Note

Financial Condition and Going Concern

Since inception, the Company has incurred substantial operating losses, principally from expenses associated with the Company’s research and development programs, clinical trials conducted in connection with the Company’s product candidates, and applications and submissions to the Food and Drug Administration (FDA). We have

not

generated significant revenue and have incurred significant net losses in each year since our inception. We have incurred approximately

$251

million of cumulated net losses. As of

June 30, 2017,

we had approximately

$3.6

million in cash and cash equivalents. In

July 2017,

we completed a

million registered direct equity offering of shares of common stock, or pre-funded warrants in lieu thereof, and a concurrent private placement of warrants to purchase common stock with several institutional healthcare investors. We have substantial future capital requirements to continue our research and development activities and advance our product candidates through various development stages. The Company believes these expenditures are essential for the commercialization of its technologies.

The Company expects its operating losses to continue for the foreseeable future as it continues its product development efforts, and when it undertakes marketing and sales activities. The Company’s ability to achieve profitability is dependent upon its ability to obtain governmental approvals, produce, and market and sell its new product candidates. There can be

assurance that the Company will be able to commercialize its technology successfully or that profitability will ever be achieved. The Company expects that its operating results will fluctuate significantly in the future and will depend on a number of factors, many of which are outside the Company’s control. The Company will need substantial additional funding in order to complete the development, testing and commercialization of its oncology product candidates and we have made a significant commitment to heat-activated liposome research and development projects. It is our intention at least to maintain the pace and scope of these development activities.

The condensed consolidated financial statements have been prepared on the going concern basis. In making this assessment, management conducted a comprehensive review of the Company’s business plan including, but

not

limited to:

	●	the Company’s financial position for the three and six months periods ended June 30, 2017;
	●	significant events and transaction the Company has entered into since December 31, 2016;
	●	the Company’s capitalization structure including common stock outstanding and common stock issuable on exercise of warrants and equity awards, and other common stock issuable under equity plans; and
	●	continued support of the Company’s stockholders.

As a result of the uncertainties involved in our business, we are unable to estimate the duration and completion costs of our research and development projects or when, if ever, and to what extent we will receive cash inflows from the commercialization and sale of a product. Our inability to complete our research and development projects in a timely manner or our failure to enter into collaborative agreements, when appropriate, could significantly increase our capital requirements and could adversely impact our liquidity. These uncertainties could force us to seek additional, external sources of financing from time to time in order to continue with our business strategy. Our inability to raise additional capital, or to do so on terms reasonably acceptable to us, would jeopardize the future success of our business. Our estimated future capital requirements are uncertain and could change materially as a result of many factors, including the progress of our research, development, clinical, manufacturing, and commercialization activities.

Management has determined the Company has suffered recurring losses from operations and has an accumulated deficit that raises substantial doubt about our ability to continue as a going concern for the next

twelve

months from our issuance date. The financial statements do

not

include any adjustments that might result from the outcome of the uncertainty.

A fundamental component of the ability to continue as a going concern is the Company’s ability to raise capital as required, as to which

assurances can be provided. To address the additional funding requirements of the Company, management has undertaken the following initiatives:

	●	in February 2017, the Company raised approximately $5.0 million in gross proceeds through a public offering of its common stock and warrants to purchase common stock;

	●	during the first six months of 2017, the Company raised approximately $5.1 million in gross proceeds through the exercise of warrants to purchase common stock;

	●	in July 2017, the Company raised approximately $5.0 million in gross proceeds through a registered direct offering of its common stock and warrants to purchase common stock;

	●	the Company’s shareholders approved an increase of its authorized shares sufficient to allow for the funding of its clinical programs at its Annual Meeting of Stockholders on May 16, 2017;

	●	the Company has $7.5 million under a controlled equity offering facility;

	●	it assessed its current expenditures and has reduced the current spending requirements where necessary;

	●	it will pursue additional capital funding in the public and private markets through equity sales and/or debt facilities;

	●	it will pursue possible partnerships and collaborations; and

	●	it will pursue potential out licensing for its drug candidates.

Our ability to continue as a going concern

may

depend on our ability to raise additional capital, attain further operating efficiencies, reduce expenditures, and, ultimately, to generate revenue. There are

assurances that these future funding and operating efforts will be successful. If management is unsuccessful in these efforts, our current capital is

not

sufficient to fund our operations for the next

twelve

months.