U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

(Mark One)

|X| ANNUAL REPORT UNDER SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended October 31, ~~2012~~2014

|_| TRANSITION REPORT UNDER SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to ______________

Commission File Number 000-52932

_______________________________________________

Arrogene, Inc.

(Exact name of registrant as specified in its charter)

______________________________________________

Delaware 20-8057585 ~~-------------------------------------- --------------------------------------~~ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) ~~2500~~8560 ~~Broadway,~~West ~~Building~~Sunset FBlvd., Suite ~~F-125;~~400, ~~Santa~~Los ~~Monica~~Angeles, ~~California~~CA ~~90404~~90069 ~~------------------------------------------------------------------------------------~~ (Address of principal executive offices) (424) ~~238~~274-~~4442~~4791 ~~----------------------------------------------------------~~ (Registrant’s telephone number, including area code)

_____________________________________________

Securities registered under Section 12(b) of the Exchange Act:

None.

Securities registered under Section 12(g) of the Exchange Act:

Common Stock, $0.0001 par value per share

-----------------------------------------

(Title of Class)

~~Check~~Indicate ~~whether~~by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ~~Yes [ ] No [X]~~

~~Check whether the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act.~~ Yes [ ] No [X]

~~Check~~Indicate ~~whether~~by ~~the~~check ~~registrant~~mark ~~(1)~~if ~~has~~the ~~filed~~registrant ~~all~~is ~~reports~~not required to befile ~~filed~~reports bypursuant to Section 13 or 15(d) of the Exchange Act ~~during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days~~. Yes ~~[X] No [ ]~~

[ ] No [X]

Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Exchange Act from their obligations under those Sections.

~~Check~~Indicate by check mark whether the registrant (1) has ~~submitted~~filed ~~electronically~~all ~~and~~reports ~~posted on its corporate website, if any, every Interactive Data File~~ required to be ~~submitted~~filed ~~and~~by ~~posted~~Section ~~pursuant~~13 toor ~~Rule~~15(d) ~~405~~ of ~~Regulation~~the ~~S-T~~Exchange ~~(§232.405~~Act of ~~this~~1934 ~~chapter)~~ during the preceding 12 months (or for such shorter period that the registrant was required to ~~submit~~file such reports), and ~~post~~(2) has been subject to such ~~files).~~filing requirements for the past 90 days. Yes [ ] No [Xx ]

~~Check~~Indicate ifby ~~there~~check ismark nowhether ~~disclosure~~the ofregistrant ~~delinquent~~has ~~filers~~submitted inelectronically ~~response~~and toposted ~~Item~~on ~~405~~its ofcorporate ~~Regulation~~website, ~~S-K~~if ~~(§229.405~~any, ofevery ~~this~~Interactive ~~chapter)~~Data ~~contained~~File ~~herein,~~required ~~and~~to nobe ~~disclosure~~submitted ~~will~~and beposted ~~contained,~~pursuant to ~~the~~Rule ~~best~~405 of ~~registrant's~~Regulation ~~knowledge,~~S-T in(§232.405 ~~definitive~~of ~~proxy~~this orchapter) ~~information~~during ~~statements~~the ~~incorporated~~preceding by12 ~~reference~~months in(or ~~Part~~for ~~III~~such ofshorter ~~this~~period ~~Form~~that ~~10-K~~the orregistrant ~~any~~was ~~amendment~~required to ~~this~~submit ~~Form~~and ~~10-K.~~post ~~[X]~~such files).

~~Check~~Yes ~~whether~~[ ~~the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.~~] ~~See~~No ~~definitions~~[ ofx ~~“large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):~~]

~~Large~~Indicate ~~Accelerated~~by ~~Filer~~check mark if disclosure of delinquent filers in response to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ X]

~~Accelerated~~Indicate ~~Filer [~~by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. ]See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

~~Non-accelerated~~ Large Accelerated Filer [ ]Accelerated Filer [ ]

Non-accelerated Filer [ ]Smaller Reporting Company [X]

(Do not check if a smaller reporting company.)

~~Check~~Indicate by check mark whether the ~~issuer~~registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ~~Yes [ ] No [X]~~

OnYes ~~June 30, 2012, the aggregate market value of the voting and non-voting common equity held by non-affiliates was $0.~~[ ] No [X]

The aggregate market value of the voting and non-voting common equity held by non-affiliated computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter is: $0.00.

APPLICABLE ONLY TO CORPORATE REGISTRANTS

As of ~~January~~April 2820, ~~2013~~2016, there were 2122,~~220~~215,860 shares of common stock, par value $.0001, outstanding.

FORWARD-LOOKING STATEMENTS

Certain statements made in this Annual Report on Form 10-K (this “Report”) are “forward-looking statements” (within the meaning of the Private Securities Litigation Reform Act of 1995) regarding the plans and objectives of management for future operations. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of Arrogene, Inc. (the “Company”) to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. In this Report, forward-looking statements are generally identified by the words "anticipate," "plan," "believe," "expect," "estimate”, “project” and the like. These forward-looking statements include, but are not limited to, statements regarding the following:

* adequacy of our financial resources; * strategic business relationships; * statements about our future business plans, strategies and prospects; * anticipated operating results and sources of future revenue; * our organization's growth; * anticipated regulatory approval paths and timeframes; * our intellectual property; * the efficacy of our technology; * our marketing plans and strategy; * development of new products and markets; * competitive pressures; * changing economic conditions; and * expectations regarding competition from other companies.

strategic business relationships;

statements about our future business plans, strategies and prospects;

anticipated operating results and sources of future revenue;

our organization's growth;

anticipated regulatory approval paths and timeframes;

our intellectual property and related license agreements;

the efficacy of our technology;

our marketing plans and strategy;

development of new products and markets;

competitive pressures;

changing economic conditions; and

expectations regarding competition from other companies.

Although we believe that any forward-looking statements we make in this Report are reasonable, because forward-looking statements involve future risks and uncertainties, there are factors that could cause actual results to differ materially from those expressed or implied. The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. The Company's plans and objectives are based, in part, on assumptions involving the continued expansion of business. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the Company. Although the Company believes its assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance the forward-looking statements included in this Report will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that the objectives and plans of the Company will be achieved. See Risk Factors included elsewhere in this Report.

PART I

Item 1. Description of Business.

Arrogene, Inc., f/k/a SRKP 16, Inc., (“we”, “us”, “our”, the "Company") was incorporated in the State of Delaware on December 7, 2006 and was originally organized as a “blank check” shell company to investigate and acquire a target company or business seeking the perceived advantages of being a publicly held corporation. On January 11, 2012, we completed a merger in accordance with the terms of an Agreement and Plan of Reorganization (the “Reverse Merger”), dated as of July 18, 2011, by and among the Company and Arrogene NanoTechnology, Inc., a California corporation (“ANI”) focused on oncology. As a result of the Reverse Merger, we became the 100% parent corporation of ANI, and the shareholders of ANI became stockholders of the Company. In addition, we adopted the business and operations of Arrogene. Effective September 4, 2012, SRKP 16, Inc. officially changed its name to Arrogene, Inc. Hereafter, Arrogene, Inc. and ANI are collectively referred to as “Arrogene” or the “Company.”

Reverse Merger

As a result of the Reverse Merger, the shareholders of ANI received 12,660,000 shares of Company common stock or approximately 86 % of the then issued and outstanding common shares of the Company after the transaction. Further, ANI warrant holders received identical common stock purchase warrants in the Company. Additionally, immediately after the Reverse Merger, the officers of ANI became the officers of the Company ~~and the Company’s Board of Directors consists solely of former ANI officers and directors~~. For accounting purposes, the Reverse Merger has been treated as an acquisition of the Company by ANI (the accounting acquirer) and a recapitalization of ANI. As a result, the financial statements for all periods presented and discussed herein are those of ANI. Immediately prior to consummating the Reverse Merger, the Company sold 502,000 units (the “Units”), with each Unit consisting of (i) one share of common stock, and (ii) two common stock purchase warrants (the “SRKP Warrants”) that are exercisable for five years from the date of issuance. One of the SRKP Warrants is exercisable at $1.50 per share and the other is exercisable at $2.00 per share. The Company received $404,688 in net proceeds from the sale of the Units after payment of commissions and other expenses associated with the offering, of which, $389,688 was acquired by ANI at the time of the Reverse Merger. Subsequent to completion of the Reverse Merger, the Company has sold 1,640,250 Units receiving net proceeds of $1,405,858 after the payment of commissions and other expenses associated with the offering.

Overview of ~~Arrogene’s~~the ~~Business~~business

The Company ~~has~~was anfounded ~~exclusive license (the “License”)~~ to acommercialize ~~family~~new ofcancer ~~related~~treatment ~~nano-biopolymers~~science and ~~related~~imaging ~~technologies,~~targeting ~~collectively~~technology ~~referred~~as towell as ~~“Polycefin™”~~a ~~that~~proprietary ~~are~~molecular ~~expected~~delivery platform designed to beinterfere ~~capable~~with ofthose ~~acting~~targets asin aorder ~~drug~~to ~~delivery~~inhibit and ~~targeting~~finally ~~platform~~eradicate ~~for~~tumor ~~cancer~~progression. ~~therapy~~The ~~and~~Company ~~diagnositcs~~is ~~based~~the onexclusive ~~pre-clinical~~licensee ~~studies~~of ~~conducted~~certain atintellectual property rights owned by Cedars- Sinai Medical Center (“CSMC”)~~. Polycefin~~ isin ~~designed~~Los toAngeles, ~~target~~one ~~cancer~~of ~~cells~~the ~~and~~nation’s ~~deliver~~premiere aresearch ~~variety~~institutions of(the ~~bound therapeutics to them~~“License”). In CSMC ~~vivo~~has ~~pre-clinical~~developed ~~studies~~a ~~have~~family ~~shown~~of ~~evidence~~related ~~that~~nano-biopolymers ~~existing~~conjugates ~~cancer~~(collectively ~~drugs~~referred ~~could have increased efficacy and reduced side effects when attached~~ to ~~the~~here ~~Polycefin~~as ~~platform. We believe that~~ Polycefin™), ~~has~~believed ~~the~~capable ~~ability~~of toacting ~~harbor~~as ~~various drugs at the same time making it possibly~~ a ~~master~~drug delivery ~~vehicle~~and ~~that~~targeting ~~can~~platform ~~be customized~~ for acancer ~~particular~~therapy ~~tumor~~ and ~~potentially~~imaging. ~~for~~Since an2009, ~~individual~~CSMC ~~patient. Additionally,~~has inbeen ~~vivo~~granted ~~testing~~seven ~~has~~patents ~~shown~~by ~~efficacy~~the ~~against~~United ~~more~~States ~~than~~Patent ~~one~~and ~~type~~Trademark ofOffice ~~cancer~~with ~~(breast~~three ~~and~~other ~~brain)~~patents ~~suggesting~~pending, ~~that~~and ~~Polycefin~~two ~~may~~Japanese ~~have~~patents. ~~application~~All torelated apatents ~~wide~~and ~~range~~patent rights of ~~cancer~~CSMC ~~types,~~are ~~therapeutics~~subsumed ~~and~~within ~~diagnostics~~our License.

~~The~~Our ~~founders~~first oftherapeutic ~~Arrogene~~drug ~~were~~candidate ~~principally~~is ~~involved~~AG in101 ~~all~~which ~~research~~will ~~and~~target ~~development~~certain ~~behind~~brain ~~all~~cancer. We ~~critical~~need ~~discoveries~~to ~~and~~commission ~~science~~final Phase 0 toxicology studies at ~~CSMC~~an ~~related~~external tolaboratory ~~Polycefin~~for ~~and~~AG101 ~~authored~~drug ~~all~~candidate preparation of an IND for submission to the ~~patents~~FDA ~~underlying~~to receive clearance to begin human clinical trial work. We then plan to commence a Phase I clinical trial. We have estimated the ~~technologies~~cost ~~behind~~related ~~Polycefin~~to an IND submission and ~~include~~a ~~internationally~~Phase ~~acclaimed~~1 ~~brain~~clinical ~~surgeon~~trial ~~and~~to ~~scientist~~be ~~Dr.~~$4,000,000 ~~Keith~~- ~~Black~~$5,000,000 ~~Dr.~~which ~~Julia~~will ~~Ljubimova,~~require Dradditional funding. There ~~Eggehard~~are ~~Holler~~various factors that can influence the timing of starting and ~~Dr.~~completing ~~Alex~~these ~~Ljubimov~~objectives and milestones as well as the total costs. ~~Work~~Such onfactors ~~Polycefin~~include, ~~involved~~but ~~seven~~are ~~years~~not limited to, the pace and success of ~~development~~scientific developments, the availability of financial and ~~over~~human $6resources,~~000,000~~ competing demands of ~~grants~~our ~~funded~~scientific ~~mainly~~team, ~~from~~and changes in regulatory requirements. Due to the ~~National~~inherent ~~Institute~~uncertainty ofand ~~Health~~variability ~~(“NIH”)~~related to these activities, we cannot accurately predict start dates, completion dates and total costs. We will also need to raise additional capital in order to complete our planned activities.

WeThe ~~plan~~founders onof ~~commercializing~~Arrogene ~~our~~were ~~products~~principally ~~using~~involved ain ~~licensing~~the research and ~~cost~~development ~~sharing~~behind ~~strategy,~~all ~~seeking~~critical todiscoveries ~~enter~~and ~~into~~science ~~arrangements~~at ~~with~~CSMC ~~major~~related ~~pharmaceutical~~to ~~companies~~Polycefin ~~with~~and ~~existing~~authored ~~cancer~~all ~~therapy~~the ~~drugs~~patents ~~facing~~underlying ~~issues~~the ~~relating~~technologies to(the ~~patent~~“Technology”). ~~expirations,~~Our ~~market~~founders ~~expansion~~include orinternationally ~~contraction. It~~acclaimed isbrain ~~our~~surgeon ~~goal~~and toscientist ~~only~~Dr. ~~commence~~Keith ~~Phase~~Black, IDr. ~~clinical~~Julia ~~trials~~Ljubimova, Dr. ~~with~~Eggehard aHoller, and ~~commitment~~Dr. ~~from~~Alex aLjubimov. Work ~~licensee~~on toPolycefin ~~complete~~has ~~Phase~~involved IIseven ~~and~~years ~~III~~of ~~clinical~~development ~~trials,~~based ~~predicated~~ on ~~the~~financial ~~successful~~support ~~outcome~~ of ~~each phase~~CSMC, ~~and~~over ~~go to market~~$17,400,000 ifof ~~approval~~grants isfunded ~~received. Further,~~from wethe ~~are~~National ~~also~~Institute ~~exploring use~~ of ~~Polycefin~~Health as(NIH) and athe ~~potential~~National ~~medical~~Cancer ~~diagnostic~~Institute ~~product~~(sNIC), ~~for~~and ~~oncology~~over ~~related~~$20,000,000 ~~applications~~from other foundations and organizations.

We also have developed important related intellectual properties surrounding Laminin-411. Laminins are the major components of basement membranes that are orderly sheet-like structures secreted by cells to separate several cell types 4

4Our Science

Laminins are the major components of basement membranes that are orderly sheet-like structures secreted by cells to separate several cell types from one another. Laminins play key roles in cell adhesion, polarity, movement, and differentiation. They form a family of related but distinct proteins. ~~To date, 15 members of this family have been discovered.~~ Like all laminins, Laminin-411 is comprised of three chains, a4, b1, and g1 (hence the name). In normal tissues, Laminin-411 expression is almost negligible in blood vessels. At the same time, vessels in some organs, like breast and brain, predominantly contain another, closely related, isoform, ~~laminin~~Laminin-421 (a4b2g1). Our scientists were the first to ~~show~~demonstrate that during tumor development, Laminin-411 (formerly, laminin-8) is produced in excessive amounts, while the normal ~~laminin~~Laminin-421 gets suppressed, causing a shift from “normal” to “tumor” laminin (Ljubimova et al., Cancer Res, 2001; Fujita et al., Breast Cancer Res, 2005). Laminin-411 has been implicated in cell migration and increased production of some cancer stem cell proteins. In general, abnormal interactions between tumor cells and laminins are among major traits of various cancers. Taken together, the data presented above suggest that by blocking the production of Laminin-411, one may expect to slow down or arrest tumor growth and inhibit cancer cell spread, as well as possibly suppress cancer stem cells thereby diminishing chances of disease relapse.

Using ~~fresh~~ clinical material from 65 patients with brain gliomas, we found an inverse correlation between Laminin-411 overproduction, patients’ survival and time of recurrent development (Ljubimova et al., Cancer, 2004). In 2007, our founders, in their capacity as researchers at CSMC, started a clinical trial to examine a possible clinicopathological use of Laminin-411 as a diagnostic tool for advanced brain glioma and as a prognostic indicator that could predict disease recurrence. The study of the expression of Laminin-411 and ~~laminin~~Laminin-421 was performed this time with the paraffin-embedded archival material routinely used in all pathological laboratories. ~~Currently,~~This ~~this~~ trial ishas ~~nearing~~been ~~completion~~completed, with more than ~~500~~300 cases of human tumors analyzed. The data, ~~show~~which has been published, shows that this protein is overproduced in more than ~~three-quarters~~ (7585%) of grade IV gliomas. ~~Its~~and its production is correlated with poor patient survival, as compared to patients whose tumors predominantly contain a normal isoform, ~~laminin~~Laminin-421. ~~These data are being prepared for publication.~~ As a result, we are in the process ~~commercializing~~of exploring licensing this new test as a Laboratory Developed Test ~~(“LDT”)~~ and we are ~~nearing~~currently ~~the~~in ~~end~~negotiations ~~of a negotiation~~ with a partner for delivery of this test ininto clinical practice. ~~With~~Additionally, ~~this potential partner~~ we have conducted protocol development and have furthered our clinical trial to measure the range of application for a Laminin 411. Conclusions of that clinical trial indicate that Laminin 411 is over-expressed in many tumors beyond the initial indications and we are working on incorporating those findings in both published results and the market strategy for the LDT.

Beyond diagnostic and prognostic applications, we believe that our discovery of Lamin 411’s role in tumor growth can be exploited together with our Polycefin technology towards novel tumor inhibiting treatments. We are currently working on the technology allowing us to combine antisense oligonucleotides against two Laminin-411 chains on one nanopolymer (Polycefin) molecule and target them specifically to tumor cells. As a result, we were able to stop brain glioma and HER2/neu breast cancer growth in mice without harming other unaffected organs (Ding et al., Proc Natl AScad Sci USA, 2010, J Control Release, 2013). This appears to be a superior approach to using antibody blocking because, due to being buried in basement membranes, laminins may not be accessible enough to the antibodies in real-life tumors to obtain a therapeutic effect. WeOur ~~plan~~goal is to use our nanopolymer Polycefin to block Laminin-411 production in primary and metastatic brain and breast tumors. Importantly, due to special chemical groups on the polymer backbone, it can deliver the antisense drugs to the tumor cells specifically, largely avoiding non-cancer cells. Our published results to date show the feasibility of this approach.

~~Antisense~~The ~~drugs~~challenge ~~and~~for ~~other~~all ~~therapeutics~~drugs ~~like~~is ~~siRNA have significant problems in delivery~~ to ~~tumor~~maximize ~~cells.~~the ~~Besides~~net ~~rapid~~clinical ~~clearance~~benefit ~~from~~by ~~blood,~~increasing ~~they~~the ~~cannot~~desired ~~specifically~~therapeutic ~~get~~effect ~~inside~~and ~~tumor~~reducing ~~cells~~adverse ~~causing potential problems for the healthy cells~~effects. ~~Our~~This ~~nanopolymer~~is ~~platform~~especially ~~has~~difficult ~~special~~in ~~antibodies~~cancer, ~~that~~where ~~guide~~ the ~~drug~~goal ~~complex~~is to ~~the~~destroy ~~tumor~~or ~~cells.~~inhibit ~~Once~~growth inof ~~these~~cancer cells, ~~another~~without ~~special~~damaging ~~module~~similar onhealthy ~~the~~cells. ~~delivery~~The ~~vehicle~~first ~~helps~~generation ~~releasing~~of ~~the~~cancer drugs ~~inside~~were ~~the~~cytotoxic ~~cell~~chemotherapies, ~~where~~such ~~they~~as ~~get~~Taxotere, ~~detached~~which ~~from~~achieved ~~the~~limited ~~polymer~~selectivity by ~~natural~~targeting mechanisms ~~and~~responsible ~~exert~~for ~~their~~cell ~~blocking~~proliferation, ~~function. As~~ a ~~result,~~key ~~the~~characteristic ~~drug~~of ~~has~~cancer ~~much~~cells. ~~lower~~The ~~clearance~~mechanisms ~~when~~responsible ~~injected~~for ~~into~~cell ~~the~~proliferation ~~bloodstream,~~are ~~and~~also ~~the~~a ~~possibility~~property of ithealthy ~~getting~~cells, ~~into~~which ~~normal~~can ~~cells~~lead isto ~~minimized.~~significant Weadverse ~~have~~effects ~~shown~~when ~~that~~healthy ~~such~~cells aare ~~nanopolymeric~~destroyed. ~~delivery~~Biopharmaceutical ~~system~~companies ~~targeting~~have ~~Laminin-411~~developed ~~can~~more ~~efficiently~~selective ~~suppress~~drugs, ~~growth~~which ofwe ~~brain~~refer ~~cancers~~to byas ~~reducing~~targeted ~~tumor~~therapies, ~~vasculature~~such ~~and~~as ~~causing~~Herceptin ~~tumor~~and ~~cell~~Gleevec ~~death~~by ~~(Fujita~~targeting etproteins ~~al.,~~found ~~Angiogenesis,~~at ~~2006;~~higher ~~Ljubimova~~levels eton ~~al.,~~the ~~Front~~surface ~~Biosci,~~of ~~2006;~~cancer ~~Ding~~cells or etby ~~al.,~~inhibiting ~~Proc~~dysregulated ~~Natl~~biochemical ~~Acad~~pathways ~~Sci~~inside ~~USA,~~cancer ~~2010)~~cells. ~~Therefore~~More recently, wedrugs ~~believe~~such ~~that~~as ~~this~~Kadcyla ~~delivery~~have ~~system~~increased isefficacy ~~currently~~by ~~most~~linking ~~promising~~toxins ~~for~~and ~~specific~~antibodies ~~treatment~~to ofdeliver ~~tumors~~targeted ~~targeting their blood supply~~cytotoxicity. ~~However~~ atWhile ~~this time~~ these ~~findings~~newer ~~are~~drugs ~~based~~were onan ~~pre-clinical~~improvement ~~research~~in ~~and~~targeting ~~there~~cancer ~~can~~cells berelative noto ~~assurances~~normal ~~that~~tissue, ~~they~~there ~~can~~continues to be ~~successfully~~a ~~translated~~need ~~into~~to ~~successful~~develop ~~therapies~~drugs inwith ~~the~~increased ~~future.~~net clinical benefit.

The majority of our planned products will require approval or marketing clearance from the United States Food and Drug Administration (the “FDA”). To date we have not filed any applications with the FDA, but we have begun the process of validating our LDT with applicable regulators. We are also performing pre-clinical work designed to support an Investigational New Drug Application (“IND”), for a first Polycefin indication5

~~Currently,~~We ~~indications~~believe ~~for~~Polycefins ~~both~~can represent the ~~diagnostic~~next ~~and~~stage ~~therapeutics~~in ~~product~~the ~~lines~~evolution ~~center~~of ~~around~~cancer ~~primary~~therapy ~~brain~~based ~~and~~on ~~breast~~its ~~cancers~~ability to deliver combinational therapy agents against multiple cancer targets. Polycefins are nano-bio-polymers bound to therapeutic payloads through a programmable release control mechanism and ~~their~~are ~~metastatic~~designed ~~forms~~to ~~into~~target ~~the~~tumors ~~brain~~at four levels: tissue, cellular and intracellular and molecular. AsPolycefins ~~survival~~also ~~rates~~contain controlled mechanisms for ~~these~~controlled ~~primary~~payload ~~cancers~~activation ~~improve,~~as ~~increasingly~~well ~~significant~~for ~~percentiles~~active penetration of ~~the~~key ~~patient~~biological ~~population~~barriers ~~are~~needed ~~developing~~to ~~metastatic~~treat ~~forms~~diseases ofsuch ~~these~~as ~~cancers~~the central nervous system, ~~which~~(the brain). We believe that Polycefins are ~~often~~the ~~found~~first ~~late~~platform ~~stage~~to ~~and~~enable ~~have~~simultaneous ~~few~~multi ortargets noas ~~treatment~~well ~~options~~as multi payload delivery, making them uniquely suited for personalized medicine and for targeted combinational therapy. ~~Arrogene~~We ~~estimates~~believe that ~~30%~~Polycefins have the potential to significantly increase the net clinical benefit of ~~breast~~the therapeutic payloads and ~~75%~~result ofin ~~lung~~efficacy ~~primary~~and ~~cancers~~safety not currently achievable through other therapeutic approaches.

5Our lead Polycefin drug candidate, AG-101, is a brain cancer specific nanodrug featuring combinational therapy for primary brain cancer (glioblastoma multiforme), and also for primary and metastatic lung and triple negative breast cancers. The active therapeutics feature of AG-101 is a combination of antisense oligonucleotides to inhibit Laminin 411 and wild EGFR and mutated EGFRvIII.

~~metastasize~~Our to the brain, based on published studies. Polycefin’s ability to pass through the Brain Blood Barrier, and Laminin 411 over-expression in brain tumors, as well as our ability to inhibit Laminin 411, could make a Laminin 411 based Polycefin drug ideally suited for use as a diagnostic and/or therapeutic to treat such metastatic cancers and might present an early market opportunity. Strategy

ItOur goal is ~~estimated~~to ~~that~~become ~~approximately~~a ~~207,000~~leading ~~new~~biopharmaceutical ~~cases~~company ofdeveloping ~~breast~~and ~~cancer~~commercializing ~~are~~targeted ~~diagnosed~~nanomedicines ~~every~~to ~~year~~address insignificant ~~the~~unmet ~~U.S.1 Approximately~~medical ~~204~~needs,~~000~~ ~~cases~~with ofan ~~lung~~initial ~~cancer~~focus ~~are diagnosed annually.2 Additionally there are between 120,000 and 140,000 annual cases of cases of secondary brain cancers.3 Based~~ on ~~these~~treatments ~~patient populations, and certain price and usage assumptions, Arrogene has estimated the market potential~~ for ~~the~~cancer. ~~diagnostic~~The ~~imaging~~critical ~~products~~components ~~for these indications at a minimum~~ of ~~$400~~our ~~million~~business ~~annually. The~~strategy ~~market potential for the therapeutics products for the same indications, based on the same assumptions, is estimated to exceed $30 billion annually.~~include:

We• ~~plan~~Develop toour ~~bring~~lead ~~our~~drug ~~products~~candidate, toAG-101, ~~market~~initially ~~using~~in aPrimary ~~licensing~~and Metastatic Brain tumors. AG-101 is nearing Phase 1 trials for the treatment of primary and ~~cost~~metastatic ~~sharing~~brain ~~strategy~~cancer. We This trial will ~~seek~~be a single-arm, open label study designed to ~~joint~~evaluate ~~venture~~efficacy ~~with~~and ~~pharmaceutical~~safety ~~companies~~in ~~with~~these ~~existing~~specific ~~cancer~~tumor ~~therapy~~types, ~~drugs~~so orthat ~~active~~we ~~diagnostic~~can ~~imaging~~move ~~agents. This~~into ~~licensing~~pivotal ~~strategy~~Phase ~~offsets~~1 ~~some~~and of3 ~~the~~trials ~~risks~~where we will seek to establish the ~~licensee~~superiority ~~while~~of ~~creating~~AG-101 ~~strong~~versus ~~incentives~~conventional therapies. We intend to petition the ~~partners~~FDA to ~~execute~~grant ~~successfully~~“rare ~~and~~disease” todesignation ~~scale~~for inour AG-101 target, which if granted, will streamline the ~~marketplace~~scope and size of the required clinical trials. It We are also ~~may~~developing ~~limit~~a ~~our~~regulatory ~~risk,~~strategy aswhereby we ~~begin~~expect ~~phases~~to Iuse ~~and~~the II505(b)(2) ~~clinical~~FDA ~~work~~approval ~~only~~pathway ~~with~~and conduct a ~~commitment~~single byPhase ~~the~~2 ~~licensee~~& 3 trial for each indication using similar criteria for approval as our original AG-101. The 505(b)(2) approval pathway would enable us to ~~complete~~rely ~~phase~~in ~~III~~part ~~clinical~~on ~~trials~~data in the public domain or the FDA’s prior conclusions regarding the safety and goeffectiveness of AG-101 when we submit our new drug application, or NDA, to ~~market~~the FDA. We will also evaluate the development of AG-101 in other oncology indications, ifincluding ~~successful~~breast cancer, and in combination with other cancer therapies.

~~Industry~~• Develop and commercialize Polycefins in collaboration with leading biopharmaceutical companies. In addition to our internal development programs, we will actively seek opportunities to collaborate with recognized biopharmaceutical companies to develop Polycefins incorporating therapeutic payloads from their proprietary product portfolios. We have begun negotiations for collaborations with industry leaders, although we do not expect to be able to enter into collaboration agreements until we can announce data pursuant to our clinical trials.

~~The~~• ~~industry~~Leverage ~~for~~our ~~cancer~~nanomedicine ~~diagnostics~~platform ~~and~~to ~~therapeutic~~develop ~~drugs is~~a ~~very~~pipeline ~~large~~of ~~and~~high ~~competitive~~value Polycefins. We ~~have~~The ~~estimated~~modularity ~~the~~of ~~market~~our ~~potential~~technology ~~for~~allows us to efficiently expand our ~~targeted~~pipeline ~~diagnostic~~of ~~imaging~~Polycefins, ~~products~~both toon beour atown ~~least~~and ~~$400~~in ~~million~~collaboration ~~annually~~with ~~for~~others, ~~the~~through ~~U.S.~~various ~~based~~combinations onof ~~published~~targeting ~~data~~ligands and wetherapeutic ~~have~~payloads, ~~estimated~~and ~~the~~also ~~market~~enables ~~potential~~us ~~for~~to ~~the~~move into therapeutic ~~products~~areas tobeyond ~~exceed~~oncology, ~~$30~~such ~~billion~~as ~~annually~~inflammatory, ~~for~~infective ~~the~~and Ucardiovascular diseases.S

~~Products~~• Capitalize on drug candidates with established drug development history to accelerate development and regulatory pathway. Where possible we seek to reduce the risk, cost and time associated with drug development by capitalizing on the known efficacy, safety and established drug development history of therapeutic payloads that have already been approved and others with promising attributes that have been deemed unsuitable for further development in their untargeted form. We seek to develop Polycefins that could be eligible for accelerated regulatory pathways, such as 505(b)(2), fast track designation, accelerated approval, priority review and breakthrough product designation.

~~We are developing Polycefin for both cancer therapeutics and diagnostics~~6

~~Therapeutics~~• ~~Pipeline~~Commercialize proprietary Polycefins, including AG-101, directly in the United States and with collaborators outside the United States. We have retained the worldwide rights to AG-101, AG-102 and AG-103 and expect to initially maintain similar rights with respect to other proprietary Polycefins we develop. We intend to build a focused oncology sales organization to market FDA-approved Polycefins in the United States. Outside the United States, we expect to rely on collaborators to commercialize proprietary approved Polycefins.

~~Our~~• ~~initial~~Continue ~~pipeline, currently in pre-clinical development, allows us~~ to ~~combine~~extend ~~antisense~~and ~~oligonucleotides~~protect ~~against~~our ~~two~~product ~~Laminin-411~~technology ~~chains on one nanopolymer (Polycefin) molecule~~ and ~~target~~Polycefins ~~them~~through ~~specifically~~our tointellectual ~~tumor~~property ~~cells~~portfolio. AsWe aseek ~~result, we were able~~ to ~~stop~~protect ~~brain~~our ~~glioma~~medicinal ~~growth~~engineering inplatform ~~mice~~through ~~without~~issued ~~harming~~U.S. ~~other~~patents ~~unaffected~~and ~~organs~~U.S. ~~(Ding~~patent etapplications ~~al.,~~that ~~Proc~~we ~~Natl~~own ~~AScad~~or ~~Sci USA~~license, ~~2010).~~in ~~This~~some ~~appears~~cases towith beforeign acounterparts ~~superior~~relating ~~approach~~ to ~~using~~elements ~~antibody~~of ~~blocking~~our ~~because~~Polycefin candidates, ~~due~~as towell ~~being~~as ~~buried~~know-how inand ~~basement~~trade ~~membranes,~~secrets ~~laminins~~relating ~~may not be accessible enough~~ to the ~~antibodies~~design inand ~~real-life~~manufacturing ~~tumors~~of toour ~~obtain a therapeutic effect~~Polycefins. We ~~plan~~expect ~~initially~~ to ~~use~~file ~~our~~additional ~~nanopolymer~~patent ~~Polycefin~~applications toas ~~block~~we ~~Laminin-411~~apply ~~production~~our intechnology ~~primary~~to ~~and~~new ~~metastatic~~targets ~~brain~~ and ~~breast~~therapeutic ~~tumors~~payloads. ~~Importantly~~In addition, ~~due~~we tobelieve ~~special chemical groups on~~ the ~~polymer~~heightened ~~backbone,~~regulatory itrequirements ~~can~~for ~~deliver~~generic ~~the~~nanomedicines ~~antisense~~strengthen ~~drugs to~~ the ~~tumor~~protection ~~cells~~afforded ~~specifically,~~by ~~largely~~our ~~avoiding~~intellectual ~~non-cancer~~property ~~cells~~portfolio. ~~Our published results show the feasibility of this approach.~~

~~Later~~Product wePipeline ~~intend to widen the indication to other brain cancers, (GlioBlastoma). Additional indications could be developed by combining Laminin inhibition with other antibodies~~ and ~~therapeutics. The expansion of the product line will be subject to collaboration with third party licensing partners.~~ Platform

~~Diagnostic~~We ~~Pipeline~~intend to use our medicinal nanobiopolymeric platform to develop Polycefins in several therapeutic areas, with an initial focus on the treatment of various types of cancer. In addition, we will seek to enter into collaboration agreements with several major biopharmaceutical companies to develop and commercialize Polycefins that are based on our collaborators’ proprietary therapeutic payloads.

~~Using~~Evolution ~~fresh clinical material from 65 patients with brain gliomas, we found an inverse correlation between Laminin-411 overproduction, patients’ survival and time~~ of ~~recurrent~~Targeted development (Ljubimova et al., Cancer, 2004). In 2007, we started a clinical trial to examine a possible clinicopathological use of Laminin-411 as a diagnostic tool for advanced brain glioma and as a prognostic indicator that could predict disease recurrence. The study of the expression of Laminin-411 and laminin-421 was performed this time with the paraffin-embedded archival material routinely used in all pathological laboratories. Currently, this trial is nearing completion, with more than 300 cases of human tumors analyzed. The data show that this protein is overproduced in more than three-quarters (75%) of grade IV gliomas. Its production is correlated with poor patient survival, as compared to patients whose tumors predominantly contain a normal isoform, Therapies

1A ~~2010~~further ~~Cases~~step in the evolution of targeted therapies is antibody drug conjugates, ~~sourced~~or ~~from~~ADCs. ~~Breast~~ADCs ~~Cancer~~consist of an antibody or antibody fragment and a chemically linked toxin.~~org~~ ADCs are designed to target antigens that are exclusively or preferentially expressed on the surface of cancer cells. The antibody causes the ADC to bind to the target cancer cells, where the ADC is required to be internalized by the cell in order to break the chemical link and release the toxin to kill the target cell. Because of the targeting, ADCs are expected to produce lower side effects and a greater net clinical benefit as compared to the toxin alone. Examples of ADCs include Adcetris, which is approved to treat relapsed and refractory Hodgkins lymphoma, and Kadcyla, which is approved to treat metastatic breast cancer.

2The ~~Center~~advent ~~for~~of ~~Disease~~targeted ~~Control~~therapies has represented a major advance in the fight against important diseases including cancer. In some instances targeted therapies have displaced cytotoxic agents in standard cancer regimens and in others targeted therapies are now used in combination with cytotoxins. However, many targeted therapies are subject to the same limitations as cytotoxic agents, and despite the commercial and clinical success of targeted therapies, we believe the industry is increasingly recognizing potential limitations associated with these therapies, including:

3• ~~Victor~~Many ~~Tse,~~molecularly-targeted ~~eMedicine,~~therapies ~~Stanford~~are ~~University~~directed toward cellular processes that are essential for cancer cell survival and proliferation, ~~March~~but ~~2011~~also play important roles in normal cells. Because targeted drugs distribute throughout the body in much the same way as cytotoxic drugs, their clinical utility is often limited by toxicity.

6• The limited payload capacity of standard monoclonal antibody therapies requires that ADCs carry highly toxic payloads, restricting the universe of payloads that can be delivered. Most current ADCs in clinical development or on the market use one of a few highly toxic molecules such as maytansine, calicheamicin or aurastatin.

~~laminin-421.~~• ~~These~~Since ~~data~~ADCs ~~are~~require ~~being~~the ~~prepared~~internalization ~~for~~of ~~publication. As~~the aantibody ~~result~~and wethe ~~are~~cleavage inof the ~~process~~link ~~commercializing~~between ~~this~~the ~~new~~antibody ~~test~~scaffold asand athe ~~Laboratory~~payload, ~~Developed~~ADCs ~~Test~~must ~~(“LDT”)~~be ~~and~~targeted weto antigens that are ~~currently~~internalized ~~negotiating~~by ~~with~~cancer acells ~~partner~~at ~~the~~a ~~delivery~~rate ofsufficient ~~this~~to ~~test~~result in ~~clinical~~an ~~practice~~effective intracellular concentration of the toxin.

~~Imaging~~As ~~studies~~a ~~have~~result ~~shown the potential~~ of ~~using~~these ~~the platform to improve the visualization~~limitations, ~~accuracy,~~there ~~and~~continues ~~definition of cancers, including the ability~~ to ~~image~~be certain metastatic cancers which are difficult to detect or visualize using conventional diagnostic imaging techniques. More importantly, the high specificity associated with Polycefin based targeting provides the opportunity to create an imaging “virtual biopsy” that can identify with a ~~high~~need ~~degree of specificity target tumors in diagnostic imaging. The Company plans~~ to develop ~~such~~targeted ~~virtual~~therapies ~~biopsy~~with ~~diagnostic~~increased ~~products~~net ~~for~~clinical ~~difficult to biopsy or operate cancers such as GlioBlastoma, (“GBM”)~~benefit.

~~Our scientists have published extensively in peer reviewed scientific journals the results of our clinical and pre-clinical work, including in Cancer Research1~~7 ~~, and the Proceeds in the US Academy of Sciences.2~~

~~Competitive~~The ~~Strengths~~Emergence of Nanomedicine

~~Antisense drugs and other therapeutics like siRNA have significant problems in delivery to tumor cells. Besides rapid clearance from blood~~Recently, ~~they~~there ~~cannot specifically get inside tumor cells causing potential problems for the healthy cells. Our nanopolymer platform~~ has ~~special~~been ~~antibodies~~a ~~that~~growing ~~guide~~interest ~~the drug complex to the tumor cells. Once~~ in ~~these cells, another special module on~~ the ~~delivery~~development ~~vehicle~~of ~~helps~~therapeutics ~~releasing~~using ~~the~~nanotechnology. ~~drugs~~Nanotechnology ~~inside~~is the ~~cell,~~science ~~where they get detached from the polymer by natural mechanisms~~ and ~~exert~~engineering ~~their~~of ~~blocking~~manipulating ~~function.~~matter Asat ~~a result,~~ the ~~drug~~nanometer ~~has~~scale—one ~~much~~nanometer ~~lower~~is ~~clearance~~one ~~when~~billionth ~~injected into the bloodstream, and the possibility~~ of ita ~~getting~~meter. ~~into~~Nanomedicine ~~normal cells~~ is ~~minimized.~~the Wemedical ~~have~~application ~~shown that such a nanopolymeric delivery system targeting Laminin-411 can efficiently suppress growth~~ of ~~brain~~nanotechnology ~~cancers~~to bydevelop ~~reducing~~therapeutics ~~tumor~~with ~~vasculature~~clinically ~~and~~useful ~~causing tumor cell death (Fujita et al.~~chemical, ~~Angiogenesis,~~physical ~~2006;~~and ~~Ljubimova~~biological ~~et al~~properties., ~~Front~~There ~~Biosci,~~are ~~2006;~~several ~~Ding~~nanomedicine etplatforms ~~al.,~~at ~~Proc~~various ~~Natl~~stages ~~Acad~~of ~~Sci~~development ~~USA,~~or ~~2010). Therefore~~commercialization, wemany ~~believe that this delivery system is currently most promising for specific treatment~~ of ~~tumors~~which ~~targeting~~have ~~their blood supply~~limitations. ~~However~~ atNotable ~~this~~platforms ~~time~~include ~~these~~albumin ~~findings~~nanoparticles, ~~are~~liposomes ~~based on pre-clinical research~~ and ~~there~~polymeric ~~can be no assurances that they can be successfully translated into successful therapies in the future~~nanoparticles.

~~Polycefin~~• Albumin nanoparticles utilize the plasma protein albumin to formulate therapeutic agents. Abraxane is an albumin nanoparticle paclitaxel that does not contain Cremophor, an excipient used in conventional solvent-based formulations of paclitaxel, such as Taxol. Abraxane has been effective at improving the ~~following~~net ~~characteristics~~clinical benefit compared to conventional paclitaxel formulations by eliminating the side effects associated with the Cremophor and enabling higher dosing of paclitaxel. However, Abraxane has not been clinically shown to target any specific cellular target. The albumin nanoparticles separate from the paclitaxel upon administration, which wethen ~~believe~~distributes ~~are~~widely ~~competitive~~throughout ~~strengths:~~all tissues.

·• Liposomes encapsulate a therapeutic payload within a lipid shell. Liposomes can cross the walls of new or defective blood vessels and accumulate at the site of the disease. For example, Doxil, liposomal doxorubicin, has been approved for the treatment of multiple types of cancer and has been effective at improving the net clinical benefit by reducing cumulative cardiotoxicity and enabling a longer treatment period. Despite the success of Doxil, the widespread adoption of liposomal technologies has been limited by the difficulty in encapsulating different therapeutic payloads within the lipid shell and controlling their release. Liposomes have also proven difficult to manufacture at commercial scale.

~~It is based on a naturally occurring nano-bio-polymer platform;~~8

·• Polymeric nanoparticles utilize synthetic polymers to attempt to create therapeutics that concentrate at the site of disease while minimizing exposure to healthy tissue, thereby increasing net clinical benefit. Polymeric nanoparticles vary with respect to whether they physically entrap or chemically attach the therapeutic payload to the polymer, the presence or absence of targeting ligands and the type of synthetic polymer used. Polycefins are a member of this class of targeted therapies; however this drug family is based on natural biopolymer, polymalic acid (PMLA). Arrogene developed the technology to obtain FDA approved purity (98-99%) of PMLA and demonstrated non-toxic, non-immunogenic and biodegradable properties of PMLA nanoplatform with end metabolic products such as H2O and C2O (Fig. 1).

~~Testing~~Fig.1 toPolymalic ~~date~~acid ~~has~~favorable ~~found~~pharmaceutical itproperties toin beterms ~~non-toxic~~of ~~and~~full ~~bio-degradable with no immunogenic properties;~~biodegradebility.

·We believe that third generation (targeted) nanomedicines hold the promise of combining the targeting specificity of ligands such as monoclonal antibodies/peptides with applicability of traditional small molecule drugs and other therapeutics, thereby increasing the net clinical benefit for the treatment of cancer and other pathological conditions (Fig2).

~~It can be loaded with multiple imaging, therapeutic and targeting agents at the same time;~~9

·Fig 2. Targeted nanomedicines that are in clinical practice.

~~It releases and activates the active ingredients only inside targeted tumor cells;~~Polycefins

·We believe Polycefins represent the next stage in the evolution of targeted therapies and nanomedicine. Polycefins are polymeric nanoparticles that incorporate multiple therapeutic payloads for molecular combinational therapy with multiple targeting agents enabling crossing multiple bio barriers, targeting of the diseased tissue and cancer cells, and provide for the controlled and timely release of the therapeutic payload, generally inside a target.

