yale agreement as a result of previous discussions between the parties about possible co‑ownership withYale of these patents. The patents that are subject to both the Yale and Asuragen licenses cover certain aspects relating to thecomposition and method of use of specified microRNA mimics, including miR-34 and let‑7, while those patent families thatare solely subject to our license from Yale cover certain uses of let‑7. In February 2014, we amended and restated ouragreement with Yale to modify, among other things, the procedure for determining the inventorship of such patents andapplications. Following this amendment, an independent third party expert was engaged to determine the inventorship, andhence the ownership, of the patents and applications potentially subject to Yale and Asuragen co‑ownership. Thisdetermination confirmed each party’s sole ownership of each patent where co‑ownership had been under consideration. Uponcommercialization of any products covered by the licensed patents, our financial obligations to Yale, if any, will depend onthe particular product and Yale’s ownership rights in any patents covering such product. We are required to use reasonable commercial efforts with respect to development and commercialization ofproducts covered by our license agreement with Yale and to fulfill certain specified development and regulatory diligencecriteria, or achieve specified development milestones by specified dates, in some cases subject to an extension upon paymentof certain fees, for products covered by the agreement. We will be required to pay royalties to Yale on net sales of licensed products that contain specified microRNAs,including MRX34 and products containing let‑7, at a percentage ranging from the very low to the low single digits, subjectto customary reductions and offsets. Our obligation to pay royalties to Yale will expire on a licensed product‑by‑licensedproduct and country‑by‑country basis upon the earlier of the expiration of the last valid claim of a licensed patent coveringsuch licensed product or the launch of a generic version of such product in such country that has been approved by theapplicable regulatory authority in such country. We will also be required to pay to Yale a portion of specified gross revenuethat we receive from our sublicensees at percentages ranging from the mid‑single digits up to the very low twenties,depending on the particular product and Yale’s ownership rights, if any, in the patents covering such product. We will also be required to make payments for achievement of certain development and regulatory milestones byproducts containing one specified microRNA and covered by the licensed patents of up to $600,000 in the aggregate foreach such product, subject to reduction in certain circumstances. In addition, we are required to pay an annual licensemaintenance fee and minimum annual royalties under certain circumstances. We have the right to terminate our agreement with Yale for any reason upon three months’ written notice to Yale,and either party may terminate the agreement on 60 days’ notice for the uncured material breach of the other party. Yale mayterminate our agreement, on a licensed product miRNA category‑by‑licensed product miRNA category basis,16 Table of Contentsif we fail to meet specified diligence obligations within specified time periods, subject to our right to extend such periodswith respect to one such product by making specified extension payments and to renegotiate such time periods under certaincircumstances with respect to the other two products. Yale may also terminate our agreement in its entirety immediately uponnotice to us if we fail to maintain adequate insurance or become insolvent. In the event that our license agreement with Yaleis terminated, we would lose our rights under any licensed patents that are solely owned by Yale. Absent earlier termination,our agreement with Yale will remain in force on a country‑by‑country basis until the expiration of the last valid claim of thelicensed patents, whether owned by us or by Yale. University of Zurich In March 2013, we entered into an exclusive, worldwide, royalty‑bearing license, with the right to grant sublicenses,with the University of Zurich under certain patent rights relating to the treatment of certain types of B‑cell lymphoma withmicroRNA mimics, in the fields of therapeutics and diagnostics. We are required to pay an annual license maintenance fee,and upon commercialization of any products covered by the licensed patent rights, we will be required to pay the Universityof Zurich a royalty on net sales of products covered by the licensed patents by us, our affiliates or sublicensees in the verylow single digits, and a portion of other fees received from any sublicensees at a percentage in the mid‑teens. We are requiredto use commercially reasonable efforts to develop, manufacture, sell and market licensed products. If we fail to comply withour diligence obligations, then under certain circumstances, the University of Zurich may terminate our agreementimmediately upon notice to us. We have the right to terminate our agreement with the University of Zurich for any reason upon six months’ priornotice. The University of Zurich may terminate our agreement immediately upon notice to us in certain circumstances if wefail to meet our diligence obligations. The University of Zurich may also terminate the agreement upon 60 days’ writtennotice to us in the event of our uncured material breach of the agreement, or immediately upon notice to us in the event ofour insolvency or if we challenge or assist any third party to challenge the validity of the licensed patents. Rosetta GenomicsIn December 2015, we entered into an agreement with Rosetta Genomics Ltd. (“Rosetta”), in-licensing certainpatents controlled by Rosetta covering certain therapeutic applications for microRNA 34a. The licensed patents are jointlyowned by YEDA Research and Development Company Ltd., the commercial arm of the Weizmann Institute of Science, andRosetta. The license grants to Mirna certain non-assignable, non-transferable, worldwide rights in connection with thedevelopment and commercialization of products that relate to the tumor suppressor microRNA miR-34 (Products), and isexclusive with respect to MRX34, the Company’s lead product candidate.The License Agreement included an up-front, non-refundable payment to Rosetta of $1.6 million. It also includesobligations to pay low single-digit royalties on net sales of Products as well as royalties on sublicense revenues. Certaindevelopment and regulatory milestone payments may also be payable in connection with certain Products that relate to theTP53 gene.The License Agreement ends on the date on which no patent applications comprised within the Licensed Patents arepending and all issued Licensed Patents have expired. We have the right to terminate the agreement without cause upon 120days’ written notice to Rosetta, subject to certain conditions, including payment of an early termination fee ranging from$2.0 million to $3.5 million. The License Agreement may also be terminated by Rosetta, with written notice, of theCompany’s uncured material breach, insolvency, bankruptcy or general assignment for the benefit of the creditors.The License Agreement also includes customary provisions regarding, among other things, representations andwarranties, recordkeeping, intellectual property, confidentiality, limitation of liability, indemnification, and disputeresolution. 17 Table of ContentsCPRIT In August 2010, we entered into a grant contract with the Cancer Prevention and Research Institute of Texas(CPRIT), under which we received a $10.3 million commercialization award from the State of Texas through CPRIT. CPRITwas established to expedite innovation and commercialization in the area of cancer research and to enhance access toevidence‑based prevention programs and services throughout the State of Texas. The award was a three‑year award that wasfunded annually, and the contract terminated on January 31, 2014, subject to our obligations to make certain payments thatsurvive termination. Under the terms of the award, we will be required to pay to CPRIT a portion of our revenues from sales ofcertain products by us, including sales of MRX34, or received from our licensees or sublicensees, at a percentage in the lowsingle digits until the aggregate amount of such payments equals a specified multiple of the grant amount, and thereafter at arate of less than one percent, subject to our right, under certain circumstances, to make a one‑time payment in a specifiedamount to CPRIT to buy out such payment obligations. We will also be required to repay CPRIT the total amount of thegrant proceeds under certain circumstances of relocation of our principal place of business outside Texas during a specifiedperiod following the final payment of grant funding to us. On September 1, 2015, we entered into a new grant contract with CPRIT in connection with an approximately$16.8 million award, subject to extension by mutual agreement by us and CPRIT. In October 2015, concurrent with our IPO,we realized this 2015 award in the form of an agreement by CPRIT to purchase approximately $16.8 million of shares of ourcommon stock in a private placement. In contrast to our 2010 award, this 2015 award does not include any royalty obligationupon commercialization of our product candidates, nor are we required to repay the grant proceeds under specifiedcircumstances. Pursuant to this grant contract, we will conduct preclinical and clinical development of certain combinationtherapy approaches for lung or liver cancer involving our lead product candidate, MRX34. If, at any time during the term ofthe grant contract, we determine that the project provided for by the grant contract is no longer commercially feasible for us,then we and CPRIT are required to consult in order to reallocate the remaining unspent budget for the project to anotheroncology project in our product candidate pipeline. Polymun Scientific Immunbiologische Forschung GmbH In November 2012, we entered into a supply agreement with Polymun Scientific ImmunbiologischeForschung GmbH (Polymun) for the formulation, manufacture and supply of a liposomal formulation of finished drugproduct for our lead product candidate, MRX34, utilizing the NOV340 SMARTICLES technology licensed to us by Marinain conjunction with Polymun’s proprietary technology relating to the production of liposomal formulations, for use by us inour clinical trials for MRX34. The agreement contains terms and conditions generally consistent with an agreement formanufacture and supply of a pharmaceutical product for clinical purposes, including with respect to supply of product inaccordance with specifications and quality assurance and quality control activities. We have also entered into a separatequality agreement with Polymun governing all supply of product under the agreement. Under our agreement with Polymun,we retain all intellectual property rights arising as a result of the activities under the agreement, subject to certain limitedexceptions relating to Polymun’s proprietary technology. The agreement remains in force until completion of the activitiesset forth under any statements of work executed under the agreement, unless earlier terminated by either party. Either we orPolymun may terminate the agreement on 30 days’ written notice in the event of the other party’s uncured material breach orinsolvency. MRX34 Market Opportunities Because each microRNA regulates a unique set of genes, we believe that the selection of microRNA‑based therapieswill be based upon the molecular characteristics of the tumors from the cancer patients. We believe that it is also likely thatour microRNA‑based therapies might be used in combination with one another to further maximize potency and drugdevelopment opportunities. Several indications of high unmet need currently included in our MRX34 development programare summarized below. 18 Table of ContentsSkin Cancer (Melanoma) An aggressive type of skin cancer, melanoma, can occur anywhere on the body, but is most common in skin that isoften exposed to sunlight, such as chest and back in men, legs in women, as well as face, neck, hands and arms. Melanoma isa disease in which pigmented cells in the skin, called melanocytes, turn into cancer cells. The World Health Organization(WHO) states that the incidence of melanoma skin cancers has been increasing over the past decades and has reached132,000 globally each year. Approximately 73,000 cases of melanoma are expected to be diagnosed and 10,000 deaths willoccur in the United States alone in 2015, according to the American Cancer Society. The five‑year survival rate is currentlyabout 15% to 20% in patients with metastatic melanoma. Approved treatment options for melanoma include surgery,chemotherapy, radiation therapy, biologic therapy and targeted therapies. In recent years, significant advances have beenachieved in the treatment of melanoma by targeting PD‑1, a protein expressed on the cellular surface of immune cells calledT cells that normally function to keep these cells from attacking other cells in the body. The PD‑1 signal is induced byPD‑L1, which is expressed by a variety of normal cells. PD‑L1 can also be expressed by various tumor cells, includingmelanoma, and consequently leads to tumor immune evasion. Drugs that block PD‑1 boost the immune response againstmelanoma cells, which can often lead to tumor shrinkage and increased patient survival. Keytruda (Pembrolizumab) andOpdivo (Nivolumab) are FDA‑approved drugs that target PD‑1. Yervoy(Ipilimumab) also boosts immune response butblocks CTLA‑4, another T cell protein. Clinical trials have recently shown these drugs to be highly effective, but packageinserts indicate that these drugs are effective against less than approximately 25% of patients. Recent preclinical data haveshown that miR‑34 also activates the immune system by repressing PD‑L1. Our development plan includes continuing tostudy MRX34 as a monotherapy in melanoma and in combination with approved checkpoint inhibitors to determine whetherMRX34 may be able to increase the numbers of patients who respond to these therapies or minimize or reverse resistance andeventual disease progression. Renal Cell Carcinoma (RCC) RCC is a type of kidney cancer that is asymptomatic in its initial stages, and as a result, is often at advanced stagesof the disease by the time it is discovered. RCC is the most common type of kidney cancer in adults in the world, accountingfor approximately 90% of all cases in adults. The WHO estimates approximately 347,000 cases of kidney cancer occurred in2012 worldwide. The American Cancer Society (ACS) estimates approximately 62,700 new diagnoses of, and approximately14,240 deaths from, kidney cancer in the United States in 2016, with a five-year survival rate for patients diagnosed withadvanced kidney cancer of approximately 8%. The most commonly used treatments for kidney cancer are various forms oftargeted therapies, including tyrosine kinase inhibitors, or immunotherapy. Opdivo (Nivolumab), an inhibitor of PD-1/PD-L1 pathways, was approved by the FDA in late 2015 for the treatment of RCC in patients who have received prior anti-angiogenic therapy. The U.S. approval was based on data from CheckMate -025, an open-label, randomized Phase 3 studywhich demonstrated a median overall survival benefit of 25 months compared with 19.6 months for Afinitor (Everolimus) inpatients with advanced or metastatic clear-cell RCC. Primary Liver Cancer (Hepatocellular Carcinoma, or HCC) According to the WHO, liver cancer is the third leading cause of cancer deaths worldwide. HCC is the mostprevalent form of liver cancer and is the most common cancer in some parts of the world, with more than one million newcases diagnosed each year worldwide according to the National Cancer Institute. According to recent reports from the Centersfor Disease Control, HCC rates in the United States are increasing with common risk factors including alcohol consumption,metabolic syndrome, chronic hepatitis B or C infection and Type 2 diabetes. Patients diagnosed with HCC have a poorprognosis, with a very low five‑year survival rate of less than 10%. Treatment options include surgical resection, livertransplantation, radiofrequency ablation and chemoembolization, or delivery of a drug mixed with particles through anarterial catheter directly into the tumor’s blood supply. The only systemic drug therapy approved for the treatment ofunresectable HCC is Nexavar (Sarofenib), which provides a 2.8 months median overall survival benefit based on a medianoverall survival of 10.7 months compared to 7.9 months for a placebo. Opdivo (Nivolumab), a PD‑1 (programmed death1) blocker, has recently shown promising results in HCC with a 19% objective response rate reported in a Phase 1 clinicaltrial. 19 ®®® ®®®®Table of ContentsLung Cancer According to the WHO, lung cancer is the most common cancer in the world and it has retained this position fordecades. There were an estimated 1.8 million new cases in 2012, 58% of which occurred in less developed regions of theworld. Lung cancer is also the most common cause of death from cancer worldwide, estimated to be responsible for nearlyone in five (19.4% of the total). Small cell lung cancer (SCLC), also called oat cell cancer, accounts for about 10%‑15% oflung cancers. SCLC is particularly aggressive and often spreads quickly. Five‑year survival rates range from approximately30% in patients with “limited stage” disease to approximately 2% for patients with “extensive stage.” Treatment options forpeople with SCLC include chemotherapy, radiation therapy and surgery. Non‑small cell lung cancer (NSCLC) is the mostcommon type of lung cancer, accounting for approximately 85% of lung cancers. Types of NSCLC include squamous cellcarcinoma, adenocarcinoma and large cell carcinoma. The five‑year survival rate for patients with NSCLC can be as high as50% for patients diagnosed in the early stages of the disease. However, for patients with metastases, the five‑year survival istypically less than 5%. Treatment options for NSCLC also include surgery, chemotherapy and radiation. However, morerecently approved targeted therapies and immunotherapies have become the standard of care. Targeted therapies includedrugs that target tumor blood vessel growth (angiogenesis inhibitors), drugs that target growth factor receptors on the surfaceof tumor cells (e.g., EGFR inhibitors) and drugs that target certain genes which have been found to have mutations whichproduce proteins that cause cancers to grow and spread (e.g., ALK inhibitors). In March 2015, Opdivo(Nivolumab), a PD‑1blocker, was the first immunotherapy to be approved by the FDA for lung cancer. The approval was based on a studydemonstrating that patients with advanced squamous cell non‑small cell lung cancer lived an average of 3.2 months longerthan those who received chemotherapy, with approximately 15% of patients treated with Opdivo experiencing tumorshrinkage or complete disappearance. Our development plans include the study of MRX34 in combination with targetedtherapies or immunotherapy agents in NSCLC. Manufacturing We contract with third parties to manufacture our compounds for nonclinical and clinical testing purposes andintend to do so in the future. We also expect to rely upon third parties to produce materials required for the commercialproduction of our product candidates if we succeed in obtaining the necessary regulatory approvals. We do not currently ownor operate facilities for product manufacturing, storage and distribution or testing. We have personnel with the technical,manufacturing, analytical, quality and project management experience to oversee contract manufacturing and testingactivities and to compile manufacturing and quality information for our regulatory submissions. Manufacturing is subject to extensive regulations that impose various procedural and documentation requirements,which govern recordkeeping, manufacturing processes and controls, personnel, quality control and quality assurance. Oursystems and contractors are required to be in compliance with these regulations, and we assess such compliance regularlythrough performance monitoring as well as a formal audit program. We continue to take steps to reduce our costs by working to improve yield in the manufacturing of the microRNAmimic, the drug substance, the liposomal formulation and the drug product, and we have and will continue to manage ourvendor and supplier costs and evaluate alternative manufacturers and suppliers for MRX34 and our other pipelinecandidates. As we move further through clinical development towards commercialization of MRX34 and our other pipelinemicroRNA mimics, we will need to work with our third party manufacturers to scale up the manufacturing processes for suchproducts, and we expect we will be able to realize additional efficiencies resulting from increased scale of production, whichwe believe will result in lower costs and better operating margins. Drug Substance We currently use NITTO DENKO Avecia (Avecia), to manufacture our MRX34 drug substance. We entered into along term clinical supply agreement with Avecia in March 2012, and we believe that Avecia has the technical, analytical,quality and regulatory expertise to reliably produce our miR‑34 mimic in sufficient quantity and of acceptable quality tosupport our development program through at least Phase 3 clinical studies, and to scale up such manufacturing process tosupport commercial production of MRX34. To ensure adequate supply and supply continuity, we are currently20 ® Table of Contentsevaluating a backup supplier for our MRX34 drug substance, which will be completed in the second half of 2015. We areevaluating other U.S. and overseas companies for the manufacture of drug substance for our pipeline microRNA mimics. The process for manufacturing our miR‑34 mimic drug substance utilizes well‑established solid phase synthesischemistry. The raw materials used in the process are readily available from a number of qualified suppliers. We currently relyon our contract manufacturers to manage the supply chain for the raw materials used in the process. Drug Product Our drug product for both MRX34 and our other microRNA mimics consists of the drug substance formulated in theSMARTICLES liposomal delivery system. The drug product is provided as a concentrated, frozen aqueous solution that isdefrosted, thawed and diluted for infusion in the clinic. Polymun, located in Vienna, Austria, is currently the exclusive manufacturer of drug product for our lead therapeuticcandidate, MRX34. In November 2012, we entered into a manufacturing and supply agreement with Polymun for theformulation, manufacture and packaging of MRX34 final drug product. Manufacture of the drug product for our microRNAmimics in conjunction with the SMARTICLES delivery system requires a high level of technical expertise, and Polymun isone of a limited number of contract manufacturers with the know‑how to manufacture drug product for our drug candidate insufficient quantity and of sufficient quality to meet our projected clinical and commercial needs. We believe that Polymuncurrently has the capability to provide a sufficient quantity of drug product through at least Phase 3 clinical studies ofMRX34, and although Polymun does not currently have the capability to scale up their manufacturing process to supportcommercialization of MRX34, we believe that Polymun will have sufficiently expanded its operations before we reachpotential commercialization of MRX34 such that it should be able to provide a sufficient quantity of drug product to supportsuch commercialization of MRX34. In the meantime, we intend to continue to work with Polymun in relation to both ourclinical supply and increasing production capacity for our projected commercial needs, but also to evaluate other potentialmanufacturers of drug product for our microRNA mimics. See “Business—Strategic Partnerships and Collaborations” for adetailed description of our manufacturing and supply agreement with Polymun, including material terms relating tocircumstances permitting termination of this agreement. The liposomal formulation manufactured by Polymun is a combination of readily available excipients, plus twospecialty lipid excipients which are currently manufactured by two qualified suppliers. The product is shipped and stored under frozen conditions. Based on current stability studies, we expect that thedrug product will be stable over the time period anticipated for currently‑planned clinical studies. Research and Development We are conducting clinical trials and other development activities to support the development of MRX34 and ourother product candidates. In the years ended December 31, 2015, 2014 and 2013, we incurred $18.9 million, $10.5 millionand $4.4 million, respectively, of research and development expense. Our research programs are directed towards the following: ·Determining if biomarkers can be used to select cancer patients who are more likely to respond to MRX34therapy. ·Selecting and developing a second miRNA‑based therapeutic candidate for which we intend to begin clinicaldevelopment in 2017. ·Identifying drugs that can be combined with MRX34 to significantly improve the clinical response rates ofcancer patients. 21 Table of Contents·Developing a next‑generation systemic delivery technology that will improve the tolerability and efficacyprofiles of miRNA mimics and expand the cancer indications that can be targeted for therapeutic intervention. Competition The biotechnology and pharmaceutical industries are characterized by intense and rapidly changing competition todevelop new technologies and proprietary products. While we believe that our intellectual property portfolio, scientificexpertise and leading clinical position in the microRNA field provide us with competitive advantages, we face potentialcompetition from many different sources, including larger and better‑funded pharmaceutical and biotechnology companies.We may compete with other companies that are focused on microRNA therapeutics in disease or indications in which wedevelop our products, including both (i) replacement therapy approaches that involve the delivery of mimics, and(ii) inhibition approaches that involve the use of antagomiRs, or anti‑miRs. Any products that we may commercialize willhave to compete with existing therapies and new therapies that may become available in the future. We are aware of several companies that are working specifically to develop microRNA therapeutics. miRagenTherapeutics, Inc. (miRagen), a privately held company based in Boulder, Colorado, announced in November 2015 initiationof a Phase 1 clinical study of MRG-201, a synthetic microRNA mimic (promiR) to microRNA-29b. The Phase 1 trial is beingconducted in normal healthy volunteers and may be extended to patients suffering from cutaneous scleroderma. In March2016, miRagen announced the initiation of Phase 1 clinical study of its anti-cancer product candidate MRG-106, a syntheticmicroRNA antagonist (LNA antimiR) of microRNA-155. The Phase 1 trial is being conducted in patients suffering fromcutaneous T-cell lymphoma (CTCL) of the mycosis fungoides (MF) sub-type. miRagen also has preclinical anti‑miRsprograms with an initial focus in cardiovascular, metabolic diseases, and neurological diseases. miRagen has entered into apartnership with Laboratoires Servier to focus on three different targets in the cardiovascular and metabolic space. Regulus Therapeutics, Inc. (Regulus), is a publicly traded company based in Carlsbad, California, which primarilyfocuses on anti‑miRs technology, or the inhibition of overexpressed microRNAs. Regulus has focused on a number ofindications, including hepatitis C, kidney fibrosis and cancer. They announced completed enrollment in their first clinicaltrial for RG‑101, their lead anti‑miR therapeutic program, against miR‑122 for hepatitis C in March 2014, and initiated aPhase 1 clinical trial evaluating RG‑012 in healthy volunteers for the treatment of Alport syndrome in June 2015. InDecember 2015, Regulus announced initiation of a Phase I clinical study by its collaboration partner, AstraZeneca, of RG-125(AZD4076), an anti-miR-103/107 oligonucleotide for the treatment of NASH in patients with type 2 diabetes/pre-diabetes. Otherprograms are still in preclinical development. Regulus has numerous research and developmentcollaborations with large pharmaceutical and biotechnology companies, including AstraZeneca plc, Biogen Idec, Inc.,GlaxoSmithKline plc and Sanofi S.A. EnGeneIC is a privately held Australian company developing a nanocell platform for delivery of cancer therapeuticsand other therapeutic molecules. In November 2014, EnGeneIC announced initiation of a Phase 1 clinical trial of its deliverysystem packaged with a miR‑16‑based microRNA mimic for the treatment of malignant pleural mesothelioma. A patient casestudy from this study was recently published in the American Journal of Respiratory and Critical Care Medicine. These competitors also compete with us in recruiting human capital and securing licenses to complementarytechnologies or specific microRNAs that may be critical to the success of our business. They also compete with us forpotential funding from the pharmaceutical industry. Government Regulation The FDA and comparable regulatory authorities in state and local jurisdictions and in other countries imposesubstantial and burdensome requirements upon companies involved in the clinical development, manufacture, marketingand distribution of drugs, such as those we are developing. These agencies and other federal, state and local entities regulate,among other things, the research and development, testing, manufacture, quality control, safety, effectiveness,22 ®Table of Contentslabeling, storage, record keeping, approval, advertising and promotion, distribution, post‑approval monitoring and reporting,sampling and export and import of our product candidates. In the United States, the FDA regulates drug products under the Federal Food, Drug and Cosmetic Act, or FFDCA,and the FDA’s implementing regulations. Drugs are also subject to other federal, state and local statutes and regulations. If wefail to comply with applicable FDA or other requirements at any time during the drug development process, clinical testing,the approval process or after approval, we may become subject to administrative or judicial sanctions. These sanctions couldinclude, among other things, the FDA’s refusal to approve pending applications, license suspension or revocation,withdrawal of an approval, warning letters, product recalls, clinical holds, product seizures, total or partial suspension ofproduction or distribution, injunctions, fines, civil penalties or criminal prosecution. Any FDA enforcement action couldhave a material adverse effect on us. FDA approval is required before any new unapproved drug or dosage form, including a new use of a previouslyapproved drug, can be marketed in the United States. The process required by the FDA before a drug may be marketed in theUnited States generally involves: ·completion of extensive nonclinical laboratory tests, nonclinical animal studies and formulation studies manyof which must be performed in accordance with the FDA’s current Good Laboratory Practice, or cGLP,regulations; ·submission to the FDA of an IND application which must become effective before human clinical trials in theUnited States may begin; ·approval by an independent Institutional Review Board (IRB) at each clinical trial site before each trial may beinitiated; ·performance of adequate and well‑controlled human clinical trials to establish the safety and efficacy of thedrug candidate for each proposed indication in accordance with the FDA’s current Good Clinical Practice(cGCP), regulations; ·satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the drug isproduced to assess compliance with current Good Manufacturing Practice (cGMP), regulations; ·submission to the FDA of an NDA; ·satisfactory completion of a potential review by an FDA advisory committee, if applicable; and ·FDA review and approval of the NDA prior to any commercial marketing, sale or shipment of the drug. The nonclinical and clinical testing and approval process requires substantial time, effort and financial resources,and we cannot be certain that any approvals for our product candidates will be granted on a timely basis, if at all. Nonclinicaltests include laboratory evaluation of product chemistry, formulation, stability and toxicity, as well as animal studies toassess the characteristics and potential safety and efficacy of the product. The results of nonclinical tests, together withmanufacturing information, analytical data and a proposed clinical trial protocol and other information, are submitted as partof an IND to the FDA. Some nonclinical testing may continue even after the IND is submitted. The IND automaticallybecomes effective 30 days after receipt by the FDA, unless the FDA, within the 30‑day time period, raises concerns orquestions relating to one or more proposed clinical trials and places the clinical trial on a clinical hold, including concernsthat human research subjects will be exposed to unreasonable health risks. In such a case, the IND sponsor and the FDA mustresolve any outstanding concerns before the clinical trial can begin. As a result, a submission of an IND may not result inFDA authorization to commence a clinical trial. A separate submission to an existing IND must also be made for eachsuccessive clinical trial conducted during product development. Clinical trials involve the administration of the investigational drug to human subjects under the supervision ofqualified investigators. Clinical trials are conducted under protocols detailing, among other things, the objectives of the23 Table of Contentsclinical trial, the parameters to be used in monitoring safety and the effectiveness criteria to be used. Each protocol must besubmitted to the FDA as part of the IND. An IRB for each medical center proposing to conduct a clinical trial must alsoreview and approve a plan for any clinical trial before it can begin at that center and the IRB must monitor the clinical trialuntil it is completed. The FDA, the IRB, or the sponsor may suspend or discontinue a clinical trial at any time on variousgrounds, including a finding that the subjects are being exposed to an unacceptable health risk. Clinical testing also mustsatisfy cGCP requirements, including the requirement to obtain effective informed consent from study subjects. All clinical research performed in the United States in support of an NDA must be authorized in advance by the FDAunder the IND regulations and procedures described above. However, a sponsor who wishes to conduct a clinical trial outsidethe United States may, but need not, obtain FDA authorization to conduct the clinical trial under an IND. If a foreign clinicaltrial is not conducted under an IND, the sponsor may submit data from the clinical trial to the FDA in support of an NDA solong as the clinical trial is conducted in compliance with an international guideline for the ethical conduct of clinicalresearch known as the Declaration of Helsinki and/or the laws and regulations of the country or countries in which theclinical trial is performed, whichever provides the greater protection to the participants in the clinical trial. Clinical Trials For purposes of NDA submission and approval, clinical trials are typically conducted in three or four sequentialphases, which may overlap or be combined. ·Phase 1: Clinical trials are initially conducted in a limited population of subjects to test the drug candidate forsafety, dose tolerance, absorption, metabolism, distribution and excretion in healthy humans or, on occasion, inpatients with severe problems or life‑threatening diseases to gain an early indication of its effectiveness. ·Phase 2: Clinical trials are generally conducted in a limited patient population to evaluate dosage toleranceand appropriate dosage, identify possible adverse effects and safety risks, and evaluate preliminarily theefficacy of the drug for specific indications in patients with the disease or condition under study. ·Phase 3: Clinical trials are typically conducted when Phase 2 clinical trials demonstrate that a dose range of theproduct candidate is effective and has an acceptable safety profile. Phase 3 clinical trials are commonly referredto as “pivotal” studies, which typically denotes a study that presents the data that the FDA or other relevantregulatory agency will use to determine whether or not to approve a drug. Phase 3 clinical trials are generallyundertaken with large numbers of patients, such as groups of several hundred to several thousand, to furtherevaluate dosage, to provide substantial evidence of clinical efficacy and to further test for safety in an expandedand diverse patient population at multiple, geographically‑dispersed clinical trial sites. ·Phase 4: In some cases, FDA may condition approval of an NDA for a product candidate on the sponsor’sagreement to conduct additional clinical trials after NDA approval. In other cases, a sponsor may voluntarilyconduct additional clinical trials post approval to gain more information about the drug. Such post approvaltrials are typically referred to as Phase 4 clinical trials. The FDA, the IRB or the clinical trial sponsor may suspend or terminate a clinical trial at any time on variousgrounds, including a finding that the research subjects are being exposed to an unacceptable health risk. Additionally, someclinical trials are overseen by an independent group of qualified experts organized by the clinical trial sponsor, known as adata safety monitoring board or committee. This group provides authorization for whether or not a trial may move forward atdesignated check points based on access to certain data from the study. We may also voluntarily suspend or terminate aclinical trial based on evolving business objectives and/or competitive climate. Concurrent with clinical trials, companies usually complete additional animal trials and must also developadditional information about the chemistry and physical characteristics of the drug and finalize a process for24 Table of Contentsmanufacturing the drug in commercial quantities in accordance with cGMP requirements. The manufacturing process must becapable of consistently producing quality batches of the drug candidate and, among other things, the manufacturer mustdevelop methods for testing the identity, strength, quality and purity of the final drug product. Additionally, appropriatepackaging must be selected and tested and stability studies must be conducted to demonstrate that the drug candidate doesnot undergo unacceptable deterioration over its shelf life. New Drug Applications The results of nonclinical studies and of the clinical trials, including negative or ambiguous results as well aspositive findings, together with other detailed information, including extensive manufacturing information and informationon the composition of the drug, are submitted to the FDA in the form of an NDA requesting approval to market the drug forone or more specified indications. The FDA reviews an NDA to determine, among other things, whether a drug is safe andeffective for its intended use. Once an NDA has been accepted for filing, by law the FDA has 180 days to review the application and respond tothe applicant. However, the review process is often significantly extended by FDA requests for additional information orclarification. Under the Prescription Drug User Fee Act, the FDA has a goal of responding to NDAs within 10 months of thefiling date for standard review, but this timeframe is also often extended. The FDA may refer the application to an advisorycommittee for review, evaluation and recommendation as to whether the application should be approved. The FDA is notbound by the recommendation of an advisory committee, but it generally follows such recommendations. Before approvingan application, the FDA will inspect the facility or the facilities at which the finished drug product, and sometimes the activedrug ingredient, is manufactured, and will not approve the drug unless cGMP compliance is satisfactory. The FDA may alsoinspect the sites at which the clinical trials were conducted to assess their compliance, and will not approve the drug unlesscompliance with cGCP requirements is satisfactory. After the FDA evaluates the NDA and conducts its inspections, it may issue an approval letter or a CompleteResponse Letter. An approval letter authorizes commercial marketing of the drug with specific prescribing information forspecific indications. A Complete Response Letter indicates that the review cycle of the application is complete and theapplication is not ready for approval. A Complete Response Letter may require additional clinical data and/or an additionalpivotal Phase 3 clinical trial(s), and/or other significant, expensive and time‑consuming requirements related to clinicaltrials, nonclinical studies or manufacturing. Even if such data are submitted, the FDA may ultimately decide that the NDAdoes not satisfy the criteria for approval. Data from clinical trials are not always conclusive and the FDA may interpret datadifferently than we interpret data. The FDA could also approve the NDA with a Risk Evaluation and Mitigation Strategy(REMS) plan to mitigate risks, which could include medication guides, physician communication plans, or elements toassure safe use, such as restricted distribution methods, patient registries and other risk minimization tools. The FDA alsomay conditionally approve the NDA, among other things, requiring changes to proposed labeling, development of adequatecontrols and specifications, or a commitment to conduct one or more post‑market studies or clinical trials. Such post‑markettesting may include Phase 4 clinical trials and surveillance to further assess and monitor the product’s safety andeffectiveness after commercialization. Regulatory approval of oncology products often requires that patients in clinical trialsbe followed for long periods after approval to determine the overall survival benefit of the drug. The FDA has the authority toprevent or limit further marketing of a drug based on the results of these post‑marketing programs. Drugs may be marketed only for the FDA approved indications and in accordance with the provisions of theapproved labeling. Further, if there are any modifications to the drug, including changes in indications, labeling, ormanufacturing processes or facilities, the applicant may be required to submit and obtain FDA approval of a new NDA orNDA supplement, which may require us to develop additional data or conduct additional nonclinical studies and clinicaltrials. Depending on the nature of the change proposed, an NDA supplement must be filed and approved before the changemay be implemented. For many proposed post‑approval changes to an NDA, the FDA has up to 180 days to review theapplication. As with new NDAs, the review process is often significantly extended by the FDA requests for additionalinformation or clarification. The testing and approval processes require substantial time, effort and financial resources, and each may take severalyears to complete. The FDA may not grant approval on a timely basis, or at all. Even if we believe a clinical trial25 Table of Contentshas demonstrated safety and efficacy of one of our drug candidates for the treatment of a disease, the results may not besatisfactory to the FDA. Nonclinical and clinical data may be interpreted by the FDA in different ways, which could delay,limit or prevent regulatory approval. We may encounter difficulties or unanticipated costs in our efforts to secure necessarygovernmental approvals, which could delay or preclude us from marketing drugs. The FDA may limit the indications for useor place other conditions on any approvals that could restrict the commercial application of the drugs. Other Regulatory Requirements Any drugs manufactured or distributed by us or our collaborators pursuant to FDA approvals would be subject tocontinuing regulation by the FDA, including recordkeeping requirements and reporting of adverse experiences associatedwith the drug. Drug manufacturers and their subcontractors are required to register their establishments with the FDA andcertain state agencies, and are subject to periodic unannounced inspections by the FDA and certain state agencies forcompliance with ongoing regulatory requirements, including cGMPs, which impose certain procedural and documentationrequirements upon us and our third party manufacturers. Failure to comply with the statutory and regulatory requirements cansubject a manufacturer to possible legal or regulatory action, such as warning letters, suspension of manufacturing, seizure ofproduct, injunctive action or possible civil penalties. We cannot be certain that we or our present or future third‑partymanufacturers or suppliers will be able to comply with the cGMP regulations and other ongoing FDA regulatoryrequirements. If we or our present or future third‑party manufacturers or suppliers are not able to comply with theserequirements, the FDA may halt our clinical trials, require us to recall a drug from distribution or withdraw approval of theNDA for that drug. The FDA closely regulates the post‑approval marketing and promotion of drugs, including standards andregulations for direct‑to‑consumer advertising, off‑label promotion, industry‑sponsored scientific and educational activitiesand promotional activities involving the internet. A company can make only those claims relating to safety and efficacy thatare approved by the FDA. Failure to comply with these requirements can result in adverse publicity, warning letters,corrective advertising and potential civil and criminal penalties. Physicians may prescribe legally available drugs for usesthat are not described in the product’s labeling and that differ from those tested by us and approved by the FDA. Suchoff‑label uses are common across medical specialties. Physicians may believe that such off‑label uses are the best treatmentfor many patients in varied circumstances. The FDA does not regulate the behavior of physicians in their choice oftreatments. The FDA does, however, impose stringent restrictions on manufacturers’ communications regarding off‑label use. Expedited Review and Accelerated Approval Programs A sponsor may seek approval of its product candidate under programs designed to accelerate FDA’s review andapproval of NDAs. For example, Fast Track Designation may be granted to a drug intended for treatment of a serious orlife‑threatening disease or condition that has potential to address unmet medical needs for the disease or condition. The keybenefits of fast track designation are potential eligibility for priority review, rolling review (submission of portions of anapplication before the complete marketing application is submitted), and accelerated approval, if relevant criteria are met.Based on results of clinical studies submitted in an NDA, upon the request of an applicant, the FDA may grant the NDA apriority review designation, which sets the target date for FDA action on the application at six months after the FDA acceptsthe application for filing. Priority review is granted where there is evidence that the proposed product would be a significantimprovement in the safety or effectiveness of the treatment, diagnosis, or prevention of a serious condition. If criteria are notmet for priority review, the application is subject to the standard FDA review period of 10 months after FDA accepts theapplication for filing. Priority review designation does not change the scientific/medical standard for approval or the qualityof evidence necessary to support approval. Under the accelerated approval program, the FDA may approve an NDA on the basis of either a surrogate endpointthat is reasonably likely to predict clinical benefit, or on a clinical endpoint that can be measured earlier than irreversiblemorbidity or mortality, that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinicalbenefit, taking into account the severity, rarity, or prevalence of the condition and the availability or lack of alternativetreatments. Post‑marketing studies or completion of ongoing studies after marketing approval are generally required to verifythe drug’s clinical benefit in relationship to the surrogate endpoint or ultimate outcome in relationship to the clinical benefit.In addition, the Food and Drug Administration Safety and Innovation Act, or FDASIA, which was26 Table of Contentsenacted and signed into law in 2012, established the new Breakthrough Therapy designation. A sponsor may seek FDAdesignation of its product candidate as a breakthrough therapy if the drug is intended, alone or in combination with one ormore other drugs, to treat a serious or life‑threatening disease or condition and preliminary clinical evidence indicates thatthe drug may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints,such as substantial treatment effects observed early in clinical development. We may consider seeking BreakthroughTherapy designation of MRX34 in the future. Orphan Drug Designation and Exclusivity Under the Orphan Drug Act, the FDA may grant orphan drug designation to drugs intended to treat a rare disease orcondition, which is generally defined as a disease or condition that affects fewer than 200,000 individuals in the UnitedStates. Orphan drug designation must be requested before submitting an NDA. In the United States, orphan drug designationentitles a party to financial incentives such as opportunities for grant funding towards clinical trial costs, tax advantages anduser‑fee waivers. After the FDA grants orphan drug designation, the generic identity of the drug and its potential orphan useare disclosed publicly by the FDA. Orphan drug designation does not convey any advantage in, or shorten the duration of,the regulatory review and approval process. The first NDA applicant to receive FDA approval for a particular activeingredient to treat a particular disease with FDA orphan drug designation is entitled to a seven‑year exclusive marketingperiod in the United States for that product, for that indication. During the seven‑year exclusivity period, the FDA may notapprove any other applications to market the same drug for the same orphan indication, except in limited circumstances, suchas a showing of clinical superiority to the product with orphan exclusivity or if FDA finds that the holder of the orphan drugexclusivity has not shown that it can assure the availability of sufficient quantities of the orphan drug to meet the needs ofpatients with the disease or condition for which the drug was designated. However, the FDA can still approve other drugs thathave a different active ingredient for use in treating the same indication or disease. While we have not sought or obtainedorphan drug designation for MRX34, we plan to seek such designation in the future for HCC, certain hematologicalmalignancies or other potential future indications. Other Healthcare Laws Although we currently do not have any products on the market, if our drug candidates are approved and we begincommercialization, we may be subject to additional healthcare regulation and enforcement by the federal government and byauthorities in the states and foreign jurisdictions in which we conduct our business. Such laws include, without limitation,state and federal anti‑kickback, fraud and abuse, false claims, privacy and security, price reporting and physician sunshinelaws and regulations. The Anti‑Kickback Statute makes it illegal for any person, including a prescription drug manufacturer (or a partyacting on its behalf) to knowingly and willfully solicit, receive, offer, or pay any remuneration that is intended to induce thereferral of business, including the purchase, order, or prescription of a particular drug, for which payment may be made undera federal healthcare program, such as Medicare or Medicaid. A person or entity does not need to have actual knowledge ofthe statute or specific intent to violate it to have committed a violation. Violations of this law are punishable by up to fiveyears in prison, and can also result in criminal fines, administrative civil money penalties and exclusion from participation infederal healthcare programs. In addition, the government may assert that a claim including items or services resulting from aviolation of the federal Anti‑Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act.Many states have also adopted laws similar to the Anti‑Kickback Statute. Some of these state prohibitions apply to thereferral of patients for healthcare services reimbursed by any insurer, not just federal healthcare programs such as Medicareand Medicaid. Due to the breadth of these federal and state anti‑kickback laws, the absence of guidance in the form ofregulations or court decisions, and the potential for additional legal or regulatory change in this area, it is possible that ourfuture sales and marketing practices and/or our future relationships with physicians might be challenged under these laws,which could harm us. The federal False Claims Act prohibits anyone from knowingly presenting, or causing to be presented, for paymentto federal programs (including Medicare and Medicaid) claims for items or services, including drugs, that are false orfraudulent, claims for items or services not provided as claimed, or claims for medically unnecessary items or services.Although we would not submit claims directly to payors, manufacturers can be held liable under these laws if they aredeemed to “cause” the submission of false or fraudulent claims by, for example, providing inaccurate billing or27 Table of Contentscoding information to customers or promoting a product off‑label. In addition, our future activities relating to the reportingof wholesaler or estimated retail prices for our products, the reporting of prices used to calculate Medicaid rebate informationand other information affecting federal, state and third‑party reimbursement for our products, and the sale and marketing ofour products, are subject to scrutiny under this law. For example, pharmaceutical companies have been prosecuted under thefederal False Claims Act in connection with their off‑label promotion of drugs. Penalties for False Claims Act violationsinclude three times the actual damages sustained by the government, plus mandatory civil penalties of between $5,500 and$11,000 for each separate false claim, the potential for exclusion from participation in federal healthcare programs, and,although the federal False Claims Act is a civil statute, False Claims Act violations may also implicate various federalcriminal statutes. If the government were to allege that we were, or convict us of, violating these false claims laws, we couldbe subject to a substantial fine and may suffer a decline in our stock price. In addition, private individuals have the ability tobring actions under the federal False Claims Act and certain states have enacted laws modeled after the federal False ClaimsAct. The federal Health Insurance Portability and Accountability Act of 1996 (HIPAA), also created new federal criminalstatutes that prohibit among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraudany healthcare benefit program, including private third‑party payors, knowingly and willfully embezzling or stealing from ahealthcare benefit program, willfully obstructing a criminal investigation of a healthcare offense, and knowingly andwillfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulentstatement in connection with the delivery of or payment for healthcare benefits, items or services. Similar to the federalAnti‑Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate itin order to have committed a violation. In addition, there has been a recent trend of increased federal and state regulation of payments made to physicians.The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, orcollectively, the Affordable Care Act, imposed new reporting requirements on drug manufacturers for payments made bythem, and, in some case, their distributors, to physicians and teaching hospitals, as well as ownership and investment interestsheld by physicians and their immediate family members. Failure to submit required information may result in civil monetarypenalties of up to an aggregate of $150,000 per year (and up to an aggregate of $1 million per year for “knowing failures”),for all payments, transfers of value or ownership or investment interests not reported in an annual submission. Manufacturersmust submit reports by the 90 day of each calendar year. There are also an increasing number of state laws that require manufacturers to implement compliance programs,impose restrictions on drug manufacturer marketing practices and require the tracking and reporting of gifts, compensationand other remuneration to physicians and other health care providers. These laws may affect our sales, marketing and otherpromotional activities by imposing administrative and compliance burdens on us. In addition, given the lack of clarity withrespect to these laws and their implementation, our reporting actions could be subject to the penalty provisions of thepertinent state and federal authorities. We may also be subject to data privacy and security regulation by both the federal government and the states inwhich we conduct our business. HIPAA, as amended by the Health Information Technology and Clinical Health Act(HITECH) and their respective implementing regulations, including the final omnibus rule published on January 25, 2013,imposes specified requirements relating to the privacy, security and transmission of individually identifiable healthinformation. Among other things, HITECH makes HIPAA’s privacy and security standards directly applicable to “businessassociates,” defined as independent contractors or agents of covered entities that create, receive, maintain or transmitprotected health information in connection with providing a service for or on behalf of a covered entity. HITECH alsoincreased the civil and criminal penalties that may be imposed against covered entities, business associates and possiblyother persons, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courtsto enforce the federal HIPAA laws and seek attorney’s fees and costs associated with pursuing federal civil actions. Inaddition, state laws govern the privacy and security of health information in certain circumstances, many of which differ fromeach other in significant ways, thus complicating compliance efforts. Because we intend to commercialize products that could be reimbursed under a federal healthcare program and othergovernmental healthcare programs, we will have to develop a comprehensive compliance program that establishes internalcontrols to facilitate adherence to the rules and program requirements to which we will or may become subject.28 thTable of ContentsAlthough compliance programs can mitigate the risk of investigation and prosecution for violations of these laws, the riskscannot be entirely eliminated. If our operations are found to be in violation of any of such laws or any other governmentalregulations that apply to us, we may be subject to penalties, including, without limitation, civil and criminal penalties,damages, fines, the curtailment or restructuring of our operations, exclusion from participation in federal and state healthcareprograms and imprisonment, any of which could adversely affect our ability to operate our business and our financial results. Coverage and Reimbursement Sales of our products, if approved, will depend, in part, on the extent to which our products will be covered bythird‑party payors, such as government health care programs, commercial insurance and managed healthcare organizations.These third‑party payors are increasingly reducing reimbursements for certain medical products and services. In addition, theU.S. government, state legislatures and foreign governments have continued implementing cost containment programs,including price controls and restrictions on reimbursement, and requirements for substitution of generic products. Adoptionof price controls and cost‑containment measures, and adoption of more restrictive policies in jurisdictions with existingcontrols and measures, could further limit our net revenue and results. Decreases in third‑party reimbursement for ourproducts once approved or a decision by a third‑party payor to not cover our products could reduce or eliminate utilizationof our products and have a material adverse effect on our sales, results of operations and financial condition. In addition, stateand federal healthcare reform measures have been and will be adopted in the future, any of which could limit the amountsthat federal and state governments will pay for healthcare products and services, which could result in reduced demand forour products once approved or additional pricing pressures. Health Care Reform In March 2010, the Affordable Care Act, was enacted, which includes measures that have or will significantlychange the way health care is financed by both governmental and private insurers. Among the provisions of Affordable CareAct of greatest importance to the pharmaceutical industry are the following: ·An increase in the minimum rebates payable by manufacturers under the Medicaid Drug Rebate Program onmost branded prescription drugs and biologic agents from 15.1% of average manufacturer price (AMP), to23.1% of AMP. ·A new rebate calculation for “line extensions” (i.e., new formulations, such as extended release formulations) ofsolid oral dosage forms of branded products. ·An extension of manufacturers’ Medicaid rebate liability to covered drugs dispensed to individuals who areenrolled in Medicaid managed care organizations. ·An expansion of the population potentially eligible for Medicaid drug benefits, to be phased‑in by 2014. ·An expansion of the types of entities eligible for discounts under the 340B drug pricing program, excludingorphan drugs when used for the orphan indication, with the exception of children’s hospitals. ·A requirement on manufacturers of branded drugs and biologic agents to provide a 50% discount off thenegotiated price of branded drugs dispensed to Medicare Part D patients in the coverage gap (i.e., “donut hole”). ·An annual, nondeductible fee on any entity that manufactures or imports certain branded prescription drugs andbiologic agents, apportioned among these entities according to their market share in certain governmenthealthcare programs, although this fee would not apply to sales of certain products approved exclusively fororphan indications. ·Creation of a new Patient‑Centered Outcomes Research to oversee, identify priorities in, and conductcomparative clinical effectiveness research, along with funding for such research. The research conducted29 Table of Contentsby the Patient‑Centered Outcomes Research Institute may affect the market for certain pharmaceutical products. ·Creation of the Independent Payment Advisory Board which, beginning in 2014, has authority to recommendcertain changes to the Medicare program to reduce expenditures by the program that could result in reducedpayments for prescription drugs. Under certain circumstances, these recommendations will become law unlessCongress enacts legislation that will achieve the same or greater Medicare cost savings. ·Establishment of a Center for Medicare and Medicaid Innovation within the Centers for Medicare & MedicaidServices, or CMS, to test innovative payment and service delivery models to lower Medicare and Medicaidspending, potentially including prescription drug spending. Funding has been allocated to support the missionof the Center for Medicare and Medicaid Innovation from 2011 to 2019. Many of the details regarding the implementation of Affordable Care Act are yet to be determined, and, at this time,it remains unclear the full effect that Affordable Care Act would have on our business. Other legislative changes have also been proposed and adopted in the United States since the Affordable Care Actwas enacted. On August 2, 2011, the Budget Control Act of 2011, among other things, created measures for spendingreductions by Congress. A Joint Select Committee on Deficit Reduction, tasked with recommending a targeted deficitreduction of at least $1.2 trillion for the years 2013 through 2021, was unable to reach required goals, thereby triggering thelegislation’s automatic reduction to several government programs. This includes aggregate reductions to Medicare paymentsto providers of 2% per fiscal year, which went into effect on April 1, 2013 and, due to subsequent legislative amendments,will remain in effect through 2024 unless additional Congressional action is taken. On January 2, 2013, President Obamasigned into law the American Taxpayer Relief Act of 2012 (ATRA) which, among other things, further reduced Medicarepayments to several providers, including hospitals, imaging centers and cancer treatment centers, and increased the statute oflimitations period for the government to recover overpayments to providers from three to five years. These new laws mayresult in additional reductions in Medicare and other health care funding, which could have a material adverse effect on ourfuture customers and accordingly, our financial operations. International Regulation In addition to regulations in the United States, we, or our collaborators, will be subject to a variety of foreignregulations governing clinical trials and commercial sales and distribution of our future drugs. Whether or not we obtain FDAapproval for a drug, we or our collaborators must obtain approval of the drug by the comparable regulatory authorities offoreign countries before commencing clinical trials or marketing of the drug in those countries. The approval process variesfrom country to country and the time may be longer or shorter than that required for FDA approval. The requirementsgoverning the conduct of clinical trials, product licensing, pricing and reimbursement vary greatly from country to country. Under European Union regulatory systems, marketing authorizations may be submitted either under a centralized,decentralized or mutual recognition procedure. The centralized procedure provides for the grant of a single markingauthorization that is valid for all European Union member states. The decentralized procedure includes selecting one“reference member state,” or RMS, and submitting to more than one member state at the same time. The RMS NationalCompeting Authority conducts a detailed review and prepares an assessment report, to which concerned member statesprovide comment. The mutual recognition procedure provides for mutual recognition of national approval decisions. Underthis procedure, the holder of a national marking authorization may submit an application to the remaining member statespost‑initial approval. Within 90 days of receiving the applications and assessment report, each member state must decidewhether to recognize approval. In addition to regulations in Europe and the United States, we, or our collaborators, will be subject to a variety offoreign regulations governing clinical trials and commercial distribution of our future drugs. 