Note

Financial Condition

and Business Plan

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) among other international regulatory authorities. We have incurred approximately

$257

million of cumulated net losses. As of

September 30, 2017,

we had approximately

$2.7

million in cash and cash equivalents. As discussed in Note

16,

October 4, 2017,

we entered into exercise agreements with certain warrant holders whereby these warrant holders would exercise

4.7

million warrants at their respective strike prices of

$2.07

and

$4.75

per share and the Company issued to these warrant holders

1.2

million new warrants at an exercise price of

$6.20

per warrant share. The exercise of these warrants, coupled with the exercise of

0.3

million additional warrants provided the Company with

$17.0

million in gross proceeds. Also as discussed in Note

16,

October 27, 2017,

we entered into an underwriting agreement whereby the Company sold approximately

2.6

million shares of common stock and warrants to purchase approximately

1.3

million shares of common stock for gross proceeds of

$6.6

million.

We have substantial future capital requirements

associated with our continued research and development activities and to advance our product candidates through various stages of development. The Company believes these expenditures are essential for the commercialization of its technologies.

The actual amount of funds the Company will need to operate is subject to many factors, some of which are beyond the Company

’s control. These factors include the following:

●

the progress of research

activities;

●

the number and scope of research programs;

●

the progress of preclinical and clinical development activities;

●

the progress of the development efforts of parties with whom the Company has entered into research and development agreements;

●

the costs associated with additional clinical trials of product candidates;

●

the ability to maintain current research and development licensing arrangements and to establish new research and development and licensing arrangements;

●

the ability to

achieve milestones under licensing arrangements;

●

the costs involved in prosecuting and enforcing patent claims and other intellectual property rights; and

●

the costs and timing of regulatory approvals.

The Company has based its estimate on assumptions that

may

prove to be wrong. The Company

may

need to obtain additional funds sooner or in greater amounts than it currently anticipates.

Potential sources of financing include strategic relationships, public or private sales of the Company’s shares or debt and other sources. If the Company raises funds by selling additional shares of common stock or other securities convertible into common stock, the ownership interest of existing stockholders

may

be diluted.

With the

$2.7

million in cash and investments on hand at

September 30, 2017

combined with the gross proceeds of $

23.6

million provided by the exercise of warrants and the equity offering in

October 2017 (

Note

), the Company believes it has sufficient capital resources to fund its operations well into the

second

quarter of

2019.

The Company will be required to obtain additional funding in order to continue the development of its current product candidates within the anticipated time periods, if at all, and to continue to fund operations. As more fully discussed in Note

10,

the Company has

$7.5

million available under a controlled equity offering facility it has with Cantor Fitzgerald & Co. Besides this equity facility, the Company does

not

have any committed sources of financing at this time, and there is uncertainty whether additional funding will be available when needed on terms that will be acceptable to it, or at all. If the Company would

not

be able to obtain financing when needed, it could be unable to carry out the business plan and

may

have to significantly limit its operations, and its business, financial condition and results of operations could be materially harmed. With the current cash on hand and the gross proceeds of

$23.6

million from warrant exercises and the equity offering in

October, 2017,

management believes the Company will be able to meet its obligations as they come due.