ItProlonged iscirculation ~~capable~~and ofmembrane ~~passing~~passage. We design Polycefins with the ~~Brain~~ability ~~Blood~~to ~~Barrier;~~target and pass through many of the critical biological barriers that insulate disease cells from access.

·Multi Targeting/ Bio Barriers crosing. We design Polycefins with specific pharmaceutical properties intended to target tumors at four levels: 1. tissue (bio barriers), 2. cellular, 3. intracellular and 4. Molecular Fig.3:

It1. Tissue ~~allows~~targeting ~~for~~is ~~flexibility~~achieved by engineering active passage through blood vessels, (such as the Brain Blood Barrier/Brain Tumor Barrier). Using the physical and chemical properties—size, shape and surface properties—of Polycefins to ~~engineer~~allow ~~multiple~~it ~~nano-conjugates~~to ~~from~~escape athrough ~~common~~gaps ~~platform~~in ~~each~~the blood vessels surrounding tumors and other disease sites. 2. Cellular targeting ~~different~~is ~~indications~~achieved using multiple proprietary targeting ligands on the surface of the Polycefin that bind to specific cell surfaces or tissue markers and ~~delivering~~receptors. ~~active~~3. ~~agents~~We have demonstrated that our Polycefins can pass through intracellular structures (endosoms) and are released into the cancer cell matrix where drugs can fight against cancer cells proliferation or ~~imaging~~vitability. ~~agents~~We design Polycefins with specific activation mechanism that provide for the controlled and timely release of the therapeutic payload only once the payload has penetrated inside the target tumor cell. 4. When AONs are escaped into the cellular cytoplasm they inhibit tumor specific proteins laminin-411 and wild EGFR and mutated EGFRvIII synthesis in vitro and in vivo. The following diagram depicts the mechanisms of tissue targeting and cellular targeting Fig 3.

~~Our Strategy~~10

~~Our~~Fig. ~~strategy~~3. isMechanism toof ~~develop~~Polycefins ~~Polycefin~~(Ag-101) ~~and~~action ~~Laminin~~at ~~411~~four ~~into~~levels: ~~both~~1. aTissue ~~diagnostic~~(bio ~~product line as well as therapeutics with both product lines targeting tumors~~barriers), ~~with~~2. ~~an initial focus on brain~~Cellular, ~~breast~~3. Intracellular and ~~lung~~4. ~~cancers including the metastatic forms of the latter two~~Molecular. ~~Based~~The ~~on the scientific results from these initial indications, we might expand our indications to other types of cancer indications as well as other diseases that could benefit from~~ Polycefin’s ~~ability~~drug toAG101 ~~target~~inhibits ~~disease cells or pass through~~ the ~~Brain~~syntheses ~~Tumor~~of ~~Barrier.~~Laminin ~~Our~~411 ~~product~~and ~~development~~wild ~~plan~~EGFR ~~focuses~~and onmutated ~~delivering a diagnostic product line first, due to the relatively shorter regulatory approval process associated with diagnostic imaging agents over therapeutics~~EGFRvIII.

~~Our~~By ~~preclinical~~combining ~~testing~~prolonged ~~has~~circulation, ~~provided~~multi ~~evidence~~targeting ~~that~~and ~~Polycefin~~controlled ~~can~~and ~~accurately~~timely ~~target~~release ~~certain~~of ~~cancers~~the ~~based~~therapeutic onpayload, ~~certain~~Polycefins ~~over-expressed~~have ~~markers~~the atpotential to significantly increase the ~~cellular~~net ~~level~~clinical benefit associated with the therapeutic payload and result in efficacy and safety currently not achievable through other therapeutic modalities.

ItEngineering isof ~~also~~nanobioconjugated ~~our goal to file IND applications for diagnostic and therapeutic products.~~(Polycefins)

InWe ~~both~~develop ~~diagnostic~~Polycefins ~~and~~utilizing ~~therapeutic~~polymalic ~~applications,~~acid weas ~~plan~~our onnanobiopolymer ~~partnering~~platform. We engineer combinatorial libraries of targeted nanomedicines with ~~larger~~systematically varied properties, ~~more~~such ~~well~~as ~~established~~ligands, ~~diagnostic~~therapeutic payloads amount and ~~pharmaceutical~~release ~~partners~~profile, using a synthesis and nano conjugation fabrication process. We design Polycefin to balance circulation time and payload release rate with effective targeting and binding for a particular cell or tissue target. We believe our platform allows us to advance a Polycefin using an existing targeting ligand into preclinical testing in approximately four to six months after identifying a therapeutic payload.

1Therapeutic ~~Cancer Research; 71(4); 1454-64.~~Payloads

2We ~~http://www~~have engineered Polycefin that incorporate therapeutic payloads with a range of physicochemical properties.~~pnas~~ We have demonstrated in preclinical studies that these Polycefins can improve tumor growth suppression, achieve higher concentrations of the payload in tumors compared to the payload administered in conventional form, and have pharmacokinetics and tolerability differentiated from their therapeutic payloads.~~org/content/107/42/18143~~

711

By partnering we believe we can reduce development risks, lower development costs and required capital for the Company. However, partnering early in the development/regulatory approval path generally translates into lower upAG-~~front and milestone payments for licensing transactions as the partner is taking a greater risk than on a transaction that occurs later in the cycle.~~101

WeOur ~~will~~lead ~~continue~~nanodrug tocandidate, ~~evaluate~~AG-101, is a Polycefin that targets primary and metastatic brain cancers by inhibiting EGFR and Laminin 411 simultaneously. The nanosize of our ~~business~~drug is 20 nm, which is optimum for blood–brain barrier (BBB) or blood–brain tumor barrier (BTB) and ~~licensing~~cellular ~~strategy~~delivery. ~~based~~Effective ontreatment ~~market~~of ~~conditions~~brain tumors should be possible with drug delivery through BBB/BTB and targeting specific types of brain cells with drug release into the cell cytoplasm. Our AG-101 drug passes through the BTB and tumor cell membrane using anti-transferring receptor (anti-TfR) monoclonal antibodies with unique ability of targeting the BTB and tumor cells. The polymeric drug inhibits tumor angiogenesis by specifically blocking the synthesis of a tumor neovascular trimer protein, ~~development~~laminin-411, ~~progress~~and tuor proliferative marker EGFR by attached Morpholino antisense oligonucleotides (AONs). The AONs oligonucleatides are released into the target cell cytoplasm via pH-activated trileucine, an endosomal escape moiety. The availability of a systemically active polymeric drug delivery system that passes through the BTB, targets tumor cells, and ~~our~~inhibits ~~access~~glioma growth gives hope for a successful strategy of glioma treatment. This delivery system with drug release into the brain-specific cell type could be useful for treatment of various brain pathologies. We expect to ~~capital~~enter Phase 1 clinical trials to evaluate the safety and level of clinical activity of AG-101.

~~Manufacturing~~AG-101 ~~and~~Market ~~Suppliers~~Opportunity

WeAs ~~currently~~survival ~~manufacture~~rates ~~batches~~for ofprimary ~~Polycefin~~cancers ~~for~~improve, ~~preclinical~~increasingly ~~testing~~significant ~~purposes~~percentiles inof the ~~laboratory~~patient atpopulation ~~CSMC. We~~are ~~source~~developing ~~biomarkers~~metastatic ~~from~~forms ~~multiple~~of ~~commercial~~these ~~partners~~cancers, ~~and~~which ~~suppliers.~~are Weoften ~~also~~found ~~work~~late ~~with~~stage ~~pharmaceutical~~and ~~companies~~have tofew ~~source~~or ~~the~~no ~~active~~treatment ~~ingredients~~options. toArrogene beestimates ~~nano-conjugated~~that ~~with~~40% ~~Polycefin. At~~of ~~this~~breast ~~time~~and ~~there~~75% ~~are~~of nolung ~~significant~~primary ~~dependencies~~cancers onmetastasize ~~any~~to ~~one~~the ~~supplier~~brain, ~~and~~based ~~the~~on ~~Company~~published ~~has~~studies. Polycefin’s ~~adopted~~ability ato ~~dual~~pass ~~sourcing~~through ~~strategy~~the ~~for~~tumor’s ~~all~~Brain ~~key~~Tumor ~~components~~Barrier ~~wherever~~(“BTB”), ~~possible. We~~which dois ~~anticipate~~the ~~working~~part ~~with~~of ~~one~~brain orblood ~~more~~barrier ~~contract~~(“BBB”), ~~manufacturers~~could ~~with~~make ~~FDA~~it ~~Current~~ideally ~~Good~~suited ~~Manufacturing~~for ~~Practices~~use ~~(“cGMP”)~~as ~~facilities~~a indiagnostic ~~the~~and/or ~~future~~therapeutic asto wetreat ~~progress~~such inmetastatic ~~our~~cancers, ~~product~~and ~~development~~these ~~efforts~~might present early market opportunities.

~~Quality~~It ~~Control~~is estimated that approximately 207,000 new cases of breast cancer and 204,000 cases of lung cancer are diagnosed every year in the U.S. Additionally there are between 120,000 and 140,000 annual cases of secondary brain cancers, according to various published sources. Based on these patient populations, and certain price and dosage assumptions, we have estimated that the total market potential for Polycefin based therapeutics products for primary and metastatic brain cancers (gliomas) could exceed $30 billion annually.

We do not have a quality system in place at this stage of our development. We plan on developing a set of Standard Operating Procedures (“SOPs”) and overall quality system that is compliant with required FDA Good Laboratory Practices (GLP) and GMP as needed in the future as we progress in our development.12

~~Sales~~AG-101 ~~and Marketing~~Development

~~As we are still in the development stage, we do not engage in any sales and marketing activities.~~ We have ~~begun,~~completed ~~however,~~most ~~the~~preclinical ~~process~~development of ~~negotiating~~AG-101 ~~technical~~ and ~~scientific~~are ~~collaborations~~preparing ~~with~~to asubmit ~~variety~~an ofIND ~~potential future licensing partners. Our strategy is~~ to ~~commercialize our technology through licensing agreements and accordingly, sales and marketing efforts of~~ the ~~end-product will be the responsibility of the licensees, while our primary focus will be to negotiate and support our licensing partners and collaborations~~FDA.

~~Research~~Phase 1 and Clinical Development Plan

WeOur ~~are~~overall ~~currently~~objective ~~utilizing the laboratory at CSMC~~ for ~~research~~AG-101 and development activities as provided for in the License. As of this time we do not employ any full time research and development personnel directly, although key personnel at CSMC are consultants to the Company. It is ~~our plan~~ to ~~expand~~establish ~~the~~it ~~development~~as ~~effort~~a bysafe ~~employing or supporting CSMC hiring of certain technical resources. Our ability to conduct research~~ and ~~development~~effective ~~activities~~new iscancer ~~greatly~~therapy ~~dependent~~with ~~upon~~superior ~~our~~efficacy ~~financial~~in ~~resources. If~~brain ~~adequate~~gliomas ~~funds are not available when required, we may have~~ to ~~delay,~~current ~~scale-back~~clinical orstandard ~~eliminate~~Temozolomide ~~certain~~(brand ~~aspects~~names ofTemodar ~~our~~and ~~research,~~Temodal ~~testing~~ and~~/or~~ ~~development activities. In 2012~~Temcad), ~~we entered into~~ an ~~agreement~~oral ~~with~~chemotherapy ~~CSMC~~drug toused ~~support~~for ~~certain~~brain ~~activities within the laboratory necessary to prepare compounds~~gliomas.

~~Competition~~As a result, are planning to seek approval to initiate Phase I clinical trials of AG-101 at the Q3W dosing schedule in a 20 patient open label, single arm, single-center trial designed to determine the safety and efficacy of AG-101 as measured by objective response rate in patients with late stage brain gliomas who have failed one prior platinum-containing chemotherapy regimen for advanced or metastatic

~~The~~This ~~diagnostic,~~clinical ~~pharmaceutical~~trial ~~and biopharmaceutical industry~~ is ~~characterized~~expected by intense competition and rapid and significant technological changes and advancements. Many companies, research institutions and universities are doing research and development work in a number of areas similar to ~~those~~take ~~that~~approximately we12 ~~focus~~months ~~on that could lead~~ to ~~the development of new products which could compete with and be superior to our product candidates. Most of the companies with which we will compete have substantially greater financial~~enroll, ~~technical, manufacturing, marketing, distribution~~ and ~~other~~can ~~resources than those of ours. A number of these companies may have or may develop technologies for developing products for treating various diseases that could prove to~~ be ~~superior~~conducted toat ~~ours.~~a Wesingle ~~expect~~clinical ~~technological~~site ~~developments~~ in the ~~diagnostic,~~United ~~pharmaceutical~~States. ~~and~~If ~~biopharmaceutical and related fields to occur at a rapid rate, and~~ we ~~believe~~obtain ~~competition~~favorable ~~will~~results ~~intensify as advances~~ in these ~~fields~~Phase ~~are~~1 ~~made. Accordingly~~studies, we ~~will~~plan ~~be required~~ to ~~continue~~initiate topivotal ~~devote~~trials ~~substantial~~of ~~resources and efforts to research and development activities in order to potentially achieve and maintain a competitive position in this field~~AG-101. ~~Products~~We ~~that~~anticipate wethese ~~develop~~will ~~may~~be ~~become obsolete before we are able~~ head-to-head ~~commercialize~~randomized ~~them~~Phase or2 totrials ~~recover all or any portion~~ of ~~our~~AG0-101 ~~research~~compared ~~and development expenses. We will be competing with respect~~ to ~~our~~Temozolomide ~~products~~(plus ~~with~~radiation) ~~companies that have significantly more experience~~ in ~~undertaking preclinical testing and human clinical trials with new or improved diagnostic and therapeutic products and obtaining regulatory approvals of such products. A number of~~ these ~~companies~~indications ~~already market~~ and ~~may~~will be indesigned ~~advanced~~to ~~phases~~demonstrate ofthe ~~clinical~~superiority ~~testing~~ of ~~various drugs that may compete with our lead product~~ AG-101.

8Phase 1 Clinical Development

~~candidate~~We orplan ~~any~~to ~~future~~conduct ~~product~~a ~~candidates.~~Phase ~~Our~~1 ~~competitors~~clinical ~~may~~trial ~~develop~~evaluating orAG-101 ~~commercialize~~in ~~products~~patients ~~more rapidly than we do or~~ with ~~significant~~advanced ~~advantages~~and ~~over~~metastatic ~~any~~solid ~~products~~brain wetumors ~~develop.~~at ~~Our~~Q3W ~~competitors~~and ~~may~~Q1W ~~therefore~~dosing ~~be more successful in commercializing their products than we are, which could adversely affect our competitive position and business~~schedules.

InThe ~~addition~~study will be designed to ~~larger~~enroll ~~pharmaceutical~~individual orcohorts ~~biopharmaceutical~~of ~~companies~~one ~~that~~to ~~may~~three ~~develop~~patients ~~different~~at ~~competing~~a ~~technologies~~starting ordose ~~technologies~~and, ~~within~~if ~~the~~no ~~cancer~~dose ~~diagnostics~~limiting ~~and~~toxicities, ~~therapeutic~~or ~~fields~~DLTs, weare ~~will~~observed, bethe ~~competing~~dose ~~with~~is aincreased ~~number~~to ofthe ~~smaller~~next ~~biotechnology~~pre-specified ~~companies~~dose ~~that~~level ~~are~~for ~~focused~~the onnext ~~cellular~~cohort orof ~~nano-technological~~patients ~~therapy~~until ~~technologies~~a tomaximum ~~treat~~tolerated ~~cancers,~~dose ~~which~~is ~~may~~identified. ~~include~~As ~~among~~long ~~others~~as ~~Arrowhead~~there ~~Research~~is ~~Corp.~~no disease progression, ~~Applied~~patients ~~Nanotech~~will ~~Holdings,~~be ~~Dendreon,~~allowed ~~Northwest~~to ~~Biotherapeutics,~~stay ~~Antigenics,~~on ~~Celldex~~drug; ~~Therapeutics~~however, ~~NeuralStem,~~since ~~Geron,~~the ~~NeuroNova,~~starting ~~ReNeuron,~~dose ~~Stemcells,~~will ~~Inc.,~~typically ~~Advanced~~sub-therapeutic ~~Cell~~we ~~Technology,~~expect ~~Immunocellular~~patients’ ~~Therapeutics~~tumors ~~and~~in ~~Osiris~~the ~~Therapeutics.~~early ~~Northwest~~cohorts ~~Biotherapeutics~~to iscontinue ~~developing~~to agrow. ~~dendritic~~In ~~cell-based~~the ~~vaccine~~Q3W ~~treating~~portion ~~brain~~of ~~tumors~~the ~~and~~study, ~~Celldex~~we ~~Therapeutics~~will ~~has~~evaluate ~~recently~~dose ~~completed~~levels aranging ~~Phase~~from II[3.5 ~~clinical~~mg/m ~~trial~~2 to ~~treat~~75 ~~glioblastoma~~mg/m ~~with~~2]. ~~their~~The ~~cancer~~Q3W ~~vaccines,~~portion ~~and~~of ~~other~~the ~~companies~~study ~~may~~will ~~also~~enroll be15 ~~developing~~patients ~~vaccines~~with a variety of ~~this~~advanced ~~type~~malignancies.

Colleges, universities, governmental agencies and other public and private research organizations are becoming more active in seeking patent protection and licensing arrangements to collect royalties for use of technologies that they have developed, some of which may be directly competitive with our lead product candidate or any future product candidates. The governments of a number of foreign countries are aggressively investing in cellular therapy research and promoting such research by public and private institutions within those countries. These domestic and foreign institutions and governmental agencies, along with pharmaceutical and specialized biotechnology companies, can be expected to compete with us in recruiting qualified scientific personnel.13

~~Intellectual~~The ~~Property~~Phase 1 study will also evaluate preliminary anti-tumor activity. Anti-tumor activity was assessed every other dose cycle using the criteria established by Response Evaluation Criteria in Solid Tumors (“RECIST”). RECIST is a set of published rules that define when cancer patients improve, stay the same or worsen during treatments.

~~The~~We ~~technology~~expect ~~covered~~to byretain ~~the~~clinical ~~CSMC~~trial ~~License~~expertise ~~includes five issued patents, United States patents “Antisense inhibition of laminin-8 expression~~ to ~~inhibit~~assist ~~human~~us ~~gliomas” No. 7,547,511 issued in June 2009, “Polymalic acid-based multifunctional drug delivery system” No. 7,935,677 B2 issued in May 2011, and “Poly (Beta Malic Acid)~~ with Pendant Leu-Leu-Leu Tripeptide for Effective Cytoplasmic Drug Delivery” No. 8,309,614 issued in November 2012 as well as Japanese patents “Antisense Inhibition of Laminin-8 Expression to Inhibit Human Gliomas” No. 4567683 issued in August 2010 and “Polymalic Acid Based Multifunctional Drug Delivery System” No. 5008981 issued in June 2012. Additionally, CSMC and Arrogene have filed multiple patent applications in the ~~United~~above ~~States~~efforts and ~~certain foreign countries, which will be covered by the license. New additional patent filings are pending. Under the scope of~~ our ~~license~~plans ~~new~~could ~~patent~~change ~~applications~~based ~~filed~~on ~~by CSMC relating to~~ the ~~same~~advice ~~subject matter or derivative~~ of ~~the~~such ~~existing~~experts ~~patents~~once ~~are subject to inclusion rights or rights of first refusal under the license~~retained.

~~Employees~~Preclinical Development

AsWe ofhave ~~October~~developed ~~31,~~important ~~2012,~~related weintellectual ~~had~~properties ~~two~~surrounding ~~part~~tumor biomarker Laminin-~~time~~411 ~~employees~~as ~~both~~a diagnostic, prognostic and treatment biomarker for number of ~~whom~~tumors. Laminins are ~~members~~the major components of ~~management~~basement ~~and~~membranes ~~one~~that ~~full~~are orderly sheet-~~time~~like ~~administrative~~structures ~~employee~~secreted ~~due~~by cells to ~~our~~separate ~~limited~~several ~~capital~~cell ~~resources~~types from one another. We ~~also~~Laminins ~~utilize~~play ~~several~~key ~~consultants~~roles ~~who~~in ~~are~~cell ~~focused~~adhesion, onpolarity, ~~business~~movement, and ~~technical~~differentiation. ~~development~~They form a family of related but distinct proteins. ~~Our~~ ~~ability~~Like toall ~~expand~~laminins, ~~our~~Laminin-411 ~~employee~~is ~~base~~comprised toof ~~include~~three ~~full~~chains, a4, b1, and g1 (hence the name). In normal tissues, Laminin-411 expression is almost negligible in blood vessels. At the same time, ~~personnel~~vessels in ~~administration~~some organs, ~~research~~like breast and ~~development~~brain, ~~and~~predominantly ~~business~~contain another, closely related, isoform, Laminin-421 (a4b2g1). Our scientists were the first to demonstrate that during tumor development, Laminin-411 (formerly, laminin-8) is ~~dependent~~produced onin excessive amounts, while the ~~availability~~normal Laminin-421 gets suppressed, causing a shift from “normal” to “tumor” laminin (Ljubimova et al., Cancer Res, 2001; Fujita et al., Breast Cancer Res, 2005). Laminin-411 has been implicated in cell migration and increased production of ~~funding~~some cancer stem cell proteins. In general, abnormal interactions between tumor cells and laminins are among major traits of various cancers. Taken together, the data presented above suggest that by blocking the production of Laminin-411, one may expect to slow down or arrest tumor growth and inhibit cancer cell spread, as well as possibly suppress cancer stem cells thereby diminishing chances of disease relapse.

~~Item~~Using 1Aclinical material from 65 patients with brain gliomas, our founders in their capacity as researchers at CSMC, found an inverse correlation between Laminin-411 overproduction, patients’ survival and time of recurrent development (Ljubimova et al., ~~Risk~~Cancer, ~~Factors~~2004). In 2007, they started a clinical trial to examine a possible clinicopathological use of Laminin-411 as a diagnostic tool for advanced brain glioma and as a prognostic indicator that could predict disease recurrence. The study of the expression of Laminin-411 and Laminin-421 was performed this time with the paraffin-embedded archival material routinely used in all pathological laboratories. This trial has recently completed, with more than 300 cases of human tumors analyzed. The data show that this protein is overproduced in more than (85%) of grade IV gliomas. Its production is correlated with poor patient survival, as compared to patients whose tumors predominantly contain a normal isoform, Laminin-421. This data is currently being prepared for publication.

~~CERTAIN~~We ~~RISK~~completed ~~FACTORS~~preclinical OFstudies ~~ARROGENE~~in ~~THAT~~mice, ~~MAY~~rats ~~AFFECT~~and ~~FUTURE~~started ~~RESULTS~~toxicity study on non-human primates to evaluate the accumulation of AG-101 at the targeted disease site, the effects of prolonged circulation of AG-101 and the impact of AG-101 on tumor size and growth. The performance of AG-101 in these preclinical studies suggests that AG-101 is highly differentiated from, and superior to, Temozolomide as well as other standard of care drugs for brain gliomas.

~~Our~~During ~~business,~~our ~~future~~collaboration ~~performance~~with ~~and~~the ~~forward-looking~~FDA/NIH ~~statements~~Nanotechnology ~~are~~Characterization ~~affected~~Laboratory bywe ~~general~~characterized ~~industry~~Polycefin and ~~market~~showed ~~conditions~~that ~~and~~Polycefin ~~growth~~(a) ~~rates,~~is ~~general~~not ~~U.S.~~hemolytic; ~~and~~(b) ~~non-U.S.~~does ~~economic~~not ~~and~~induce ~~political~~platelet ~~conditions~~aggregation; (~~including the global economy~~c), ~~competition,~~does ~~interest~~not ~~rate~~induce ~~and~~plasma ~~currency~~coagulation; ~~exchange~~(d) ~~rate~~complement ~~fluctuations~~activation ~~and~~by ~~other~~Polycefin ~~events. The~~is ~~following~~about ~~items~~4 ~~are~~times ~~representative~~lower ofthan ~~the risks, uncertainties and other conditions~~ that ~~may~~caused ~~impact~~by ~~our~~market ~~business,~~standard ~~future~~Doxil. ~~performance~~This ~~and~~provides ~~the~~strong ~~forward-looking~~support ~~statements~~for ~~that~~our wepending ~~make in this report or that we may make in the future~~IND.

~~Risks~~We ~~Related~~plan to ~~our~~complete ~~Business,~~the ~~Products~~pharmacokinetics and ~~Markets~~toxicitity of AG-101 in cynomolgus monkeys, as a precursor to FDA IND submission.

~~Our~~We ~~auditors~~ have ~~expressed~~also ~~substantial~~shown ~~doubt~~that ~~about~~Polycefin ~~our~~has the ability to ~~continue~~harbor asvarious drugs at the same time making it a ~~going~~potential ~~concern~~master delivery vehicle that can be customized for a particular tumor and even for an individual patient. Additionally, in vivo treatment has shown effectiveness against more than one, widely different, type of cancers: HER2/neu positive breast cancer, EGFR positive Triple Negative Breast Cancer (TNBC) and Glioblastoma, suggesting that Polycefin’s application might be flexible and appropriate to a wide range of cancer types and therapeutics (Inoue et al, Cancer Research 2011, Inoue et al, PlosOne 2012, Ding et al, J Control Release 2013).

~~Arrogene~~Beyond ~~has~~diagnostic ~~incurred~~and ~~cumulative~~prognostic ~~net~~applications, ~~operating~~we ~~losses~~believe ~~and~~that ~~negative~~our ~~cash~~discovery ~~flow~~of ~~since~~Lamin ~~inception~~411’s role in tumor growth could be exploited together with our Polycefin technology towards novel tumor inhibiting treatments. WeOur ~~expect~~Laminin ~~that~~411 ~~the~~inhibition ~~Company~~is ~~will~~a ~~continue~~key tomechanism ~~experience~~of ~~operating~~action ~~losses~~in ~~and~~AG-101, ~~negative~~using ~~cash~~combinational ~~flow~~antisense ~~for~~oligonucleotides ~~the~~against ~~foreseeable~~Laminin-411 ~~future~~and EGFR on one nanopolymer (Polycefin) molecule, ~~which~~and ~~will~~target ~~impact~~them specifically to tumor cells.

914

~~the~~AG-101 ~~financial~~Regulatory ~~results of Arrogene. Accordingly, our auditors have expressed substantial doubt about our ability to continue as a going concern.~~Pathway

We ~~require~~expect ~~additional~~to ~~funding~~seek ~~which~~to ~~may~~qualify ~~not~~AG-101 befor ~~available~~rare/orphan-disease ondesignation ~~favorable~~with ~~terms~~the FDA. The Orphan Drug Act (ODA) provides for granting special status to a drug or biological product (“drug”) to treat a rare disease or condition upon request of a sponsor. This status is referred to as orphan designation (or sometimes “orphan status”). For a drug to qualify for orphan designation both the drug and the disease or condition must meet certain criteria specified in the ODA and FDA’s implementing regulations at ~~all~~21 CFR Part 316. Orphan designation qualifies the sponsor of the drug for various development incentives of the ODA, including tax credits for qualified clinical testing. A marketing application for a prescription drug product that has received orphan designation is not subject to a prescription drug user fee unless the application includes an indication for other than the rare disease or condition for which the drug was designated. The granting of an orphan designation request does not, however, alter the standard regulatory requirements and process for obtaining marketing approval.

WeIt ~~will~~is ~~require~~our ~~additional~~intention ~~funds~~ to ~~support~~also ~~our~~pursue ~~working~~breakthrough ~~capital~~therapy ~~and~~designation ~~planned~~with ~~development requirements within~~ the ~~next~~FDA ~~twelve~~for ~~months~~AG-101. ~~Adequate~~ ~~funds~~We ~~may~~believe ~~not~~that bewe ~~available~~can ~~when~~justify ~~needed~~this orstatus ~~may not be available on favorable terms. If the Company raises additional funds~~ by issuing equity securities or convertible debt securities, existing shareholders may be diluted or have their rights subordinated to newly-issued senior securities. If funding is insufficient at any time in the ~~future,~~lack ~~we may not be able to develop or commercialize its products or services, take advantage~~ of ~~business~~viable ~~opportunities~~alternative ortreatments ~~respond~~for tobrain ~~competitive~~cancers ~~pressures,~~and ~~any~~the ofhigh ~~which~~mortality ~~could~~associated ~~harm~~with ~~its business~~them.

The ~~future~~FDA ~~capital~~may ~~requirements~~also accelerate the approval of ~~Arrogene~~a ~~depend~~designated ~~upon~~breakthrough ~~many~~therapy, ~~factors~~which is a drug that is intended, ~~including~~alone or in combination with one or more other drugs, to treat a serious or life-threatening disease or condition and preliminary clinical evidence indicates that the ~~following:~~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. The sponsor of a breakthrough therapy may request the FDA to designate the drug as a breakthrough therapy at the time of, or any time after, the submission of an IND for the drug. If the FDA designates a drug as a breakthrough therapy, it must take actions appropriate to expedite the development and review of the application, which may include holding meetings with the sponsor and the review team throughout the development of the drug; providing timely advice to, and interactive communication with, the sponsor regarding the development of the drug to ensure that the development program to gather the nonclinical and clinical data necessary for approval is as efficient as practicable; involving senior managers and experienced review staff, as appropriate, in a collaborative, cross-disciplinary review; assigning a cross-disciplinary project lead for the FDA review team to facilitate an efficient review of the development program and to serve as a scientific liaison between the review team and the sponsor; and taking steps to ensure that the design of the clinical trials is as efficient as practicable, when scientifically appropriate, such as by minimizing the number of patients exposed to a potentially less efficacious treatment.

·Fast ~~the~~Track ~~cost~~designation, ofpriority ~~testing~~review, ~~and~~accelerated ~~developing~~approval ~~our technologies; · the cost~~ and ~~timing~~breakthrough oftherapy ~~regulatory~~designation ~~approvals;~~do ·not change the ~~rate~~standards atfor ~~which~~approval webut ~~expand~~may ~~our~~expedite ~~operations; and ·~~ the ~~cost~~development ofor ~~commercializing~~approval ~~our products~~process.

~~Current~~Some ~~economic~~Polycefins ~~conditions~~might ~~and~~also inqualify for the ~~global~~FDA’s ~~economy~~505(b)(2) ~~generally~~regulatory pathway as well as the European Medicines Agency’s, ~~including~~or ~~ongoing~~EMA’s, ~~disruptions~~hybrid application pathway, which would allow an abbreviated pathway to approval for the use of Polycefin for additional cancer indications as a targeted delivery of existing pipeline drugs. Section 505(b)(2) of the Federal Food Drug & Cosmetic Act, or FDCA, enables an applicant to rely, in part, on the ~~debt~~FDA’s findings of safety and ~~equity~~efficacy ~~capital~~for ~~markets~~an existing product, ~~may~~or ~~adversely~~published ~~affect~~literature, in support of its NDA. Section 505(b)(2) NDAs often provide an alternate regulatory pathway to FDA approval for new or improved formulations or new uses of previously approved products. To the extent that we not chemically modify but physically encapsulate an active therapeutic with existing approvals in our ~~business~~Polycefin, this pathway would allow us to reference both preclinical and ~~results~~clinical information that was part of ~~operations~~the original registration filing on the active drug, and would allow for potential approval based on a single pivotal trial designed with the same endpoints as the reference compound. However, unlike most 505(b)(2) pathway approaches, we will be powering our ~~ability~~pivotal trials with the goal of demonstrating superiority over conventional therapies. In this way, the 505(b)(2) pathway offers us the opportunity to obtain ~~financing~~FDA approval for other Polycefins based on already approved drugs, at a lower cost and in a shorter period of time than is typically possible for new chemical entities.

The global economy is currently undergoing numerous challenges, and the future economic environment may continue to be less favorable than that of past years. We are unable to predict the likely duration and severity of the current disruptions in debt and equity capital markets and adverse economic conditions in the United States and other countries, which may continue to have an adverse effect on our business and results of operations, in part because we are dependent upon customer behavior and the impact on consumer spending that the continued market disruption may have. Collaborations

~~The~~In ~~global~~addition ~~stock and credit markets have recently experienced significant price volatility, dislocations and liquidity disruptions, which have caused market prices of many stocks~~ to ~~fluctuate~~our ~~substantially~~internal ~~and~~development ~~the spreads on prospective and outstanding debt financings to widen considerably. These circumstances have materially impacted liquidity in the financial markets~~programs, ~~making~~we terms for certain financings materially less attractive, and in certain cases have resulted in the unavailability of certain types of financing. This volatility and illiquidity has negatively affected a broad range of mortgage and asset-backed and other fixed income securities. As a result, the market for fixed income securities has experienced decreased liquidity, increased price volatility, credit downgrade events, and increased defaults. Global equity markets have also ~~been~~consider ~~experiencing~~opportunities ~~heightened~~to ~~volatility~~collaborate ~~and turmoil,~~ with ~~issuers~~recognized ~~exposed~~biopharmaceutical ~~to the credit markets particularly affected. These factors and the continuing market disruption have an adverse effect on us, in part because we, like many~~ companies, ~~from time~~ to ~~time~~develop ~~may~~Polycefins ~~need~~incorporating totherapeutic ~~raise~~payloads ~~capital~~from intheir ~~debt~~proprietary ~~and~~product ~~equity capital markets including in the asset-backed securities markets~~portfolios. We will require additional capital within the following 12 months and our ability to raise such capital, including the terms under which such capital is raised, will be dependent on the general economic conditions of the United States and the capital markets. If we are unable to raise additional capital, it was have a material adverse affect on our liquidity and business operations and would likely put us out of business.

We ~~cannot~~generally ~~predict~~consider ~~our~~each ~~future~~of ~~capital~~the ~~needs~~following ~~and~~criteria wewhen ~~may~~evaluating ~~not~~a bepotential ~~able~~collaborator toand ~~secure~~its ~~additional~~proposed ~~financing.~~therapeutic payload:

Our projection of future capital needs is based on our operating plan, which in turn is based on assumptions that may prove to be incorrect. As a result, our financial resources may not be sufficient to satisfy our future capital requirements. Should these assumptions prove incorrect, there is no assurance that we can raise additional financing on a timely basis or on favorable terms. If funding is insufficient at any time in the future, we may not be able to develop or commercialize our products or services, take advantage of business opportunities or respond to competitive pressures, any of which could harm our business.15

10• The physical and chemical properties of the proposed therapeutic payload are well suited for encapsulation and release in an Polycefin;

~~Future~~• ~~financings~~The ~~may~~therapeutic ~~result~~payload inhas ~~dilution~~high totherapeutic ~~our~~potential ~~shareholders~~for ~~and~~addressing ~~restrictions~~an onimportant ~~its~~unmet ~~business~~medical ~~operations.~~need;

If• weThe ~~raise~~therapeutic ~~additional~~payload ~~funds~~is byhighly ~~issuing~~validated ~~equity~~in orits ~~convertible debt securities~~original, ~~further~~untargeted dilution to our shareholders could occur. Additionally, we may grant registration rights to investors purchasing equity or debt securities. Debt financing, if available, may involve pledging some or all of our assets and may contain restrictive covenants with respect to raising future capital and other financial and operational matters. If we are unable to obtain necessary additional capital, we may be unable to execute our business strategy, which would have a material adverse effect on our business, financial condition and results of operations.form;

~~Future~~• ~~share~~The ~~issuances~~collaborator topossesses ~~CSMC~~substantial ~~will~~resources ~~have~~and acapabilities ~~dilutive~~for ~~effect~~contributing onto the development and commercialization of our ~~shareholders.~~collaboration product;

• The ~~License~~collaborator ~~requires~~places usstrategic toimportance ~~issue~~on ~~additional~~our ~~shares~~collaboration ofproduct ~~common stock to CSMC~~ in ~~the~~their future for no additional consideration to ensure that CSMC will own 5% of the total issued and outstanding common shares. This commitment continues until December 31, 2015. As a result, existing shareholders may suffer further dilution in the event we sell or issue additional shares in the future.portfolio;

~~Because~~• weThe ~~have~~collaborator ais ~~limited~~committed ~~operating~~to ~~history,~~our weproject ~~may~~as ~~not~~demonstrated beby ~~able~~the tosponsorship ~~successfully~~of ~~manage~~their ~~our~~executive ~~business~~management; ~~or achieve profitability.~~and

We• ~~have~~The acollaborator ~~limited~~values ~~operating history upon which to base an evaluation of~~ our ~~prospects~~relationship and ~~the~~ongoing ~~potential~~input ~~value of our common stock. We are confronted with the risks inherent~~ in ~~an early stage company, including difficulties and delays in connection with~~ the development of ~~Polycefin~~the ~~into~~collaboration ~~a commercially viable~~ product~~, reliance on a small number of scientific collaborators, operational difficulties, and difficulty in estimating future development, regulatory, and administrative costs~~. If we cannot successfully manage our business, we may not be able to develop a commercially viable product, generate future profits and may not be able to support our operations. It is possible that we will incur additional expenses and losses in the further implementation of our business plan. We may not be able to improve operations and therefore may not become profitable.

We ~~have~~expect ~~incurred~~to ~~losses~~continue ~~since~~to ~~inception~~maintain a close research collaboration with CSMC’s Nanomedicine Research Center. The Nanomedicine Research Center was established in August, 2011 to create and ~~may~~bring ~~never~~to ~~achieve~~the ~~profitability~~clinical practice new generation of nanomedicine imaging agents and drugs which are cancer specific for precise diagnostic and highly anti-cancer effective. Polycefin was developed at the center. The Nanomedicine Research Center is part of the NIH/NCI Alliance for Nanotechnology in Cancer 2010-2015, which engages the nation’s leading nanomedicine centers in a collaborative effort aimed at accelerating use of nanotechnology to advance cancer diagnosis, treatment and prevention.

We are ~~subject~~conducting topre-clinical ~~many~~studies ofin ~~the~~collaboration ~~risks~~with ~~common~~the toToxicology ~~developing~~Research ~~enterprises~~Laboratory, ~~including~~a ~~undercapitalization~~GLP operated, ~~cash~~AAA ~~shortages~~LAC International accredited facility, ~~limitations~~and ~~with~~an ~~respect~~independent tocontract ~~financial~~research organization (CRO) located within the University of Illinois at Chicago (UlC). The Laboratory has conducted many preclinical toxicology programs on potential therapeutic agents and other ~~resources~~chemicals. Entities such as the National Cancer Institute, ~~and~~the ~~insufficient~~World ~~revenue~~Health toOrganization, bethe ~~self-sustaining~~U.S. ~~There~~Army isMedical noResearch ~~assurance~~and ~~that~~Development weCommand, ~~will~~and ~~ever~~several ~~attain~~biotechnology, ~~profitability~~pharmaceutical, and agricultural companies utilize the expertise and commitment of the interdisciplinary Toxicology Research Laboratory team for their clinical research effort.

We have ~~limited~~also ~~human~~had ~~resources;~~an weexisting ~~need~~collaboration with the Nanotechnology Characterization Laboratory, (NCL). Working in concert with the National Institute of Standards and Technology (“NIST”) and the U.S. Food and Drug Administration (“FDA”), the National Cancer Institute (“NCI”) established the Nanotechnology Characterization Laboratory to ~~attract~~perform preclinical efficacy and ~~retain~~toxicity ~~highly~~testing ~~skilled~~of ~~personnel;~~nanoparticles. The NCL serves as a national resource and weknowledge ~~may~~base befor ~~unable~~all cancer researchers to ~~manage~~facilitate ~~our~~the ~~growth~~regulatory ~~with~~review of nanotechnologies intended for cancer therapies and diagnostics. By providing the critical infrastructure and characterization services to nanomaterial providers, the NCL accelerates the transition of basic nanoscale particles and devices into clinical applications, thereby reducing suffering and death from cancer. The NCL has fully characterized our ~~limited~~nanoplatform ~~resources~~and ~~effectively~~a number of Polycefins in pipeline, including our AG-101 formulation.

We expect that the expansion of our business will place a significant strain on our limited managerial, operational, and financial resources. We will be required to expand our operational and financial systems significantly and to expand, train and manage our work force in order to manage the expansion of our operations. Our future success will depend in large part on our ability to attract, train, and retain additional highly skilled executive level management with experience in the pharmaceutical industry. Competition is intense for these types of personnel from more established organizations, many of which have significantly larger operations and greater financial, marketing, human, and other resources than we have. We will need substantial additional capital in order to attract and retain critical management. We may not be successful in attracting and retaining qualified personnel on a timely basis, on competitive terms or at all. We currently are required to limit the engagement of critical management to part-time due to limited resources and there is no assurance that we will be successful in raising the necessary additional financial resources to employ them, and other key employees, on a full time basis. If we are not successful in attracting and retaining these personnel, our business, prospects, financial condition and operating results would be materially adversely affected. Further, our ability to manage our growth effectively will require us to continue to improve our operational, financial and management controls, reporting systems and procedures, to install new management information and control systems and to train, motivate and manage employees. If we are unable to manage growth effectively and new employees are unable to achieve adequate performance levels, our business, prospects, financial condition and operating results could be materially adversely affected.Manufacturing

We ~~will~~have bea ~~dependent~~pilot onmanufacturing facility at our Los Angeles location where we conduct process development, scale-up activities and assemble the ~~rights~~manufacturing ~~included~~equipment in a non-GMP environment. We do not own or operate GMP manufacturing facilities for the ~~License~~production of any of our drug candidates, and we do not have plans to develop our own manufacturing operations in the foreseeable future. We currently rely on third-party contract manufacturers for all of our required raw materials, therapeutic payload and finished product for our preclinical research and clinical trials. We do not have long-term agreements with any of these third parties. We also do not have any current contractual relationship for the manufacture of commercial supplies of any of our drug candidates if they are approved. If any of our products are approved by any regulatory agency, we intend to enter into agreements with a third-party contract manufacturer and one or more backup manufacturers for the commercial production of those products. Development and commercial quantities of any products that we develop will need to be manufactured in facilities, and by processes, that comply with the requirements of the FDA and the regulatory agencies of other jurisdictions in which we are seeking approval. We currently employ internal resources to manage our manufacturing contractors.

Since we have acquired the License, we will have to continue to comply with the requirements of that agreement to maintain the license rights in full force and effect. The License may be terminated if we fail to perform our obligations under the agreement in accordance with its terms including, but not limited to, our ability to make all payments due under 16

11Quality Control

~~the~~We ~~License~~do asnot ~~well~~have asa ~~certain~~quality ~~other~~system ~~development~~in ~~milestones.~~place ~~Our~~at ~~inability~~this tostage ~~continue~~of ~~to license these technologies will materially adversely affect~~ our ~~business, prospects, financial condition, and operating results~~development. InWe ~~addition,~~plan ~~our strategy depends~~ on ~~the~~developing ~~successful~~a ~~development~~set of ~~these~~Standard ~~licensed~~Operating ~~technologies~~Procedures ~~into~~(“SOPs”) ~~commercial products,~~ and, ~~therefore,~~overall ~~any~~quality ~~limitations~~system onthat ~~our~~is ~~ability~~compliant towith ~~utilize~~required ~~these~~FDA ~~technologies~~Good ~~may~~Laboratory ~~impair~~Practices ~~our~~(GLP) ~~ability to market~~ and ~~sell~~GMP ~~our~~as ~~products,~~needed ~~delay~~in ~~new~~the ~~product~~future ~~introductions,~~as ~~and/or~~we ~~adversely~~progress ~~affect~~in our ~~reputation, any of which could have a material adverse effect on our business, prospects, financial condition, and operating results~~development.

IfSales ~~clinical~~and ~~trials of our current or future product candidates do not produce results necessary to support regulatory approval in the United States or elsewhere, we will be unable to commercialize these products.~~Marketing

ToAs ~~receive~~a ~~regulatory~~Company ~~approval~~we ~~for~~are ~~the~~still ~~commercial~~in ~~sale~~the ofdevelopment ~~our product candidates that we may develop or out-license~~stage, we ~~must~~do ~~conduct,~~not atengage ~~our~~in ~~own~~any ~~expense,~~sales ~~adequate~~ and ~~well~~marketing ~~controlled~~activities. Our ~~clinical~~strategy ~~trials~~is to ~~demonstrate~~commercialize ~~efficacy~~our ~~and~~technology ~~safety~~through inlicensing ~~humans.~~agreements ~~Clinical~~and ~~testing is expensive~~accordingly, ~~takes~~sales ~~many years~~ and ~~has~~marketing anefforts ~~uncertain~~of ~~outcome.~~the ~~Clinical~~end-product ~~failure~~will ~~can~~be ~~occur~~the atresponsibility ~~any stage~~ of the ~~testing. Our clinical trials may produce negative or inconclusive results~~licensees, ~~and~~while weour ~~may~~primary ~~decide,~~focus orwill ~~regulators~~be ~~may require us,~~ to ~~conduct~~negotiate ~~additional clinical~~ and~~/or~~ ~~non-clinical~~support ~~testing. Our~~our ~~failure~~licensing topartners ~~adequately demonstrate the efficacy~~ and ~~safety of any product candidate that we may develop or out-license would prevent receipt of regulatory approval of that product candidate~~collaborations.