30 Table of ContentsEnvironmental Regulation We are subject to numerous foreign, federal, state and local environmental, health and safety laws and regulationsrelating to, among other matters, safe working conditions, product stewardship and end‑of‑life handling or disposition ofproducts, and environmental protection, including those governing the generation, storage, handling, use, transportation anddisposal of hazardous or potentially hazardous materials. Some of these laws and regulations require us to obtain licenses orpermits to conduct our operations. Environmental laws and regulations are complex, change frequently and have tended tobecome more stringent over time. Although the costs to comply with applicable laws and regulations, including requirementsin the European Union relating to the restriction of use of hazardous substances in products, have not been material, wecannot predict the impact on our business of new or amended laws or regulations or any changes in the way existing andfuture laws and regulations are interpreted or enforced, nor can we ensure we will be able to obtain or maintain any requiredlicenses or permits. Facilities and Services Agreement with AsuragenIn October 2014, we amended an existing service agreement under which Asuragen provides certain services to us.These services include facilities‑related services, warehouse services, shipping and receiving and other services. The term forthe agreement expires in August 2016, but may be terminated earlier by either party with six months’ notice.EmployeesAs of December 31, 2015, we had 31 full‑time employees, of whom two have medical degrees and four have Ph.D.degrees. Of these full‑time employees, 24 employees are engaged in research and development activities and sevenemployees are engaged in business development, finance, human resources and general management. We have no collectivebargaining agreements with our employees and we have not experienced any work stoppages. We consider our relations withour employees to be good.About UsWe were incorporated in late 2007 under the laws of Delaware and were maintained as a wholly-owned subsidiary ofour former parent company, Asuragen, Inc., until the end of 2009 when we became an independent entity. We completed theinitial public offering of our common stock in October 2015. Our common stock is currently listed on The NASDAQ GlobalMarket under the symbol “MIRN.” We are an “emerging growth company” under the Jumpstart Our Business Startups Act of2012, and therefore we are subject to reduced public company reporting requirements.Our principal executive offices are located at 2150 Woodward St., Austin, TX 78744 and our telephone number is(512) 901-0900. Our website address is www.mirnarx.com. The information contained on, or that can be accessed through,our website is not part of this Annual Report on Form 10-K or any other filings we make with the U.S. Securities andExchange Commission (SEC). We have included our website address in this document solely as an inactive textual reference.Available InformationWe make available on or through our website certain reports and amendments to those reports that we file with, orfurnish to, the SEC in accordance with the Securities Exchange Act of 1934, as amended, or the Exchange Act. These includeour Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K, andamendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act. We make thisinformation available on or through our website free of charge as soon as reasonably practicable after we electronically filethe information with, or furnish it to, the SEC. Copies of this information may be obtained at the SEC’s Public ReferenceRoom at 100 F Street, NE, Washington, D.C. 20549. Information on the operation of the Public Reference Room may beobtained by calling the SEC at 1-800-SEC-0330. The SEC maintains a website that contains reports, proxy and informationstatements, and other information regarding our filings, at www.sec.gov. The information on, or that can be accessed through,our website is not incorporated by reference into this document or any other filings we make with the SEC.31 Table of Contents ITEM 1A. RISK FACTORS Investing in our common stock involves a high degree of risk. You should consider carefully the following risks,together with all the other information in this periodic report, including our financial statements and notes thereto and“Management’s Discussion and Analysis of Financial Condition and Results of Operations,” before you invest in ourcommon stock. If any of the following risks actually materializes, our operating results, financial condition and liquiditycould be materially adversely affected. As a result, the trading price of our common stock could decline and you could losepart or all of your investment. Additional risks and uncertainties not presently known to us or that we currently deemimmaterial also may impair our business operations. Risk Factors Risks Related to Our Limited Operating History, Financial Position and Capital Requirements We have incurred significant losses since inception. We anticipate that we will continue to incur significant losses for theforeseeable future, and if we are unable to achieve and sustain profitability, the market value of our common stock willlikely decline. We are a clinical‑stage biopharmaceutical company with a limited operating history. Biopharmaceutical productdevelopment is a highly speculative undertaking and involves a substantial degree of risk. We have not generated anyproduct revenues and we do not expect to generate any product revenues for the foreseeable future. We have incurred lossesin each year since our founding in 2007 and we expect to continue to incur significant operating losses for the foreseeablefuture. The amount of future losses is uncertain. All of our product candidates are in development, and none has beenapproved for sale. We have devoted substantially all of our efforts to research and development, including our preclinicaland nonclinical development activities, and expect that it will be many years, if ever, before we have a product candidateready for commercialization. To date, we have derived all of our funding from our collaboration with our former parentcompany, Asuragen, Inc., or Asuragen, private placements of preferred stock and government grants for research anddevelopment. Our net loss for the year ended December 31, 2015 was $25.0 million. Since inception, we have incurred netlosses leading to an accumulated deficit of approximately $76.5 million as of December 31, 2015. We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future as weexpand our clinical development plan for MRX34 as a mono therapy, pursue development of MRX34 as a combinationtherapy, conduct research and development of other product candidates and pursue marketing approval for MRX34 in thefuture. If we obtain marketing approval of MRX34, we also expect to incur significant sales, marketing, distribution andmanufacturing expenses. Even after obtaining such marketing approval, our products may never gain sufficient marketacceptance and adequate market share. If we fail to succeed in any of these activities or our product candidates fail todemonstrate safety and efficacy in clinical trials, do not gain regulatory approval or do not achieve significant marketacceptance following regulatory approval and commercialization, we may never become profitable. Even if we achieveprofitability in the future, we may not be able to sustain profitability in subsequent periods. Our prior losses, combined withexpected future losses, have had and will continue to have an adverse effect on our stockholders’ equity and working capital.If we are unable to achieve and sustain profitability, the market value of our common stock will likely decline. Because ofthe numerous risks and uncertainties associated with developing biopharmaceutical products, we are unable to predict theextent of any future losses or whether we will become profitable. Our short operating history may make it difficult for you to evaluate the success of our business to date and to assess ourfuture viability. We are a clinical‑stage biopharmaceutical company that was founded in 2007 and did not exist as a standalonecompany until 2009. Our operations to date have been limited to organizing and staffing our company, business planning,raising capital, acquiring and developing our technology, identifying and evaluating potential product candidates anddelivery technologies, undertaking nonclinical studies, filing an Investigational New Drug, or IND, application with the U.S.Food and Drug Administration, or FDA, and conducting the Phase 1 clinical trial of our most32 Table of Contentsadvanced product candidate, MRX34. Except for MRX34, all of our product candidates are still in preclinical development.We have not yet demonstrated our ability to initiate clinical trials for product candidates other than MRX34, or successfullycomplete any clinical trials, including large‑scale, pivotal clinical trials, obtain marketing approvals, manufacture acommercial scale medicine, or arrange for a third party to do so on our behalf, or conduct sales and marketing activitiesnecessary for successful commercialization. Typically, it takes many years to develop one new product candidate from thetime it is discovered to when it is available for treating patients. Consequently, any predictions about our future success orviability, or any evaluation of our business or prospects, may not be as accurate as they could be if we had a longer operatinghistory. In addition, as a new business, we may encounter unforeseen expenses, difficulties, complications, delays and otherknown and unknown challenges. We will need to transition from a company with a research focus to a company capable ofsupporting commercial activities. We may not be successful in such a transition. We will need substantial additional funding. If we are unable to raise capital when needed, we could be forced to delay,reduce or terminate our product development, other operations or commercialization efforts. Developing biopharmaceutical products, including conducting preclinical and nonclinical studies and clinicaltrials, is an expensive and highly uncertain process that takes years to complete. Our expenses will increase substantially aswe expand our clinical development plan for MRX34 as a mono therapy, pursue development of MRX34 as a combinationtherapy, conduct research and development of other product candidates and pursue marketing approval for MRX34 in thefuture. Additional clinical trials, including one or more late‑stage pivotal trials, will be required to obtain potentialmarketing approval for MRX34, and the costs of any future trials may be more expensive and time consuming than ourcurrent trial. If we obtain marketing approval of MRX34, we also expect to incur significant sales, marketing, distributionand outsourced manufacturing expenses. As of December 31, 2015, we had working capital of $84.6 million and cash and cash equivalents of $89.7 million.Based on our current operating plan, we believe that our available cash at such date are sufficient to fund our anticipatedlevels of operation for at least the next 12 months. Our future capital requirements for the period for which we expect ourexisting resources to support our operations may vary significantly from what we expect. For example, our expenses couldincrease beyond expectations if we are required by the FDA or comparable foreign regulatory agencies to perform studies andtrials in addition to those that we currently anticipate. Our funds at December 31, 2015 will not be sufficient to obtainmarketing approval for MRX34. As a result, we will be required to obtain additional financing in the future, which we mayobtain through public or private equity offerings, debt financings, a credit facility, government grants and contracts and/orstrategic collaborations. If we are required to secure additional capital, such additional fundraising efforts may divert ourmanagement from our day‑to‑day activities, which may adversely affect our ability to develop and commercialize futureproduct candidates. Additional financing may not be available to us when we need it or it may not be available to us onfavorable terms, if at all. If we are unable to obtain adequate financing or form favorable collaborations, when needed, wemay have to delay, reduce the scope of or eliminate one or more of our clinical trials, research and development programs orour commercialization efforts, including with respect to MRX34. Additionally, our future financing requirements will depend on many factors, some of which are beyond our control,including: ·the demonstration of further clinical proof‑of‑concept with our product candidates, including MRX34, in one ormore cancer types or other indications; ·the rate of progress and cost of our clinical trials, preclinical and nonclinical studies and other discovery andresearch and development activities; ·the successful outcome of one or more pivotal clinical trials demonstrating safety and efficacy of our productcandidates, including MRX34; ·the timing of, and costs involved in, seeking and obtaining FDA and other regulatory approvals; 33 Table of Contents·the costs of preparing, filing, prosecuting, maintaining and enforcing any patent claims and other intellectualproperty rights, including litigation costs and the results of such litigation; ·our ability to practice our technology without infringing the intellectual property rights of third parties; ·our ability to enter into additional collaboration, licensing, government or other arrangements and the termsand timing of such arrangements; ·the potential need to acquire, by acquisition or in‑licensing, other products or technologies; and ·the emergence of competing technologies or other adverse market developments. Future capital requirements will also depend on the extent to which we acquire or invest in additionalcomplementary businesses, products and technologies. We currently have no understandings, commitments or agreementsrelating to any of these types of transactions. Raising additional capital may cause dilution to our existing stockholders, restrict our operations or require us torelinquish rights to our technologies or product candidates. Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needsthrough public or private equity offerings, debt financings, credit facilities, government grants and contracts and/or strategiccollaborations. To raise capital, we may from time to time issue additional shares of common stock at a discount from thethen‑current trading price of our common stock. As a result, our common stockholders would experience immediate dilutionupon the purchase of any shares of our common stock sold at such discount. In addition, as opportunities present themselves,we may enter into financing or similar arrangements in the future, including the issuance of debt securities, preferred stock orcommon stock. Whether or not we issue additional shares of common stock at a discount, any issuance of common stock will,and any issuance of other equity securities, securities convertible into equity securities or options, warrants or other rights topurchase common stock may, result in additional dilution of the percentage ownership of our stockholders and could causeour stock price to decline. New investors could also gain rights, preferences and privileges senior to those of holders of ourcommon stock, which could cause the price of our common stock to decline. Debt securities may also contain covenants thatrestrict our operational flexibility, impose liens or other restrictions on our assets, restrict our ability to incur additional debt,impose limitations on our ability to acquire, sell or license intellectual property or impose other operating restrictions thatcould adversely affect our business and could also cause the price of our common stock to decline. Other than our collaboration with our former parent company, Asuragen, private placements of preferred stock, andofferings of common stock, the only external source of funds to date has been state and federal government grants forresearch and development. The grants have been, and any future government grants and contracts we may receive may be,subject to the risks and contingencies set forth below under the risk factor entitled “Reliance on government funding for ourprograms may add uncertainty to our research and commercialization efforts with respect to those programs that are tied tosuch funding and may impose requirements that limit our ability to take certain actions, increase the costs ofcommercialization and production of product candidates developed under those programs and subject us to potentialfinancial penalties, which could materially and adversely affect our business, financial condition and results of operations.”Although we might apply for government and private contracts and grants in the future, we cannot assure you that we will besuccessful in obtaining additional grants or contracts for MRX34 or any other product candidates or programs. 34 Table of ContentsRisks Related to Product Development and Commercialization The approach we are taking to discover and develop novel therapeutics using microRNA is unproven and may never leadto marketable products. The scientific discoveries that form the basis for our efforts to discover and develop new drugs are relatively recent.To date, neither we nor any other company has received regulatory approval to market therapeutics utilizing microRNA. Thescientific evidence to support the feasibility of developing drugs based on these discoveries is both preliminary and limited.Successful development of microRNA‑based products by us will require solving a number of issues, including providingsuitable methods of stabilizing the microRNA material and delivering it into target cells in the human body. In addition, anycompounds that we develop may not demonstrate in patients the chemical and pharmacological properties ascribed to themin laboratory and nonclinical studies, and they may interact with human biological systems in unforeseen, ineffective or evenharmful ways. If we do not successfully develop and commercialize product candidates based upon our technologicalapproach, we may not become profitable and the value of our common stock may decline. Further, the FDA has relatively limited experience with microRNA‑based therapeutics. No regulatory authority hasgranted approval to any person or entity, including us, to market and commercialize microRNA therapeutics, which mayincrease the complexity, uncertainty and length of the regulatory approval process for our product candidates. If ourmicroRNA technologies prove to be ineffective, unsafe or commercially unviable, our entire pipeline would have little, ifany, value, which would have a material adverse effect on our business, financial condition, results of operations andprospects. Further, our exclusive focus on microRNA technology for developing products as opposed to multiple, more proventechnologies for drug development increases the risk associated with our business. If we are not successful in developing aproduct candidate using microRNA technology, we may not be able to identify and successfully implement an alternativeproduct development strategy. We are heavily dependent on the success of our lead product candidate, MRX34, which is in Phase 1 clinical development. We currently have no products approved for sale and have invested a significant portion of our efforts and financialresources in the development of MRX34. The clinical development of MRX34 began in April 2013 with a multi‑centerPhase 1 clinical trial that is currently enrolling patients with advanced stage solid cancers. We have also included in thePhase 1 clinical trial a separate cohort of patients with hematological malignancies, which may include patients withnon‑Hodgkin’s lymphoma, acute myelogenous leukemia, acute and chronic lymphocytic leukemia, chronic myelogenousleukemia in accelerated or blast phase, multiple myeloma and myelodysplastic syndrome. The primary objectives of thePhase 1 clinical trial, including the hematological malignancy cohort, are to establish the maximum tolerated dose and anappropriate dose for Phase 2 clinical trials. The secondary objectives of the Phase 1 clinical trial are to assess the safety,tolerability and pharmacokinetic profile of MRX34 after intravenous dosing as well as to assess any biological and clinicalactivity. Our prospects are substantially dependent on our ability to develop and commercialize MRX34. Our ability totimely develop and effectively commercialize MRX34 will depend on several factors, including the following: ·successful completion of our Phase 1 clinical trial or other clinical trials, which will depend substantially uponthe satisfactory performance of third‑party contractors; ·successful demonstration of further clinical proof‑of‑concept with MRX34 in one or more cancer types; ·successful outcome of one or more pivotal clinical trials required for regulatory approval demonstrating safetyand efficacy of MRX34; 35 Table of Contents·receipt of marketing approvals for MRX34 from the FDA and similar regulatory authorities outside the UnitedStates; ·establishing commercial manufacturing capabilities, for example, by making arrangements with third‑partymanufacturers; ·successfully launching commercial sales of the product, whether alone or in collaboration with others; ·acceptance of the product by patients, the medical community and third‑party payors; ·establishing market share while competing with other therapies; ·a continued acceptable safety and adverse event profile of the product following regulatory approval; ·qualifying for, identifying, registering, maintaining, enforcing and defending intellectual property rights andclaims covering the product; and ·manufacturing, marketing, selling and using MRX34 and practicing our technology without infringing theproprietary rights of third parties, or successfully defending against claims alleging such infringement. If we do not achieve one or more of these factors in a timely manner, or at all, we could experience significant delaysor an inability to commercialize MRX34, which would materially and adversely affect our business, financial condition andresults of operations. We have not previously submitted a new drug application, or NDA, to the FDA, or similar drug approval filings tocomparable foreign authorities, for any product candidate, and we cannot be certain that any of our product candidates willbe successful in clinical trials or receive regulatory approval. Further, our product candidates may not receive regulatoryapproval even if they are successful in clinical trials. If we do not receive regulatory approvals for our product candidates, wemay not be able to continue our operations. Even if we successfully obtain regulatory approvals to market one or more of ourproduct candidates, our revenues will be dependent upon the size of the markets in the territories for which we gainregulatory approval and have commercial rights. If the markets for patient subsets that we are targeting are not as significantas we estimate, we may not generate significant revenues from sales of such products, if approved. Successful development ofMRX34 or other product candidates for additional indications will be subject to these same risks. If we are not successful in discovering, developing and commercializing additional product candidates, our ability toexpand our business and achieve our strategic objectives would be impaired. Although a substantial amount of our efforts will focus on the MRX34 Phase 1 clinical trial and the initiation ofseveral Phase 2 studies, a key element of our strategy is to discover, develop and potentially commercialize a portfolio ofproduct candidates to treat cancer and other indications. We are seeking to do so through our internal research programs andare exploring, and intend to explore in the future, strategic partnerships for the development of new products. Other thanMRX34, all of our other potential product candidates remain in the discovery and preclinical study stages. Researchprograms to identify product candidates require substantial technical, financial and human resources, whether or not anyproduct candidates are ultimately identified. Our research programs may initially show promise in identifying potentialproduct candidates, yet fail to yield product candidates for clinical development for many reasons, including the following: ·the research methodology used may not be successful in identifying potential product candidates; ·competitors may develop alternatives that render our product candidates obsolete; ·product candidates we develop may nevertheless be covered by third parties’ patents or other exclusive rights;36 Table of Contents ·a product candidate may, on further study, be shown to have harmful side effects or other characteristics thatindicate it is unlikely to be effective or otherwise does not meet applicable regulatory criteria; ·a product candidate may not be capable of being produced in commercial quantities at an acceptable cost, or atall; and ·a product candidate may not be accepted as safe and effective by patients, the medical community or third‑partypayors. If we are unsuccessful in identifying and developing additional product candidates, our potential for growth may beimpaired. We may use our financial and human resources to pursue a particular research program or product candidate and fail tocapitalize on programs or product candidates that may be more profitable or for which there is a greater likelihood ofsuccess. Because we have limited financial and human resources, we may forego or delay pursuit of opportunities withcertain programs or product candidates or for other indications that later prove to have greater commercial potential. Ourresource allocation decisions may cause us to fail to capitalize on viable commercial products or more profitable marketopportunities. Our spending on current and future research and development programs and future product candidates forspecific indications may not yield any commercially viable products. We may also enter into strategic alliance agreements todevelop and commercialize certain of our programs and potential product candidates in indications with potentially largecommercial markets. If we do not accurately evaluate the commercial potential or target market for a particular productcandidate, we may relinquish valuable rights to that product candidate through strategic alliance, licensing or other royaltyarrangements in cases in which it would have been more advantageous for us to retain sole development andcommercialization rights to such product candidate, or we may allocate internal resources to a product candidate in atherapeutic area in which it would have been more advantageous to enter into a partnering arrangement. The regulatory approval process is lengthy, expensive and uncertain, and we may be unable to obtain regulatory approvalfor our drug products under applicable regulatory requirements. The denial or delay of any such approval would delaycommercialization of our drug products and adversely impact our ability to generate revenue, our business and our resultsof operations. The development, research, testing, manufacturing, labeling, approval, selling, import, export, marketing anddistribution of drug products are subject to extensive and evolving regulation by federal, state and local governmentalauthorities in the United States, principally the FDA, and by foreign regulatory authorities, which regulations differ fromcountry to country. Neither we nor any future collaborator is permitted to market MRX34 or any other product candidate inthe United States until we receive regulatory approval of an NDA from the FDA. Obtaining regulatory approval of an NDA can be a lengthy, expensive and uncertain process. Prior to obtainingapproval to commercialize a drug candidate in the United States or abroad, we or our collaborators must demonstrate withsubstantial evidence from well‑controlled clinical trials, and to the satisfaction of the FDA or other foreign regulatoryagencies, that such drug candidates are safe and effective for their intended uses. The number of nonclinical studies andclinical trials that will be required for FDA approval varies depending on the drug candidate, the disease or condition that thedrug candidate is designed to address, and the regulations applicable to any particular drug candidate. Results fromnonclinical studies and clinical trials can be interpreted in different ways. Even if we believe the nonclinical or clinical datafor our drug candidates are promising, such data may not be sufficient to support approval by the FDA and other regulatoryauthorities. Administering drug candidates to humans may produce undesirable side effects, which could interrupt, delay orhalt clinical trials and result in the FDA or other regulatory authorities denying approval of a drug candidate for any or allindications. The FDA may also require us to conduct additional studies or trials for our product candidates either prior to orpost‑approval, such as additional drug‑drug interaction studies or safety or efficacy studies or trials, or it may object toelements of our clinical development program such as the number of subjects in our current clinical trials from the UnitedStates.37 Table of Contents We expect to complete enrollment in the Phase 1 clinical trial and to initiate enrollment in a Phase 1b translationalmedicine study and the Phase 2 clinical trials for our lead product candidate, MRX34, by the end of 2016, and our businesscurrently depends substantially on the successful development, regulatory approval and commercialization of MRX34. Wecurrently have no drug products approved for sale, and we may never obtain regulatory approval to commercialize MRX34. The FDA or any foreign regulatory bodies can delay, limit or deny approval of MRX34 or require us to conductadditional nonclinical or clinical testing or abandon a program for many reasons, including: ·the FDA or the applicable foreign regulatory agency’s disagreement with the design or implementation of ourclinical trials; ·negative or ambiguous results from our clinical trials or results that may not meet the level of statisticalsignificance required by the FDA or comparable foreign regulatory agencies for approval; ·serious and unexpected drug‑related side effects experienced by participants in our clinical trials or byindividuals using drugs similar to our product candidates; ·our inability to demonstrate to the satisfaction of the FDA or the applicable foreign regulatory body thatMRX34 is safe and effective for the proposed indication; ·the FDA’s or the applicable foreign regulatory agency’s disagreement with the interpretation of data fromnonclinical studies or clinical trials; ·our inability to demonstrate the clinical and other benefits of MRX34 outweigh any safety or other perceivedrisks; ·the FDA’s or the applicable foreign regulatory agency’s requirement for additional nonclinical studies orclinical trials; ·the FDA’s or the applicable foreign regulatory agency’s disagreement regarding the formulation, labelingand/or the specifications of MRX34; ·the FDA’s or the applicable foreign regulatory agency’s failure to approve the manufacturing processes orfacilities of third‑party manufacturers with which we contract; or ·the potential for approval policies or regulations of the FDA or the applicable foreign regulatory agencies tosignificantly change in a manner rendering our clinical data insufficient for approval. Of the large number of drugs in development, only a small percentage successfully complete the FDA or otherregulatory approval processes and are commercialized. The lengthy approval process as well as the unpredictability of futureclinical trial results may result in our failing to obtain regulatory approval to market MRX34, which would significantlyharm our business, financial condition, results of operations and prospects. Even if we eventually complete clinical testing and receive approval of an NDA or foreign marketing application forMRX34, the FDA or the applicable foreign regulatory agency may grant approval contingent on the performance of costlyadditional clinical trials, including Phase 4 clinical trials, and/or the implementation of a Risk Evaluation and MitigationStrategy, or REMS, which may be required to ensure safe use of the drug after approval. The FDA or the applicable foreignregulatory agency also may approve MRX34 for a more limited indication or a narrower patient population than weoriginally requested, and the FDA or applicable foreign regulatory agency may not approve the labeling that we believe isnecessary or desirable for the successful commercialization of MRX34. Any delay in obtaining, or inability to obtain,applicable regulatory approval would delay or prevent commercialization of MRX34 and would materially adversely impactour business and prospects.38 Table of Contents Clinical drug development involves a lengthy and expensive process with an uncertain outcome, and results of earlierstudies and trials may not be predictive of future trial results. Clinical testing is expensive and can take many years to complete, and its outcome is inherently uncertain.Furthermore, we rely on contract research organizations, or CROs, and clinical trial sites to ensure the proper and timelyconduct of our clinical trials. While we have agreements with our CROs governing their committed activities, and the abilityto audit their performance, we have limited influence over their actual performance. Failure or delay can occur at any timeduring the clinical trial process. Success in nonclinical testing and early clinical trials does not ensure that later clinical trialswill be successful, and the results of clinical trials by other parties may not be indicative of the results in trials we mayconduct. A number of companies in the pharmaceutical industry, including biotechnology companies, have sufferedsignificant setbacks in clinical trials, even after promising results in earlier nonclinical or clinical studies. These setbackshave been caused by, among other things, nonclinical findings made while clinical studies were underway and safety orefficacy observations made in clinical studies, including previously unreported adverse events. The results of preclinical,nonclinical and early clinical studies of our product candidates may not be predictive of the results of later‑stage clinicaltrials. Product candidates in later stages of clinical trials may fail to show the desired safety and efficacy traits despite havingprogressed through preclinical and initial clinical trials. Notwithstanding any potential promising results in earlier studies,we cannot be certain that we will not face similar setbacks. Even if our clinical trials are completed, the results may not besufficient to obtain regulatory approval for our product candidates. Although we have an ongoing Phase 1 clinical trial for MRX34 that is expected to complete enrollment andplanned Phase 1b translational medicine study and Phase 2 clinical trials that are expected to initiate enrollment by the endof 2016, we may experience delays in these trials and we cannot be certain that the trial or any other future clinical trials forMRX34 or other product candidates will begin on time, need to be redesigned, enroll an adequate number of patients on timeor be completed on schedule, if at all. Clinical trials can be delayed or aborted for a variety of reasons, including delay orfailure related to: ·the FDA or comparable foreign regulatory authorities disagreeing as to the design or implementation of ourclinical studies; ·obtaining regulatory approval to commence a trial; ·reaching agreement on acceptable terms with prospective CROs and clinical trial sites, the terms of which canbe subject to extensive negotiation and may vary significantly among different CROs and trial sites; ·obtaining institutional review board, or IRB, or equivalent approval at each site; ·recruiting suitable patients to participate in a trial; ·having patients complete a trial or return for post‑treatment follow‑up; ·clinical sites deviating from trial protocol or dropping out of a trial; ·addressing patient safety concerns that arise during the course of a trial; ·addressing any conflicts with new or existing laws or regulations; ·adding a sufficient number of clinical trial sites; or ·manufacturing sufficient quantities of product candidate for use in clinical trials. Patient enrollment is a significant factor in the timing of clinical trials and is affected by many factors, including thesize and nature of the patient population, the proximity of patients to clinical sites, the eligibility criteria for the trial, thedesign of the clinical trial, competing clinical trials and clinicians’ and patients’ perceptions as to the potential39 Table of Contentsadvantages of the drug being studied in relation to other available therapies, including any new drugs or treatments that maybe approved for the indications we are investigating. We could also encounter delays if a clinical trial is suspended or terminated by us, by the IRBs of the institutions inwhich such trials are being conducted, by the Data Safety Monitoring Board, or DSMB, for such trial or by the FDA or otherregulatory authorities. Such authorities may suspend or terminate a clinical trial due to a number of factors, including failureto conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, inspection of the clinicaltrial operations or trial site by the FDA or other regulatory authorities resulting in the imposition of a clinical hold,unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using a drug, changes in governmentalregulations or administrative actions or lack of adequate funding to continue the clinical trial. Further, conducting clinical trials in foreign countries, as we currently do for MRX34, presents additional risks thatmay delay completion of our clinical trials. These risks include the failure of enrolled patients in foreign countries to adhereto clinical protocol as a result of differences in healthcare services or cultural customs, managing additional administrativeburdens associated with foreign regulatory schemes, as well as political and economic risks relevant to such foreigncountries. If we experience delays in the completion, or termination, of any clinical trial of our product candidates, thecommercial prospects of our product candidates may be harmed, and our ability to generate product revenues from any ofthese product candidates will be delayed or not realized at all. In addition, any delays in completing our clinical trials willincrease our costs, slow down our product candidate development and approval process and jeopardize our ability tocommence product sales and generate revenues. Any of these occurrences may significantly harm our business, financialcondition and prospects. In addition, many of the factors that cause, or lead to, a delay in the commencement or completionof clinical trials may also ultimately lead to the denial of regulatory approval of our product candidates. If we are required to suspend or discontinue clinical trials due to side effects or other safety risks, or if we are required toconduct studies on the long‑term effects associated with the use of MRX34 or other product candidates, our ability tocommercialize our product candidates could be adversely affected. Our clinical trials, including our Phase 1 clinical trial for MRX34, the planned initiation of a Phase 1b translationalmedicine study and several Phase 2 studies, or other trials our strategic partners or CROs may conduct, may be suspended orterminated at any time for a number of safety‑related reasons. For example, we may voluntarily suspend or terminate ourclinical trials if at any time we believe that our product candidates present an unacceptable safety risk to the clinical trialpatients. In addition, IRBs or regulatory agencies may order the temporary discontinuation or termination of our clinicaltrials at any time if they believe that the clinical trials are not being conducted in accordance with applicable regulatoryrequirements, including if they present an unacceptable safety risk to patients. Administering any product candidate tohumans may produce undesirable side effects. The existence of undesirable side effects resulting from our product candidatescould cause us or regulatory authorities, such as the FDA, to interrupt, delay or halt clinical trials of our product candidatesand could result in the FDA or other regulatory agencies denying further development or approval of our product candidatesfor any or all indications. We have not conducted complete studies on the long‑term effects associated with the use of MRX34 or any otherproduct candidate. Studies of these long‑term effects may be required for regulatory approval and such requirement woulddelay our introduction of MRX34 or other product candidates into the market. These studies could also be required at anytime after regulatory approval of a product candidate. Absence of long‑term data may also limit the approved uses of aproduct, if any, to short‑term use. MRX34 or any other product candidate may prove to be unsafe for human use, whichwould materially harm our business. Certain oligonucleotide therapeutics and liposomal drug delivery products have shown injection site reactions,infusion reactions and pro‑inflammatory effects and may also lead to impairment of organ function, including kidney or liverfunction. There is a risk that our current and future product candidates may induce similar adverse events, or require pre‑ orco‑administration of other drugs to minimize such effects, which pre‑ or co‑administration might adversely affect the benefitsof our product or add additional side effects to the treatment regimens. Results of our clinical trials could40 Table of Contentsreveal a high and unacceptable severity and prevalence of these or other side effects. In such an event, our trials could besuspended or terminated and the FDA or comparable foreign regulatory authorities could order us to cease furtherdevelopment of or deny approval of our product candidates for any or all indications. Drug‑related side effects could affectpatient recruitment or the ability of enrolled patients to complete the trial or result in potential product liability claims. Anyof these occurrences may significantly harm our business, financial condition, results of operations and prospectssignificantly. Our product candidates may cause undesirable side effects or have other properties that could delay or prevent theirregulatory approval, limit the commercial profile of an approved label, or result in significant negative consequencesfollowing marketing approval, if any. As with many pharmaceutical products and product candidates under development, MRX34 or our other potentialproduct candidates may produce undesirable side effects or adverse reactions or events. In the event we or others identifyundesirable side effects caused by one of our product candidates, any of the following adverse events could occur: ·we may be required, or we may decide, to halt or delay further clinical development of our product candidates; ·the FDA or comparable foreign regulatory authorities could order us to cease further development of or denyapproval of our product candidates for any or all indications; or ·product‑related side effects could affect patient recruitment or the ability of enrolled patients to complete thetrial or result in potential product liability claims. If MRX34 or our other potential product candidates receives marketing approval, and we or others later identifyundesirable side effects caused by such products, a number of potentially significant negative consequences could result,including: ·regulatory authorities may withdraw their approval of the product; ·we may be required to recall a product or change the way such product is administered to patients; ·additional restrictions may be imposed on the marketing of the particular product or the manufacturingprocesses for the product or any component thereof; ·regulatory authorities may require the addition of labeling statements, such as a “black box” warning or acontraindication; ·we may be required to implement a REMS or create a Medication Guide outlining the risks of such side effectsfor distribution to patients; ·we could be sued and held liable for harm caused to patients; ·the product may become less competitive; and ·our reputation may suffer. Any of the foregoing events could prevent us from achieving or maintaining market acceptance of the particularproduct candidate, if approved, and result in the loss of significant revenues to us, which would materially and adverselyaffect our results of operations and business. 