~~Our~~Research ~~assumptions~~and ~~concerning the regulatory approval pathway for our diagnostic products may prove to be incorrect.~~Development

~~Our~~We ~~business~~are ~~plan~~currently ~~makes~~utilizing ~~certain~~the ~~assumptions~~laboratory ~~concerning~~at ~~the~~CSMC ~~regulatory~~for ~~approval~~research ~~pathway~~and ~~for~~development ~~our~~activities ~~planned~~as ~~diagnostic~~provided ~~and~~for ~~therapeutic~~in ~~products~~the License. ~~While~~As ~~such~~of ~~assumptions~~this ~~are~~time ~~based~~we ondo ~~the~~not ~~guidance~~employ ofany ~~regulatory~~full ~~consultants~~time research and development personnel directly, ~~there~~although key personnel at CSMC are consultants to the Company. It is noour ~~assurance~~plan to expand the ~~FDA~~development ~~will~~effort ~~agree~~by ~~with~~employing or supporting CSMC hiring of certain technical resources. Our ability to conduct research and development activities is greatly dependent upon our ~~conclusions~~financial resources. If adequate funds are not available when required, ~~which~~we ~~could~~may ~~result~~have into adelay, ~~longer~~scale-back or eliminate certain aspects of our research, ~~more~~testing ~~costly~~and/or ~~process~~development ~~than~~activities. In 2012, we ~~are~~entered ~~currently~~into ~~anticipating~~an agreement with CSMC to support certain activities within the laboratory necessary to prepare compounds. This project was completed during 2014.

~~Delays in the commencement or completion of clinical testing could result in increased costs to us and delay or limit our ability to obtain regulatory approval for our product candidates.~~Competition

~~Delays~~The inbiotechnology ~~the~~and ~~commencement~~pharmaceutical orindustries ~~completion~~are ofcharacterized ~~clinical~~by ~~testing~~rapidly ~~could~~advancing ~~significantly~~technologies, ~~affect~~intense ~~our~~competition ~~product development costs. The commencement~~ and ~~completion~~a ofstrong ~~clinical~~emphasis ~~trials~~on ~~requires~~proprietary usproducts. toWhile ~~identify~~we ~~and~~believe ~~maintain~~that aour ~~sufficient~~medicinal ~~number~~nanoengineering oftechnologies, ~~trial~~integrated ~~sites~~research, ~~many~~clinical ofand ~~which~~manufacturing ~~may~~capabilities, ~~already~~development beexperience ~~engaged~~and inscientific ~~other~~knowledge ~~clinical~~provide ~~trial~~us ~~programs~~with ~~for~~competitive ~~the~~advantages, ~~same~~we ~~indication~~face aspotential ~~our~~competition ~~product~~from ~~candidates~~many ordifferent ~~may~~sources, ~~not~~including bemajor ~~eligible~~pharmaceutical, tospecialty ~~participate~~pharmaceutical inand orbiotechnology ~~may~~companies, beacademic ~~required~~institutions toand ~~withdraw~~governmental ~~from~~agencies aand ~~clinical~~public ~~trial~~and asprivate aresearch ~~result~~institutions. ofAny ~~changing~~drug ~~standards~~candidates ofthat ~~care.~~we ~~The~~successfully ~~commencement~~develop and ~~completion~~commercialize ofwill ~~clinical~~compete ~~trials~~with ~~can~~existing betherapies ~~delayed~~and ~~for~~new atherapies ~~variety~~that ofmay ~~other~~become ~~reasons,~~available ~~including~~in ~~delays~~the ~~related to:~~future.

·Many of our competitors may have significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and marketing approved products than we do. Mergers and acquisitions in the pharmaceutical, biotechnology and diagnostic industries may result in even more resources being concentrated among a smaller number of our competitors. These competitors also compete with us in recruiting and retaining qualified scientific and management personnel and establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs. Smaller or early stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies.

~~reaching~~The ~~agreements~~key oncompetitive ~~acceptable~~factors ~~terms~~affecting ~~with~~the ~~prospective~~success ~~clinical~~of ~~research~~AG-101and ~~organizations,~~any orother ~~CROs,~~drug ~~and~~candidates ~~trial~~that ~~sites~~we develop, ~~the~~if ~~terms~~approved, ofare ~~which~~likely ~~can~~to be ~~subject~~their toefficacy, ~~extensive~~safety, ~~negotiation~~convenience, price, the level of generic competition and ~~may~~the ~~vary~~availability ~~significantly~~of ~~among~~reimbursement ~~different~~from ~~CROs~~government and ~~trial~~other ~~sites;~~third-party payors.

·Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize products that are more effective, have fewer or less severe side effects, are more convenient or are less expensive than any products that we may develop. Our competitors also may obtain FDA or other regulatory approval for their products more rapidly than we may obtain approval for ours. In addition, our ability to compete may be affected in many cases by insurers or other third-party payors seeking to encourage the use of generic products. Generic products are currently on the market, including the therapeutics payload in for the indications that we are pursuing, and additional products are expected to become available on a generic basis over the coming years. If our drug candidates achieve marketing approval, we expect that they will be priced at a significant premium over competitive generic products.

~~obtaining regulatory approval to commence a clinical trial;~~17

·The most common methods of treating patients with cancer are surgery, radiation and drug therapy, including chemotherapy and targeted drug therapy. There are a variety of available drug therapies marketed for solid tumors. In many cases, these drugs are administered in combination to enhance efficacy. Some of these drugs are branded and subject to patent protection, and others are available on a generic basis, including the therapeutic payload contained in AG-101. Many of these approved drugs are well established therapies and are widely accepted by physicians, patients and third-party payors. In general, although there has been considerable progress over the past few decades in the treatment of solid tumors and the currently marketed therapies provide benefits to many patients, these therapies all are limited to some extent in their efficacy and frequency of adverse events, and none of them are successful in treating all patients. As a result, the level of morbidity and mortality from solid tumor cancers remains high.

~~obtaining~~There ~~institutional~~are ~~review~~also ~~board~~a ~~approval~~number toof ~~conduct~~products ain late stage clinical ~~trial~~development atto treat solid tumors. These products in development may provide efficacy, safety, convenience and other benefits that are not provided by currently marketed therapies. As a ~~prospective~~result, ~~site;~~they may provide significant competition for AG-101 or any other drug candidate for which we obtain marketing approval.

·In addition to larger pharmaceutical or biopharmaceutical companies that may develop different competing technologies or technologies within the cancer diagnostics and therapeutic fields, we will be competing with a number of smaller biotechnology companies that are focused on cellular or nano-technological therapy technologies to treat cancers, which may include among others Arrowhead Research Corp., Applied Nanotech Holdings, Dendreon, Northwest Biotherapeutics, Antigenics, Celldex Therapeutics, NeuralStem, Geron, NeuroNova, ReNeuron, Stemcells, Inc., Advanced Cell Technology, Immunocellular Therapeutics and Osiris Therapeutics and Bind Therapeutics and Envisia Therapeutics and Liquidia Technologies. Northwest Biotherapeutics is developing a dendritic cell-based vaccine treating brain tumors and Celldex Therapeutics has recently completed a Phase II clinical trial to treat glioblastoma with their cancer vaccines, and other companies may also be developing vaccines of this type.

~~recruiting~~Intellectual ~~and enrolling patients to participate in clinical trials for a variety of reasons, including competition from other clinical trial programs for the same indication as our product candidates; and~~Property

·Patents and Proprietary Rights

~~retaining~~We ~~patients~~actively ~~who~~seek ~~have~~to ~~initiated~~protect aour ~~clinical~~medicinal ~~trial~~nanomedicine ~~but~~platform ~~may~~technology, bewhich ~~prone~~we consider important to ~~withdraw~~our ~~due~~business, including by pursuing patents relating to ~~the~~our ~~treatment~~products ~~protocol~~and compositions, ~~lack~~their methods of ~~efficacy,~~use ~~personal~~and ~~issues~~the processes for their manufacture, ~~side~~as ~~effects~~well ~~from~~as any other relevant inventions and improvements that are commercially important to the ~~therapy~~development orof ~~who~~our business and are ~~lost~~eligible for patent protection. We attempt a layered approach by seeking multiple different patents or patent applications on different aspects of Polycefin. We also rely on trade secrets that may be important to ~~further~~the ~~follow-up~~development of our business.

InOur ~~addition,~~success awill ~~clinical~~depend ~~trial~~significantly ~~may~~on beour ~~suspended~~ability orto ~~terminated~~obtain byand ~~us,~~maintain ~~the~~patent ~~FDA~~and or other ~~regulatory~~proprietary ~~authorities~~protection for the technology, ~~due~~inventions and improvements we consider important to aour ~~number~~business; defend our patents; preserve the confidentiality of ~~factors~~our trade secrets; and operate without infringing the patents and proprietary rights of third parties. We also rely on know-how, ~~including:~~continuing technological innovation and in-licensing opportunities to develop and maintain our proprietary position.

·As of March 31, 2016, we owned or had exclusive license to the issued and pending U.S. patents listed below, 2 patents issued in Japan, and non-provisional patent applications that relate to our medicinal nanoengineering platform, as well as pending foreign counterparts to many of these patents and patent applications. The exclusive licenses are, in some cases, limited to certain field of uses, generally the use in human diagnostics and therapeutic applications. Our owned and licensed patents and patent applications relate to our nanobiopolymer, nanobiopolymer compositions, nanobiopolymer with specific drugs, targeting ligands, methods of making nanobiopolymer, methods of making targeting ligands and methods of treating breast and brain cancer using our nanoparticles, the use of the nanobiopolymer for diagnostic imaging applications, the use of Laminin 411 as a novel biomarker, and the inhibition of Laminin 411 as a novel cancer inhibitor. We believe these patents and patent applications relate to advances in the nanobiopolymer field that are important for the development of a therapeutic nanoparticle. The issued patents generally are expected to expire between 2025 and 2030.

~~failure~~Our toissued ~~conduct~~and ~~the~~pending ~~clinical~~U.S. ~~trial~~patents inare ~~accordance~~as ~~with regulatory requirements or our clinical protocols;~~follows:

·1.U.S. Patent No. 7,547,511 “Antisense inhibition of laminin-8 expression to inhibit human gliomas”, granted June 16, 2009.

~~inspection of the clinical trial operations or trial sites by the FDA or other regulatory authorities resulting in the imposition of a clinical hold;~~18

·2.U.S. Patent No. 7,935,677 “Polymalic acid-based multifunctional drug delivery system”, granted May 3, 2011.

~~unforeseen~~3.U.S. ~~safety~~Patent ~~issues~~No. or8,309,614 ~~any~~“Poly(b-L-malic ~~determination~~acid) ~~that~~with apendant ~~trial~~Leu-Leu-Leu ~~presents~~tripeptide ~~unacceptable~~for ~~health~~effective ~~risks;~~cytoplasmic ordrug delivery”, granted November 13, 2012.

·4.U.S. Patent No. 8,377,652 “Fermentative production and high grade preparative purification of long-chain poly (b-L-malic acid)", granted February 19, 2013.

~~lack~~5.U.S. ofPatent ~~adequate~~No. ~~funding to continue the clinical trial~~8,562,964 ~~including~~“Polymalic ~~the~~acid-based ~~incurrence~~multifunctional ofdrug ~~unforeseen~~delivery ~~costs~~system”", ~~due~~granted toOctober ~~enrollment delays~~22, ~~requirements to conduct additional trials and studies and increased expenses associated with the services of our CROs and other third parties~~2013.

126.U.S. Patent No. 8,785,371 “Drug delivery of temozolomide for systemic based treatment of cancer”, granted July 22, 2014.

~~Additionally, changes in regulatory requirements and guidance may occur and we may need to amend clinical trial protocols to reflect these changes~~7. ~~Amendments may require us to resubmit our clinical trial protocols to institutional review boards for reexamination, which may impact the costs, timing or successful completion of a clinical trial~~U.S. IfPatent wepending ~~experience~~“Using ~~delays~~overexpression ~~in the completion~~ of, orlaminin ifalpha we4 ~~terminate,~~chain ~~our~~as ~~clinical~~a ~~trials,~~diagnostic ~~the commercial prospects for our product candidates will be harmed,~~ and ~~our~~prognostic ~~ability~~indicator ~~to generate product revenues will be delayed. In addition, many~~ of ~~the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of a product candidate~~gliomas”. ~~Even~~Docket ifNo ~~we are able to ultimately commercialize our product candidates, other therapies for the same indications may have been introduced to the market and established a competitive advantage~~CEDAR-45266.

~~Even~~8.U.S. ifPatent ~~our~~pending ~~product~~“Polymalic ~~candidates~~acid-based ~~receive~~nanobiopolymer ~~regulatory~~provides ~~approval,~~efficient ~~they~~systemic ~~may~~breast ~~still~~cancer ~~face~~treatment ~~future~~by ~~development~~inhibiting both HER2/neu receptor synthesis and ~~regulatory~~activity”. ~~difficulties~~Docket No. 61/428,402, Filed in December 30, 2011.

~~Even if U~~9.S.Polymalic ~~regulatory approval or clearance is obtained, the FDA can impose significant restrictions on a product’s indicated uses or marketing or may impose ongoing requirements for potentially costly post~~acid-~~approval~~based ~~studies.~~nanoconjugates ~~Any of these restrictions or requirements could adversely affect our potential product revenues. Our product candidates will also be subject to ongoing FDA requirements~~ for ~~the labeling, packaging, storage, advertising, promotion, record-keeping and submission of safety and other post-market information on the drug~~imaging. InDocket ~~addition, approved products, manufacturers and manufacturers’ facilities are subject to continual review and periodic inspections~~No. IfUS ~~a regulatory agency discovers previously unknown problems with a product~~13/441, ~~such as adverse events of unanticipated severity or frequency~~599, orFiled ~~problems~~in ~~with~~April ~~the facility where the product is manufactured, a regulatory agency may impose restrictions on that product or us, including requiring withdrawal of the product from the market~~2012. ~~If our product candidates fail to comply with applicable regulatory requirements, such as cGMP, a regulatory agency may:~~

·10.U.S. Patent PMLA Based Immuno-Nanoconjugates for Local and General Immune System Stimulation to Treat Primary and Metastatic Tumor Docket No CEDAR – 065472-000597PR00, Filed in March 2016.

~~issue~~The ~~warning~~term ~~letters~~of individual patents depends upon the legal term of the patents in the countries in which they are obtained. In most countries in which we file, the patent term is 20 years from the date of filing the non-provisional application or ~~untitled~~PCT ~~letters;~~application.

·In the United States, a patent’s term may be lengthened by patent term adjustment, which compensates a patentee for administrative delays by the U.S. Patent and Trademark Office in granting a patent, or may be shortened if a patent is terminally disclaimed over an earlier-filed patent. The patent term of a patent that covers an approved drug may also be eligible for patent term extension, which permits patent term restoration as compensation for the patent term lost during the development and regulatory review process. To obtain a patent extension in the United States, the term of the relevant patent must not have expired before the extension application, the patent cannot have been extended previously under this law, an application for extension must be submitted, the product must be subject to regulatory review prior to its commercialization, and the permission for the commercial marketing or use of the product after such regulatory review period is the first permitted commercial marketing or use of the product. Some of the active ingredients in AG-101 have been previously approved and commercially marketed and, as such, we do not expect to be eligible for a patent term extension in the United States. If our future products contain active ingredients which have not been previously approved, we may be eligible for a patent term extension in the United States. If patent extensions are available to us outside of the United States, we would expect to file for a patent term extension in applicable jurisdictions.

~~require~~Trade ~~us to enter into a consent decree, which can include imposition of various fines, reimbursements for inspection costs, required due dates for specific actions and penalties for noncompliance;~~Secrets

·We endeavor to maintain trade secret protection for certain aspects of our technology, primarily through non-disclosure and confidentiality agreements. In some situations, maintaining information as a trade secret is more appropriate than filing a patent application. Specifically, we have a number of trade secrets relating to identifying new Polycefins and to our Polycefins manufacturing process. With regard to manufacturing Polycefins, we believe that small changes in processing Polycefins can result in Polycefins with different properties. As a result, we expect the FDA and other regulatory bodies to require additional clinical data for approval of a generic Polycefin. As such, we believe that maintaining our manufacturing process as a trade secret will be helpful to maintaining our product exclusivity.

~~impose~~Government ~~other civil or criminal penalties;~~Regulation

·Government authorities in the United States, at the federal, state and local level, and in other countries extensively regulate, among other things, the research, development, testing, manufacturing, quality control, approval, labeling, packaging, storage, record-keeping, promotion, advertising, distribution, post-approval monitoring and reporting, marketing and export and import of drug products such as those we are developing. AG-101 and any other drug candidates that we develop must be approved by the FDA before they may be legally marketed in the United States and by the appropriate foreign regulatory agency before they may be legally marketed in foreign countries.

~~suspend regulatory approval;~~19

·United States Drug Review and Approval Processes

~~suspend~~The ~~any~~results ~~ongoing~~of product development, preclinical studies and clinical trials;, along with descriptions of the manufacturing process, analytical tests conducted on the chemistry of the drug, proposed labeling, and other relevant information are submitted to the FDA as part of an NDA requesting approval to market the product. The FDA reviews all NDAs submitted to ensure that they are sufficiently complete for substantive review before it accepts them for filing. It may request additional information rather than accept an NDA for filing. In this event, the NDA must be resubmitted with the additional information. The resubmitted application also is subject to review before the FDA accepts it for filing.

·Once the submission is accepted for filing, the FDA begins an in-depth and substantive review. The FDA reviews an NDA to determine, among other things, whether a product is safe and effective for its intended use and whether its manufacturing is cGMP-compliant. The FDA may seek advice and a recommendation from an external advisory committee as to whether the application should be approved and under what conditions. The FDA is not bound by the recommendation of an advisory committee, but it generally follows such recommendations. Before approving an NDA, the FDA will inspect the facility or facilities where the product is manufactured and tested. The FDA may refuse to approve an NDA if the applicable regulatory criteria are not satisfied or may require submission of additional clinical or other data and information which, upon agency review and interpretation, may or may not be deemed by the FDA to satisfy the criteria for approval. The FDA may also issue a “complete response” letter, which may require additional clinical or other data or impose other conditions that must be met in order to secure final approval of the NDA.

~~refuse~~NDAs toreceive ~~approve~~either ~~pending~~standard ~~applications~~or priority review. A drug representing a significant improvement in treatment, prevention or ~~supplements~~diagnosis toof disease may receive priority review. In addition, products studied for their safety and effectiveness in treating serious or life-threatening illnesses and that provide meaningful therapeutic benefit over existing treatments may receive accelerated approval and may be approved ~~applications~~on ~~filed~~the bybasis ~~us;~~of adequate and well-controlled clinical trials establishing that the drug candidate has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit or on the basis of an effect on a clinical endpoint other than survival or irreversible morbidity. As a condition of approval, the FDA may require that a sponsor of a drug receiving accelerated approval perform adequate and well-controlled post-marketing clinical trials. Priority review and accelerated approval do not change the standards for approval, but may expedite the approval process.

·In the recently enacted Food and Drug Administration Safety and Innovation Act, or FDASIA, Congress encouraged the FDA to utilize innovative and flexible approaches to the assessment of products under accelerated approval. The law requires the FDA to issue related draft guidance within a year after the law’s enactment and also promulgate confirming regulatory changes.

~~impose~~If ~~restrictions~~approved onby ~~operations~~the FDA, ~~including~~the ~~costly~~product’s ~~new~~use ~~manufacturing~~may ~~requirements;~~be limited to specific diseases, dosages or indications. In addition, the FDA may require us to conduct additional testing post-approval, which may involve further nonclinical studies or clinical trials designed to further assess the drug’s safety and effectiveness and may require additional testing and surveillance programs to monitor the safety of the drug in the marketplace

·Section 505(b)(2) Regulatory Pathway

~~seize~~New ordrugs ~~detain~~must ~~products~~obtain FDA approval through an NDA prior to marketing in the United States. Most NDAs are submitted under Section 505(b)(1) of the FDCA, where all clinical investigations supporting the safety and effectiveness of the drug product are conducted by or ~~require~~for athe applicant. However, an NDA may also be submitted under Section 505(b)(2) of the FDCA, which enables the applicant to rely, in part, on the FDA’s findings of safety and efficacy for an existing product, ~~recall~~or published literature, in support of its application.

~~Our~~Section 505(b)(2) ~~commercialization~~NDAs ~~efforts~~often ~~will~~provide bean ~~greatly~~alternate ~~dependent~~regulatory ~~upon~~pathway ~~our~~to ~~ability~~FDA toapproval ~~demonstrate~~for ~~product~~new ~~efficacy~~or inimproved ~~clinical~~formulations ~~trials.~~or ~~Pharmacies~~new ~~and~~uses ~~other~~of ~~dispensing~~previously ~~facilities~~approved ~~will~~products. beSpecifically, ~~reluctant~~Section 505(b)(2) topermits ~~order~~the ~~our~~filing ~~products,~~of ~~and~~an ~~medical~~NDA ~~practitioners~~where ~~will~~at beleast ~~reluctant~~some toof ~~prescribe~~the ~~our~~information ~~products,~~required ~~without~~for ~~compelling~~approval ~~supporting~~comes ~~data.~~from ~~While~~studies wenot ~~believe~~conducted ~~that~~by ~~our~~or ~~products~~for ~~will~~the beapplicant ~~effective~~and for ~~our~~which ~~planned~~the ~~indications,~~applicant ~~there~~has isnot noobtained ~~assurance~~a ~~that~~right ~~this~~of ~~will~~reference. beThe ~~proven~~applicant inmay rely upon the FDA’s findings from preclinical or clinical ~~trials~~studies conducted for an approved product. The ~~failure~~FDA tomay ~~demonstrate~~also ~~efficacy~~require inSection 505(b)(2) ~~our~~applicants ~~clinical~~to ~~trials,~~perform oradditional astudies ~~delay~~ or ~~failure~~measurements to ~~complete~~support ~~our~~the ~~clinical~~change ~~trials,~~from ~~would~~the ~~have~~approved aproduct. ~~material~~The ~~adverse~~FDA ~~effect~~may onthen ~~our~~approve ~~business,~~the ~~prospects~~new drug candidate for all or some of the label indications for which the referenced product has been approved, ~~financial~~as ~~condition~~well ~~and~~as ~~operating~~for ~~results~~any new indication sought by the Section 505(b)(2) applicant.

~~Our failure to convince medical practitioners to use our technologies will limit our revenue and profitability.~~20

IfIn ~~we,~~seeking orapproval ~~our~~for ~~commercialization~~a ~~partners~~drug through an NDA, ~~fail~~applicants are required to ~~convince~~list ~~medical~~with ~~practitioners~~the toFDA ~~prescribe~~each ~~products~~patent ~~using~~with ~~our~~claims ~~technologies,~~that wecover ~~will~~the ~~not~~applicant’s beproduct. ~~able~~Upon toapproval ~~sell~~of ~~our~~a ~~products~~drug, oreach ~~license~~of ~~our~~the ~~technologies~~patents listed in ~~sufficient~~the ~~volume~~application for ~~our~~the ~~business~~drug tois ~~become~~then ~~profitable~~published in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations , commonly known as the Orange Book. WeDrugs ~~will~~listed ~~need~~in tothe ~~make~~Orange ~~leading~~Book ~~physicians~~can, ~~aware~~in turn, be cited by potential competitors in support of approval of a generic drug or a new drug submitted for approval under a Section 505(b)(2) NDA. To the ~~benefits~~extent that the Section 505(b)(2) applicant is relying on findings of ~~products~~safety ~~using~~or ~~our~~efficacy ~~technologies~~for ~~through~~an ~~published~~already ~~papers~~approved product, ~~presentations~~the atapplicant ~~scientific~~is ~~conferences~~subject ~~and~~to ~~favorable~~existing ~~results~~exclusivity ~~from~~for ~~our~~the ~~clinical~~reference ~~studies.~~product ~~Our~~and ~~failure~~is required to becertify ~~successful~~to the FDA concerning any patents listed for the approved product in ~~these~~the ~~efforts~~Orange Book to the same extent that a generic applicant would. ~~make~~Specifically, itapplicants ~~difficult~~must certify to the FDA concerning any patents listed for usthe approved product in the Orange Book that: (1) the required patent information has not been filed; (2) the listed patent has expired; (3) the listed patent has not expired, but will expire on a particular date and approval is sought after patent expiration; or (4) the listed patent is invalid or will not be infringed by the new product. A certification that the new product will not infringe the already approved product’s listed patents or that such patents are invalid is called a Paragraph IV certification. If an applicant has provided a Paragraph IV certification to ~~convince~~the ~~medical~~FDA, ~~practitioners~~the applicant must also send notice of the Paragraph IV certification to ~~prescribe~~the ~~products~~NDA ~~using~~and ~~our~~patent ~~technologies~~holders once the application has been accepted for ~~their~~filing ~~patients~~by the FDA. ~~Failure~~The NDA and patent holders may then initiate a patent infringement lawsuit in response to ~~convince~~the ~~medical~~notice ~~practitioners~~of the Paragraph IV certification. The filing of a patent infringement lawsuit within 45 days of the receipt of a Paragraph IV certification prevents the FDA from approving the application until the earlier of 30 months from the date of the lawsuit, expiration of the patent, settlement of the lawsuit or a decision in the infringement case that is favorable to ~~prescribe~~the ~~our~~applicant. ~~products~~Thus ~~will~~approval ~~damage~~of ~~our~~a ~~commercialization~~Section 505(b)(2) ~~efforts~~NDA ~~and~~can ~~would~~be stalled until all the listed patents claiming the referenced product have expired, until any non-patent exclusivity, such as exclusivity for obtaining approval of a ~~material~~new ~~adverse~~chemical ~~effect~~entity, onlisted ~~our~~in ~~business~~the Orange Book for the referenced product has expired, ~~prospects~~and, ~~financial~~in ~~condition~~the case of a Paragraph IV certification and ~~operating~~subsequent ~~results~~patent infringement suit, until the earlier of 30 months, settlement of the lawsuit or a decision in the infringement case that is favorable to the Section 505(b)(2) applicant.

IfOrphan weDrug lose the support of our key scientific collaborators, it may be difficult to establish products using our technologies as a standard of care for various indications, which may limit our revenue growth and profitability.Designation

WeUnder ~~have~~the ~~established~~Orphan ~~relationships~~Drug ~~with~~Act, ~~leading~~the ~~scientists~~FDA ~~around~~may ~~the~~grant ~~world.~~orphan Wedesignation ~~plan~~to a drug intended to ~~formalize~~treat ~~certain~~a ofrare ~~these~~disease ~~relationships~~or bycondition, ~~establishing~~which is a ~~scientific~~disease ~~advisory~~or ~~board.~~condition Wethat ~~believe~~affects ~~that~~fewer ~~such~~than ~~relationships~~200,000 ~~are~~individuals ~~key~~in tothe ~~establishing~~United ~~products~~States, ~~using~~or ~~our~~if ~~technologies~~it asaffects amore ~~standard~~than 200,000 individuals in the United States, there is no reasonable expectation that the cost of ~~care~~developing and making a drug product available in the United States for ~~various~~this ~~indications~~type of disease or condition will be recovered from sales of the product. WeOrphan ~~plan~~product todesignation ~~enter~~must ~~into~~be ~~consulting~~requested ~~agreements~~before ~~with~~submitting ~~our~~an ~~scientific~~NDA. ~~advisory~~After ~~board~~the ~~members~~FDA grants orphan product designation, ~~but~~the ~~such~~identity ~~agreements~~of ~~will~~the ~~likely~~therapeutic ~~provide~~agent ~~for~~and ~~termination~~its ~~with~~potential 30orphan ~~days~~use ~~notice~~are disclosed publicly by the FDA. ~~Additionally,~~Orphan product designation does not convey any advantage in or shorten the duration of the regulatory review and approval process.

13If a product that has orphan designation subsequently receives the first FDA approval for the disease or condition for which it has such designation, the product is entitled to orphan product exclusivity, which means that the FDA may not approve any other applications to market the same drug or biological product for the same indication for seven years, except in limited circumstances, such as a showing of clinical superiority to the product with orphan exclusivity. The designation of such drug also entitles a party to financial incentives such as opportunities for grant funding toward clinical trial costs, tax advantages and user-fee waivers. Competitors, however, may receive approval of different products for the indication for which the orphan product has exclusivity or obtain approval for the same product but for a different indication for which the orphan product has exclusivity. Orphan product exclusivity also could block the approval of one of our products for seven years if a competitor obtains approval of the same drug or biological product as defined by the FDA or if our drug candidate is determined to be contained within the competitor’s product for the same indication or disease. If a drug product designated as an orphan product receives marketing approval for an indication broader than what is designated, it may not be entitled to orphan product exclusivity. Orphan drug status in the EU has similar but not identical benefits in that jurisdiction.

there is no assurance that our current research partners will continue to work with us or we will be able to attract additional research partners. The inability to maintain and build on our existing scientific relationships could have a material adverse effect on our business, prospects, financial condition and operating results.21

IfExpedited weDevelopment ~~are unsuccessful in establishing strategic licensing arrangement with strategic industry partners, our efforts to develop our products will be more costly~~ and ~~involve~~Review ~~significant delays.~~Programs

~~Our~~The ~~product~~FDA ~~development~~has ~~plan~~a ~~relies~~Fast ~~upon~~Track ~~our~~program ~~ability~~that is intended to ~~join~~expedite ~~with~~or ~~strategic~~facilitate ~~industry~~the ~~partners~~process infor ~~licensing~~reviewing ~~arrangements~~new drug products that meet certain criteria. ~~This~~ ~~approach~~Specifically, ~~would~~new ~~allow~~drugs usare eligible for Fast Track designation if they are intended to ~~utilize~~treat ~~the~~a ~~resources~~serious or life-threatening disease or condition and ~~scientific~~demonstrate ~~talent~~the ofpotential ~~our~~to ~~strategic~~address ~~licensing~~unmet ~~partners~~medical needs for the disease or condition. ~~However,~~ ifFast weTrack ~~are~~designation ~~not~~applies ~~successful~~to inthe ~~establishing~~combination ~~these~~of ~~relationships,~~the weproduct ~~will~~and bethe ~~required~~specific indication for which it is being studied. Unique to ~~bear~~a Fast Track product, the ~~cost~~FDA may consider for review sections of ~~commercializing~~the ~~our~~NDA ~~technology,~~on ~~both~~a ~~financial~~rolling ~~and~~basis ~~human~~before ~~resources~~the complete application is submitted, ~~alone.~~if Asthe sponsor provides a ~~result~~schedule for the submission of the sections of the NDA, wethe ~~would~~FDA ~~expect~~agrees ~~that~~to ~~our~~accept ~~future~~sections ~~capital~~of ~~requirements~~the ~~would~~NDA beand ~~significantly~~determines ~~increased~~that ~~than~~the ~~presently~~schedule ~~projected~~is acceptable, and the ~~time~~sponsor topays ~~market~~any ~~materially~~required ~~delayed~~user fees upon submission of the first section of the NDA.

WeAny product submitted to the FDA for approval, including a product with a Fast Track designation, may ~~not~~also be ~~able~~eligible for other types of FDA programs intended to ~~market~~expedite development and review, such as priority review and accelerated approval. A product is eligible for priority review if it has the potential to provide safe and effective therapy where no satisfactory alternative therapy exists or ~~generate~~a ~~sales~~significant improvement in the treatment, diagnosis or prevention of ~~our~~a disease compared to marketed products. The FDA will attempt to direct additional resources to the ~~extent~~evaluation ~~anticipated~~of an application for a new drug designated for priority review in an effort to facilitate the review. Additionally, a product may be eligible for accelerated approval. Drug products studied for their safety and effectiveness in treating serious or life-threatening diseases or conditions may receive accelerated approval upon a determination that the product has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit, or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity, or prevalence of the condition and the availability or lack of alternative treatments. As a condition of approval, the FDA may require that a sponsor of a drug product receiving accelerated approval perform adequate and well-controlled post-marketing clinical studies. In addition, the FDA currently requires as a condition for accelerated approval pre-approval of promotional materials, which could adversely impact the timing of the commercial launch of the product.

~~Assuming~~The FDA may also accelerate the approval of a designated breakthrough therapy, which is a drug that weis ~~are~~intended, ~~successful~~alone or in ~~receiving~~combination ~~regulatory~~with ~~clearances~~one or more other drugs, to ~~market~~treat a serious or life-threatening disease or condition and preliminary clinical evidence indicates that the 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. The sponsor of a breakthrough therapy may request the FDA to designate the drug as a breakthrough therapy at the time of, or any time after, the submission of ~~our~~an ~~products~~IND for the drug. If the FDA designates a drug as a breakthrough therapy, ~~our~~it ~~ability~~must take actions appropriate to ~~successfully~~expedite ~~penetrate~~the development and review of the ~~market~~application, which may include holding meetings with the sponsor and ~~generate~~the ~~sales~~review team throughout the development of ~~those~~the ~~products~~drug; ~~may~~providing betimely ~~limited~~advice byto, and interactive communication with, the sponsor regarding the development of the drug to ensure that the development program to gather the nonclinical and clinical data necessary for approval is as efficient as practicable; involving senior managers and experienced review staff, as appropriate, in a ~~number~~collaborative, cross-disciplinary review; assigning a cross-disciplinary project lead for the FDA review team to facilitate an efficient review of ~~factors~~the development program and to serve as a scientific liaison between the review team and the sponsor; and taking steps to ensure that the design of the clinical trials is as efficient as practicable, ~~including~~when scientifically appropriate, such as by minimizing the ~~following:~~number of patients exposed to a potentially less efficacious treatment.

·Fast Track designation, priority review, accelerated approval and breakthrough therapy designation do not change the standards for approval but may expedite the development or approval process. We plan to explore these opportunities for AG-101 as appropriate for our targeted indications.

~~Certain~~Post-Approval of our competitors in the field have already received regulatory approvals for and have begun marketing similar products, which may result in greater physician awareness of their products as compared to ours.Requirements

·Any drug products for which we receive FDA approvals are subject to continuing regulation by the FDA, including, among other things, record-keeping requirements, reporting of adverse experiences with the product, providing the FDA with updated safety and efficacy information, product sampling and distribution requirements, and complying with FDA promotion and advertising requirements, which include, among other requirements, standards for direct-to-consumer advertising, restrictions on promoting drugs for uses or in patient populations that are not described in the drug’s approved labeling (known as “off-label use”), limitations on industry sponsored scientific and educational activities, and requirements for promotional activities involving the Internet. Although physicians may prescribe legally available drugs for off-label uses, manufacturers may not market or promote such off-label uses.

Information from our competitors or the academic community indicating that current products or new products are more effective than our products could, if and when it is generated, impede our market penetration or decrease our existing market share.22

·In addition, quality control and manufacturing procedures must continue to conform to applicable manufacturing requirements after approval. We rely, and expect to continue to rely, on third parties for the production of clinical and commercial quantities of our products in accordance with cGMP regulations. cGMP regulations require, among other things, quality control and quality assurance as well as the corresponding maintenance of records and documentation and the obligation to investigate and correct any deviations from cGMP. Drug manufacturers and other entities involved in the manufacture and distribution of approved drugs are required to register their establishments with the FDA and certain state agencies, and are subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with cGMP and other laws. Accordingly, manufacturers must continue to expend time, money and effort in the area of production and quality control to maintain cGMP compliance. Discovery of problems with a product after approval may result in restrictions on a product, manufacturer or holder of an approved NDA, including, among other things, recall or withdrawal of the product from the market. In addition, changes to the manufacturing process are strictly regulated, and depending on the significance of the change, may require prior FDA approval before being implemented. Other types of changes to the approved product, such as adding new indications and additional labeling claims, are also subject to further FDA review and approval.

~~Physicians~~The FDA also may berequire ~~reluctant~~Phase 4 testing and surveillance to ~~switch~~monitor ~~from~~the ~~existing~~effects ~~treatment~~of ~~methods~~an approved product or place conditions on an approval that could restrict the distribution or use of the product. Discovery of previously unknown problems with a product or the failure to comply with applicable FDA requirements can have negative consequences, including ~~traditional~~adverse ~~therapy~~publicity, ~~agents~~judicial or administrative enforcement, warning letters from the FDA, mandated corrective advertising or communications with doctors, and civil or criminal penalties, among others. Newly discovered or developed safety or effectiveness data may require changes to a product’s approved labeling, including the addition of new warnings and contraindications, and also may require the implementation of other risk management measures, such as a REMS. Also, new government requirements, including those resulting from new legislation, may be established, or the FDA’s policies may change, which could delay or prevent regulatory approval of our products under development.

·United States Patent Term Restoration, Generic Nanomedicine Pathway and Marketing Exclusivity

~~The~~Depending ~~price~~upon ~~for~~the timing, duration and specifics of the FDA approval of the use of our ~~products~~drug candidates, if any, some of our U.S. patents may be eligible for limited patent term extension under the Drug Price Competition and Patent Term Restoration Act of 1984, commonly referred to as ~~well~~the Hatch-Waxman Amendments. The Hatch-Waxman Amendments permit a patent restoration term of up to five years as ~~pricing~~compensation ~~decisions~~for bypatent ~~our~~term ~~competitors~~lost during product development and the FDA regulatory review process. However, ~~may~~patent ~~have~~term restoration cannot extend the remaining term of a patent beyond a total of 14 years from the product’s approval date. The patent term restoration period is generally one-half the time between the effective date of an ~~effect~~IND and the submission date of an NDA plus the time between the submission date of an NDA and the approval of that application. Only one patent applicable to an approved drug is eligible for the extension and the application for the extension must be submitted prior to the expiration of the patent. The U.S. Patent and Trademark Office, in consultation with the FDA, reviews and approves the application for any patent term extension or restoration. However, to obtain a patent extension in the United States, the permission for the commercial marketing or use of the product after the applicable regulatory review period must be the first permitted commercial marketing or use of the product. As some of the active ingredient in AG-101, has been previously approved and commercially marketed, we do not expect to be eligible for a patent term extension in the United States. If a future product contains an active ingredient which has not been previously approved, we may intend to apply for restoration of patent term for one of the U.S. patents relating to such product, depending on ~~our~~the ~~revenues~~expected length of the clinical trials, other factors involved in the filing of the relevant NDA, and the eligibility for patent term extension.

·Market exclusivity provisions under the FDCA can also delay the submission or the approval of certain competing marketing applications. The FDCA provides a five-year period of non-patent marketing exclusivity within the United States to the first applicant to obtain approval of an NDA for a new chemical entity. A drug is a new chemical entity if the FDA has not previously approved any other new drug containing the same active moiety, which is the molecule or ion responsible for the action of the drug substance. During the exclusivity period, the FDA may not accept for review an abbreviated new drug application, or ANDA, or a 505(b)(2) NDA submitted by another company for another drug based on the same active moiety, regardless of whether the drug is intended for the same indication as the original innovative drug or for another indication, where the applicant does not own or have a legal right of reference to all the data required for approval. However, an application may be submitted after four years if it contains a certification of patent invalidity or non-infringement to one of the patents listed with the FDA by the innovator NDA holder. The FDCA also provides three years of marketing exclusivity for an NDA or supplement to an existing NDA if new clinical investigations, other than bioavailability studies, that were conducted or sponsored by the applicant are deemed by the FDA to be essential to the approval of the application, for example, clinical investigations to support new indications, dosages or strengths of an existing drug. This three-year exclusivity covers only the modification for which the drug received approval on the basis

~~Our revenues may diminish if third-party payors, including private health coverage insurers and health maintenance organizations, do not provide adequate coverage or reimbursement for our products.~~23

Ifof ~~any~~the ofnew ~~our~~clinical ~~future~~investigations ~~marketed~~and ~~products~~does ~~were~~not toprohibit ~~experience~~the ~~problems~~FDA ~~related~~from toapproving ~~their~~ANDAs ~~efficacy,~~for ~~safety,~~drugs containing the active agent for the original indication or ~~otherwise,~~condition of use. Five-year and three-year exclusivity will not delay the submission or ifapproval ~~new~~of any full NDA. However, ~~more~~an ~~effective~~applicant ~~treatments~~submitting ~~were~~a tofull NDA would be ~~introduced,~~required ~~our~~to ~~revenues~~conduct ~~from~~or ~~such~~obtain ~~marketed~~a ~~products~~right ~~could~~of ~~decrease~~reference to all of the preclinical and clinical trials necessary to demonstrate safety and effectiveness.

IfOther ~~any~~types of ~~our~~non-patent ~~current~~marketing orexclusivity ~~future~~include ~~marketed~~orphan ~~products~~drug ~~become~~exclusivity under the ~~subject~~Orphan Drug Act, which may offer a seven-year period of ~~problems~~marketing exclusivity as described above, ~~including~~and ~~those~~pediatric ~~related~~exclusivity tounder the Best Pharmaceuticals for Children Act, ~~among~~which ~~others:~~may add six months to existing exclusivity periods and patent terms. This six-month pediatric exclusivity may be granted based on the voluntary completion of a pediatric trial in accordance with an FDA-issued “Written Request” for such a trial.

·In addition, regulatory authorities have established heightened requirements for the demonstration of equivalence between proposed generic drugs and therapeutics using certain nanomedicine platforms, such as liposomes and other nanoparticulate suspensions. We expect these requirements will apply to the development of generic Polycefin as well. We believe these additional regulatory requirements will strengthen the protection afforded by our intellectual property portfolio and present significant barriers to entry for potential generics.

~~efficacy~~Fraud orand ~~safety~~Abuse ~~concerns with the products, even if not justified;~~Laws

·We will also be subject to healthcare regulation and enforcement by the federal government and the states and foreign governments in which we will conduct our business once our products are approved. The laws that may affect our ability to operate include: the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, which governs the conduct of certain electronic healthcare transactions and protects the security and privacy of protected health information; the federal healthcare programs’ Anti-Kickback Law, which prohibits, among other things, persons from knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, in exchange for or to induce either the referral of an individual for, or the purchase, order or recommendation of, any good or service for which payment may be made under federal healthcare programs such as the Medicare and Medicaid programs; federal false claims laws which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid or other third-party payors that are false or fraudulent; federal criminal laws that prohibit executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters; and state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers.

~~unexpected~~United ~~side-effects;~~States Drug Development Process

·In the United States, the FDA regulates drugs under the Federal Food, Drug, and Cosmetic Act, or FDCA, and implementing regulations. Failure to comply with the applicable U.S. requirements at any time during the product development process or approval process, or after approval, may subject an applicant to administrative or judicial sanctions, any of which could have a material adverse effect on us. These sanctions could include:

~~regulatory~~• ~~proceedings~~refusal ~~subjecting~~to ~~the~~approve ~~products~~pending toapplications; ~~potential~~• ~~recall~~withdrawal of an approval; • imposition of a clinical hold; • warning letters; • product seizures; • total or partial suspension of production or distribution; or • injunctions, fines, disgorgement, or civil or criminal penalties.

·The process required by the FDA before a drug may be marketed in the United States generally involves the following:

~~publicity~~• ~~affecting~~completion ~~doctor~~of ~~prescription~~preclinical laboratory tests, animal studies and formulation studies according to Good Laboratory Practices, or ~~patient~~GLPs, ~~use~~or ofother ~~the~~applicable ~~product~~regulations;

·24

~~pressure~~• ~~from~~submission ~~competitive~~to ~~products~~the FDA of an Investigational New Drug Application, or IND, which must become effective before human clinical trials may begin; • performance of adequate and well-controlled human clinical trials according to Good Clinical Practices, or GCPs, and other applicable requirements to establish the safety and efficacy of the proposed drug for its intended use; • submission to the FDA of an NDA; • satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the drug is produced to assess compliance with current cGMP, to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity; and • FDA review and approval of the NDA.

·As part of the IND, an IND sponsor must submit to the FDA the results of preclinical tests, which may include laboratory evaluations and animal studies, together with manufacturing information and analytical data, and the proposed clinical protocol for the first Phase of the clinical trial of the drug. The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA, within the 30-day time period, places the clinical trial on a “clinical hold” because of safety concerns or perceived procedural deficiencies. In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before clinical trials may begin. A clinical hold may be imposed by the FDA at any time during the life of an IND, and may affect one or more specific studies or all studies conducted under the IND.

~~introduction~~All clinical trials must be conducted under the supervision of one or more ~~effective~~qualified ~~treatments~~investigators in accordance with GCPs. They must be conducted under protocols detailing the objectives of the trial, dosing procedures, research subject selection and exclusion criteria and the safety and effectiveness criteria to be evaluated. Each protocol must be submitted to the FDA as part of the IND, and progress reports detailing the status of the clinical trials must be submitted to the FDA annually. Sponsors also must timely report to FDA serious and unexpected adverse reactions, any clinically important increase in the rate of a serious suspected adverse reaction over that listed in the protocol or investigation brochure, or any findings from other studies or animal or in vitro testing that suggest a significant risk in humans exposed to the drug. An institutional review board, or IRB, must also review and approve each new clinical protocol and patient informed consent form prior to commencement of the corresponding clinical trial at each institution where a trial is to be performed.

~~Our~~Human ~~revenues~~clinical ~~from~~trials ~~such~~are ~~marketed~~typically ~~products~~conducted ~~could~~in ~~decrease.~~three ~~For~~sequential ~~example,~~Phases ~~efficacy~~that ~~or safety concerns~~ may ~~arise,~~overlap ~~whether~~ or ~~not~~be ~~justified,~~combined: ~~that could lead to the recall or withdrawal of such marketed products. In the event of a recall or withdrawal of a product, our revenues would significantly decline.~~

IfPhase we1 do: The ~~not~~drug ~~receive~~is ~~adequate~~initially ~~third-party~~introduced ~~reimbursement~~into healthy human subjects and tested for safety, dosage tolerance, absorption, metabolism, distribution and excretion. In the ~~sales~~case of ~~our~~some products for severe or life-threatening diseases, wesuch ~~may~~as ~~not~~cancer, especially when the product may be ~~able~~inherently too toxic to ~~sell~~ethically ~~such~~administer ~~products~~to onhealthy avolunteers, ~~profitable~~the ~~basis~~initial human testing is often conducted in patients.

~~Sales~~Phase of2 ~~our~~: Clinical ~~products~~trials ~~will~~are ~~depend,~~performed inon ~~part,~~a ~~upon~~limited ~~the~~patient ~~extent~~population intended to ~~which~~identify ~~the~~possible ~~costs~~adverse ofeffects ~~our products will be paid by health maintenance, managed care, pharmacy benefit~~ and ~~similar~~safety ~~reimbursement sources~~risks, orto ~~reimbursed~~preliminarily byevaluate ~~government~~the ~~health~~efficacy ~~administration~~of ~~authorities, private health coverage insurers and other third-party payors. Such third-party payors continue to aggressively challenge~~ the ~~prices~~product ~~charged~~ for ~~healthcare~~specific ~~products~~targeted ~~and~~diseases ~~services. Additionally, federal~~ and ~~state~~to ~~governments~~determine ~~have~~dosage ~~prioritized~~tolerance ~~the containment of healthcare costs,~~ and ~~drug~~optimal ~~prices have been targeted in this effort~~dosage. ~~If these organizations~~

14Phase 3 : Clinical trials are undertaken to further evaluate dosage, clinical efficacy and safety in an expanded patient population at geographically dispersed clinical study sites. These studies are intended to establish the overall risk-benefit ratio of the product and provide, if appropriate, an adequate basis for product labeling.

Human clinical trials are inherently uncertain and ~~third-party~~Phase ~~payors~~1, doPhase ~~not~~2 ~~consider~~and ~~our~~Phase ~~products~~3 totesting may not be ~~cost-effective,~~successfully ~~they~~completed. The FDA or the sponsor may ~~not~~suspend ~~reimburse~~a ~~providers~~clinical trial at any time for a variety of ~~our~~reasons, ~~products~~including a finding that the research subjects or patients are being exposed to an unacceptable health risk. Similarly, an IRB can suspend or ~~the~~terminate ~~level~~approval of ~~reimbursement~~a ~~may~~clinical trial at its institution if the clinical trial is not bebeing ~~sufficient~~conducted toin ~~allow~~accordance uswith tothe ~~sell~~IRB’s ~~our~~requirements ~~products~~or onif athe ~~profitable~~drug ~~basis~~has been associated with unexpected serious harm to patients.

Although we have potential products that appear to be promising at early stages of development and in pre clinical trials, none of our potential products may reach the commercial market for a number of reasons.25

~~Successful~~During ~~research~~the ~~and~~ development of ~~pharmaceutical~~a ~~products~~new isdrug, ~~high~~sponsors ~~risk.~~are ~~Most~~given ~~products~~an ~~and~~opportunity ~~development candidates fail~~ to ~~reach~~meet ~~the~~with ~~market. Our success depends on~~ the ~~discovery~~FDA ofat ~~new~~certain ~~drugs or devices that we can commercialize~~points. ItThese ispoints ~~possible that our potential products~~ may ~~never~~be ~~reach~~prior ~~the~~to ~~market~~submission ~~for a number~~ of ~~reasons.~~an ~~They~~IND, ~~may~~at bethe ~~found~~end ~~ineffective~~of orPhase ~~may~~2, ~~cause~~and ~~harmful~~before ~~side-effects~~an ~~during~~NDA ~~pre-clinical~~is ~~testing or clinical trials or fail to receive necessary regulatory approvals~~submitted. WeThese ~~may~~meetings ~~find~~can ~~that~~provide ~~certain~~an ~~products~~opportunity ~~cannot~~for bethe ~~manufactured~~sponsor onto ashare ~~commercial~~information ~~scale~~about ~~basis~~the ~~and,~~data ~~therefore,~~gathered ~~they may not be economical~~ to ~~produce.~~date ~~Our~~and ~~products~~for ~~could~~the ~~also~~FDA ~~fail~~ to ~~achieve~~provide ~~market~~advice ~~acceptance~~on orthe benext ~~precluded~~phase ~~from commercialization by proprietary rights~~ of ~~third parties~~development. WeSponsors ~~have~~typically ause ~~number~~the end-of-Phase ~~product~~2 ~~candidates~~meeting into ~~various~~discuss ~~stages~~their ofPhase ~~development~~2 ~~but~~clinical doresults ~~not~~and ~~expect~~present their plans for the ~~majority~~pivotal ofPhase ~~them~~3 toclinical betrial ~~commercially~~that ~~available~~they ~~for~~believe awill ~~number~~support approval of ~~years,~~the ifnew ~~at all~~drug.

IfConcurrent ~~our~~with ~~competitors~~clinical ~~succeed~~trials, insponsors ~~developing~~usually ~~products~~complete additional animal safety studies and ~~technologies~~also ~~that~~develop ~~are~~additional ~~more~~information ~~effective~~about ~~than~~the ~~our~~chemistry ~~own,~~and orphysical ifcharacteristics ~~scientific~~of ~~developments~~the ~~change~~drug ~~our~~and ~~understanding~~finalize a process for manufacturing commercial quantities of the ~~potential~~product ~~scope~~in accordance with cGMP requirements. The manufacturing process must be capable of consistently producing quality batches of the drug and ~~utility~~the manufacturer must develop methods for testing the quality, purity and potency of ~~our~~the ~~products~~drug. Additionally, ~~then~~appropriate ~~our~~packaging ~~products~~must be selected and ~~technologies~~tested ~~may~~and stability studies must be ~~rendered~~conducted ~~less~~to ~~competitive~~demonstrate that the drug candidate does not undergo unacceptable deterioration over its proposed shelf-life.

WeIf ~~will~~a ~~face~~drug ~~significant~~is ~~competition~~intended ~~from~~to ~~industry~~treat ~~participants~~a ~~that~~serious ~~are~~or ~~pursuing~~life ~~similar~~threatening ~~products~~condition ~~and~~for ~~technologies~~which ~~that~~there weis ~~are~~an ~~pursuing~~unmet ~~and~~medical ~~are~~need, ~~developing~~a ~~pharmaceutical~~company ~~products~~may request that ~~are~~the ~~competitive~~FDA ~~with~~consider ~~our~~the ~~planned~~drug ~~products~~for ~~and~~a ~~potential~~fast ~~products.~~track ~~Nearly all of our industry competitors have greater capital resources, larger overall research and~~ development ~~staffs~~program ~~and~~at ~~facilities,~~the ~~and~~time aof ~~longer~~submitting ~~history~~its inIND ~~drug~~or ~~discovery~~at ~~and~~any ~~development,~~time ~~obtaining~~prior ~~regulatory~~to ~~approval~~receiving ~~and pharmaceutical product manufacturing and~~ marketing ~~than we do~~approval. ~~With~~The ~~these~~fast ~~additional~~track ~~resources,~~program ~~our~~is ~~competitors~~designed ~~may be able~~ to ~~respond~~facilitate to the ~~rapid~~development and ~~significant~~expedite ~~technological changes in~~ the ~~biotechnology~~review ~~and~~of ~~pharmaceutical industries faster than we can. Our future success will depend in large part on our ability to maintain~~ a ~~competitive position with respect to these technologies. Rapid technological development, as well as~~ new ~~scientific~~drug ~~developments,~~for ~~may~~the ~~result~~treatment ~~in our compounds, products or processes becoming obsolete before we can recover any~~ of ~~the~~specific ~~expenses incurred to develop them~~conditions. ~~For~~If ~~example,~~the ~~changes~~FDA inagrees ~~our~~that ~~understanding of~~ the ~~appropriate~~drug ~~population~~meets ofthe ~~patients~~criteria ~~who~~for ~~should~~fast betrack ~~treated~~development ~~with~~for atreatment ~~targeted~~of ~~therapy~~one ~~like~~or wemore ~~are~~conditions, ~~developing may limit the product's market potential if~~ it iswill ~~subsequently~~grant ~~demonstrated~~fast ~~that~~track ~~only certain subsets of patients should be treated with the targeted therapy~~status.

~~Our~~Pediatric ~~reliance~~Exclusivity onand ~~third~~Pediatric ~~parties,~~Use ~~such as clinical research organizations, may result in delays in completing, or a failure to complete, clinical trials if they fail to perform under our agreements with them.~~

InUnder the ~~course~~Best ofPharmaceuticals ~~product~~for ~~development~~Children Act, weor ~~may~~BPCA, ~~engage~~certain ~~clinical~~drugs ~~research~~may ~~organizations~~obtain toan ~~conduct~~additional ~~and~~six ~~manage~~months ~~clinical~~of ~~studies~~exclusivity, ~~and~~if tothe ~~assist~~sponsor ussubmits ininformation ~~guiding~~requested ~~our~~in ~~products~~writing ~~through~~by the FDA, ~~review~~or ~~and~~a ~~approval~~Written ~~process.~~Request, Ifrelating ~~we engage clinical research organizations~~ to ~~help~~the ususe ~~obtain~~of ~~market~~the ~~approval~~active ~~for~~moiety ~~our drug candidates, many important aspects~~ of ~~this~~the ~~process~~drug ~~have~~in ~~been~~children. ~~and~~The ~~will~~FDA bemay ~~out~~not ofissue ~~our~~a ~~direct~~Written ~~control.~~Request Iffor ~~the~~studies ~~clinical~~on ~~research~~unapproved ~~organizations~~or ~~fail~~approved toindications ~~perform~~or ~~their~~where ~~obligations~~it ~~under~~determines ~~our~~that ~~agreements~~information ~~with~~relating ~~them or fail~~ to ~~perform~~the ~~clinical~~use ~~trials~~of in a ~~satisfactory~~drug ~~manner, we may face delays~~ in ~~completing~~a ~~our~~pediatric ~~clinical trials~~population, asor ~~well~~part ~~as commercialization~~ of ~~one~~the orpediatric ~~more drug candidates. Furthermore~~population, ~~any loss or delay in obtaining contracts with such entities~~ may ~~also~~not ~~delay~~produce ~~the~~health ~~completion~~benefits ofin ~~our~~that ~~clinical trials and the market approval of drug candidates~~population.

IfTo receive the ~~manufacturers~~six-month ~~upon~~pediatric ~~whom~~market exclusivity, we ~~rely~~would ~~fail~~have to ~~produce~~receive ~~our~~a ~~product~~Written ~~candidates~~Request infrom the ~~volumes~~FDA, ~~that~~conduct wethe ~~require~~requested onstudies in accordance with a ~~timely~~written ~~basis,~~agreement with the FDA or, toif ~~comply~~there ~~with~~is ~~stringent~~no ~~regulations~~written ~~applicable~~agreement, toin ~~pharmaceutical~~accordance ~~drug~~with ~~manufacturers~~commonly accepted scientific principles, weand submit reports of the studies. A Written Request may ~~face~~include ~~delays~~studies for indications that are not currently in the ~~development~~labeling ~~and~~if ~~commercialization~~the ~~of,~~FDA ordetermines bethat ~~unable~~such information will benefit the public health. The FDA will accept the reports upon its determination that the studies were conducted in accordance with and are responsive to ~~meet~~the ~~demand~~original ~~for~~Written Request or commonly accepted scientific principles, ~~our~~as ~~products~~appropriate, and ~~may~~that ~~lose~~the ~~potential~~reports ~~revenues~~comply with the FDA’s filing requirements.

WeIn doaddition, ~~not~~the ~~manufacture~~Pediatric ~~any~~Research ofEquity ~~our~~Act, ~~product~~or ~~candidates~~PREA, ~~and~~requires wea dosponsor ~~not~~to ~~currently~~conduct ~~plan~~pediatric tostudies ~~develop~~for ~~any~~most ~~capacity~~drugs toand dobiologicals, ~~so.~~for Toa ~~date~~new active ingredient, wenew ~~have~~indication, ~~only~~new ~~manufactured~~dosage ~~product~~form, innew ~~small~~dosing ~~batches~~regimen ator ~~CSMC~~new route of administration. WeUnder doPREA, ~~not~~original ~~yet~~NDAs, ~~have~~biologics ~~agreements~~license ~~established~~application ~~regarding~~and ~~commercial~~supplements ~~supply~~thereto, ofmust ~~any~~contain ~~product~~a ~~candidates~~pediatric assessment unless the sponsor has received a deferral or waiver. ~~There~~The isrequired noassessment ~~assurance~~must ~~that~~assess wethe ~~will~~safety beand ~~successful~~effectiveness of the product for the claimed indications in ~~negotiating~~all anrelevant ~~agreement~~pediatric onsubpopulations ~~commercially~~and ~~reasonable~~support ~~terms.~~dosing ~~There~~and isadministration nofor ~~assurance~~each ~~that~~pediatric ~~our~~subpopulation ~~commercialization~~for ~~partner~~which ~~will~~the ~~approve~~product ofis ~~our~~safe ~~manufacturer~~and effective. ~~Any~~ ~~problems~~The sponsor or ~~delays~~FDA wemay ~~experience~~request ina ~~preparing~~deferral of pediatric studies for ~~commercial-scale~~some ~~manufacturing~~or all of ~~any~~the ~~product~~pediatric ~~candidate~~subpopulations. ~~may~~A ~~impair~~deferral ~~our~~may ~~ability~~be togranted ~~manufacture~~for ~~commercial~~several ~~quantities~~reasons, ~~which~~including ~~would~~a ~~adversely~~finding ~~affect~~that ~~our~~the ~~business.~~drug ~~For~~or ~~example,~~biologic ~~our~~is ~~manufacturers~~ready ~~will~~for ~~need~~approval tofor ~~produce~~use ~~specific~~in ~~batches~~adults ofbefore ~~our~~pediatric ~~product~~studies ~~candidates~~are tocomplete ~~demonstrate~~or ~~acceptable~~that ~~stability~~additional ~~under~~safety ~~various~~or ~~conditions~~effectiveness ~~and~~data ~~for~~needs ~~commercially~~to ~~viable~~be ~~lengths~~collected ofbefore ~~time~~the pediatric studies begin. ~~Furthermore~~After April 2013, ifthe ~~our~~FDA ~~commercial~~must ~~manufacturers~~send ~~fail~~a non-compliance letter to ~~deliver~~any sponsor that fails to submit the required ~~commercial~~assessment, ~~quantities~~keep ofa ~~bulk~~deferral ~~drug~~current ~~substance~~ or ~~finished~~fails ~~product~~to onsubmit a ~~timely~~request for approval of a pediatric formulation.

15As part of the FDASIA, Congress made a few revisions to BPCA and PREA, which were slated to expire on September 30, 2012, and made both laws permanent.

~~basis and at commercially reasonable prices, we would likely be unable to meet demand for our products and we would lose potential revenues.~~26

~~The~~Post-Approval ~~manufacture~~Requirements of pharmaceutical products requires significant expertise and capital investment, including the development of advanced manufacturing techniques and process controls. Manufacturers of pharmaceutical products often encounter difficulties in production, particularly in scaling up initial production. These problems include difficulties with production costs and yields, quality control, including stability of the product candidate and quality assurance testing, shortages of qualified personnel, as well as compliance with strictly enforced federal, state and foreign regulations. Our manufacturers may not perform as agreed. If our manufacturers were to encounter any of these difficulties, our ability to provide product to commercialization partners or product candidates to patients in our clinical trials would be jeopardized. In addition, all manufacturers of our product candidates must comply with cGMP requirements enforced by the FDA through its facilities inspection program. These requirements include quality control, quality assurance and the maintenance of records and documentation. Manufacturers of our product candidates may be unable to comply with these cGMP requirements and with other FDA, state and foreign regulatory requirements. We have little control over our manufacturers’ compliance with these regulations and standards. 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 product approval. If the safety of any quantities supplied is compromised due to our manufacturers’ failure to adhere to applicable laws or for other reasons, we may not be able to obtain regulatory approval for or successfully commercialize our product candidates.

~~The~~Once ~~use~~an ofapproval ~~any~~is granted, the FDA may withdraw the approval if compliance with regulatory requirements is not maintained or if problems occur after the product reaches the market. Later discovery of ~~our~~previously ~~potential~~unknown ~~products~~problems with a product may result in ~~clinical~~restrictions ~~trials~~on ~~and~~the product or even complete withdrawal of the ~~sale~~product from the market. After approval, some types of ~~any~~changes to the approved product, such as adding new indications, manufacturing changes and additional labeling claims, are subject to further FDA review and approval. In addition, the FDA may require testing and surveillance programs to monitor the effect of approved products ~~exposes~~that ushave been commercialized, and the FDA has the power to ~~liability~~prevent ~~claims~~or limit further marketing of a product based on the results of these post-marketing programs.

~~The~~Any ~~nature of our business exposes us to potential liability risks inherent in the testing, manufacturing and marketing of~~ drug ~~candidates and~~ products. Ifmanufactured ~~any of our drug candidates in clinical trials~~ or ~~our~~distributed ~~marketed~~by products harm people or allegedly harm people, we may be subject to costly and damaging product liability claims. A number of patients who participate in trials are already critically ill when they enter a trial. The waivers we obtain may not be enforceable and may not protect us ~~from~~pursuant ~~liability or the costs of product liability litigation. Although we intend~~ to ~~obtain~~FDA ~~product~~approvals ~~liability insurance that we believe is adequate, we~~ are subject to ~~the~~continuing ~~risk~~regulation ~~that~~by ~~our insurance will not be sufficient to cover claims. There is also a risk that adequate insurance coverage will not be available in~~ the ~~future~~FDA, ~~on commercially reasonable terms~~including, ifamong ~~at all. The successful assertion of an uninsured product liability or~~ other ~~claim~~things: against us could cause us to incur significant expenses to pay such a claim, could adversely affect our product development and could cause a decline in our product revenues. Even a successfully defended product liability claim could cause us to incur significant expenses to defend such a claim, could adversely affect our product development and could cause a decline in our product revenues.

If• ~~other~~record-keeping ~~companies~~requirements; ~~claim~~• ~~that~~reporting weof ~~infringe~~adverse onexperiences ~~their~~with ~~intellectual~~the ~~property~~drug; ~~rights,~~• weproviding ~~may~~the beFDA ~~subject~~with toupdated ~~costly~~safety and ~~time-consuming~~efficacy ~~litigation~~information; • drug sampling and ~~delays~~distribution inrequirements; ~~product~~• ~~introduction~~notifying the FDA and obtaining its approval of specified manufacturing or labeling changes; and • complying with FDA promotion and advertising requirements.

~~Our~~Drug ~~processes~~manufacturers and ~~potential~~other ~~products~~entities ~~may~~involved ~~conflict~~in ~~with~~the ~~patents~~manufacture ~~that~~and ~~have~~distribution ~~been~~of orapproved ~~may~~drugs beare ~~granted~~required to ~~competitors,~~register ~~academic~~their ~~institutions~~establishments orwith ~~others. As~~ the ~~biotechnology~~FDA and ~~pharmaceutical~~certain ~~industries~~state ~~expand~~agencies, and ~~more patents~~ are ~~filed~~subject ~~and issued, the risk increases that our product candidates may give rise~~ to aperiodic ~~declaration~~unannounced ofinspections ~~interference~~ by the ~~U.S.~~FDA ~~Patent~~ and ~~Trademark~~some ~~Office,~~state toagencies ~~administrative~~for ~~proceedings~~compliance inwith ~~foreign~~cGMP ~~patent~~and ~~offices or to claims of patent infringement by~~ other ~~companies, institutions or individuals~~laws. These entities or persons could bring legal proceedings against us seeking substantial damages or seeking to enjoin us from testing, manufacturing or marketing our products. If any of these actions were successful, we may also be required to cease the infringing activity or obtain the requisite licenses or rights to use the technology that may not be available to us on acceptable terms, if at all. Any litigation, regardless of the outcome, could be extremely costly to us.

~~Because~~We itrely, isand ~~difficult~~expect ~~and~~to ~~costly~~continue to ~~protect~~rely, on third parties for the production of clinical and commercial quantities of our ~~proprietary~~products. ~~rights,~~Future weFDA and state inspections may ~~not~~identify becompliance ~~able~~issues toat ~~ensure~~the ~~their~~facilities ~~protection~~of our contract manufacturers that may disrupt production or distribution, or require substantial resources to correct.

~~Our~~From ~~commercial~~time ~~success~~to ~~will~~time, ~~depend~~legislation is drafted, introduced and passed in ~~part~~Congress onthat ~~maintaining~~could ~~patent~~significantly ~~protection~~change ~~and~~the ~~trade~~statutory ~~secret~~provisions ~~protection~~governing ~~for~~the ~~our~~approval, manufacturing and marketing of products regulated by the FDA. In addition, asFDA ~~well~~regulations asand ~~successfully~~guidance ~~defending~~are ~~these~~often ~~patents~~revised ~~against~~or ~~third-party~~reinterpreted ~~challenges.~~by Wethe ~~will~~agency ~~only~~in beways ~~able~~that tomay ~~protect~~significantly affect our ~~technologies~~business ~~from~~and ~~unauthorized~~our ~~use~~products. byIt ~~third~~is ~~parties~~impossible to ~~the~~predict ~~extent~~whether ~~that~~legislative ~~valid~~changes ~~and~~will ~~enforceable~~be ~~patents~~enacted, or ~~trade~~FDA ~~secrets~~regulations, ~~cover~~guidance ~~them~~or interpretations changed or what the impact of such changes, if any, may be.

~~The~~Foreign ~~patent~~Regulation positions of pharmaceutical and biotechnology companies can be highly uncertain and involve complex legal and factual questions for which important legal principles remain unresolved. No consistent policy regarding the breadth of claims allowed in pharmaceutical or biotechnology patents has emerged to date in the United States. The patent situation outside the United States is even more uncertain. Changes in either the patent laws or in interpretations of patent

16In addition to regulations in the United States, we will be subject to a variety of foreign regulations governing clinical trials and commercial sales and distribution of our products. Whether or not we obtain FDA approval for a product, we must obtain approval by the comparable regulatory authorities of foreign countries before we can commence clinical trials or marketing of the product in those countries. The approval process varies from country to country and the time may be longer or shorter than that required for FDA approval. The requirements governing the conduct of clinical trials, product licensing, pricing and reimbursement vary greatly from country to country.

~~laws~~Under inEuropean ~~the~~Union ~~United~~regulatory ~~States~~systems, a company may submit marketing authorization applications either under a centralized or decentralized procedure. The centralized procedure, which is compulsory for medicines produced by biotechnology or those medicines intended to treat AIDS, cancer, neurodegenerative disorders or diabetes and ~~other~~optional ~~countries~~for ~~may~~those ~~diminish~~medicines which are highly innovative, provides for the ~~value~~grant of ~~our~~a ~~intellectual~~single ~~property~~marketing authorization that is valid for all European Union member states. ~~Accordingly,~~The wedecentralized ~~cannot~~procedure ~~predict~~provides for mutual recognition of national approval decisions. Under this procedure, the ~~breadth~~holder of ~~claims~~a ~~that~~national marketing authorization may besubmit ~~allowed~~an orapplication ~~enforced~~to inthe ~~our~~remaining ~~patents~~member orstates. inWithin ~~third-party~~90 ~~patents~~days of receiving the applications and assessments report, each member state must decide whether to recognize approval. If a member state does not recognize the marketing authorization, the disputed points are eventually referred to the European Commission, whose decision is binding on all member states.

The degree of future protection for our proprietary rights is uncertain, because legal means afford only limited protection and may not adequately protect our rights or permit us to gain or keep our competitive advantage. For example: our licensors might not have been the first to make the inventions covered by each of our pending patent applications and issued patents; our licensors might not have been the first to file patent applications for these inventions; others may independently develop similar or alternative technologies or duplicate any of our product candidates or technologies; it is possible that none of the pending patent applications licensed to us will result in issued patents; the issued patents covering our product candidates may not provide a basis for commercially viable active products, may not provide us with any competitive advantages, or may be challenged by third parties; we may not develop additional proprietary technologies that are patentable; or patents of others may have an adverse effect on our business.27

InReimbursement the event that a third party has also filed a U.S. patent application relating to our product candidates or a similar invention, we may have to participate in interference proceedings declared by the U.S. Patent and Trademark Office to determine priority of invention in the United States. The costs of these proceedings could be substantial and it is possible that our efforts would be unsuccessful, resulting in a material adverse effect on our U.S. patent position. It is also possible we may not have the financial resources to pursue infringement actions on a timely basis if at all. Furthermore, we may not have identified all U.S. and foreign patents or published applications that affect our business either by blocking our ability to commercialize our drugs or by covering similar technologies that affect our drug market.

InSales ~~addition~~of our product candidates, ~~some~~if ~~countries~~approved, ~~including~~will ~~many~~depend, in ~~Europe~~part, doon ~~not~~the ~~grant~~extent ~~patent~~to ~~claims~~which ~~directed~~physicians tobelieve ~~methods~~our ofproducts ~~treating~~are ~~humans,~~efficacious and incost ~~these~~effective. ~~countries~~The ~~patent~~costs ~~protection~~of ~~may~~most ~~not~~drugs beused ~~available~~during atsurgical ~~all~~procedures toare ~~protect~~typically ~~our~~included ~~drug~~in ~~candidates.~~the ~~Even~~cost ifof ~~patents~~the ~~issue,~~procedure weand ~~cannot~~are ~~guarantee~~not ~~that~~reimbursed ~~the~~as ~~claims~~separate ofexpenses ~~those~~by ~~patents~~third-party ~~will~~payors, besuch ~~valid~~as government health programs such as Medicare and ~~enforceable~~Medicaid, orcommercial ~~provide~~health usinsurers ~~with~~and ~~any~~managed ~~significant~~care ~~protection~~organizations. ~~against~~The ~~competitive~~containment ~~products,~~of orhealthcare ~~otherwise~~costs behas ~~commercially~~become ~~valuable~~a topriority usfor federal and state governments.

We ~~may~~expect ~~also~~that ~~rely~~there onwill ~~trade~~continue ~~secrets~~ to ~~protect~~be ~~our~~a ~~technology,~~number ~~particularly~~of ~~where~~federal weand dostate ~~not~~proposals ~~believe~~to ~~patent~~limit ~~protection~~the isgrowth ~~appropriate~~of orhealthcare ~~obtainable. However~~costs, ~~trade~~including ~~secrets~~the ~~are~~cost ~~difficult~~of totreatment ~~protect.~~regiments ~~While~~and wehospital ~~use~~stays. ~~reasonable~~The ~~efforts~~adoption toof ~~protect our trade secrets, our licensors, employees, consultants, contractors, outside scientific collaborators and~~ other ~~advisors~~legislative ~~may unintentionally~~ or ~~willfully~~regulatory ~~disclose~~proposals ~~our~~could ~~information~~have ~~to competitors. Enforcing~~ a ~~claim~~material ~~that~~adverse aeffect ~~third~~on ~~party illegally obtained and is using~~ our ~~trade secrets is expensive and time consuming~~business, ~~and~~financial ~~the~~condition outcome is unpredictable. In addition, courts outside the United States are sometimes less willing to protect trade secrets. Moreover, our competitors may independently develop equivalent knowledge, methods and ~~know-how~~profitability.

IfIn ~~our~~addition, ~~licensors~~in orsome weforeign ~~fail~~countries, the proposed pricing for a drug must be approved before it may be lawfully marketed. The requirements governing drug pricing vary widely from country to ~~obtain~~country. For example, the European Union provides options for its member states to restrict the range of medicinal products for which their national health insurance systems provide reimbursement and to control the prices of medicinal products for human use. A member state may approve a specific price for the medicinal product or ~~maintain~~it ~~patent~~may ~~protection~~instead adopt a system of direct or ~~trade~~indirect ~~secret~~controls ~~protection~~on the profitability of the company placing the medicinal product on the market. There can be no assurance that any country that has price controls or reimbursement limitations for ~~our~~pharmaceutical products, ~~third~~will ~~parties~~allow ~~could~~favorable ~~use~~reimbursement ~~our~~and ~~proprietary~~pricing ~~information,~~arrangements ~~which~~for ~~could~~any ~~impair~~of our ~~ability~~products. toHistorically, ~~compete~~products launched in the ~~market~~European ~~and~~Union ~~adversely~~do ~~affect~~not ~~our~~follow ~~ability~~price tostructures ~~generate~~of ~~revenues~~the United States and ~~achieve~~generally ~~profitability~~tend to be significantly lower.

IfOther weUnited ~~are~~States ~~sued~~Regulations ~~for infringing intellectual property rights of third parties, it will be costly and time consuming, and an unfavorable outcome in any litigation would harm our business.~~

~~Our~~Pharmaceutical ~~ability~~companies toalso ~~develop,~~are ~~manufacture,~~subject ~~market and sell our products depends upon our ability~~ to ~~avoid~~various ~~infringing~~federal ~~the proprietary rights of third parties. There is a substantial amount of litigation involving patent~~ and ~~other~~state ~~intellectual~~laws ~~property~~pertaining ~~rights~~to inhealthcare ~~the~~“fraud ~~biotechnology~~ and ~~biopharmaceutical industries generally. If a third party claims that we infringe on their products or technology~~abuse,” ~~we could face a number of issues,~~ including: ~~infringement~~anti-kickback laws and ~~other~~false ~~intellectual property~~ claims ~~which~~laws, ~~with or without merit, can be expensive~~ and time consuming to litigate and can divert management’s attention from our core business; substantial damages for past infringement which we may have to pay if a court decides that our product infringes on a competitor’s patent; a court prohibiting us from selling or licensing our product unless the ~~patent~~reporting ~~holder~~of ~~licenses~~payments ~~the patent~~ to ~~us,~~physicians ~~which it is not required to do; if a license is available from a patent holder, we may have to pay substantial royalties or grant cross licenses to our patents;~~ and ~~re-designing~~teaching ~~our processes so they do not infringe, which may not be possible or could require substantial funds and time~~hospitals.

17Anti-Kickback Laws

~~Risks~~U.S. ~~Related~~federal laws prohibit fraud and abuse involving state and federal healthcare programs, such as Medicare and Medicaid. These laws are interpreted broadly and enforced aggressively by various state and federal agencies, including the Centers for Medicare & Medicaid Services, or CMS, the Department of Justice, the Office of Inspector General for the Department of Health and Human Services and various state agencies. These anti-kickback laws prohibit, among other things, knowingly and willfully Offering, paying, soliciting, receiving or providing remuneration, directly or indirectly, in exchange for or to ~~Our~~induce ~~Stock~~either the referral of an individual, or the furnishing, arranging for or recommending of an item or service that is reimbursable, in whole or in part, by a federal healthcare program. Remuneration is broadly defined to include anything of value, such as, cash payments, gifts or gift certificates, discounts, or the furnishing of services, supplies or equipment. The anti-kickback laws are broad and prohibit many arrangements and practices that are lawful in businesses outside of the healthcare industry.

~~There~~The ~~currently~~penalties ~~exists~~for noviolating ~~public~~the ~~trading~~anti-kickback ~~market~~laws ~~for~~can ~~the~~be ~~Arrogene~~severe. ~~shares;~~The ~~and~~sanctions ~~should~~include acriminal ~~public~~and ~~trading~~civil ~~market~~penalties, ~~develop~~and inpossible exclusion from the ~~future,~~federal orhealthcare ~~which~~programs. ~~there~~Many ~~can~~states behave noadopted ~~assurance,~~laws ~~such~~similar ~~trading~~to ~~will~~the ~~likely~~federal beanti-kickback ~~subject~~laws, and some apply to ~~the~~items ~~“penny~~and ~~stock”~~services ~~rules~~reimbursable by any payor, including third-party payors.

~~Arrogene~~State ~~common stock is currently not quoted on the OTC Electronic Bulletin Board, a NASD sponsored~~ and ~~operated~~Federal ~~quotation~~Prohibitions system for equity securities, or OTCQB or OTC Pink electronic quotation systems run by OTC Markets Group Inc. Should a public trading market for the shares develop in the future, of which there can be no assurance, the shares will likely be quoted on ~~the~~False ~~Bulletin~~Claims Board, OTCQB or OTC Pink Sheets. These are more limited trading markets than the Nasdaq Capital Market, and timely, accurate quotations of the price of our common stock may not always be available. You may expect trading volume to be low in such a market. Consequently, the activity of only a few shares may affect the market and may result in wide swings in price and in volume.

~~Arrogene~~The ~~common~~federal ~~stock~~False ~~will~~Claims beAct ~~subject~~imposes toliability ~~the~~on ~~requirements~~any ofperson ~~Rule~~or ~~15g.9~~entity that, ~~promulgated~~among ~~under~~other ~~the~~things, ~~Securities~~knowingly ~~Exchange~~presents, ~~Act~~or ascauses ~~long~~to asbe ~~the~~presented, ~~price~~a offalse ~~our~~or ~~common~~fraudulent ~~stock~~claim isfor ~~below~~payment ~~$5.00 per share. Under such rule, broker-dealers who recommend low-priced securities~~ to ~~persons~~the ~~other~~federal ~~than~~government. ~~established~~Under ~~customers~~the ~~and~~False ~~accredited~~Claims ~~investors~~Act, ~~must~~a ~~satisfy~~person ~~special~~acts ~~sales~~knowingly ~~practice~~if ~~requirements,~~he ~~including~~has aactual ~~requirement~~knowledge ~~that~~of ~~they~~the ~~make~~information anor ~~individualized~~acts ~~written~~in ~~suitability~~deliberate ~~determination~~ignorance ~~for~~or ~~the~~in ~~purchaser~~reckless ~~and~~disregard ~~receive~~of the ~~purchaser's~~truth ~~consent~~or ~~prior~~falsity toof the ~~transaction~~information. ~~The~~ ~~Securities~~Specific ~~Enforcement~~intent ~~Remedies~~to ~~and~~defraud ~~Penny~~is ~~Stock~~not ~~Reform~~required. ~~Act~~Provisions of ~~1990~~the ~~also~~False ~~requires~~Claims ~~additional~~Act ~~disclosure~~allow ina ~~connection~~private ~~with~~individual ~~any~~to ~~trades~~bring ~~involving~~an aaction ~~stock~~on ~~defined~~behalf asof athe ~~penny~~federal ~~stock. Generally,~~government aand ~~penny~~to ~~stock~~share isin ~~defined as~~ any ~~equity~~amounts ~~security~~paid ~~not~~by ~~traded~~the ondefendant anto ~~exchange~~the orgovernment ~~quoted~~in onconnection ~~Nasdaq~~with ~~that~~the ~~has a market price of less than $5~~action.00 ~~per share.~~ The ~~penny~~number ~~stock~~of ~~rules~~filings ~~require~~under athese ~~broker-dealer~~provisions tohas ~~deliver~~increased asignificantly ~~standardized~~in ~~risk~~recent ~~disclosure~~years. ~~document~~When ~~prepared~~an byentity ~~the~~is ~~SEC,~~determined to ~~provide~~have violated the ~~customer~~False ~~with~~Claims ~~additional~~Act, ~~information~~it ~~including~~may ~~current~~be ~~bid~~required ~~and~~to ~~offer~~pay ~~quotations~~up ~~for~~to ~~the~~three ~~penny~~times ~~stock,~~ the ~~compensation~~actual ofdamages ~~the~~sustained ~~broker-dealer~~by ~~and its salesperson in~~ the ~~transaction~~government, ~~monthly~~plus ~~account~~civil ~~statements~~penalties ~~showing~~for ~~the~~each ~~market~~false ~~value~~claim. ofConduct ~~each~~that ~~penny~~violates ~~stock~~the ~~held~~False inClaims ~~the~~Act ~~customer's~~may ~~account,~~also ~~and~~lead to ~~make~~exclusion afrom ~~special~~the ~~written~~federal ~~determination~~healthcare ~~that~~programs. Given the ~~penny~~number ~~stock~~of isclaims alikely ~~suitable~~to ~~investment~~be ~~for~~at ~~the~~issue, ~~customer~~potential ~~and~~damages ~~receive~~under the ~~customer’s~~False ~~written~~Claims ~~agreement~~Act tofor ~~the~~even ~~transaction.~~a ~~The~~single ~~required~~inappropriate ~~penny~~arrangement ~~stock~~could ~~disclosures~~be ~~include~~significant. ~~the~~In ~~delivery~~addition, ~~prior~~various tostates ~~any~~have ~~transaction,~~enacted ofsimilar alaws ~~disclosure~~modeled ~~schedule~~after ~~explaining~~ the ~~penny~~False ~~stock~~Claims ~~market~~Act ~~and~~that ~~the~~apply ~~risks~~to ~~associated~~items ~~with~~and ~~it. Such~~services ~~requirements~~reimbursed ~~could~~under ~~severely~~Medicaid ~~limit~~and ~~the~~other ~~market~~state ~~liquidity~~healthcare ofprograms, ~~the~~and, ~~securities~~in ~~and~~several ~~the~~states, ~~ability~~such oflaws ~~purchasers~~apply to ~~sell~~claims ~~their~~submitted ~~securities~~to inall ~~the secondary market~~payors.

~~Over-the-counter stocks are subject to risks of high volatility and price fluctuation.~~28

~~Arrogene’s~~Federal ~~common~~Prohibitions ~~stock is currently not traded or listed~~ on ~~any~~Healthcare ~~market,~~Fraud and itFalse isStatements ~~not~~Related ~~eligible~~ to ~~have~~Healthcare ~~its~~Matters shares listed on any stock exchange or on the NASDAQ Capital Market. As a result, the trading market for our common stock, if any, will be on the over-the-counter market. The OTC market for securities has experienced extreme price and volume fluctuations during certain periods. These broad market fluctuations and other factors, such as new product developments and trends in our company's industry and the investment markets generally, as well as economic conditions and quarterly variations in our results of operations, may adversely affect the market price of our common stock and make it more difficult for investors in this offering to sell their shares.

~~Trading~~Under inthe ~~Arrogene~~administrative ~~securities~~simplification ~~will~~provisions ~~likely~~of bethe ~~conducted~~Health onInsurance anPortability ~~electronic~~and ~~bulletin~~Accountability ~~board~~Act ~~established~~of 1996, or HIPAA, and state laws there are numerous regulations for ~~securities~~protecting ~~that~~the doprivacy ~~not~~and ~~meet~~security ~~NASDAQ~~of ~~listing~~protected ~~requirements~~health information. AsAdditional aadministrative ~~result,~~simplification ~~investors~~provisions ~~will~~created ~~find~~the itfollowing ~~substantially~~new ~~more~~federal ~~difficult~~crimes: healthcare fraud, false statements relating to ~~dispose~~healthcare matters, theft or embezzlement in connection with a health benefit program and obstruction of ~~our~~criminal ~~securities~~investigation of healthcare offenses. ~~Investors~~The ~~may~~healthcare ~~also~~fraud ~~find~~statute itprohibits ~~difficult~~knowingly and willfully executing a scheme to ~~obtain~~defraud ~~accurate~~any healthcare benefit program, including a private insurer. The false statements statute prohibits knowingly and willfully falsifying, concealing, or covering up a material fact or making any materially false, fictitious, or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items, or services. The theft or embezzlement statute prohibits knowingly and willfully embezzling, stealing or otherwise converting or misapplying the money or property of a healthcare benefit program. The obstruction of criminal investigations of healthcare offenses statute prohibits willfully preventing, obstructing, misleading or delaying the communication of information and ~~quotations~~records asrelating to ~~the~~a ~~price~~violation of ~~our~~a ~~common~~federal ~~stock~~healthcare offense to a criminal investigator. A violation of any of these laws is a felony and may result in fines, or exclusion from the federal healthcare programs.

~~Arrogene’s stock price may be volatile and as a result, investors could lose all or part of their investment.~~ The ~~value~~Physician ofPayment anSunshine ~~investment~~Act ~~could decline due to the impact of any of the following factors upon the market price of our common stock:~~

·The Physician Payment Sunshine Act, or the Sunshine Act, which was enacted as part of the Patient Protection and Affordable Care Act, or the ACA, requires applicable manufacturers of drugs, devices, biologicals, or medical supplies covered under Medicare, Medicaid or the Children’s Health Insurance Program, to report annually to the Secretary of the Department of Health and Human Services payments or other transfers of value made by that entity, or by a third party as directed by that entity, to physicians and teaching hospitals, or to third parties on behalf of physicians or teaching hospitals, during the course of the preceding calendar year. The Final Rule implementing the Sunshine Act, published on February 8, 2013, requires data collection on payments to begin on August 1, 2013. The first annual report, comprised of data collected from August 1, 2013 to December 31, 2013, was due March 31, 2014. Failure to comply with the reporting requirements can result in significant civil monetary penalties ranging from $1,000 to $10,000 for each payment or other transfer of value that is not reported (up to a maximum per annual report of $150,000) and from $10,000 to $100,000 for each knowing failure to report (up to a maximum per annual report of $1 million). We will be required to collect data on and report these payments.

~~failure to meet sales and marketing goals or operating budget~~Employees

·As of October 31, 2014, we had no employees. Our executive officers all work on a part time basis as contractors. We also had one full-time administrative contractor due to our limited capital resources. We also utilize several consultants who are focused on business and technical development. Our ability to expand our employee base to include full-time personnel in administration, research and development and business development is dependent on the availability of funding.

~~failure to achieve development goals~~29

·Item 1A. Risk Factors

~~failure~~CERTAIN toRISK ~~obtain~~FACTORS ~~regulatory~~OF ~~approvals~~ARROGENE THAT MAY AFFECT FUTURE RESULTS

·Our business, future performance and forward-looking statements are affected by general industry and market conditions and growth rates, general U.S. and non-U.S. economic and political conditions (including the global economy), competition, interest rate and currency exchange rate fluctuations and other events. The following items are representative of the risks, uncertainties and other conditions that may impact our business, future performance and the forward-looking statements that we make in this report or that we may make in the future.

~~concerns~~Risks ~~regarding~~Related ~~insufficient~~to ~~financial~~our ~~resources~~Business, Products and Markets

·Our auditors have expressed substantial doubt about our ability to continue as a going concern.

~~inability~~We have incurred cumulative net operating losses and negative cash flow since inception. We expect that the Company will continue to ~~create~~experience anoperating ~~active~~losses ~~trading~~and ~~market~~negative cash flow for the foreseeable future, which will impact the financial results of Arrogene. Accordingly, our ~~common~~auditors ~~stock~~have expressed substantial doubt about our ability to continue as a going concern.