41 Table of ContentsOur clinical drug development program may not uncover all possible adverse events that patients who take MRX34 orother product candidates may experience. The number of subjects exposed to MRX34 or other product candidates and theaverage exposure time in the clinical development program may be inadequate to detect rare adverse events, or chancefindings, that may only be detected once the product is administered to more patients and for greater periods of time. Clinical trials by their nature utilize a sample of the potential patient population. However, with a limited number ofsubjects and limited duration of exposure, we cannot be fully assured that rare and severe side effects of MRX34 or otherproduct candidates will be uncovered. Such rare and severe side effects may only be uncovered with a significantly largernumber of patients exposed to the drug. If such safety problems occur or are identified after MRX34 or another productcandidate reaches the market, the FDA may require that we amend the labeling of the product or recall the product, or mayeven withdraw approval for the product. We face potential product liability, and, if successful claims are brought against us, we may incur substantial liability andcosts. If the use or misuse of our product candidates harms patients, or is perceived to harm patients even when such harmis unrelated to our product candidates, our regulatory approvals could be revoked or otherwise negatively impacted andwe could be subject to costly and damaging product liability claims. If we are unable to obtain adequate insurance or arerequired to pay for liabilities resulting from a claim excluded from, or beyond the limits of, our insurance coverage, amaterial liability claim could adversely affect our financial condition. The use or misuse of our product candidates in clinical trials and the sale of any products for which we obtainmarketing approval exposes us to the risk of product liability claims. Product liability claims might be brought against us byconsumers, healthcare providers, pharmaceutical companies or others selling or otherwise coming into contact with ourproducts. There is a risk that our product candidates may induce adverse events. If we cannot successfully defend againstproduct liability claims, we could incur substantial liability and costs. Certain oligonucleotide therapeutics and liposomaldrug delivery products have shown injection site reactions, infusion reactions, and pro‑inflammatory effects, and may alsolead to organ dysfunction, including impairment of kidney or liver function. There is a risk that our future product candidatesmay induce similar adverse events. Patients with the diseases targeted by our product candidates are often already in severeand advanced stages of disease and have both known and unknown significant pre‑existing and potentially life‑threateninghealth risks. During the course of treatment, patients may suffer adverse events, including death, for reasons that may berelated to our product candidates. Such events could subject us to costly litigation, require us to pay substantial amounts ofmoney to injured patients, delay, negatively impact or end our opportunity to receive or maintain regulatory approval tomarket our products, or require us to suspend or abandon our commercialization efforts. Even in a circumstance in which wedo not believe that an adverse event is related to our products, the investigation into the circumstance may betime‑consuming or inconclusive. These investigations may interrupt our sales efforts, delay our regulatory approval processin other countries, or impact and limit the type of regulatory approvals our product candidates receive or maintain. As a resultof these factors, a product liability claim, even if successfully defended, could have a material adverse effect on our business,financial condition or results of operations. Although we have product liability insurance that we feel is appropriate for our stage of development, which coversour clinical trials in the United States, for up to $1 million per occurrence, up to an aggregate limit of $5 million, ourinsurance may be insufficient to reimburse us for any expenses or losses we may suffer, and we will be required to increaseour product liability insurance coverage for our advanced clinical trials that we plan to initiate. We have obtained anadditional product liability insurance policy for our clinical trials in the Republic of Korea. If and when we obtain marketingapproval for product candidates, we intend to expand our insurance coverage to include the sale of commercial products. Wedo not know whether we will be able to continue to obtain product liability coverage and obtain expanded coverage if werequire it, in sufficient amounts to protect us against losses due to liability, on acceptable terms, or at all. We may not havesufficient resources to pay for any liabilities resulting from a claim excluded from, or beyond the limits of, our insurancecoverage. Where we have provided indemnities in favor of third parties under our agreements with them, there is also a riskthat these third parties could incur liability and bring a claim under such indemnities. An individual may bring a productliability claim against us alleging that one of our product candidates or products causes, or is claimed to have caused, aninjury or is found to be unsuitable for consumer use. Any such product liability claims may include allegations of defects inmanufacturing, defects in design, a failure to warn of dangers42 Table of Contentsinherent in the product, negligence, strict liability, and a breach of warranties. Claims could also be asserted under stateconsumer protection acts. Any product liability claim brought against us, with or without merit, could result in: ·withdrawal of clinical trial volunteers, investigators, patients or trial sites or limitations on approvedindications; ·the inability to commercialize, or if commercialized, decreased demand for, our product candidates; ·if commercialized, product recalls, withdrawals or labeling, marketing or promotional restrictions or the need forproduct modification; ·initiation of investigations by regulators; ·loss of revenues; ·substantial costs of litigation, including monetary awards to patients or other claimants; ·liabilities that substantially exceed our product liability insurance, which we would then be required to payourselves; ·an increase in our product liability insurance rates or the inability to maintain insurance coverage in the futureon acceptable terms, if at all; ·the diversion of management’s attention from our business; and ·damage to our reputation and the reputation of our products and our technology. Product liability claims may subject us to the foregoing and other risks, which could have a material adverse effecton our business, financial condition, results of operations and prospects. Currently, our product candidates are expensive to produce and are expensive relative to presently‑marketed therapeuticstargeting similar indications. To date, our proposed product candidates have only been manufactured at a scale that is adequate to supply ourresearch activities and early‑stage clinical trials. As with many companies conducting Phase 1 and Phase 2 clinical trials orpreclinical studies on product candidates, the current cost of each treatment is expensive relative to presently‑marketedtherapeutics targeting similar indications. We cannot assure you that we will be able to scale the manufacturing of ourproducts during future clinical trials or commercialization in order to achieve a treatment price that would allow forcommercial acceptance. In the event our product candidates cannot be manufactured in sufficient commercial quantities at acompetitive price, our future prospects could be significantly impacted and our financial prospects would be materiallyharmed. Even if a product candidate does obtain regulatory approval, that product candidate may never achieve marketacceptance or commercial success. Even if we obtain FDA or other regulatory approvals, and are able to launch MRX34 or any other product candidatecommercially, the product candidate may not achieve market acceptance among physicians, patients, patient advocacygroups and third‑party payors and, ultimately, may not be commercially successful. Market acceptance of any productcandidate for which we receive approval depends on a number of factors, including: ·the efficacy and safety of the product candidate as demonstrated in clinical trials; ·the clinical indications for which the product candidate is approved; 43 Table of Contents·acceptance by physicians, patients, operators of treatment facilities and parties responsible for reimbursement ofthe product candidate as a safe and effective treatment; ·the potential and perceived advantages of the product candidate, including the cost of treatment and benefitsover alternative treatments; ·the safety of the product candidate seen in a broader patient group, including use outside the approvedindications; ·the cost of treatment in relation to alternative treatments; ·the availability of adequate reimbursement and pricing by third‑party payors and government authorities; ·relative convenience and ease of administration; ·the tolerance of the products by patients, including prevalence and severity of adverse side effects; ·the availability of the product and the ability to meet market demand; and ·the effectiveness of our sales and marketing efforts. Any failure by MRX34 or any other product candidate that obtains regulatory approval to achieve marketacceptance or commercial success would adversely affect our financial results. Risks Related to Our Reliance on Third Parties We rely on third parties to conduct some of our nonclinical and all of our clinical trials. If these third parties do notsuccessfully carry out their contractual duties or meet expected deadlines, we may be unable to obtain regulatory approvalfor or commercialize any of our product candidates. Although we conduct certain nonclinical studies, we currently do not have the ability to independently conductnonclinical studies that comply with the regulatory requirements known as good laboratory practice, or GLP, requirements.We also do not currently have the ability to independently conduct any clinical trials. The FDA and regulatory authorities inother jurisdictions require us to comply with regulations and standards, commonly referred to as current good clinicalpractice, or GCP, requirements for conducting, monitoring, recording and reporting the results of clinical trials, in order toensure that the data and results are scientifically credible and accurate and that the trial subjects are adequately informed ofthe potential risks of participating in clinical trials. We rely on medical institutions, clinical investigators, contractlaboratories and other third parties, such as CROs, to conduct GLP‑compliant nonclinical studies and GCP‑compliant clinicaltrials on our product candidates properly and on time. While we will have agreements governing their activities, we controlonly certain aspects of their activities and have limited influence over their actual performance. The third parties with whomwe contract for execution of our GLP nonclinical studies and our GCP clinical trials play a significant role in the conduct ofthese studies and trials and the subsequent collection and analysis of data. These third parties are not our employees and,except for restrictions imposed by our contracts with such third parties, we have limited ability to control the amount ortiming of resources that they devote to our programs. Although we rely on these third parties to conduct our GLP‑compliantpreclinical and nonclinical studies and GCP‑compliant clinical trials, we remain responsible for ensuring that each of ourGLP preclinical and nonclinical studies and GCP clinical trials is conducted in accordance with its investigational plan andprotocol and applicable laws and regulations, and our reliance on the CROs does not relieve us of our regulatoryresponsibilities. Many of the third parties with whom we contract may also have relationships with other commercial entities,including our competitors, for whom they may also be conducting clinical trials or other drug development activities thatcould harm our competitive position. If the third parties conducting our GLP preclinical or nonclinical studies or our clinicaltrials do not perform their contractual duties or obligations, experience work stoppages, do not meet expected deadlines,terminate their agreements with us or need to be replaced, or if the quality or accuracy of the clinical data they44 Table of Contentsobtain is compromised due to their failure to adhere to our clinical trial protocols or to GCPs, or for any other reason, we mayneed to enter into new arrangements with alternative third parties. This could be difficult, costly or impossible, and ournonclinical studies or clinical trials may need to be extended, delayed, terminated or repeated. As a result we may not be ableto obtain regulatory approval in a timely fashion, or at all, for the applicable product candidate, our financial results and thecommercial prospects for our product candidates would be harmed, our costs could increase, and our ability to generaterevenues could be delayed. We rely on a limited number of third‑party contract manufacturing organizations to manufacture and supply MRX34 andother product candidates for us. If our supplier or manufacturer fails to perform adequately or fulfill our needs, or if theseagreements are terminated by the third parties, we may be required to incur significant costs and devote significant effortsto find new suppliers or manufacturers. We may also face delays in the development and commercialization of our productcandidates. We do not currently independently conduct manufacturing activities for our product candidates, including MRX34.We rely upon single source third‑party contract manufacturing organizations to manufacture and supply our productcandidates. We currently have a relationship with two suppliers for clinical supply of the drug substance for our miR‑34mimic. Polymun Scientific Immunbiologische Forschung GmbH, or Polymun, located in Austria, is the exclusivemanufacturer of our MRX34 drug product. Further, we rely on our contract manufacturers to manage the supply chain for theraw materials used in the manufacture of the drug substance and drug product. Any manufacturers of the drug substance and drug product for our product candidates must comply with currentgood manufacturing practice, or cGMP, requirements enforced by the FDA through its facilities inspection program. Theserequirements include, among other things, quality control, quality assurance and the maintenance of records anddocumentation. Manufacturers of our component materials may be unable to comply with these cGMP requirements and withother FDA, state and foreign regulatory requirements. We do not directly control the manufacturing process of, and arecompletely dependent on, our contract manufacturing partners for compliance with cGMPs. If our contract manufacturerscannot successfully manufacture material that conforms to our specifications and the strict regulatory requirements of theFDA or foreign regulatory agencies, they will not be able to secure and/or maintain regulatory approval for theirmanufacturing facilities. In addition, we have no direct control over the ability of our contract manufacturers to maintainadequate quality control, quality assurance and qualified personnel. The FDA or similar foreign regulatory agencies at anytime may also implement new standards, or change their interpretation and enforcement of existing standards formanufacture, packaging or testing of products. We have little control over a manufacturer’s compliance with theseregulations and standards. However, a failure to comply with these requirements may result in fines and civil penalties,suspension of production, suspension or delay in product approval, product seizure or recall, or withdrawal of productapproval. If the safety of any product supplied is compromised due to our manufacturer’s failure to adhere to applicable lawsor for other reasons, we may not be able to obtain regulatory approval for or successfully commercialize our products, and wemay be held liable for any injuries sustained as a result. In addition, if the FDA or a comparable foreign regulatory agencydoes not approve our contract manufacturer’s facilities for the manufacture of our product candidates or if it withdraws itsapproval in the future, we may need to find alternative manufacturing facilities, which would negatively impact our ability todevelop, obtain regulatory approval for, or market our product candidates, if approved. Any of these factors could cause adelay of clinical trials, regulatory submissions, approvals or commercialization of our product candidates or entail highercosts or impair our reputation. The manufacture of pharmaceutical products in compliance with cGMP regulations requires significant expertiseand capital investment, including the development of advanced manufacturing techniques and process controls.Manufacturers of pharmaceutical products often encounter difficulties in production, including difficulties with productioncosts and yields, quality control, including stability of the product candidate and quality assurance testing, or shortages ofqualified personnel. If our manufacturers were to encounter any of these difficulties or otherwise fail to comply with theirobligations to us or under applicable regulations, our ability to provide study materials in our nonclinical studies andclinical trials would be jeopardized. Any delay or interruption in the supply of nonclinical study or clinical trial materialscould delay the completion of our nonclinical studies and clinical trials, increase the costs associated with maintaining ournonclinical study and clinical trial programs and, depending upon the period of delay, require us to conduct nonclinicalstudies, commence new trials at significant additional expense or terminate the studies and trials completely.45 Table of Contents We currently believe that our third party suppliers have the necessary expertise to produce our MRX34 drugsubstance and drug product in sufficient quantity and of acceptable quality to support our development program through atleast Phase 3 clinical trials and possibly through commercialization of MRX34. However, our current agreements with oursuppliers do not provide for the entire supply of the drug necessary for additional clinical trials or for full‑scalecommercialization. In the event that we and our suppliers cannot agree to the terms and conditions for them to provide someor all of our clinical and commercial drug supply needs, or if our suppliers terminate their agreements with us in response to abreach by us or any other reason permitted under our agreements, we would not be able to manufacture the drug on acommercial scale until a qualified alternative supplier is identified, which could also delay the development of, and impairour ability to commercialize, our product candidates. Any supplier would be required to obtain regulatory approval of theirmanufacturing facilities, processes and quality systems before engaging in the commercial manufacture of a pharmaceuticalproduct. Due to the complexity of the processes used to manufacture pharmaceutical products and product candidates, anypotential third‑party manufacturer may be unable to continue to pass or initially pass federal, state or international regulatoryinspections in a cost‑effective manner. Although we believe that appropriate alternative sources of supply exist for each of our current product candidates,the number of third‑party suppliers with the necessary manufacturing and regulatory expertise and facilities is limited, and itcould be expensive and take a significant amount of time to arrange for alternative suppliers, which could have a materialadverse effect on our business. New suppliers of any drug would be required to qualify under applicable regulatoryrequirements and would need to have sufficient rights under applicable intellectual property laws to the method ofmanufacturing such ingredients. Obtaining the necessary FDA approvals or other qualifications under applicable regulatoryrequirements and ensuring non‑infringement of third‑ party intellectual property rights could result in a significantinterruption of supply and could require the new manufacturer to bear significant additional costs which may be passed on tous. The failure of third‑party manufacturers or suppliers to perform adequately or the termination of our arrangementswith any of them may negatively and adversely affect our business. Reliance on third‑party manufacturers entails risks to which we would not be subject if we manufactured the productcandidates ourselves, including: ·the inability to meet any product specifications and quality requirements consistently; ·a delay or inability to procure or expand sufficient manufacturing capacity; ·capacity related to the scale‑up of manufacturing; ·manufacturing and product quality issues related to scale‑up of manufacturing; ·costs and validation of new equipment and facilities required for scale‑up; ·a failure to comply with cGMP and similar foreign standards; ·operations of our third‑party manufacturers or suppliers could be disrupted by conditions unrelated to ourbusiness or operations, including the bankruptcy of the manufacturer or supplier; ·carrier disruptions or increased costs that are beyond our control; ·the failure of third parties involved in the transportation, storage and distribution of our products, including thefailure to deliver products under specified storage conditions and in a timely manner; and ·the possibility that our contract manufacturer, or third parties with access to their facilities, will have access toand may appropriate our trade secrets or other proprietary information. 46 Table of ContentsAny of these events could lead to clinical trial delays or failure to obtain regulatory approval, or impact our abilityto successfully commercialize future products. Some of these events could be the basis for FDA action, including injunction,recall, seizure or total or partial suspension of production. We may not be able to develop or identify a technology that can effectively deliver our miR‑34 mimic or any other of ourmicroRNA‑based product candidates to the intended diseased cells or tissues, and any failure in such delivery technologycould adversely affect and delay the development of MRX34 and our other product candidates. In connection with our Phase 1 clinical trial of MRX34, we have used a SMARTICLES liposomal formulation tofacilitate delivery to tumors. SMARTICLES has demonstrated successful tumor delivery of our miR‑34 mimic in multiplemouse models of liver cancer, but we cannot be certain that the SMARTICLES technology will be capable of deliveringadequate levels of our miR‑34 mimic to tumors in patients to produce a therapeutic response. While we are continuing toevaluate the use of SMARTICLES in different indications, and additional delivery technologies that might enable us totarget specific cancer cells with our product candidates, we cannot be certain whether we will be successful in developingsuch alternative delivery mechanisms. Our failure to effectively deliver any of our product candidates to the intendeddiseased cells or tissues could adversely affect and delay the development of our product candidates. We currently have no sales and marketing staff or distribution organization. If we are unable to develop a sales andmarketing and distribution capability on our own or through third parties, we will not be successful in commercializingour future products. We currently have no sales, marketing or distribution capabilities or experience. To achieve commercial success forany approved product candidate, we must either develop a sales, marketing and distribution organization or outsource thesefunctions to third parties. If we rely on third parties for marketing and distributing our approved products, any revenue wereceive will depend upon the efforts of third parties, which may not be successful and are only partially within our controland our product revenue may be lower than if we directly marketed or sold our products. If we are unable to enter intoarrangements with third parties to sell, market and distribute product candidates for which we have received regulatoryapproval on acceptable terms or at all, we will need to market these products ourselves. This is likely to be expensive andlogistically difficult, as it would require us to build our own sales, marketing and distribution capacity. We have noexperience in this area, and if such efforts were necessary, we may not be able to successfully commercialize our futureproducts. If we are not successful in commercializing our future products, either on our own or through third parties, anyfuture product revenue will be materially and adversely affected. We may attempt to form collaborations in the future with respect to our product candidates, but we may not be able to doso, which may cause us to alter our development and commercialization plans. We may attempt to form strategic alliances, create joint ventures or collaborations or enter into licensingarrangements with third parties with respect to our programs that we believe will complement or augment our existingbusiness. For example, we may attempt to find a strategic partner for the development and/or commercialization of MRX34.We may face significant competition in seeking appropriate strategic partners, and the negotiation process to secureappropriate terms is time‑consuming and complex. We may not be successful in our efforts to establish such a strategicpartnership for any product candidates and programs on terms that are acceptable to us, or at all. This may be because ourproduct candidates and programs may be deemed to be at too early of a stage of development for collaborative effort, ourresearch and development pipeline may be viewed as insufficient, the competitive or intellectual property landscape may beviewed as too intense or risky, and/or third parties may not view our product candidates and programs as having sufficientpotential for commercialization, including the likelihood of an adequate safety and efficacy profile. Any delays in identifying suitable collaborators and entering into agreements to develop and/or commercialize ourproduct candidates could delay the development or commercialization of our product candidates, which may reduce theircompetitiveness even if they reach the market. Absent a collaboration partner, we would need to undertake developmentand/or commercialization activities at our own expense. If we elect to fund and undertake development and/orcommercialization activities on our own, we may need to obtain additional expertise and additional capital, which47 Table of Contentsmay not be available to us on acceptable terms or at all. If we are unable to do so, we may not be able to develop our productcandidates or bring them to market and our business may be materially and adversely affected. We may be unable to realize the potential benefits of any collaboration. Even if we are successful in entering into a collaboration with respect to the development and/or commercializationof one or more product candidates, there is no guarantee that the collaboration will be successful. Collaborations may pose anumber of risks, including: ·collaborators often have significant discretion in determining the efforts and resources that they will apply tothe collaboration, and may not commit sufficient resources to the development, marketing or commercializationof the product or products that are subject to the collaboration; ·collaborators may not perform their obligations as expected; ·any such collaboration may significantly limit our share of potential future profits from the associated program,and may require us to relinquish potentially valuable rights to our current product candidates, potentialproducts or proprietary technologies or grant licenses on terms that are not favorable to us; ·collaborators may cease to devote resources to the development or commercialization of our product candidatesif the collaborators view our product candidates as competitive with their own products or product candidates; ·disagreements with collaborators, including disagreements over proprietary rights, contract interpretation or thecourse of development, might cause delays or termination of the development or commercialization of productcandidates, and might result in legal proceedings, which would be time‑ consuming, distracting and expensive; ·collaborators may be impacted by changes in their strategic focus or available funding, or businesscombinations involving them, which could cause them to divert resources away from the collaboration; ·collaborators may infringe the intellectual property rights of third parties, which may expose us to litigation andpotential liability; ·the collaborations may not result in us achieving revenues to justify such transactions; and ·collaborations may be terminated and, if terminated, may result in a need for us to raise additional capital topursue further development or commercialization of the applicable product candidate. As a result, a collaboration may not result in the successful development or commercialization of our productcandidates. Reliance on government funding for our programs may add uncertainty to our research and commercialization efforts withrespect to those programs that are tied to such funding and may impose requirements that limit our ability to take certainactions, increase the costs of commercialization and production of product candidates developed under those programsand subject us to potential financial penalties, which could materially and adversely affect our business, financialcondition and results of operations. During the course of our development of our product candidates, we have been funded in significant part throughfederal and state grants, including but not limited to the substantial funding we have received from the Texas EmergingTechnology Fund and the Cancer Prevention and Research Institute of Texas, or CPRIT. In addition to the funding we havereceived to date, we have applied and intend to continue to apply for federal and state grants to receive additional funding inthe future. Contracts and grants funded by the U.S. government, state governments and their related agencies, including ourcontracts with the State of Texas pertaining to funds we have already received, include48 Table of Contentsprovisions that reflect the government’s substantial rights and remedies, many of which are not typically found incommercial contracts, including powers of the government to: ·require repayment of all or a portion of the grant proceeds, in certain cases with interest, in the event we violatecertain covenants pertaining to various matters that include any potential relocation outside of the State ofTexas, failure to achieve certain milestones or to comply with terms relating to use of grant proceeds, or failureto comply with certain laws; ·terminate agreements, in whole or in part, for any reason or no reason; ·reduce or modify the government’s obligations under such agreements without the consent of the other party; ·claim rights, including intellectual property rights, in products and data developed under such agreements; ·audit contract‑related costs and fees, including allocated indirect costs; ·suspend the contractor or grantee from receiving new contracts pending resolution of alleged violations ofprocurement laws or regulations; ·impose U.S. manufacturing requirements for products that embody inventions conceived or first reduced topractice under such agreements; ·impose qualifications for the engagement of manufacturers, suppliers and other contractors as well as othercriteria for reimbursements; ·suspend or debar the contractor or grantee from doing future business with the government; ·control and potentially prohibit the export of products; ·pursue criminal or civil remedies under the False Claims Act, False Statements Act and similar remedyprovisions specific to government agreements; and ·limit the government’s financial liability to amounts appropriated by the U.S. Congress on a fiscal‑year basis,thereby leaving some uncertainty about the future availability of funding for a program even after it has beenfunded for an initial period. In addition to those powers set forth above, the government funding we may receive could also impose requirementsto make payments based upon sales of our products in the future. For example, under the terms of our 2010 award fromCPRIT, we are required to pay CPRIT a portion of our revenues from sales of certain products by us, or received from ourlicensees or sublicensees, at a percentage in the low single digits until the aggregate amount of such payments equals aspecified multiple of the grant amount, and thereafter at a rate of less than one percent, subject to our right, under certaincircumstances, to make a one‑time payment in a specified amount to CPRIT to buy out such payment obligations. See“Business—Key Partnerships and Licenses” for a description of this CPRIT agreement, which includes a description of ourobligations to make royalty payments. We may not have the right to prohibit the U.S. government from using certain technologies developed by us, and wemay not be able to prohibit third‑party companies, including our competitors, from using those technologies in providingproducts and services to the U.S. government. The U.S. government generally takes the position that it has the right toroyalty‑free use of technologies that are developed under U.S. government contracts. These and other provisions ofgovernment grants may also apply to intellectual property we license now or in the future. 49 Table of ContentsIn addition, government contracts and grants normally contain additional requirements that may increase our costsof doing business, reduce our profits, and expose us to liability for failure to comply with these terms and conditions. Theserequirements include, for example: ·specialized accounting systems unique to government contracts and grants; ·mandatory financial audits and potential liability for price adjustments or recoupment of government fundsafter such funds have been spent; ·public disclosures of certain contract and grant information, which may enable competitors to gain insights intoour research program; and ·mandatory socioeconomic compliance requirements, including labor standards, non‑discrimination andaffirmative action programs and environmental compliance requirements. If we fail to maintain compliance with any such requirements that may apply to us now or in the future, we may besubject to potential liability and to termination of our contracts. Our business involves the use of hazardous materials and we and our third‑ party manufacturers must comply withenvironmental laws and regulations, which may be expensive and restrict how we do business. Our third‑party manufacturers’ activities and our own activities involve the controlled storage, use and disposal ofhazardous materials, including the components of our pharmaceutical product candidates, test samples and reagents,biological materials and other hazardous compounds. We and our manufacturers are subject to federal, state, local andforeign laws and regulations governing the use, generation, manufacture, storage, handling and disposal of these hazardousmaterials. We currently carry no insurance specifically covering environmental claims relating to the use of hazardousmaterials. Although we believe that our safety procedures for handling and disposing of these materials and waste productscomply with the standards prescribed by these laws and regulations, we cannot eliminate the risk of accidental injury orcontamination from the use, storage, handling or disposal of hazardous materials. In the event of an accident, state or federalor other applicable authorities may curtail our use of these materials and/or interrupt our business operations. In addition, ifan accident or environmental discharge occurs, or if we discover contamination caused by prior operations, including byprior owners and operators of properties we acquire, we could be liable for cleanup obligations, damages and fines. If suchunexpected costs are substantial, this could significantly harm our financial condition and results of operations. Risks Related to Administrative, Organizational and Commercial Operations and Growth We will need to increase the size of our organization, and we may experience difficulties in managing growth. As of December 31, 2015, we had 31 employees. We may need to expand our managerial, operational, financial andother resources in order to manage our operations and clinical trials, continue our development activities and commercializeMRX34 or other product candidates. Our management and personnel, systems and facilities currently in place are likely notadequate to support this future growth. Also, our management may need to divert a disproportionate amount of its attentionaway from our day‑to‑day activities and devote a substantial amount of time to managing these growth activities. We maynot be able to effectively manage the expansion of our operations, which may result in weaknesses in our infrastructure andgive rise to operational mistakes, loss of business opportunities, loss of employees and reduced productivity amongremaining employees. Our expected growth could require significant capital expenditures and may divert financial resourcesfrom other projects, such as the development of additional product candidates. Our need to effectively execute our businessstrategy requires that we: ·manage our Phase 1 clinical trial, which is being conducted at multiple trial sites, as well as manage any otherclinical trials in the future; 50 Table of Contents·manage our internal development efforts effectively while carrying out our contractual obligations to licensors,contractors, government agencies, any future collaborators and other third parties; ·continue to improve our operational, financial and management controls, reporting systems and procedures; and ·identify, recruit, maintain, motivate and integrate additional employees. If we are unable to expand our managerial, operational, financial and other resources to the extent required tomanage our development and commercialization activities, our business will be materially adversely affected. We face substantial competition and our competitors may discover, develop or commercialize products faster or moresuccessfully than us. The development and commercialization of new drug products is highly competitive. We face competition frommajor pharmaceutical companies, specialty pharmaceutical companies, biotechnology companies, universities and otherresearch institutions worldwide with respect to MRX34 and other product candidates that we may seek to develop orcommercialize in the future. Our competitors may succeed in developing, acquiring or licensing technologies and drugproducts that are more effective or less costly than MRX34 or any other product candidates that we are currently developingor that we may develop, which could render our product candidates obsolete and noncompetitive. There are a number of pharmaceutical and biotechnology companies that currently market and sell products or arepursuing the development of product candidates for the treatment of solid tumors. The most common treatments for solidtumors are various chemotherapeutic agents, radiation therapy and certain targeted therapies, including monoclonalantibodies such as Avastin, Erbitux, Herceptin and Vectibix. Small molecules, such as Nexavar, Sutent and Tarceva, arealso indicated for the treatment of solid tumors. In addition to the competition we face from alternative therapies for the diseases we intend to target with ourproduct candidates, we are also aware of several companies that are also working specifically to develop microRNAtherapeutics, including miRagen Therapeutics, Inc., Regulus Therapeutics, Inc. and Santaris Pharma A/S (now Roche). Manyof our competitors have substantially greater financial, technical and other resources, such as larger research anddevelopment staff and experienced marketing and manufacturing organizations. Insurers and other third‑party payors mayalso encourage the use of generic products. For example, if MRX34 is approved, it may be priced at a significant premiumover other competitive products. This may make it difficult for MRX34 or any other future products to compete with theseproducts. If our competitors obtain marketing approval from the FDA or comparable foreign regulatory authorities for theirproduct candidates more rapidly than us, it could result in our competitors establishing a strong market position before weare able to enter the market. Many of our competitors have materially greater name recognition and financial, manufacturing, marketing,research and drug development resources than we do. Additional mergers and acquisitions in the biotechnology andpharmaceutical industries may result in even more resources being concentrated in our competitors. Large pharmaceuticalcompanies in particular have extensive expertise in preclinical, nonclinical and clinical testing and in obtaining regulatoryapprovals for drugs. In addition, academic institutions, government agencies, and other public and private organizationsconducting research may seek patent protection with respect to potentially competitive products or technologies. Theseorganizations may also establish exclusive collaborative or licensing relationships with our competitors. Failure of MRX34or other product candidates to effectively compete against established treatment options or in the future with new productscurrently in development would harm our business, financial condition, results of operations and prospects. 51 ®®®®®®Table of ContentsWe may engage in strategic transactions that could impact our liquidity, increase our expenses and present significantdistractions to our management. From time to time, we may consider strategic transactions, such as acquisitions of companies, asset purchases, andout‑licensing or in‑licensing of products, product candidates or technologies. Additional potential transactions that we mayconsider include a variety of different business arrangements, including spin‑offs, strategic partnerships, joint ventures,restructurings, divestitures, business combinations and investments. Any such transaction may require us to incurnon‑recurring or other charges, may increase our near‑ and long‑term expenditures and may pose significant integrationchallenges or disrupt our management or business, which could adversely affect our operations and financial results. Forexample, these transactions may entail numerous operational and financial risks, including: ·exposure to unknown liabilities; ·disruption of our business and diversion of our management’s time and attention in order to develop acquiredproducts, product candidates or technologies; ·incurrence of substantial debt or dilutive issuances of equity securities to pay for acquisitions; ·higher‑than‑expected acquisition and integration costs; ·write‑downs of assets or goodwill or impairment charges; ·increased amortization expenses; ·difficulty and cost in combining the operations and personnel of any acquired businesses with our operationsand personnel; ·impairment of relationships with key suppliers or customers of any acquired businesses due to changes inmanagement and ownership; and ·inability to retain key employees of any acquired businesses. Accordingly, although there can be no assurance that we will undertake or successfully complete any transactions ofthe nature described above, any transactions that we do complete may be subject to the foregoing or other risks, could have amaterial adverse effect on our business, financial condition, results of operations and prospects. We are highly dependent on the services of our President and Chief Executive Officer, Paul Lammers, M.D., M.Sc., and ourability to attract and retain qualified personnel. We may not be able to attract or retain qualified management and scientific and clinical personnel in the future dueto the intense competition for qualified personnel among biotechnology, pharmaceutical and other businesses. Our industryhas experienced a high rate of turnover of management and scientific personnel in recent years. If we are not able to attract,retain and motivate necessary personnel to accomplish our business objectives, we may experience constraints that willsignificantly impede the achievement of our development objectives, our ability to raise additional capital and our ability toimplement our business strategy. We are highly dependent on the principal members of our management and scientific staff. The loss of service of anyof our management and key scientific staff could harm our business, particularly our President and Chief Executive Officer,Dr. Lammers. Due to our limited resources, we may not be able to effectively attract and recruit additional qualifiedpersonnel. If we are not able to retain our management, particularly our President and Chief Executive Officer, Dr. Lammers,and to attract, on acceptable terms, additional qualified personnel necessary for the continued development of our business,we may not be able to sustain our operations or grow. Although we have executed employment agreements with eachmember of our current executive management team, including Dr. Lammers, we may not be able to retain their services asexpected.52 Table of Contents In addition, we have scientific and clinical advisors who assist us in formulating our product development andclinical strategies. These advisors are not our employees and may have commitments to, or consulting or advisory contractswith, other entities that may limit their availability to us, or may have arrangements with other companies to assist in thedevelopment of products that may compete with ours. Our internal computer systems, or those of our CROs or other contractors or consultants, may fail or suffer securitybreaches, which could result in a material disruption of our product development programs. Despite the implementation of security measures, our internal computer systems and those of our CROs and othercontractors and consultants are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism,war and telecommunication and electrical failures. While we have not experienced any such system failure, accident orsecurity breach to date, if such an event were to occur and cause interruptions in our operations, it could result in a materialdisruption of our programs. For example, the loss of clinical trial data from completed or ongoing clinical trials for any of ourproduct candidates could result in delays in our regulatory approval efforts and significantly increase our costs to recover orreproduce the data. To the extent that any disruption or security breach results in a loss of or damage to our data orapplications, or inappropriate disclosure of confidential or proprietary information, including the confidential medicalinformation of clinical trial participants, we could incur liability and the further development of our product candidatescould be delayed. Our employees, independent contractors, principal investigators, CROs, consultants and vendors may engage inmisconduct or other improper activities, including noncompliance with regulatory standards and requirements. We are exposed to the risk that employees, independent contractors, principal investigators, CROs, consultants andvendors may engage in fraudulent or other illegal activity. Misconduct by these parties could include intentional, recklessand/or negligent conduct or disclosure of unauthorized activities to us that violates: (i) FDA regulations, including thoselaws requiring the reporting of true, complete and accurate information to the FDA; (ii) manufacturing standards; (iii) federaland state healthcare fraud and abuse laws and regulations; or (iv) laws that require the true, complete and accurateinformation or data. Specifically, sales, marketing and business arrangements in the healthcare industry are subject toextensive laws and regulations intended to prevent fraud, kickbacks, self‑dealing and other abusive practices. These laws andregulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission,customer incentive programs and other business arrangements. Activities subject to these laws also involve the improper useof information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to ourreputation. It is not always possible to identify and deter misconduct by our employees and other third parties, and theprecautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks orlosses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be incompliance with such laws or regulations. If any such actions are instituted against us, and we are not successful in defendingourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition ofcivil, criminal and administrative penalties, damages, monetary fines, possible exclusion from participation in Medicare,Medicaid and other federal healthcare programs, contractual damages, reputational harm, diminished profits and futureearnings, and curtailment of our operations, any of which could adversely affect our ability to operate our business and ourresults of operations. Requirements associated with being a public company have increased and will continue to increase our costs significantly,as well as divert significant company resources and management attention. Prior to our IPO, we were not subject to the reporting requirements of the Securities Exchange Act of 1934, asamended, or the Exchange Act, or the other rules and regulations of the Securities and Exchange Commission, or SEC, or anysecurities exchange relating to public companies. We are working with our legal, independent accounting and financialadvisors to identify those areas in which changes should be made to our financial and management control systems tomanage our growth and our obligations as a public company. These areas include corporate governance, corporate control,disclosure controls and procedures and financial reporting and accounting systems. We have made, and will continue tomake, changes in these and other areas. However, the expenses that will be required in order to operate as a public companyare, and could continue to be, material, particularly after we cease to be an “emerging53 Table of Contentsgrowth company.” Compliance with the various reporting and other requirements applicable to public companies will alsorequire considerable time and attention of management. In addition, the changes we have made and make may not besufficient to allow us to satisfy our obligations as a public company on a timely basis. However, for as long as we remain an “emerging growth company” as defined in the Jumpstart our Business StartupsAct, or the JOBS Act, we may take advantage of certain exemptions from various reporting requirements that are applicableto other public companies that are not “emerging growth companies,” including not being required to comply with theauditor attestation requirements of Section 404 of the Sarbanes‑Oxley Act, reduced disclosure obligations regardingexecutive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding anonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments notpreviously approved. We may take advantage of these reporting exemptions until we are no longer an “emerging growthcompany.” Because the JOBS Act has only recently been enacted, it is not yet clear whether investors will accept the morelimited disclosure requirements that we may be entitled to follow while we are an “emerging growth company.” If they donot, we may end up electing to comply with disclosure requirements as if we were not an “emerging growth company,” inwhich case we would incur the greater expenses associated with such disclosure requirements. We will remain an “emerging growth company” for up to five years after the completion of our IPO, although if themarket value of our common stock that is held by non‑affiliates exceeds $700 million as of any September 30 before thattime or if we have total annual gross revenues of $1 billion or more during any fiscal year before that time, we would cease tobe an “emerging growth company” as of the end of that fiscal year, or if we issue more than $1 billion in non‑convertibledebt in a three‑year period, we would cease to be an “emerging growth company” immediately. In addition, being a public company could make it more difficult or more costly for us to obtain certain types ofinsurance, including directors’ and officers’ liability insurance, and we may be forced to accept reduced policy limits andcoverage or incur substantially higher costs to obtain the same or similar coverage. The impact of these events could alsomake it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees oras executive officers. If we are not able to implement the requirements of Section 404 of the Sarbanes‑Oxley Act of 2002 in a timely manner orwith adequate compliance, we may be subject to sanctions by regulatory authorities. Section 404 of the Sarbanes‑Oxley Act of 2002 requires that we evaluate and determine the effectiveness of ourinternal controls over financial reporting and, beginning with our annual report for fiscal year 2016, provide a managementreport on the internal control over financial reporting. If we have a material weakness in our internal control over financialreporting, we may not detect errors on a timely basis and our financial statements may be materially misstated. We will beevaluating our internal controls systems to allow management to report on, and eventually allow our independent auditors toattest to, our internal controls. We will be performing the system and process evaluation and testing (and any necessaryremediation) required to comply with the management certification and eventual auditor attestation requirements ofSection 404 of the Sarbanes‑Oxley Act of 2002. The aforementioned auditor attestation requirements will not apply to usuntil we are not an “emerging growth company.” To date, we have never conducted a review of our internal controls for the purpose of providing the reports requiredby these rules. We cannot be certain as to the timing of completion of our evaluation, testing and remediation actions or theimpact of the same on our operations. If we are not able to implement the requirements of Section 404 in a timely manner orwith adequate compliance, we may be subject to sanctions or investigation by regulatory authorities, such as the SEC or TheNASDAQ Stock Market LLC, or NASDAQ. Any such action could adversely affect our financial results or investors’confidence in us and could cause our stock price to fall. Moreover, if we are not able to comply with the requirements ofSection 404 in a timely manner, or if we or our independent registered public accounting firm identifies deficiencies in ourinternal controls that are deemed to be material weaknesses, we could be subject to sanctions or investigations by the SEC,NASDAQ or other regulatory authorities, which would entail expenditure of additional financial and management resourcesand could materially adversely affect our stock price. Inferior internal controls could also cause us to fail to meet ourreporting obligations or cause investors to lose confidence in our reported financial information, which could have anegative effect on our stock price.54 Table of Contents Our ability to utilize 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 2015 and maynever achieve profitability. To the extent that we continue to generate taxable losses, unused losses will carry forward tooffset future taxable income, if any, until such unused losses expire. We may be unable to use these losses to offset incomebefore such unused losses expire. Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, or theCode, if a corporation undergoes an “ownership change,” generally defined as a greater than 50 percentage point change (byvalue) in its equity ownership over a three‑year period, the corporation’s ability to use its pre‑change net operating loss, orNOL, carryforwards and other pre‑change tax attributes to offset its post‑change income or taxes may be further limited. Webelieve that we have experienced at least one ownership change in the past. We may also experience additional ownershipchanges as a result of subsequent shifts in our stock ownership, including as a result of our IPO. Accordingly, our ability touse our pre‑change NOL carryforwards to offset U.S. federal taxable income may be subject to limitations, which couldpotentially result in increased future tax liability to us. For these reasons, we may not be able to utilize any or a materialportion of our NOL carryforwards and other tax attributes. If we seek and obtain approval to commercialize MRX34 outside of the United States, a variety of risks associated withinternational operations could materially adversely affect our business. If MRX34 is approved for commercialization outside the United States, we will likely enter into agreements withthird parties to market MRX34 outside the United States. We expect that we will be subject to additional risks related toentering into these international business relationships, including: ·different regulatory requirements for drug approvals in foreign countries; ·differing U.S. and foreign drug import and export rules; ·reduced protection for our intellectual property rights in foreign countries; ·existence of third party intellectual property rights of potential relevance to our business; ·unexpected changes in tariffs, trade barriers and regulatory requirements; ·different reimbursement systems; ·economic weakness, including inflation, or political instability in particular foreign economies and markets; ·compliance with tax, employment, immigration and labor laws for employees living or traveling abroad or withU.S. regulations that would apply to activities in such foreign jurisdictions, such as the Foreign CorruptPractices Act; ·foreign taxes, including withholding of payroll taxes; ·foreign currency fluctuations, which could result in increased operating expenses and reduced revenues, andother obligations incident to doing business in another country; ·workforce uncertainty in countries where labor unrest is more common than in the United States; ·production shortages resulting from any events affecting raw material supply or manufacturing capabilitiesabroad; ·potential liability resulting from development work conducted by these distributors; and 55 Table of Contents·business interruptions resulting from geopolitical actions, including war and terrorism, or natural disasters. We or the third parties upon whom we depend may be adversely affected by natural disasters and our business continuityand disaster recovery plans may not adequately protect us from a serious disaster. Natural disasters could severely disrupt our operations, and have a material adverse effect on our business, financialcondition and results of operations. If a natural disaster, power outage or other event occurred that prevented us from usingall or a significant portion of our headquarters, that damaged critical infrastructure, such as our enterprise financial systems ormanufacturing resource planning and enterprise quality systems, or that otherwise disrupted operations, it may be difficult or,in certain cases, impossible for us to continue our business for a substantial period of time. The disaster recovery and businesscontinuity plans we have in place currently are limited and are unlikely to prove adequate in the event of a serious disaster orsimilar event. We may incur substantial expenses as a result of the limited nature of our disaster recovery and businesscontinuity plans, which could have a material adverse effect on our business. Furthermore, certain integral parties in our supply chain are geographically concentrated and operating from singlesites, increasing their vulnerability to natural disasters or other sudden, unforeseen and severe adverse events. Although webelieve there to be sufficient alternative suppliers in other geographic locations, if such an event were to affect such existingparties in our supply chain, it could have a material adverse effect on our business. Risks Related to Intellectual Property If we are unable to obtain and maintain sufficient patent protection for our technology and product candidates, or if thescope of the patent protection is not sufficiently broad, our competitors could develop and commercialize products similaror identical to ours, and our ability to successfully commercialize our product candidates may be adversely affected. We rely upon a combination of patents, trade secret protection and confidentiality agreements to protect theintellectual property related to our technologies. In particular, our success depends in large part on our ability to obtain and maintain patent protection in the UnitedStates and other countries with respect to our product candidates. If we do not adequately protect our intellectual property,competitors may be able to use our technologies and erode or negate any competitive advantage we may have, which couldharm our business and ability to achieve profitability. To protect our proprietary position, we file patent applications in theUnited States and in limited jurisdictions abroad related to our product candidates and compounds in development that maybecome our product candidates. The patent application and approval process is expensive and time‑consuming. We may notbe able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. We mayalso fail to identify patentable aspects of our research and development before it is too late to obtain patent protection. The strength of patents in the biotechnology and pharmaceutical field involves complex legal and scientificquestions and can be uncertain. This uncertainty includes changes to the patent laws through either legislative action tochange statutory patent law or court action that may reinterpret existing law in ways affecting the scope or validity of issuedpatents. The patent applications that we own or in‑license may fail to result in issued patents in the United States or inforeign countries in which we pursue protection with claims that cover our product candidates. There is no assurance that allof the potentially relevant prior art relating to our patents and patent applications has been found, which can invalidate apatent or prevent a patent from issuing from a pending patent application. Even if patents have issued, or do successfullyissue, from patent applications that we own or license, third parties may challenge the validity, enforceability or scopethereof, which may result in such patents being narrowed, invalidated or held unenforceable. For example, patents granted bythe European Patent Office, or EPO, may be challenged, also known as opposed, by any person within nine months from thepublication of their grant. In May 2015, two separate and unidentified parties filed submissions before the EPO opposing agranted European patent related to MRX34, EP2302055 (the ’055 Patent), in‑licensed to us from Asuragen. We havereviewed these submissions and have submitted our response. We are currently awaiting a response from the EPO. All of theclaims of the ’055 Patent remain valid and in force during the opposition proceedings. It is not possible to predict theoutcome of the opposition proceedings, for example whether the56 Table of Contentspatent will be maintained, limited in scope or whether the grant may be revoked. If the ’055 Patent is ultimately narrowed inscope or revoked during the opposition proceedings, the patent protection afforded by the ’055 Patent, and the extent of ourexclusivity with respect to commercialization of MRX‑34 in Europe could be materially impaired. Even if they areunchallenged, our patents may not adequately protect our product candidates, provide any competitive advantage or preventothers from designing around our claims. If the breadth or strength of protection provided by the patents and patentapplications we hold, in‑license or pursue with respect to our product candidates is threatened or insufficient, it coulddissuade companies from collaborating with us to develop or undermine our ability to commercialize our product candidatesand could have a material adverse effect on our business, financial condition, results of operations and prospects. Currently, our patent portfolio includes over 10 issued U.S. patents and over 42 pending U.S. and ex‑U.S. patentapplications that we own, co‑own, or have in‑licensed from third parties, primarily focused on various aspects of microRNAtherapeutics, including various microRNA mimics, and methods of use as microRNA related therapies. Within our patentportfolio, we are the sole owner of multiple U.S. and foreign patent applications related to microRNA therapies, includingchemically modified versions of miR‑34 not currently used in MRX34 (U.S. Patent No. 8,586,727) and other microRNAsmimics that are possible candidates for future product development as microRNA therapeutics. Further, our patent portfolioincludes U.S. 7,960,359 and U.S. 8,563,708, both of which are related to miR‑34 and are in‑licensed from Asuragen.Specifically, U.S. 7,960,359 is related to use of a miR‑34a mimic, for example MRX34, for reducing cell viability of humanlung cancer cells, human cancerous T cells, human prostate cancer cells or human skin cancer cells. This patent is expected toexpire in 2025. We also are the exclusive licensee with respect to MRX34 of US 9,006,206, which relates to use of miR-34 totreat a cancer associated with p53, and EP2126078, which relates to treatment of certain cancers that are also p53 negative.Both US 9,006,206 and EP 2126078 are co-owned by Rosetta Genomics and Yeda Research & Development. See “Business—Intellectual Property—Our Patent Portfolio” for a more detailed description of the patents we own or license covering ourproduct candidates. If the patent applications we hold or have in‑licensed with respect to our programs or product candidates fail toissue, if their breadth or strength of protection is threatened, if we abandon or allow owned or in‑licensed patents or patentapplications that we are responsible for prosecuting to lapse, or if our owned and in‑licensed