·We are a development stage company with no commercial products.

~~decline~~We are developing Polycefin, our lead drug candidate. Currently, we have no product candidates in ~~demand~~our clinical development pipeline other than Polycefin and have no products approved for sale. We will not be able to file our ~~common~~IND ~~stock~~for Polycefin with the FDA without additional funding. Thereafter, we expect to commence our initial clinical trials for Polycefin. Although we have begun pre-clinical and in vitro studies, we have not yet begun human clinical trials, and therefore, we are still many years from beginning to commercialize and market Polycefin or any other product candidate, if ever. We expect the clinical development of Polycefin will require significant additional effort, resources, time, and expenses prior to seeking FDA approval. Polycefin is not expected to be commercially available in the United States or outside the United States for several years, if ever.

·We are heavily dependent on the success of our lead drug candidate, Polycefin, and we cannot provide any assurance that our lead drug candidate or other product candidates we may have in the future will be commercialized.

~~operating~~We ~~results~~intend ~~failing~~ to ~~meet~~invest the ~~expectations~~vast majority of ~~securities~~our ~~analysts~~time orand ~~investors~~financial resources in ~~any~~the ~~quarter~~development and commercialization of our lead drug candidate, Polycefin, which is currently in pre-clinical development. We cannot file our IND with the FDA without additional funding. Our future success depends heavily on our ability to successfully develop, obtain regulatory approval for, and commercialize our lead drug candidate, which may never occur. We currently generate no revenues and incur substantial losses, and we may never be able to develop or commercialize a marketable drug.

18Before we generate any revenues from product sales, we must complete preclinical studies and clinical trials for Polycefin, establish manufacturing capabilities that comply with the FDA’s cGMP requirements for manufacturing sterile drugs, receive approval from the FDA in the United States and other regulatory agencies in foreign jurisdictions, build a commercial organization, make substantial investments and undertake significant marketing efforts ourselves or in partnership with others. We will not be permitted to market or promote Polycefin or any other product candidates we may have in the future, before we receive regulatory approval from the FDA or comparable foreign regulatory authorities, and we may never receive such regulatory approval for any of our other product candidates.

·We have not previously submitted a biologics license application, or BLA, or a new drug application, or NDA, to the FDA, or similar drug approval filings to comparable foreign authorities, for any product candidate. We cannot be certain that our lead drug candidate or any other product candidate will be successful in clinical trials or receive regulatory approval. Further, our lead drug candidate or any other product candidate may not receive regulatory approval even if our clinical trials are successful. If we do not receive regulatory approvals for our lead drug candidate or any other product candidate, we may not be able to continue our operations. Even if we successfully obtain regulatory approvals to market our lead drug candidate or any other product candidate, our revenues will be dependent, in part, upon the size of the markets in the territories for which we gain regulatory approval and have commercial rights. If the markets for patient subsets that we are targeting are not as significant as we estimate, we may not generate significant revenues from sales of such products, if approved.

~~downward revisions in securities analysts' estimates or changes in general market conditions~~30

·We plan to seek regulatory approval to commercialize Polycefin in the United States, Canada, Europe and Japan. While the scope of regulatory approval is similar in other countries, to obtain separate regulatory approval in many other countries we must comply with numerous and varying regulatory requirements of such countries regarding safety and efficacy, clinical trials and commercial sales, pricing and distribution of our lead drug candidate or any other product candidate, and we cannot predict success in these jurisdictions.

~~investor~~Because ~~perception~~we ofhave ~~our~~a ~~company's~~limited ~~industry~~operating history, we may not be able to successfully manage our business or ~~prospects~~achieve profitability.

·We have a limited operating history upon which to base an evaluation of our prospects and the potential value of our common stock. We are confronted with the risks inherent in an early stage company, including difficulties and delays in connection with the development of Polycefin into a commercially viable product, reliance on a small number of scientific collaborators, operational difficulties, and difficulty in estimating future development, regulatory, and administrative costs. If we cannot successfully manage our business, we may not be able to develop a commercially viable product, generate future profits and may not be able to support our operations. It is possible that we will incur additional expenses and losses in the further implementation of our business plan. We may not be able to improve operations and therefore may not become profitable.

~~general~~We ~~economic~~have ~~trends~~incurred losses since inception and may never achieve profitability.

InWe ~~addition,~~are ~~stock~~subject ~~markets~~to ~~have~~many ~~experienced~~of ~~extreme~~the ~~price~~risks ~~and~~common ~~volume~~to ~~fluctuations~~developing ~~and~~enterprises, ~~the~~including ~~market~~undercapitalization, ~~prices~~cash ofshortages, ~~securities~~limitations ~~have~~with ~~been~~respect ~~highly~~to ~~volatile. These~~financial, ~~fluctuations~~human ~~are~~and ~~often~~other ~~unrelated~~resources, toand ~~operating~~insufficient ~~performance~~revenue ~~and~~to ~~may~~be ~~adversely~~self-sustaining. ~~affect~~There ~~the~~is ~~market~~no ~~price~~assurance ofthat ~~our~~we ~~common~~will ~~stock.~~ever attain profitability.

~~There~~We ~~can~~have belimited nohuman ~~assurance~~resources; ~~that~~ we ~~will~~need ~~be able~~ to ~~successfully~~attract ~~complete~~and aretain ~~secondary~~highly ~~public~~skilled ~~offering~~personnel; ~~that~~and ~~will~~we ~~allow~~may ~~our~~be ~~shares~~unable to bemanage ~~listed~~our ~~and~~growth ~~traded~~with onour alimited ~~national~~resources ~~exchange or Nasdaq Capital Market~~effectively.

~~While~~We weexpect ~~would~~that ~~like~~the toexpansion ~~undertake~~of aour ~~public~~business ~~offering~~will ~~that~~place ~~would~~a ~~qualify~~significant usstrain ~~for~~on ~~listing~~our limited managerial, operational, and ~~trading~~financial onresources. We awill ~~national~~be ~~exchange~~required ~~(eg.~~to ~~NYSE~~expand ~~MKT,~~our ~~LLC,~~operational ~~formerly~~and ~~NYSE~~financial ~~Amex)~~systems orsignificantly ~~Nasdaq~~and ~~Capital~~to ~~Market~~expand, ~~there~~train ~~can~~and bemanage noour ~~assurance~~work ~~that~~force ~~market~~in ~~conditions~~order orto manage the expansion of our operations. Our future ~~performance~~success will ~~support~~depend ~~such~~in anlarge ~~effort~~part on our ability to attract, train, and retain additional highly skilled executive level management with experience in the pharmaceutical industry. ~~Numerous~~Competition ~~factors~~is intense for these types of personnel from more established organizations, ~~including~~many ~~market~~of ~~liquidity~~which have significantly larger operations and ~~demand~~greater ~~for~~financial, ~~our~~marketing, ~~stock~~human, ~~our~~and ~~ability~~other resources than we have. We will need substantial additional capital in order to ~~identify~~attract ~~one~~and retain critical management. We may not be successful in attracting and retaining qualified personnel on a timely basis, on competitive terms or ~~more~~at ~~underwriters~~all. We ~~willing~~currently are required to ~~undertake~~limit ~~such~~the anengagement ~~offering~~of critical management to part-time due to limited resources and there is no assurance that we will be successful in raising the necessary additional financial resources to employ them, and ~~general~~other ~~economic~~key ~~conditions~~employees, ~~could~~on ~~adversely~~a ~~affect~~full ~~this~~time ~~effort~~basis. We currently are in arrears in paying our management team. There is no assurance that our management team will continue working without getting paid. If we are ~~unable~~not tosuccessful ~~complete~~in aattracting ~~public~~and ~~offering,~~retaining ~~trading~~these inpersonnel, our ~~stock~~business, ifprospects, ~~any~~financial condition and operating results would be materially adversely affected. Further, our ability to manage our growth effectively will require us to continue onto ~~the~~improve ~~volatile~~our operational, financial and ~~illiquid~~management ~~over-the-counter~~controls, ~~market. In~~reporting ~~addition~~systems and procedures, weto ~~may~~install benew ~~required~~management information and control systems and to ~~curtail~~train, ormotivate ~~delay~~and ~~our~~manage ~~efforts~~employees. If we are unable to ~~commercialize~~manage ~~our~~growth ~~technology~~effectively and ~~may~~new ~~have~~employees ~~difficulty~~are inunable ~~meeting~~to ~~some~~achieve ofadequate ~~the~~performance levels, our business, prospects, financial ~~milestones~~condition ~~required~~and ~~under~~operating ~~the~~results ~~the~~could ~~License~~be materially adversely affected.

~~Future~~Our ~~issuances~~failure ofto ~~our~~convince ~~Common~~medical ~~Stock~~practitioners ~~could~~to ~~dilute~~use ~~current~~our ~~shareholders~~technologies ~~and~~will ~~adversely~~limit ~~affect~~our ~~the~~revenue ~~market~~and ~~if it develops~~profitability.

WeIf ~~have~~we, ~~the~~or ~~authority~~our tocommercialization ~~issue~~partners, upfail to ~~100,000,000~~convince ~~shares~~medical ofpractitioners ~~common~~to ~~stock~~prescribe ~~and~~products 10using our technologies,~~000,000~~ ~~shares~~we ofwill ~~preferred~~not ~~stock~~be ~~and~~able to ~~issue~~sell ~~options~~our ~~and~~products ~~warrants~~or tolicense ~~purchase~~our ~~shares~~technologies ofin ~~our~~sufficient ~~common~~volume ~~stock,~~for ~~without~~our ~~shareholder~~business ~~approval~~to become profitable. ~~These~~ ~~future~~We ~~issuances~~will ~~could~~need beto atmake ~~values~~leading ~~substantially~~physicians ~~below~~aware of the ~~price~~benefits ~~paid~~of ~~for~~products using our ~~common~~technologies ~~stock~~through bypublished ~~existing shareholders~~papers, ~~which~~presentations ~~would~~at ~~result~~scientific inconferences ~~significant~~and ~~dilution~~favorable toresults ~~those~~from ~~shareholders~~our clinical studies. In ~~addition,~~Our wefailure ~~could~~to ~~issue~~be ~~large~~successful ~~blocks~~in ofthese ~~our~~efforts ~~common~~would ~~stock~~make toit ~~fend~~difficult ~~off~~for ~~unwanted~~us ~~tender~~to ~~offers~~convince ormedical ~~hostile~~practitioners ~~takeovers~~to ~~without~~prescribe ~~further~~products ~~shareholder~~using ~~approval,~~our ~~which~~technologies ~~would~~for ~~not~~their ~~only~~patients. ~~result~~Failure into ~~further~~convince ~~dilution~~medical practitioners to ~~investors~~prescribe inour ~~this~~products ~~offering~~will ~~but~~damage ~~could~~our ~~also~~commercialization ~~depress~~efforts ~~the~~and ~~market~~would ~~value~~have ofa material adverse effect on our ~~common~~business, ~~stock~~prospects, iffinancial acondition ~~public~~and ~~trading~~operating ~~market develops~~results.

~~We may issue preferred stock that would have rights that are preferential to the rights of the common stock that could discourage potentially beneficial transactions to our Common Stockholders.~~31

AnIf ~~issuance~~we oflose ~~additional~~the ~~shares~~support of ~~preferred stock could result in a class of outstanding securities that would have preferences with respect to voting rights and dividends and in liquidation over~~ our ~~common~~key ~~stock~~scientific ~~and could~~collaborators, ~~upon~~it ~~conversion~~may orbe ~~otherwise,~~difficult ~~have~~to ~~all~~establish ofproducts ~~the~~using ~~rights of~~ our ~~common~~technologies ~~stock. Our~~as ~~Board of Directors' authority to issue preferred stock could discourage potential takeover attempts or could delay or prevent~~ a ~~change~~standard inof ~~control~~care ~~through~~for ~~merger,~~various ~~tender offer~~indications, ~~proxy~~which ~~contest~~may orlimit ~~otherwise~~our byrevenue ~~making~~growth ~~these attempts more difficult or costly to achieve. The issuance of preferred stock could impair the voting, dividend~~ and ~~liquidation rights of common stockholders without their approval~~profitability.

We dohave ~~not~~established ~~expect~~relationships with leading scientists around the world. We plan to ~~pay~~formalize ~~cash~~certain ~~dividends~~of inthese ~~the~~relationships ~~foreseeable~~by ~~future~~establishing a scientific advisory board. ~~Any~~ ~~return~~We onbelieve ~~investment~~that ~~may~~such berelationships ~~limited~~are key to ~~the~~establishing ~~value~~products using our technologies as a standard of care for various indications. We plan to enter into consulting agreements with our ~~stock~~scientific advisory board members, but such agreements will likely provide for termination with 30 days’ notice. Additionally, there is no assurance that our current research partners will continue to work with us or we will be able to attract additional research partners. The inability to maintain and build on our existing scientific relationships could have a material adverse effect on our business, prospects, financial condition and operating results.

WeIf ~~have never paid any cash dividends on any shares of our capital stock, and~~ we doare ~~not~~unsuccessful ~~anticipate that we will pay any dividends~~ in ~~the~~establishing ~~foreseeable~~strategic ~~future. Our~~licensing ~~current~~arrangements ~~business~~with ~~plan~~strategic isindustry topartners, ~~retain any future earnings to finance the expansion of~~ our ~~business. Any~~efforts ~~future determination~~ to ~~pay~~develop ~~cash~~and ~~dividends~~commercialize ~~will be at the discretion of~~ our ~~Board~~products ~~of Directors, and~~ will be ~~dependent~~more ~~upon~~costly ~~our consolidated financial condition, results of operations, capital requirements~~ and ~~other~~involve ~~factors~~significant ~~as our board of directors may deem relevant at that time~~delays. If ~~we do not pay cash dividends, our stock may be less valuable because a return on your investment will only occur if our stock price appreciates.~~

IfOur ~~the~~product ~~Company~~development ~~were~~plan relies upon our ability to ~~dissolve~~join orwith ~~wind-up,~~strategic ~~holders~~industry partners in licensing arrangements. This approach would allow us to utilize the resources and scientific talent of our ~~Common~~strategic ~~Stock~~licensing ~~may~~partners. However, if we are not ~~receive~~successful in establishing these relationships, we will be required to bear the cost of developing and commercializing our technology alone. As a ~~liquidation~~result, ~~distribution~~we would expect that our future capital requirements would be significantly increased than presently projected, and the time to market materially delayed.

IfWe wemay ~~were~~not tobe ~~wind-up~~able ~~or dissolve the Company and liquidate and distribute our assets, our shareholders would share ratably in our assets only after we satisfy any amounts we would owe~~ to ~~our~~market ~~creditors. If our liquidation~~ or ~~dissolution~~generate ~~were~~sales ~~attributable~~of to our ~~inability~~products to ~~profitably operate our business, then it is likely that we would have material liabilities at~~ the ~~time~~extent ~~of liquidation or dissolution~~anticipated. ~~Accordingly, we cannot give you any assurance that sufficient assets will~~

19Assuming that we are successful in receiving regulatory clearances to market any of our products, our ability to successfully penetrate the market and generate sales of those products may be limited by a number of factors, including the following:

~~remain~~Certain ~~available~~of ~~after~~our competitors in the ~~payment~~field ofhave ~~our~~already ~~creditors~~received toregulatory ~~enable~~approvals ~~you~~for toand ~~receive~~have ~~any~~begun ~~liquidation~~marketing ~~distribution~~similar ~~with~~products, ~~respect~~which tomay ~~any~~result ~~shares~~in ~~you~~greater ~~may~~physician ~~hold.~~awareness of their products as compared to ours.

IfInformation wefrom ~~fail~~our tocompetitors ~~maintain~~or anthe ~~effective~~academic ~~system~~community ofindicating ~~internal~~that ~~controls,~~current weproducts ~~may~~or ~~not~~new beproducts ~~able~~are tomore ~~accurately~~effective ~~report~~than our ~~financial~~products ~~results or prevent fraud. As a result~~could, ~~current~~if and ~~potential~~when ~~shareholders~~it ~~could~~is ~~lose confidence in our financial reporting~~generated, ~~which~~impede ~~would harm~~ our ~~business~~market ~~and~~penetration ~~the~~or ~~trading~~decrease ~~price of~~ our ~~stock,~~existing ~~should a public~~ market ~~develop in the future~~share.

~~Effective~~Physicians ~~internal~~may ~~controls~~be ~~are~~reluctant ~~necessary for us~~ to ~~provide~~switch ~~reliable~~from ~~financial~~existing ~~reports~~treatment ~~and~~methods, ~~effectively~~including ~~prevent~~traditional ~~fraud.~~therapy ~~If we cannot provide financial reports or prevent fraud~~agents, ~~our business reputation and operating results could be harmed. Inferior internal controls could also cause investors~~ to ~~lose confidence in~~ our ~~reported financial information, which could have a negative effect on the trading price of our stock~~products.

~~Item~~The ~~1B.~~price ~~Unresolved~~for ~~Staff~~our ~~Comments~~products, as well as pricing decisions by our competitors, may have an effect on our revenues.

~~None.~~Our revenues may diminish if thirdparty payors, including private health coverage insurers and health maintenance organizations, do not provide adequate coverage or reimbursement for our products.

~~Item~~If 2.any ~~Description~~ of ~~Property~~our future marketed products were to experience problems related to their efficacy, safety, or otherwise, or if new, more effective treatments were to be introduced, our revenues from such marketed products could decrease.

~~The~~If ~~Company~~any ~~leases executive office space at 2500 Broadway, Building F, Suite F-125, Santa Monica, California pursuant to a lease with a monthly payment~~ of ~~$3,642 through February 28, 2014. We believe that this office space will be sufficient for~~ our ~~anticipated~~current ~~needs~~or ~~for the foreseeable~~ future. ~~The~~marketed ~~Company~~products ~~currently~~become ~~has~~the nosubject ~~policy~~of ~~with respect to investments or interests in real estate~~problems, ~~real~~including ~~estate~~those ~~mortgages~~related ~~or securities of~~to, oramong ~~interests in, persons primarily engaged in real estate activities.~~others:

~~Item~~efficacy 3.or ~~Legal~~safety ~~Proceedings~~concerns with the products, even if not justified;

~~There~~unexpected ~~are~~side presently no material pending legal proceedings to which the Company, any of its subsidiaries, any executive officer, any owner of record or beneficially of more than five percent of any class of voting securities is a party or as to which any of its property is subject, and no such proceedings are known to the Company to be threatened or contemplated against it. effects;

~~Item~~regulatory 4.proceedings ~~Mine~~subjecting ~~Safety~~the ~~Disclosures~~products to potential recall;

~~Not~~publicity ~~applicable~~affecting doctor prescription or patient use of the product;

20pressure from competitive products; or

~~PART~~introduction IIof more effective treatments.

~~Item~~our 5revenues from such marketed products could decrease. ~~Market~~For ~~for~~example, ~~Common~~efficacy ~~Equity~~or safety concerns may arise, ~~Related~~whether ~~Stockholder~~or ~~Matters~~not ~~and~~justified, ~~Small~~that ~~Business~~could ~~Issuer~~lead ~~Purchases~~to the recall or withdrawal of ~~Equity~~such ~~Securities~~marketed products. In the event of a recall or withdrawal of a product, our revenues would significantly decline.

~~Common Stock~~32

~~Our~~If ~~Certificate~~we ofdo ~~Incorporation~~not ~~authorizes~~receive ~~the~~adequate ~~issuance~~thirdparty ofreimbursement upfor tothe ~~100,000,000~~sales ~~shares~~ of ~~common~~our ~~stock~~products, ~~par~~we ~~value~~may ~~$.0001~~not ~~per~~be ~~share~~able ~~(the~~to ~~“Common~~sell ~~Stock”). The~~such ~~Common~~products ~~Stock is not listed~~ on a ~~publicly-traded~~profitable ~~market~~basis. ~~As of January 28, 2013, there were 110 holders of record of 21,220,860 shares of the Company’s Common Stock.~~

~~Preferred~~Sales ~~Stock~~of our products will depend, in part, upon the extent to which the costs of our products will be paid by health maintenance, managed care, pharmacy benefit and similar reimbursement sources, or reimbursed by government health administration authorities, private health coverage insurers and other thirdparty payors. Such thirdparty payors continue to aggressively challenge the prices charged for healthcare products and services. Additionally, federal and state governments have prioritized the containment of healthcare costs, and drug prices have been targeted in this effort. If these organizations and thirdparty payors do not consider our products to be costeffective, they may not reimburse providers of our products, or the level of reimbursement may not be sufficient to allow us to sell our products on a profitable basis.

~~Our~~Although ~~Certificate~~we ofhave ~~Incorporation~~potential ~~authorizes~~products ~~the~~that ~~issuance~~appear ofto upbe topromising ~~10,000,000~~at ~~shares~~early stages of ~~preferred stock~~development, ~~par~~none ~~value~~of ~~$.0001~~our ~~per~~potential ~~share~~products ~~(the~~may ~~“Preferred~~reach ~~Stock”). The~~the ~~Company~~commercial ~~does~~market ~~not~~for ~~have~~a ~~any~~number ~~Preferred~~of ~~Stock issued or outstanding~~reasons.

~~Dividend~~Successful ~~Policy~~research and development of pharmaceutical products is high risk. Most products and development candidates fail to reach the market. Our success depends on the discovery of new drugs or devices that we can commercialize. It is possible that our potential products may never reach the market for a number of reasons. They may be found ineffective or may cause harmful sideeffects during preclinical testing or clinical trials or fail to receive necessary regulatory approvals. We may find that certain products cannot be manufactured on a commercial scale basis and, therefore, they may not be economical to produce. Our products could also fail to achieve market acceptance or be precluded from commercialization by proprietary rights of third parties. We have a number of product candidates in various stages of development but do not expect the majority of them to be commercially available for a number of years, if at all.

~~The~~If ~~Company~~our ~~has~~competitors ~~not~~succeed ~~declared~~in ordeveloping ~~paid~~products ~~any cash dividends on its Common Stock~~ and ~~does~~technologies ~~not~~that ~~intend~~are tomore ~~declare~~effective orthan ~~pay~~our ~~any cash dividend in the foreseeable future. The payment of dividends~~own, or if ~~any,~~scientific isdevelopments ~~within~~change ~~the~~our ~~discretion~~understanding of the ~~Board~~potential ofscope ~~Directors~~ and ~~will~~utility ~~depend~~of onour ~~the Company’s earnings~~products, ifthen ~~any,~~our ~~its~~products ~~capital requirements~~ and ~~financial~~technologies ~~condition~~may ~~and~~be ~~such~~rendered ~~other~~less ~~factors as the Board of Directors may consider~~competitive.

~~Securities~~We ~~Authorized~~will ~~for~~face ~~Issuance~~significant ~~under~~competition ~~Equity~~from ~~Compensation~~industry ~~Plans~~participants that are pursuing similar products and technologies that we are pursuing and are developing pharmaceutical products that are competitive with our planned products and potential products. Nearly all of our industry competitors have greater capital resources, larger overall research and development staffs and facilities, and a longer history in drug discovery and development, obtaining regulatory approval and pharmaceutical product manufacturing and marketing than we do. With these additional resources, our competitors may be able to respond to the rapid and significant technological changes in the biotechnology and pharmaceutical industries faster than we can. Our future success will depend in large part on our ability to maintain a competitive position with respect to these technologies. Rapid technological development, as well as new scientific developments, may result in our compounds, products or processes becoming obsolete before we can recover any of the expenses incurred to develop them. For example, changes in our understanding of the appropriate population of patients who should be treated with a targeted therapy like we are developing may limit the product's market potential if it is subsequently demonstrated that only certain subsets of patients should be treated with the targeted therapy.

InIf ~~March~~the ~~2012,~~manufacturers ~~our~~upon ~~Board~~whom ofwe ~~Directors~~rely ~~and~~fail ato ~~majority~~produce ofour ~~shareholders~~product ~~approved~~candidates in the ~~2012~~volumes ~~Equity~~that ~~Incentive~~we ~~Plan~~require ~~(the~~on ~~“2012~~a ~~Equity~~timely ~~Plan”). There~~basis, ~~are~~or ~~1,500,000~~to ~~shares~~comply ofwith ~~Common~~stringent ~~Stock~~regulations ~~reserved~~applicable ~~for~~to ~~issuance~~pharmaceutical ~~under~~drug manufacturers, we may face delays in the ~~2012~~development ~~Equity~~and ~~Plan. As~~commercialization of, ~~October~~or ~~31,~~be ~~2012,~~unable noto ~~shares~~meet ~~had~~demand ~~been~~for, ~~awarded~~our ~~pursuant~~products toand ~~the~~may ~~plan~~lose potential revenues.

~~The~~We ~~following~~do ~~table~~not ~~illustrates~~manufacture ~~the~~any ~~number~~of our product candidates, and we do not currently plan to develop any capacity to do so. To date, we have only manufactured product in small batches at CSMC. We do not yet have agreements established regarding commercial supply of ~~shares~~any ~~remaining~~product ~~available~~candidates. There is no assurance that we will be successful in negotiating an agreement on commercially reasonable terms. There is no assurance that our commercialization partner will approve of our manufacturer. Any problems or delays we experience in preparing for ~~issuance~~commercial-scale manufacturing of any product candidate may impair our ability to manufacture commercial quantities, which would adversely affect our business. For example, our manufacturers will need to produce specific batches of our product candidates to demonstrate acceptable stability under ~~the~~various ~~Plan~~conditions and for commercially viable lengths of time. Furthermore, if our commercial manufacturers fail to deliver the required commercial quantities of bulk drug substance or finished product on a timely basis and at commercially reasonable prices, we would likely be unable to meet demand for our products and we would lose potential revenues.

~~Equity Compensation Plan Information~~33

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)	Weighted-average exercise price of outstanding options, warrants and rights (b)	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by security holders	0	NA	1,500,000
Equity compensation plans not approved by security holders	0	NA	0
TOTAL	0	NA	1,500,000

The manufacture of pharmaceutical products requires significant expertise and capital investment, including the development of advanced manufacturing techniques and process controls. Manufacturers of pharmaceutical products often encounter difficulties in production, particularly in scaling up initial production. These problems include difficulties with production costs and yields, quality control, including stability of the product candidate and quality assurance testing, shortages of qualified personnel, as well as compliance with strictly enforced federal, state and foreign regulations. Our manufacturers may not perform as agreed. If our manufacturers were to encounter any of these difficulties, our ability to provide product to commercialization partners or product candidates to patients in our clinical trials would be jeopardized. In addition, all manufacturers of our product candidates must comply with cGMP requirements enforced by the FDA through its facilities inspection program. These requirements include quality control, quality assurance and the maintenance of records and documentation. Manufacturers of our product candidates may be unable to comply with these cGMP requirements and with other FDA, state and foreign regulatory requirements. We have little control over our manufacturers’ compliance with these regulations and standards. 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 product approval. If the safety of any quantities supplied is compromised due to our manufacturers’ failure to adhere to applicable laws or for other reasons, we may not be able to obtain regulatory approval for or successfully commercialize our product candidates.

~~Recent~~The ~~Sales~~use of ~~Unregistered~~any ~~Securities~~of our potential products in clinical trials and the sale of any approved products exposes us to liability claims.

~~During~~The ~~the~~nature ~~fourth~~of ~~quarter~~our ofbusiness ~~2012,~~exposes us to potential liability risks inherent in the ~~Company~~testing, ~~sold~~manufacturing anand ~~aggregate~~marketing of ~~125,000~~drug ~~Units~~candidates ~~receiving~~and ~~net~~products. ~~proceeds~~If any of ~~$102~~our drug candidates in clinical trials or our marketed products harm people or allegedly harm people,~~377~~ ~~after~~we ~~payment~~may ofbe ~~commissions~~subject to costly and ~~other~~damaging ~~offering~~product ~~expenses~~liability claims. A number of patients who participate in trials are already critically ill when they enter a trial. The ~~Units~~waivers ~~were~~we ~~sold~~obtain tomay ~~three~~not ~~(3)~~be ~~persons~~enforceable ~~each~~and may not protect us from liability or the costs of ~~whom~~product ~~qualified~~liability aslitigation. anAlthough ~~“accredited~~we ~~investor”~~intend ~~within~~to obtain product liability insurance that we believe is adequate, we are subject to the ~~meaning~~risk ofthat ~~Rule~~our ~~501(c)~~insurance ofwill ~~Regulation~~not Dbe sufficient to cover claims. There is also a risk that adequate insurance coverage will not be available in the future on commercially reasonable terms, if at all. The ~~common~~successful ~~stock~~assertion of an uninsured product liability or other claim against us could cause us to incur significant expenses to pay such a claim, could adversely affect our product development and could cause a decline in our product revenues. Even a successfully defended product liability claim could cause us to incur significant expenses to defend such a claim, could adversely affect our product development and could cause a decline in our product revenues.

21Risks Related to Obtaining Regulatory Approval for our Product Candidates

~~warrants~~If ~~underlying~~clinical ~~the~~trials ~~Units~~of ~~issued~~our ~~were~~current ~~“restricted~~or ~~securities”~~future ~~under~~product ~~the~~candidates ~~Securities~~do ~~Act~~not ofproduce ~~1933,~~results asnecessary ~~amended~~to ~~and~~support regulatory approval in the ~~certificate~~United ~~evidencing~~States ~~same~~or ~~bears~~elsewhere, ~~the~~we ~~Company’s~~will ~~customary~~be ~~restrictive~~unable ~~legend~~to commercialize these products.

~~Issuer~~To ~~Purchases~~receive regulatory approval for the commercial sale of ~~Equity~~our ~~Securities~~product candidates that we may develop or out-license, we must conduct, at our own expense, adequate and well controlled clinical trials to demonstrate efficacy and safety in humans. Clinical testing is expensive, takes many years and has an uncertain outcome. Clinical failure can occur at any stage of the testing. Our clinical trials may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical and/or non-clinical testing. Our failure to adequately demonstrate the efficacy and safety of any product candidate that we may develop or out-license would prevent receipt of regulatory approval of that product candidate.

~~None~~Our assumptions concerning the regulatory approval pathway for our diagnostic products may prove to be incorrect.

~~Item~~Our 6business plan makes certain assumptions concerning the regulatory approval pathway for our planned diagnostic and therapeutic products. While ~~Selected~~such ~~Financial~~assumptions ~~Data~~are based on the guidance of regulatory consultants, there is no assurance the FDA will agree with our conclusions, which could result in a longer, more costly process than we are currently anticipating.

~~As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.~~ 34

~~Item~~Delays 7.in ~~Management’s~~the ~~Discussion~~commencement ~~and~~or ~~Analysis~~completion of ~~Financial~~clinical ~~Condition~~testing could result in increased costs to us and ~~Results~~delay ofor ~~Operation~~limit our ability to obtain regulatory approval for our product candidates.

~~This~~Delays ~~management’s~~in ~~discussion~~the commencement or completion of clinical testing could significantly affect our product development costs. The commencement and ~~analysis~~completion of ~~financial~~clinical ~~condition~~trials requires us to identify and ~~results~~maintain a sufficient number of ~~operations~~trial ~~should~~sites, many of which may already be ~~read~~engaged in ~~conjunction~~other ~~with~~clinical trial programs for the ~~Company’s~~same ~~financial~~indication ~~statements~~as ~~and~~our ~~the~~product ~~related~~candidates ~~notes,~~or ~~and~~may ~~the~~not ~~other~~be ~~financial~~eligible ~~information~~to ~~included~~participate in ~~this~~or ~~Report~~may be required to withdraw from a clinical trial as a result of changing standards of care. The commencement and completion of clinical trials can be delayed for a variety of other reasons, including delays related to:

~~Overview~~reaching agreements on acceptable terms with prospective clinical research organizations, or CROs, and trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites;

~~The~~obtaining ~~Company~~regulatory ~~was~~approval ~~founded~~ to ~~commercialize~~commence ~~both~~ a ~~new~~clinical cancer treatment targeting technology and a proprietary molecular delivery platform that interferes with those targets in order to inhibit and finally eradicate tumor progression. The Company is the exclusive licensee to certain intellectual property rights owned by CSMC in Los Angeles, one of the nation’s premiere research institutions (the “License”). CSMC has developed a family of related nano-biopolymers (collectively referred to here as Polycefin™), believed capable of acting as a drug delivery and targeting platform for cancer therapy. The founders of Arrogene were principally involved in all research and development behind all critical discoveries and science at CSMC related to Polycefin and authored all the patents underlying the technologies behind Polycefin (the “Technology”) and include internationally acclaimed brain surgeon and scientist Dr. Keith Black, Dr. Julia Ljubimova, Dr. Eggehard Holler, Dr. Alex Ljubimov. Work on Polycefin involved seven years of development and over $6,000,000 of grants funded mainly from the NIH. trial;

Weobtaining ~~also~~institutional ~~have~~review ~~developed~~board ~~important~~approval ~~related intellectual properties surrounding Laminin-411. Laminins are the major components of basement membranes that are orderly sheet-like structures secreted by cells~~ to ~~separate~~conduct ~~several cell types from one another. Laminins play key roles in cell adhesion, polarity, movement, and differentiation. They form~~ a ~~family~~clinical oftrial ~~related~~at but distinct proteins. Like all laminins, Laminin-411 is comprised of three chains, a4, b1, and g1 (hence the name). In normal tissues, Laminin-411 expression is almost negligible in blood vessels. At the same time, vessels in some organs, like breast and brain, predominantly contain another, closely related, isoform, Laminin-421 (a4b2g1). Our scientists were the first to demonstrate that during tumor development, Laminin-411 (formerly, laminin-8) is produced in excessive amounts, while the normal Laminin-421 gets suppressed, causing a ~~shift~~prospective ~~from “normal” to “tumor” laminin (Ljubimova et al., Cancer Res, 2001~~site; Fujita et al., Breast Cancer Res, 2005). Laminin-411 has been implicated in cell migration and increased production of some cancer stem cell proteins. In general, abnormal interactions between tumor cells and laminins are among major traits of various cancers. Taken together, the data presented above suggest that by blocking the production of Laminin-411, one may expect to slow down or arrest tumor growth and inhibit cancer cell spread, as well as possibly suppress cancer stem cells thereby diminishing chances of disease relapse.

~~Using~~recruiting ~~clinical~~and ~~material~~enrolling ~~from 65~~ patients ~~with~~to ~~brain~~participate ~~gliomas,~~in ~~we found an inverse correlation between Laminin-411 overproduction, patients’ survival and time of recurrent development (Ljubimova et al., Cancer, 2004). In 2007, our founders started a~~ clinical ~~trial~~trials ~~to examine a possible clinicopathological use of Laminin-411 as a diagnostic tool~~ for ~~advanced brain glioma and as~~ a ~~prognostic~~variety ~~indicator that could predict disease recurrence. The study~~ of ~~the~~reasons, ~~expression~~including ofcompetition ~~Laminin-411~~from ~~and~~other ~~Laminin-421~~clinical ~~was performed this time with the paraffin-embedded archival material routinely used in all pathological laboratories. Currently, this~~ trial isprograms nearing completion, with more than 300 cases of human tumors analyzed. The data show that this protein is overproduced in more than three-quarters (75%) of grade IV gliomas. Its production is correlated with poor patient survival, as compared to patients whose tumors predominantly contain a normal isoform, Laminin-421. These data are being prepared for ~~publication. As a result we are in~~ the ~~process~~same ofindication ~~commercializing this new test~~ as a Laboratory Developed Test (“LDT”) and we are currently nearing the end of a negotiation with a partner for delivery of this test into clinical practice. With this potential partner, we have conducted protocol development and have furthered our ~~clinical~~product ~~trial~~candidates; ~~to measure the range of application for Laminin 411. Conclusions of that clinical trial indicate that Laminin 411 is~~ and

22retaining patients who have initiated a clinical trial but may be prone to withdraw due to the treatment protocol, lack of efficacy, personal issues, side effects from the therapy or who are lost to further follow-up.

~~over-expressed~~In inaddition, ~~many~~a ~~tumors~~clinical ~~beyond~~trial ~~the~~may ~~initial~~be ~~indications~~suspended ~~and~~or weterminated ~~are~~by ~~working~~us, onthe ~~incorporating~~FDA ~~those~~or ~~findings~~other inregulatory ~~both~~authorities, ~~published~~due ~~results~~to ~~and~~a ~~the~~number ~~market~~of ~~strategy~~factors, ~~for the LDT.~~including:

~~Beyond~~failure ~~diagnostic~~to ~~and~~conduct ~~prognostic~~the ~~applications,~~clinical wetrial ~~believe that our discovery of Lamin 411’s role~~ in ~~tumor~~accordance ~~growth can be exploited together~~ with ~~our~~regulatory ~~Polycfin~~requirements ~~technology~~or towards novel tumor inhibiting treatments. We are currently working on the technology allowing us to combine antisense oligonucleotides against two laminin-411 chains on one nanopolymer (Polycefin) molecule and target them specifically to tumor cells. As a result, we were able to stop brain glioma growth in mice without harming other unaffected organs (Ding et al., Proc Natl AScad Sci USA, 2010). This appears to be a superior approach to using antibody blocking because, due to being buried in basement membranes, laminins may not be accessible enough to the antibodies in real-life tumors to obtain a therapeutic effect. We plan to use our ~~nanopolymer~~clinical Polycefin to block Laminin-411 production in primary and metastatic brain and breast tumors. Importantly, due to special chemical groups on the polymer backbone, it can deliver the antisense drugs to the tumor cells specifically, largely avoiding non-cancer cells. Our published results to date show the feasibility of this approach. protocols;

~~Antisense~~inspection ~~drugs~~of and other therapeutics like siRNA have significant problems in delivery to tumor cells. Besides rapid clearance from blood, they cannot specifically get inside tumor cells causing potential problems for the ~~healthy~~clinical ~~cells.~~trial ~~Our~~operations ~~nanopolymer~~or ~~platform~~trial ~~has~~sites ~~special~~by ~~antibodies that guide~~ the ~~drug~~FDA ~~complex~~or toother ~~the~~regulatory ~~tumor~~authorities ~~cells.~~resulting ~~Once~~ in ~~these cells, another special module on~~ the ~~delivery~~imposition vehicle helps release the drugs inside the cell, where they get detached from the polymer by natural mechanisms and exert their blocking function. As a result, the drug has much lower clearance when injected into the bloodstream, and the possibility of ~~it getting into normal cells is minimized. We have shown that such~~ a nanopolymeric delivery system targeting Laminin-411 can efficiently suppress growth of brain cancers by reducing tumor vasculature and causing tumor cell death (Fujita et al., Angiogenesis, 2006; Ljubimova et al., Front Biosci, 2006; Ding et al., Proc Natl Acad Sci USA, 2010). Therefore, we believe that this delivery system is currently most promising for specific treatment of tumors targeting their blood supply. However at this time, these findings are based on pre-clinical ~~research and there can be no assurances that they can be successfully translated into successful therapies in the future. .~~ hold;

Inunforeseen ~~vivo~~safety ~~studies~~issues ~~show~~or ~~evidence~~any ~~that~~determination ~~when attached to the platform, drugs for cancer therapy could have increased treatment efficacy and reduced side effects. In vivo and in vitro studies, many of which have been published, have shown~~ that ~~tumor~~a ~~size~~trial ~~was~~presents ~~reduced~~unacceptable ~~and~~health ~~animal~~risks; ~~survival increased using the targeting platform in conjunction with therapeutics as compared to using those same therapeutics in conventional therapies. 1 2~~or

Welack ~~believe~~of ~~that~~adequate ~~Polycefin~~funding ~~has the ability~~ to ~~harbor~~continue ~~various drugs at~~ the ~~same~~clinical ~~time making it a potential master delivery vehicle that can be customized for a particular tumor and even for an individual patient.3 Additionally~~trial, inincluding ~~vivo~~the ~~testing~~incurrence ~~has~~of ~~shown~~unforeseen ~~effectiveness~~costs ~~against~~due ~~more~~to ~~than~~enrollment ~~one~~delays, ~~widely~~requirements ~~different,~~to ~~type~~conduct ofadditional ~~cancer~~trials ~~(HER2/neu Breast, EGFR Triple Negative Breast~~ and ~~Glioblastoma),~~studies ~~suggesting that Polycefin’s application might be flexible~~ and ~~appropriate~~increased toexpenses aassociated ~~wide~~with ~~range~~the services of ~~cancer~~our ~~types~~CROs and ~~therapeutics.~~other third parties.

WeAdditionally, ~~are~~changes ~~also~~in ~~working~~regulatory torequirements ~~complete~~and ~~some~~guidance ofmay ~~the~~occur ~~pre-clinical~~and ~~work~~we may need to ~~support~~amend anclinical ~~Investigational~~trial ~~New~~protocols ~~Drug~~to ~~(“IND”)~~reflect ~~application~~these ~~with~~changes. ~~the~~Amendments ~~FDA~~may ~~for~~require us to resubmit our ~~first~~clinical ~~therapeutic~~trial ~~compound~~protocols to institutional review boards for reexamination, awhich ~~process~~may ~~that~~impact wethe ~~intend~~costs, totiming ~~follow~~or assuccessful completion of a ~~second~~clinical ~~step~~trial. ~~Our~~ ~~expected~~If ~~initial~~we ~~indications~~experience ~~for~~delays ~~our~~in ~~therapeutic~~the ~~INDs~~completion ~~and~~of, ~~subsequent~~or if we terminate, our clinical trials, ~~center~~the oncommercial ~~primary~~prospects ~~breast and~~for ~~lung~~our ~~cancers~~product candidates will be harmed, and ~~their~~our ~~metastatic~~ability ~~forms~~to ~~into~~generate product revenues will be delayed. In addition, many of the ~~brain~~factors asthat ~~well~~cause, asor ~~Glioblastoma.~~lead ~~However~~to, a ~~final~~delay ~~decision~~in onthe ~~exactly~~commencement ~~which~~or ~~indication~~completion toof ~~target~~clinical ~~first,~~trials ~~will~~may bealso ~~made~~ultimately inlead ~~consultation~~to ~~with~~the ~~our~~denial ~~potential~~of ~~licensing~~regulatory ~~partners~~approval ~~and~~of ~~will~~a beproduct ~~based~~candidate. inEven ~~part~~if onwe ~~their~~are ~~interest~~able to ~~target~~ultimately ~~specific~~commercialize our product candidates, other therapies for the same indications may have been introduced to the market and ~~active~~established ~~drugs~~a competitive advantage.

AsClinical ~~survival~~trials ~~rates~~ for ~~these~~our ~~primary~~product ~~cancers~~candidates ~~improve, increasingly significant percentiles of the patient population~~ are ~~developing~~expensive, ~~metastatic forms of these cancers~~time-consuming, ~~which~~uncertain ~~are often found late stage~~ and ~~have~~susceptible ~~few or no treatment options. Arrogene estimates that 30% of breast and 75% of lung primary cancers metastasize~~ to ~~the brain~~change, ~~based~~delay ~~on published studies. Polycefin’s ability to pass through the tumor’s Brain Blood Barrier could make it ideally suited for use as a diagnostic and/~~or ~~therapeutic to treat such metastatic cancers, and these might present early market opportunities~~termination.

1Clinical ~~Inoue S.,~~trials ~~Ding~~are H.very expensive, ~~Portilla~~time-~~Arias~~consuming Jand difficult to design and implement., etEven ~~al (2011)~~if ~~Polymalic~~the ~~Acid-Based~~results ~~Nanobiopolymer~~of ~~Provedes~~our ~~Efficient~~clinical ~~Systemic~~trials ~~Breast~~are ~~Cancer~~favorable, ~~Treatment~~clinical bytrials ~~Inhibiting~~usually ~~both~~continue ~~Her2/neu~~for ~~Receptor~~several ~~Snthetsis~~years and ~~Activity~~may take significantly longer to complete. ~~Cancer~~In ~~Res;~~addition, ~~71(4)~~we, ~~February~~the 15FDA, ~~2011~~an Institutional Review Board, or other regulatory authorities, including state and local, may suspend, delay or terminate our clinical trials at any time for various reasons, including:

2lack ~~Inoue~~of S,effectiveness ~~Patil~~of R,our ~~Portilla-Arias~~lead J,drug ~~Ding~~candidate H,or ~~Konda~~any B,other etproduct ~~al.~~candidate ~~(2012)~~during ~~Nanobiopolymer~~clinical ~~for~~trials; ~~Direct Targeting and Inhibition of EGFR Expression in Triple Negative~~

~~Breast~~discovery ~~Cancer.~~of ~~PLoS~~serious ~~ONE~~or ~~7(2):~~unexpected ~~e31070.~~toxicities ~~doi:10.1371/journal.pone.0031070~~or side effects experienced by study participants or other safety issues;

3slower ~~Ding~~than ~~H.,~~expected ~~Portilla-Arias~~rates ~~J., Patil R., et al. (2011). The optimization~~ of ~~polymalic~~subject ~~acid~~recruitment ~~peptide~~and ~~copolymers~~enrollment ~~for~~rates ~~endosomolytic~~in ~~drug~~clinical ~~delivery.~~trials; ~~Biomaterials 32 (2011) 5269-5278~~

23delays or inability in manufacturing or obtaining sufficient quantities of materials for use in clinical trials due to regulatory and manufacturing constraints;

Itinadequacy ~~is estimated that approximately 207,000 new cases~~ of ~~breast~~or ~~cancer~~changes ~~are diagnosed every year~~ in ~~the~~our ~~U.S.~~manufacturing ~~Approximately~~process ~~204,000~~or ~~cases~~product offormulation; lung cancer are diagnosed annually. Additionally there are between 120,000 and 140,000 annual cases of cases of secondary brain cancers, according to various published sources. Based on these patient populations, and certain price and usage assumptions, we have estimated that the total market potential for Polycefin based therapeutics products could exceed $30 billion annually.

Wedelays ~~plan~~in toobtaining ~~bring~~regulatory ~~our~~authorization ~~products~~ to ~~market~~commence ~~using~~ a ~~licensing~~study, ~~and~~including ~~cost~~“clinical ~~sharing~~holds” ~~strategy. We~~or ~~will~~delays ~~seek~~requiring tosuspension ~~joint~~or ~~venture~~termination ~~with~~of ~~pharmaceutical~~a ~~companies~~study ~~with~~by ~~existing~~a ~~cancer~~regulatory ~~therapy~~agency, ~~drugs~~such as the FDA, before or ~~active~~after ~~diagnostic~~a ~~imaging~~study ~~agents.~~ is commenced;

Over the following twelve months we are targeting a number of objectives and milestones that we plan to pursue utilizing cash on hand and proceeds from capital raising efforts. We may or may not be successful in consummating such capital raises and this remains a significant risk to our ability to meet our objectives. These objectives and milestones are the commissioning of final Phase 0 toxicology studies for our first Polycefin drug candidate; prepare an IND for submission to the FDA to receive clearance to begin human clinical trial work; and begin human clinical studies once such IND clearance can be obtained. There are various factors that can influence the timing of starting and completing these objectives and milestones as well as the total costs. Such factors include, but are not limited to, the pace and success of scientific developments, the availability of financial and human resources, competing demands of our scientific team, and changes in regulatory requirements. We have budgeted approximately $1.4 million through December 2013 towards these efforts but given the inherent uncertainty and variability related to these activities, we cannot accurately predict start dates, completion dates and total costs35

Inchanges ~~addition, we are expanding our production of the key ingredients for the production of Polycefin, according to a proprietary production and purification process,~~ in ~~preparation~~applicable toregulatory ~~support~~policies ~~both pre-clinical~~ and ~~clinical~~regulations; ~~phases of upcoming clinical trials. We are also taking steps to negotiate outside supplies agreements to create industrial partnerships relating to the production under license of these compounds.~~

~~General~~delays ~~Factors~~or failure in reaching agreement on acceptable terms in clinical trial contracts or protocols with prospective clinical trial sites;

~~Our~~delay ~~profitability~~or ~~will~~failure ~~be affected by costs associated with our efforts~~ to ~~develop~~supply ~~Polycefin into a commercial~~ product ~~including~~for ~~regulatory~~use ~~approvals,~~in ~~the~~clinical ~~expansion~~trials ofwhich ~~our~~conforms ~~general~~to ~~and~~regulatory ~~administrative~~specification; capabilities, and the expenses that we incur as a publicly-traded company. These costs include costs associated with, among other things, financial reporting, information technology, complying with federal securities laws (including compliance with the Sarbanes-Oxley Act of 2002), tax administration and human resources related functions.

~~Critical~~unfavorable ~~Accounting~~results ~~Policies~~from ongoing clinical trials and ~~Estimates~~pre-clinical studies;

~~The~~failure ~~discussion and analysis~~ of our ~~financial~~CROs, ~~condition~~or ~~and~~other results of operations is based upon our financial statements which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities. On an onthird-~~going~~party ~~basis,~~contractors ~~we evaluate our estimates including those related~~ to ~~valuing~~comply ~~our~~with ~~share-based~~all ~~compensation~~contractual ~~and~~requirements ~~contingencies. We~~or ~~base our estimates on historical experience and on other assumptions that we believe~~ to beperform ~~reasonable~~their ~~under~~services ~~the~~in ~~circumstances,~~a ~~the~~timely results of which form our basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or ~~conditions.~~acceptable manner;

Wefailure ~~cannot~~by ~~predict~~us, ~~what~~our ~~future~~employees, ~~laws~~our ~~and~~CROs ~~regulations~~or ~~might~~their beemployees ~~passed~~to ~~that~~comply ~~could~~with ~~have~~all aapplicable ~~material~~FDA ~~effect~~or onother ~~our~~regulatory ~~results~~requirements ofrelating ~~operations. We~~to ~~assess~~ the ~~impact~~conduct of ~~significant~~clinical ~~changes~~trials inor ~~laws~~the ~~and~~handling, ~~regulations~~storage, onsecurity ~~a regular basis~~ and ~~update~~recordkeeping ~~the~~for ~~assumptions~~controlled ~~and~~substances; ~~estimates used to prepare our financial statements when we deem it necessary.~~

~~Revenue~~scheduling ~~Recognition~~conflicts with participating clinicians and clinical institutions; and

~~While~~failure ~~we have not generated revenue~~ to ~~date,~~design weappropriate ~~will~~clinical ~~recognize~~trial ~~revenue when there is persuasive evidence that an arrangement exists, when title has passed, the price is fixed or determinable, and we are reasonably assured of collecting the resulting receivable~~protocols. Revenue arrangements that include multiple deliverables are divided into separate units of accounting if the deliverables meet certain criteria. If applicable, we will record product revenues net of revenue reserves such as sales returns and allowances. This accounting policy for revenue recognition may have a substantial impact on our reported results and relies on certain estimates that can require difficult, subjective and complex judgments on the part of management.

24Any of the foregoing could have a material adverse effect on our business, results of operations and financial condition.

~~Share-Based~~There ~~Payments~~is a high rate of failure for drug candidates proceeding through clinical trials.

WeGenerally, ~~account~~there is a high rate of failure for ~~share-based~~drug ~~payment~~candidates ~~costs~~proceeding atthrough ~~fair~~clinical ~~value~~trials. onWe may suffer significant setbacks in our clinical trials similar to the ~~date~~experience of ~~grant~~a number of other companies in the pharmaceutical and ~~recognition~~biotechnology ofindustries, ~~compensation~~even ~~over~~after receiving promising results in earlier trials. Further, even if we view the ~~service~~results ~~period~~of ~~for~~a ~~awards~~clinical ~~expected~~trial to ~~vest~~be positive, the FDA or other regulatory authorities may disagree with our interpretation of the data. ~~For~~In ~~stock~~the ~~options~~event that ~~may~~we beobtain ~~granted~~negative inresults from the ~~future~~Polycefin planned clinical trials or receive poor clinical results for other product candidates, or the ~~estimation~~FDA ofchooses ~~stock~~to ~~awards~~block ~~that~~progress ~~will~~of ~~ultimately~~the ~~vest~~trials ~~requires~~due ~~judgment~~to potential Chemistry, Manufacturing and toControls, ~~the~~or ~~extent~~CMC, ~~actual~~issues ~~results~~or ~~differ~~other ~~from~~hurdles or does not approve our ~~estimates~~NDA for Polycefin, ~~such~~we ~~amounts~~may ~~will~~not be ~~recorded~~able asto agenerate ~~cumulative~~sufficient ~~adjustment~~revenue inor ~~the~~obtain ~~period~~financing ~~estimates~~to ~~are~~continue ~~revised.~~our Weoperations, ~~will~~our ~~consider~~ability ~~various~~to ~~factors~~execute ~~when~~on ~~estimating~~our ~~expected~~current ~~forfeitures~~business plan will be materially impaired, ~~including~~our ~~historical~~reputation ~~experience.~~in ~~Actual~~the ~~results~~industry ~~may~~and ~~differ~~in ~~substantially~~the ~~from~~investment ~~these~~community ~~estimates~~would likely be significantly damaged and the price of our stock would likely decrease significantly.

WeEven ~~determine~~if ~~the~~our ~~fair~~product ~~value~~candidates ofreceive ~~warrants~~regulatory ~~and stock options using the Black-Scholes valuation model~~approval, ~~which~~they ~~considers~~may ~~the~~still ~~exercise~~face ~~price~~future ~~relative~~development ~~to the market value of the underlying stock, the expected stock price volatility, the risk-free interest rate~~ and ~~the~~regulatory ~~dividend yield, and the estimated period of time option grants will be outstanding before they are ultimately exercised~~difficulties. ~~Significant~~ ~~management judgment is required in making certain of these assumptions.~~

~~Fair~~Even ~~Value~~if ~~Measurements~~U.S. regulatory approval or clearance is obtained, the FDA can impose significant restrictions on a product’s indicated uses or marketing or may impose ongoing requirements for potentially costly post-approval studies. Any of these restrictions or requirements could adversely affect our potential product revenues. Our product candidates will also be subject to ongoing FDA requirements for the labeling, packaging, storage, advertising, promotion, record-keeping and submission of safety and other post-market information on the drug. In addition, approved products, manufacturers and manufacturers’ facilities are subject to continual review and periodic inspections. If a regulatory agency discovers previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, or problems with the facility where the product is manufactured, a regulatory agency may impose restrictions on that product or us, including requiring withdrawal of the product from the market. If our product candidates fail to comply with applicable regulatory requirements, such as cGMP, a regulatory agency may:

Weissue ~~measure~~warning ~~our~~letters ~~financial assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset~~ or ~~paid~~untitled to transfer a liability (i.e., exit price) in an orderly transaction between market participants at the measurement date. Additionally, we are required to provide disclosure and categorize assets and liabilities measured at fair value into one of three different levels depending on the assumptions (i.e., inputs) used in the valuation. Level 1 provides the most reliable measure of fair value while Level 3 generally requires significant management judgment. Financial assets and liabilities are classified in their entirety based on the lowest level of input significant to the fair value measurement. The fair value hierarchy is defined as follows:letters;

~~Level~~require ~~1—Inputs~~us ~~are~~to ~~unadjusted~~enter into a consent decree, ~~quoted~~which ~~prices~~can ininclude ~~active~~imposition ~~markets~~of various fines, reimbursements for ~~identical~~inspection ~~assets~~costs, orrequired ~~liabilities.~~due dates for specific actions and penalties for noncompliance;

~~Level~~impose ~~2—Inputs~~ other ~~than~~civil ~~Level 1 that are observable, either directly~~ or ~~indirectly,~~criminal ~~such as quoted prices for similar assets or liabilities~~penalties; ~~quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.~~

~~Level~~suspend ~~3—Unobservable~~regulatory ~~inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.~~approval;

~~Recently~~suspend ~~Issued~~any ~~Accounting~~ongoing ~~Pronouncements~~clinical trials;

Inrefuse July 2012, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2012-02, Testing Indefinite-Lived Intangible Assets for Impairment (ASU 2012-02), which amended the guidance in ASU 2011-08 to ~~simplify~~approve ~~the~~pending ~~testing~~applications ~~of indefinite-lived intangible assets other than goodwill for impairment. ASU 2012-02 becomes effective for annual and interim impairment tests performed for fiscal years beginning on~~ or ~~after~~supplements ~~September 15, 2012 and earlier adoption is permitted. We will adopt ASU 2012-02 effective November 1, 2012. The adoption of ASU 2012-02 is not expected~~ to ~~have~~approved ~~any~~applications ~~impact~~filed onby ~~our consolidated financial position, results of operations or cash flows.~~ us;

In*impose ~~September~~restrictions 2011, the FASB issued ASU No. 2011-08, Intangibles – Goodwill and Other (Topic 350) – Testing Goodwill for Impairment (ASU 2011-08), to allow entities to use a qualitative approach to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If after performing the qualitative assessment an entity determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step goodwill impairment test is unnecessary. However, if an entity concludes otherwise, then it is required to perform the first step of the two-step goodwill impairment test. ASU 2011-08 is effective for us in fiscal 2013 and earlier adoption is permitted. We will adopt this pronouncement effective November 1, 2012. The adoption of ASU 2011-08 is not anticipated to have any impact on ~~our consolidated financial position~~operations, ~~results~~including ofcostly ~~operations~~new ormanufacturing ~~cash~~requirements; ~~flows.~~or

In*seize ~~May~~or ~~2011,~~detain ~~the~~products ~~FASB~~or ~~issued~~require ~~ASU 2011-04, Fair Value Measurement (ASU 2011-04), which amended ASC 820, Fair Value Measurements (ASC 820), providing~~ a ~~consistent~~product ~~definition and measurement of fair value, as well as similar disclosure requirements between U~~recall.S. GAAP and International Financial Reporting Standards. ASU 2011-04 changes certain fair value measurement principles, clarifies the application of existing fair value measurement and expands the disclosure requirements. We adopted ASU 2011-04 in our fiscal year ending October 31, 2012. The adoption of ASU 2011-04 did not have a material effect on our consolidated financial statements or disclosures.

2536

InOur ~~June~~commercialization ~~2010,~~efforts ~~the~~will ~~FASB~~be ~~issued~~greatly ~~ASU~~dependent ~~No. 2010-17,~~upon ~~Revenue~~our ~~Recognition—Milestone~~ability ~~Method~~to ~~(Topic~~demonstrate ~~605):~~product ~~Milestone~~efficacy ~~Method~~in ofclinical ~~Revenue Recognition~~trials. ~~This~~Pharmacies ~~ASU~~and ~~codifies~~other ~~the~~dispensing ~~consensus~~facilities ~~reached~~will inbe ~~EITF~~reluctant ~~Issue~~to ~~No. 08-9,~~order ~~“Milestone~~our ~~Method~~products, ofmedical ~~Revenue~~practitioners ~~Recognition.”~~will ~~The~~be ~~amendments~~reluctant to ~~the~~prescribe ~~Codification~~our ~~provide~~products, ~~guidance on defining a milestone~~ and ~~determining~~third ~~when~~party itpayors ~~may~~reluctant ~~be appropriate~~ to ~~apply~~provide ~~the~~reimbursement ~~milestone~~for ~~method~~our ofproducts ~~revenue~~without ~~recognition~~compelling ~~for~~supporting ~~research~~data. orWhile ~~development~~we ~~transactions.~~believe ~~Consideration~~ that isour ~~contingent~~products onwill ~~achievement of a milestone in its entirety may~~ be ~~recognized~~effective asfor ~~revenue~~our inplanned ~~the~~indications, ~~period~~there ~~in which the milestone~~ is ~~achieved~~no ~~only~~assurance ifthat ~~the~~this ~~milestone~~will ~~is judged to meet certain criteria to~~ be ~~considered~~proven ~~substantive. Milestones should be considered substantive~~ in ~~their~~clinical ~~entirety and may not be bifurcated~~trials. The Anfailure ~~arrangement~~to ~~may~~demonstrate ~~contain~~efficacy ~~both~~in ~~substantive~~our ~~and~~clinical ~~nonsubstantive milestones~~trials, ~~and~~or ~~each~~a ~~milestone~~delay ~~should~~or befailure ~~evaluated individually~~ to ~~determine~~complete ifour itclinical ~~is substantive. This guidance was adopted effective November 1~~trials, ~~2010.~~would ~~The adoption of this guidance did not~~ have a material ~~impact~~adverse effect on our ~~consolidated~~business, prospects, financial ~~statements.~~condition and operating results.

~~Liquidity~~Our ~~and~~reliance ~~Capital~~on ~~Resources~~third parties, such as clinical research organizations, may result in delays in completing, or a failure to complete, clinical trials if they fail to perform under our agreements with them.

AsIn the course of ~~October~~product 31development, ~~2012,~~we may engage clinical research organizations to conduct and manage clinical studies and to assist us in guiding our products through the ~~Company’s~~FDA ~~cash~~review ~~balance~~and ~~was $539~~approval process. If we engage clinical research organizations to help us obtain market approval for our drug candidates,~~727~~ ~~compared~~many important aspects of this process have been and will be out of our direct control. If the clinical research organizations fail to $2perform their obligations under our agreements with them or fail to perform clinical trials in a satisfactory manner,~~094~~ atwe ~~October~~may 31face delays in completing our clinical trials, ~~2011~~as well as commercialization of one or more drug candidates. Furthermore, any loss or delay in obtaining contracts with such entities may also delay the completion of our clinical trials and the market approval of drug candidates.

~~The~~We ~~following~~may isbe asubject ~~summary~~to ofextensive ~~the~~regulations ~~Company's~~and ~~cash~~may ~~flows~~not ~~provided~~obtain bymarketing ~~(used~~approvals ~~in) operating, investing, and financing activities~~ for ~~the~~products ~~years~~in ~~ended~~Europe ~~October 31, 2012~~ and ~~October~~other ~~31, 2011 and for the cumulative period from August 7, 2007 (Inception) to October 31, 2012~~jurisdictions.

	Fiscal Year Ended October 31, 2012	Fiscal Year Ended October 31, 2011	For the Cumulative Period from August 7, 2007 (Inception) to October 31, 2012
Net Cash (Used in) Operating Activities	$ (1,136,831)	$ (550,626)	$ (1,759,529)
Net Cash Provided by (Used in) Investing Activities	386,780	(1,789)	384,991
Net Cash Provided by Financing Activities	1,287,684	444,351	1,914,265
Net Increase (Decrease) in Cash and Cash Equivalents	537,633	(108,064)	539,727

In addition to regulations in the United States, should we or our collaborators pursue marketing approvals for Polycefin internationally, we and our collaborators will be subject to a variety of regulations in other jurisdictions governing, among other things, clinical trials and any commercial sales and distribution of our products. Whether or not we, or our collaborators, obtain FDA approval for a product, we must obtain the requisite approvals from regulatory authorities in foreign countries prior to the commencement of clinical trials or marketing of the product in those countries. The requirements and process governing the conduct of clinical trials, product licensing, pricing and reimbursement vary from country to country.

~~Operating~~We ~~Activities~~expect to pursue marketing approvals for Polycefin in Europe and other jurisdictions outside the United States with collaborative partners. The time and process required to obtain regulatory approvals and reimbursement in Europe and other jurisdictions may be different from those in the United States regulatory and approval in one jurisdiction does not ensure approvals in any other jurisdiction; however, negative regulatory decisions in any jurisdiction may have a negative impact on the regulatory process in other jurisdictions.

~~During~~If ~~the~~we, ~~year~~or ~~ended~~our ~~October~~collaborators, 31fail to comply with applicable foreign regulatory requirements, ~~2012~~we may be subject to, $1among other things,~~136~~ fines,~~831~~ ofsuspension ~~cash~~or ~~was~~withdrawal ~~used~~of inregulatory ~~operating~~approvals, ~~activities~~product ~~which~~recalls, ~~primarily~~seizure ~~represents~~of ~~cash~~products, operating ~~expenses~~restrictions and ~~payment~~criminal ~~of certain accrued expenses~~prosecution.

~~Investing~~We ~~Activities~~have limited knowledge and experience with NDA studies and product applications and we may not be successful in obtaining FDA approvals for our lead drug candidate, Polycefin.

~~During~~Currently, ~~the~~we ~~year~~have ~~ended~~no ~~October~~products ~~31,~~approved ~~2012~~for sale. We have not submitted an application for, ~~$386~~or obtained any FDA approval for,~~780~~ ~~was~~any ~~provided~~product bythrough ~~investing~~the ~~activities~~NDA ~~representing~~process. ~~cash~~This ~~acquired~~lack of previous experience with NDA processes and requirements may impede our ability to obtain FDA approval in ~~the~~a ~~Reverse~~timeframe ~~Merger~~consistent ~~partially~~with ~~offset~~our byexpectations ~~capital~~and ~~expenditures~~plans, or at all, for Polycefin. As ofFailure ~~October~~to 31comply with FDA and other applicable regulatory requirements, ~~2012~~either before or after product approval, wemay ~~had~~subject nous ~~material~~to ~~commitments~~sanctions, including: warning letters, deficiency notifications, application denials, approval denials, requirements for ~~capital~~additional ~~expenditures~~pre-clinical and/or clinical studies, civil and/or criminal penalties, injunctions or suspensions of production, black box warnings and other product label requirements, loss of product approvals, product seizures, or recalls.

~~Financing Activities~~37

~~During~~Risks ~~the~~Related ~~year~~to ~~ended~~our ~~October~~Financial 31, 2012, we received $1,288,984 in net proceeds from the sale of 1,510,250 Units. Additionally, during the year ended October 31, 2012, we received $80,000 in proceeds from the Promissory Notes which were repaid in full during the same period. Condition

~~Sources~~We ofrequire ~~Capital~~additional funding which may not be available on favorable terms or at all.

AsWe ofwill ~~October~~require ~~31,~~additional ~~2012,~~funds weto ~~had~~support ~~$539,727~~our ofworking ~~cash~~capital onand ~~hand~~planned development requirements. AsAdequate ~~previously~~funds ~~described,~~may ~~the~~not ~~Company~~be ~~has~~available ~~closed~~when onneeded ~~the~~or ~~sale~~may ofnot ~~Units~~be ~~pursuant~~available toon afavorable ~~private~~terms. ~~placement,~~If ~~generating $1,510,250 in gross proceeds exclusive of sales that took place prior to consummation of~~ the ~~Reverse~~Company ~~Merger~~raises ~~and~~additional ~~subsequent~~funds toby ~~year~~issuing ~~end. Under~~equity ~~the~~securities ~~terms~~or ofconvertible ~~the~~debt ~~private placement memorandum~~securities, asexisting ~~amended,~~shareholders we may ~~sell~~be updiluted toor anhave ~~additional~~their ~~1,987,750~~rights ~~Units~~subordinated ~~until~~to ~~such~~newly-issued ~~time~~senior ~~that we terminate the private placement~~securities. In ~~aggregate,~~If iffunding ~~all~~is ofinsufficient ~~the~~at ~~Units~~any ~~are~~time ~~sold~~in ~~(excluding~~ the ~~overallotment option)~~future, ~~gross~~we ~~proceeds of $4,000,000~~ may not be ~~raised. In~~able ~~addition,~~to ~~based~~develop onor ~~the~~commercialize ~~Units~~our ~~sold~~products ~~through~~or ~~the date of this Report~~services, ~~approximately~~take ~~$8.5~~advantage ~~million~~of inbusiness ~~gross~~opportunities ~~proceeds~~or ~~may~~respond ~~be available~~ to uscompetitive ~~upon~~pressures, ~~the~~any ~~exercise~~ of ~~warrants, of~~ which ~~exercise~~could ~~cannot~~harm beour ~~assured, nor does management expect to receive in the near future~~business.

26The future capital requirements of Arrogene depend upon many factors, including the following:

~~Requirements~~the cost of ~~Capital~~testing and developing our technologies;

~~In addition to~~ the ~~costs~~cost ~~associated with operating our business in accordance with our plan,~~ and ~~complying~~timing ~~with public company reporting requirements, the License requires that we expend $1,000,000 during the calendar year ending December 31, 2013, towards the development~~ of ~~one~~regulatory ~~or more products using the licensed technology.~~ approvals;

~~Management’s~~the ~~Outlook~~rate at which we expand our operations; and

~~We believe that existing cash on hand, combined with~~ the ~~proceeds~~cost ~~received from the sale~~ of ~~Units~~commercializing ~~that took place subsequent to October 31, 2012 will be sufficient to fund~~ our ~~planned operations and contractual commitments through at least the end of the June 2013~~products. Accordingly, the Company will require additional funding, whether through the sale of Units or from alternative sources within the next six months. We are continuing to market the sale of the Units and we believe that the Company will consummate at least one additional closing prior to terminating the offering. While management is hopeful that a sufficient number of Units will be sold to fund the Company’s planned activities and contractual operations for at least the next twelve months and beyond, there is no assurance that we will be successful in these efforts.

~~The~~Our ~~success~~limited ofoperating ~~our~~history ~~business~~makes ~~will~~evaluating ~~depend in great part on~~ our ~~ability~~business ~~to conduct research~~ and ~~development~~future onprospects ~~the~~difficult technology covered by the License. Our plan forecasts the need for additional capital beyond the next twelve months even if we sell the maximum number of Units authorized. Our ability to conduct research and development activities is greatly dependent upon our financial resources. No assurance can be given that the necessary financing will be available on terms acceptable to us, if at all. If adequate additional funds are not available when required, we may have to delay, scale-back, or eliminate certain aspects of our research, testing and/or development activities.

InWe ~~the~~have ~~event~~a ~~that~~limited operating history and have financed our operations primarily through funding from sales of equity and convertible debt securities. We have incurred net losses since we ~~cannot~~began ~~raise~~operations. ~~sufficient~~Through ~~capital~~October ~~within~~31, ~~the~~2014, ~~required~~we ~~timeframes~~had a accumulated deficit of $6,384,743. itThese ~~will~~losses have resulted principally from costs incurred in connection with our research and development activities, pre-clinical tests and other regulatory activities, expanding and maintaining our intellectual property, and other general and administrative costs. We face considerable risks and difficulties as a ~~material~~company ~~adverse~~with ~~effect~~limited onoperating ~~the~~history. ~~Company’s~~If ~~liquidity~~we do not successfully address these risks, our business, prospects, operating results and financial condition may be materially and ~~business~~adversely ~~prospects~~harmed. orAdditionally, ~~force~~our ~~the~~financial ~~Company~~status ~~out~~creates ofsubstantial ~~business~~doubt about our ability to continue as a going concern.

~~RESULTS~~We OFexpect ~~OPERATIONS~~to incur significant additional operating losses over the next several years as we expand our research and development efforts, pre-clinical testing and clinical trials, human resources, and as we implement manufacturing, marketing and sales programs. In addition, as our development testing activities continue, our operating losses may increase. Further, this may result in negative cash flow in future periods as we fund operating losses and capital expenditures, and, therefore, will result in decreases in our working capital, total assets and stockholder's equity, which may not be offset by future financings. Our limited operating history makes it particularly difficult for us to predict our future operating results and appropriately budget for our expenses. In the event that actual results differ from our estimates or we adjust our estimates in future periods, our operating results and financial position could be materially affected.

~~Licensing~~Moreover, ~~Fees~~we do not have a product approved for commercial sale. We have limited experience as a newly formed research and development stage entity in the biopharmaceutical field, and our prospects must be considered in light of the fact that we have not yet demonstrated an ability to successfully overcome many of the risks and uncertainties frequently encountered by companies in new and rapidly evolving fields, particularly in the pharmaceutical or biotechnology areas. These risks include, but are not limited to, unforeseen capital requirements, delays in obtaining regulatory approvals, failure to gain market acceptance and competition from foreseen and unforeseen sources. Accordingly, you should consider our prospects in light of the costs, uncertainties, delays and difficulties encountered by companies in the early stage of development.

We recorded $480,430 of licensing fees for the year ended October 31, 2012 representing the fair value of 1,468,100 shares of common stock issued to CSMC as well as a $40,000 cash payment to satisfy certain conditions precedent to effectuating the License. There were no similar transactions during the prior year. 38

~~Research~~Our ~~and~~existing ~~Development~~debt is in technical default

~~During~~As ~~the~~of ~~year~~April ~~ended October 31~~1, ~~2012~~2016, we ~~incurred~~had $981,~~549~~060,000 in ~~research~~convertible ~~and~~debt ~~development~~instruments ~~expense~~that ~~representing~~are ~~costs~~in ~~incurred~~technical ~~for~~default. While the ~~management~~holders ofhave ~~our~~not ~~research~~taken ~~and~~any ~~development~~actions ~~activities. We~~related ~~had~~to this status, there is no ~~comparable~~assurance ~~expenses~~that they will not pursue collection in the ~~prior~~future. ~~year~~Our plan is to have these holders exchange their debt for a new form of debt currently being offered for sale. In the event the holders were to take a collection action or refuse to exchange their existing debt for new debt, it could make it more difficult for us to raise additional funds, or require that the proceeds from a future capital raise be redirected to repay old debts.

~~General~~Our operating results for the foreseeable future will depend significantly on our ability to fund our research and ~~Administrative~~development programs for, obtain regulatory approval of, and to successfully commercialize Polycefin.

~~General~~Polycefin ~~and~~is ~~administrative~~currently ~~expense~~our ~~decreased~~only bydrug ~~$133,129~~candidate. orWe ~~approximately~~may ~~15%~~not ~~for~~receive ~~the~~revenues ~~year~~or ~~ended~~royalties ~~October~~from ~~31,~~commercial ~~2012~~sales ~~compared~~of toPolycefin ~~the~~or ~~prior~~any ~~year. The~~other ~~decrease~~drug in ~~expense was~~ the ~~net~~foreseeable ~~result~~future, ofif ~~expense~~at ~~recorded under a financial advisory agreement in 2011 that was not in existence during 2012 partially offset by expenses related to being a public reporting company during 2012~~all.

~~Loss~~Our ~~from~~development ~~Operations~~of Polycefin involves a high degree of risk. Many important factors affect our ability to successfully develop and commercialize Polycefin, including our ability to:

Asdemonstrate asafety ~~result~~and efficacy of ~~the~~Polycefin ~~factors~~at ~~described~~each ~~above,~~stage ~~the~~of ~~loss from operations for~~ the ~~year~~clinical ~~ended~~trial ~~October~~process; ~~31, 2012, increased by $445,850 compared to the prior year period.~~

27meet applicable regulatory standards and receive required regulatory approvals;

~~Other~~obtain ~~Expense~~and maintain necessary patents and/or licenses;

~~For~~produce ~~the~~Polycefin year ended October 31, 2012, we recorded other expense of $757,427 compared to $120,604 for the prior year. Expense for the year ended October 31, 2012 includes a charge taken for reducing the conversion price of the Convertible Notes which resulted in ~~the~~commercial ~~issuance~~quantities ofat ~~2,388,500~~reasonable ~~additional~~costs; ~~shares of common stock.~~

~~Net~~obtain ~~Loss~~reimbursement coverage for Polycefin;

Ascompete asuccessfully ~~result~~against ofother ~~the~~products; ~~factors~~and ~~described above, we recorded $2,073,490 of net loss for the year ended October 31, 2012 compared to a net loss of $990,817 in the prior year.~~

~~Off-Balance~~market ~~Sheet~~Polycefin ~~Arrangements~~successfully.

~~The~~We ~~Company~~cannot ~~does~~assure ~~not~~you ~~have~~that ~~any~~we ~~off-balance~~will ~~sheet~~successfully ~~arrangements~~develop and commercialize Polycefin or that we will obtain required regulatory approvals for its commercialization. As a result, we may never generate revenues from Polycefin sales. To date, we have not generated any revenue from Polycefin or ~~are~~any ~~reasonably~~other ~~likely~~product toand ~~have~~we ado ~~current~~not know when, or if, we will generate any revenue in the future. ~~effect~~We onmay never be able to successfully develop or commercialize Polycefin or any other product. Even if we do commercialize Polycefin or other product candidates in the ~~Company’s~~future, ~~financial~~we ~~condition~~may incur significant sales, ~~changes~~marketing, inmanufacturing ~~financial~~and ~~condition~~other general and administrative expenses, ~~revenues~~as orwell as continued research and development expenses. As a result, ~~results~~we cannot predict when we will become profitable, if at all, and if we do, we may not remain profitable for any substantial period of ~~operations~~time. If we fail to achieve profitability within the timeframe expected by investors, ~~liquidity~~the market price of the common stock may decline, and, therefore, may negatively impact our ability to raise capital, ~~expenditures~~invest in or ~~capital~~expand ~~resources~~our ~~that~~business, isacquire ~~material~~additional toproducts ~~investors~~or licenses, commercialize our products, or continue our operations.

~~Contractual~~We ~~Obligations~~will need additional funding to advance our clinical trial programs, launch and commercialize our lead drug candidate or any other product candidate.

AsPharmaceutical product development, which includes research and development, pre-clinical and clinical studies and human clinical trials, is a ~~“smaller~~time-consuming ~~reporting~~and ~~company”~~expensive process that takes years to complete. We expect that our expenses will increase substantially as ~~defined~~we bymove ~~Item~~Polycefin 10into ofhuman ~~Regulation~~clinical Strials, and seek regulatory approval for Polycefin. If we obtain marketing approval for Polycefin or any other product candidate that we develop, license, or acquire, we expect to incur significant commercialization expenses related to pre-Klaunch activities, ~~the~~regulatory ~~Company~~compliance isrequirements, ~~not~~sales ~~required~~and marketing, manufacturing and distribution. Additionally, we may incur expenses directly related to ~~provide~~license ~~this~~and ~~information~~product acquisitions.

~~Item~~Current ~~7A.~~economic ~~Quantitative~~conditions and ~~Qualitative~~in ~~Disclosures~~the ~~about~~global ~~Market~~economy ~~Risk~~generally, including ongoing disruptions in the debt and equity capital markets, may adversely affect our business and results of operations, and our ability to obtain financing.

AsThe aglobal ~~“smaller~~economy ~~reporting~~is ~~company”~~currently asundergoing ~~defined~~numerous bychallenges, ~~Item~~and 10the future economic environment may continue to be less favorable than that of ~~Regulation~~past ~~S-K,~~years. We are unable to predict the ~~Company~~likely isduration ~~not~~and ~~required~~severity of the current disruptions in debt and equity capital markets and adverse economic conditions in the United States and other countries, which may continue to ~~provide~~have ~~this~~an ~~information~~adverse effect on our business and results of operations, in part because we are dependent upon customer behavior and the impact on consumer spending that the continued market disruption may have.

~~Item 8. Financial Statements and Supplementary Data.~~39

~~Audited~~The ~~financial~~global ~~statements~~stock ~~begin~~and credit markets have recently experienced significant price volatility, dislocations and liquidity disruptions, which have caused market prices of many stocks to fluctuate substantially and the spreads on prospective and outstanding debt financings to widen considerably. These circumstances have materially impacted liquidity in the ~~following~~financial ~~page~~markets, making terms for certain financings materially less attractive, and in certain cases have resulted in the unavailability of ~~this~~certain ~~report~~types of financing. This volatility and illiquidity has negatively affected a broad range of mortgage and asset-backed and other fixed income securities. As a result, the market for fixed income securities has experienced decreased liquidity, increased price volatility, credit downgrade events, and increased defaults. Global equity markets have also been experiencing heightened volatility and turmoil, with issuers exposed to the credit markets particularly affected. These factors and the continuing market disruption have an adverse effect on us, in part because we, like many companies, from time to time may need to raise capital in debt and equity capital markets including in the asset-backed securities markets. If we are unable to raise additional capital, it was have a material adverse affect on our liquidity and business operations and would likely put us out of business.

28Future financings may result in dilution to our shareholders and restrictions on its business operations.

~~ARROGENE~~If we raise additional funds by issuing equity or convertible debt securities, ~~INC~~further dilution to our shareholders could occur. Additionally, we may grant registration rights to investors purchasing equity or debt securities. Debt financing, if available, may involve pledging some or all of our assets and may contain restrictive covenants with respect to raising future capital and other financial and operational matters. If we are unable to obtain necessary additional capital, we may be unable to execute our business strategy, which would have a material adverse effect on our business, financial condition and results of operations.

(ARisks ~~Development~~Related ~~Stage~~to ~~Company)~~our Intellectual Property

~~INDEX~~We TOwill ~~FINANCIAL~~be ~~STATEMENTS~~dependent on the rights included in the License for all of our products.

~~Page~~Our business is dependent upon the intellectual property rights we have acquired through the License, and accordingly, we will have to continue to comply with the requirements of that agreement to maintain the license rights in full force and effect. The License may be terminated if we fail to perform our obligations under the agreement in accordance with its terms including, but not limited to, our ability to make all payments due under the License as well as certain other development milestones. Our inability to continue to license these technologies will materially adversely affect our business, prospects, financial condition, and operating results. In addition, our strategy depends on the successful development of these licensed technologies into commercial products, and, therefore, any limitations on our ability to utilize these technologies may impair our ability to market and sell our products, delay new product introductions, and/or adversely affect our reputation, any of which could have a material adverse effect on our business, prospects, financial condition, and operating results. We are currently in arrears in making payments to CSMC under a research and development agreement. CSMC completed work under this agreement during fiscal year 2014. While these delinquent payments are not an event of default under the License, if they damage our working relationship with CSMC, CMSC may be less willing to cooperate with us on various fronts including development efforts and future License amendments.

~~Report~~CSMC ofmay ~~Independent~~not ~~Registered~~agree ~~Public~~to ~~Accounting~~amend ~~Firm~~the License.

~~F-2~~As noted above, the License requires us to achieve certain milestones. While we believe that we have achieved all of the required milestones under the License, in some instances, the achievement is subject to interpretation and ambiguous, including our belief that administrative expenses incurred in support of the Company’s business activities meet the definition of “development and promotion” of the licensed technology. We are in negotiations with CSMC to amend the License to remove any ambiguity and confirm it is in good standing. CSMC has provided us no notice indicating that they believe we are not in compliance with the License. However, there is no assurance that we will be successful in amending the License to remove the ambiguity and confirm we have met all of the milestones, or if amended, that we will be able to comply with the amended terms.

~~Financial Statements:~~40

~~Consolidated~~If ~~Balance~~other ~~Sheets~~companies claim that we infringe on their intellectual property rights, we may be subject to costly and timeconsuming litigation and delays in product introduction.

~~F-3~~Our processes and potential products may conflict with patents that have been or may be granted to competitors, academic institutions or others. As the biotechnology and pharmaceutical industries expand and more patents are filed and issued, the risk increases that our product candidates may give rise to a declaration of interference by the U.S. Patent and Trademark Office, to administrative proceedings in foreign patent offices or to claims of patent infringement by other companies, institutions or individuals. These entities or persons could bring legal proceedings against us seeking substantial damages or seeking to enjoin us from testing, manufacturing or marketing our products. If any of these actions were successful, we may also be required to cease the infringing activity or obtain the requisite licenses or rights to use the technology that may not be available to us on acceptable terms, if at all. Any litigation, regardless of the outcome, could be extremely costly to us.

~~Consolidated~~Because ~~Statements~~it ofis ~~Operations~~difficult and costly to protect our proprietary rights, we may not be able to ensure their protection.

FOur commercial success will depend in part on maintaining patent protection and trade secret protection for our products, as well as successfully defending these patents against third-4party challenges. We will only be able to protect our technologies from unauthorized use by third parties to the extent that valid and enforceable patents or trade secrets cover them.

~~Consolidated~~The ~~Statement~~patent positions of pharmaceutical and biotechnology companies can be highly uncertain and involve complex legal and factual questions for which important legal principles remain unresolved. No consistent policy regarding the breadth of claims allowed in pharmaceutical or biotechnology patents has emerged to date in the United States. The patent situation outside the United States is even more uncertain. Changes in ~~Stockholders'~~either ~~Equity~~the ~~(Deficit)~~patent laws or in interpretations of patent laws in the United States and other countries may diminish the value of our intellectual property. Accordingly, we cannot predict the breadth of claims that may be allowed or enforced in our patents or in third-party patents.

~~F-5~~The degree of future protection for our proprietary rights is uncertain, because legal means afford only limited protection and may not adequately protect our rights or permit us to gain or keep our competitive advantage. For example: our licensors might not have been the first to make the inventions covered by each of our pending patent applications and issued patents; our licensors might not have been the first to file patent applications for these inventions; others may independently develop similar or alternative technologies or duplicate any of our product candidates or technologies; it is possible that none of the pending patent applications licensed to us will result in issued patents; the issued patents covering our product candidates may not provide a basis for commercially viable active products, may not provide us with any competitive advantages, or may be challenged by third parties; we may not develop additional proprietary technologies that are patentable; or patents of others may have an adverse effect on our business.

~~Consolidated~~In ~~Statements~~the event that a third party has also filed a U.S. patent application relating to our product candidates or a similar invention, we may have to participate in interference proceedings declared by the U.S. Patent and Trademark Office to determine priority of ~~Cash~~invention ~~Flows~~in the United States. The costs of these proceedings could be substantial and it is possible that our efforts would be unsuccessful, resulting in a material adverse effect on our U.S. patent position. It is also possible we may not have the financial resources to pursue infringement actions on a timely basis if at all. Furthermore, we may not have identified all U.S. and foreign patents or published applications that affect our business either by blocking our ability to commercialize our drugs or by covering similar technologies that affect our drug market.

~~F-6~~In addition, some countries, including many in Europe, do not grant patent claims directed to methods of treating humans, and in these countries patent protection may not be available at all to protect our drug candidates. Even if patents issue, we cannot guarantee that the claims of those patents will be valid and enforceable or provide us with any significant protection against competitive products, or otherwise be commercially valuable to us.

~~Notes~~We may also rely on trade secrets to ~~Consolidated~~protect ~~Financial~~our ~~Statements~~technology, particularly where we do not believe patent protection is appropriate or obtainable. However, trade secrets are difficult to protect. While we use reasonable efforts to protect our trade secrets, our licensors, employees, consultants, contractors, outside scientific collaborators and other advisors may unintentionally or willfully disclose our information to competitors. Enforcing a claim that a third party illegally obtained and is using our trade secrets is expensive and time consuming, and the outcome is unpredictable. In addition, courts outside the United States are sometimes less willing to protect trade secrets. Moreover, our competitors may independently develop equivalent knowledge, methods and know-how.

~~F-7~~If our licensors or we fail to obtain or maintain patent protection or trade secret protection for our products, third parties could use our proprietary information, which could impair our ability to compete in the market and adversely affect our ability to generate revenues and achieve profitability.

~~F-1~~41

~~REPORT~~As OFwe ~~INDEPENDENT~~expand ~~REGISTERED~~our ~~PUBLIC~~patent ~~ACCOUNTING~~portfolio, ~~FIRM~~the cost of maintaining such patents will increase. We cannot predict the future cost of maintaining our patents. We may find ourselves in a position where we cannot afford to maintain all of the patents in our portfolio.

ToIf ~~the~~we ~~Board~~are ofsued ~~Directors~~for ~~and~~infringing ~~Stockholders~~intellectual property rights of ~~Arrogene~~third parties, ~~Inc~~it will be costly and time consuming, and an unfavorable outcome in any litigation would harm our business.

WeOur ~~have~~ability ~~audited~~to ~~the~~develop, ~~accompanying~~manufacture, ~~consolidated~~market ~~balance~~and ~~sheets~~sell our products depends upon our ability to avoid infringing the proprietary rights of ~~Arrogene,~~third ~~Inc~~parties. (There is a ~~Delaware~~substantial ~~development~~amount ~~stage~~of ~~enterprise)~~litigation involving patent and ~~subsidiary~~other (intellectual property rights in the ~~“Company”)~~biotechnology asand ofbiopharmaceutical ~~October~~industries ~~31,~~generally. ~~2012~~If ~~and~~a ~~2011~~third ~~and~~party ~~the~~claims ~~related consolidated~~that ~~statements~~we ofinfringe ~~operations~~on their products or technology, ~~stockholders’~~we ~~equity~~could ~~(deficit)~~face ~~and~~a ~~cash~~number ~~flows~~of ~~for~~issues, ~~the~~including: ~~years~~infringement ~~ended~~and ~~October~~other 31intellectual property claims which, ~~2012~~with or without merit, can be expensive and ~~2011~~time consuming to litigate and ~~for~~can ~~the~~divert ~~period~~management’s attention from ~~August~~our 7,core ~~2007~~business; ~~(inception)~~substantial ~~through~~damages ~~October~~for ~~31,~~past ~~2012. These~~infringement ~~consolidated~~which ~~financial~~we ~~statements~~may ~~are~~have ~~the~~to ~~responsibility~~pay ofif ~~the~~a ~~Company~~court decides that our product infringes on a competitor’s ~~management. Our~~patent; ~~responsibility~~a court prohibiting us from selling or licensing our product unless the patent holder licenses the patent to us, which it is not required to ~~express~~do; anif ~~opinion~~a onlicense ~~these~~is ~~financial~~available ~~statements~~from ~~based~~a onpatent holder, we may have to pay substantial royalties or grant cross licenses to our ~~audits~~patents; and re-designing our processes so they do not infringe, which may not be possible or could require substantial funds and time.