patents and patent applicationsfail to provide meaningful exclusivity for our product candidates, it could dissuade companies from collaborating with us todevelop product candidates, and threaten our ability to commercialize future products. We have multiple pending patentapplications relating to our product candidates. We cannot offer any assurances about which, if any, patents will issue, thebreadth of the claims of any such patent, should it issue, or whether any issued patents will be found invalid and/orunenforceable, will be interpreted narrowly or will be threatened by third parties. Any successful opposition to these patentsor any other patents owned by or licensed to us could deprive us of rights necessary for the successful commercialization ofany product candidates that we may develop. Almost all of our patents and patent applications are entitled to effective filing dates prior to March 16, 2013. ForU.S. patent applications in which patent claims are entitled to a priority date before March 16, 2013, an interferenceproceeding can be provoked by a third party, for example a competitor, or instituted by the U.S. Patent and Trademark Office,or the USPTO, to determine who was the first to invent any of the subject matter covered by those patent claims. Anunfavorable outcome could require us to cease using the related technology or to attempt to license rights from theprevailing party. Our business could be harmed if the prevailing party does not offer us a license on commercially reasonableterms. Our participation in an interference proceeding may fail and, even if successful, may result in substantial costs anddistract our management. Further, if we encounter delays in our clinical trials or achieving regulatory approvals, the period of time duringwhich we could market any of our product candidates under patent protection, if approved, would be reduced. Since patentapplications in the United States and most other countries are confidential for a period of time after filing, and some remainso until issued, we cannot be certain that we were the first to file any patent application related to our product candidates.Furthermore, an interference proceeding can be provoked by a third party or instituted by the U.S. Patent and TrademarkOffice, or USPTO, to determine who was the first to invent any of the subject matter covered by the patent claims of ourapplications. In addition, patents have a limited lifespan. In the United States, the natural expiration of a patent is generally20 years after it is filed. Various extensions may be available; however, the life of a patent, and the protection it affords, islimited. Even if we obtain patents that cover the manufacture, use and/or sale of57 Table of Contentsour product candidates and such patents are not successfully challenged by any third parties, once the patent life has expiredfor a product, we may be open to competition, including from generic medications. We may not be successful in obtaining or maintaining necessary rights to product components and processes for ourdevelopment pipeline through acquisitions and in‑licenses. Presently we have rights to certain intellectual property through licenses from third parties and under patents that weown or co‑own, related to a subset of the known microRNA targets. Because our programs may involve a range of microRNAtargets and specific formulations of microRNA mimics directed to such targets, including targets and formulations that mayrequire the use of proprietary rights held by third parties, the growth of our business will likely depend in part on our abilityto acquire, in‑license or otherwise gain the right to use these proprietary rights. We may be unable to acquire or in‑licenseany necessary or desirable third‑party intellectual property rights on reasonable terms, or at all. The licensing and acquisitionof third‑party intellectual 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 consider attractive now or in thefuture. These established companies may have a competitive advantage over us due to their size, cash resources and greaterclinical development and commercialization capabilities. In addition, companies that perceive us to be a competitor may beunwilling to assign or license rights to us. We also may be unable to license or acquire third‑party intellectual property rightson terms that would allow us to make an appropriate return on our investment. If we are unable to successfully obtain rightsto required third‑party intellectual property rights, including rights related to our lead product candidate, our business,financial condition and prospects for growth could suffer. If we are unable to protect the confidentiality of our trade secrets, the value of our technology could be materiallyadversely affected and our business would be harmed. In addition to the protection afforded by patents, we rely on trade secret protection and confidentiality agreementsto protect proprietary know‑how that may not be patentable or that we elect not to patent, processes for which patents may bedifficult to obtain or enforce, and any other elements of our product candidates’ discovery and development processes thatinvolve proprietary know‑how, information or technology that is not covered by patents. However, trade secrets can bedifficult to protect. We seek to protect our proprietary data and processes, in part, by confidentiality agreements andinvention assignment agreements with our employees, consultants, scientific advisors, contractors and collaborators, and anyother third parties that have access to our proprietary know‑how, information or technology, for example, third partiesinvolved in our clinical trials. Although we expect all of our employees, consultants, advisors and any third parties who haveaccess to our proprietary know‑how, information or technology to enter into confidentiality agreements, we cannot provideany assurances that all such agreements have been duly executed, and we cannot be certain that our trade secrets and otherconfidential proprietary information will not be disclosed or that competitors will not otherwise gain access to our tradesecrets or independently develop substantially equivalent information and techniques. Misappropriation or unauthorizeddisclosure of our trade secrets could impair our competitive position and may have a material adverse effect on our business.Additionally, if the steps taken to maintain our trade secrets are deemed inadequate, we may have insufficient recourseagainst third parties for misappropriating the trade secret. In addition, others may independently discover our trade secretsand proprietary information. For example, the FDA, as part of its Transparency Initiative, is currently considering whether tomake additional information publicly available on a routine basis, including information that we may consider to be tradesecrets or other proprietary information, and it is not clear at the present time how the FDA’s disclosure policies may changein the future, if at all. We also seek to preserve the integrity and confidentiality of our data, trade secrets and know‑how by maintainingphysical security of our premises and physical and electronic security of our information technology systems. While we haveconfidence in these individuals, organizations and systems, agreements or security measures may be breached, and we maynot have adequate remedies for any breach. Moreover, if any of our trade secrets were to be lawfully obtained orindependently developed by a competitor, we would have no right to prevent such competitor from using that technology orinformation to compete with us, which could harm our competitive position. Further, the laws of some foreign countries do not protect proprietary rights to the same extent or in the same manneras the laws of the United States. As a result, we may encounter significant problems in protecting and defending ourintellectual property both in the United States and abroad. If we are unable to prevent material disclosure of the58 Table of Contentsintellectual property related to our technologies to third parties, we will not be able to establish or maintain a competitiveadvantage in our market, which could materially adversely affect our business, financial condition and results of operations. Issued patents covering our product candidates could be found invalid or unenforceable if challenged in court or theUSPTO. If we or one of our licensing partners initiated legal proceedings against a third party to enforce a patent coveringthe manufacture, use or sale, or other aspects of one of our product candidates, the defendant could counterclaim that thepatent covering our product candidate is invalid and/or unenforceable. In patent litigation in the United States, defendantcounterclaims alleging invalidity and/or unenforceability are commonplace, and there are numerous grounds upon which athird party can assert invalidity or unenforceability of a patent. Third parties may also raise similar claims beforeadministrative bodies in the United States or abroad, even outside the context of litigation. Such mechanisms include exparte re‑examination, inter partes review, post grant review and equivalent proceedings in foreign jurisdictions(e.g., opposition proceedings). Such proceedings could result in revocation or amendment to our patents in such a way thatthey no longer cover our product candidates. The outcome following legal assertions of invalidity and unenforceability isunpredictable. With respect to the validity question, for example, we cannot be certain that there is no invalidating prior art,of which we, our patent counsel and the patent examiner were unaware during prosecution. If a defendant were to prevail on alegal assertion of invalidity and/or unenforceability, we would lose at least part, and perhaps all, of the patent protection onour product candidates. Similarly, the outcome following administrative review of a patent that we own or license, such asvia a reexamination or opposition proceeding before the USPTO or a foreign body, is unpredictable. If a third party were toprevail, we could lose at least part, and perhaps all, of the patent protection on our product candidates. Such a loss of patentprotection could have a material adverse impact on our business. If we are sued for infringing the patent rights or misappropriating the trade secrets of third parties, such litigation could becostly and time consuming and could prevent or delay us from developing or commercializing our product candidates. Our commercial success depends, in part, on our ability to develop, manufacture, market and sell our productcandidates and use our proprietary technology without infringing the patent rights of third parties. Numerous third‑party U.S.and non‑U.S. issued patents and pending applications exist in the area of microRNA. We are aware of certain U.S. and foreignpatents and pending patent applications owned by our competitors or other third parties that cover certain miR‑34 mimicsand therapeutic uses thereof. We are currently monitoring these patents and patent applications. We have and we may in thefuture pursue available proceedings in the U.S. and foreign patent offices to challenge the validity of these patents and patentapplications. In addition, or alternatively, we may consider whether to seek to negotiate a license of rights to technologycovered by one or more of such patents and patent applications. If any patents or patent applications cover our productcandidates or technologies, we may not be free to manufacture or market our product candidates, including MRX34, asplanned, absent such a license, which may not be available to us on commercially reasonable terms, or at all. It is also possible that we have failed to identify relevant third‑party patents or applications. For example,applications filed before November 29, 2000 and certain applications filed after that date that will not be filed outside theUnited States remain confidential until patents issue. Moreover, it is difficult for industry participants, including us, toidentify all third‑party patent rights that may be relevant to our product candidates and technologies because patentsearching is imperfect due to differences in terminology among patents, incomplete databases and the difficulty in assessingthe meaning of patent claims. We may fail to identify relevant patents or patent applications or may identify pending patentapplications of potential interest but incorrectly predict the likelihood that such patent applications may issue with claims ofrelevance to our technology. In addition, we may be unaware of one or more issued patents that would be infringed by themanufacture, sale or use of a current or future product candidate, or we may incorrectly conclude that a third‑party patent isinvalid, unenforceable or not infringed by our activities. Additionally, pending patent applications that have been publishedcan, subject to certain limitations, be later amended in a manner that could cover our technologies, our products or the use ofour products. 59 Table of ContentsThere is a substantial amount of intellectual property litigation in the biotechnology and pharmaceutical industries,and we may become party to, or threatened with, litigation or other adversarial proceedings regarding patent rights withrespect to our technology or products candidates, including interferences, oppositions and inter partes review proceedingsbefore the USPTO and corresponding foreign patent offices. We also monitor patent prosecution activities and pendingapplications of competitors and potential competitors in our field in order to identify third party patent rights that could posea potential threat to our freedom to operate in the market with respect to our product candidates, once commercialized. Weare currently pursuing and may in the future pursue available administrative proceedings in the U.S. or foreign patent officesto challenge third party patent rights that could adversely impact our ability to commercialize one or more of our productcandidates. As the biotechnology and pharmaceutical industries expand and more patents are issued, the risk increases thatour current or future product candidates may be subject to claims of infringement of the patent rights of third parties, whomay assert infringement claims against us based on existing or future patent rights. Third parties may assert that we areemploying their proprietary technology without authorization. There may be third‑party patents or patent applications withclaims to materials, formulations, methods of manufacture or methods for treatment related to the use or manufacture of ourproduct candidates and third parties could allege that our technology infringes such claims. Further, because patentapplications can take many years to issue, third parties may have currently pending patent applications which may laterresult in issued patents that our product candidates may infringe, or which such third parties claim are infringed by the use ofour technologies. The outcome of patent litigation is subject to uncertainties that cannot be adequately quantified inadvance. The pharmaceutical and biotechnology industries have produced a significant number of patents, and it may notalways be clear to industry participants, including us, which patents cover various types of products or methods of use. Thecoverage of patents is 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 either do not infringethe patent claims of the relevant patent or that the patent claims are invalid, and we may not be able to do this. Proving that apatent is invalid is difficult. For example, in the United States, proving invalidity requires a showing of clear and convincingevidence to overcome the presumption of validity enjoyed by issued patents. Even if we are successful in these proceedings,we may incur substantial costs and the time and attention of our management and scientific personnel could be diverted inpursuing these proceedings, which could have a material adverse effect on us. In addition, we may not have sufficientresources to bring these actions to a successful conclusion. If we are found to infringe a third party’s patent rights, including any patent rights related to miR‑34, we could beforced, including by court order, to cease developing, manufacturing or commercializing the infringing product candidate orproduct. Alternatively, we may be required to obtain a license from such third party in order to use the infringing technologyand continue developing, manufacturing or marketing the infringing product candidate. However, we may not be able toobtain any required license on commercially reasonable terms or at all. Even if we were able to obtain a license, it could benon‑exclusive, thereby giving our competitors access to the same technologies licensed to us. In addition, we could be foundliable for monetary damages, including treble damages and attorneys’ fees if we are found to have willfully infringed apatent. A finding of infringement could prevent us from commercializing our product candidates or force us to cease some ofour business operations, which could materially harm our business. Claims that we have misappropriated the confidentialinformation or trade secrets of third parties could have a similar negative impact on our business. Parties making claims against us for infringement of their patent rights may obtain injunctive or other equitablerelief, which could effectively block our ability to further develop and commercialize one or more of our product candidates.Defense of these claims, regardless of their merit, would involve substantial litigation expense and would be a substantialdiversion of employee resources from our business. In the event of a successful claim of infringement against us, we could berequired to redesign our infringing products or obtain a license from such third party to continue developing andcommercializing our products and technology. However, we may not be able to obtain any required license on commerciallyreasonable terms, or at all. Even if we are able to obtain a license, it may be non‑exclusive, thereby giving our competitorsaccess to the same technologies licensed to us. It may be impossible to redesign our products and technology, or it mayrequire substantial time and monetary expenditure, which could force us to cease commercialization of one or more of ourproduct candidates, including MRX34, or some of our business operations, which could materially harm our business. Inaddition, in any such proceeding, we may be required to pay substantial damages, including treble damages and attorneys’fees in the event we are found liable for willful infringement. 60 Table of ContentsWe may be involved in lawsuits or administrative proceedings to protect or enforce our intellectual property rights, whichcould be expensive, time consuming and unsuccessful. Competitors may infringe or we may believe that they infringe patents that we own or license. To counterinfringement or unauthorized use, we may be required to file infringement claims, which can be expensive andtime‑consuming. In addition, in an infringement proceeding, a court may decide that a patent of ours is not valid or isunenforceable, or may refuse to stop the other party in such infringement proceeding from using the technology at issue onthe grounds that our patents do not cover the technology in question. An adverse result in any litigation or defenseproceedings could put one or more of our patents at risk of being invalidated, held unenforceable or interpreted narrowly,and could put any of our patent applications at risk of not yielding an issued patent. Litigation is uncertain, and we cannotpredict whether we would be successful in any such litigation. Interference proceedings provoked by third parties or brought by the USPTO or any foreign patent authority may benecessary to determine the priority of inventions with respect to our patents or patent applications. An unfavorable outcomecould require us to cease using the related technology or to attempt to license rights to it from the prevailing party. Ourbusiness could be harmed if the prevailing party does not offer us a license on commercially reasonable terms, if any licenseis offered at all. Litigation or interference proceedings may fail and, even if successful, may result in substantial costs anddistract our management and other employees. We may not be able to prevent misappropriation of our trade secrets or confidential information, particularly incountries where the laws may not protect those rights as fully as in the United States. Furthermore, because of the substantialamount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidentialinformation could be compromised by disclosure during this type of litigation. In addition, there could be publicannouncements of the results of hearings, motions or other interim proceedings or developments. If securities analysts orinvestors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock. Legal actions to enforce patent rights or other intellectual property rights that we own or license can be expensiveand may involve the diversion of significant management time. In addition, these legal actions could be unsuccessful andcould also result in the invalidation of our patents or a finding that they are unenforceable. Moreover, third parties may beable to successfully design around our patents using pre‑existing technology, by developing new technology or by usingsimilar technology that is outside the scope of our patents. We may or may not choose to pursue litigation against those thathave infringed on our patents, or used them without authorization, due to the associated expense and time commitment ofmonitoring these activities. If we fail to protect or to enforce our intellectual property rights successfully, our competitiveposition could suffer, which could harm our results of operations. We may not be able to protect our intellectual property rights throughout the world. Filing, prosecuting and defending patents on all of our product candidates throughout the world would beprohibitively expensive, and our patent rights in some countries outside the United States can be less extensive than those inthe United States. The requirements for patentability may differ in certain countries, particularly developing countries. Forexample, unlike other countries, China has a heightened requirement for patentability, and specifically requires a detaileddescription of medical uses of a claimed therapeutic. In addition, the laws of some foreign countries do not protectintellectual property rights to the same extent as federal and state laws in the United States. Consequently, we may not beable to prevent third parties from practicing our inventions in all countries outside the United States, or from selling orimporting products made using our inventions in and into the United States or other jurisdictions. As part of ordinary course prosecution and maintenance activities, we determine whether to seek patent protectionoutside the United States and in which countries. This also applies to patents we have acquired or in‑licensed from thirdparties. In some cases, this means that we, or our predecessors in interest or licensors of patents within our portfolio, havesought patent protection in a limited number of countries for patents covering our product candidates, including for patentsproviding coverage for MRX34. Competitors may use our technologies in jurisdictions where we have not pursued andobtained patent protection to develop their own products and, further, may export otherwise infringing products to territorieswhere we have patent protection but where enforcement is not as strong as in the United61 Table of ContentsStates. These products may compete with our products in jurisdictions where we do not have any issued patents and, even injurisdictions where we have or are able to obtain issued patents, our patent claims or other intellectual property rights maynot be effective or sufficient to prevent them from so competing. Many companies have encountered significant problems inprotecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries,particularly certain developing countries, do not favor the enforcement of patents and other intellectual property protection,particularly those relating to biopharmaceuticals, which could make it difficult for us to stop the infringement of our patentsor marketing of competing products in violation of our proprietary rights generally. Proceedings to enforce our patent rightsin foreign jurisdictions could result in substantial cost and divert our efforts and attention from other aspects of our business,could put our patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuingand could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate and thedamages or other remedies awarded, if any, may not be commercially meaningful. In addition, certain countries in Europeand certain developing countries, including India and China, have compulsory licensing laws under which a patent ownermay be compelled to grant licenses to third parties. In those countries, we may have limited remedies if our patents areinfringed or if we are compelled to grant a license to our patents to a third party, which could materially diminish the value ofthose patents. This could limit our potential revenue opportunities. Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain asignificant commercial advantage from the intellectual property that we own or license. Moreover, patent protection mustultimately be sought on a country‑by‑country basis, which is an expensive and time‑consuming process with uncertainoutcomes. Accordingly, we may choose not to seek patent protection in certain countries, and we will not have the benefit ofpatent protection in such countries. The patent protection and patent prosecution for some of our product candidates may be dependent on our third partylicensors. While we normally seek to obtain the right to control the filing, prosecution, maintenance, defense and enforcementof the patents and patent applications that we in‑license relating to our product candidates, there may be times when suchactivities for patents that relate to our product candidates are controlled by our licensors. For example, we do not have thefirst right to prosecute, maintain, defend, or enforce the patent rights licensed to us relating to the SMARTICLES technologyunder our agreement with Marina Biotech, Inc., or Marina. Although we may retain the right to consult on such filing,prosecution, maintenance, defense, and enforcement activities, our overall ability to influence such activities is limited.Moreover, the patent rights we have in‑licensed from Marina may be put at risk in litigation or administrative proceedingsunrelated to our product candidates. Further, while we seek to have rights to take action to defend our in‑licensed patents andpatent applications from third‑party challenges in the event that our licensors determine not to, we may not be aware of anysuch potential threats to the intellectual property rights we in‑license, or we may be unsuccessful in protecting suchintellectual property rights if we respond to any such challenges by third parties. If these licensors or any of our future licensors fail to appropriately file, prosecute, maintain, defend or enforce ourin‑licensed patents and patent applications covering any of our product candidates, our ability to develop and commercializethose product candidates may be adversely affected and we may not be able to prevent competitors from making, using andselling competing products. If we breach any of the agreements under which we license patent rights to use, develop and commercialize our productcandidates or our technologies from third parties or, in certain cases, we fail to meet certain development deadlines, wecould lose license rights that are important to our business. We are a party to a number of license agreements under which we are granted rights to intellectual property that areimportant to our business and we expect that we may need to enter into additional license agreements in the future. Theseinclude our exclusive cross‑license agreement with Asuragen, our exclusive licenses from Yale University, or Yale, Marina, the University of Zurich, and Rosetta Genomics. 62 Table of ContentsOur existing license agreements, except our cross‑license agreement with Asuragen, generally impose, and weexpect that future license agreements will impose on us, various development, regulatory and/or commercial diligenceobligations, and financial obligations, such as payment of milestones and/or royalties. If we fail to comply with ourobligations under these agreements, or we are subject to a bankruptcy, the licensor may have the right to terminate thelicense, in which event we may not be able to market products covered by the license. Our business could suffer, for example,if any current or future licenses terminate, if the licensors fail to abide by the terms of the license, if the licensed patents orother rights are found to be invalid or unenforceable, or if we are unable to enter into necessary licenses on acceptable terms.See “Business—Key Partnerships and Licenses” for a description of our license agreements, which sets forth the materialterms and obligations, including a description of the termination provisions, under our agreements with Asuragen, Yale,Marina, the University of Zurich and Rosetta Genomics. We license the technology related to SMARTICLES from Marina. Our license with Marina imposes variousdevelopment, regulatory, commercial diligence, financial and other obligations. If we fail to comply with our obligationsunder the agreement with Marina, or otherwise materially breach the agreement with Marina, and fail to remedy such failureor cure such breach, Marina may have the right to terminate the license. The loss of the license from Marina would affect aportion of the patent portfolio for MRX34, which would adversely affect our ability to proceed with any development orpotential commercialization of MRX34, and could subject us to claims of patent infringement by Marina if MRX34 iscovered by the affected patents. As we have done previously, we may need to obtain licenses from third parties to advance our research or allowcommercialization of our product candidates, and we cannot provide any assurances that third‑party patents do not exist thatmight be enforced against our current product candidates or future products in the absence of such a license. We may fail toobtain any of these licenses on commercially reasonable terms, if at all. Even if we are able to obtain a license, it may benon‑exclusive, thereby giving our competitors access to the same technologies licensed to us. In that event, we may berequired to expend significant time and resources to develop or license replacement technology. If we are unable to do so, wemay be unable to develop or commercialize the affected product candidates, which could materially harm our business andthe third parties owning such intellectual property rights could seek either an injunction prohibiting our sales, or, withrespect to our sales, an obligation on our part to pay royalties and/or other forms of compensation. Licensing of intellectual property is of critical importance to our business and involves complex legal, business andscientific issues. Disputes may arise between us and our licensors regarding intellectual property subject to a licenseagreement, including: ·the scope of rights granted under the license agreement and other interpretation‑related issues; ·whether and the extent to which our technology and processes infringe on intellectual property of the licensorthat is not subject to the licensing agreement; ·our right to sublicense patent and other rights to third parties under collaborative development relationships; ·our diligence obligations with respect to the use of the licensed technology in relation to our development andcommercialization of our product candidates, and what activities satisfy those diligence obligations; and ·the ownership of inventions and know‑how resulting from the joint creation or use of intellectual property byour licensors and us and our partners. If disputes over intellectual property that we have licensed arise, we would expect to exercise all rights and remediesavailable to us, including seeking to cure any breach by us, and otherwise seek to preserve our rights under the patentslicensed to us. However, we may not be able to do so in a timely manner, at an acceptable cost or at all. Generally, the loss ofany one of our current licenses, or any other license we may acquire in the future, could prevent or63 Table of Contentsimpair our ability to successfully develop and commercialize the affected product candidates and thus materially harm ourbusiness, prospects, financial condition and results of operations. Intellectual property rights do not necessarily address all potential threats to our competitive advantage. The degree of future protection afforded by our intellectual property rights is uncertain because intellectual propertyrights have limitations, and may not adequately protect our business, provide a barrier to entry against our competitors orpotential competitors, or permit us to maintain our competitive advantage. Moreover, if a third party has intellectual propertyrights that cover the practice of our technology, we may not be able to fully exercise or extract value from our intellectualproperty rights. The following examples are illustrative: ·others may be able to make compounds that are similar to our product candidates but that are not covered by theclaims of the patents that we own or license; ·we or our licensors or collaborators might not have been the first to make the inventions covered by an issuedpatent or pending patent application that we own or license; ·we or our licensors or collaborators might not have been the first to file patent applications covering aninvention; ·others may independently develop similar or alternative technologies or duplicate any of our technologieswithout infringing or misappropriating our intellectual property rights; ·pending patent applications that we own or license may not lead to issued patents; ·issued patents that we own or license may not provide us with any competitive advantages, or may be heldinvalid or unenforceable, as a result of legal challenges by our competitors; ·our competitors might conduct research and development activities in countries where we do not have patentrights and then use the information learned from such activities to develop competitive products for sale in ourmajor commercial markets; ·we may not develop or in‑license additional proprietary technologies that are patentable; and ·the patents of others may have an adverse effect on our business. Should any of these events occur, they could significantly harm our business, results of operations and prospects. We may be subject to claims challenging the inventorship or ownership of our patents and other intellectual property. We were previously involved in discussions with Yale regarding the inventorship and ownership of certain patentsand patent applications licensed to us by Asuragen. An independent third party expert was engaged to determine theinventorship and the ownership of patents and patent applications potentially subject to Yale and Asuragen co‑ownership.This determination confirmed Asuragen’s sole ownership of the patents and patent applications where co‑ownership hadbeen under consideration and resulted in a determination that Yale should be removed as a co‑owner of one of the pendingpatent applications, an action we are currently undertaking. Although we seek to protect our ownership of our patents and other intellectual property by ensuring that ouragreements with our employees and certain collaborators and other third parties with whom we do business includeprovisions requiring, for instance, such parties to assign rights in inventions to us, we may be subject to claims that former orcurrent employees, collaborators or other third parties have an ownership interest in our patents, in‑licensed patents or otherintellectual property. In some situations, our confidentiality agreements may conflict with, or be subject to, the rights of thirdparties with whom our employees, consultants or advisors have previous employment or consulting64 Table of Contentsrelationships, and further, many of our consultants are currently retained by other biotechnology or pharmaceuticalcompanies, including our competitors or potential competitors, and may be subject to conflicting obligations to these thirdparties. To the extent that our employees, consultants or contractors use any intellectual property owned by third parties intheir work for us, disputes may arise as to the ownership of rights in any related or resulting know‑how and inventions,arising, for example, from such conflicting obligations of consultants, employees or others who are involved in developingour 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 lose valuableintellectual property rights, such as exclusive ownership of, or right to use, valuable intellectual property. Such an outcomecould have a material adverse effect on our business. Even if we are successful in defending against such claims, litigationcould result in substantial costs and be a distraction to management and other employees. Obtaining and maintaining patent protection depends on compliance with various procedural, document submission, feepayment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced oreliminated for non‑compliance with these requirements. The USPTO and various foreign governmental patent agencies require compliance with a number of procedural,documentary, fee payment and other similar provisions during the patent prosecution process. Periodic maintenance fees,renewal fees, annuity fees and various other governmental fees on patents and/or patent applications will be due to be paid tothe USPTO and various patent agencies outside of the United States in several stages over the lifetime of the patents and/orapplications. We have systems in place to remind us to pay these fees, and we employ reputable law firms and otherprofessionals and rely on such third parties to effect payment of these fees with respect to the USPTO and non‑U.S. patentagencies with respect to the patents and patent applications we own, and we rely upon our licensors to effect payment ofthese fees with respect to the patents and patent applications that we in‑license. Even if we do not control prosecution andmaintenance of our in‑licensed patents, we may be responsible for reimbursing our licensors for some or all of the costsassociated with such activities. If we fail to make timely payment to our licensors for such fees, our licensors may have theright to terminate the affected license, in which event we would not be able to market products covered by the license. Wealso employ reputable law firms and other professionals to help us comply with the various documentary and otherprocedural requirements with respect to the patents and patent applications that we own. In some cases, an inadvertent lapsecan be cured by payment of a late fee or by other means in accordance with the applicable rules. However, there are situationsin which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial orcomplete loss of patent rights in the relevant jurisdiction. In such an event, our competitors might be able to enter the marketand this circumstance would have a material adverse effect on our business. Changes in U.S. patent law could diminish the value of patents in general, thereby impairing our ability to protect ourproducts, and recent patent reform legislation could increase the uncertainties and costs surrounding the prosecution ofour patent applications and the enforcement or defense of our issued patents. As is the case with other biotechnology companies, our success is heavily dependent on patents. Obtaining andenforcing patents in the biotechnology industry involve both technological and legal complexity, and is therefore costly,time‑consuming and inherently uncertain. In addition, the United States has recently enacted and is currently implementingwide‑ranging patent reform legislation. Recent U.S. Supreme Court rulings have narrowed the scope of patent protectionavailable in certain circumstances and weakened the rights of patent owners in certain situations. In addition to increasinguncertainty with regard to our ability to obtain patents in the future, this combination of events has created uncertainty withrespect to the value of patents, once obtained. Depending on decisions by the U.S. Congress, the federal courts, and theUSPTO, the laws and regulations governing patents could change in unpredictable ways that would weaken our ability toobtain new patents or to enforce our existing patents and patents that we might obtain in the future. Some of our patentclaims may be affected by the recent U.S. Supreme Court decision in Association for Molecular Pathology v. MyriadGenetics. In Myriad, the Supreme Court held that unmodified isolated fragments of genomic sequences, such as the DNAconstituting the BRCA1 and BRCA2 genes, are not eligible for patent protection because they constitute a product of nature.The exact boundaries of the Supreme Court’s decision remain unclear as the Supreme Court did not address other types ofnucleic acids, such as isolated microRNAs. Nevertheless, our patent portfolio contains claims of various types and scope,including chemically modified mimics, such as in MRX34, as well as methods of medical treatment. In our view, the presenceof varying claims in our patent portfolio significantly65 Table of Contentsreduces, but does not eliminate, our exposure to potential validity challenges under Myriad or future judicial decisions.However, it is not yet clear what, if any, impact this recent Supreme Court decision or future decisions will have on theoperation of our business. For our U.S. patent applications containing a claim not entitled to priority before March 16, 2013, there is a greaterlevel of uncertainty in the patent law. On September 16, 2011, the Leahy‑Smith America Invents Act, or the Leahy‑Smith Act,was signed into law. The Leahy‑Smith Act includes a number of significant changes to U.S. patent law. These includeprovisions that affect the way patent applications will be prosecuted and may also affect patent litigation. The USPTO haspromulgated regulations and developed procedures to govern administration of the Leahy‑Smith Act, and many of thesubstantive changes to patent law associated with the Leahy‑Smith Act, and in particular, the first to file provisions, did notcome into effect until March 16, 2013. Accordingly, it is not yet clear what, if any, impact the Leahy‑Smith Act will have onthe operation of our business. However, the Leahy‑Smith Act and its implementation could increase the uncertainties andcosts surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all ofwhich could have a material adverse effect on our business and financial condition. An important change introduced by the Leahy‑Smith Act is that, as of March 16, 2013, the United Statestransitioned to a “first‑to‑file” system for deciding which party should be granted a patent when two or more patentapplications are filed by different parties claiming the same invention. A third party that files a patent application in theUSPTO after that date but before us could therefore be awarded a patent covering an invention of ours even if we had madethe invention before it was made by the third party. This will require us to be cognizant going forward of the time frominvention to filing of a patent application. Furthermore, our ability to obtain and maintain valid and enforceable patentsdepends on whether the differences between our technology and the prior art allow our technology to be patentable over theprior art. Since patent applications in the United States and most other countries are confidential for a period of time afterfiling, we cannot be certain that we were the first to either (i) file any patent application related to our product candidates or(ii) invent any of the inventions claimed in our patents or patent applications. Among some of the other changes introduced by the Leahy‑Smith Act are changes that limit where a patentee mayfile a patent infringement suit and providing opportunities for third parties to challenge any issued patent in the USPTO. Thisapplies to all of our U.S. patents, even those issued before March 16, 2013. Because of a lower evidentiary standard inUSPTO proceedings compared to the evidentiary standard in United States federal court necessary to invalidate a patentclaim, a third party could potentially provide evidence in a USPTO proceeding sufficient for the USPTO to hold a claiminvalid even though the same evidence would be insufficient to invalidate the claim if first presented in a district courtaction. Accordingly, a third party may attempt to use the USPTO procedures to invalidate our patent claims that would nothave been invalidated if first challenged by the third party as a defendant in a district court action. We may be subject to claims that our employees or consultants or independent contractors have wrongfully used ordisclosed confidential information or trade secrets of third parties or that our employees or consultants have wrongfullyused or disclosed alleged trade secrets of former or other employers. Many of our employees, independent contractors and consultants, including our senior management, have beenpreviously employed or retained by other biotechnology or pharmaceutical companies, including our competitors orpotential competitors. Although we try to ensure that our employees, consultants and independent contractors do not use theproprietary information or know‑how of third parties in their work for us, and do not perform work for us that is in conflictwith their obligations to another employer or any other entity, we may be subject to claims that we or our employees,consultants or independent contractors have inadvertently or otherwise improperly used or disclosed confidentialinformation, including trade secrets or other proprietary information, of a former employer or other third parties. We may alsobe subject to claims that an employee, advisor, consultant, or independent contractor performed work for us that conflictswith that person’s obligations to a third party, such as an employer, and thus, that the third party has an ownership interest inthe intellectual property arising out of work performed for us. We are not aware of any threatened or pending claims related tothese matters, but in the future litigation may be necessary to defend against such claims. If we fail in defending any suchclaims, in addition to paying monetary damages, we may lose valuable personnel or intellectual property rights, such asexclusive ownership of, or right to use, valuable intellectual property. Such an66 Table of Contentsoutcome could have a material adverse effect on our business. Even if we are successful in defending against such claims,litigation could result in substantial costs and be a distraction to management. Intellectual property disputes could cause us to spend substantial resources and distract our personnel from their normalresponsibilities. Even if resolved in our favor, litigation or other legal proceedings relating to intellectual property claims may causeus to incur significant expenses, and could distract our technical and/or management personnel from their normalresponsibilities. In addition, there could be public announcements of the results of hearings, motions or other interimproceedings or developments and if securities analysts or investors perceive these results to be negative, it could have asubstantial adverse effect on the market price of our common stock. Such litigation or proceedings could substantiallyincrease our operating losses and reduce the resources available for development activities or any future sales, marketing ordistribution activities. We may not have sufficient financial or other resources to adequately conduct such litigation orproceedings. Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively thanwe can because of their greater financial resources. Uncertainties resulting from the initiation and continuation of patentlitigation or other proceedings could have a material adverse effect on our ability to compete in the marketplace. If we do not obtain patent term extension in the United States under the Hatch‑Waxman Act and in foreign countries undersimilar legislation, thereby potentially extending the term of our marketing exclusivity for our product candidates, ourbusiness may be materially harmed. Depending upon the timing, duration and specifics of FDA marketing approval of our product candidates, if any,one of the U.S. patents covering each of such approved product(s) or the use thereof may be eligible for up to five years ofpatent term restoration under the Hatch‑Waxman Act. The Hatch‑Waxman Act allows a maximum of one patent to beextended per FDA approved product. Patent term extension also may be available in certain foreign countries uponregulatory approval of our product candidates. Nevertheless, we may not be granted patent term extension either in theUnited States or in any foreign country because of, for example, failing to apply within applicable deadlines, failing to applyprior to expiration of relevant patents or otherwise failing to satisfy applicable requirements. Moreover, the term ofextension, as well as the scope of patent protection during any such extension, afforded by the governmental authority couldbe less than we request. In addition, if a patent we wish to extend is owned by another party and licensed to us, we may needto obtain approval and cooperation from our licensor to request the extension. If we are unable to obtain patent term extension or restoration, or the term of any such extension is less than werequest, the period during which we will have the right to exclusively market our product will be shortened and ourcompetitors may obtain approval of competing products following our patent expiration, and our revenue could be reduced,possibly materially. Risks Related to Government Regulation Even if we receive regulatory approval for a product candidate, we will be subject to ongoing regulatory obligations andcontinued regulatory review, which may result in significant additional expense and subject us to penalties if we fail tocomply with applicable regulatory requirements. Once regulatory approval has been granted, the approved product and its manufacturer are subject to continualreview by the FDA and/or non‑U.S. regulatory authorities. Any regulatory approval that we receive for our productcandidates may be subject to limitations on the indicated uses for which the product may be marketed or containrequirements for potentially costly post‑ marketing follow‑up studies to monitor the safety and efficacy of the product. Inaddition, if the FDA and/or non‑U.S. regulatory authorities approve any of our product candidates, we will be subject toextensive and ongoing regulatory requirements by the FDA and other regulatory authorities with regard to the labeling,packaging, adverse event reporting, storage, sampling, advertising, promotion and recordkeeping for our products.Manufacturers of our products are required to comply with cGMP regulations, which include requirements related to qualitycontrol and quality assurance as well as the corresponding maintenance of records and documentation. Further, regulatoryauthorities must approve these manufacturing facilities before they can be used to manufacture our products, and thesefacilities are subject to continual review and periodic inspections by the FDA and other regulatory authorities67 Table of Contentsfor compliance with cGMP regulations. Accordingly, we and others with whom we work must continue to expend time,money, and effort in all areas of regulatory compliance, including manufacturing, production, and quality control. We willalso be required to report certain adverse reactions and production problems, if any, to the FDA, and to comply withrequirements concerning 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 with the information inthe product’s approved label. As such, we may not promote our products for indications or uses for which they do not haveFDA approval. If we, any current or future collaborator or a regulatory authority discovers previously unknown problems with aproduct, such as adverse events of unanticipated severity or frequency, or problems with the facility where the product ismanufactured, a regulatory authority may impose restrictions on that product, such collaborator, the manufacturer or us,including requiring withdrawal of the product from the market or suspension of manufacturing. If we, our product candidatesor the manufacturing facilities for our product candidates fail to comply with regulatory requirements of the FDA and/orother non‑U.S. regulatory authorities, we could be subject to administrative or judicially imposed sanctions, including: ·warning letters; ·civil or criminal penalties; ·injunctions; ·suspension of or withdrawal of regulatory approval; ·total or partial suspension of any ongoing clinical trials or of production; ·voluntary or mandatory product recalls and publicity requirements; ·refusal to approve pending applications for marketing approval of new products or supplements to approvedapplications filed by us; ·restrictions on operations, including costly new manufacturing requirements; or ·seizure or detention of our products or import bans. The regulatory requirements and policies may change and additional government regulations may be enacted forwhich we may also be required to comply. We cannot predict the likelihood, nature or extent of government regulation thatmay arise from future legislation or administrative action, either in the United States or in other countries. Any newregulations or revisions or reinterpretations of existing regulations may impose additional costs or lengthen review times ofour product candidates. In addition, if we or any current or future collaborator are not able to maintain regulatorycompliance, we or such collaborator, as applicable, will not be permitted to market our future products and our business willsuffer. The availability of adequate third‑party coverage and reimbursement for newly approved products is uncertain, and failureto obtain adequate coverage and reimbursement from third‑party payors could impede our ability to market any futureproducts we may develop and could limit our ability to generate revenue. There is significant uncertainty related to the third‑party payor coverage and reimbursement of newly approvedmedical products. The commercial success of our future products in both domestic and international markets depends onwhether such third‑party coverage and reimbursement are available for our future products. Governmental payors, includingMedicare and Medicaid, health maintenance organizations and other third‑party payors are increasingly attempting tomanage their healthcare expenditures and challenging the prices charged for medical products and services by limiting bothcoverage and the level of reimbursement of new drugs and biologics and, as a result, they may not cover or provide adequatereimbursement for our future products. These payors may not view our future products as68 Table of Contentscost‑effective, and coverage and reimbursement may not be available to our customers, may be limited to certain indicationsor may not be sufficient to allow our future products to be marketed on a competitive basis. Third‑party payors are exertingincreasing influence on decisions regarding the use of, and coverage and reimbursement levels for, particular treatments.Cost‑control initiatives could cause us to decrease the price we might establish for our products candidates, which couldresult in lower than anticipated product revenues. If we decrease the prices for our product candidates because of competitivepressures or if governmental and other third‑party payors do not provide adequate coverage or reimbursement, our prospectsfor revenue and profitability will suffer. If we fail to comply or are found to have failed to comply with FDA and other regulations related to the promotion of ourproducts for unapproved uses, we could be subject to criminal penalties, substantial fines or other sanctions and damageawards. The regulations relating to the promotion of products for unapproved uses are complex and subject to substantialinterpretation by the FDA and other government agencies. If we receive marketing approval for MRX34 or other productcandidates, we will be restricted from promoting the products for uses outside of the approved labeling. However, physiciansmay nevertheless prescribe products to their patients in a manner that is inconsistent with the approved label. We intend toimplement compliance and training programs designed to ensure that our sales and marketing practices comply withapplicable regulations. Notwithstanding these programs, the FDA or other government agencies may allege or find that ourpractices constitute prohibited promotion of our products for unapproved uses. We also cannot be sure that our employeeswill comply with company policies and applicable regulations regarding the promotion of products for unapproved uses. Over the past several years, a significant number of pharmaceutical and biotechnology companies have been thetarget of inquiries and investigations by various federal and state regulatory, investigative, prosecutorial and administrativeentities in connection with the promotion of products for unapproved uses and other sales practices, including theDepartment of Justice and various U.S. Attorneys’ Offices, the Office of Inspector General of the Department of Health andHuman Services, the FDA, the Federal Trade Commission and various state Attorneys General offices. These investigationshave included claims asserting alleged violations of various federal and state laws and regulations, including antitrust laws,the Food, Drug and Cosmetic Act, the False Claims Act, the Prescription Drug Marketing Act, anti‑kickback laws, and otheralleged violations in connection with the promotion of products for unapproved uses, pricing and reimbursement fromgovernment programs such as the Medicare and Medicaid programs. Many of these investigations originate as “qui tam”actions, commonly referred to as “whistleblower suits,” under the False Claims Act, often brought by current or formeremployees. Under the False Claims Act, any individual can bring a claim on behalf of the government alleging that a personor entity has presented a false claim, or caused a false claim to be submitted, to the government for payment. In a qui tam suit,the government must decide whether to intervene and prosecute the case. If it declines, the individual may pursue the casealone. The person bringing a qui tam suit is entitled to a share of any recovery or settlement, up to a certain cap; the relator’sshare depends on the extent of the relator’s involvement in the case and whether the government intervenes. If the FDA or any other governmental agency initiates an enforcement action against us or if we are the subject of aqui tam suit and it is determined that we violated prohibitions relating to the promotion of products for unapproved uses, wecould be subject to substantial civil or criminal fines or damage awards and other sanctions such as consent decrees andcorporate integrity agreements pursuant to which our activities would be subject to ongoing scrutiny and monitoring toensure compliance with applicable laws and regulations. Any such fines, awards or other sanctions would have an adverseeffect on our revenue, business, financial prospects and reputation. If approved, MRX34 or any future products may cause or contribute to adverse medical events that we are required toreport to regulatory agencies, and if we fail to do so we could be subject to sanctions that would materially harm ourbusiness. If we are successful in commercializing MRX34 or any other products, FDA and foreign regulatory agency regulationsrequire that we report certain information about adverse medical events if those products may have caused or contributed tothose adverse events. The timing of our obligation to report would be triggered by the date we become aware of the adverseevent as well as the nature of the event. We may fail to report adverse events we become aware of within the69 Table of Contentsprescribed timeframe. We may also fail to appreciate that we have become aware of a reportable adverse event, especially if itis not reported to us as an 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 or a foreign regulatory agency could take action,including criminal prosecution, the imposition of civil monetary penalties, seizure of our products or delay in approval offuture products. Through the first 32 months of our Phase 1 clinical trial, most of the 122 patients treated with MRX34experienced at least one adverse event, with fever, chills, back pain, abdominal pain, nausea, diarrhea, vomiting,dehydration, anorexia, dyspnea, fatigue, headache, cough, insomnia, dysgeusia, tachycardia, anemia, neutropenia,lymphopenia, leukopenia, thrombocytopenia, elevation of liver enzymes, hyperglycemia, and hyponatremia being the mostcommonly reported adverse events. Two treatment-related deaths occurred during the study. Among the 47 patients in theBIW dosing cohorts, the serious adverse events determined to be related to MRX34 treatment occurring in more than onepatient were fever, fatigue, dehydration and elevation of liver enzymes, each of which occurred in two patients. For the 75patients in the QD × 5 dosing cohort, capillary leak syndrome, delirium or altered mental status, and bleeding in silent orasymptomatic HCC brain metastasis, each of which occurred in two patients, and elevation of liver enzymes, fever, andthrombocytopenia, which occurred in four patients. These adverse events associated with MRX34 are generally manageableor preventable with standard interventions or tests used by oncologists, such as administering other medications that preventor reduce side effects, temporary slowing of infusions, delaying or stopping dosing, or using magnetic resonance imaging, orMRI, to detect silent brain metastases. Of the 42 patients with primary liver cancer treated with escalating doses of MRX34,one patient in 70 mg/ m dose cohort in BIW schedule achieved confirmed partial response. Of the two acral melanomapatients enrolled in the study, one patient enrolled in the 110 mg/ m dose cohort on the QD × 5 schedule achieved aconfirmed partial response. Of the two metastatic renal cell carcinoma patients enrolled in the study, one patient enrolled inthe 110 mg/ m dose cohort on the QD × 5 schedule achieved a confirmed partial response. See “Business—MRX34: OurLead Product Candidate” for a more detailed description of the adverse events experienced during the course of the MRX34clinical development program. Failure to obtain regulatory approvals in foreign jurisdictions will prevent us from marketing our product candidatesinternationally. We may seek a distribution and marketing collaborator for MRX34 or other product candidates. In order to marketour product candidates in the European Economic Area, or EEA (which is comprised of the 28 Member States of the EU plusNorway, Iceland and Liechtenstein), and many other foreign jurisdictions, we or any such collaborator must obtain separateregulatory approvals. More concretely, in the EEA, medicinal products can only be commercialized after obtaining aMarketing Authorization, or MA. There are two types of marketing authorizations: ·The Community MA, which is issued by the European Commission through the Centralized Procedure, basedon the opinion of the Committee for Medicinal Products for Human Use of the European Medicines Agency, orEMA, and which is valid throughout the entire territory of the EEA. The Centralized Procedure is mandatory forcertain types of products, such as biotechnology medicinal products, orphan medicinal products, and medicinalproducts indicated for the treatment of AIDS, cancer, neurodegenerative disorders, diabetes, auto‑immune andviral diseases. The Centralized Procedure is optional for products containing a new active substance not yetauthorized in the EEA, or for products that constitute a significant therapeutic, scientific or technicalinnovation or which are in the interest of public health in the EU. ·National MAs, which are issued by the competent authorities of the Member States of the EEA and only covertheir respective territory, are available for products not falling within the mandatory scope of the CentralizedProcedure. Where a product has already been authorized for marketing in a Member State of the EEA, thisNational MA can be recognized in another Member State through the Mutual Recognition Procedure. If theproduct has not received a National MA in any Member State at the time of application, it can be approvedsimultaneously in various Member States through the Decentralized Procedure. Under these two procedures, before granting the MA, the EMA or the competent authorities of the Member States ofthe EEA make an assessment of the risk‑benefit balance of the product on the basis of scientific criteria concerning itsquality, safety and efficacy. 