WeRisks ~~conducted~~Related ~~our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit~~ to ~~obtain~~Owning reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our ~~audit~~Common included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.Stock

InThere ~~our~~currently ~~opinion,~~exists ~~the~~no ~~consolidated~~public ~~financial~~trading ~~statements~~market ~~referred~~for ~~to above present fairly, in all material respects,~~ the ~~financial position of~~ Arrogene, ~~Inc.,~~shares; and ~~Subsidiary~~should asa ofpublic ~~October~~trading ~~31,~~market ~~2012~~develop ~~and~~in ~~2011, and~~ the ~~results~~future, of ~~their~~which ~~operations~~there ~~and~~can ~~their~~be ~~cash~~no ~~flows for the years ended October 31~~assurance, ~~2012~~such ~~and~~trading ~~2011,~~will ~~and~~likely ~~for~~be ~~the~~subject ~~period~~to ~~from August 7, 2007 (inception) through October 31, 2012 in conformity with accounting principles generally accepted in~~ the ~~United~~“penny ~~States~~stock” ~~of America~~rules.

~~The~~There ~~accompanying~~is ~~consolidated~~currently ~~financial~~no ~~statements~~public ~~have~~trading ~~been~~market ~~prepared~~for ~~assuming~~Arrogene ~~that~~common stock and it is not quoted on the ~~Company~~OTC ~~will~~Electronic ~~continue~~Bulletin asBoard, a ~~going~~FINRA-sponsored ~~concern. As~~and ~~discussed~~operated inquotation ~~Note 2~~system tofor ~~the~~equity ~~consolidated~~securities, ~~financial~~or ~~statements,~~OTCQB ~~the~~or ~~Company~~OTC ~~has~~Pink ~~not~~electronic ~~generated~~quotation ~~cash~~systems ~~flows~~run ~~from~~by ~~operations~~OTC ~~since~~Markets ~~inception,~~Group ~~has~~Inc. ~~incurred~~Should ~~continuing~~a ~~losses~~public ~~and~~trading ~~has~~market ~~accumulated~~for athe ~~deficit~~shares ~~during~~develop in the ~~development~~future, ~~stage~~of atwhich ~~October 31~~there can be no assurance, ~~2012~~the shares will likely be quoted on the Bulletin Board, OTCQB or OTC Pink Sheets. These ~~factors~~are ~~raise~~more ~~substantial~~limited ~~doubt~~trading ~~about~~markets than the ~~Company’s~~Nasdaq ~~ability~~Capital toMarket, ~~continue~~and astimely, aaccurate ~~going~~quotations ~~concern~~of the price of our common stock may not always be available. ~~Management’s~~You ~~plans~~may inexpect ~~regard~~trading volume to ~~these~~be ~~matters~~low ~~are~~in ~~also~~such ~~described~~a ~~in Note 2~~market. ~~The~~Consequently, ~~consolidated~~the ~~financial~~activity ~~statements~~of doonly ~~not~~a ~~include~~few ~~any~~shares ~~adjustments~~may ~~that~~affect ~~might~~the market and may result ~~from~~in ~~the~~wide ~~outcome~~swings ofin ~~this~~price ~~uncertainty~~and in volume.

~~Rose~~Arrogene common stock will be subject to the requirements of Rule 15g.9, ~~Snyder~~promulgated &under ~~Jacobs~~the ~~LLP~~Securities Exchange Act as long as the price of our common stock is below $5.00 per share. Under such rule, broker-dealers who recommend low-priced securities to persons other than established customers and accredited investors must satisfy special sales practice requirements, including a requirement that they make an individualized written suitability determination for the purchaser and receive the purchaser's consent prior to the transaction. The Securities Enforcement Remedies and Penny Stock Reform Act of 1990 also requires additional disclosure in connection with any trades involving a stock defined as a penny stock. Generally, a penny stock is defined as any equity security not traded on an exchange or quoted on Nasdaq that has a market price of less than $5.00 per share. The penny stock rules require a broker-dealer to deliver a standardized risk disclosure document prepared by the SEC, to provide the customer with additional information including current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, monthly account statements showing the market value of each penny stock held in the customer's account, and to make a special written determination that the penny stock is a suitable investment for the customer and receive the customer’s written agreement to the transaction. The required penny stock disclosures include the delivery, prior to any transaction, of a disclosure schedule explaining the penny stock market and the risks associated with it. Such requirements could severely limit the market liquidity of the securities and the ability of purchasers to sell their securities in the secondary market.

~~/s/~~Over-the-counter ~~Rose,~~stocks ~~Snyder~~are &subject ~~Jacobs~~to risks of high volatility and price fluctuation.

~~Encino~~Arrogene’s common stock is currently not traded or listed on any market, ~~California~~and it is not eligible to have its shares listed on any stock exchange or on the NASDAQ Capital Market. As a result, the trading market for our common stock, if any, will be on the over-the-counter market. The OTC market for securities has experienced extreme price and volume fluctuations during certain periods. These broad market fluctuations and other factors, such as new product developments and trends in our company's industry and the investment markets generally, as well as economic conditions and quarterly variations in our results of operations, may adversely affect the market price of our common stock and make it more difficult for investors to sell their shares.

~~January 28, 2013~~42

~~F-2~~Trading in Arrogene securities will likely be conducted on an electronic bulletin board established for securities that do not meet NASDAQ listing requirements. As a result, investors will find it substantially more difficult to dispose of our securities. Investors may also find it difficult to obtain accurate information and quotations as to the price of our common stock.

~~ARROGENE~~Arrogene’s stock price may be volatile and as a result, ~~INC~~investors could lose all or part of their investment. The value of an investment could decline due to the impact of any of the following factors upon the market price of our common stock:

(afailure ~~development~~to ~~stage~~meet ~~enterprise)~~sales and marketing goals or operating budget

~~CONSOLIDATED~~failure ~~BALANCE~~to ~~SHEETS~~achieve development goals

ASfailure OFto ~~OCTOBER~~obtain ~~31,~~regulatory ~~2012 AND 2011~~approvals

ASSETS	2012				2011
Current assets:
Cash and cash equivalents	$	539,727		$		2,094
Prepaid expenses and deposit	13,020			10,024
Total current assets	552,747			12,118
Property and equipment, net of accumulated depreciation of $1,426 and $547 at October 31, 2012 and 2011, respectively	3,271			1,242
Total assets	$	556,018		$		13,360
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
LIABILITIES:
Current liabilities:
Accrued compensation	$	29,240		$		79,453
Accrued legal fees	7,754			153,547
Related party payables	10,000			66,350
Other accrued liabilities	32,599			9,747
Convertible notes	10,000			726,550
Total current liabilities	89,593			1,035,647
Total liabilities	89,593			1,035,647
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY (DEFICIT)
Preferred stock, $.0001 par value 10,000,000 shares authorized, none issued	—			—
Common stock, $.0001 par value; 100,000,000 shares authorized; 21,090,860 and 11,091,900 shares, respectively, issued and outstanding	2,109			1,109
Additional paid-in capital	4,059,670			498,468
Deficit accumulated during the development stage	(3,595,354		)	(1,521,864			)
Total stockholders’ equity	466,425			(1,022,287			)
Total liabilities and stockholders’ equity	$	556,018		$		13,360

concerns regarding insufficient financial resources

~~The~~inability ~~accompanying~~to ~~notes~~create ~~are~~ an ~~integral~~active ~~part~~trading ofmarket ~~these~~for ~~consolidated~~our ~~financial~~common ~~statements.~~stock

~~F-3~~decline in demand for our common stock

~~ARROGENE,~~operating ~~INC.~~results failing to meet the expectations of securities analysts or investors in any quarter

(adownward ~~development~~revisions ~~stage~~in ~~enterprise)~~securities analysts' estimates or changes in general market conditions

~~STATEMENTS~~investor OFperception ~~OPERATIONS~~of our company's industry or prospects

~~FOR~~general ~~THE~~economic ~~YEARS ENDED OCTOBER 31, 2012 AND 2011 AND THE PERIOD FROM AUGUST 7, 2007 (INCEPTION) THROUGH OCTOBER 31, 2012~~trends

	2012			2011				Cumulative From Inception (August 7, 2007) Through October 31, 2012
REVENUE:	$	—		$	—			$	—
OPERATING EXPENSES:
General and administrative	737,084			870,213			2,137,186
Licensing fees	480,430			—			480,430
Research and development	98,549			—			98,549
	1,316,063			870,213			2,716,165
Loss from operations	(1,316,063		)	(870,213		)	( 2,716,165			)
OTHER INCOME (EXPENSE):
Interest	(757,427		)	(120,604)			(879,189			)
	(757,427		)	(120,604)			(879,189			)
NET LOSS	$ ( 2,073,490		)	$ ( 990,817		)	$ (3,595,354			)
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic and diluted	17,645,317			10,992,996			N/A
LOSS PER SHARE:
Basic and diluted	$	(0.12	)	$	(0.09	)	N/A

In addition, stock markets have experienced extreme price and volume fluctuations and the market prices of securities have been highly volatile. These fluctuations are often unrelated to operating performance and may adversely affect the market price of our common stock.

~~The~~There ~~accompanying~~can ~~notes~~be ~~are~~no anassurance ~~integral~~that ~~part~~we ofwill ~~these~~be ~~consolidated~~able ~~financial~~to ~~statements~~successfully complete a secondary public offering that will allow our shares to be listed and traded on a national exchange or Nasdaq Capital Market.

FWhile we would like to undertake a public offering in the future that would qualify us for listing and trading on a national exchange (eg. NYSE MKT, LLC, formerly NYSE Amex or Nasdaq Capital Market), there can be no assurance that market conditions or our future performance will support such an effort. Numerous factors, including market liquidity and demand for our stock, our ability to identify one or more underwriters willing to undertake such an offering, and general economic conditions, could adversely affect this effort. If we are unable to complete a public offering, trading in our stock, if any, will continue on the volatile and illiquid over-4the-counter market. In addition, we may be required to curtail or delay our efforts to commercialize our technology and may have difficulty in meeting some of the financial milestones required under the License.

~~ARROGENE~~If a public market for our common stock develops, ~~INC~~it may be volatile. This may affect the ability of our investors to sell their shares as well as the price at which they sell their shares.

~~CONSOLIDATED~~If ~~STATEMENTS~~a OFmarket ~~STOCKHOLDERS’~~for ~~EQUITY~~our ~~(DEFICIT)~~common stock develops, the market price for the shares may be significantly affected by factors such as variations in quarterly and yearly operating results, general trends in the pharmaceutical industry, and changes in state or federal regulations affecting us and our industry. Furthermore, in recent years the stock market has experienced extreme price and volume fluctuations that are unrelated or disproportionate to the operating performance of the affected companies. Such broad market fluctuations may adversely affect the market price of our common stock, if a market for it develops.

~~FOR~~Future ~~THE~~share ~~PERIOD~~issuances ~~FROM~~to ~~AUGUST~~CSMC 7,will ~~2007~~have ~~(INCEPTION)~~a ~~THROUGH~~dilutive ~~OCTOBER~~effect ~~31,~~on ~~2012~~our shareholders.

	Preferred Stock			Common Stock					Deficit Accumulated during the Development
	Shares	Amount		Shares	Amount		APIC		Stage			Total
INCEPTION, August 7, 2007	—		$ —	10,960,000		$ 1,096		$ —		$ —			$ 1,096
Net Loss	—		—	—		—		—		(1,215)			(1,215)
BALANCES, October 31, 2007	—		—	10,960,000		1,096		—		(1,215	)		(119)
Net loss	—		—	—		—		—		(868)			(868)
BALANCES, October 31, 2008	—		—	10,960,000		1,096		—		(2,083)			(987)
Net loss	—		—	—		—		—		(168,756)			(168,756)
BALANCES, October 31, 2009	—		—	10,960,000		1,096		—		(170,839)			(169,743)
Issuance of common stock for License	—		—	31,900		3		—		—			3
Fair value of warrants issued to placement agent	—		—	—		—		13,133		—			13,133
Warrants issued for advisory services agreement	—		—	—		—		251,112		—			251,112
Extinguishment of related party liability	—		—	—		—		100,000		—			100,000
Net loss	—		—	—		—		—		(360,208)			(360,208)
BALANCES, October 31, 2010	—		—	10,991,900		1,099		364,245		(531,047)			(165,703)
Fair value of warrants issued to placement agent	—		—	—		—		34,233		—			34,233
Shares issued in satisfaction of accrued compensation	—		—	100,000		10		99,990		—			100,000
Net loss	—		—	—		—		—		(990,817)			(990,817)
BALANCES, October 31, 2011	—		—	11,091,900		1,109		498,468		(1,521,864	)		(1,022,287)
Shares issued for licensing agreement	—	—		1,468,100	147		440,283		—			440,430
Reverse Merger with SRKP 16, Inc.	—	—		2,243,610	224		389,464		—			389,688
Sale of Units at $1.00 per Unit	—	—		1,510,250	151		1,288,833		—			1,288,984
Conversion of Convertible Notes into common stock	—	—		4,777,000	478		1,442,622		—			1,443,100
Net loss	—	—		—	—		—		(2,073,490		)	(2,073,490)
BALANCES, October 31, 2012	—	$	—	21,090,860	$	2,109	$	4,059,670	$	(3,595,354	)	$	466,425

The License requires us to issue additional shares of common stock to CSMC in the future for no additional consideration to ensure that CSMC will own 5% of the total issued and outstanding common shares. This commitment continued until December 31, 2015.

~~The accompanying notes are an integral part of these financial statements.~~43

~~F-5~~Future issuances of our Common Stock could dilute current shareholders and adversely affect the market if it develops.

~~ARROGENE~~We have the authority to issue up to 100,000,000 ~~INC~~shares of common stock and 10,000,000 shares of preferred stock and to issue options and warrants to purchase shares of our common stock, without shareholder approval. These future issuances could be at values substantially below the price paid for our common stock by existing shareholders, which would result in significant dilution to those shareholders. In addition, we could issue large blocks of our common stock to fend off unwanted tender offers or hostile takeovers without further shareholder approval, which would not only result in further dilution to investors but could also depress the market value of our common stock, if a public trading market develops.

(aWe ~~development~~may ~~stage~~issue ~~enterprise)~~preferred stock that would have rights that are preferential to the rights of the common stock that could discourage potentially beneficial transactions to our Common Stockholders.

~~STATEMENTS~~An OFissuance ~~CASH~~of ~~FLOWS~~additional shares of preferred stock could result in a class of outstanding securities that would have preferences with respect to voting rights and dividends and in liquidation over our common stock and could, upon conversion or otherwise, have all of the rights of our common stock. Our Board of Directors' authority to issue preferred stock could discourage potential takeover attempts or could delay or prevent a change in control through merger, tender offer, proxy contest or otherwise by making these attempts more difficult or costly to achieve. The issuance of preferred stock could impair the voting, dividend and liquidation rights of common stockholders without their approval.

~~FOR~~We ~~THE~~do ~~YEARS~~not ~~ENDED~~expect ~~OCTOBER~~to ~~31,~~pay ~~2012~~cash ~~AND~~dividends ~~2011~~in ~~AND~~the ~~THE~~foreseeable ~~PERIOD~~future. Any ~~FROM~~return on investment may be limited to the value of our stock.

~~AUGUST~~We 7have never paid any cash dividends on any shares of our capital stock, ~~2007~~and ~~(INCEPTION)~~we ~~THROUGH~~do ~~OCTOBER~~not 31anticipate that we will pay any dividends in the foreseeable future. Our current business plan is to retain any future earnings to finance the expansion of our business. Any future determination to pay cash dividends will be at the discretion of our Board of Directors, ~~2012~~and will be dependent upon our consolidated financial condition, results of operations, capital requirements and other factors as our board of directors may deem relevant at that time. If we do not pay cash dividends, our stock may be less valuable because a return on your investment will only occur if our stock price appreciates.

	2012				2011					Cumulative From Inception (August 7, 2007) Through October 31, 2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(2,073,490	)	$		(990,817	)	$	(3,595,354)
Adjustments to reconcile net loss to net cash used in operating activities:
Non-cash charge for reduction in conversion price of Convertible Notes	726,550			—				726,550
Amortization of debt placement costs	—			120,359				121,517
Shares issued for License	440,430			—				440,430
Share-based payment expense	22,400			167,440				273,680
Depreciation expense	879			547				1,426
Increase in prepaids and deposit	(2,996		)	(10,024			)	(13,020)
Increase (decrease) in accrued liabilities	(194,254		)	109,019				275,242
Increase (decrease) in related party payables	(56,350		)	52,850				10,000
Net cash used in operating activities	(1,136,831		)	(550,626			)	(1,759,529)
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash acquired in Reverse Merger with SRKP 16, Inc.	389,688			—				389,688
Capital expenditures	(2,908		)	(1,789			)	(4,697)
Net cash provided by (used in) investing activities	386,780			(1,789			)	384,991
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds received from Promissory Notes	80,000			—				80,000
Repayments of Promissory Notes	(80,000		)	—				(80,000)
Net proceeds from sales of Units	1,288,984			—				1,288,984
Net proceeds from sale of Convertible Notes	—			444,351				624,351
Proceeds from sale of Series A Preferred Stock	—			—				930
Advances from related parties	—			—				1,300
Repayment of related party advances	(1,300		)	—				(1,300)
Net cash provided by financing activities	1,287,684			444,351				1,914,265
Net increase (decrease) in cash	537,633			(108,064			)	539,727
Cash and cash equivalents at the beginning of year	2,094			110,158				—
Cash and cash equivalents at the end of year	$	539,727		$		2,094		$	539,727

If the Company were to dissolve or wind-up, holders of our Common Stock may not receive a liquidation distribution.

~~The~~If ~~accompanying~~we ~~notes~~were ~~are~~to anwind-up ~~integral~~or ~~part~~dissolve the Company and liquidate and distribute our assets, our shareholders would share ratably in our assets only after we satisfy any amounts we would owe to our creditors. If our liquidation or dissolution were attributable to our inability to profitably operate our business, then it is likely that we would have material liabilities at the time of ~~these~~liquidation ~~consolidated~~or ~~financial~~dissolution. Accordingly, ~~statements~~we cannot give you any assurance that sufficient assets will remain available after the payment of our creditors to enable you to receive any liquidation distribution with respect to any shares you may hold.

~~F-6~~If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud. As a result, current and potential shareholders could lose confidence in our financial reporting, which would harm our business and the trading price of our stock, should a public market develop in the future.

~~ARROGENE~~Effective internal controls are necessary for us to provide reliable financial reports and effectively prevent fraud. If we cannot provide financial reports or prevent fraud, ~~INC~~our business reputation and operating results could be harmed. Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our stock.

~~(a development stage enterprise)~~44

~~NOTES~~We TOhave ~~CONSOLIDATED~~a ~~FINANCIAL~~significant ~~STATEMENTS~~number of options and warrants outstanding and we may issue additional options in the future to employees, officers, directors, independent contractors and agents. Sales of the underlying shares of common stock could adversely affect the market price of our common stock.

~~OCTOBER~~As of October 31, 2014, we had outstanding options and warrants for the purchase of 1,450,000 and 6,358,358 shares of common stock, respectively. Under the Arrogene 2012 ~~AND~~Equity ~~2011~~Incentive Plan (the “Plan”), we have the ability to grant awards of options to employees, officers, directors, independent contractors and agents. The holders may sell these shares in the public markets from time to time, without limitations on the timing, amount or method of sale. If our stock price rises, the holders may exercise their warrants and options and sell a large number of shares. This could cause the market price of our common stock to decline.

~~(1)~~We incur significant increased costs as a result of being a public company that reports to the Securities and Exchange Commission and our management will be required to devote substantial time to meet compliance obligations.

~~BUSINESS~~As a public company reporting to the Securities and Exchange Commission, ~~OVERVIEW~~we incur significant legal, ~~BASIS~~accounting OFand ~~PRESENTATION~~other ~~AND~~expenses ~~CONSOLIDATION~~that we did not incur as a private company. We are subject to reporting requirements of the Securities Exchange Act of 1934 and the Sarbanes-Oxley Act of 2002, as well as rules subsequently implemented by the Securities and Exchange Commission that impose significant requirements on public companies, including requiring establishment and maintenance of effective disclosure and financial controls and changes in corporate governance practices. In addition, on July 21, 2010, the Dodd-Frank Wall Street Reform and Protection Act was enacted. There are significant corporate governance and executive compensation-related provisions in the Dodd-Frank Act that are expected to increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly and may also place undue strain on our personnel, systems and resources. Our management and other personnel will need to devote a substantial amount of time to these new compliance initiatives. In addition, we expect these rules and regulations to make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified people to serve on our board of directors, our board committees or as executive officers.

~~Arrogene,~~Shares ~~Inc.~~eligible ~~(“Arrogene”~~for ~~f/k/a~~future ~~SRKP~~sale ~~16,~~may ~~Inc.),~~adversely ~~was~~affect ~~incorporated under~~ the ~~laws of the State of Delaware on December 7, 2006~~market. On January 11, 2012, we consummated a reverse merger transaction (the “Reverse Merger”) with Arrogene Nanotechnology, Inc. (“ANI”), a company focused on oncology. Hereafter, SRKP 16, Inc., Arrogene and ANI are collectively referred to as the “Company.” Effective September 4, 2012, SRKP 16, Inc. officially changed its name to Arrogene, Inc.

AsFrom atime ~~result~~to ~~of the Reverse Merger~~time, ~~the~~certain ~~shareholders~~ of ~~ANI~~our ~~received~~shareholders ~~12,660,000~~may ~~shares~~be ofeligible ~~Company~~to ~~common~~sell ~~stock~~all or ~~approximately~~some ~~86 %~~ of ~~the~~their ~~issued and outstanding common~~ shares of ~~the~~common ~~Company~~stock ~~immediately~~by ~~after~~means ~~the~~of ~~transaction. Further,~~ordinary ~~ANI~~brokerage ~~warrant~~transactions ~~holders~~in ~~received~~the ~~identical~~open ~~common~~market ~~stock~~pursuant ~~purchase~~to ~~warrants~~Rule ~~in the Company. Additionally~~144, ~~immediately~~promulgated ~~after~~under the ~~Reverse~~Securities ~~Merger~~Act, ~~the~~subject ~~officers~~to ofcertain ~~ANI~~limitations. In ~~became~~general, ~~the~~pursuant ~~officers~~to ofRule ~~the~~144, ~~Company~~non-affiliate ~~and~~shareholders ~~the~~may ~~Company’s~~sell ~~Board~~freely ofafter ~~Directors~~six ~~was~~months ~~changed~~subject only to ~~consist~~the ~~solely~~current ofpublic ~~former~~information ~~ANI~~requirement ~~officers~~(which ~~and~~disappears ~~directors~~after one year). Affiliates ~~For~~may ~~accounting~~sell ~~purposes,~~after ~~the~~six ~~Reverse~~months ~~Merger~~subject ~~has~~to ~~been~~the ~~treated~~Rule as144 anvolume, ~~acquisition~~manner of ~~the~~sale ~~Company by ANI~~ (~~the~~for ~~accounting~~equity ~~acquirer~~securities) ~~and a recapitalization of ANI. As a result~~, ~~the~~current ~~financial~~public ~~statements~~information ~~for all periods presented~~ and ~~discussed~~notice ~~herein are those of ANI~~requirements. ~~Immediately~~ Of ~~prior to consummating~~ the ~~Reverse Merger~~21, ~~the Company sold 502~~375,~~000~~860 ~~units~~shares ~~(the~~of ~~“Units”),~~our ~~with~~common ~~each~~stock ~~Unit~~outstanding ~~consisting~~as of ~~(i)~~ ~~one~~October ~~share~~31, of2014, ~~common~~approximately ~~stock~~8,257,913 ~~and~~shares ~~(ii)~~are ~~two~~held ~~common~~by ~~stock purchase warrants (the~~ “~~SRKP Warrants~~non-affiliates”) ~~that~~and are, ~~exercisable~~or ~~for~~will ~~five~~be, ~~years~~freely ~~from~~tradable ~~the~~without ~~date~~restriction, ~~of issuance. One of the SRKP Warrants is exercisable at $1.50 per share~~ and the ~~other~~remaining isshares ~~exercisable~~are atheld ~~$2.00~~by ~~per~~our ~~share. The Company received $404~~“affiliates”,~~688~~ inas ~~net~~of ~~proceeds~~such ~~from~~date. Any ~~the~~substantial sale of ~~the~~our ~~Units~~common ~~after~~stock ~~payment~~pursuant ofto ~~commissions~~Rule ~~and~~144 ~~other~~or ~~expenses~~pursuant ~~associated~~to ~~with~~any ~~the~~resale ~~offering,~~prospectus ofmay ~~which,~~have ~~$389,688~~a ~~was~~material ~~acquired~~adverse byeffect ~~ANI~~on at the ~~time~~market price of ~~the~~our ~~Reverse~~common ~~Merger~~stock.

~~The~~We ~~Company~~are ~~has~~ an ~~exclusive license (the~~ “~~License”)~~emerging togrowth ~~a family of related nano-biopolymers collectively referred to as “Polycefin™~~company” ~~as well as certain tumor bio-markers~~ and ~~related~~our ~~intellectual~~election ~~properties that are collectively expected~~ to bedelay ~~capable~~adoption of ~~acting~~new asor arevised ~~drug~~accounting ~~delivery~~standards ~~and~~applicable ~~targeting~~to ~~platform~~public ~~for~~companies ~~cancer~~may ~~therapy~~result ~~and~~in ~~diagnositcs~~our ~~based~~financial onstatements ~~pre-clinical~~not ~~studies~~being ~~conducted~~comparable ~~at Cedars-Sinai Medical Center (“CSMC”). Polycefin are designed~~ to ~~target~~those ~~cancer cells and deliver a variety~~ of ~~bound~~other ~~therapeutics~~public ~~to them~~companies. In ~~vivo~~As ~~pre-clinical~~a ~~studies~~result ~~have~~of ~~shown~~this ~~evidence that existing cancer drugs could have increased efficacy~~ and other reduced ~~side~~disclosure ~~effects~~requirements ~~when~~applicable ~~attached~~ to ~~the~~emerging ~~Polycefin~~growth platform. We believe that Polycefin has the ability to harbor various drugs at the same time making it possibly a master delivery vehicle that can be customized for a particular tumor and potentially for an individual patient. Additionallycompanies, inour ~~vivo~~securities ~~testing has shown efficacy against more than one type of cancer (breast and brain) suggesting that Polycefin~~ may ~~have~~be ~~application~~less attractive to ~~a wide range of cancer types, therapeutics and diagnostics~~investors.

We ~~plan~~are onan ~~commercializing~~“emerging ~~our~~growth ~~products~~company,” ~~using~~as adefined ~~licensing~~in ~~and~~the ~~cost~~Jumpstart ~~sharing~~Our ~~strategy,~~Business ~~seeking~~Startups toAct ~~enter~~of ~~into~~2012, ~~arrangements~~or ~~with~~the ~~major~~JOBS ~~pharmaceutical~~Act, ~~companies~~and ~~with~~we ~~existing~~intend ~~cancer~~to ~~therapy~~take ~~drugs~~advantage ~~facing~~of ~~issues~~certain ~~relating~~exemptions tofrom ~~patent~~various ~~expirations,~~reporting ~~market~~requirements ~~expansion~~that orare ~~contraction. It~~applicable isto ~~our~~other ~~goal~~public tocompanies ~~only~~that ~~commence~~are ~~Phase~~not I“emerging ~~clinical~~growth ~~trials~~companies” ~~with~~including, abut ~~commitment~~not ~~from~~limited ato, ~~licensee~~not being required to ~~complete~~comply ~~Phase~~with IIthe ~~and~~auditor ~~III~~attestation ~~clinical~~requirements ~~trials,~~of ~~predicated~~Section on404 of the ~~successful~~Sarbanes-Oxley ~~outcome~~Act, ofreduced ~~each~~disclosure ~~phase,~~obligations ~~and~~regarding goexecutive tocompensation ~~market,~~in ifour ~~approval~~periodic isreports ~~received. Further~~and proxy statements, weand ~~are~~exemptions ~~also~~from ~~exploring~~the ~~use~~requirements of ~~Polycefin~~holding as a ~~potential~~nonbinding ~~medical~~advisory ~~diagnostic~~vote ~~product(s)~~on ~~for~~executive ~~oncology~~compensation ~~related~~and ~~applications. We~~shareholder ~~also~~approval ~~have~~of ~~developed~~any ~~important~~golden ~~related~~parachute ~~intellectual~~payments ~~properties~~not ~~surrounding~~previously ~~Laminin-411~~approved. ~~Pre-clinical~~In ~~investigation~~addition, isSection 107 of the JOBS Act also ~~on-going~~provides onthat ~~methods~~an of“emerging ~~inhibiting~~growth ~~Laminin-411~~company” ascan atake ~~therapeutic~~advantage ~~agent,~~of ~~which~~the ~~could~~extended betransition ~~conjugated~~period provided in ~~various~~Section ~~forms~~7(a)(2)(B) of ~~Polycefin~~the inSecurities ~~the~~Act, ~~future~~for complying with new or revised accounting standards.

The majority, of our planned products will require approval or marketing clearance from the United States Food and Drug Administration (the “FDA”). To date we have not filed any applications with the FDA, but we have begun the process of validating our LDT with applicable regulators. 45

~~Since~~In ~~its~~other ~~inception~~words, inan ~~August 2007,~~“emerging ~~ANI’s~~growth ~~principal~~company” ~~activities~~can ~~have~~delay ~~involved~~the ~~developing~~adoption aof ~~business~~certain ~~strategy~~accounting standards until those standards would otherwise apply to private companies. If we elect to delay such adoption of new or revised accounting standards, ~~raising~~and ~~capital~~as a result, ~~identifying~~we ~~and~~may ~~licensing~~not comply with new or revised accounting standards on the ~~Polycefin~~relevant ~~technology,~~dates ~~development~~on which adoption of ~~the~~such ~~technology,~~standards ~~expanding~~is ~~intellectual~~required ~~property~~for ~~rights,~~non-emerging ~~and~~growth ~~recruiting~~companies. ~~management~~As a result of such election, ~~key~~our ~~staff~~financial statements may not be comparable to the financial statements of other public companies. We cannot predict whether investors will find our securities less attractive because we will rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and ~~board~~our ~~members~~stock price may be more volatile. ~~For~~ ~~accounting~~We ~~purposes,~~may ~~the~~take ~~Company~~advantage isof ~~considered~~these areporting ~~development~~exemptions ~~stage~~until we are no longer an “emerging growth company.” We could remain an “emerging growth company” until the earliest to occur of earliest of (i) the last day of the fiscal year in ~~accordance~~which ~~with~~we ~~Accounting~~have ~~Standards~~total ~~Codification~~annual gross revenues of $1 billion or more; (~~“ASC”~~ii) ~~915~~the last day of our fiscal year following the fifth anniversary of the date of the completion of this Offering; (iii) the date on which we have issued more than $1 billion in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the Securities and Exchange Commission.

FIf the Company were to dissolve or wind-7up, holders of our Common Stock may not receive a liquidation distribution.

~~The~~If ~~accompanying~~we ~~consolidated~~were ~~financial~~to ~~statements~~wind-up ~~include~~or dissolve the ~~accounts~~Company ofand ~~Arrogene~~liquidate and ~~its~~distribute ~~wholly~~our ~~owned~~assets, ~~subsidiary~~our ~~ANI~~shareholders would share ratably in our assets only after we satisfy any amounts we would owe to our creditors. ~~All~~If ~~intercompany~~our ~~transactions~~liquidation or dissolution were attributable to our inability to profitably operate our business, then it is likely that we would have ~~been~~material ~~eliminated~~liabilities inat ~~consolidation~~the time of liquidation or dissolution. Accordingly, we cannot give you any assurance that sufficient assets will remain available after the payment of our creditors to enable you to receive any liquidation distribution with respect to any shares you may hold.

~~(2)~~Item 1B. ~~GOING~~Unresolved ~~CONCERN~~Staff ~~AND MANAGEMENT’S PLANS~~Comments

~~The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern~~None. Since our inception in August 2007, we have not generated revenue, incurred cash and operating losses, and as of October 31, 2012, had a deficit accumulated during the development stage of $3,595,354. We have relied primarily upon proceeds from the sale of convertible notes (the “Convertible Notes”) and the Units to fund our operations. These conditions raise substantial doubt about our ability to continue as a going concern.

AsItem ~~discussed above, immediately prior to the Reverse Merger, the Company sold 502,000 Units resulting in net proceeds of $404,688 of which $389,688 remained at the time of the Reverse Merger~~2. ~~Subsequent~~ toDescription ~~the Reverse Merger, we have sold an additional 1,640,250 Units receiving net proceeds~~ of $1,405,858 after payment of commissions and offering expenses. As of October 31, 2012, the Company’s cash balance was $539,727. We are continuing to market the sale of Units and expect to have at least one additional closing before terminating the private placement. The Company is authorized to sell up to 4.0 million Units in the aggregate. Management believes that existing cash on hand, combined with proceeds received from an additional sale of Units subsequent to October 31, 2012, described below in Note 6, will be sufficient to fund the Company’s planned activities and contractual obligations through at least the end of June 2013. Accordingly, the Company will require additional funding, whether through the sale of Units or from alternative sources within the next six months. Property

InThe ~~the~~Company ~~event~~does ~~that~~not ~~we cannot raise sufficient capital within the required timeframe, it will~~ have aany ~~material~~leased ~~adverse effect on the Company’s liquidity, financial condition and business prospects or force the Company out of business~~property. ~~The~~We ~~accompanying~~maintain ~~financial~~a ~~statements~~mailbox doaccount ~~not~~with ~~include~~Regus ~~adjustments~~that toalso ~~reflect~~provides ~~the~~for ~~possible~~telephone ~~future~~answering ~~effects~~at ona ~~the~~cost ~~recoverability and classification~~ of ~~assets~~$129 orper ~~the amounts and classifications of liabilities that may result from an inability of the Company to continue as a going concern~~month.

(Item 3). Legal Proceedings

~~SIGNIFICANT~~There ~~ACCOUNTING~~are ~~POLICIES~~presently no material pending legal proceedings to which the Company, any of its subsidiaries, any executive officer, any owner of record or beneficially of more than five percent of any class of voting securities is a party or as to which any of its property is subject, and no such proceedings are known to the Company to be threatened or contemplated against it.

~~Use~~Item of4. ~~Estimates~~Mine ~~and~~Safety ~~Assumptions~~Disclosures

~~The~~ Not preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported periods. Actual results may differ from these estimates.applicable

~~Cash and cash equivalents~~46

WePART ~~consider~~II ~~all investments with original maturities of three months or less to be cash equivalents.~~

~~Property~~Item 5. Market for Common Equity, Related Stockholder Matters and ~~Equipment~~Small Business Issuer Purchases of Equity Securities.

~~Property~~Common and equipment is recorded at historical cost, and is comprised of computer equipment and software. Depreciation and amortization of property and equipment is provided in amounts sufficient to relate the cost of the related assets to operations over their estimated service lives using the straight-line method. The useful lives of the assets are three years. Depreciation and amortization expense amounted to $879, $547, and $1,426 for the years ended October 31, 2012 and 2011 and for the period from August 7, 2007 (Inception) through October 31, 2012, respectively. Stock

~~Revenue~~Our ~~Recognition~~Certificate of Incorporation authorizes the issuance of up to 100,000,000 shares of common stock, par value $.0001 per share (the “Common Stock”). The Common Stock is not listed on a publicly-traded market. As of March 31, 2016, there were approximately 130 holders of record of 22,215,860 shares of the Company’s Common Stock.

~~While~~Preferred we have not generated revenue to date, we will recognize revenue when there is persuasive evidence that an arrangement exists, when title has passed, the price is fixed or determinable, and we are reasonably assured of collecting the resulting receivable. Revenue arrangements that include multiple deliverables are divided into separate units of accounting if the deliverables meet certain criteria. If applicable, we will record product revenues net of revenue reserves such as sales returns and allowances. This accounting policy for revenue recognition may have a substantial impact on our reported Stock

~~F-8~~Our Certificate of Incorporation authorizes the issuance of up to 10,000,000 shares of preferred stock, par value $.0001 per share (the “Preferred Stock”). Our Board of Directors has authorized the issuance of up to 6,000,000 shares of Series A Preferred Stock, of which 2.4 million shares were issued and outstanding at March 31, 2016.

~~results~~Dividend ~~and relies on certain estimates that can require difficult, subjective and complex judgments on the part of management.~~Policy

~~Research~~The Company has not declared or paid any cash dividends on its Common Stock and ~~Development~~does ~~Costs~~not intend to declare or pay any cash dividend in the foreseeable future. The payment of dividends, if any, is within the discretion of the Board of Directors and will depend on the Company’s earnings, if any, its capital requirements and financial condition and such other factors as the Board of Directors may consider.

~~Research~~Securities ~~and~~Authorized ~~development~~for ~~costs~~Issuance ~~are~~under ~~expensed~~Equity asCompensation ~~incurred.~~Plans

~~Income~~In ~~Taxes~~March 2012, our Board of Directors and a majority of shareholders approved the 2012 Equity Incentive Plan (the “2012 Equity Plan”). There are 1,500,000 shares of Common Stock reserved for issuance under the 2012 Equity Plan. As of October 31, 2014, 1,450,000 shares had been awarded pursuant to the Plan.

WeThe ~~account~~following ~~for~~table ~~income~~illustrates ~~taxes by recognizing deferred tax assets and liabilities for~~ the ~~expected~~number ~~future income tax consequences~~ of ~~transactions~~shares ~~that~~remaining ~~have~~available been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for ~~the~~issuance ~~year~~under ~~in which~~ the ~~differences are expected to reverse~~Plan. ~~Deferred~~ ~~tax assets then may be reduced by a valuation allowance for amounts that do not satisfy specified realization criteria.~~

~~Accounting~~Equity ~~rules also~~Compensation ~~prescribe~~Plan a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. We are required to recognize a liability in the financial statements for the impact of a tax position if that position is more likely than not of not being sustained on audit, based on the technical merits of the position. We currently do not have any tax positions that meet this threshold.Information

We currently have a full valuation allowance against our net deferred tax assets and have not recognized any benefits from tax positions in earnings. We will recognize potential interest and penalties related to income tax positions as a component of the provision for income taxes on the statements of operations in any future periods in which we must record a liability. Interest and penalties totaled $0 and $0 for the years ended October 31, 2012 and 2011, respectively, and $449 for the period from August 7, 2007 (date of inception) through October 31, 2012. We file income tax returns in the U.S. federal jurisdiction and with the State of California. We are still subject to income tax examinations by the State of California and the IRS for all tax years since the date of inception. Since we have not recorded a liability at October 31, 2012, there is no impact to our effective tax rate. We do not believe there will be any material changes in our unrecognized tax positions over the next 12 months. Our review of prior year tax positions using the criteria and provisions presented by the FASB did not result in a material impact on the Company’s financial position or results of operations.

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)	Weighted-average exercise price of outstanding options, warrants and rights (b)	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by security holders	1,450,000	$1.00	50,000
Equity compensation plans not approved by security holders	0	NA	0
TOTAL	1,450,000	$1.00	50,000

~~Share-Based~~Recent ~~Payments~~Sales of Unregistered Securities

We account for share-based payment costs at fair value on the date of grant and recognition of compensation over the service period for awards expected to vest. For stock options that may be granted in the futureNone, ~~the~~except ~~estimation of stock awards that will ultimately vest requires judgment, and to the extent actual results differ from our estimates, such amounts will be recorded~~ as apreviously ~~cumulative adjustment in the period estimates are revised~~reported. ~~We will consider various factors when estimating expected forfeitures, including historical experience. Actual results may differ substantially from these estimates.~~

We determine the fair value of warrants and stock options using the Black-Scholes valuation model, which considers the exercise price relative to the market value of the underlying stock, the expected stock price volatility, the risk-free interest rate and the dividend yield, and the estimated period of time option grants will be outstanding before they are ultimately exercised. Significant management judgment is required in making certain of these assumptions.47

~~Earnings~~Issuer ~~(Loss)~~Purchases ~~Per~~of ~~Share~~Equity Securities

~~Earnings (loss) per share are computed by dividing the Company’s income (loss) attributable to common shareholders by the weighted average number of common shares outstanding~~ None. The impact of any potentially dilutive securities is excluded. Diluted earnings per share are computed by dividing the Company’s income (loss) attributable to common shareholders by the weighted average number of common shares and dilutive potential common shares outstanding during the period. In calculating diluted earnings per share, we utilize the “treasury stock method” for all stock options and warrants and the “if converted method” for all other convertible securities. For all periods presented, the basic and diluted loss per share is the same as the impact of potential dilutive common shares is anti-dilutive.

~~F-9~~Item 6. Selected Financial Data.

~~Shares~~As ofa ~~common~~“smaller ~~stock~~reporting ~~from~~company” ~~the~~as ~~exercise~~defined ofby ~~warrants~~Item ~~and~~10 ~~convertible~~of ~~securities~~Regulation ~~excluded~~S-K, ~~from~~ the ~~calculation~~Company ofis ~~diluted~~not ~~loss~~required ~~per~~to ~~share~~provide ~~are~~this asinformation. ~~follows:~~

	Years ended October 31,
	2012	2011
Convertible Notes	66,667	2,421,833
Warrants	5,710,358	1,082,183

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation

~~Segment~~This ~~Information~~management’s discussion and analysis of financial condition and results of operations should be read in conjunction with the Company’s financial statements and the related notes, and the other financial information included in this Report.

WeOverview operate in one business segment. The determination of reportable segments is based on the way management organizes financial information for making operating decisions and assessing performances. All of our operations are located in the United States.

~~Concentration~~The Company was founded to commercialize new cancer treatment science and imaging targeting technology as well as a proprietary molecular delivery platform designed to interfere with those targets in order to inhibit and finally eradicate tumor progression. The Company is the exclusive licensee of ~~Credit~~certain ~~Risk~~intellectual property rights owned by Cedars Sinai Medical Center (“CSMC”) in Los Angeles, one of the nation’s premiere research institutions (the “License”). CSMC has developed a family of related nano-biopolymers conjugates (collectively referred to here as Polycefin™), believed capable of acting as a drug delivery and targeting platform for cancer therapy and imaging. Since 2009, CSMC has been granted seven patents by the United States Patent and Trademark Office with three other patents pending, and two Japanese patents. All related patents and patent rights of CSMC are subsumed within our License.

WeOur ~~maintain~~first atherapeutic ~~checking~~drug ~~account~~candidate ~~with~~is ~~Wells~~AG ~~Fargo~~101 ~~Bank~~which ~~(“Wells”)~~will target certain brain cancer. ~~The~~We ~~account~~need isto ~~insured~~commission byfinal ~~the~~Phase ~~Federal~~0 ~~Deposit~~toxicology ~~Insurance~~studies ~~Corporation~~at ~~(“FDIC”)~~an external laboratory for upAG101 drug candidate preparation of an IND for submission to the FDA to receive clearance to begin human clinical trial work. We then plan to commence a Phase I clinical trial. We have estimated the cost related to an IND submission and a Phase 1 clinical trial to be $~~250~~4,000,000 - $5,000,000 which will require additional funding. AtThere ~~times~~are ~~our~~various ~~cash~~factors ~~balance~~that ~~may~~can ~~exceed~~influence the ~~FDIC~~timing ~~insurance~~of ~~coverage. Management~~starting ~~believes~~and ~~that~~completing these objectives and milestones as well as the ~~Company~~total iscosts. Such factors include, but are not ~~exposed~~limited to, ~~significant~~the ~~credit~~pace ~~risk~~and ~~due~~success toof scientific developments, the availability of financial ~~position~~and human resources, competing demands of ~~Wells~~our scientific team, and changes in regulatory requirements. Due to the inherent uncertainty and variability related to these activities, we cannot accurately predict start dates, completion dates and total costs. We will also need to raise additional capital in order to complete our planned activities.