70 222Table of ContentsWe have had limited interactions with foreign regulatory authorities, and the approval procedures vary amongcountries and can involve additional clinical testing, and the time required to obtain approval may differ from that requiredto obtain FDA approval. Clinical trials conducted in one country may not be accepted by regulatory authorities in othercountries. Approval by the FDA does not ensure approval by regulatory authorities in other countries, and approval by one ormore foreign regulatory authorities does not ensure approval by regulatory authorities in other foreign countries or by theFDA. However, a failure or delay in obtaining regulatory approval in one country may have a negative effect on theregulatory process in others. The foreign regulatory approval process may include all of the risks associated with obtainingFDA approval. We or may not obtain foreign regulatory approvals on a timely basis, if at all. We may not be able to file forregulatory approvals and even if we file, we may not receive necessary approvals to commercialize our product candidates inany market. Healthcare reform measures could hinder or prevent our product candidates’ commercial success. In the United States, there have been, and we expect there will continue to be, a number of legislative and regulatorychanges to the healthcare system that could affect our future revenues and profitability and the future revenues andprofitability of our potential customers. Federal and state lawmakers regularly propose and, at times, enact legislation thatresults in significant changes to the healthcare system, some of which are intended to contain or reduce the costs of medicalproducts and services. For example, in March 2010, the President signed one of the most significant healthcare reformmeasures in decades, the Patient Protection and Affordable Care Act, as amended by the Health Care and EducationReconciliation Act, or collectively, the Affordable Care Act. It contains a number of provisions, including those governingenrollment in federal healthcare programs, reimbursement changes and fraud and abuse measures, all of which will impactexisting government healthcare programs and will result in the development of new programs. The Affordable Care Act,among other things: ·imposes a non‑deductible annual fee on pharmaceutical manufacturers or importers who sell “brandedprescription drugs”; ·increases the minimum level of Medicaid rebates payable by manufacturers of brand‑name drugs from 15.1% to23.1%; ·addresses a new methodology by which rebates owed by manufacturers under the Medicaid Drug RebateProgram are calculated for drugs that are inhaled, infused, instilled, implanted or injected; ·requires collection of rebates for drugs paid by Medicaid managed care organizations; ·requires manufacturers to participate in a coverage gap discount program, under which they must agree to offer50% point‑of‑sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during theircoverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under MedicarePart D; and ·mandates a further shift in the burden of Medicaid payments to the states. Other legislative changes have been proposed and adopted since the Affordable Care Act was enacted. On August 2,2011, the President signed into law the Budget Control Act of 2011, which, among other things, created the Joint SelectCommittee on Deficit Reduction to recommend proposals in spending reductions to Congress. The Joint Select Committeedid not achieve its targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, triggering thelegislation’s automatic reductions to several government programs. These reductions include aggregate reductions toMedicare payments to providers of 2% per fiscal year, which went into effect on April 1, 2013 and, due to subsequentlegislative amendments, will remain in effect through 2024 unless additional Congressional action is taken. On January 2,2013, President Obama signed into law the American Taxpayer Relief Act of 2012, which, among other things, furtherreduced Medicare payments to several providers, including hospitals, imaging centers and cancer treatment centers, andincreased the statute of limitations period for the government to recover overpayments to providers from three to five years. 71 Table of ContentsThere likely will continue to be legislative and regulatory proposals at the federal and state levels directed atcontaining or lowering the cost of health care. We cannot predict the initiatives that may be adopted in the future or their fullimpact. The continuing efforts of the government, insurance companies, managed care organizations and other payors ofhealthcare services to contain or reduce costs of health care may adversely affect: ·our ability to set a price we believe is fair for our products; ·our ability to generate revenues and achieve or maintain profitability; and ·the availability of capital. In light of widely publicized events concerning the safety risk of certain drug products, regulatory authorities,members of Congress, the Governmental Accounting Office, medical professionals and the general public have raisedconcerns about potential drug safety issues. These events have resulted in the withdrawal of drug products, revisions to druglabeling that further limit use of the drug products and establishment of risk management programs that may, for instance,restrict distribution of drug products. The increased attention to drug safety issues may result in a more cautious approach bythe FDA to clinical trials and the drug approval process. Data from clinical trials may receive greater scrutiny with respect tosafety, which may make the FDA or other regulatory authorities more likely to terminate clinical trials before completion, orrequire longer or additional clinical trials that may result in substantial additional expense and a delay or failure in obtainingapproval or approval for a more limited indication than originally sought. In, addition, because of the serious public healthrisks of high profile adverse safety events with certain products, the FDA may require, as a condition of approval, costly riskmanagement programs which may include safety surveillance, restricted distribution and use, patient education, enhancedlabeling, special packaging or labeling, expedited reporting of certain adverse events, preapproval of promotional materialsand restrictions on direct‑to‑consumer advertising. If we fail to comply with healthcare regulations, we could face substantial penalties and our business, results of operationsand financial condition could be adversely affected. Even though we do not and will not control referrals of healthcare services or bill directly to Medicare, Medicaid orother third‑party payors, certain federal and state healthcare laws and regulations pertaining to fraud and abuse and patients’rights are and will be applicable to our business. We could be subject to healthcare fraud and abuse and patient privacyregulation by both the federal government and the states in which we conduct our business. The regulations that may affectour ability to operate include, without limitation: ·the federal Anti‑Kickback Statute, which prohibits, among other things, any person from knowingly andwillfully offering, soliciting, receiving or providing remuneration, directly or indirectly, to induce either thereferral of an individual, for an item or service or the purchasing or ordering of a good or service, for whichpayment may be made under federal healthcare programs such as the Medicare and Medicaid programs. Aperson or entity does not need to have actual knowledge of the statute or specific intent to violate it to havecommitted a violation. In addition, the government may assert that a claim including items or services resultingfrom a violation of the federal Anti‑Kickback Statute constitutes a false or fraudulent claim for purposes of theFalse Claims Act; ·the federal False Claims Act, which prohibits, among other things, individuals or entities from knowinglypresenting, or causing to be presented, false claims, or knowingly using false statements, to obtain paymentfrom the federal government, and which may apply to entities that provide coding and billing advice tocustomers; ·federal criminal laws that prohibit executing a scheme to defraud any healthcare benefit program or makingfalse statements relating to healthcare matters. Similar to the federal Anti‑Kickback Statute, a person or entitydoes not need to have actual knowledge of the statute or specific intent to violate it to have committed aviolation; 72 Table of Contents·the federal Physician Payment Sunshine Act, which requires manufacturers of drugs, devices, biologics andmedical supplies for which payment is available under Medicare, Medicaid or the Children’s Health InsuranceProgram (with certain exceptions) to report annually to the government information related to payments or other“transfers of value” made to physicians (defined to include doctors, dentists, optometrists, podiatrists andchiropractors) and teaching hospitals, and requires applicable manufacturers and group purchasingorganizations to report annually to the government ownership and investment interests held by the physiciansdescribed above and their immediate family members and payments or other “transfers of value” to suchphysician owners (manufacturers are required to submit reports to the government by the 90 day of eachcalendar year); ·the federal Health Insurance Portability and Accountability Act of 1996, as amended by the Health InformationTechnology for Economic and Clinical Health Act, which governs the conduct of certain electronic healthcaretransactions and protects the security and privacy of protected health information; and ·state law equivalents of each of the above federal laws, such as anti‑kickback and false claims laws which mayapply to items or services reimbursed by any third‑party payor, including commercial insurers; state laws thatrequire pharmaceutical companies to comply with the industry’s voluntary compliance guidelines and theapplicable compliance guidance promulgated by the federal government or otherwise restrict payments thatmay be made to healthcare providers and other potential referral sources; state laws that require drugmanufacturers to report information related to payments and other transfers of value to physicians and otherhealthcare providers or marketing expenditures; and state laws governing the privacy and security of healthinformation in certain circumstances, many of which differ from each other in significant ways and may nothave the same effect, thus complicating compliance efforts. 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 penalties, including civil and criminal penalties, damages, fines, exclusionfrom participation in government health care programs, such as Medicare and Medicaid, imprisonment, and the curtailmentor restructuring of our operations, any of which could adversely affect our ability to operate our business and our financialresults. Any action against us for violation of these laws, even if we successfully defend against it, could cause us to incursignificant legal expenses and divert our management’s attention from the operation of our business. Moreover, achievingand sustaining compliance with applicable federal and state privacy, security and fraud and abuse laws may prove costly. Risks Related to Our Common Stock The price of our common stock may be volatile, and you may not be able to resell your shares at or above the initial publicoffering price. The trading price of our common stock could be highly volatile and could be subject to wide fluctuations inresponse to various factors, some of which are beyond our control. These factors include those discussed in this “RiskFactors” section of this document and others such as: ·ability to commercialize or obtain regulatory approval for our product candidates, or delays in commercializingor obtaining regulatory approval; ·results from, or any delays in, preclinical or nonclinical testing or clinical trial programs relating to our productcandidates, including the Phase 1 clinical trial for MRX34; ·any need to suspend or discontinue clinical trials due to side effects or other safety risks, or any need to conductstudies on the long‑term effects associated with the use of our product candidates; ·manufacturing issues related to our product candidates for clinical trials or future products forcommercialization; 73 thTable of Contents·commercial success and market acceptance of our product candidates following regulatory approval; ·undesirable side effects caused by product candidates after they have entered the market; ·ability to discover, develop and commercialize additional product candidates; ·announcements relating to collaborations that we may enter into with respect to the development orcommercialization of our product candidates; ·announcements relating to the receipt, modification or termination of government contracts or grants; ·success of our competitors in discovering, developing or commercializing products; ·strategic transactions undertaken by us; ·additions or departures of key personnel; ·product liability claims related to our clinical trials or product candidates; ·prevailing economic conditions; ·business disruptions caused by earthquakes or other natural disasters; ·disputes concerning our intellectual property or other proprietary rights; ·FDA or other U.S. or foreign regulatory actions affecting us or our industry; ·healthcare reform measures in the United States; ·sales of our common stock by our officers, directors or significant stockholders; ·future sales or issuances of equity or debt securities by us; ·fluctuations in our quarterly operating results; and ·the issuance of new or changed securities analysts’ reports or recommendations regarding us. In addition, the stock markets in general, and the markets for pharmaceutical, biopharmaceutical and biotechnologystocks in particular, have experienced extreme volatility that have been often unrelated to the operating performance of theissuer. These broad market fluctuations may adversely affect the trading price or liquidity of our common stock. In the past,when the market price of a stock has been volatile, holders of that stock have sometimes instituted securities class actionlitigation against the issuer. If any of our stockholders were to bring such a lawsuit against us, we could incur substantialcosts defending the lawsuit and the attention of our management would be diverted from the operation of our business. Our principal stockholders and management own a significant percentage of our stock and are able to exert significantcontrol over matters subject to stockholder approval. Based on the beneficial ownership of our common stock as of December 31, 2015, our officers and directors,together with holders of 5% or more of our outstanding common stock and their respective affiliates, beneficially ownapproximately 74.8% of our common stock. Accordingly, these stockholders have significant influence over the outcome ofcorporate actions requiring stockholder approval, including the election of directors, any merger, consolidation or sale of allor substantially all of our assets or any other significant corporate transaction. The interests of these stockholders74 Table of Contentsmay not be the same as or may even conflict with your interests. For example, these stockholders could delay or prevent achange of control of our company, even if such a change of control would benefit our other stockholders, which coulddeprive our stockholders of an opportunity to receive a premium for their common stock as part of a sale of our company orour assets and might affect the prevailing market price of our common stock. The significant concentration of stockownership may adversely affect the trading price of our common stock due to investors’ perception that conflicts of interestmay exist or arise. We are an “emerging growth company” and we cannot be certain if the reduced disclosure requirements applicable toemerging growth companies will make our common stock less attractive to investors. We are an “emerging growth company,” as defined in the JOBS Act, and may take advantage of certain exemptionsfrom various reporting requirements that are applicable to other public companies that are not “emerging growth companies”including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes‑Oxley Act,reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements andexemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholderapproval of any golden parachute payments not previously approved. We cannot predict if investors will find our commonstock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as aresult, there may be a less active trading market for our common stock and our stock price may be more volatile. In addition, Section 102 of the JOBS Act also provides that an “emerging growth company” can take advantage ofthe extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, or the Securities Act,for complying with new or revised accounting standards. An “emerging growth company” can therefore delay the adoptionof certain accounting standards until those standards would otherwise apply to private companies. However, we are choosingto “opt out” of such extended transition period, and as a result, we will comply with new or revised accounting standards onthe relevant dates on which adoption of such standards is required for non‑emerging growth companies. Section 107 of theJOBS Act provides that our decision to opt out of the extended transition period for complying with new or revisedaccounting standards is irrevocable. Future sales of our common stock or securities convertible or exchangeable for our common stock may depress our stockprice. If our existing stockholders or holders of our options sell, or indicate an intention to sell, substantial amounts of ourcommon stock in the public market after the lock‑up and legal restrictions on resale discussed in this periodic report lapse,the trading price of our common stock could decline. The perception in the market that these sales may occur could alsocause the trading price of our common stock to decline. Of the 20,830,555 shares of common stock outstanding at March 15,2016, only the shares of common stock sold by us in the IPO, plus any shares sold upon exercise of the underwriters’ optionto purchase additional shares of common stock, are currently freely tradable without restriction, unless held by our affiliatesor otherwise subject to the lock-up agreements pertaining to the IPO, in the public market. The lock‑up agreements pertaining to the IPO will expire on March 28, 2016. After the lock‑up agreements expire,an additional approximately 13,875,593 shares of common stock will be eligible for sale in the public market, subject tovolume limitations under Rule 144 under the Securities Act, with respect to shares held by directors, executive officers andother affiliates. The underwriters may, however, in their sole discretion, permit our officers, directors and other stockholdersand the holders of our outstanding options who are subject to the lock‑up agreements to sell shares prior to the expiration ofthe lock‑up agreements. Sales of these shares, or perceptions that they will be sold, could cause the trading price of ourcommon stock to decline. In addition, based on the number of shares subject to outstanding awards under our 2008 Long Term Incentive Plan,or 2008 Stock Plan, as of December 31, 2015, and including the initial reserves under our 2015 Equity Incentive Award Plan,or 2015 Plan, and Employee Stock Purchase Plan, or ESPP, approximately 2.6 million shares of common stock that are eithersubject to outstanding options, outstanding but subject to vesting, or reserved for future issuance under the 2008 Stock Plan,2015 Plan or ESPP will become eligible for sale in the public market to the extent permitted75 Table of Contentsby the provisions of various vesting schedules, the lock‑up agreements and Rule 144 and Rule 701 under the Securities Act.We also filed a registration statement permitting certain shares of common stock issued in the future pursuant to the 2008Plan, 2015 Plan and ESPP to be freely resold by plan participants in the public market, subject to the lock‑up agreements,applicable vesting schedules and, for shares held by directors, executive officers and other affiliates, volume limitationsunder Rule 144 under the Securities Act. The 2015 Plan and ESPP also contain provisions for the annual increase of thenumber of shares reserved for issuance under such plans, which shares we also intend to register. If the shares we may issuefrom time to time under the 2008 Stock Plan, 2015 Plan or ESPP are sold, or if it is perceived that they will be sold, by theaward recipient in the public market, the trading price of our common stock could decline. Certain holders of approximately 13.9 million shares of our common stock at December 31, 2015 are entitled torights with respect to the registration of their shares under the Securities Act, subject to the lock‑up agreements describedabove. Registration of these shares under the Securities Act would result in the shares becoming freely tradable withoutrestriction under the Securities Act, except for shares purchased by affiliates. Sales of such shares could also cause the tradingprice of our common stock to decline. An active, liquid and orderly market for our common stock may not develop. Prior to our IPO in October 2015, there had been no public market for our common stock, and an active publicmarket for our shares may not develop or be sustained. Further, certain of our existing institutional investors, includinginvestors affiliated with certain of our directors, purchased approximately 2.4 million shares of common stock in our IPO andconsequently fewer shares may be actively traded in the public market because these stockholders are restricted from sellingthe shares by restrictions under applicable securities laws and the lock-up agreements entered into in connection with ourIPO, which would reduce the liquidity of the market for our common stock. The lack of an active market may impair ourstockholders’ ability to sell their shares at the time they wish to sell them or at a price that they consider reasonable. Aninactive market may also impair our ability to raise capital by selling shares and may impair our ability to acquire otherbusinesses or technologies or in-license new product candidates using our shares as consideration. Our quarterly operating results may fluctuate significantly or may fall below the expectations of investors or securitiesanalysts, each of which may cause our stock price to fluctuate or decline. We expect our operating results to be subject to quarterly fluctuations. Our net loss and other operating results willbe affected by numerous factors, including: ·variations in the level of expenses related to our product candidates or future development programs; ·if MRX34 or any other product candidate receives regulatory approval, the level of underlying demand forthese product candidates; ·addition or termination of clinical trials or funding support; ·receipt, modification or termination of government contracts or grants, and the timing of payments we receiveunder these arrangements; ·our execution of any collaborative, licensing or similar arrangements, and the timing of payments we may makeor receive under these arrangements; ·any intellectual property infringement lawsuit or opposition, interference or cancellation proceeding in whichwe may become involved; and ·regulatory developments affecting our product candidates or those of our competitors. If our quarterly operating results fall below the expectations of investors or securities analysts, the price of ourcommon stock could decline substantially. Furthermore, any quarterly fluctuations in our operating results may, in turn,76 Table of Contentscause the price of our stock to fluctuate substantially. We believe that quarterly comparisons of our financial results are notnecessarily meaningful and should not be relied upon as an indication of our future performance. We will have broad discretion to determine how to use the net proceeds of our IPO and the concurrent private placementand may not use them effectively. Our management has broad discretion over the use of the net proceeds from our IPO and the concurrent privateplacement described in the Prospectus. Because of the number and variability of factors that will determine our use of suchproceeds, you may not agree with how we allocate or spend the proceeds from our IPO and the concurrent private placement.We may pursue collaborations or clinical trials that do not result in an increase in the market value of our common shares andthat may increase our losses. Our failure to allocate and spend the net proceeds from our IPO and the concurrent privateplacement effectively would have a material adverse effect on our business, financial condition and results of operations.Until the net proceeds are used, they may be placed in investments that do not produce significant investment returns or thatmay lose value. Provisions of our charter documents or Delaware law could delay or prevent an acquisition of our company, even if theacquisition would be beneficial to our stockholders, and could make it more difficult for you to change management. Provisions in our amended and restated certificate of incorporation and our amended and restated bylaws maydiscourage, delay or prevent a merger, acquisition or other change in control that stockholders may consider favorable,including transactions in which stockholders might otherwise receive a premium for their shares. In addition, theseprovisions may frustrate or prevent any attempt by our stockholders to replace or remove our current management by makingit more difficult to replace or remove our board of directors. These provisions include: ·a classified board of directors so that not all directors are elected at one time; ·a prohibition on stockholder action through written consent; ·no cumulative voting in the election of directors; ·the exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of theboard of directors or the resignation, death or removal of a director; ·a requirement that special meetings of stockholders be called only by the board of directors, the chairman of theboard of directors, the chief executive officer or, in the absence of a chief executive officer, the president; ·an advance notice requirement for stockholder proposals and nominations; ·the authority of our board of directors to issue preferred stock with such terms as our board of directors maydetermine; and ·a requirement of approval of not less than 66/3% of all outstanding shares of our capital stock entitled to voteto amend any bylaws by stockholder action, or to amend specific provisions of our certificate of incorporation. In addition, Delaware law prohibits a publicly held Delaware corporation from engaging in a business combinationwith an interested stockholder, generally a person who, together with its affiliates, owns or within the last three years hasowned 15% or more of our voting stock, for a period of three years after the date of the transaction in which the personbecame an interested stockholder, unless the business combination is approved in a prescribed manner. Accordingly,Delaware law may discourage, delay or prevent a change in control of our company. Furthermore, our amended and restatedcertificate of incorporation will specify that the Court of Chancery of the State of Delaware will be the sole and exclusiveforum for most legal actions involving actions brought against us by stockholders. We believe this77 2Table of Contentsprovision benefits us by providing increased consistency in the application of Delaware law by chancellors particularlyexperienced in resolving corporate disputes, efficient administration of cases on a more expedited schedule relative to otherforums and protection against the burdens of multi‑forum litigation. However, the provision may have the effect ofdiscouraging lawsuits against our directors and officers. The enforceability of similar choice of forum provisions in othercompanies’ certificates of incorporation has been challenged in legal proceedings, and it is possible that, in connection withany applicable action brought against us, a court could find the choice of forum provisions contained in our amended andrestated certificate of incorporation to be inapplicable or unenforceable in such action. Provisions in our charter and other provisions of Delaware law could limit the price that investors are willing to payin the future for shares of our common stock. Our employment agreements with our officers may require us to pay severance benefits to any of those persons who areterminated in connection with a change of control of us, which could harm our business, financial condition or results ofoperations. Our officers are parties to employment agreements providing for aggregate cash payments of up to approximately$2.5 million at December 31, 2015 for severance and other benefits in the event of a termination of employment inconnection with a change of control of us. The payment of these severance benefits could harm our business, financialcondition and results of operations. In addition, these potential severance payments may discourage or prevent third partiesfrom seeking a business combination with us. We do not anticipate paying any cash dividends on our common stock in the foreseeable future; therefore, capitalappreciation, if any, of our common stock will be your sole source of gain for the foreseeable future. We have never declared or paid cash dividends on our common stock. We do not anticipate paying any cashdividends on our common stock in the foreseeable future. We currently intend to retain all available funds and any futureearnings to fund the development and growth of our business. In addition, the terms of any future debt financing arrangementmay contain terms prohibiting or limiting the amount of dividends that may be declared or paid on our common stock. As aresult, capital appreciation, if any, of our common stock will be your sole source of gain for the foreseeable future. If securities or industry analysts do not publish research, or publish inaccurate or unfavorable research, about ourbusiness, our stock price and trading volume could decline. The trading market for our common stock will depend, in part, on the research and reports that securities or industryanalysts publish about us or our business. Securities and industry analysts do not currently, and may never, publish researchon our company. If no securities or industry analysts commence coverage of our company, the trading price for our commonstock would likely be negatively impacted. In the event securities or industry analysts initiate coverage, if one or more of theanalysts who cover us downgrade our common stock or publish inaccurate or unfavorable research about our business, ourstock price would likely decline. In addition, if our operating results fail to meet the forecast of analysts, our stock pricewould likely decline. If one or more of these analysts cease coverage of our company or fail to publish reports on usregularly, demand for our common stock could decrease, which might cause our stock price and trading volume to decline. Changes in, or interpretations of, accounting rules and regulations could result in unfavorable accounting charges orrequire us to change our compensation policies. Accounting methods and policies for biopharmaceutical companies, including policies governing revenuerecognition, research and development and related expenses and accounting for stock‑based compensation, are subject tofurther review, interpretation and guidance from relevant accounting authorities, including the SEC. Changes to, orinterpretations of, accounting methods or policies may require us to reclassify, restate or otherwise change or revise ourfinancial statements, including those contained in this periodic report. 78 Table of ContentsITEM 1B. UNRESOLVED STAFF COMMENTS None. ITEM 2. PROPERTIES Our corporate headquarters is located in Austin, Texas. In October 2014, we entered into a sublease agreement withAsuragen under which we share space with Asuragen. The facility we occupy as a part of this agreement encompassesapproximately 10,280 square feet of office and laboratory space, the laboratory space of which we share with Asuragen. Theterm for the agreement expires in August 2016, but may be terminated earlier by either party with six months’ notice. ITEM 3. LEGAL PROCEEDINGS From time to time, we are subject to various legal proceedings, claims and administrative proceedings that arise in theordinary course of our business activities. Although the results of litigation and claims cannot be predicted with certainty, asof the date of this prospectus, we do not believe we are party to any claim, proceeding or litigation the outcome of which, ifdetermined adversely to us, would individually or in the aggregate be reasonably expected to have a material adverse effecton our business. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlementcosts, diversion of management resources and other factors. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUERPURCHASES OF EQUITY SECURITIES Price Range of Common Stock Our common stock has been publicly traded on The NASDAQ Stock Market LLC, or NASDAQ, under the symbol“MIRN” since the initial public offering, or IPO, of our common stock on October 1, 2015. Prior to that time, there was nopublic market for our common stock. The following table sets forth on a per share basis, for the periods indicated, the low andhigh sale prices of our common stock as reported by NASDAQ. High Low Year Ended December 31, 2015 Fourth quarter (beginning October 1) $11.01 $5.54 Holders of Record At March 15, 2016, there were approximately 178 stockholders of record of our common stock, and the closing price pershare of our common stock was $4.74. Since many of our shares of common stock are held by brokers and other institutionson behalf of stockholders, we are unable to estimate the total number of stockholders represented by these record holders. Dividends We have never declared or paid cash dividends on our capital stock. However, we issued shares of common stock to theholders of Series C convertible preferred stock and Series D convertible preferred stock as part of our IPO under the terms ofour then-effective certificate of incorporation as a result of an accruing paid-in-kind dividend. 79 Table of ContentsWe intend to retain all available funds and any future earnings, if any, to fund the development and expansion of ourbusiness and we do not anticipate paying any cash dividends in the foreseeable future. Any future determination related todividend policy will be made at the discretion of our board of directors and will depend upon, among other factors, ourresults of operations, financial condition, capital requirements, contractual restrictions, business prospects and other factorsour board of directors may deem relevant. Stock Performance Graph The following graph illustrates a comparison of the total cumulative stockholder return on our common stock sinceSeptember 30, 2015, which is the date our common stock first began trading on NASDAQ, to two indices: the NASDAQComposite Index and the NASDAQ Biotechnology Index. The stockholder return shown in the graph below is notnecessarily indicative of future performance, and we do not make or endorse any predictions as to future stockholder returns.This graph shall not be deemed “soliciting material” or be deemed “filed” for purposes of Section 18 of the Exchange Act, orotherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any of ourfilings under the Securities Act, whether made before or after the date hereof and irrespective of any general incorporationlanguage in any such filing. Recent Sales of Unregistered Securities The following list sets forth information as to all securities we have sold from January 1, 2015 through December 31,2015 which were not registered under the Securities Act. 1. In March 2015, we issued an aggregate of 3,872,278 shares of our Series D convertible preferred stock at aprice per share of $9.165 per share for aggregate gross consideration of $35.5 million to 17 accredited investors. 2. In April 2015, we issued an aggregate of 687,397 shares of our Series D convertible preferred stock at aprice per share of $9.165 per share for aggregate gross consideration of $6.3 million to two accredited investors. 3. Prior to filing our registration statement on Form S-8 in October 2015, we granted stock options and stockawards to employees, directors and consultants under our 2008 Long Term Incentive Plan, as amended, covering anaggregate of 328,101 shares of common stock, at a weighted-average average exercise price of $6.45 per share. Ofthese, no options were cancelled without being exercised during this time period. 80 Table of Contents4. Prior to filing our registration statement on Form S-8 in October 2015, we granted stock options and stockawards to employees, directors and consultants under our 2015 Equity Incentive Award Plan, as amended, coveringan aggregate of 727,981 shares of common stock, at a weighted-average average exercise price of $7.00 per share. Ofthese, no options were cancelled without being exercised during this time period. 5. Prior to filing our registration statement on Form S-8 in October 2015, we sold an aggregate of 28,516shares of common stock to employees, directors and consultants for cash consideration in the aggregate amount ofapproximately $67,000 upon the exercise of stock options and stock awards. We claimed exemption from registration under the Securities Act for the sale and issuance of securities in thetransactions described in paragraphs (1) and (2) above by virtue of Section 4(2) and/or Regulation D promulgated thereunderas transactions not involving any public offering. All of the purchasers of unregistered securities for which we relied onSection 4(2) and/or Regulation D represented that they were accredited investors as defined under the Securities Act. Weclaimed such exemption on the basis that (a) the purchasers in each case represented that they intended to acquire thesecurities for investment only and not with a view to the distribution thereof and that they either received adequateinformation about the registrant or had access, through employment or other relationships, to such information and(b) appropriate legends were affixed to the stock certificates issued in such transactions. We claimed exemption from registration under the Securities Act for the sales and issuances of securities in thetransactions described in paragraphs (3) through (5) above under Section 4(2) of the Securities Act, in that such sales andissuances did not involve a public offering, or under Rule 701 promulgated under the Securities Act, in that they were offeredand sold either pursuant to written compensatory plans or pursuant to a written contract relating to compensation, asprovided by Rule 701. In addition, on October 5, 2015, we issued and sold 2,395,010 shares of our common stock to the Cancer Prevention andResearch Institute of Texas in a private placement at a price of $7.00 per share for an aggregate offering price ofapproximately $16.8 million. We claimed exemption from registration under the Securities Act for the sale and issuance ofsecurities in this transaction by virtue of Section 4(2) and/or Regulation D promulgated thereunder as a transaction notinvolving any public offering. We claimed such exemption on the basis that (a) the purchaser represented that it was anaccredited investor and intended to acquire the securities for investment only and not with a view to the distribution thereofand that it either received adequate information about the registrant or had access, through employment or otherrelationships, to such information and (b) appropriate legends were affixed to the securities issued in the transaction. Use of Proceeds On September 30, 2015, the U.S. Securities and Exchange Commission declared effective our registration statement onForm S-1 (File No. 333-206544), as amended, filed in connection with our initial public offering. Pursuant to the registrationstatement, we registered the offer and sale of 6,250,000 shares of our common stock with an aggregate offering price ofapproximately $43.7 million, as well as the issuance of an additional 704,962 shares of our common stock pursuant to theunderwriters’ partial exercise of their option to purchase additional shares, for an aggregate offering price of approximately$4.9 million. In total, we issued and sold an aggregate of 6,954,962 shares of our common stock at a price to the public of$7.00 per share for an aggregate offering price of approximately $48.7 million. The managing underwriters of the offeringwere Citigroup, Leerink Partners, Oppenheimer & Co. and Cantor Fitzgerald & Co. After deducting underwriting discountsand commissions and offering expenses paid or payable by us of $5.0 million, the aggregate net proceeds from the offeringwere $43.7 million. No offering expenses were paid or are payable, directly or indirectly, to our directors or officers, topersons owning 10% or more of any class of our equity securities or to any of our affiliates. The net proceeds from the initial public offering have been invested in a variety of capital preservation investments,including short-term, investment-grade, interest-bearing instruments and U.S. government securities. There has been nomaterial change in the expected use of the net proceeds from our initial public offering as described in our registrationstatement on Form S-1. 81 Table of ContentsPurchases of Equity Securities by the Issuer and Affiliated Purchasers None. ITEM 6. SELECTED FINANCIAL DATA The following selected statement of operations data for the years ended December 31, 2013, 2014 and 2015, and theselected balance sheet data at December 31, 2013, 2014 and 2015 have been derived from our audited financial statementsincluded elsewhere in this Annual Report on Form 10-K. Our historical results for any prior period are not necessarilyindicative of results to be expected in any future period. The information set forth below should be read in conjunction with the “Management’s Discussion and Analysis ofFinancial Condition and Results of Operations” section of this Annual Report on Form 10-K and with our financialstatements and notes thereto included elsewhere in this Annual Report on Form 10-K. Year Ended December 31, 2015 2014 2013 2012 (in thousands, except share and per share data) Statement of Operations Data: Operating expenses: Research and development $18,947 $10,545 $4,391 $2,742 General and administrative 6,080 3,369 2,384 1,562 Write-off of offering expenses — 1,920 — Total operating expenses 25,027 15,834 6,775 4,304 Other income (expense): Change in fair value of option liability — — 339 — Gain on Extinguishment of NotePayable — — — 1,001 Interest income (expense) 44 — — (355) Net loss $(24,983) $(15,834) $(6,436) $(3,658) Less: Accretion and dividends onconvertible preferred stock (4,320) (2,824) (2,324) (6,142) Net loss attributable to commonstockholders $(29,303) $(18,658) $(8,760) $(9,800) Net loss per share attributable to commonstockholders, basic and diluted $5.85 $(291.00) $(4,408.65) $(5,603.23) Common shares used to compute basicand diluted net loss per shareattributable to common stockholders 5,010,323 64,131 1,987 1,749 82 Table of Contents At December 31, 2015 2014 2013 2012 (in thousands) Balance Sheet Data: Cash and cash equivalents $89,713 $9,319 $23,182 $13,266 Total assets 90,917 9,825 23,684 13,706 Total liabilities 5,901 2,499 1,145 4,364 Convertible preferred stock — 55,277 52,453 33,710 Common stock 21 — — — Additional paid-in capital 161,518 — 890 — Accumulated deficit (76,523) (47,951) (30,804) (24,368) Total stockholders’ (deficit) equity 85,016 (47,951) (29,914) (24,368) 83 Table of ContentsITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONS You should read the following management’s discussion and analysis of our financial condition and results togetherwith the section entitled “Selected Financial Data” and our financial statements and related notes included elsewhere inthis Annual Report on Form 10-K. This discussion and other parts of this Annual Report contain forward-looking statementsthat involve risk and uncertainties, such as statements of our plans, objectives, expectations and intentions. Our actualresults could differ materially from those discussed in these forward-looking statements. Factors that could cause orcontribute to such differences include, but are not limited to, those discussed in the "Risk Factors" section in Part I Item IA. Overview We are a clinical‑stage biopharmaceutical company developing a broad pipeline of microRNA‑based oncologytherapeutics. microRNAs are naturally occurring, short ribonucleic acid, or RNA, molecules, or oligonucleotides, that play acritical role in regulating key biological pathways. Misexpression of even a single microRNA can contribute to diseasedevelopment and tumor suppressor microRNAs are commonly reduced in cancer. Our scientists and others at leadingacademic institutions have identified numerous tumor suppressor microRNAs that play key roles in preventing normal cellsfrom becoming cancerous and facilitating proper cancer immunosurveillance. We are developing mimics of naturallyoccurring microRNAs that are designed to restore this tumor suppressor activity and aid appropriate tumor immune response.This approach is known as microRNA replacement therapy. Our lead product candidate, MRX34, a mimic of naturallyoccurring microRNA‑34 (miR‑34) encapsulated in a liposomal nanoparticle formulation, is the first microRNA mimic to enterclinical development and has demonstrated clinical proof of concept as a single agent in our ongoing Phase 1 clinical trial.We believe that microRNA mimics represent a new paradigm in cancer therapy and have the potential to create a new,important class of effective cancer drugs, that can potentially be used alone or in combination with other cancer therapeutics.We plan to develop MRX34 as a monotherapy and in combination with other therapeutic modalities, such as targetedtherapies and immuno‑oncology agents. We are developing a pipeline of tumor suppressor microRNA mimics. We believe that these mimics have thepotential to become promising new oncology therapeutics due to their capacity to regulate many different oncogenes acrossmultiple oncogenic pathways. We believe our technology is supported by a strong intellectual property position, which wecontinue to expand and strengthen. Our scientists have also discovered functions of microRNAs in numerous diseases otherthan cancer, which may provide us an opportunity to expand this novel technology into other therapeutic areas of unmetmedical need. We believe these microRNAs represent future partnering or diversification opportunities. We were incorporated in 2007 under the laws of Delaware and were maintained as a wholly‑owned subsidiary of ourformer parent company, Asuragen, Inc., or Asuragen, until the end of 2009, when we became an independent entity. Our operations have focused on developing our understanding of and capabilities in microRNA biology,identifying potential product candidates, undertaking preclinical studies, initiating and conducting a clinical trial,protecting and enhancing our intellectual property estate and providing general and administrative support for theseactivities. We have not generated any revenue from product sales and, to date, have funded our operations primarily throughthe private placement of convertible preferred stock, federal and state government grants, offerings of our common stock, andsupport from our former parent company, Asuragen. From our inception through December 31, 2015, we have raised anaggregate of approximately $167.3 million to fund our operations, of which approximately $89.9 million was from theissuance of preferred stock for cash and assets, $48.7 million from a public offering of our common stock, $16.8 million froma private placement of our common stock and $11.9 million was from federal and state grants. Since our inception, we have incurred significant operating losses. Our net loss was $25.0 million for the year endedDecember 31, 2015. At December 31, 2015, we had an accumulated deficit of $76.5 million. We expect to continue to incursignificant expenses and operating losses over the next several years. Our net losses may fluctuate significantly from quarterto quarter and from year to year. We anticipate that our expenses will increase significantly as84 Table of Contentswe conduct clinical trials for MRX34 and other product candidates; manufacture clinical trial materials; continue todiscover, validate and develop additional novel product candidates; expand and protect our intellectual property portfolio;and hire additional development and scientific personnel. Fiscal Year 2015 and Other Recent Highlights In March and April of 2015, we issued an aggregate of 4,559,675 shares of our Series D convertible preferred stockat a price per share of $9.17. We received aggregate gross consideration of approximately $41.8 million. On September 30, 2015, our registration statement on Form S-1 relating to our initial public offering (“IPO”) ofcommon stock became effective. Our IPO closed on October 6, 2015 and we issued and sold 6,250,000 shares of our commonstock at an initial price of $7.00 per share of common stock. On October 9, 2015, we closed the offering of an additional704,962 shares issued pursuant to the partial exercise by the underwriters of their over-allotment option. We received cashproceeds of approximately $43.7 million from our IPO, net of underwriting discounts and commissions and offering costspaid by us. On October 5, 2015, we issued 2,395,010 shares of common stock in a private placement at a price of $7.00 pershare. Net proceeds from the private placement were approximately $16.6 million, net of estimated offering costs payable byus. Financial Operations Overview Revenue We have not generated any revenue from product sales or from collaborations. In the future, we may generaterevenue from collaborations and licenses. Revenue may fluctuate from period to period, and the timing and extent of anyfuture revenue will depend on our ability to advance our product candidates through the clinical trial process and to obtainregulatory approval and our ability, or our future partners’ ability, to commercialize our product candidates. Research and Development Expenses Research and development expenses consist primarily of costs incurred for our research activities, including ourdrug discovery efforts, and the development of our product candidates, which include the following: ·employee‑related expenses, including salaries, benefits, travel and stock‑based compensation; ·external research and development expenses incurred under arrangements with third parties, such as contractresearch organizations, or CROs, consultants and our scientific advisory board; ·lab supplies, and acquiring, developing and manufacturing preclinical study materials in accordance withGood Laboratory Practices; ·costs of clinical trials, including costs for management, investigator fees and related vendors that provideservices for the clinical trials; ·costs to manufacture the drug used in the clinical trials in accordance with Good Manufacturing Practices; ·license and milestone fees; ·development and prosecution of intellectual property; and ·costs of facilities, depreciation and other expenses. 85 Table of ContentsThese research and development costs are expensed as incurred. In certain circumstances, we will makenonrefundable advance payments to purchase goods and services for future use pursuant to contractual arrangements. Inthose instances, we defer and recognize an expense in the period that we receive or consume the goods or services. The Company records upfront and milestone payments made to third parties under licensing arrangements as anexpense. Upfront payments are recorded when incurred and milestone payments are recorded when the specific milestone hasbeen achieved. Our research and development expenses have been offset by proceeds derived from federal and state grants. Thesegovernment grants, which have supplemented our research efforts on specific projects, generally provide for reimbursementof approved costs, as defined in the terms of the grant awards. The proceeds from these reimbursement grants are treated as areduction to the associated expenses as the allowable expenses are incurred. In August 2010, we received a $10.3 million commercialization award from the State of Texas through the CancerPrevention and Research Institute of Texas, or CPRIT. The CPRIT grant was a three‑year award that was funded annually, andfunding of the grant was completed in January 2014. At December 31, 2015, all proceeds from this grant had beenrecognized. We accounted for advances received for the award as deferred grant reimbursement. Under the terms of the award,we are required to pay to CPRIT a portion of our revenues from sales of certain products by us, or received from our licenseesor sublicensees, at a percentage in the low single digits until the aggregate amount of such payments equals a specifiedmultiple of the grant amount, and thereafter at a rate of less than one percent, subject to our right, under certaincircumstances, to make a one‑time payment in a specified amount to CPRIT to buy out such payment obligations. Inaddition, in September 2015, we entered into a new grant contract with CPRIT in connection with an award of approximately$16.8 million in the form of a concurrent private placement of shares of our common stock at a price per share equal to theIPO price of $7.00. At December 31, 2015, we had one National Institutes of Health, or NIH, grant ongoing with approximately $59,000incurred and approximately $166,000 still to be incurred on the grant. At any point in time, we typically have various early stage research and drug discovery projects ongoing. Ourinternal resources, employees and infrastructure are not directly tied to any one research or drug discovery project and aretypically deployed across multiple projects. As such, we do not maintain information regarding the costs incurred for theseearly stage research and drug discovery programs on a project‑specific basis. However, we have spent and are currentlyspending the vast majority of our research and development resources on our lead product candidate, MRX34. Most of our product development programs are at an early stage, and successful development of future productcandidates from these programs is highly uncertain and may not result in approved products. The process of conductingpreclinical studies and clinical trials necessary to obtain regulatory approval is costly and time consuming, and we expectour research and development expenses to increase for the foreseeable future as we advance our research programs toward theclinic and initiate and continue clinical trials. The probability of success for each product candidate may be affected bynumerous factors, including preclinical data, clinical data, competition, manufacturing capability and commercial viability.We anticipate we will make determinations as to which programs to pursue and how much funding to direct to each programon an ongoing basis in response to the scientific and clinical success of each future product candidate, as well as ongoingassessments as to each future product candidate’s commercial potential. Completion dates and completion costs can varysignificantly for each future product candidate and are difficult to predict. We will need to raise additional capital and mayseek strategic alliances in the future in order to advance the various products in the pipeline and other products that may bedeveloped. General and Administrative Expenses General and administrative expenses consist primarily of salaries and related benefits, including stock‑basedcompensation, related to our executive, finance and support functions. Other general and administrative expenses includeallocated facility‑related costs not otherwise included in research and development expenses, travel expenses andprofessional fees for auditing, tax and legal services. We expect that general and administrative expenses will increase in thefuture as we expand our operating activities and incur additional costs associated with being a publicly‑traded86 Table of Contentscompany. These increases will likely include legal fees, accounting fees, directors’ and officers’ liability insurance premiumsand fees associated with investor relations. Recent Accounting PronouncementsFor recent accounting pronouncements see Note 2. Summary of Significant Accounting Policies of Notes toConsolidated Financial Statements in Part II, Item 8 of this Report. Critical Accounting Policies and Estimates This management’s discussion and analysis of financial condition and results of operations is based on our financialstatements, which have been prepared in accordance with accounting principles generally accepted in the United States, orGAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reportedamounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements,as well as the revenue and expenses incurred during the reported periods. On an ongoing basis, we evaluate our estimates andjudgments, including those related to stock‑based compensation and clinical trial and pre-clinical study accruals. We baseour estimates on historical experience and on various other factors that we believe are reasonable under the circumstances,the results of which form the basis for making judgments about the carrying value of assets and liabilities that are notapparent from other sources. Changes in estimates are reflected in reported results for the period in which they becomeknown. Actual results may differ from these estimates under different assumptions or conditions. While our significant accounting policies are described in the Notes to our financial statements appearing elsewherein this Annual Report on Form 10-K, we believe that the following critical accounting policies are most important tounderstanding and evaluating our reported financial results. Stock-Based Compensation We estimate the fair value of our stock‑based awards to employees using the Black‑Scholes option‑pricing model,which requires the input of several assumptions, including: (1) the expected volatility of our stock; (2) the expected term ofthe award; (3) the risk‑free interest rate; and (4) expected dividends. Due to the lack of a public market for the trading of ourcommon stock and a lack of company‑specific historical and implied volatility data, we have based our estimate of expectedvolatility on the historical volatility of a group of similar companies that are publicly traded. For these analyses, we haveselected companies with comparable characteristics to ours, including enterprise value, risk profiles, position within theindustry and historical share price information, sufficient to meet the expected life of the stock‑based awards. We computethe historical volatility data using the daily closing prices for the selected companies’ shares during the equivalent period ofthe calculated expected term of our stock‑based awards. We will continue to apply this process until a sufficient amount ofhistorical information regarding the volatility of our own stock price becomes available. We have estimated the expected lifeof our employee stock options using the “simplified” method, whereby the expected life equals the average of the vestingterm and the original contractual term of the option. The risk‑free interest rates for periods within the expected life of theoption are based on the U.S. Treasury yield curve in effect during the period the options were granted. We are also required to estimate forfeitures at the time of grant and revise those estimates in subsequent periods ifactual forfeitures differ from estimates. We use historical data to estimate pre‑vesting option forfeitures and recordstock‑based compensation expense only for those awards that are expected to vest. Stock‑based compensation expenserecognized in the financial statements is based on awards that are ultimately expected to vest. We expect the impact of ourstock based compensation expense for stock options to grow in future periods due to the potential increases in headcountand the value of our common stock. Clinical Trial and Pre-Clinical Study Accruals We estimate pre-clinical study and clinical trial expenses pursuant to contracts with research institutions andcontract research organizations that conduct and manage preclinical studies and clinical trials on our behalf based onestimates of the level of service performed and the underlying agreement. Further, we accrue expenses related to clinical87 Table of Contentstrials based on the level of patient enrollment and other activities according to the related agreements. We monitor patientenrollment levels and other activities to the extent reasonably possible and adjust estimates accordingly. Results of Operations Comparison of years ended December 31, 2015 and 2014: Year Ended December 31, Dollar 2015 2014 Change % Change (in thousands) Statement of operations data: Operating expenses: Research and development, before grant reimbursement $19,405 $10,626 $8,779 82.6%Less grant reimbursement (458) (81) (377) 465.4%Research and development 18,947 10,545 8,402 79.7%General and administrative 6,080 3,369 2,711 80.5%Write off of offering expenses — 1,920 (1,920) (100.0)%Interest (income) (44) — (44) 100.0%Net loss $24,983 $15,834 $9,149 57.8% Research and Development Expenses Research and development spending, prior to the offset of grant reimbursements, was $19.4 million for the yearended December 31, 2015, which was an increase of approximately $8.8 million, or 83%, compared to research anddevelopment spending, prior to the offset of grant reimbursements, of $10.6 million for the year ended December 31, 2014.After giving effect to the offset of grant reimbursements, research and development expenses were $18.9 million for the yearended December 31, 2015, which was an increase of $8.4 million, or 80%, compared to research and development expensesof approximately $10.5 million for the year ended December 31, 2014. The increase in the year ended December 31, 2015was primarily due to increased clinical trial costs related to our Phase 1 clinical trial, including a higher number of patients,additional investigator sites and additional drug costs related to the increased trial activity; and increased personnel costsdue to increases in personnel and compensation, and increased intellectual property and licensing costs. Research and development spending was partially offset by approximately $458,000 of grant reimbursements forthe year ended December 31, 2015, compared to reimbursement of approximately $81,000 for the same period in 2014. Theincrease was due to a higher volume of work being performed on the research funded by the federal grants. General and Administrative Expenses General and administrative expenses were approximately $6.1 million for the year ended December 31, 2015, whichwas an increase of approximately $2.7 million, or 81%, compared to the same period in 2014. General and administrativeexpenses increased primarily due to increased personnel related expenses, higher outside professional costs, consulting andrecruiting costs. Write Off of Offering Costs The Company deferred costs incurred for a planned initial public offering through August 2014, which includedlegal, audit, tax and other professional fees. The IPO was delayed and, as a result, the Company recorded a write-off ofdeferred offering costs of $1.9 million during the year ended December 31, 2014. Deferred offering costs incurred throughDecember 31, 2015 have been recorded as a reduction of proceeds from a concurrent private placement and the IPO. 88 Table of ContentsComparison of year ended December 31, 2014 and 2013: Year Ended December 31, Dollar 2014 2013 Change % Change (in thousands) Statement of operations data: Operating expenses: Research and development, before grant reimbursement $10,626 $8,241 $2,385 28.9%Less grant reimbursement (81) (3,850) 3,769 (97.9)%Research and development 10,545 4,391 6,154 140.2%General and administrative 3,369 2,384 985 41.3%Write off of offering expenses 1,920 — 1,920 Other income (expense): Change in fair value of option liability — (339) 339 (100.0)%Net loss $15,834 $6,436 $(9,398) (146.0)% Research and Development Expenses Research and development expenses were $10.5 million for the year ended December 31, 2014, which was anincrease of $6.2 million, or 140%, compared to research and development expenses of $4.4 million for the year endedDecember 31, 2013. The net change was due to an increase in overall research and development spending and a significantreduction in grant reimbursement from the prior year. Research and development spending, prior to offset by grant reimbursement, was $10.6 million for the year endedDecember 31, 2014, which was an increase of $2.4 million, or 29%, compared to research and development spending of$8.2 million for the year ended December 31, 2013. The increase in research and development spending in 2014 wasprimarily due to the increased costs for clinical trials. The initiation of our Phase 1 clinical trial was in April 2013. In 2014,the clinical trial costs increased as a result of a full year of clinical trial costs and expansion of testing for additionalindications, additional investigator sites, expansion of the trial to overseas locations and a related increase in clinical trialdrug costs. The increase was also due to an increase in intellectual property spending. The increases in overall research anddevelopment spending were partially offset by lower licensing costs in 2014. We offset research and development expenses by approximately $81,000 for the year ended December 31, 2014.This was a decrease from the $3.9 million of grant proceeds received for the year ended December 31, 2013 of approximately$3.8 million, or 98%. The reduction in grant reimbursements was due to the completion of the allowable expense providedfor by the grant by the Cancer Prevention and Research Institute of Texas, or CPRIT, during the fourth quarter of 2013. General and Administrative Expenses General and administrative expenses were $3.4 million for the year ended December 31, 2014, which was anincrease of approximately $1.0 million, or 41%, compared to general and administrative expenses of $2.4 million for the yearended December 31, 2013. The increase year over year was due to increases in headcount and the related salaries andbenefits, increases in legal and other professional fees, and general overall spending related to increase activities. Write-off of Offering Expenses In August 2014, a proposed offering was delayed and the deferred offering costs for that offering, which consisted ofdirect incremental legal and professional accounting fees related to that offering, in the amount of $1.9 million wereexpensed. 89 Table of ContentsChange in Fair Value of Option Liability In October 2012, we completed an initial closing of an offering of Series C convertible preferred stock. Thepurchasers of the convertible preferred stock in the initial closing received an option to participate in the second closing forthe same number of shares and at the same price as the initial closing. At the time of the initial closing, the fair value of thisoption to participate in the second closing was calculated using an option pricing model, and the effect of this non-cashaccounting adjustment was to record an option liability on the balance sheet for the fair value that was calculated. Theoption liability is marked to fair value at each reporting period and any changes in fair value are recorded in the statement ofoperations. When the second closing of the Series C convertible preferred stock was completed in December 2013, we had aone-time non-cash gain on the change in the fair value of the option and the balance of the option liability was reclassified toadditional paid-in capital. Liquidity and Capital Resources Liquidity and Capital Expenditures Since inception, our operations have been financed primarily through proceeds of $167.3 million to fund ouroperations, of which approximately $89.9 million was from the issuance of preferred stock for cash and assets, $48.7 millionfrom a public offering of our common stock, $16.8 million from a private placement of our common stock and $11.9 millionwas from federal and state grants. At December 31, 2015, we had $89.7 million of cash and cash equivalents. Our primary uses of cash are to fundoperating expenses, primarily research and development expenditures. Cash used to fund operating expenses is impacted bythe timing of when we pay these expenses, as reflected in the change in our outstanding accounts payable and accruedexpenses. On March 31, 2015, April 7, 2015 and April 21, 2015, we issued an aggregate of 4,559,675 shares of our Series Dconvertible preferred stock at a price per share of $9.17. We received aggregate gross consideration of approximately $41.8million. On September 30, 2015, our Form S-1 (File No. 333-206544), as amended, relating to our IPO was declared effectiveby the Securities and Exchange Commission, and on October 6, 2015 and on October 9, 2015, we issued an aggregate of6,954,962 shares of common stock at an offering price of $7.00 per share. In connection with a research grant awarded to us in September 2015, CPRIT agreed to purchase from usconcurrently with our IPO in a private placement approximately $16.8 million of our common stock at a price per share equalto the IPO price of $7.00 per share. The concurrent private placement was completed on October 5, 2015, with the issuanceof 2,935,010 shares of the Company’s common stock. We believe that our existing cash and cash equivalents as of December 31, 2015, is sufficient to meet ouranticipated cash requirements for at least the next 12 months. However, our forecast of the period of time through which ourfinancial resources will be adequate to support our operations is a forward‑looking statement that involves risks anduncertainties, and actual results could vary materially. Our future capital requirements are difficult to forecast and will depend on many factors, including: ·the initiation, progress, timing and completion of preclinical studies and clinical trials for our lead productand potential product candidates; ·the number and characteristics of product candidates that we pursue; ·the progress, costs and results of our clinical trials;90 Table of Contents ·the terms and timing of any other strategic alliance, licensing and other arrangements that we may establish; ·the outcome, timing and cost of regulatory approvals; ·delays that may be caused by changing regulatory requirements; ·the costs and timing of hiring new employees to support our continued growth; ·the costs and timing of procuring clinical supplies of our product candidates; and ·the extent to which we acquire or invest in businesses, products or technologies. The following table shows a summary of our cash flows for the year ended December 31, 2015 and 2014: Year Ended December 31, 2015 2014 2013 (in thousands) Net cash provided by (used in): Operating activities $(21,135) $(13,970) $(6,496) Investing activities (251) (102) (7) Financing activities 101,780 209 16,419 Net increase (decrease) $80,394 $(13,863) $9,916 Operating Activities Net cash used in operating activities was $21.1 million and $14.0 million for the year ended December 31, 2015 and2014, respectively. The increase in overall spending for operating activities of approximately $7.1 million was due toincreased headcount and personnel expenses, increased spending for clinical trials and intellectual property related expensesand higher license fees for 2015. The increase was partially offset by the one-time write-off of IPO offering-related costs inAugust 2014. Net cash used in operating activities was $14.0 million and $6.5 million for the year ended December 31, 2014 and2013, respectively. The increase in overall spending for operating activities of approximately $7.5 million was due toincreased headcount and personnel expenses, increased spending for clinical trials and intellectual property related expenses.The increase was also caused by the lower grant payment from CPRIT, with an annual payment made in 2013. Investing Activities The net cash used in investing activities for the periods presented relates entirely to the purchases of property andequipment, primarily computer and lab equipment. For the year ended December 31, 2015, 2014, and 2013, total amountsspent on the purchase of fixed assets were approximately $313,000, $102,000, and $7,000 respectively. Financing Activities Net cash provided by financing activities was approximately $101.7 million for the year ended December 31, 2015,which was due to the offering of our Series D convertible preferred stock and our IPO and concurrent private placement. Forthe year ended December 31, 2014, approximately $67,000 of net cash provided by financing activities was due to theexercise of stock options. Net cash provided by financing activities was approximately $209,000 for the year ended December 31, 2014,which was due to the exercise of stock options. For the year ended December 31, 2013 net cash provided by financing91 Table of Contentsactivities of $16.4 million was due to the net proceeds from the second funding round of our Series C convertible preferredstock. The initial funding of the Series C convertible preferred stock was in October 2012 and the second funding was inDecember 2013. Contractual Obligations and Commitments In October 2014, we entered into a sublease agreement and amended an agreement with Asuragen under which weshare space with Asuragen and Asuragen provides certain services to us. These services currently include facilities-relatedservices, warehouse services, shipping and receiving and other services. Each of the services agreement and subleaseagreement expires in August 2016. As of December 31, 2015, the remaining commitments for payments under the servicesagreement and the sublease agreement through 2016 total approximately $322,000 and $59,000, respectively. There are nofurther payment commitments under either agreement. Off‑Balance Sheet Arrangements We did not have during the periods presented, and we do not currently have, any off‑balance sheet arrangements, asdefined in the rules and regulations of the Securities and Exchange Commission. Segment Information We have one primary business activity and operate as one reportable segment. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The market risk inherent in our financial instruments and in our financial position represents the potential loss arising fromadverse changes in interest rates. At December 31, 2015, we had cash and cash equivalents of $89.7 million, consisting ofinterest‑bearing money market accounts and prime money market funds. Our primary exposure to market risk is interest ratesensitivity, which is affected by changes in the general level of U.S. interest rates. Due to the short‑term maturities of our cashequivalents and the low risk profile of our investments, we do not believe a change in interest rates would have a materialeffect on the fair market value of our cash equivalents. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The following consolidated financial statements, and the related notes thereto, of Mirna Therapeutics, Inc. and theReports of the Company’s Independent Registered Public Accounting Firm are filed as a part of this Report. 92 Table of ContentsReport of Independent Registered Public Accounting Firm The Board of Directors and Stockholders ofMirna Therapeutics, Inc. We have audited the accompanying balance sheets of Mirna Therapeutics, Inc. (the “Company”) as of December 31, 2015and 2014, and the related statements of operations, stockholders’ equity (deficit) and cash flows for each of the three years inthe period ended December 31, 2015. These financial statements are the responsibility of the Company’s management. Ourresponsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (UnitedStates). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether thefinancial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internalcontrol over financial reporting. Our audits included consideration of internal control over financial reporting as a basis fordesigning audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on theeffectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An auditalso includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements,assessing the accounting principles used and significant estimates made by management and evaluating the overall financialstatement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position ofMirna Therapeutics, Inc. at December 31, 2015 and 2014, and the results of its operations and its cash flows for each of thethree years in the period ended December 31, 2015 in conformity with U.S. generally accepted accounting principles. /s/ Ernst & Young LLP Austin, TexasMarch 29, 201693 Table of ContentsMIRNA THERAPEUTICS, INC. Balance Sheets (in thousands, except share and per share data) December 31, December 31, 2015 2014 Assets Current Assets: Cash and cash equivalents $89,713 $9,319 Grant reimbursement and other receivables 36 155 Prepaid expenses and other current assets 793 143 Total current assets 90,542 9,617 Property and equipment, net 375 116 Deferred offering costs — 92 Total assets $90,917 $9,825 Liabilities, Convertible Preferred Stock and Stockholders’ Equity (Deficit) Current Liabilities: Accounts payable $3,687 $871 Accrued expenses 2,214 1,628 Total liabilities 5,901 2,499 Commitments and contingencies (Note 13) Convertible preferred stock, $0.001 par value; 0 shares and 84,000,783 shares authorized atDecember 31, 2015 and 2014; Series A: 3,192,083 shares designated at December 31, 2014; 0 shares and 212,754 sharesissued and outstanding at December 31, 2015 and 2014, respectively; aggregateliquidation preference of $0 and $6.4 million at December 31, 2015 and 2014, respectively — 6,384 Series B: 540,341 shares designated at December 31, 2014; 0 shares and 36,019 shares issuedand outstanding at December 31, 2015 and 2014, respectively; aggregate liquidationpreference of $0 and $1.5 million at December 31, 2015 and 2014, respectively — 1,500 Series B- 1: 10,914,947 shares designated at December 31, 2014; 0 shares and 727,643 sharesissued and outstanding at December 31, 2015 and 2014, respectively; aggregateliquidation preference of $0 and $7.5 million at December 31, 2015 and 2014, respectively — 7,498 Series C: 69,353,712 shares designated at December 31, 2014; 0 shares and 4,623,523 sharesissued and outstanding at December 31, 2015 and 2014, respectively; aggregateliquidation preference of $0 and $39.9 million at December 31, 2015 and 2014,respectively — 39,895 Series D: 73,649,755 shares designated at December 31, 2014; No shares issued andoutstanding at December 31, 2015 and 2014 — — Stockholders’ Equity (Deficit): Preferred stock, $0.001 par value, 5,000,000 and 0 shares authorized at December 31, 2015and 2014; 0 shares outstanding at December 31, 2015 and 2014 — — Common stock, $0.001 par value; 250,000,000 shares authorized at December 31, 2015;95,000,000 shares authorized at December 31, 2014; 20,830,555 shares issued andoutstanding at December 31, 2015; 83,325 shares issued and outstanding atDecember 31, 2014 21 — Additional paid in capital 161,518 — Accumulated deficit (76,523) (47,951) Total stockholders’ (equity) deficit 85,016 (47,951) Total liabilities, convertible preferred stock and stockholders’ (equity) deficit $90,917 $9,825 94 Table of ContentsMIRNA THERAPEUTICS, INC. Statements of Operations (in thousands, except share and per share data) Year Ended December 31, 2015 2014 2013 Operating expenses: Research and development $18,947 $10,545 $4,391 General and administrative 6,080 3,369 2,384 Write-off of offering costs — 1,920 — Total operating expenses 25,027 15,834 6,775 Other income: Change in fair value of option liability — — 339 Interest income 44 — — Total other income 44 — 339 Net loss $(24,983) $(15,834) $(6,436) Less: Accretion and dividends on convertible preferred stock (4,320) (2,824) (2,324) Net loss attributable to common stockholders $(29,303) $(18,658) $(8,760) Net loss per share attributable to common stockholders—basic and diluted $(5.85) $(291.00) $(4,408.65) Common shares used to compute basic and diluted net loss per share attributableto common stockholders 5,010,323 64,131 1,987 95 Table of ContentsMIRNA THERAPEUTICS, INC. Statements of Stockholders’ Equity (Deficit) (in thousands, except share amounts) Total Common Stock AdditionalPaid-in Accumulated Stockholders' Shares Amount Capital Deficit Equity(Deficit) Balance at January 1, 2013 1,835 $ — $ — $(24,368) $(24,368) Exercise of stock options 226 — 1 — 1 Stock-based compensation — — 163 — 163 Reclassification of option liability — — 3,050 — 3,050 Accretion of convertible preferred stock — — (831) — (831) Series C dividends — — (1,493) — (1,493) Net loss — — — (6,436) (6,436) Balance at December 31, 2013 2,061 — 890 (30,804) (29,914) Exercise of stock options 80,816 — 209 — 209 Issuance of common stock 448 — 4 — 4 Stock-based compensation — — 408 — 408 Series C dividends — — (1,511) (1,313) (2,824) Net loss — — — (15,834) (15,834) Balance at December 31, 2014 83,325 — — (47,951) (47,951) Exercise of stock options 28,516 1 66 — 67 Stock-based compensation — — 985 — 985 Accretion of convertible preferred stock — — (180) (269) (449) Series C and Series D dividends — — (551) (3,320) (3,871) Conversion of preferred stock 11,368,742 11 100,927 — 100,938 Initial public offerings of common stock, net ofoffering costs of $5,021 6,954,962 7 43,657 — 43,664 Issuance of common stock in private placementconcurrently with initial public offering, net ofoffering costs of $149 2,395,010 2 16,614 — 16,616 Net loss — — — (24,983) (24,983) Balance at December 31, 2015 20,830,555 $21 $161,518 $(76,523) $85,016 96 Table of ContentsMIRNA THERAPEUTICS, INC. Statements of Cash Flows (in thousands) Year Ended December 31, 2015 2014 2013 Operating activities Net loss $(24,983) $(15,834) $(6,436) Adjustment to reconcile net loss to net cash used in operating activities: Depreciation and amortization 54 35 36 Stock-based compensation 985 408 163 Issuance of stock for services — 4 — Change in fair value of option liability — — (339) Changes in operating assets and liabilities: Grant reimbursement and other receivables 119 40 121 Prepaid expenses and other current assets (650) (99) 2 Deferred offering costs — 105 (197) Other noncurrent assets — 17 (17) Accounts payable 2,816 189 (132) Accrued expenses 524 1,165 303 Net cash used in operating activities (21,135) (13,970) (6,496) Investing activities Purchase of property and equipment (251) (102) (7) Net cash used in investing activities (251) (102) (7) Financing activities Proceeds from issuance of convertible preferred stock, net of issuance costs 41,433 — 16,418 Proceeds from the issuance of common stock, net of issuance costs 60,280 — — Proceeds from the exercise of stock options 67 209 1 Cash provided by financing activities 101,780 209 16,419 Net increase (decrease) in cash and cash equivalents 80,394 (13,863) 9,916 Cash and cash equivalents at beginning of period 9,319 23,182 13,266 Cash and cash equivalents at end of period $89,713 $9,319 $23,182 Supplemental disclosure of non-cash financing activities Conversion of preferred stock to common stock $100,938 $ — $ — 97 Table of ContentsMIRNA THERAPEUTICS, INC. Notes to Financial Statements 1. Organization Mirna Therapeutics, Inc. (“Mirna” or “the Company”) is a clinical stage biopharmaceutical company developing abroad pipeline of microRNA‑based oncology therapeutics. The Company was incorporated in Delaware in December 2007 asa wholly‑owned subsidiary of Asuragen, Inc. (“Asuragen”) and was spun out to existing Asuragen stockholders in December2009. The Company is located in Austin, Texas.In connection with the completion of its initial public offering (“IPO”), on October 6, 2015, the Company filed anamended and restated certificate of incorporation and bylaws, which, among other things, authorizes 250,000,000 shares ofcommon stock and 5,000,000 shares of preferred stock. 2. Summary of Significant Accounting Policies Use of estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requiresthe Company’s management to make estimates and assumptions that affect the amounts reported in the financial statementsand accompanying notes. Actual results could differ from those estimates. Prior to the IPO on October 6, 2015, the Company utilized significant estimates and assumptions in determining thefair value of its common stock. The board of directors determined the estimated fair value of the Company’s common stockbased on a number of objective and subjective factors, including external market conditions affecting the biotechnologyindustry sector and the prices at which the Company sold shares of convertible preferred stock, the superior rights andpreferences of securities senior to its common stock at the time and the likelihood of achieving a liquidity event, such as aninitial public offering or sale of the Company. Prior to its IPO, the Company utilized various valuation methodologies in accordance with the framework of theAmerican Institute of Certified Public Accountants, or AICPA, Audit and Accounting Practice Aid Series: Valuation ofPrivately Held Company Equity Securities Issued as Compensation, or the AICPA Practice Aid, to estimate the fair value ofits common stock. The methodologies included the Option Pricing Method utilizing the Backsolve Method (a form of themarket approach defined in the AICPA Practice Aid) and the Probability‑Weighted Expected Return Method based upon theprobability of occurrence of certain future liquidity events such as an initial public offering or sale of the Company. Eachvaluation methodology includes estimates and assumptions that require the Company’s judgment. Significant changes to thekey assumptions used in the valuations could result in different fair values of common stock at each valuation date. Liquidity The Company continues to be subject to a number of risks common to companies in similar stages of development.Principal among these risks are the uncertainties of technological innovations, dependence on key individuals, developmentof the same or similar technological innovations by the Company’s competitors and protection of proprietary technology.The Company’s ability to fund its planned clinical operations, including completion of its planned trials, is expected todepend on the amount and timing of cash receipts from future collaboration or product sales and/or financing transactions.The Company believes that its cash and cash equivalents of $89.7 million at December 31, 2015, will enable the Company tomaintain its current and planned operations for the next twelve months. 98 Table of ContentsResearch and development costs Research and development costs consist of costs we incur for our own research and development activities and forpreclinical studies and clinical trials. Research and development costs include salaries and personnel‑related costs,consulting fees, fees paid for contract research services, the costs of laboratory equipment and facilities, license fees and otherexternal costs. These research and development costs are expensed when incurred. The Company records upfront and milestone payments made to third parties under licensing arrangements as anexpense. Upfront payments are recorded when incurred and milestone payments are recorded when the specific milestone hasbeen achieved. The Company accounts for government grants as a reduction of research and development expenses. Governmentgrants are recorded at the time the related research and development costs have been incurred by the Company and,accordingly, become eligible for reimbursement. The Company accrues for government grants that have been earned but notyet received. Nonrefundable advance payments for goods or services to be received in the future for use in research anddevelopment activities are deferred and capitalized. The capitalized amounts are expensed as the related goods are deliveredor the services are performed. Stock‑based compensation The Company accounts for its stock‑based compensation awards in accordance with ASC Topic 718, Compensation—Stock Compensation (“ASC 718”). ASC 718 requires all stock‑based payments to employees, including grants of employeestock options, to be recognized in the statements of operations based on their grant date fair values. For stock options grantedto employees and to members of the board of directors for their services on the board of directors, the Company estimates thegrant date fair value of each option award using the Black‑Scholes option‑pricing model. The use of the Black‑Scholesoption‑pricing model requires management to make assumptions with respect to the expected term of the option, theexpected volatility of the common stock consistent with the expected life of the option, risk‑free interest rates and expecteddividend yields of the common stock. For awards subject to service‑based vesting conditions, the Company recognizesstock‑based compensation expense, net of estimated forfeitures, equal to the grant date fair value of stock options on astraight‑line basis over the requisite service period. Clinical Trial and Pre-Clinical Study Accruals The Company estimates pre-clinical study and clinical trial expenses pursuant to contracts with research institutionsand contract research organizations that conduct and manage preclinical studies and clinical trials on the Company’s behalfbased on estimates of the level of service performed and the underlying agreement. Further, the Company accrues expensesrelated to clinical trials based on the level of patient enrollment and other activities according to the related agreements. TheCompany monitors patient enrollment levels and other activities to the extent reasonably possible and adjusts estimatesaccordingly. Income Taxes Income taxes are recorded in accordance with ASC 740, Accounting for Income Taxes (“ASC 740”), which providesfor deferred taxes using an asset and liability approach. The Company recognizes deferred tax assets and liabilities for theexpected future tax consequences of events that have been included in the financial statements or tax returns. The Companydetermines its deferred tax assets and liabilities based on differences between financial reporting and tax bases of assets andliabilities, which are measured using the enacted tax rates and laws that will be in effect when the differences are expected toreverse. Valuation allowances are provided if, based upon the weight of available evidence, it is more likely than not thatsome or all of the deferred tax assets will not be realized. The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740. When uncertaintax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit will99 Table of Contentsmore likely than not be realized. The determination as to whether the tax benefit will more likely than not be realized isbased upon the technical merits of the tax position as well as consideration of the available facts and circumstances. As ofDecember 31, 2015 and 2014, the Company does not have any significant uncertain tax positions. Comprehensive loss Comprehensive loss is defined as the change in equity of a business enterprise during a period from transactions,and other events and circumstances from non‑owner sources. The Company had no items of other comprehensive loss for theyears ended December 31, 2015, 2014 and 2013. Cash and cash equivalents The Company considers highly liquid investments with a maturity of three months or less when purchased to becash equivalents. Cash equivalents, which consist primarily of money market funds, are stated at fair value. Concentrations of credit risk Financial instruments that potentially subject the Company to credit risk consist primarily of cash and cashequivalents. The Company holds these investments in highly‑rated financial institutions, and limits the amounts of creditexposure to any one financial institution. These amounts at times may exceed federally insured limits. The Company has notexperienced any credit losses in such accounts and does not believe it is exposed to any significant credit risk on these funds.The Company has no off‑balance sheet concentrations of credit risk, such as foreign currency exchange contracts, optioncontracts or other hedging arrangements. Fair value measurements The Company records money market funds at fair value. ASC Topic 820, Fair Value Measurements and Disclosures,establishes a fair value hierarchy for those instruments measured at fair value that distinguishes between assumptions basedon market data (observable inputs) and the Company’s own assumptions (unobservable inputs). The hierarchy consists ofthree levels: ·Level 1—Unadjusted quoted prices in active markets for identical assets or liabilities. ·Level 2—Quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are notactive, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset orliability. ·Level 3—Unobservable inputs that reflect the Company’s own assumptions about the assumptions marketparticipants would use in pricing the asset or liability in which there is little, if any, market activity for theasset or liability at the measurement date. The following table summarizes the money market funds measured at fair value on a recurring basis as of December31, 2015: Level 1 Level 2 Level 3 Total Money market funds $89,713 $— $— $89,713 Total $89,713 $— $— $89,713 100 Table of ContentsThe following table summarizes the money market funds measured at fair value on a recurring basis as ofDecember 31, 2014 (in thousands): Level 1 Level 2 Level 3 Total Money market funds $9,319 $— $— $9,139 Total $9,319 $— $— $9,139 The carrying amounts reflected in the balance sheets for cash, prepaid expenses and other current assets, accountspayable, and accrued expenses approximate their fair values at December 31, 2015 and 2014, due to their short‑term nature. There have been no changes to the valuation methods during the years ended December 31, 2015 and 2014. TheCompany evaluates transfers between levels at the end of each reporting period. There were no transfers of assets or liabilitiesbetween Level 1, Level 2 or Level 3 during the years ended December 31, 2015 or 2014. Property and equipment Property and equipment consist of laboratory equipment, computer equipment and software, leaseholdimprovements, furniture and fixtures and office equipment. Property and equipment are stated at cost and depreciated usingthe straight‑line method over the estimated useful lives of the respective assets: ● Laboratory equipment 5-7 years● Computer equipment and software 3 years● Leasehold improvements shorter of asset’s useful life or remaining termof lease● Furniture and fixtures 5 years● Office equipment 5 years Costs of major additions and betterments are capitalized; maintenance and repairs, which do not improve or extendthe life of the respective assets, are charged to expense as incurred. Upon retirement or sale, the cost of the disposed asset andthe related accumulated depreciation are removed from the accounts and the resulting gain or loss is recognized. Impairment of long‑lived assets The Company periodically evaluates its long‑lived assets for potential impairment in accordance with ASC Topic360, Property, Plant and Equipment. Potential impairment is assessed when there is evidence that events or changes incircumstances indicate that the carrying amount of an asset may not be recovered. Recoverability of these assets is assessedbased on undiscounted expected future cash flows from the assets, considering a number of factors, including past operatingresults, budgets and economic projections, market trends and product development cycles. If impairments are identified,assets are written down to their estimated fair value. The Company has not recognized any impairment charges throughDecember 31, 2015. Deferred offering costs Deferred offering costs, which consist of direct incremental legal and professional accounting fees relating topreferred stock private placements and initial public offerings, are capitalized. The deferred offering costs are offset againstthe proceeds from the offering upon the consummation of the offering. In 2014, the Company’s initial public offering wasdelayed and the deferred offering costs for that offering in the amount of $1,920,000 were expensed. Segment and geographic information Operating segments are identified as components of an enterprise about which separate discrete financialinformation is available for evaluation by the chief operating decision maker, or decision making group, in making101 Table of Contentsdecisions on how to allocate resources and assess performance. The Company’s chief operating decision maker is the chiefexecutive officer. The Company and the chief operating decision maker view the Company’s operations and manage itsbusiness as one operating segment. The Company operates in only one geographic segment. Convertible preferred stock Prior to the Company’s IPO, the Company initially recorded convertible preferred stock that could have beenredeemed at the option of the holder or based upon the occurrence of events not under the Company’s control outside ofstockholders’ deficit at the value of the proceeds received, net of issuance costs. Subsequently, the Company adjusted thecarrying value to the redemption value at each reporting period. In the absence of retained earnings, these accretion chargeswere recorded against additional paid‑in capital, if any, and then to accumulated deficit. Upon completing the IPO, all sharesof the Company’s convertible preferred stock then outstanding was converted into shares of our common stock. Net loss per share attributable to common stockholders Prior to the IPO, the Company used the two‑class method to compute net loss per common share attributable tocommon stockholders because the Company has issued securities, other than common stock, that contractually entitle theholders to participate in dividends and earnings of the Company. The two‑class method requires earnings for the period to beallocated between common stock and participating securities based upon their respective rights to receive distributed andundistributed earnings. Historically, holders of the Company’s Series A, Series B, Series B‑1, Series C and Series Dconvertible preferred stock were entitled, on a pari passu basis, to receive dividends when, as and if declared by the board ofdirectors, prior and in preference to any declaration or payment of any dividend on the common stock until such time as thetotal dividends paid on each share of Series C and Series D convertible preferred stock is equal to its cumulative dividends.The Series A, Series B and Series B‑1 convertible preferred stock would also be entitled to the dividend amount paid tocommon stockholders on an as‑if‑converted‑to‑common stock basis. As a result, all series of the Company’s convertiblepreferred stock were considered participating securities. All of the Company’s outstanding preferred stock was converted tocommon stock in connection with the IPO in October 2015. Under the two‑class method, for periods with net income, basic net income per common share is computed bydividing the net income attributable to common stockholders by the weighted‑average number of shares of common stockoutstanding during the period. Net income attributable to common stockholders is computed by subtracting from net incomethe portion of current year earnings that the participating securities would have been entitled to receive pursuant to theirdividend rights had all of the year’s earnings been distributed. No such adjustment to earnings is made during periods with anet loss, as the holders of the participating securities have no obligation to fund losses. Diluted net loss per common share iscomputed by using the weighted‑average number of shares of common stock outstanding. Due to net losses for the yearsended December 31, 2015, 2014, and 2013, basic and diluted net loss per share attributable to common stockholders were thesame, as the effect of all potentially dilutive securities would have been anti‑dilutive. Recent accounting pronouncements In February 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016-02, Leases (Topic 842). Thenew standard requires the recognition of assets and liabilities arising from lease transactions on the balance sheet and thedisclosure of key information about leasing arrangements. Accordingly, a lessee will recognize a lease asset for its right touse the underlying asset and a lease liability for the corresponding lease obligation. Both the asset and liability will initiallybe measured at the present value of the future minimum lease payments over the lease term. Subsequent measurement,including the presentation of expenses and cash flows, will depend on the classification of the lease as either a finance or anoperating lease. Initial costs directly attributable to negotiating and arranging the lease will be included in the asset. Forleases with a term of twelve months or less, a lessee can make an accounting policy election by class of underlying asset tonot recognize an asset and corresponding liability. Lessees will also be required to provide additional qualitative andquantitative disclosures regarding the amount, timing and uncertainty of cash flows arising from leases. These disclosures areintended to supplement the amounts recorded in the financial statements and provide additional information about thenature of an organization’s leasing activities. The new standard is effective for fiscal years beginning after December 15,2018, and interim periods within those years, with early adoption permitted. In102 Table of Contentstransition, lessees are required to recognize and measure leases at the beginning of the earliest period presented using amodified retrospective approach. The transition guidance also provides specific guidance for sale and leaseback transactions,build-to-suit leases and amounts previously recognized in accordance with the business combinations guidance for leases.We are currently evaluating our expected adoption method and the impact of this new standard on our financial statements. In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes (“ASU2015-17”). The standard requires all deferred income tax assets and liabilities to be classified as noncurrent within an entity’sconsolidated balance sheet. ASU 2015-17 is effective for annual periods beginning after December 15, 2016, and interimperiods within those fiscal years, with early adoption permitted. Entities are also permitted to apply the revised guidance oneither a prospective or retrospective basis. The Company early adopted this guidance on a prospective basis and hasclassified deferred income taxes in the consolidated balance sheets as noncurrent beginning with the period ended December31, 2015. Adoption of this guidance did not affect the historical consolidated results of operations, financial position orliquidity. In August 2014 the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue asa Going Concern. The ASU is intended to define management’s responsibility to evaluate whether there is substantial doubtabout an organization’s ability to continue as a going concern and to provide related footnote disclosures. For all entities,the ASU is effective for annual periods ending after December 15, 2016 and interim periods within annual periods beginningafter December 15, 2016. We will adopt this standard in 2016. 3. Cancer Prevention and Research Institute of Texas Grant and Other Grants In August 2010, the Company received a $10.3 million commercialization award from the State of Texas throughthe Cancer Prevention and Research Institute of Texas (“CPRIT”). CPRIT was established to expedite innovation andcommercialization in the area of cancer research and to enhance access to evidence‑based prevention programs and servicesthroughout the state. The commercialization award was a reimbursement grant and was terminated on January 31, 2014. TheCompany is obligated to make certain payments to CPRIT that survive termination. Under the terms of the award, theCompany is required to pay to CPRIT a portion of its revenues from sales of certain products by the Company, or receivedfrom the Company’s licensees or sublicensees, at a percentage in the low single digits until the aggregate amount of suchpayments equals a specified multiple of the grant amount, and thereafter at a rate of less than one percent, subject to theCompany’s right, under certain circumstances, to make a one‑time payment in a specified amount to CPRIT to buy out suchpayment obligations. At such time when the Company records revenues that are subject to royalties owed to CPRIT, theCompany will record such royalties as cost of revenues in the period in which the related revenue is recorded. If the Companyexercises its right to make a one‑time payment to CPRIT to buy out the royalty payment obligations, the Company willrecord the entire one‑time payment as cost of revenues in the period in which it exercises such right. In September 2015, the Company entered into a new grant contract with CPRIT in connection with an award ofapproximately $16.8 million. This 2015 award has a three‑year term, subject to extension by mutual agreement by theCompany and CPRIT. However, in contrast to the Company’s 2010 award, this 2015 award does not include any royaltyobligation upon commercialization of the Company’s product candidates, nor is the Company required to repay the grantproceeds under specified circumstances. Instead, the 2015 award is in the form of an agreement by CPRIT to purchase$16.8 million of shares of common stock of the Company in a private placement concurrent with an initial public offering,subject to certain conditions, occurring prior to December 31, 2016, at the public offering price. The private placement wascompleted in October 2015 with the issuance of 2,395,010 shares of the common stock at $7.00 per share. Pursuant to the grant contract, the Company will conduct preclinical and clinical development of certaincombination therapy approaches for lung or liver cancer involving the Company’s lead product candidate, MRX34. If, at anytime during the term of the grant contract and following the consummation of our initial public offering, the Companydetermines that the project provided for by the grant contract is no longer commercially feasible for it, then the Company andCPRIT are required to consult in order to reallocate the remaining unspent budget for the project to another oncology projectin our product candidate pipeline. 103 Table of ContentsTotal government grants recognized as a reduction of research and development expenses during the years endedDecember 31, 2015, 2014, and 2013 were $458,000; $81,000 and $3,850,000, respectively. 4. Property and Equipment Property and equipment consisted of the following (in thousands): December 31, December 31, 2015 2014 Machinery, computers and equipment $687 $373 Leasehold improvements 18 18 Accumulated depreciation (330) (275) $375 $116 Depreciation expense was $54,000, $35,000 and $36,000 in 2015, 2014 and 2013, respectively. 5. Accrued expenses Accrued expenses consist of the following (in thousands): December 31, 2015 2014 Compensation and related items $1,151 $243 Professional fees 437 210 Clinical trial costs 489 551 Drug product costs — 525 State franchise taxes 106 — Other 31 99 $2,214 $1,628 6. Convertible Preferred Stock On various dates between March 31, 2015 and April 20, 2015, the Company completed two closings of an offeringof the Company’s Series D convertible preferred stock (“Series D”). The Company issued 4,559,675 shares with grossproceeds totaling approximately $41.8 million. In conjunction with the IPO, the Company’s Series A, Series B, Series B-1, Series C and Series D preferred stock wasconverted into an aggregate of 10,159,614 shares of the Company’s common stock on a 1-for-1 basis. In addition and inconjunction with the IPO, cumulative dividends on the Company’s Series C and Series D preferred stock, which totaledapproximately $8.5 million, were paid in-kind, with a total of 1,209,128 shares of common stock issued to shareholders,which were calculated by dividing the cumulative dividends earned by the offering price per share of $7.00 in the IPO. As of December 31, 2015, the Company had no outstanding convertible preferred stock. ConversionPrior to the IPO, the Series A, Series B, Series B‑1, Series C and Series D were convertible into common stock at anytime at the option of the holders. The conversion price was initially set at the original issue price per share of the convertiblepreferred stock and was adjusted to prevent dilution for stock splits, combinations and dividends.104 Table of ContentsThe Company’s convertible preferred stock would automatically convert into shares of common stock at thethen‑applicable conversion price for each such series, immediately upon the closing of a firm underwritten public offeringpursuant to an effective registration statement under the Securities Act of 1933, with minimum offering requirements. TheCompany’s convertible preferred stock would also automatically convert upon an affirmative vote of at least a majority ofthe convertible preferred stockholders voting together as a single class on an as‑if converted basis.VotingPrior to the IPO, holders of the Company’s convertible preferred stock were entitled to voting rights equal to holdersof common stock. Holders of the Company’s convertible preferred stock were also entitled to vote on certain matters with allshares of convertible preferred stock voting as a single class. Holders of the Company’s Series D convertible preferred stockwere also entitled to vote on certain matters with all Series D shares voting as a single class.DividendsPrior to the IPO and subject to certain circumstances, holders of shares of Series C and shares of Series D wereentitled to receive cumulative dividends at a rate per annum of 8%, payable in cash or in kind at the option of the holder ofthe stock. Such dividends were payable in cash or in‑kind in the event of a liquidation, redemption or conversion. In theevent of a conversion of the Series C shares and the Series D shares in connection with an initial public offering thecumulative dividends were only payable in‑kind.Liquidation Prior to the IPO, in the event of any liquidation, dissolution or winding up of the affairs of the Company, merger or saleresulting in a change of control, or sale or license of all assets, the holders of the then-outstanding shares would receive anamount per share equal to the sum of $9.165, $7.635, $10.305, $31.59 and $19.95 per share of Series D, Series C, Series B-1,Series B and Series A, respectively, plus all accrued and/or declared but unpaid dividends, payable in preference and priorityto any payments made to the holders of the then-outstanding preferred or common stock. In the event that the Series B-1 hasbeen deemed converted to common stock prior to the liquidation amounts being paid to Series A or Series B holders, theamount per share to be received by the holders of the Series B and Series A would be adjusted to $41.64 and $30.00 pershare, respectively.Redemption Prior to the IPO, at any time after March 27, 2019, with a written request from at least sixty percent of the holders of thethen-outstanding Series D, the Company would redeem the requested shares of the Series D at an amount equal to the originalissue price, plus any accrued and/or declared but unpaid dividends, where the original purchase price is $9.165. Prior to the IPO, at any time after October 22, 2017, with a written request from the majority holders of the then-outstanding Series C, the Company would redeem the requested shares of the Series C at an amount equal to the originalissue price, plus any accrued and/or declared but unpaid dividends, where the original purchase price is $7.635. The Series A and Series B were not entitled to any redemption rights. However, because a majority of the Company'soutstanding stock is in the control of the convertible preferred stockholders who also control the Company's board ofdirectors, a hostile takeover or other sale could have occurred outside the Company's control and thereby trigger a "deemedliquidation" and payment of liquidation preferences. Accordingly, the Company classified convertible preferred stockoutside of stockholders' deficit for all periods presented. The Company adjusted the carrying value of the convertible preferred stock to the liquidation preferences of such sharesat each reporting period end prior to the IPO. The change in carrying value of the convertible preferred stock was recorded asa charge to additional paid-capital, if any, and then to accumulated deficit.105 Table of ContentsConversion of Preferred Stock and Accrued Dividends Immediately prior to the closing of the IPO, each share of the Company’s outstanding preferred stock was convertedinto one share of common stock. In conjunction with the conversion, cumulative dividends on the Company’s Series C andSeries D preferred stock were paid with in-kind in shares of common stock. The following table presents the conversion ofpreferred stock and accrued dividends paid in-kind into common stock on October 5, 2015: Prior to Conversion PreferredShares Paid-in-KindDividendShares SubsequenttoConversion Convertible preferred stock Series A 212,754 — Series B 36,019 — Series B-1 727,643 — Series C 4,623,523 964,667 — Series D 4,559,675 244,461 Total 10,159,614 1,209,128 Common stock — — 11,368,742 7. Shareholders’ Equity Common Stock The voting, dividend and liquidation rights of holders of shares of common stock are subject to and qualified by therights, powers and preferences of the holders of shares of convertible preferred stock. The Company’s common stock has thefollowing characteristics: The holders of shares of common stock are entitled to one vote for each share of common stock held at all meetingsof stockholders and written actions in lieu of meetings. The holders of shares of common stock are entitled to receive dividends, if and when declared by the Company’sboard of directors. Cash dividends may not be declared or paid to holders of common stock until paid on each series ofoutstanding convertible preferred stock in accordance with their respective terms. As of December 31, 2015, no cashdividends have been declared or paid since the Company’s inception. Reverse Stock Split In September 2015, the stockholders approved a reverse stock split of the outstanding shares of the Company’scommon stock, Series A convertible preferred stock, Series B convertible preferred stock, Series B-1 convertible preferredstock, Series C convertible preferred stock and Series D convertible preferred stock in which every 15 shares were convertedinto one share of the related stock. No fractional shares were issued as a result of the reverse stock split. The par value for eachclass of stock remained at $0.001 per share. The effect of the reverse stock split has been recognized retroactively, in all shareand price per share data presented in the financial statements and the notes to the financial statements. Offerings In September 2015, the Company entered into a new grant contract with Cancer Prevention and Research Institute ofTexas (“CPRIT”), as discussed in Note 3, in connection with an award of approximately $16.8 million. The 2015 award is inthe form of an agreement by CPRIT to purchase $16.8 million of shares of common stock of the Company in a privateplacement concurrent with the initial public offering of the Company’s common stock. On October 5, 2015, CPRITpurchased 2,395,010 shares of the Company’s common stock at $7.00 per share. Net proceeds from the private placement,after related transaction offering costs, were approximately $16.6 million. 106 Table of Contents In October 2015, the Company issued 6.25 million shares of common stock in an underwritten public offering, with aprice of $7.00 per share. The underwriters purchased an additional 704,962 shares of common stock pursuant to their optionto purchase additional shares. The Company received aggregate net proceeds of approximately $43.7 million in the publicoffering, after deducting the underwriting discounts and commissions and estimated offering expenses payable by theCompany. 8. Stock Option Plans 2008 Long Term Incentive Plan During 2008, the Company adopted the 2008 Long Term Incentive Plan, which allows for incentive stock optionsfor its employees and nonqualified stock options (inclusive of restricted stock units and stock appreciation rights) (the “2008Plan”) for employees and nonemployees under which an aggregate of 330,582 stock options and stock purchase rights maybe granted. In December 2013, the total amount available for grant under the 2008 Plan was increased by 224,200 to554,782. In March 2014, the Company’s board of directors approved an increase of 115,153 shares available for grantpursuant to the 2008 Plan to 669,935. In March 2015, the total amount of available to grant under the 2008 Plan wasincreased in conjunction with the Company’s offering of Series D preferred stock by 391,650 shares to 1,061,585. Optionsunder the 2008 Plan have a maximum life of 10 years. Options vest at various intervals, as determined by the Company’sboard of directors at the date of grant. 2015 Equity Incentive Plan In August 2015, the Company’s board of directors approved the 2015 Equity Incentive Award Plan, (the “2015Plan”), which was effective in connection with the pricing of the IPO on September 30, 2015. The 2015 Plan provides for thegranting of a variety of stock‑based compensation awards, including stock options, stock appreciation rights, or SARs,restricted stock awards, restricted stock unit awards, deferred stock awards, dividend equivalent awards, stock paymentawards, performance awards and other stock‑based awards. The 2015 Plan is the successor to the 2008 Plan and the 800,478options outstanding in the 2008 Plan at December 31, 2015 may be transferred to the 2015 Plan if awards thereunderterminate, expire or lapse for any reason without the delivery of shares to the holder thereof. Under the 2015 Plan, 1,671,800shares of the Company’s common stock will be initially authorized and reserved for issuance, and will be added to theoutstanding shares transferred from the 2008 Plan for a total of 2,472,278 authorized for grant under the 2015 Plan atDecember 31, 2015. 2015 Employee Stock Purchase Plan In August 2015, the Company’s board of directors approved the 2015 Employee Stock Purchase Plan (the “ESPP”),which was effective in connection with the pricing of the IPO on September 30, 2015. The ESPP allows eligible employees topurchase shares of the Company’s common stock at a discount through payroll deductions of up to 15% of their eligiblecompensation, subject to any plan limitations. The ESPP generally provides for set offering periods, and at the end of eachoffering period, employees are able to purchase shares at 85% of the lower of the fair market value of the Company’s commonstock on the first trading day of the offering period or on the last trading day of the offering period. There were no salesunder the ESPP as of December 31, 2015. Shares available for future purchase under the ESPP were 167,180 at December 31,2015. 107 Table of ContentsStock Option Activity The Company’s stock option activity for the years ended December 31, 2015, 2014, and 2013 was as follows: Weighted‑‑ Average Weighted‑‑Average Number Exercise Contractual of Shares Price Life (years) Outstanding at December 31, 2012 31,712 $7.50 5.84 Granted 329,323 1.95 Exercised (226) 2.40 Forfeited/canceled (5,976) 3.50 Outstanding at December 31, 2013 354,833 2.40 8.80 Granted 234,447 8.10 Exercised (80,816) 2.40 Forfeited/canceled (7,553) 4.7 Outstanding at December 31, 2014 500,911 4.95 8.52 Granted 1,057,082 6.82 Exercised (28,516) 2.36 Forfeited/canceled (18) 7.50 Outstanding at December 31, 2015 1,529,459 $6.29 9.00 Options exercisable at December 31, 2015 356,661 $4.56 7.61 The total intrinsic value of options exercised during the years ended December 31, 2015, 2014 and 2013 was$160,000, $383,000, and $440,000, respectively. The intrinsic value of options exercisable and total options outstanding atDecember 31, 2015 was $820,000 and $985,000, respectively. The total fair value of options vested during the years endedDecember 31, 2015, 2014 and 2013 was $858,000, $198,000 and $132,000, respectively. Stock Based Compensation Expense Total stock‑based compensation expense was allocated as follows (in thousands): Year Ended December 31, 2015 2014 2013 Research and development expense $306 $110 $55 General and administrative expense 679 298 108 $985 $408 $163 There was approximately $5.2 million of unrecognized compensation cost related to the stock options grantedunder the 2015 Plan, which is expected to be amortized over the next 3.8 years. There were no restricted stock units or stockappreciation rights granted under the 2015 Plans of December 31, 2015. The fair value of each stock option award is estimated on the date of grant using the Black‑Scholes option‑pricingmodel that uses the assumptions noted in the table below. Expected volatility for the Company’s common stock wasdetermined based on an average of the historical volatility of a peer group of similar companies. The Company has limitedstock option exercise information. Accordingly, the expected term of stock options granted was calculated using thesimplified method, which represents the average of the contractual term of the stock option and the weighted‑average vestingperiod of the stock option. The assumed dividend yield is based upon the Company’s expectation of not paying dividends inthe foreseeable future. The risk‑free rate for periods within the expected life of the stock option is based upon the U.S.Treasury yield curve in effect at the time of grant. 108 Table of ContentsThe assumptions used in the Black‑Scholes option‑pricing model for stock option grants during the years endedDecember 31, 2015, 2014 and 2013 are as follows: Year Ended December 31, 2015 2014 2013 Expected life (in years) 5.9 - 6.7 5.8 - 6.1 5.6 - 6.1 Risk‑free interest rate 1.54% -1.98% 1.8% -2.8% 0.9% -2.0% Expected volatility 77.5% -84.7% 75.3% -85.4% 74.7% -76.2% Expected dividend yield — — — Weighted-average grant date fair value per share $4.73 $5.40 $1.95 No related tax benefits were recognized for the years ended December 31, 2015, 2014 or 2013. 9. Income Taxes The Company recorded no provision for income taxes as of December 31, 2015 due to reported net losses sinceinception. A reconciliation of the expected income tax benefit (expense) computed using the federal statutory income tax rateto the Company’s effective income tax rate is as follows for the years ended December 31, 2015, 2014 and 2013 (inthousands): 2015 2014 2013 Income tax benefit computed at federal statutory tax rate $(8,494) $(5,383) $(2,188) Change in valuation allowance 9,002 5,675 2,264 General business credits (661) (386) (32) Change in fair value of option liability — — (115) Other 153 94 71 Total $ — $ — $ — The Company has established a valuation allowance due to uncertainties regarding the realization ofdeferred tax assets based upon the Company’s lack of earnings history. During the year endedDecember 31, 2015, the valuation allowance increased by $9.0 million. Significant components of theCompany’s deferred tax assets and liabilities as of December 31, 2015 and 2014 are as follows (inthousands): 2015 2014 Net operating loss carryforwards $19,562 $12,414 Depreciation and amortization 1,207 507 Stock‑based compensation 260 71 Credit carryforwards 1,147 444 Prepaid expenses — (49) Accrued liabilities 264 30 Total deferred tax assets 22,440 13,417 Valuation allowance (22,440) (13,417) Net deferred tax asset $ — $ — As of December 31, 2015 and 2014, the Company had net operating loss (“NOL”) carryforwards for federal incometax purposes of approximately $57.5 million and $36.5 million, respectively. As of December 31, 2015 and 2014, theCompany also had available research and development tax credits for federal income tax purposes of approximately$985,000 and $405,000, respectively. If not utilized, these carryforwards expire at various dates beginning in 2028. As ofDecember 31, 2015, the Company had state research and development tax credit carryforwards of approximately $162,000,which will begin to expire in 2024 if not utilized.109 Table of Contents Utilization of the NOL carryforwards and tax credit carryforwards may be subject to a substantial annual limitationdue to ownership change limitations that have occurred previously or that could occur in the future, as provided bySection 382 of the Internal Revenue Code of 1986 (“Section 382”), as well as similar state provisions. Ownership changesmay limit the amount of NOL carryforwards and tax credit carryforwards that can be utilized annually to offset future taxableincome and tax, respectively. In general, an ownership change, as defined by Section 382, results from transactions thatincrease the ownership of 5% shareholders in the stock of a corporation by more than 50 percentage points in the aggregateover a three‑year period. The Company has not performed a study to determine whether any ownership change has occurredsince the Company’s formation through December 31, 2015. However, the Company believes that it has experienced at leastone ownership change in the past and that it may experience additional ownership changes as a result of subsequent shifts inits stock ownership. Should there be an ownership change that has occurred or will occur, the Company’s ability to utilizeexisting carryforwards could be substantially restricted. The Company applies the accounting guidance in ASC 740 related to accounting for uncertainty in income taxes.The Company’s reserves related to taxes are based on a determination of whether, and how much of, a tax benefit taken bythe Company in its tax filings or positions is more likely than not to be realized following resolution of any potentialcontingencies present related to the tax benefit. As of December 31, 2015 and 2014, the Company had no unrecognized taxbenefits. During the years ended December 31, 2015 and 2014, the Company had no interest and penalties related to incometaxes. The Company files income tax returns in the U.S. federal and Texas jurisdictions. As of December 31, 2015, thestatute of limitations for assessment by the Internal Revenue Service (“IRS”) is open for the 2012 and subsequent tax years,although carryforward attributes that were generated for tax years prior to then may still be adjusted upon examination by theIRS if they either have been, or will be, used in a future period. The 2011 and subsequent tax years remain open and subjectto examination by the State of Texas. There are currently no federal or state income tax audits in progress. 10. Shared Services Agreement with Asuragen On November 3, 2009, the Company entered into an agreement with Asuragen under which Asuragen shares spacewith and provides services to the Company in support of the Company’s business. Such services have included humanresources, finance and accounting, information technology, purchasing, shipping and receiving, equipment use, and variousfacility expenses. The Company pays Asuragen a monthly service fee for the services provided by Asuragen to the Company,which does not include direct charges incurred by Asuragen on behalf of the Company. The Company paid Asuragenapproximately $490,000, $506,000 and $908,000 for the years ended December 31, 2015, 2014 and 2013, respectively. On October 31, 2014, the Company entered into a sublease agreement with Asuragen for use of office, laboratoryand shared space. Total rent expense was approximately $89,000 and $15,000 for the year ended December 31, 2015 and2014, respectively. Both the lease and the shared service agreements expire on August 31, 2016, with the ability by eitherparty to terminate with six months’ notice. 11. Retirement Plan The Company sponsors a defined contribution plan that provides all eligible employees an opportunity toaccumulate funds for retirement. Employees who have completed 90 days of service and are at least 21 years of age maycontribute to this plan, and these contributions are matched by the employer on a basis that is determined annually by theCompany’s board of directors. The Company may also make profit sharing contributions to the plan. Employer contributionsfor 2015, 2014 and 2013 were approximately $117,000, $91,000 and $64,000, respectively. 110 Table of Contents12. License agreements Rosetta Genomics Ltd. In December 2015, the Company entered into a Patent License Agreement (the “License Agreement”) with RosettaGenomics Ltd. (“Rosetta”), licensing to the Company certain patents owned or controlled by Rosetta as specified in theLicense Agreement. Under the License Agreement, Rosetta has granted the Company a non-assignable, non- transferable,worldwide license for certain patents in connection with the development and commercialization of products that relate tothe tumor suppressor microRNA MIR-34 (“Products”). This license is exclusive with respect to Products that relate toMRX34, the Company’s lead product candidate and non-exclusive for products that are not related. Under the License Agreement, the Company paid Rosetta an up-front, non- refundable payment of $1.6 million inJanuary 2016. The Company shall also be obligated to pay low single- digit royalties on net sales of Products, as well asroyalties on sublicense revenues. Certain development and regulatory milestone payments totaling $3 million may also bepayable in connection with specified types of Products, upon the achievement of certain development and/ or regulatorymilestone events. Marina Biotech, Inc. In December 2011, the Company entered into a licensing agreement with Marina, pursuant to which Marina grantedto the Company a license to liposomal delivery technology, NOV340, known under the brand name “SMARTICLES,” todevelop and commercialize drug products incorporating Marina’s delivery system exclusively in combination with theCompany’s lead therapeutic product, MRX34. In December 2013, the license agreement was amended to include threeadditional specific mimics selected by the Company to use with SMARTICLES on an exclusive basis, and in May 2015, thelicense agreement was further amended to reduce the amount of a specific milestone payment and to provide for theprepayment of such milestone payment. In August 2015, the Company also entered into a side letter to the license agreement,under which it exercised its right to select an additional specific microRNA, in exchange for the payment of a specifiedselection fee payment. The Company has cumulatively paid Marina approximately $2.1 million through December 31,2015 in up‑front and milestone payments and as consideration for the inclusion within the license of fouradditional microRNA compounds. As the Company progresses with respect to development andcommercialization of its products, the Company will be required to make payments to Marina based uponthe achievement of certain development and regulatory milestones, totaling up to $6 million in theaggregate for each licensed product. The Company has agreed to pay up to an additional $4 million perlicensed product upon the achievement of certain regulatory milestones for a specified number of additionalindications, leading to a maximum cap on all milestone payments of $10 million per product. The exceptionto this is for the Company’s lead therapeutic product, MRX34, where the aggregate of all remainingdevelopment and regulatory milestone payments due to Marina, including for all additional indications, is$4.0 million. In addition to milestone payments, the Company will be required to pay low single digit royalties on net sales oflicensed products other than MRX34, subject to customary reductions and offsets. As a result of the Company’s 2013amendment to the agreement with Marina, the Company is no longer required to pay a royalty to Marina with respect to salesof the Company’s lead therapeutic product, MRX34. If the Company sublicenses its rights under the license from Marina, foreach optioned microRNA compound covered by such sublicense the Company is required to pay a specified lump‑sumpayment representing the remainder of the selection fee for the inclusion of such microRNA compound within the scope ofthe license agreement, as well as a portion of any revenue the Company receives from such sublicensees at a tieredpercentage between the very low single digits and the mid‑teens, depending on the circumstances in which the sublicense isentered into. 111 Table of ContentsYale University In 2006, Asuragen entered into an exclusive license agreement with Yale University (“Yale”) under certain patentrights relating to microRNAs arising from the laboratory of Dr. Frank Slack. This agreement was assigned to the Company byAsuragen in connection with the Company’s acquisition of certain assets, including patent rights, in 2009. In February 2014,the Company as successor‑in‑interest to Asuragen, amended and restated the exclusive license agreement. Some of the patentfilings in the Company’s intellectual property portfolio that are licensed to the Company by Asuragen are also included inthe patents licensed under the agreement with Yale. The Company will be required to pay royalties to Yale on net sales oflicensed products that contain specified microRNAs, at a percentage ranging from the very low to the low single digits,subject to customary reductions and offsets. The Company will also be required to pay to Yale a portion of specified grossrevenue that the Company receives from the Company’s sublicensees at a percentage in the mid‑single digits. The Company will be required to make payments for achievement of certain development and regulatory milestonesby products containing one specified microRNA and covered by the licensed patents, of up to $600,000 in the aggregate foreach such product, subject to reduction in certain circumstances. In addition, the Company is required to pay an annuallicense maintenance fee and minimum annual royalties under certain circumstances. 13. Commitments and Contingencies Shared Services Agreement Pursuant to a shared services agreement and sublease with Asuragen, the Company has remaining commitments forpayments in 2016 of approximately $381,000 for shares services and rent under the Shared Services Agreement and SubleaseAgreement with Asuragen. (see Note 10) Legal Contingencies The Company does not currently have any contingencies related to ongoing legal matters. 14. Net Loss Per Share Attributable to Common Stockholders The following table summarizes the computation of basic and diluted net loss per share attributable to commonstockholders of the Company (in thousands, except share and per share data): Year Ended December 31, 2015 2014 2013 Net loss $(24,983) $(15,834) $(6,436) Accretion of convertible preferred stock to redemption value (449) — (831) Accrued dividends on convertible preferred stock (3,871) (2,824) (1,493) Net loss attributable to common stockholders—basic and diluted (29,303) (18,658) (8,760) Weighted-average number of common shares—basic and diluted 5,010,323 64,131 1,987 Net loss per share attributable to common stockholders—basic and diluted $(5.85) $(291.00) $(4,408.65) 112 Table of ContentsThe following potentially dilutive securities outstanding, prior to the use of the treasury stock method orif‑converted method, have been excluded from the computation of diluted weighted‑average common shares outstanding,because including them would have had an anti‑dilutive effect due to the losses reported. December 31, 2015 2014 2013 Convertible preferred stock 7,921,490 5,599,939 5,599,939 Stock options 1,529,459 500,911 354,834 9,450,949 6,100,850 5,954,773 15. Selected Quarterly Data (unaudited) The following table contains quarterly financial information for 2015 and 2014. The operating results for anyquarter are not necessary indicative of results for any future period. 2015 Quarter Ended December 31 September 30 June 30 March 31 Operating Expenses: Research and Development $6,363 $4,683 $4,499 $3,402 General and Administrative 2,462 1,556 1,185 877 Total operating expenses 8,825 6,239 5,684 4,279 Other (income) (36) (8) — — Net loss (8,789) (6,231) (5,684) (4,279) Net loss attributable to common stockholders (8,890) (7,785) (7,229) (5,397) 2014 Quarter Ended December 31 September 30 June 30 March 31 Operating Expenses: Research and Development $3,501 $2,788 $2,068 $2,188 General and Administrative 877 715 929 848 Write-off of offering costs — 1,920 — — Total operating expenses 4,378 5,423 2,997 3,036 Other (income) — — — — Net loss (4,378) (5,423) (2,997) (3,036) Net loss attributable to common stockholders (5,090) (6,135) (3,701) (3,732) 113 Table of ContentsITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIALDISCLOSURE None. ITEM 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act refers tocontrols and procedures that are designed to ensure that information required to be disclosed by a company in the reports thatit files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specifiedin the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and proceduresdesigned to ensure that information required to be disclosed by a company in the reports that it files or submits under theExchange Act is accumulated and communicated to the company’s management, including its principal executive andprincipal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regardingrequired disclosure. Our management recognizes that any controls and procedures, no matter how well designed andoperated, can provide only reasonable assurance of achieving their objectives and our management necessarily applies itsjudgment in evaluating the cost-benefit relationship of possible controls and procedures. Our disclosure controls andprocedures are designed to provide reasonable assurance of achieving their control objectives. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated theeffectiveness of our disclosure controls and procedures as of December 31, 2015, the end of the period covered by thisAnnual Report on Form 10-K. Based upon such evaluation, our Chief Executive Officer and Chief Financial Officer haveconcluded that our disclosure controls and procedures were effective at the reasonable assurance level as of such date. Management’s Annual Report on Internal Control Over Financial Reporting This Annual Report on Form 10-K does not include a report of management’s assessment regarding internal control overfinancial reporting or an attestation report of the Company’s independent registered public accounting firm due to atransition period established by the rules of the SEC for newly public companies. Changes in Internal Control over Financial Reporting There was no change in our internal control over financial reporting that occurred during the period covered by this AnnualReport on Form 10-K that has materially affected, or is reasonably likely to materially affect, our internal control overfinancial reporting. ITEM 9B. OTHER INFORMATION None.114 Table of ContentsPART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE The information required by this item is incorporated by reference from the applicable information set forth in “Election ofDirectors,” “Corporate Governance,” “Executive Officers,” and “Section 16(a) Beneficial Ownership Reporting Compliance”which will be included in our definitive Proxy Statement for our 2016 Annual Meeting of Stockholders to be filed with theSEC. ITEM 11. EXECUTIVE COMPENSATION The information required by this item is incorporated by reference from the applicable information set forth in “CorporateGovernance,” “Non-Employee Director Compensation” and “Executive Compensation” which will be included in ourdefinitive Proxy Statement for our 2016 Annual Meeting of Stockholders to be filed with the SEC. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATEDSTOCKHOLDER MATTERS The information required by this item is incorporated by reference from the applicable information set forth in “SecurityOwnership of Certain Beneficial Owners and Management” and “Equity Plan Compensation Information” which will beincluded in our definitive Proxy Statement for our 2016 Annual Meeting of Stockholders to be filed with the SEC. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE The information required by this item is incorporated by reference from the applicable information set forth in “CertainRelationships and Related Party Transactions” and “Corporate Governance” which will be included in our definitive ProxyStatement for our 2016 Annual Meeting of Stockholders to be filed with the SEC. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES The information required by this item is incorporated by reference from the applicable information set forth in “Ratificationof Selection of Independent Registered Accounting Firm” which will be included in our definitive Proxy Statement for our2016 Annual Meeting of Stockholders to be filed with the SEC. 115 Table of ContentsPART IV ITEM 15. EXHIBITS and FINANCIAL STATEMENT SCHEDULES (a)The following documents are filed as part of this Annual Report on Form 10-K: 1.Consolidated Financial Statements: Reference is made to the Index to consolidated financial statements of Mirna Therapeutics, Inc. under Item 8 of Part II hereof. 2.Financial Statement Schedule: All schedules are omitted because they are not applicable or the amounts are immaterial or the required information ispresented in the consolidated financial statements and notes thereto in Part II, Item 8 above. 3.Exhibits See Exhibit Index immediately following the signature page of this Form 10-K.116 Table of ContentsSIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has dulycaused this report to be signed on its behalf by the undersigned, thereunto duly authorized. MIRNA THERAPEUTICS, INC. (Registrant) Date: March 29, 2016/s/ Paul Lammers Paul Lammers, M.D., M.Sc.Chief Executive Officer(Principal Executive Officer) Date: March 29, 2016/s/ Alan Fuhrman Alan FuhrmanChief Financial Officer(Principal Financial Officer) POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appointseach of Paul Lammers, Alan Fuhrman and Jon Irvin his or her true and lawful attorney-in-fact and agent, with full power ofsubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendmentsto this annual report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connectiontherewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power andauthority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fullyto all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-factand agent, or his substitutes or substitute, may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, each of the undersigned has executed this Power of Attorney as of the date indicated oppositehis/her name. 117 Table of ContentsPursuant to the requirements of the Securities Act, this report has been signed by the following persons in the capacities andon the dates indicated. Signature Title Date /s/ Paul Lammers Director, President and Chief Executive Officer March 29, 2016Paul Lammers, M.D., M.Sc. (Principal Executive Officer) /s/ Alan Fuhrman Chief Financial Officer March 29, 2016Alan Fuhrman (Principal Financial Officer) /s/ Jon Irvin Vice President of Finance March 29, 2016Jon Irvin (Principal Accounting Officer) /s/ Michael Powell Chairman of the Board March 29, 2016Michael Powell, Ph.D. /s/ Lawrence M. Alleva Director March 29, 2016Lawrence M. Alleva /s/ Elaine V. Jones Director March 29, 2016Elaine V. Jones, Ph.D. /s/ Edward Mathers Director March 29, 2016Edward Mathers /s/ Clay Siegall Director March 29, 2016Clay Siegall, Ph.D. /s/ Matthew Winkler Director March 29, 2016Matthew Winkler, Ph.D. /s/ Peter Greenleaf Director March 29, 2016Peter Greenleaf 118 Table of ContentsExhibit Index ExhibitNumberExhibit DescriptionIncorporated byReference FormDateNumberFiledHerewith3.1 Amended and Restated Certificate of Incorporation8-K10/06/20153.1 3.2 Amended and Restated Bylaws8-K10/06/20153.2 4.1 Reference is made to Exhibits 3.1 through 3.2. 4.2 Form of Common Stock Certificate.S-1/A09/18/20154.2 10.1 Third Amended and Restated Investor Rights Agreement,dated as of March 31, 2015, by and among MirnaTherapeutics, Inc. and certain of its stockholders.S-1/A09/11/20154.3 10.2 Registration Rights Agreement, dated October 5, 2015, byand between Mirna Therapeutics, Inc. and the CancerPrevention and Research Institute of Texas.8-K10/5/20154.1 10.3(A)Services Agreement, dated January 1, 2013, by and betweenMirna Therapeutics, Inc. and Asuragen, Inc.S-1/A08/24/201510.1(A) 10.3(B)Amendment No. 1 to the Services Agreement, datedOctober 31, 2014, by and between Mirna Therapeutics, Inc.and Asuragen, Inc.S-1/A08/24/201510.1(B) 10.4(A)†Cross License Agreement, dated November 3, 2009, by andbetween Mirna Therapeutics, Inc. and Asuragen, Inc.S-1/A08/24/201510.2(A) 10.4(B)†First Amendment to the Cross License Agreement, datedSeptember 28, 2012, by and between MirnaTherapeutics, Inc. and Asuragen, Inc.S-1/A08/24/201510.2(B) 10.5(A)†License Agreement, dated December 22, 2011, by andbetween Mirna Therapeutics, Inc. and Marina Biotech, Inc.S-1/A09/11/201510.3(A) 10.5(B)†Side Letter to License Agreement, dated December 22,2011, by and between Mirna Therapeutics, Inc. and MarinaBiotech, Inc.S-1/A08/24/201510.3(B) 10.5(C)†Side Letter to License Agreement, dated November 16,2012, by and between Mirna Therapeutics, Inc. and MarinaBiotech, Inc.S-1/A08/24/201510.3(C) 10.5(D)†Amendment No. 1 to License Agreement, datedDecember 27, 2013, by and between MirnaTherapeutics, Inc. and Marina Biotech, Inc.S-1/A09/18/201510.3(D) 10.5(E)†Side Letter to License Agreement, dated January 9, 2014,by and between Mirna Therapeutics, Inc. and MarinaBiotech, Inc.S-1/A09/30/201510.3(E) 10.5(F)Amendment No. 2 to License Agreement, dated May 11,2015, by and between Mirna Therapeutics, Inc. and MarinaBiotech, Inc.S-1/A09/18/201510.3(F) 10.5(G)†Side Letter to License Agreement, dated August 24, 2015,by and between Mirna Therapeutics, Inc. and MarinaBiotech, Inc.S-1/A09/11/201510.3(G) 10.6†Amended and Restated Agreement, dated February 6, 2014,by and between Mirna Therapeutics, Inc. and YaleUniversity.S-1/A09/11/201510.4 10.7†License Agreement, dated March 10, 2013, by and betweenMirna Therapeutics, Inc. and University of Zurich.S-1/A09/11/201510.5 119 Table of Contents10.8†Supply Agreement for a Liposomal Formulation, datedNovember 18, 2012, by and between MirnaTherapeutics, Inc. and Polymun ScientificImmunbiologische Forschung GmbH.S-1/A08/24/201510.7 10.9 Sublease, dated October 31, 2014, by and between MirnaTherapeutics, Inc. and Asuragen, Inc.S-1/A08/24/201510.11 10.10†Cancer Research Grant Contract, dated August 31, 2010, byand between Mirna Therapeutics, Inc. and the CancerPrevention and Research Institute of Texas.S-1/A08/24/201510.6 10.11 Cancer Research Grant Contract, dated September 1, 2015,by and between Mirna Therapeutics, Inc. and the CancerPrevention and Research Institute of Texas.S-1/A09/11/201510.19 10.12 Stock Purchase Agreement, dated September 1, 2015, byand between Mirna Therapeutics, Inc. and the CancerPrevention and Research Institute of Texas.S-1/A09/11/201510.15 10.13*Patent License Agreement, dated December 31, 2015, byand between Rosetta Genomics Ltd. and MirnaTherapeutics, Inc. X10.14(A)#2008 Long Term Incentive Plan, as amended.S-1/A08/24/201510.8(A) 10.14(B)#Form of Notice of Stock Option Grant under 2008 LongTerm Incentive Plan.S-1/A08/24/201510.8(B) 10.14(C)#Form of Stock Option Agreement under 2008 Long TermIncentive Plan.S-1/A08/24/201510.8(C) 10.15(A)#2015 Equity Incentive Award Plan.S-1/A09/18/201510.9(A) 10.15(B)#Form of Stock Option Grant Notice and Stock OptionAgreement under the 2015 Equity Incentive Award Plan.S-1/A09/11/201510.9(B) 10.15(C)#Form of Restricted Stock Award Agreement and RestrictedStock Unit Award Grant Notice under the 2015 EquityIncentive Award Plan.S-1/A09/11/201510.9(B) 10.16#2015 Employee Stock Purchase Plan.S-1/A09/18/201510.10 10.17#Non‑Employee Director Compensation Program.S-1/A09/18/201510.11 10.18#Form of Change in Control Severance Agreement.S-1/A09/11/201510.12 10.19#Form of Indemnification Agreement.S-1/A09/11/201510.13 10.20(A)#Employment Agreement, dated November 4, 2009, by andbetween Mirna Therapeutics, Inc. and Paul Lammers, M.D.,M.Sc.S-1/A09/11/201510.16(A) 10.20(B)#First Amendment to Employment Agreement, datedJanuary 5, 2011, by and between Mirna Therapeutics, Inc.and Paul Lammers, M.D., M.Sc.S-1/A09/11/201510.16(B) 10.21(A)#Offer Letter, dated April 29, 2013, by and between MirnaTherapeutics, Inc. and Sinil Kim, M.D.S-1/A09/11/201510.17(A) 10.21(B)#Employment Agreement, dated May 22, 2013, by andbetween Mirna Therapeutics, Inc. and Sinil Kim, M.D.S-1/A09/11/201510.17(B) 10.22#Employment Agreement, dated March 1, 2014, by andbetween Mirna Therapeutics, Inc. and Casi DeYoung.S-1/A09/11/201510.18 10.23(A)#Offer Letter, dated August 31, 2015, by and between MirnaTherapeutics, Inc. and Alan Fuhrman.S-1/A09/18/201510.20(A) 10.23(B)#Employment Agreement, dated September 8, 2015, by andbetween Mirna Therapeutics, Inc. and Alan Fuhrman.S-1/A09/18/201510.20(B) 10.24(A)#Employment Agreement, dated April 18, 2013, by andbetween Mirna Therapeutics, Inc. and Jon Irvin.S-1/A09/18/201510.21(A) 120 Table of Contents10.24(B)#Amendment No. 1 to the Employment Agreement, datedAugust 1, 2014, by and between Mirna Therapeutics, Inc.and Jon Irvin.S-1/A09/18/201510.21(B) 10.25(A)#Offer Letter, dated September 17, 2015, by and betweenMirna Therapeutics, Inc. and Miguel Barbosa, Ph.D.S-1/A09/18/201510.22 10.25(B)#Employment Agreement, dated September 23, 2015, by andbetween Mirna Therapeutics, Inc. and Miguel Barbosa,Ph.D.S-1/A09/25/201510.22(B) 23.1 Consent of independent registered public accounting firm. X24.1 Power of Attorney (included on the signature page hereto). X31.1 Certification of Chief Executive Officer pursuant to Section302 of the Sarbanes-Oxley Act of 2002. X31.2 Certification of Chief Financial Officer pursuant to Section302 of the Sarbanes-Oxley Act of 2002. X32.1**Certification of Chief Executive Officer and ChiefFinancial Officer pursuant to 18 U.S.C. Section 1350, asadopted pursuant to Section 906 of the Sarbanes-Oxley Actof 2002. X101.INSXBRL Instance Document X101.SCHXBRL Taxonomy Extension Schema Document X101.CALXBRL Taxonomy Extension Calculation LinkbaseDocument X101.DEFXBRL Taxonomy Extension Definition LinkbaseDocument X101.LABXBRL Taxonomy Extension Labels Linkbase Document X101.PREXBRL Taxonomy Extension Presentation LinkbaseDocument. X† Confidential treatment has been granted for certain information contained in this exhibit. Such information has beenomitted and filed separately with the Securities and Exchange Commission. * Portions of this exhibit (indicated by asterisks) have been omitted pursuant to a request for confidential treatment andthis exhibit has been filed separately with the Securities and Exchange Commission. # Indicates management contract or compensatory plan. ** The certification attached as Exhibit 32.1 that accompanies this Form 10-K is not deemed filed with the Securities andExchange Commission and is not to be incorporated by reference into any filing of Mirna Therapeutics, Inc. under theSecurities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or afterthe date of this Form 10-K, irrespective of any general incorporation language contained in such filing.121Exhibit 10.13[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.Confidential treatment has been requested with respect to the omitted portions.PATENT LICENSE AGREEMENTThis PATENT LICENSE AGREEMENT, effective as of December 31, 2015 (the “Effective Date”), is enteredinto between Rosetta Genomics Ltd., a corporation organized under the laws of the State of Israel, with offices at10 Plaut Street, Science Park, Rehovot 76706, Israel (“Rosetta ”) and Mirna Therapeutics, Inc., a Texascorporation with offices at 2150 Woodward St., Suite 100, Austin, TX 78744 (“Mirna”). Rosetta and Mirna arehereafter referred to collectively as the “Parties,” and each individually as a “Party.”WHEREAS, Rosetta is a co-owner of the Licensed Patents, and has the right to grant licenses thereunder(defined below);WHEREAS, Mirna [***]; andWHEREAS, [***] Rosetta desires to grant such license, in each case on the terms and subject to the conditionsset forth herein.NOW THEREFORE, in consideration of the foregoing premises and the covenants, warranties and indemnitiesset forth herein, and for other good and valuable consideration, the receipt and sufficiency of which is herebyacknowledged, intending to be legally bound the Parties agree as follows:1.DEFINITIONS1.1.The following terms when capitalized have the meanings set forth below:(a)“Affiliate” means, with respect to a Party, any entity that is controlled by, controls, or isunder common control with such Party, provided that such entity shall be an Affiliate hereunder only for so longas such control exists. For purposes of this definition, the term “control” means: (i) direct or indirect ownership ofmore than fifty percent (50%) of the voting interest in the entity in question, provided, however, that if local lawrequires a minimum percentage of local ownership, control will be established by direct or indirect beneficialownership of one hundred percent (100%) of the maximum ownership percentage that may, under such locallaw, be owned by foreign interests; or (ii) possession, directly or indirectly, of the power to direct or cause thedirection of management or policies of the entity in question (whether through ownership of securities or otherownership interests, by contract or otherwise)..(b)“Agreement” means this Patent License Agreement, together with all Schedules hereto,and any duly executed amendments to the foregoing.(c)“Business Day” means any day other than a Saturday, Sunday, or day on which bankinginstitutions in New York, New York and Austin, Texas are authorized or obligated by applicable Law orexecutive order to be closed.(d)“Compound” means the Current Compound and/or any Non-Exclusive Compound, asapplicable. (e)“Covered Sale” means the Sale by Mirna or any Sublicensee of a Product to a Third Party,where (i) such Sale, (ii) the importation of such Product, or (iii) the manufacturing of such Product, is in ajurisdiction in which there is, at the time of such event: (A) at least one patent application for a Licensed Patentthat, at the applicable time, has not been pending for more than [***] ([***]) years or (B) at least one issued andunexpired Licensed Patent, and in the case of (A) or (B) has not been dedicated to the public, disclaimed,abandoned or held unenforceable by a court or other body of competent jurisdiction (which decision is notappealable or has not been appealed within the time allowed for appeal) or admitted invalid or unenforceablethrough reexamination, reissue, disclaimer or otherwise.(f)“Entity” means a corporation, association, partnership, business trust, joint venture, limitedliability company, proprietorship, unincorporated association or other organization or individual that can exerciseindependent legal standing.(g)“Governmental Authority” means any federal, national, supranational, state, provincial,local or other government, governmental, regulatory or administrative authority, agency or commission or anycourt, tribunal, or judicial or arbitral body.(h)“Homologue” means a nucleic acid that comprises a nucleic acid sequence that is [***]%to[***]% identical to either of the nucleic acid sequences set forth in Schedule C. (i)“Law” means any U.S. or non U.S. law (including common law), ordinance, writ, statute,treaty, rule or regulation, decree, judgment, consent decree or other governmental requirement of anyGovernmental Authority.(j)“Licensed Patents” means (i) the patent applications and issued patents listed in ScheduleA attached hereto, together with (ii) any application or patent claiming priority to any such application or patent,and any substitutions, divisions, continuations, continuing prosecution applications, extensions, term restorations,renewals, or continuations-in-part of any such applications or patents issuing on any of the foregoing applicationsand all reexaminations, substitutions, or reissues thereof, and any and all foreign counterparts of any and all ofthe foregoing, in each case to the extent such patent or patent application is owned or controlled by Rosetta andlicenseable by Rosetta under the terms hereof.(k)“Current Compound” means a compound with the sequence set forth in Schedule Battached hereto, which is the Mirna active pharmaceutical ingredient included in MRX34 that currently is thesubject of clinical trials.(l)“Mimetic of miR-34a” means any synthetic polynucleotide having the sequence as setforth in Schedule C.(m)“Net Sales” means the gross amount, excluding [***], of consideration (whether forpayment or in exchange for other goods or services) invoiced by Mirna or its Sublicensee for any Covered Saleof a Product to a Third Party, after deduction of the Qualifying Costs (defined below).[***] Certain information in this document has been omitted and filed separately with the Securities and ExchangeCommission. Confidential treatment has been requested with respect to the omitted portions. (i)“Qualifying Costs” means the following amounts [***] by Mirna (or, asapplicable, its Sublicensee):(1)sales taxes (including value added taxes and other similar taxes) to theextent applicable to such Sale [***];(2)discounts granted on the relevant Sale and not already reflected in theinvoiced price and credits, rebates, chargebacks, and other deductions and allowances, if any, actually grantedon account of price adjustments, recalls, rejections or returns of products or services previously sold, providedthat, for the avoidance of doubt, a chargeback or other deduction shall not be excluded if it already has beenaccounted for under Section 1.1(m)(i)(4);(3)freight, postage and duties, and transportation charges relating to such Sale(including handling and insurance thereto) separately identified invoice or other documentation maintained in theordinary course of business;(4)[***]. For the avoidance of doubt, an amount falling into multiple categories above may not be deducted more thanonce.(ii)Mirna shall [***] any proposed excluded Qualifying Costs or other exclusionspursuant to Section 1.1(m)(iii) through 1.1(m)(v) in accordance with Section 4.4(b). For the avoidance of doubt,amounts received by Mirna from a Sublicensee (or if the grant of a multiple tier Sublicense is permittedhereunder, received by a Sublicensee from its sub-sublicensee) that are in consideration of the grant of sublicenserights under the Licensed Patents but are not calculated based on or otherwise related to the Covered Sale of aProduct, are Sublicensing Revenue and not Net Sales.(iii)Sales between Mirna and its Affiliates or Sublicensees for resale shall be excludedfrom the computation of Net Sales, and no payments will be payable on such sales except where such Affiliatesor Sublicensees are end users. (iv)Notwithstanding the foregoing, Product provided for clinical or non-clinicalresearch and trials or as Product samples shall be excluded from Net Sales. Product provided [***]. (v)If a Product is Sold as part of a Combination Product (as defined below), NetSales will be calculated by multiplying the (x) Net Sales of the Combination Product calculated as above (i.e.,calculated as for a non-Combination Product) by (y) the fraction (A/(A+B)), where:(1)“A” is the average gross selling price during the previous calendar quarterin such country of such Product as the sole therapeutically active component; and[***] Certain information in this document has been omitted and filed separately with the Securities and ExchangeCommission. Confidential treatment has been requested with respect to the omitted portions. (2)“B” is the average gross selling price during the previous calendar quarterin such country of the other therapeutically active component contained in the Combination Product.If “A” or “B” cannot be determined by reference to non-Combination Product Sales as described above, thenNet Sales will be calculated as above, but the average gross selling price in the above equation will be [***] priorto the end of the accounting period in question based on[***] that takes into account, in the applicable country, [***] in the Combination Product. If [***] the end of the applicable accounting period,[***]. As used in thisSection 1.1(m)(v), “Combination Product” means a Product that contains one or more additional therapeuticagents (whether co-formulated or co-packaged) that are not the therapeutic agent in the Product. For theavoidance of doubt, drug delivery vehicles, adjuvants, and excipients, and equipment used to administer aProduct, will not be deemed an “additional therapeutic agent” for the purposes of the definition of “CombinationProduct.”(n)“Non-Exclusive Compound” means a compound that is (a) a Mimetic of miR-34a or (b) amiR-34a Homologue, in each case other than the Current Compound. (o)“p53” means [***] protein encoded by the TP53 gene.(p)“p53 Status” means [***].(q)“Phase II Trial” means any human clinical trial conducted on patients with the disease orcondition being studied, the principal purpose of which is to determine (i) preliminary evidence of efficacy andsafety and/or (ii) selection of the dose or dose range to be studied in a subsequent Phase II Trial(s) or Phase IIITrial(s) for such product, as further described in 21 C.F.R. §312.21(b) (including, any such clinical study in anycountry other than the United States).(r)“Phase III Trial” means a human clinical trial, the principal purpose of which is toestablish safety and efficacy of the Product in patients with the disease being studied, as further described in 21C.F.R. §312.21(c) (including, any such clinical study in any country other than the United States).(s)“Pivotal Trial” means (i) a Phase III Trial or (ii) a Phase II Trial, which is designed andintended to be of a size and statistical power sufficient to serve as a pivotal study to support the filing of anapplication for drug regulatory approval. (t)“Quarter” means any respective period of three (3) consecutive calendar months endingon March 31, June 30, September 30 and December 31 of any Year.(u)“Product” means any pharmaceutical product comprising or containing (a) the CurrentCompound and/or (b) one or more Non-Exclusive Compounds.(v)“Sale” means, with respect to a Product, the sale, importation lease, rental, transfer orother exploitation of such Product. “Sell” and “Sold” have the correlative meanings.[***] Certain information in this document has been omitted and filed separately with the Securities and ExchangeCommission. Confidential treatment has been requested with respect to the omitted portions. (w)“Sublicensing Revenues” means [***] received by Mirna from a Sublicensee inconsideration of a grant of a Sublicense under the Licensed Patents to such Sublicensee, or [***] under theLicensed Patents, which in each case may include [***] in consider for such grant of a Sublicense, but excludingany consideration received by Mirna from a Sublicensee as bona fide payments in consideration for:(i)[***];(ii)[***];(iii)[***];(iv)[***];(v)[***];(vi)[***] payments made by such Sublicensee to Mirna in consideration of [***],provided that the [***] that are attributable to Sublicense Revenues hereunder will be [***] in accordance withSection 4.4(b), including with [***].;(vii)[***]; and(viii)[***].(items (i) through (viii), the “Excluded Revenue”). For the avoidance of doubt, an amount that falls into morethan one of the categories of exclusions listed above may not be deducted more than once. Mirna shall [***] inaccordance with Section 4.4(b).(x)“Third Party” means with respect to any Party, any Entity other than such Party and itsAffiliates.(y) “Tier 1 Product” means a Product where (i) the assessment of p53 Status is on theapproved label of such Product or (ii) Mirna (or its Sublicensee) Sells a [***], or (iii) Mirna (or its Sublicensee)requires or recommends that [***]; provided however [***].(z)“Tier 2 Product” means a Product, other than a Tier 1 Product, where [***].(aa)“Tier 3 Product” means any Product other than a Tier 1 Product or Tier 2 Product.(bb)“WIS” means Weizmann Institute of Science.(cc)“Year” means a calendar year.(dd)“Yeda” means Yeda Research and Development Company, Ltd., a corporation organizedunder the laws of Israel.[***] Certain information in this document has been omitted and filed separately with the Securities and ExchangeCommission. Confidential treatment has been requested with respect to the omitted portions. (ee)“Yeda Agreement” means the Agreement between Rosetta and Yeda dated April 17,2005Other Defined TermsSection“Audit”5.2“Bankruptcy Code”11.8“Challenge”7.2(a)“Claim”10.5“Combination Product”1.1(m)(v)“Discloser”8.1“Dispute”11.2“Dispute Notice”11.2(a)“Effective Date”Introductory Paragraph“Excluded Revenue”1.1(w)“Expiration Date”9.1“Indemnitees10.5“License”2.1“Losses”10.5“Milestone Payment”4.2“Mirna”Introductory Paragraph“Negotiation Period”6.1“Notice or notice”11.5“Offset”4.3(b)[***][***]“Qualifying Costs”1.1(m)“Representative”8.1“Recipient”8.1“Rosetta”Introductory Paragraph“Royalties”4.3(a)“Sublicense”2.3“Sublicense Agreement”2.3“Sublicensee”2.3“Sublicense Fees”4.3(c)“Term”9.1“Third Party Payment”4.3(b)“Up-Front Payment”4.1“Yeda Confidential Information”8.5 1.2.Rules of Construction. (a)Each of the Parties acknowledges and agrees that this Agreement has been diligentlyreviewed by and negotiated by and between them, that in such negotiations each of them has been representedby competent counsel and that the final agreement contained herein, including the language whereby it has beenexpressed, represents the joint efforts of the Parties hereto and their counsel. Accordingly, in the event anambiguity or a question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly bythe Parties and no[***] Certain information in this document has been omitted and filed separately with the Securities and ExchangeCommission. Confidential treatment has been requested with respect to the omitted portions. presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of anyprovisions of this Agreement.(b)The definitions of the terms herein shall apply equally to the singular and plural forms ofthe terms defined, and derivative forms of any capitalized term defined herein shall have meanings correlative tothe meaning specified herein. Whenever the context may require, any pronoun shall include the correspondingmasculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to befollowed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning andeffect as the word “shall”. The word “any” shall mean “any and all” unless otherwise clearly indicated bycontext. “$” as used in this Agreement means the lawful currency of the United States. (c)Unless the context requires otherwise: (i) any definition of or reference to any agreement,instrument or other document herein shall be construed as referring to such agreement, instrument or otherdocument as from time to time amended, supplemented or otherwise modified (subject to any restrictions on suchamendments, supplements or modifications set forth herein or therein), (ii) references to this Agreement includeall Schedules, which are incorporated herein and made part hereof, and any duly executed amendments to theforegoing; (iii) any reference to any Laws herein shall be construed as referring to such Laws as from time totime enacted, repealed or amended, (iv) where either Party’s consent is required hereunder, except as otherwisespecified herein, such Party’s consent may be granted or withheld in such Party’s sole discretion, (v) anyreference herein to any person shall be construed to include the person’s successors and assigns, (vi) the words“herein” “hereof’ and “hereunder”, and words of similar import, shall be construed to refer to this Agreement inits entirety and not to any particular provision hereof, and (vii) all references herein to an Article, Section, orSchedule, unless otherwise specifically provided, shall be construed to refer to an Article, Section, or Schedule ofthis Agreement.2.GRANT OF LICENSE2.1.Grant. Subject to the terms of this Agreement, Rosetta hereby grants to Mirna, effective as of theEffective Date and during the Term:(a)a non-assignable and non-transferable (except as permitted under Section 11.7),worldwide, exclusive license, with the right to authorize and grant Sublicenses under the Licensed Patents solelyas set forth in Section 2.3, to: (i) make, have made, use, offer for sale, sell and import Products [***], and (b)perform processes covered by the Licensed Patents solely in connection the activities permitted under subsection(a)(i); and(b)a non-assignable and non-transferable (except as permitted under Section 11.7),worldwide, non-exclusive license, with the right to authorize and grant Sublicenses under the Licensed Patentssolely as set forth in Section 2.3, to: (i) make, have made, use, offer for sale, sell and import Products that [***]and (ii) perform processes covered by the Licensed Patents solely in connection with the activities permittedunder subsection (b)(i). (collectively (a) and (b), the “License”).[***] Certain information in this document has been omitted and filed separately with the Securities and ExchangeCommission. Confidential treatment has been requested with respect to the omitted portions. 2.2.Limited Exclusivity. The License shall be exclusive solely for Products that [***], and nothingherein is intended to limit or prohibit Rosetta from granting licenses under the Licensed Patents to any Person forany other product or service. 2.3.Sublicenses. (a)The License includes the right for Mirna to grant to third parties a sublicense of the rightsgranted under the License (each, a “Sublicensee” and such sublicense, a “Sublicense”) in accordance with thisSection 2.3, Mirna may not grant to such Sublicensee the right to grant any further Sublicenses, without the priorwritten consent of Rosetta, such consent of Rosetta not to be unreasonably withheld, and the prior writtenconsent of Yeda in accordance with the Yeda Agreement. In the event Mirna desires to obtain such consents togrant a sublicense with the right to grant further sublicenses,[***]. Mirna shall at all times be responsible toRosetta for its Sublicensee’s compliance with the terms of this Agreement and the Yeda Agreement that areapplicable to Rosetta’s sublicensees and sub-sublicensees. (b)Mirna agrees that each Sublicense shall be pursuant to a written sublicense agreement (a“Sublicense Agreement”) which shall comply with the following:(i)[***] terms hereof applicable to a Sublicensee, and [***], including [***].(ii)provide that: the Sublicense is personal to the Sublicensee and may not be sold,assigned, delegated or otherwise transferred or encumbered, in whole or in part, without the prior written consentof each of Rosetta and Yeda (such consent by Yeda to be sought and provided in accordance with Section 5.7.5of the Yeda Agreement), and the Sublicensee may [***] of its receipt from the Sublicensee. For the avoidanceof doubt, for purposes of this, Sublicense Agreement, a merger or consolidation of the Sublicensee with a thirdparty where the Sublicensee is the surviving entity, or the acquisition of all or substantially all of the stock ofcontrol of the Sublicensee, shall not be deemed an assignment and the prior consent of Rosetta or Yeda is notrequired for such transaction .(iii)provide that the Sublicensee shall have no right to grant further sublicenses;(iv)provide that all Yeda-dependent provisions under the Sublicense will terminate inthe event that the Yeda Agreement is terminated;(v)provide that the Sublicense will automatically terminate on the earlier of (x) theExpiration Date or (y) the date on which this Agreement expires or terminates for any reason, provided that inthe event that this Agreement is terminated prior to the Expiration Date, and provided that a Sublicensee is at thattime not in breach of its Sublicense Agreement, Rosetta agrees to enter into good faith negotiations withSublicensee with respect to the provision of a direct license between Rosetta and such Sublicensee onsubstantially the same financial terms as those set forth herein and in the Sublicense Agreement, subject to themutual agreement of Rosetta and the Sublicensee.[***] Certain information in this document has been omitted and filed separately with the Securities and ExchangeCommission. Confidential treatment has been requested with respect to the omitted portions. (c)Mirna shall promptly provide Rosetta (i) [***], (ii) the[***], and (iii) [***] after itsexecution. All amendments to any such Sublicense shall comply with this Section 2.3(c), and [***].(d)Mirna shall promptly notify Rosetta in the event that any Sublicensee is in material breachof its Sublicense Agreement, and will promptly provide Rosetta with a copy of any notice of breach, termination,or the like sent to or received from a Sublicensee. Rosetta shall [***].2.4.Limitations. Mirna and its Sublicensees:(a)may exercise rights under the Licensed Patents solely as expressly permitted under theLicense;(b)in connection with the exercise of their rights and compliance with their obligations underthis Agreement, shall at all times strictly comply with all applicable Laws now or hereafter in effect, and make,obtain, and maintain in force at all times during the Term, all filings, registrations, reports, licenses, permits, andauthorizations required under applicable Law to perform its obligations under this Agreement;(c)acknowledges that Yeda is a co-owner of some or all of the Licensed Patents, that Rosettaand certain of its rights with respect to the licensing of the Licensed Patents is subject to the Yeda Agreement;and agrees that Mirna and its Sublicensee are obligated hereunder and agree to comply with all applicable termsof the Yeda Agreement, and that all Yeda-dependent provisions under this Agreement will terminate in the eventthat the Yeda Agreement is terminated. Mirna acknowledges that it has received and reviewed a copy of theYeda Agreement prior to entering into this Agreement;(d)acknowledges and agrees that Rosetta has no responsibility for the Products manufacturedor sold or on behalf of Mirna or its Sublicensees, including no responsibility for the formulation or efficacythereof, or the pricing thereof or any discounts or price reductions that may be applied with respect thereto .2.5.Reservation of Rights. Mirna acknowledges and agrees that: (a) except for the rights and licensesexpressly granted under the License, it shall have no rights under this Agreement, by implication, estoppel orotherwise, in, under or to any Intellectual Property now or hereafter owned by Rosetta or any of its Affiliates,and all rights not expressly licensed or granted hereunder are expressly reserved by Rosetta and its Affiliates; (b)no license is granted hereunder to Mirna under any patent claim owned by Rosetta or its Affiliates other than thepatents expressly listed in the definition of Licensed Patents; and (c) no license is granted under the LicensedPatents to any Entity other than Mirna. For the avoidance of doubt, and without limiting the foregoing Rosetta isunder no obligation hereunder to deliver, and shall not deliver, to Mirna any data or know-how relating to theLicense Patents, including any data relating to results of the joint research conducted by Rosetta and Yeda underthe Yeda Agreement (i.e., the “Results” as defined in the Yeda Agreement).3.[***][***] Certain information in this document has been omitted and filed separately with the Securities and ExchangeCommission. Confidential treatment has been requested with respect to the omitted portions. 3.1.[***].4.PAYMENTS4.1.Up-front Payment. A non-refundable payment in the amount of one million six hundredthousand U.S. Dollars ($1,600,000) (the “Up-Front Payment”) will be due by Mirna to Rosetta upon executionof this agreement which shall be paid within [***] ([***]) Business Days after such execution.4.2.Milestone Payments. Mirna shall pay to Rosetta the following non-refundable milestonepayments (the “Milestone Payments”). For the avoidance of doubt, the Milestones Payments shall be payable[***]:(a)Tier 1 Product. Mirna will provide written Notice to Rosetta within [***] ([***]) days of[***], which Notice shall specify [***], and Mirna will make a payment to Rosetta in the amount of [***] U.S.Dollars ($[***]) within [***] ([***]) days of [***].(b)Tier 2 Product. Mirna will provide written notice to Rosetta within [***], which noticeshall specified [***], and Mirna will make a payment to Rosetta in the amount of [***] U.S. Dollars ($[***])within [***] ([***]) days of [***].4.3.Royalties and Sublicense Fees. (a)Royalty Rates. Mirna will pay to Rosetta running royalties on Net Sales of Product byMirna or its Sublicensees on a country-by-country and Product-by-Product basis as follows (“Royalties”):(i)For Sales of Tier 1 Products, [***]% of Net Sales;(ii)For Sales of Tier 2 Products, [***]% of Net Sales; and(iii)For Sales of Tier 3 Products, [***]% of Net Sales.For the avoidance of doubt, no Royalties shall be payable under this Section 4.3 for any Sales of Products madeafter the Expiration Date.(b)Certain Reduction of [***](i)For Third Party Payments. In the event that, in order to exercise the rights grantedunder the License, Mirna and/or its Sublicensee licenses [***] and makes [***] to such Third Party inconsideration of such license under such intellectual property (a “Third Party Payment”), then with respect toProducts covered by such Third Party Payment, Mirna shall be entitled to reduce the amount of [***] payable toRosetta hereunder by an amount equal to up to [***] percent ([***]%) of the corresponding Third PartyPayment (the “Offset”), provided that in no event may [***] be reduced by more than [***] percent ([***]%) ofthe amount that would otherwise have been due and payable hereunder.(ii)For Termination of the Yeda Agreement. If the Yeda Agreement is terminatedand Rosetta has granted to Mirna the nonexclusive license under Section 10.3(b), [***] Certain information in this document has been omitted and filed separately with the Securities and ExchangeCommission. Confidential treatment has been requested with respect to the omitted portions. then the amount of [***] payable to Rosetta, including [***] shall be reduced by [***] percent ([***]%) of theamount that would otherwise have been due and payable hereunder.(c)Sublicense Fees. With respect to all Sublicensing Revenues received by Mirna, Mirnashall pay to Rosetta a percentage of such Sublicensing Revenue (“Sublicense Fees”), which percentage will bebased on [***] by the Sublicensee, such percentage determined as of the time such Sublicense Fees become due,in accordance with the following:[***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***] For the avoidance of doubt, application of the foregoing shall be based on the [***] by such Sublicensee (forexample – if a Product can be [***], it will be considered a [***] Product). For the purpose of this Section,“[***]” means [***]. 4.4.Reports and Payments. (a) Quarterly Reports. For each Quarter during the Term, within [***] ([***]) days of theend of such Quarter, Mirna and/or its Sublicensee, as applicable, shall provide to a written report, certified ascorrect by its chief financial officer or similar officer, setting forth the amount of Royalties and Sublicense Feesthat accrued with respect to such Entity in the preceding Quarter and the manner in which such amounts werecalculated in accordance with this Agreement. Such report shall set forth, for Mirna and each Sublicensee, on aProduct-by-Product and jurisdiction by jurisdiction basis, the following applicable amounts that accrued duringsuch Quarter:(i)Net Sales before any deductions or exclusions;(ii)all exclusions from Net Sales separately listed, including Qualifying Costs andother exclusions or deductions applied pursuant to each of Sections 1.1(m)(ii) through 1.1(m)(iv).(iii)Third Party Payments any adjustment for Compound Products as permitted underSection 1.1(m)(v);(iv)all Excluded Revenue excluded from Sublicensing Revenue pursuant to Section1.1(w);(v)any Offset permitted pursuant to Section 4.3(b);(vi)net Royalties payable hereunder, calculated in accordance with Section 4.3, and(vii)net Sublicense Fees payable hereunder, calculated in accordance with Section4.3. [***] Certain information in this document has been omitted and filed separately with the Securities and ExchangeCommission. Confidential treatment has been requested with respect to the omitted portions. (b)Payments. Together with such report, Mirna shall make a payment to Rosetta of allRoyalties and Sublicense Fees payable for such Quarter, and provide written documentation, including [***].(c)Annual Reports. Mirna shall provide to Rosetta written reports within [***] ([***]) daysof the end of each calendar year, which shall include [***] of: (i) [***] of the Products in the said year; (i) [***]activities related to the Products during the said year; (i) Mirna’s and any Sublicensee’s (and permitted sub-Sublicensee’s) plans in respect of the [***] under the Agreement or any Sublicense (or permitted sub-Sublicense)for [***]. At Rosetta’s request, from time to time, Mirna shall [***] relating its and any Sublicensee’s (andpermitted sub-Sublicensee’s) [***] under the Agreement or Sublicense (or permitted sub-sublicense).4.5.Patent Costs. [***] will [***] for [***] percent ([***]%) of all costs incurred with respect to theprosecution or protection of the Licensed Patents incurred by [***], provided such amount [***] shall beprorated if [***]. By way of example and not limitation, if [***]. [***] shall [***] issue invoices to [***]specifying the [***], and [***] shall pay the invoice amount within [***] ([***]) days of the issuance of suchinvoice.4.6.Method of Payment. Unless otherwise agreed to by the Parties, all payments by Mirna hereundershall be effected by direct bank transfer to the following Rosetta bank account: Bank: [***]ABA# [***]Account Name: [***]Account No: [***] All banking charges shall be from [***]’s account. All payments contemplated under this Agreement shall bedenominated in U.S. Dollars (US$) unless otherwise agreed by the Parties.4.7.Taxes. All payments hereunder by Mirna shall be net of any withholding taxes that may be paidto any government or tax authority. Mirna shall be responsible for all taxes imposed on payments made underthis Agreement, excepting income taxes payable in respect of Rosetta’s income.4.8. Late Fees. Mirna shall be liable for interest on any overdue payment under this Agreementcommencing on the date such payment became due at a [***] rate equal to [***] in respect of unapprovedoverdrafts in current accounts in the relevant currency, except that [***] (provided that [***]). If such interestrate exceeds the maximum legal rate in the jurisdiction where a claim therefore is being asserted, the interest rateshall be reduced to such maximum legal rate.5.RECORDS AND AUDIT5.1.Recordkeeping. Mirna shall keep and require its Sublicensees to keep, complete, accurate andcorrect books of account and records consistent with GAAP and sound business and accounting principles andpractices and in such form and in such details as to enable the determination of the amounts due to Mirna orRosetta, as the case may be, in terms hereof or any Sublicense Agreement. Mirna shall supply to Rosetta at theend of each Year, commencing with[***] Certain information in this document has been omitted and filed separately with the Securities and ExchangeCommission. Confidential treatment has been requested with respect to the omitted portions. the first Year in which any amount is payable by Mirna to Rosetta hereunder, a report signed by Mirna’sindependent auditors in respect of the amounts due to Rosetta pursuant to Section 4 in respect of the Yearcovered by the said report and containing details in accordance with Section 4.4 above in respect of the Quarterlyreports. Mirna shall retain, and cause its Sublicensees to retain, the foregoing books of account for [***] ([***])years after the end of each Year during the Term, and, if this Agreement is terminated for any reason whatsoever,for [***] ([***]) years after the end of the Year in which such termination becomes effective.5.2.Audit. During the Term [***], no more often than [***] in any [***] ([***]) month period,Rosetta shall have the right to have an independent third party auditor audit Mirna’s and/or its Sublicensee’sbooks and records for purposes of verifying compliance with its payment and other obligations hereunder (an“Audit”). If Rosetta elects to have such an Audit conducted, Rosetta shall select the independent auditor, whichauditor is subject to approval by Mirna, such approval not to be unreasonably withheld, delayed orconditioned. Any such Audit shall be conducted by such auditor upon at least [***] ([***]) days advance noticeand during normal business hours. Any such Audit shall be performed at Rosetta’s expense; provided, that inthe event that the Audit shows any underpayment greater than [***] percent ([***]%) of the aggregate amountsof the payment reportable by Mirna to Rosetta for any Year, then Mirna shall reimburse Rosetta for the cost ofthe Audit.6.DIAGNOSTIC PRODUCTS6.1.[***] Diagnostic Product. In the event that Mirna intends to [***], then its shall [***]. Mirna[***]diagnostic product [***] until [***] in accordance with this Section 6.1. In the event that [***], the Partieswill [***] the [***] such diagnostic product, [***]). If [***], or if [***], then Mirna [***] develop andcommercialize such diagnostic product, [***] such diagnostic product, [***], Mirna [***]. For the avoidance ofdoubt, Mirna’s [***] applies and accrues with respect to [***] during the Term.7.INTELLECTUAL PROPERTY7.1.Licensed Patents. Mirna acknowledges and agrees that:(a)Rosetta retains all right, title and interest in and to the Licensed Patents, and except forrights expressly granted to Mirna and its Subsidiaries under this Agreement, Mirna and its Sublicensees have noownership or other rights in the Licensed Patents;(b)Rosetta has no obligation hereunder to disclose or supply to Mirna or its Sublicensees anyknow-how, trade secrets or technology relating to the Products or the subject matter of the Licensed Patents.7.2.No Challenges. (a)[***], Mirna agrees, and shall cause its Sublicensee to agree, that Mirna and itsSublicensees shall not participate directly or indirectly in, or assist any other Entity with respect to, any judicial oradministrative proceeding in any jurisdiction to invalidate or render unenforceable any Licensed Patent (a“Challenge”). [***] Certain information in this document has been omitted and filed separately with the Securities and ExchangeCommission. Confidential treatment has been requested with respect to the omitted portions. (b)Without limiting Section 7.2(a), in the event that Mirna or its Sublicensee commences orparticipates in, directly or indirectly, any Challenge:(i)Mirna or its Sublicensee, as the case may be, will provide [***] written notice toRosetta, stating the basis for such Challenge [***];(ii)Rosetta may immediately terminate this Agreement upon written notice to Mirna;(iii) Mirna or its Sublicensee, as the case may be, will be required [***];(iv)other than a Challenge brought before the United States Patent and TrademarkOffice, any Challenge of any U.S. License Patents shall be litigated in the courts located in New York, NewYork, and the Parties agree not to challenge personal jurisdiction in that forum; and (v)during the Term and during pendency of the Challenge, Milestone Payments andRoyalties due hereunder will be [***], and their payment shall be [***], and starting on the date that theChallenge is won by Rosetta, Milestone Payments and Royalties due hereunder will be [***].(c)Exception. Notwithstanding anything to the contrary herein, Sections 7.2(a) and 7.2(b)shall not apply with respect to any Challenge asserted by Mirna or its Sublicensee, as the case may be, inresponse to or in defense of the prior assertion by Rosetta of a claim under such Licensed Patent against Mirna orsuch Sublicensee, as the case may be.7.3.Prosecution of the Licensed Patents. As between the Parties, Rosetta retains the sole andexclusive right to apply for, prosecute and defend the Licensed Patents, [***], subject to the [***]. 7.4.Enforcement of Licensed Patents. (a)Monitoring. Mirna shall use commercially reasonable efforts to monitor Third Partyinfringement of the Licensed Patents with respect to any products competing with the Products, and shall providenotice to Rosetta if it learns of any alleged infringement.(b)Protection. As between the Parties, Rosetta will have the sole and exclusive right, but notthe obligation, for the protection of the Licensed Patents, including the initiation, defense, and management ofany adversarial legal proceeding relating to the Licensed Patents, in any jurisdiction (including any declaratoryjudgment action, patent infringement action or opposition), at Rosetta’s expense, subject to the reimbursementterms set forth in Section 4.5 If Mirna provides Notice to Rosetta demonstrating that a Third Party is infringingany Licensed Patent in any jurisdiction by making or selling within Mirna’s exclusive field, and following suchNotice Rosetta elects not to enforce the Licensed Patents against such alleged infringer, then during the periodsuch Third Party is so infringing the Licensed Patents (as[***] Certain information in this document has been omitted and filed separately with the Securities and ExchangeCommission. Confidential treatment has been requested with respect to the omitted portions. demonstrated by Mirna), [***], provided that the foregoing [***] shall not apply if Rosetta has elected not toproceed against the accused Third Party [***]. Upon Rosetta’s request, Mirna shall join in and/or providecooperation with respect to any such action to enforce the Licensed Patents. 8.CONFIDENTIALITY8.1.Non-Disclosure. Except as expressly permitted herein, a Party that receives disclosure ofConfidential Information in connection with this Agreement (a “Recipient”) from the other Party (a “Discloser”)shall not disclose Discloser’s Confidential Information, and shall prevent the disclosure of such information byRecipient’s Representatives. “Confidential Information” means (a) the terms of this Agreement and the terms ofthe Yeda Agreement and (a) the Reports provided by Mirna to Rosetta pursuant to Section 4.4. Recipient shalluse Confidential Information of Discloser solely during the Term and as necessary for Recipient to comply withits obligations, and exercise its rights, in accordance with the Agreement. Recipient may disclose ConfidentialInformation of Discloser solely to its employees and independent contractors under their direction and control(each, a “Representative”), in each case solely to Representatives who are subject to a duty of non-use and non-disclosure at least as protective of Discloser and its Confidential Information as the provisions herein and whoneed to know such information in order for Recipient to reasonably exercise and perform its rights andobligations hereunder. Recipient also may disclose Discloser’s Confidential Information as reasonably necessaryin the operation of Recipient’s business, to its financial advisors, accountants, attorneys and potential and actualinvestors and lenders under circumstances that reasonably ensure the confidentiality thereof.8.2.Exclusions. The confidentiality obligations and use limitations set forth in this Agreement shallnot apply to any of Discloser’s Confidential Information that Recipient can demonstrate with competent writtenproof: (a) was lawfully in Recipient's possession prior to disclosure by Discloser hereunder; (b) was generallyknown, in the trade or business in which it is practiced by Discloser and/or had entered the public domain, at thetime of disclosure to Recipient hereunder, or becomes so generally known and/or entered the public domain aftersuch disclosure, through no action or inaction of Recipient or its employees, agents or independent contractors or(c) has come into the possession of Recipient from a Third Party who is not known by Recipient to be under anyobligation to maintain the confidentiality of such information. For purposes of this Section 8.2, no combinationof elements within the Confidential Information shall be deemed to be part of the public domain merely becausethe individual elements of such combination are part of the public domain, unless the entire combination itself, orthe entire principle of use or operation of such combination (if any), is part of the public domain. In addition, noelement within the Confidential Information shall be deemed to be a part of the public domain merely because itis embraced by more general information or data that is part of the public domain.8.3.Terms of Agreement. Notwithstanding anything to the contrary herein, the terms of thisAgreement are the Confidential Information of both Parties, and may not be disclosed by one Party without theconsent of the other Party, provided that both Parties may disclose to third Parties that Mirna has been granted aroyalty-bearing license under the Licensed Patents to sell [***] Certain information in this document has been omitted and filed separately with the Securities and ExchangeCommission. Confidential treatment has been requested with respect to the omitted portions. Products, without disclosing any specific financial terms of this Agreement. Rosetta may issue a press releasedisclosing that Mirna has been granted a royalty-bearing license under the Licensed Patents to sell Products, andshall provide a copy of such press release to Mirna for its review and comment prior to issuance.8.4.Disclosures Required by Law. In the event that Recipient is ordered to disclose Discloser'sConfidential Information under applicable Law or pursuant to a judicial or governmental request, requirement ororder, Recipient shall promptly provide written notice to Discloser of any required disclosure, which notice shall,to the extent reasonably practicable, be given a reasonable period of time in advance of such requireddisclosure. Upon Discloser’s reasonable written request and at Discloser’s sole cost, the Recipient shall takereasonable efforts to resist or limit such disclosure and assist Discloser in contesting such request, requirement ororder or otherwise protecting Discloser's rights, such reasonable efforts shall be no less than efforts exerted bysuch Party to preserve the confidentiality of such Party’s own similar Confidential Information. In the eventeither Party is required to file this Agreement with the Securities and Exchange Commission or any comparablenon-United States regulatory agency, such Party shall apply for confidential treatment of this Agreement to thefullest extent permitted by applicable law, shall provide the other Party a copy of the confidential treatmentrequest far enough in advance of its filing to give the other Party a meaningful opportunity to comment thereon,and shall incorporate in such confidential treatment request any reasonable comments of the other Party. IfDiscloser waives Recipient’s compliance with this Agreement or fails to obtain a protective order or otherappropriate remedy, Recipient will furnish only that portion of the Confidential Information that is legallyrequired to be disclosed; provided that any Confidential Information so disclosed shall maintain its confidentialityprotection for all purposes other than such legally compelled disclosure.8.5.Yeda Confidential Information. Notwithstanding anything to the contrary herein, Mirna and itsSublicensees shall maintain in confidence the Yeda Agreement and the terms thereof hereof (hereinafter,collectively referred to as the “Yeda Confidential Information"), except and to the extent that Mirna and itsSublicensee can prove that any such information or data is in the public domain at the date of the signing hereofor becomes part of the public domain thereafter (other than through a violation by Mirna or a Sublicensee of thisor its obligation of confidentiality) and except with regard to that portion, if any, of the Confidential Informationexpressly released by Rosetta from this obligation of confidentiality by notice in writing to Mirna to sucheffect. Mirna and its Sublicensees undertake not to make any use of the names of Yeda, WIS and theiremployees, without Yeda’s prior written consent. 9.TERM AND TERMINATION9.1.Term. The term of this Agreement shall commence on the Effective Date and end on the date onwhich no patent applications comprised within the Licensed Patents are pending and all issued Licensed Patentshave expired (the “Expiration Date” and such term, the “Term”) unless this Agreement is earlier terminated inaccordance with this Section 9.9.2.Termination At-will. This Agreement may be terminated without cause by Mirna upon onehundred and twenty (120) days’ written notice, provided that the effective date of such termination (the “Termination Date”) must be at least eighteen (18) months from the Effective Date, andprovided further that on the Termination Date Mirna pays to Rosetta an early termination fee as follows: (a) if asof the Termination Date Mirna has [***], the early termination fee shall be three million five hundred thousanddollars ($3,500,000) and (b) [***] the early termination fee will be two million dollars ($2,000,000). In the eventof a termination under this Section 9.2, then the restriction on Challenges in Section 7.2 will not survive suchtermination, provided that if following termination Mirna or its Sublicensee [***], then Mirna or its Sublicensee,as the case may be, will be required to [***], provided further that [***] if Mirna has paid an early terminationfee of three million five hundred thousand dollars ($3,500,000) in accordance with subsection (a) above, and (ii)[***] if Mirna has paid an early termination fee of two million dollars ($2,000,000) in accordance withsubsection (b) above.9.3.Termination for Cause. This Agreement may be terminated by Rosetta immediately upon writtennotice in the event of the occurrence of any of the following:(a)Mirna is in material breach of this Agreement and fails to cure such material breach withinforty (40) days of written notice of breach by Rosetta, and within fifteen (15) days for any breach of paymentrequired hereunder. For the avoidance of doubt and without limitation, any failure to make timely payments dueunder this Agreement, a breach of Section 7.2 (No Challenge), or any breach hereunder that is a material breachof the Yeda Agreement, is a material breach of this Agreement for purposes of this Section 9.3(a). If Mirna[***], then the termination of this Agreement [***]; or (b)A court determines that Mirna is insolvent; a petition in bankruptcy is filed against Mirnaand is consented to, acquiesced in or remains undismissed for thirty (30) days; or makes a general assignment forthe benefit of creditors, or a receiver is appointed for Mirna, and Mirna does not return to solvency before theexpiration of a thirty (30) day period.9.4.Effect of Termination. Upon expiration or termination of this Agreement for any reason:(a)The License and all rights of Mirna and its Sublicensees with respect to the LicensedPatents, immediately will terminate;(b)Within [***] ([***]) days of such expiration or termination, Mirna will provide a royaltyreport pursuant to Section 4.4, and make all payments due hereunder in respect of any accrued milestones orProducts Sold during the Term; and(c)Termination of this Agreement shall not constitute a termination or a waiver of any rightsof either Party against the other Party accruing at or prior to the time of such termination. The obligations setforth in this Section 9.4 are without limitation of any other obligations of Mirna pursuant to this Agreement, andwill not be affected by any dispute between the Parties with respect to this Agreement or any other matter. Upontermination of this Agreement as permitted hereunder there will be no refund, in whole or in part, of anypayments hereunder already made. Expiration or termination of this Agreement shall not relieve Mirna ofresponsibility for any payment obligations or any liability for breach or otherwise accrued prior to the date ofsuch expiration or termination.[***] Certain information in this document has been omitted and filed separately with the Securities and ExchangeCommission. Confidential treatment has been requested with respect to the omitted portions. 9.5.Survival. Notwithstanding anything to the contrary herein, upon expiration or termination of theAgreement for any reason, the rights and obligations of the Parties hereunder will terminate, except that Sections[***] (solely for [***]), [***] (except as provided in Section [***]),[***] and [***]will survive any expiration ortermination of this Agreement for any reason.10. REPRESENTATIONS AND WARRANTIES; LIMITATION OF LIABILITY; INDEMNITY.10.1.Mutual Representations and Warranties. Each Party hereby represents and warrants to theother Party that:(a) it is duly organized, validly existing and in good standing under the laws of thejurisdiction of its organization;(b) the execution, delivery and performance of this Agreement by such Party has been dulyauthorized by all requisite action under the provisions of its charter, bylaws and other organizational documents,and does not require any action or approval by any of its shareholders or other holders of its voting securities orvoting interests;(c) it has the power and authority to execute and deliver this Agreement and to perform itsobligations hereunder;(d) this Agreement has been duly executed and is a legal, valid and binding obligation onsuch Party, enforceable against such Party in accordance with its terms; and(e) the execution, delivery and performance by such Party of this Agreement and itscompliance with the terms and provisions hereof does not and will not conflict with or result in a breach of ordefault under any obligation to any Third Party existing as of the Effective Date.10.2.Representations and Warranties of Rosetta. Rosetta hereby represents and warrants to Mirnathat as of the Effective Date:(a) Rosetta is the co-exclusive owner of, or otherwise Controls pursuant to the YedaAgreement, the Licensed Patents, all of which, to the best of its knowledge, are free and clear of any claims,liens, charges or encumbrances. For purposes of this Section 10.2(a), “Controls” means ability to grant to theother Party access to or a license under such item or right, as provided herein, without violating the terms of anyagreement or other arrangements with any Third Party and without the prior consent of any Third Party.(b) to Rosetta’s knowledge, each Licensed Patent is in full force and effect;(c) to its knowledge, the Licensed Patents issued and existing as of the Effective Date arevalid and enforceable patents;(d) (i) there are no agreements between Rosetta and any Third Party existing as of theEffective Date under which Rosetta obtains rights in or to any Licensed Patents, other[***] Certain information in this document has been omitted and filed separately with the Securities and ExchangeCommission. Confidential treatment has been requested with respect to the omitted portions. than the Yeda Agreement, a true and complete copy of which has been provided to Mirna, (ii) except asprovided in the Yeda Agreement no Third Party has any right, title or interest in or to, or any license under, anyLicensed Patents, (iii) no rights granted by or to Rosetta or its Affiliates under the Yeda Agreement conflict withany right or license granted to Mirna or its Affiliates hereunder, and (iv) Rosetta and its Affiliates are incompliance in all respects with the Yeda Agreement.10.3.Rosetta Covenants. In addition to the covenants made by Rosetta elsewhere in thisAgreement, Rosetta hereby covenants to Mirna that, from the Effective Date until expiration or termination ofthis Agreement, it will:(a) not enter into any agreement with a Third Party that conflicts with or limits (i) the rightsgranted to Mirna hereunder or (ii) Rosetta’s ability to fully perform its obligations hereunder;(b) not amend, terminate or otherwise modify the Yeda Agreement or consent or waive rightswith respect thereto in any manner that (i) conflicts or the rights granted to Mirna hereunder, or (ii) adverselyimpacts Rosetta’s ability to fully perform its obligations hereunder; provided that in the event that Yedaterminates the License (as defined in the Yeda Agreement), except where such termination by Yeda arisesdirectly or indirectly out of a breach by Mirna or its sublicensees of this Agreement or the Yeda Agreement,Rosetta hereby grants Mirna a worldwide, non-exclusive, transferable, assignable, with the right to authorize andgrant Sublicenses in multiple tiers, to: (x) make, have made, use, offer for sale, sell and import Products thatcomprise or contain either the Current Compound or the Non-Exclusive Compounds and (y) perform processescovered by the Licensed Patents solely in connection with the activities permitted under subsection (b)(x).(c) promptly furnish Mirna with copies of all amendments to the Yeda Agreement;(d) fulfill, and cause its Affiliates to fulfill, all of their respective obligations under the YedaAgreement so as not to be in breach of such agreement; and(e) furnish Mirna with copies of all notices received by Rosetta or its Affiliates relating to anyactual or alleged breach by Rosetta or its Affiliates under the Yeda Agreement, within [***] ([***]) BusinessDays after receipt thereof; and(f) in the event that Rosetta receives a notice alleging a breach by Rosetta of the YedaAgreement, and does not resolve any such actual or alleged breach as permitted thereunder, and where it wouldbe possible for Mirna to effect a cure of such actual or alleged breach, notify Mirna within a sufficient period oftime before the expiration of the cure period for such actual or alleged breach under the Yeda Agreement suchthat Mirna is able to cure or otherwise resolve such actual or alleged breach or default, and if Mirna makes anypayments to any Third Party in connection with the cure or other resolution of such breach or default (exceptwhere the alleged breach of the Yeda Agreement was based on any breach of this Agreement or the YedaAgreement by, or gross negligence or intentional misconduct of, Mirna or any of its[***] Certain information in this document has been omitted and filed separately with the Securities and ExchangeCommission. Confidential treatment has been requested with respect to the omitted portions. Sublicensees) then Mirna may credit the amount of such payments against any royalties or other amounts payableto Rosetta pursuant to this Agreement.10.4.DISCLAIMERS. EXCEPT AS EXPRESSLY SET FORTH HEREIN, ROSETTA AND ITSAFFILIATES DO NOT MAKE (EITHER EXPRESSLY OR IMPLIEDLY), AND EXPRESSLYDISCLAIM ALL, REPRESENTATIONS AND WARRANTIES RELATING TO THE LICENSEDPATENTS OR THE PRODUCTS, INCLUDING ANY WARRANTY OF MERCHANTABILITY, NON-INFRINGEMENT OR FITNESS FOR A PARTICULAR PURPOSE. WITHOUT LIMITING THEFOREGOING, (a) THE LICENSED PATENTS AND ALL INFORMATION PROVIDED BY ROSETTATO MIRNA IS PROVIDED “AS-IS;” AND (b) ROSETTA AND ITS AFFILIATES DO NOT ASSUMEANY RESPONSIBILITIES OR MAKE ANY REPRESENTATION OR WARRANTIES WHATSOEVERWITH RESPECT TO MIRNA’S PRODUCTS, THE CONDUCT OF ANY PATENTED PROCESS BYMIRNA, ITS SUBLICENSEES OR CUSTOMERS, OR THAT THE CONDUCT OF THE PATENTEDPROCESS WILL ACHIEVE ANY PARTICULAR RATE, COST OR QUALITY OF PRODUCTION, ORTHAT THE PRODUCTS PRODUCED THEREWITH WILL MEET ANY PARTICULARPERFORMANCE STANDARD. 10.5.Indemnification. In recognition of the fact that Rosetta and Yeda will have no control of theactivities of Mirna or its Sublicensees under this Agreement, Mirna agrees, and shall cause its Sublicensees, toagree as follows:(a) Mirna agrees to indemnify, defend and hold harmless Rosetta, Yeda, WIS, their Affiliatesand their respective directors, officers and employees (hereinafter collectively the “Indemnitees”) for anydemands, liabilities, costs, losses, fines, damages or expenses (including legal costs and attorneys’ fees) ofwhatever kind or nature (“Losses”) arising from a claim, action or lawsuit or other proceeding (“Claim”) that (i)is asserted by a third party and [***] in connection with the exercise of the rights and or the performance of theobligations of Mirna or any Sublicensee under this Agreement or any Sublicense Agreement, including theexercise of the License or any Sublicense, including [***] in connection with the development, manufacture,Sale or use of any of products or services by Mirna, any Sublicensee, or any Entity acting in the name of or onbehalf of any of the foregoing, or [***], or [***] in connection with the exploitation or use by Mirna or anySublicensee of the Licensed Patents or any data or results relating thereto; and (ii) any third party Claim thatRosetta is in breach of the Yeda Agreement that [***] arises out of a breach by Mirna or its sublicensees of thisAgreement or the Yeda Agreement, except, in each case, to the extent caused by the gross negligence,recklessness or intentional acts of Rosetta or any Indemnitee or any material breach of a representation orwarranty by Rosetta.(b) Without limiting the generality of the foregoing, Mirna’s indemnification under Section10.5(a) shall extend to product liability claims and to Losses attributable to death, personal injury or propertydamage [***].(c) Rosetta shall (i) promptly notify Mirna in writing of any claim or action triggering anindemnification obligation under this Section 10.5 after it becomes aware of the same; (ii) provide Mirna withsuch information and assistance as reasonably required in[***] Certain information in this document has been omitted and filed separately with the Securities and ExchangeCommission. Confidential treatment has been requested with respect to the omitted portions. connection therewith; and (iii) enable Mirna to assume and solely control any proceedings or negotiations relatedto such defense or settlement with its own counsel (except that no settlement of any such claim or actionprejudicial to Rosetta’s or Yeda’s IP rights and/or requiring the Indemnitees to take or refrain from taking anyaction may be made without Rosetta’s prior written consent); provided that any Indemnitee shall be entitled to berepresented separately by counsel of the Indemnitee's choice and at its own expense. Further and withoutderogating from the foregoing, any compromise made by an Indemnitee without Mirna’s prior written consentshall release Mirna of its obligation to indemnify the Indemnitee with respect to the compromised liability.(d) Mirna shall at its own expense insure its liability pursuant to Section 10.5 during theperiod beginning on the date on which any clinical trials are undertaken in the development of Products and/orservices utilizing the Licensed Patents shall first commence, and continuing during the entire period that theLicense is in force plus an additional period of [***] ([***]) years. Such insurance shall be in reasonableamounts and on reasonable terms in the circumstances, having regard, in particular, to the nature of the productsand services sold under the License and shall be obtained from a reputable insurance company. The policy willname Rosetta as an additional insured. The policy or policies so issued shall include a “cross-liability” provisionpursuant to which the insurance is deemed to be separate insurance for each named insured (without right ofsubrogation as against any of the insured under the policy, or any of their representatives, employees, officers,directors or anyone in their name). Mirna hereby undertakes to comply with all obligations imposed upon itunder such policy or policies and in particular, without limiting the generality of the foregoing, to pay in full andall premiums and other payments for which it is liable pursuant to such policy or policies. Mirna shall be obligedto submit to Rosetta certificates of insurance within [***] ([***]) days of the date of issue of each such policy. 11. MISCELLANEOUS11.1.Governing Law; Venue. This Agreement and any dispute between the Parties arising hereunderor relating hereto, including the interpretation thereof, the rights and obligations thereunder or compliancetherewith (a “Dispute”), shall be governed by and construed in accordance with the laws of New York, U.S.A,exclusively, as such laws shall be in effect from time to time, without giving effect to any choice of law orconflict of law provision or rule that would cause the application of the laws of any other jurisdiction, providedthat any Dispute as to the scope, validity, enforceability, infringement or ownership of any U.S. Licensed Patentsshall be governed by the federal laws of the United States.11.2.Dispute Resolution. Any dispute or controversy arising out of or in connection with thisAgreement (each, a “Dispute”) between the Parties shall be resolved in accordance with this Section 11.2.(a) Escalation. Either Party may notify the other Party of the existence of a Dispute bywritten notice, specifying in reasonable detail the basis for such Dispute (a “Dispute Notice”). Promptlyfollowing the issuance of such notice, at least one senior representative of each Party shall meet to attempt toresolve the Dispute. If the Parties are unable to resolve the[***] Certain information in this document has been omitted and filed separately with the Securities and ExchangeCommission. Confidential treatment has been requested with respect to the omitted portions. Dispute within [***] days of the issuance of the Dispute Notice, either Party may commence litigation withrespect to such Dispute.11.3.Litigation. The state and federal courts located in New York, New York shall have exclusivejurisdiction to resolve any suit, action, proceeding or judgment relating to or arising out of this Agreement or anyDispute hereunder, and each Party hereby irrevocably submits to, and agrees not to object to, the jurisdiction ofsuch courts and the appropriateness of such venue. 11.4.Injunctive Relief. Nothing in this Agreement shall limit the right of either Party to seek to obtainin any court of competent jurisdiction any equitable or interim relief or provisional remedy. Mirna herebyacknowledges that violation by it, its Affiliates or their respective officers, directors, employees, agents, orcontractors of Sections 2 or 7.2 may cause Rosetta irreparable injury not compensable by money damages andfor which Rosetta may not have an adequate remedy at law. Further, if Rosetta institutes an action or proceedingto enforce any provision of this Agreement and a court of competent jurisdiction determines that Rosetta isentitled to injunctive or other equitable relief as may be necessary to enjoin, prevent or curtail any breach thereof,threatened or actual, then Rosetta will be entitled to seek such relief without the posting of any bond orsecurity. The foregoing will be in addition to and without prejudice to or limitation of any other rights Rosettamay have under this Agreement, at law or in equity, including the right to seek preliminary injunctive relief forviolations of provisions of this Agreement other than those listed above.11.5.Notices. Any and all notices, elections, offers, acceptances, approvals and demands permitted orrequired to be made under this Agreement (each a “Notice” or “notice”) shall be in writing, signed by the Partygiving such notice, election, offer, acceptance, approval or demand, and shall be delivered personally, or sent byregistered or certified mail (including by overnight carrier), to the Party as follows:If to Rosetta: Rosetta Genomics Ltd.10 Plaut St.Rehovot, 7670609IsraelAttn: Chief Executive Officer If to Mirna: Mirna Therapeutics, Inc.2150 Woodward St., Suite 100Austin, TX 78744 Attn: Chief Executive OfficerWith a copy to: Brian Keane, MemberMintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.One Financial Center,Boston, MA 02111With a copy to: Maya SkubatchWilson, Sonsini, Goodrich and Rosati650 Page Mill RdPalo Alto, CA 94304 or as changed by written notice given by such Party. To the extent it is valid and complete, any such notice,statement or other communication shall be effective as of the date received, unless[***] Certain information in this document has been omitted and filed separately with the Securities and ExchangeCommission. Confidential treatment has been requested with respect to the omitted portions. sent by overnight carrier, in which case it shall be effective the date mailed, as evidenced by the postal documentreceived at the time of registration or certification.11.6.Force Majeure. If the performance of any part of this Agreement by either Party, or of anyobligation under this Agreement, is prevented, restricted, interfered with, or delayed by reason of any causebeyond the reasonable control of the Party liable to perform, unless conclusive evidence to the contrary isprovided, the Party so affected shall, on giving written notice to the other Party, be excused from suchperformance to the extent of such prevention, restriction, interference, or delay. The foregoing shall in no eventrelieve Mirna of its obligation to timely pay in-full amounts due Rosetta in accordance with the terms of thisAgreement.11.7.Successors and Assigns. (a) This Agreement and the related rights and obligations granted hereunder to Mirna arepersonal to Mirna and may not be sold, assigned, delegated or otherwise transferred or encumbered, in whole orin part, without the prior written consent of each of Rosetta and Yeda (such consent by Yeda to be sought andprovided in accordance with Section 5.7.5 of the Yeda Agreement),. Mirna may seek the consent of Yedadirectly, or may request that Rosetta solicit such consent from Yeda, in which case Rosetta will forward suchrequest to Yeda within [***] of its receipt from Mirna. For the avoidance of doubt, for purposes of this,Agreement, a merger or consolidation of Mirna with a third party where Mirna is the surviving entity, or theacquisition of all or substantially all of the stock of control of Mirna, shall not be deemed an assignment and theprior consent of Rosetta or Yeda is not required for such transaction. Any transfer or assignment in violation ofthis Section 11.7(a) shall be null and void. This Agreement shall be binding on and shall inure to the benefit ofthe Parties, their respective successors, successors in title, and permitted assigns, and each Party agrees, on behalfof it, its successors, successors in title, and permitted assigns, to execute any instruments that may be necessary orappropriate to carry out and execute the purpose and intentions of this Agreement and hereby authorizes anddirects its successors, successors in title, and assigns to execute any and all such instruments. Each and everysuccessor in interest to any Party shall hold such interest subject to all of the terms and provisions of thisAgreement. For the avoidance of doubt, nothing hereunder limits Rosetta from assigning this Agreement. (b) If (i) Mirna desires to assign this Agreement to a successor to all or substantially all ofMirna’s assets to which this Agreement relates, including any assignment of Mirna’s rights in the Product,whether by merger, asset sale, or otherwise, (ii) [***], and (iii) [***], then, upon Mirna’s written request, (A)[***] and (B) [***] (provided that if Mirna paid any amounts under this Agreement for fees or milestonepayments, such amounts shall not be payable by Mirna’s successor).11.8.Bankruptcy. All rights and licenses granted under this Agreement are, and shall otherwise bedeemed to be, for purposes of Section 365(n) of the United States Bankruptcy Code (the “Bankruptcy Code”),licenses to rights to “intellectual property” as defined in Section 11 U.S.C. § 101(56) of the BankruptcyCode. The Parties agree that Section 11 U.S.C. 365 of the Bankruptcy Code is applicable to this Agreement,and that, if Rosetta, as debtor in possession, or a trustee in bankruptcy for Rosetta, in a case under theBankruptcy Code rejects this Agreement, [***] Certain information in this document has been omitted and filed separately with the Securities and ExchangeCommission. Confidential treatment has been requested with respect to the omitted portions. Mirna may elect to retain its licensee rights under this Agreement as provided for in Section 365(n) of theBankruptcy Code over Rosetta, as applicable, or the trustee in such circumstances, in each case as provided inSection 365(n). In the event that this Agreement or the licenses granted hereunder should ever become subject tofuture United States bankruptcy proceeding, Rosetta hereby agrees to waive the provisions of Section 365(c) ofthe Bankruptcy Code and applicable non-bankruptcy law to the extent such law could operate to prevent Mirna,as a debtor in United States bankruptcy cases and in its capacity as a licensee of intellectual property, fromassuming the Agreement. Provided that the conditions for assumption under Section 365(b) of the BankruptcyCode are satisfied (or waived by the appropriate parties at the time of the proposed assumption), and the soleimpediment to assumption is the operation of Section 365(c) of the Bankruptcy Code, Rosetta hereby irrevocablyconsents to the assumption by Mirna of the Agreement, notwithstanding the filing of any bankruptcy case inrespect of Mirna, as the case may be, and the provisions of Section 365(c) of the Bankruptcy Code, to the extentsuch law could operate to restrict assumption Mirna's license rights under this Agreement. Under nocircumstances should the foregoing waiver and consent be deemed a waiver or consent to the assignment of thisAgreement to any Third Party by either Mirna or Rosetta.11.9.Entire Agreement, Amendments. This Agreement, including all Schedules hereto, constitutesthe entire agreement between the Parties with respect to the subject matter hereof, and supersedes all prioragreements, understandings, and communications between the Parties, whether oral or written, relating to suchsubject matter. No change, modification, or amendment of this Agreement shall be valid or binding on theParties unless such change or modification shall be in writing signed by duly authorized representatives of bothParties.11.10.Further Assurances. Each Party hereby covenants and agrees that it shall execute and deliversuch deeds and other documents as may be required to implement any of the provisions of this Agreement.11.11.No Waiver. Any waiver under this Agreement shall be in writing. The failure of either Party toenforce, at any time, or for any period of time, any provision of this Agreement, shall not be construed to be awaiver of such provision, or in any way affect the validity of this Agreement, or any part thereof, or the right ofany Party thereafter to enforce each and every such provision.11.12.Severability. If any provision of this Agreement should become fully or partially invalid orunenforceable for any reason whatsoever, or violate any applicable law, this Agreement is to be considereddivisible as to such provision and such provision deleted from this Agreement, and the remainder of thisAgreement shall be valid and binding as if such provision were not included herein. A new provision shall besubstituted for any such deleted prevision which shall come as close to what the Parties intended, as far as legallypossible, according to the sense and purpose of this Agreement.11.13.Costs and Expenses. Unless otherwise expressly provided in this Agreement, each Party shallbear all fees and expenses incurred in performing its obligations under this Agreement. 11.14.Independent Contractors. This Agreement is not intended to create, and shall not be interpretedor construed as creating a partnership, joint venture, agency, employment, master and servant, or similarrelationship between Rosetta and Mirna, and no representation to the contrary shall be binding uponRosetta. Neither Party shall be considered an agent or employee of the other. Neither Party has the right orpower, express or implied, to make any commitments of any kind on behalf of the other Party without priorwritten consent of the other Party.11.15.Non-Disparagement. The Parties agree that neither will disparage the other Party nor theirrespective Affiliates, nor any of their respective officers, directors, employees or contractors with respect to thematters relating to or arising from the matter hereunder of the settlement of a Claim or this Agreement. 11.16.Counterparts. This Agreement may be executed in multiple copies, each of which is deemed anoriginal, but all of which constitute one and the same agreement, binding on the Parties, and each Party herebycovenants and agrees to execute all duplicates or replacement counterparts of this Agreement as may berequired. Delivery of an executed counterpart of this Agreement by facsimile or other electronic transmissionwill be as effective as physical delivery of a manually executed counterpart and copies of executed signaturepages shall be binding as originals.[REMAINDER OF PAGE INTENTIONALLY BLANK] IN WITNESS WHEREOF, each of the Parties hereto has caused this Agreement to be executed by its dulyauthorized officer or representative set forth below as of the Effective Date: /sROSETTA GENOMICS LTD. MIRNA THERAPEUTICS, INC. By:/s/ Kenneth A. Berlin By:/s/ Paul LammersName:Kenneth A. Berlin Name:Dr. Paul LammersTitle:President and CEO Title:President and CEODate:December 31, 2015 Date:December 31, 2015 SCHEDULE ALICENSED PATENTSJurisdictionApplication No.Filing DateIssue DatePatent No.[***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***] [***] Certain information in this document has been omitted and filed separately with the Securities and ExchangeCommission. Confidential treatment has been requested with respect to the omitted portions. SCHEDULE B Sequence for Current Compound: Active:[***]Passenger:[***] Where [***]. [***] Certain information in this document has been omitted and filed separately with the Securities and ExchangeCommission. Confidential treatment has been requested with respect to the omitted portions. SCHEDULE C Nucleic acid sequence: [***] or [***] 1This Schedule is also reference for Mimetic of miR-34a definition.[***] Certain information in this document has been omitted and filed separately with the Securities and ExchangeCommission. Confidential treatment has been requested with respect to the omitted portions.1Exhibit 23.1 Consent of Independent Registered Public Accounting Firm We consent to the incorporation by reference in the Registration Statement on Form S-8 (Nos. 333-207299) pertainingto the 2008 Long Term Incentive Plan, 2015 Equity Incentive Plan and 2015 Employee Stock Purchase Plan of MirnaTherapeutics, Inc. of our report dated March 29, 2016, with respect to the financial statements of Mirna Therapeutics,Inc., included in this Annual Report (Form 10-K) for the year ended December 31, 2015, filed with the Securities andExchange Commission. /s/ Ernst & Young LLP Austin, TexasMarch 29, 2016 Exhibit 31.1CERTIFICATION OF THE CHIEF EXECUTIVE OFFICERPURSUANT TOSECURITIES EXCHANGE ACT RULES 13A-14(A) AND 15D-14(A) I, Paul Lammers, certify that:1.I have reviewed this Annual Report on Form 10-K of Mirna Therapeutics, Inc.;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a materialfact necessary to make the statements made, in light of the circumstances under which such statements were made, notmisleading with respect to the period covered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly presentin all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, theperiods presented in this report;4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls andprocedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designedunder our supervision, to ensure that material information relating to the registrant, including its consolidatedsubsidiaries, is made known to us by others within those entities, particularly during the period in which this reportis being prepared;(b)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report ourconclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered bythis report based on such evaluation; and(c)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred duringthe registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) thathas materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financialreporting; and5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal controlover financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (orpersons performing the equivalent functions):(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financialreporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize andreport financial information; and(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in theregistrant’s internal control over financial reporting.Date: March 29, 2016 /s/ Paul Lammers Paul Lammers, M.D., M.Sc. Chief Executive Officer (Principal Executive Officer) Exhibit 31.2CERTIFICATION OF THE CHIEF FINANCIAL OFFICERPURSUANT TOSECURITIES EXCHANGE ACT RULES 13A-14(A) AND 15D-14(A) I, Alan Fuhrman, certify that:1.I have reviewed this Annual Report on Form 10-K of Mirna Therapeutics, Inc.;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a materialfact necessary to make the statements made, in light of the circumstances under which such statements were made, notmisleading with respect to the period covered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly presentin all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, theperiods presented in this report;4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls andprocedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designedunder our supervision, to ensure that material information relating to the registrant, including its consolidatedsubsidiaries, is made known to us by others within those entities, particularly during the period in which this reportis being prepared;(b)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report ourconclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered bythis report based on such evaluation; and(c)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred duringthe registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) thathas materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financialreporting; and5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal controlover financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (orpersons performing the equivalent functions):(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financialreporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize andreport financial information; and(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in theregistrant’s internal control over financial reporting.Date: March 29, 2016 /s/ Alan Fuhrman Alan Fuhrman Chief Financial Officer (Principal Financial Officer) Exhibit 32.1CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of Mirna Therapeutics, Inc. (the “Company”) on Form 10-K for the fiscal year endedDecember 31, 2015, as filed with the Securities and Exchange Commission (the “Report”), Paul Lammers, Chief ExecutiveOfficer of the Company, and Alan Fuhrman, Chief Financial Officer of the Company, respectively, do each hereby certify,pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:·The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934;and·The information in the Report fairly presents, in all material respects, the financial condition and results ofoperations of the Company.Date: March 29, 2016 /s/ Paul Lammers Paul Lammers, M.D., M.Sc. Chief Executive Officer (Principal Executive Officer) /s/ Alan Fuhrman Alan Fuhrman Chief Financial Officer (Principal Financial Officer) 

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