~~Fair~~The ~~Value~~founders of ~~Financial~~Arrogene ~~Instruments~~were principally involved in the research and development behind all critical discoveries and science at CSMC related to Polycefin and authored all the patents underlying the technologies (the “Technology”). Our founders include internationally acclaimed brain surgeon and scientist Dr. Keith Black, Dr. Julia Ljubimova, Dr. Eggehard Holler, and Dr. Alex Ljubimov. Work on Polycefin involved seven years of development based on financial support of CSMC and over $17,400,000 of grants funded from the National Institute of Health (NIH) and the National Cancer Institute (NIC), and over $20,000,000 from other foundations and organizations.

~~The~~Our ~~fair~~goal ~~value~~is ofto ~~cash,~~become ~~accounts~~a ~~payable~~leading ~~and~~biopharmaceutical ~~accrued~~company ~~liabilities,~~developing and ~~notes~~commercializing ~~payable~~targeted ~~approximate~~nanomedicines ~~their~~to ~~carrying~~address ~~amounts~~significant ~~due~~unmet tomedical ~~the~~needs, ~~short~~with ~~term~~an ~~maturities~~initial offocus ~~these~~on ~~instruments~~treatments for cancer. The critical components of our business strategy include:

~~Fair~~Develop ~~Value~~our ~~Measurements~~lead drug candidate, AG-101, initially in Primary and Metastatic Brain tumors. AG-101 is nearing Phase 1 trials for the treatment of primary and metastatic brain cancer. This trial will be a single-arm, open label study designed to evaluate efficacy and safety in these specific tumor types, so that we can move into pivotal Phase 1 and 3 trials where we will seek to establish the superiority of AG-101 versus conventional therapies. We intend to petition the FDA to grant “rare disease” designation for our AG-101 target, which if granted, will streamline the scope and size of the required clinical trials. We are also developing a regulatory strategy whereby we expect to use the 505(b)(2) FDA approval pathway and conduct a single Phase 2 & 3 trial for each indication using similar criteria for approval as our original AG-101. The 505(b)(2) approval pathway would enable us to rely in part on data in the public domain or the FDA’s prior conclusions regarding the safety and effectiveness of AG-101 when we submit our new drug application, or NDA, to the FDA. We will also evaluate the development of AG-101 in other oncology indications, including breast cancer, and in combination with other cancer therapies.

We measure our financial assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., exit price) in an orderly transaction between market participants at the measurement date. Additionally, we are required to provide disclosure and categorize assets and liabilities measured at fair value into one of three different levels depending on the assumptions (i.e., inputs) used in the valuation. Level48 1 provides the most reliable measure of fair value while Level 3 generally requires significant management judgment. Financial assets and liabilities are classified in their entirety based on the lowest level of input significant to the fair value measurement. The fair value hierarchy is defined as follows:

~~Level~~Develop ~~1—Inputs~~and ~~are~~commercialize ~~unadjusted~~Polycefins in collaboration with leading biopharmaceutical companies. In addition to our internal development programs, ~~quoted~~we ~~prices~~will inactively ~~active~~seek ~~markets~~opportunities ~~for~~to ~~identical~~collaborate ~~assets~~with orrecognized ~~liabilities~~biopharmaceutical companies to develop Polycefins incorporating therapeutic payloads from their proprietary product portfolios. We have begun negotiations for collaborations with industry leaders, although we do not expect to be able to enter into collaboration agreements until we can announce data pursuant to our clinical trials.

~~Level~~Leverage ~~2—Inputs~~our ~~other~~nanomedicine ~~than~~platform ~~Level~~to 1develop ~~that~~a ~~are~~pipeline ~~observable,~~of ~~either~~high ~~directly~~value orPolycefins. ~~indirectly,~~The ~~such~~modularity asof ~~quoted~~our ~~prices~~technology ~~for~~allows ~~similar~~us ~~assets~~to orefficiently ~~liabilities;~~expand ~~quoted~~our ~~prices~~pipeline of Polycefins, both on our own and in ~~markets~~collaboration ~~that~~with ~~are~~others, ~~not~~through ~~active;~~various orcombinations ~~other~~of ~~inputs~~targeting ~~that~~ligands ~~are~~and ~~observable~~therapeutic orpayloads, ~~can~~and bealso ~~corroborated~~enables byus ~~observable~~to ~~market~~move ~~data~~into ~~for~~therapeutic ~~substantially~~areas ~~the~~beyond ~~full~~oncology, ~~term~~such ofas ~~the~~inflammatory, ~~assets~~infective orand ~~liabilities~~cardiovascular diseases.

~~Level~~Capitalize ~~3—Unobservable~~on ~~inputs~~drug ~~that~~candidates ~~are~~with ~~supported~~established bydrug ~~little~~development orhistory noto ~~market~~accelerate ~~activity~~development and ~~that~~regulatory ~~are~~pathway. ~~significant~~Where possible we seek to reduce the ~~fair~~risk, ~~value~~cost ofand time associated with drug development by capitalizing on the ~~assets~~known orefficacy, ~~liabilities~~safety and established drug development history of therapeutic payloads that have already been approved and others with promising attributes that have been deemed unsuitable for further development in their untargeted form. We seek to develop Polycefins that could be eligible for accelerated regulatory pathways, such as 505(b)(2), fast track designation, accelerated approval, priority review and breakthrough product designation.

Commercialize proprietary Polycefins, including AG-101, directly in the United States and with collaborators outside the United States. We ~~had~~have noretained ~~financial~~the ~~assets~~worldwide orrights ~~liabilities~~to ~~subject~~AG-101, AG-102 and AG-103 and expect to ~~fair~~initially ~~value~~maintain ~~measurement~~similar atrights ~~October 31~~with respect to other proprietary Polycefins we develop. We intend to build a focused oncology sales organization to market FDA-approved Polycefins in the United States. Outside the United States, ~~2012~~we orexpect ~~2011~~to rely on collaborators to commercialize proprietary approved Polycefins.

~~Supplemental~~Continue ~~Disclosures~~to extend and protect our product technology and Polycefins through our intellectual property portfolio. We seek to protect our medicinal engineering platform through issued and pending U.S. patents that we own or license, in some cases with foreign counterparts relating to elements of ~~Cash~~our ~~Flow~~Polycefin ~~Information~~candidates, as well as know-how and trade secrets relating to the design and manufacturing of our Polycefins. We expect to file additional patent applications as we apply our technology to new targets and therapeutic payloads. In addition, we believe the heightened regulatory requirements for generic nanomedicines strengthen the protection afforded by our intellectual property portfolio.

Cash paid during the year for:	Years ended October 31,				Cumulative from Inception
	2012		2011		(August 7, 2007)
Interest	$	8,477	$	244	$ 8,721
Income taxes	—		—		—

General Factors

FOur profitability will be affected by costs associated with our efforts to develop Polycefin into a commercial product including regulatory approvals, the expansion of our general and administrative capabilities, and the expenses that we incur as a public reporting company. These costs include costs associated with, among other things, financial reporting, information technology, complying with federal securities laws (including compliance with the Sarbanes-10Oxley Act of 2002), tax administration and human resources related functions.

~~Supplemental disclosures of noncash investing and financing activities:~~49

	Years ended October 31,
	2012		2011
Fair value of warrants issued under placement agent and advisory agreements	$	—	$	34,233
Accrued compensation satisfied with common stock		—		100,000
Convertible Notes converted into common stock		716,550		—

Critical Accounting Policies and Estimates

~~Recently~~The ~~Issued~~discussion ~~Accounting~~and ~~Pronouncements~~analysis of our financial condition and results of operations is based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities. On an on-going basis, we evaluate our estimates including those related to valuing our share-based compensation and contingencies. We base our estimates on historical experience and on other assumptions that we believe to be reasonable under the circumstances, the results of which form our basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

InWe ~~July~~cannot ~~2012,~~predict ~~the~~what ~~Financial~~future ~~Accounting~~laws ~~Standards~~and ~~Board~~regulations ~~(“FASB”)~~might ~~issued~~be ~~Accounting~~passed ~~Standards~~that ~~Update~~could ~~(“ASU”)~~have ~~2012-02,~~a ~~Testing~~material ~~Indefinite-Lived~~effect ~~Intangible~~on ~~Assets~~our ~~for~~results ~~Impairment~~of ~~(ASU~~operations. We ~~2012-02),~~assess ~~which amended~~ the ~~guidance~~impact ~~in ASU 2011-08 to simplify the testing~~ of ~~indefinite-lived~~significant ~~intangible~~changes ~~assets~~in ~~other~~laws ~~than goodwill for impairment. ASU 2012-02 becomes effective for annual~~ and ~~interim~~regulations ~~impairment tests performed for fiscal years beginning~~ on ora ~~after~~regular ~~September~~basis ~~15, 2012~~ and ~~earlier~~update ~~adoption~~the isassumptions ~~permitted. We~~and ~~will~~estimates ~~adopt~~used ~~ASU 2012-02 effective November 1, 2012. The adoption of ASU 2012-02 is not expected~~ to ~~have~~prepare ~~any impact on~~ our ~~consolidated~~ financial ~~position,~~statements ~~results~~when ofwe ~~operations~~deem orit ~~cash flows~~necessary.

InRevenue September 2011, the FASB issued ASU No. 2011-08, Intangibles – Goodwill and Other (Topic 350) – Testing Goodwill for Impairment (ASU 2011-08), to allow entities to use a qualitative approach to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If after performing the qualitative assessment an entity determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step goodwill impairment test is unnecessary. However, if an entity concludes otherwise, then it is required to perform the first step of the two-step goodwill impairment test. ASU 2011-08 is effective for us in fiscal 2013 and earlier adoption is permitted. We will adopt this pronouncement effective November 1, 2012. The adoption of ASU 2011-08 is not anticipated to have any impact on our consolidated financial position, results of operations or cash flows.Recognition

InWhile ~~May~~we ~~2011,~~have ~~the~~not ~~FASB~~generated ~~issued~~revenue ~~ASU~~to ~~2011-04~~date, ~~Fair~~we ~~Value~~will ~~Measurement~~recognize ~~(ASU~~revenue ~~2011-04),~~when ~~which~~there ~~amended~~is ~~ASC~~persuasive ~~820,~~evidence ~~Fair~~that ~~Value~~an ~~Measurements~~arrangement ~~(ASC~~exists, ~~820)~~when title has passed, ~~providing~~the aprice ~~consistent~~is ~~definition~~fixed or determinable, and ~~measurement~~we are reasonably assured of ~~fair~~collecting ~~value,~~the asresulting ~~well~~receivable. Revenue asarrangements ~~similar~~that ~~disclosure~~include ~~requirements~~multiple ~~between~~deliverables ~~U.S.~~are ~~GAAP~~divided ~~and~~into ~~International~~separate ~~Financial~~units ~~Reporting~~of ~~Standards.~~accounting ~~ASU~~if ~~2011-04~~the ~~changes~~deliverables meet certain ~~fair~~criteria. If ~~value~~applicable, ~~measurement~~we ~~principles,~~will ~~clarifies~~record ~~the~~product ~~application~~revenues net of ~~existing~~revenue ~~fair~~reserves ~~value~~such ~~measurement~~as ~~and~~sales ~~expands~~returns ~~the~~and ~~disclosure requirements~~allowances. This Weaccounting ~~adopted~~policy ~~ASU~~for ~~2011-04~~revenue inrecognition ~~our~~may ~~fiscal~~have ~~year~~a ~~ending~~substantial ~~October~~impact ~~31,~~on ~~2012.~~our ~~The~~reported ~~adoption~~results ofand ~~ASU~~relies ~~2011-04~~on ~~did~~certain ~~not~~estimates ~~have~~that acan ~~material~~require ~~effect~~difficult, onsubjective ~~our~~and ~~consolidated~~complex ~~financial~~judgments ~~statements~~on orthe ~~disclosures.~~part of management.

~~In June 2010, the FASB issued ASU No. 2010~~Share-~~17,~~Based Revenue Recognition—Milestone Method (Topic 605): Milestone Method of Revenue Recognition. This ASU codifies the consensus reached in EITF Issue No. 08-9, “Milestone Method of Revenue Recognition.” The amendments to the Codification provide guidance on defining a milestone and determining when it may be appropriate to apply the milestone method of revenue recognition for research or development transactions. Consideration that is contingent on achievement of a milestone in its entirety may be recognized as revenue in the period in which the milestone is achieved only if the milestone is judged to meet certain criteria to be considered substantive. Milestones should be considered substantive in their entirety and may not be bifurcated. An arrangement may contain both substantive and nonsubstantive milestones, and each milestone should be evaluated individually to determine if it is substantive. This guidance was adopted effective November 1, 2010. The adoption of this guidance did not have a material impact on our consolidated financial statements. Payments

~~(4)~~We account for share-based payment costs at fair value on the date of grant and recognition of compensation over the service period for awards expected to vest. For stock options, the estimation of stock awards that will ultimately vest requires judgment, and to the extent actual results differ from our estimates, such amounts will be recorded as a cumulative adjustment in the period estimates are revised. We will consider various factors when estimating expected forfeitures, including historical experience. Actual results may differ substantially from these estimates.

~~OPTION~~We TOdetermine ~~LICENSE~~the ~~AGREEMENT~~fair value of warrants and stock options using the Black-Scholes valuation model, which considers the exercise price relative to the market value of the underlying stock, the expected stock price volatility, the risk-free interest rate and the dividend yield, and the estimated period of time option grants will be outstanding before they are ultimately exercised. Significant management judgment is required in making certain of these assumptions.

OnFair ~~December~~Value 23, 2009, we entered into an agreement for the right to an exclusive license agreement with CSMC which provides us with the world-wide rights to U.S Patent No. 7,547,511 “Antisense Inhibition of Laminin-8 Expression to Inhibit Human Gliomas” along with related technical information to develop, market and sell human therapeutic and diagnostic products, including new pharmaceutical products and/or non-prescriptive products using the patented technology (the “CSMC Agreement”). The CSMC Agreement has been amended four times; December 8, 2010, June 30, 2011, August 31, 2011 and October 28, 2011. The CSMC Agreement also provides us with the rights to several other related, filed, but yet unissued patents. The CSMC Agreement requires royalty payments equal to 3.5% of the gross sales price and other forms of consideration (such as milestone and sublicense payments), as defined in the agreement, on all products Measurements

~~F-11~~We measure our financial assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., exit price) in an orderly transaction between market participants at the measurement date. Additionally, we are required to provide disclosure and categorize assets and liabilities measured at fair value into one of three different levels depending on the assumptions (i.e., inputs) used in the valuation. Level 1 provides the most reliable measure of fair value while Level 3 generally requires significant management judgment. Financial assets and liabilities are classified in their entirety based on the lowest level of input significant to the fair value measurement. The fair value hierarchy is defined as follows:

~~using~~Level ~~the~~1—Inputs ~~licensed~~are ~~technology. The~~unadjusted, ~~CSMC~~quoted ~~Agreement~~prices ~~expires~~in onactive amarkets ~~country-by-country~~for ~~basis~~identical onassets ~~the~~or ~~date that the last patent covered under the agreement expires (currently 2029)~~liabilities.

InLevel ~~connection~~2—Inputs ~~with~~other ~~effectuating~~than ~~the~~Level ~~License,~~1 onthat ~~November~~are 2observable, ~~2011,~~either wedirectly ~~paid~~or ~~a non-refundable licensing fee of $40~~indirectly,~~000~~ assuch ~~well~~ as ~~issued~~quoted toprices ~~CSMC~~for ~~1,468,100~~similar ~~shares~~assets ofor ~~common~~liabilities; ~~stock. We~~quoted ~~valued~~prices ~~the~~in ~~shares~~markets ~~issued~~that toare ~~CSMC~~not atactive; ~~$.30~~or ~~per~~other ~~share~~inputs ~~based~~that onare ~~Convertible~~observable ~~Notes~~or ~~most~~can ~~recently~~be ~~issued. Accordingly,~~corroborated weby ~~recorded~~observable ~~$440,430~~market asdata afor ~~licensing~~substantially ~~fee~~the tofull ~~reflect~~term of the ~~issuance~~assets ofor ~~these shares~~liabilities.

~~The~~Level ~~CSMC~~3—Unobservable ~~Agreement~~inputs ~~also~~that ~~requires~~are ussupported toby ~~achieve~~little ~~certain~~or ~~other~~no ~~milestones~~market inactivity ~~order~~and tothat ~~maintain~~are significant to the ~~agreement. These~~fair ~~include~~value of the ~~following:~~assets or liabilities.

·50

~~Begin~~Recently ~~development~~Issued orAccounting ~~enter~~Pronouncements into a joint venture, licensing or sub-licensing agreement, or other business arrangement with a third party not an affiliate of the Company to cause development of at least one product consistent with sound business practices by December 31, 2012;

·In June 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance (“ASU 2014-10”), which eliminates the financial reporting distinction between development stage entities and other reporting entities from U.S. GAAP. Additionally, ASU 2014-10 eliminates the separate requirements for development stage entities to (1) present inception-to-date information in the statements of income, cash flow and shareholders’ equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage. ASU 2014-10 is effective for fiscal years beginning after December 15, 2014 and interim periods therein, with early adoption permitted. We adopted ASU 2014-10 during the third quarter of our year ended October 31, 2014.

~~Expend~~Liquidity at least $500,000 in the aggregate toward the development or promotion of the sale of products based on the licensed patent rights or technical information commencing from the effective date of the agreement and ~~continuing~~Capital ~~through~~Resources ~~and including December 31, 2012, and at least $1,000,000 annually thereafter, for further development or promotion of the sale of products through and including December 31, 2013;~~

·As of October 31, 2014, the Company’s cash balance was $37,007 compared to $13,822 at October 31, 2013.

~~Provide~~The tofollowing ~~CSMC~~is ata ~~least~~summary ~~$150,000~~of ~~(in~~the ~~aggregate)~~Company's ~~within~~cash atflows ~~least~~provided aby ~~four~~(used ~~year~~in) ~~period~~operating, toinvesting, ~~fund research~~ and ~~development~~financing ofactivities for the ~~licensed~~years ~~patent~~ended ~~rights~~October 31, 2014 and ~~technical~~October ~~information;~~31, 2013.

	Fiscal Year Ended October 31, 2014	Fiscal Year Ended October 31, 2013
Net Cash (Used in) Operating Activities	$ (571,589)	$ (753,550)
Net Cash Provided by Investing Activities	—	—
Net Cash Provided by Financing Activities	594,774	227,645
Net Increase (Decrease) in Cash and Cash Equivalents	23,185	(525,905)

OnOperating ~~or before December 31, 2013, the Company shall have commenced a clinical trial or trials in connection with at least one intended commercial use;~~Activities

WeDuring ~~believe that we have achieved~~ the ~~required~~year ~~milestones for the contractual period~~ ended ~~December~~October 31, ~~2012. It~~2014, is$571,589 ~~management’s~~of ~~belief that~~ cash ~~administrative~~was ~~expenses~~used in ~~support~~operating ~~of the Company’s business~~ activities ~~meet~~which ~~the~~primarily ~~definition~~represents ofcash ~~“development~~operating ~~and~~expenses ~~promotion”~~to ofprincipally ~~the~~support ~~licensed~~continued ~~technology.~~pre-clinical ~~We can~~development, ~~however~~drug synthesis, ~~provide no assurance that CSMC will concur with our position~~ and ~~that~~administrative ~~we will be able to meet any or all of these milestones in the future~~activities.

~~Further,~~Investing in the event the Company issues or sells shares of common stock in addition to those sold in the private placement of Units previously discussed, the CSMC Agreement requires that the Company issue to CSMC additional shares of common stock for no additional consideration so as to assure CSMC will own 5% of the total issued and outstanding shares of the Company until December 31, 2015. Activities

~~(5)~~During the year ended October 31, 2014, there were no cash flows from investing activities. As of October 31, 2014, we had no material commitments for capital expenditures.

~~CONVERTIBLE~~Financing ~~NOTES~~Activities

~~Commencing~~During October 2010 through April 2011, we sold in private transactions an aggregate of $726,550 of Convertible Notes. The Convertible Notes were initially convertible into shares of our common stock at $.30 per share (the ~~“Conversion~~year ~~Price”).~~ended ~~The Convertible Notes do not bear interest and were originally payable on~~ October 1931, ~~2011. However~~2014, ~~in October 2011~~$594,774 ~~a majority~~ of ~~the~~cash ~~note~~was ~~holders~~provided ~~agreed to extend the maturity date of the notes to December 15, 2011. The Convertible Notes are secured~~ by afinancing ~~first~~activities ~~lien~~which ~~security~~primarily ~~interest~~represents ~~on all of our tangible and intangible assets. The Convertible Notes automatically convert into shares of our common stock at~~ the ~~then~~net ~~current~~proceeds Conversion Price in the event that (i) there is an effective registration statement registering the underlying common shares or the shares are eligible to be resold without restriction or limitation under Rule 144 of the Securities Act of 1934 and (ii) the closing bid price of our common stock as quoted on the OTC Bulletin Board or other principal trading market is at least 200% of the Conversion Price for 20 out of 30 consecutive trading days with an average daily trading volume of at least 1.0 million shares. However, the Convertible Notes contain a provision that prohibits a holder from ~~converting~~ the ~~note~~sale ~~if such conversion would result in the holder owning more than 4.99%~~ of ~~our~~Bridge ~~outstanding common stock at the time of such conversion. Holders of the Convertible~~ Notes ~~have no voting, preemptive, or other rights of shareholders~~.

Events of default include failure to pay principal when due and payable; a failure to observe or perform any covenant, agreement or warranty, or otherwise breach, any term contained in the Convertible Notes or related borrowing documents that is not remedied within 30 days of notice; or if a proceeding commences under the United States Bankruptcy Code (whether voluntary or involuntary) and such proceeding is not controverted within 30 days or dismissed within 60 days after commencement. An event of default can only be declared by a vote of the majority of the principal amount of the holders of the Convertible Notes upon not less than 30 days written notice to the Company. If we fail to cure the default within the 30 day period, then the Conversion Price shall be reduced to $.15 per common share and the holders may declare all amounts due 51

~~F-12~~Management’s Outlook

~~under~~Management believes that existing cash on hand, combined with net proceeds of $258,675 received from the ~~Convertible~~sale of Bridge Notes ~~immediately~~in ~~due~~December 2014 and ~~payable~~March 2015, ~~apply~~along with the $750,000 in proceeds received from the sale of the Convertible Promissory Notes in February 2016, will be sufficient to fund the Company’s planned activities through at least October 31, 2016. This assumes that we continue to defer payment of certain liabilities to our officers but allows for some payments to be made to CSMC for amounts owed under a ~~court~~research inand ~~California~~development agreement. Additionally, certain key professionals such as legal counsel have also had payments deferred and the proceeds from the Bridge Notes will allow for some partial payments of these deferred balances but not payment in full. While these parties have continued to work with the ~~appointment~~Company despite this lack of payment, there is no assurance they will continue to do so, and the loss of a ~~receiver~~key management member, ~~convert~~or the loss of CSMC as a research partner, could have a material adverse effect on the Company’s business prospects. Further, as of April 1, 2016, all of the Bridge Notes are currently past due. We plan on converting the majority, if not all, of the Bridge Notes into Convertible Promissory Notes but there is no assurance that we will be successful in these efforts. If we are not successful in converting the Bridge Notes into Convertible Promissory Notes, it could hinder our ability to ~~common~~sell ~~stock~~additional Convertible Promissory Notes, or ~~assert~~limit ~~any~~the ~~other~~proceeds ~~remedy~~from the sale of such notes that are available atto ~~law~~fund orour inongoing ~~equity~~operations.

We ~~did~~plan ~~not repay the Convertible Notes by the December 15, 2011 extended maturity date and the notes were therefore technically in default. As an inducement~~ to ~~obtain~~continue ~~conversions, we agreed to reduce~~ the ~~conversion~~sale ~~price~~ of ~~the~~ Convertible Promissory Notes to ~~$.15~~fund ~~per~~our ~~share. During~~operations ~~the~~until ~~year~~a ~~ended~~longer ~~October~~term ~~31,~~financing ~~2012,~~can ~~holders~~be ~~converted $716,550 of Convertible Notes into 4,777,000 shares of common stock~~consummated. ~~$10,000~~Our ofBoard ~~Convertible~~has ~~Notes~~authorized ~~remains~~the ~~outstanding~~sale as of ~~October~~up ~~31,~~to ~~2012. On~~ an asadditional ~~converted~~$3.25 ~~basis,~~million asin ~~of October 31, 2012, the value of the~~ Convertible Promissory Notes ~~exceeds~~excluding ~~the~~those ~~principal~~sold ~~balance~~in byMarch ~~$27,333~~2016. AsNo aassurance ~~result~~can ofbe ~~the~~given ~~reduction~~that inthese ~~conversion~~efforts ~~price,~~will webe ~~recorded~~successful aor ~~charge~~adequately ofcapitalize ~~$726,550, in accordance with ASC 470-50-40, which is included in interest expense on~~ the ~~accompanying consolidated statements of operations~~Company.

InThe ~~connection~~success ~~with~~of ~~the~~our ~~sale~~business ofwill ~~the~~depend ~~Convertible~~in ~~Notes,~~great wepart ~~paid~~on ~~the~~our ~~placement~~ability ~~agent~~to ~~cash~~conduct ~~commissions~~research ~~equal~~and todevelopment ~~10%~~on of the ~~gross~~technology ~~proceeds~~covered ~~received~~by ~~from~~ the ~~sale~~License. ~~(except~~Our ~~for~~plan ~~sales~~forecasts ofthe ~~Convertible~~need ~~Notes to Company identified purchasers including management and directors~~ for ~~which~~additional wecapital ~~paid~~beyond ~~cash~~the ~~commissions~~next ~~equal~~twelve tomonths ~~5%)~~even ~~and~~if we ~~issued~~sell to the ~~placement~~maximum ~~agent common stock purchase warrants to acquire a~~ number of ~~common~~Bridge ~~shares equal to 10% of the common shares issuable upon conversion of the Convertible~~ Notes ~~(the “Placement Agent Warrants”)~~authorized. ~~The~~ Our ~~Placement~~ability ~~Agent~~to ~~Warrants~~conduct ~~have~~research ~~an exercise price of $0.30 per share~~ and ~~expire~~development onactivities ~~October~~is ~~19,~~greatly ~~2015.~~dependent Weupon ~~paid~~our ~~the~~financial ~~placement agent cash commissions of $67,905 and issued warrants exercisable to purchase an aggregate of 242,183 shares of common stock~~resources. WeNo ~~recorded~~assurance ~~the~~can ~~cash~~be ~~commissions~~given ~~and~~that the ~~fair~~necessary ~~value~~financing ofwill ~~the~~be ~~Placement~~available ~~Agent~~on ~~Warrants~~terms asacceptable ~~debt placement costs which were amortized~~ to ~~interest~~us, ~~expense~~if ~~over~~at ~~the original term of the Convertible Notes~~all. WeIf ~~used~~adequate ~~the~~additional ~~Black-Scholes~~funds ~~option~~are ~~pricing~~not ~~model~~available towhen ~~determine the fair value of the Placement Agent Warrants. For the years ended October 31~~required, ~~2012 and 2011,~~ we ~~amortized~~may $0have ~~and~~to ~~$120~~delay,~~359,~~ ~~respectively~~scale-back, ofor ~~debt~~eliminate ~~placement~~certain ~~costs~~aspects ~~which~~of isour ~~included~~research, intesting ~~interest~~and/or ~~expense~~development ~~on the accompanying consolidated statements of operations~~activities.

~~The~~In ~~Level~~the 3event ~~assumptions~~that ~~used~~we incannot ~~valuing~~raise ~~the~~sufficient ~~Placement~~capital ~~Agent~~within ~~Warrants issued during~~ the ~~year~~required ~~ended October 31~~timeframes, ~~2011~~it ~~follows~~will ~~below. The~~have ~~expected~~a ~~life~~material ~~used~~adverse ineffect ~~the~~on ~~calculation was~~ the ~~life~~Company’s ofliquidity, ~~the~~financial ~~warrants~~condition atand ~~the~~business ~~date~~prospects ~~they~~or ~~became~~could ~~issuable. The~~force ~~risk~~the ~~free~~Company ~~interest~~out ~~rate was derived from U.S. government treasury securities for similar lived periods. The volatility rate used was derived from a peer group~~ of ~~comparable public companies~~business.

	Year ended October 31,
	2012		2011
Risk free interest rate		N/A		1.11%	- 2.04%
Expected life		N/A		4.5-	5.0 years
Dividend yield		N/A		0	%
Volatility		N/A		83.28	%-84.5%

RESULTS OF OPERATIONS

WeResearch ~~evaluated the conversion feature of the Convertible Notes within the context of ASC 815~~ and ~~concluded that it did not meet the definition of an embedded derivative due to the Company being privately held with no active market for its common stock.~~Development

~~(6)~~During the year ended October 31, 2014, research and development expenses decreased by $166,643 or 37% compared to the prior year. The decrease in research and development expense is primarily due to activities under the research agreement with CSMC supporting pre-clinical development of Polycefin and synthesis of drug candidates.

~~STOCKHOLDERS’~~General ~~EQUITY~~and Administrative

~~Our~~General ~~articles~~and ofadministrative ~~incorporation~~expense ~~authorizes~~increased ~~our~~by ~~board~~$432,257 ofor ~~directors~~approximately (61% for the ~~“Board”)~~year toended ~~issue~~October up31, 2014 compared to ~~10,000,000~~the ~~shares~~prior ofyear. The ~~preferred~~increase ~~stock~~in ~~and~~expense ~~allows~~was the ~~Board~~net toresult ~~determine~~of ~~preferences,~~increased ~~conversion~~non ~~and~~cash ~~other~~share-based ~~rights,~~payment ~~voting~~expense ~~powers,~~related ~~restrictions,~~to ~~limitations~~stock options and investor relation services as towell ~~distributions,~~as ~~qualifications,~~legal ~~and~~fees ~~other~~associated ~~terms~~with our intellectual property partially offset by reduced compensation and ~~conditions~~consulting expenses..

~~Preferred~~Loss ~~Stock~~from Operations

InAs ~~connection~~a ~~with~~result of the ~~Reverse~~factors ~~Merger~~described inabove, ~~January~~the ~~2012,~~loss ~~all~~from ~~outstanding~~operations ~~shares~~for ofthe ~~preferred~~year ~~stock~~ended ofOctober ~~ANI~~31, 12014,~~030,000~~ ~~shares~~increased inby ~~aggregate~~$265,614 ~~were~~compared ~~converted~~to ~~into~~the ~~10,722,000~~prior ~~shares~~year ~~of common stock~~period.

~~Common Stock~~52

~~F-13~~Other Expense

InFor ~~connection with~~ the ~~formation~~year ofended ~~the~~October ~~Company~~31, 2014, we ~~issued~~recorded ~~238,000~~other ~~shares~~expense of ~~common~~$211,644 ~~stock~~compared to ~~founders. We~~$839 ~~ascribed~~for nothe ~~value~~prior toyear. ~~these~~The ~~shares~~increase asin ~~management~~expense ~~believes~~between ~~that~~years ~~the~~is ~~value~~due ofto ~~the~~interest ~~common~~expense ~~stock~~recorded ~~was~~on $0the ~~until~~Bridge ~~after~~Notes ~~consummation~~including amortization of ~~the~~debt ~~CSMC~~discount ~~Agreement in December 2009~~ and ~~receipt~~offering ~~of adequate funding~~costs.

InNet December 2009, we issued to CSMC 31,900 shares of common stock in connection with entering into the CSMC Agreement. We ascribed no value to the common shares issued to CSMC. As described above in Note 4, in November 2011, we issued to CSMC 1,468,100 shares of common stock in order to effectuate the License. We valued the shares issued to CSMC at $.30 per share based on the stated conversion price of the Convertible Notes most recently issued. Loss

InAs ~~connection~~a ~~with~~result ~~accounting~~of ~~for~~ the ~~Reverse~~factors ~~Merger~~described above, we ~~are~~recorded ~~deemed~~$1,632,904 toof ~~have~~net ~~issued~~loss tofor the ~~shareholders~~year ofended ~~SRKP,~~October 231,~~143,610~~ ~~shares~~2014 ofcompared ~~common~~to ~~stock~~a ~~which~~net weloss ~~recorded~~of at $~~389~~1,~~688~~156,485 ~~representing the net assets received~~ in the ~~acquisition. As~~prior ~~part of the same transaction, 100,000 shares of common stock were issued to legal counsel~~year.

~~Units~~Off-Balance Sheet Arrangements

AsThe ~~described~~Company ~~above~~does innot ~~Note~~have 2,any ~~during~~off-balance ~~the~~sheet ~~year~~arrangements ~~ended~~that ~~October~~have ~~31,~~or ~~2012,~~are wereasonably ~~sold~~likely ~~1,510,250~~to ~~Units~~have ~~for~~a ~~$1.00~~current ~~per~~or ~~Unit,~~future ~~receiving~~effect ~~net~~on ~~proceeds~~the ofCompany’s $1financial condition,~~288,984~~ ~~after~~changes ~~payment~~in offinancial ~~commissions~~condition, ~~and~~revenues ~~offering~~or expenses., ~~Each~~results ~~Unit~~of ~~consists~~operations, ~~of (i)~~liquidity, ~~one~~capital ~~share~~expenditures ofor ~~common~~capital ~~stock,~~resources ~~and~~that ~~(ii)~~is ~~two~~material ~~SRKP~~to ~~Warrants~~investors.

~~Subsequent~~Contractual ~~to October 31, 2012, we sold an additional 130,000 Units receiving net proceeds of $116,874.~~Obligations

~~Warrants~~As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.

OnItem ~~August 24, 2010, we entered into a financial advisory agreement with an investment banking firm to provide certain services over a six month period~~7A. AsQuantitative compensation for the services, we issued common stock purchase warrants to acquire 840,000 shares of common stock at $.001 per share exercisable for five years from the date of issuance (the “Advisory Warrants”). We recorded the Advisory Warrants at their fair value of $251,160 using the Black-Scholes option pricing model. We amortized the Advisory Warrants over the six month term of the agreement. For the years ended October 31, 2012 and ~~2011,~~Qualitative weDisclosures ~~amortized~~about $0Market ~~and $167,440, respectively, which is included in general and administrative expense on the accompanying consolidated statements of operations~~Risk.

InAs ~~connection~~a ~~with~~“smaller ~~the~~reporting ~~sale~~company” of the Units, the placement agents earned warrants to acquire 453,075 shares of common stock consisting of 151,025 warrants exercisable at $1.00 per share, 151,025 warrants exercisable at $1.50 per share and 151,025 warrants exercisable at $2.00 per share. Each warrant expires five years from the date of issuance. We valued these warrants at $99,677 using the Black Scholes option pricing model. We recorded the warrants as adefined ~~reduction~~by toItem ~~the~~10 ~~net proceeds from the sale~~ of ~~the~~Regulation ~~Units with a corresponding increase to additional paid in capital. As described above~~S-K, ~~in connection with~~ the ~~sale~~Company ofis ~~the~~not ~~Units,~~required ~~we issued~~ to ~~the~~provide ~~investors~~this ~~1,510,250 warrants exercisable at $1~~information.50 ~~per share and 1,510,250 warrants exercisable at $2.00 per share.~~

InItem ~~connection with the Reverse Merger, we assumed warrants from the sale of the Units to acquire 1,154,600 shares of common stock; 50,200 with an exercise price of $1~~8.00 Financial ~~per~~Statements ~~share, 552,200 with an exercise price of $1.50 per share,~~ and ~~552,200~~Supplementary ~~with an exercise price of $2~~Data.~~00 per share. Each warrant expires on January 11, 2017~~

~~(7)~~Audited financial statements begin on the following page of this Report.

~~INCOME TAXES~~53

~~The Company did not incur any income tax expense or benefit during the years ended October 31~~ARROGENE, ~~2012 and 2011~~INC.

AINDEX ~~reconciliation~~TO ofFINANCIAL ~~the statutory federal income tax rate to the effective rate is as follows for the years ended October 31, 2012 and 2011:~~STATEMENTS

		2012			2011
Federal income tax rate	34.00		%	34.00		%
State income taxes, net of Federal income tax effect	5.80		%	6.50		%
Nondeductible expenses and other	(11.50		)%	(8.80		)%
Valuation allowance	(28.30		)%	(31.70		)%
	0.00		%	0.00		%

Page

FReport of Independent Registered Public Accounting FirmF-142

~~Deferred~~Financial tax assets and liabilities represent the future impact of temporary differences between the financial statement and tax bases of assets and liabilities. At October 31, 2012 and 2011, the significant components of deferred income taxes relates to net operating loss carryforwards, offset by a 100% valuation allowance.Statements:

~~The Tax Reform Act of 1986 contains provisions that limit the utilization of net operating loss (“NOL”) and tax credit carryforwards if there has been a change of ownership as described in Section~~ ~~382~~Consolidated ofBalance ~~the Internal Revenue Code. We have not prepared an analysis to determine if a change of ownership has occurred. Such a change of ownership may limit the utilization of our net operating losses.~~SheetsF-3

~~Total deferred tax assets and the valuation allowance increased by $585,778 during 2012. As of October~~ ~~31,~~Consolidated ~~2012,~~Statements ~~we had an estimated NOL carryforward~~ of approximately $2.3 million for federal income tax purposes, which is available to offset future taxable income, if any, through 2032. The ultimate realization of these assets is dependent upon the generation of future taxable income sufficient to offset the related deductions and loss carryforwards within the applicable carryforward period. All tax years since inception (August 7, 2007) are still subject to examination by the State of California and the IRS.OperationsF-4

Consolidated Statement of Changes in Stockholders' Equity (8Deficit)F-5

~~PROMISSORY~~ Consolidated ~~NOTES~~Statements of Cash FlowsF-6

~~In November 2011, the Company entered into two promissory note agreements each for $40,000 for an aggregate of $80,000 (the “Promissory~~ Notes~~”). The~~ ~~Promissory Notes did not bear interest but required repayment of $44,000 representing principal and an origination fee. The Promissory Notes were~~ to ~~mature~~Consolidated onFinancial January 30, 2012. In addition to the required payment of principal and origination fee, upon repayment of each Promissory Note, the Company was obligated to issue 20,000 shares of common stock. In the event the Promissory Notes were not repaid by January 30, 2012, the Company was to issue an additional 2,000 shares of common stock under each note for each thirty day period until the note is paid in full. The Promissory Notes were unsecured. StatementsF-7

The Promissory Notes were repaid in full in January 2012. Included in interest expense for the year ended October 31 2012 is $8,000 representing the origination fees. Also included in interest expense for the year ended October 31, 2012 is $22,400 representing the value of the 40,000 shares of common stock issuable to the makers of the Promissory Notes. As of October 31, 2012, these shares had not been issued, and accordingly, the associated liability is included in other payables and accrued expenses on the accompanying consolidated balance sheet.F-1

~~(9)~~REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

~~COMMITMENTS,~~To ~~CONTINGENCIES~~the ~~AND~~Board ~~RELATED~~of ~~PARTY~~Directors ~~TRANSACTIONS~~and Stockholders of Arrogene, Inc.

~~Related~~We ~~Party~~have ~~Transactions~~audited the accompanying consolidated balance sheets of Arrogene, Inc. (a Delaware enterprise) and subsidiary (the “Company”) as of October 31, 2014 and 2013 and the related consolidated statements of operations, stockholders’ equity (deficit) and cash flows for the years ended October 31, 2014, and 2013. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

~~Advances~~We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

~~During~~In our opinion, the ~~year~~consolidated ~~ended~~financial ~~October~~statements 31referred to above present fairly, ~~2009~~in all material respects, ~~certain~~the ~~directors~~financial ~~advanced~~position $1of Arrogene,~~300~~ toInc., ~~the~~and ~~Company~~Subsidiary inas ~~order~~of toOctober ~~fund~~31, ~~operating~~2014 ~~expenses. The~~and ~~advances~~2013, ~~were~~and ~~made~~the onresults anof ~~informal~~their ~~basis~~operations and ~~not~~their ~~pursuant~~cash toflows ~~any~~for ~~documented~~the ~~agreement. Accordingly,~~years ~~there~~ended isOctober no31, ~~stated~~2014 ~~repayment~~and ~~term~~2013 orin ~~interest~~conformity ~~rate. These~~with ~~advances~~accounting ~~were~~principles ~~repaid~~generally ~~during~~accepted in the ~~year~~United ~~ended~~States ~~October~~of ~~31, 2012~~America.

~~Consulting~~The ~~Agreements~~accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has not generated cash flows from operations since inception, has incurred continuing losses, has a negative working capital balance and has accumulated a deficit at October 31, 2014. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

~~In December 2008~~Rose, weSnyder ~~entered~~& ~~into~~Jacobs an agreement with an entity controlled by our chief executive officer for his services (the “Synthetica Agreement”). The Synthetica Agreement was replaced by a second agreement for the personal services of our chief executive officer in July 2011. Under the Synthetica Agreement, there was no monthly retainer or minimum billing amount but the maximum that could be charged to us in any given month could not exceed $15,000. During the years ended October 31, 2012 and 2011, we were billed $180,000 and $180,000, respectively, under these agreements. In October 2011, we issued 100,000 shares of common stock to Synthetica, Ltd (“Synthetica”) in satisfaction of $100,000 in accrued compensation that had been earned under the agreement. At October 31, 2012 and 2011, $15,000 and $60,000, respectively, is included in accrued compensation for amounts owed to Synthetica on the accompanying consolidated balance sheets. LLP

~~F-15~~/s/ Rose, Snyder & Jacobs, LLP

~~In September 2010~~Encino, we entered into a business and financial consulting agreement with an entity controlled by our Board chairman. The agreement was for an initial term of 12 months with an automatic 12 month renewal period unless terminated by either party upon 30 days written notice. The agreement is now on a month-to-month basis. There is no monthly retainer or minimum billing amount but the maximum that can be billed to us in a given month cannot exceed $10,000. During the years ended October 31, 2012 and 2011, we were charged $120,000 and $120,000, respectively, under this agreement which is included in general and administrative expense on the accompanying consolidated statements of operations. At October 31, 2012 and October 31, 2011, $10,000 and $40,000, respectively, is included in related party payables on the accompanying consolidated balance sheets.California

~~CSMC~~April 19, 2016

Certain founders and directors of the Company are employees of CSMC. These individuals are also the inventors of the Polycefin technology and are primarily responsible for its development. As described further in Note 4 above, we have a right to an exclusive license agreement with CSMC for this technology. F-2

~~The License requires royalty payments equal to 3.5% of the gross sales price and other forms of consideration (such as milestone and sublicense payments)~~ARROGENE, ~~as defined in the agreement, on all products using the licensed technology~~INC. ~~The License also requires us to achieve certain milestones as described in Note 4.~~

InCONSOLIDATED ~~2012,~~BALANCE ~~we entered into an agreement with CSMC to support certain activities within the laboratory necessary to prepare compounds.~~ SHEETS

~~Sublease~~AS ~~Agreement~~OF OCTOBER 31, 2014 AND 2013

For the period commencing November 2010 through March 2012, we had an agreement (the “Sublease”) with Compumed, Inc. (“Compumed”) for office space whereby we subleased space from Compumed. Our chief executive officer also served as the chief executive officer of Compumed during this time period. The Sublease required monthly payments of $8,000 and was on a month-to-month basis. The Sublease was approved by our Board. For the years ended October 31, 2012 and 2011 we recorded $40,000 and $96,000, respectively, of rent expense which is included in general and administrative expense on the accompanying consolidated statements of operations. Additionally, at October 31, 2011, $24,000 of accrued but unpaid rent is included in related party payables on the accompanying consolidated balance sheets.

ASSETS		2014		2013

Current assets:
Cash and cash equivalents	$	37,007	$	13,822
Prepaid expenses and deposit		13,592		13,709
Debt offering costs		65,244		—
Total current assets		115,843		27,531

Property and equipment, net of accumulated depreciation of $4,011 and $2,992 at October 31, 2014 and 2013, respectively		686		1,705

Total assets	$	116,529	$	29,236

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

LIABILITIES:
Current liabilities:
Accrued compensation	$	244,990	$	85,280
Payable to CSMC		158,391		229,003
Bridge notes, less discount of $99,330		600,670		—
Accrued legal fees		93,998		50,518
Related party payables		49,000		39,000
Common stock payable		246,400		59,733
Other accrued liabilities		189,677		18,117
Convertible notes		10,000		10,000
Total current liabilities		1,593,126		491,651

Total liabilities		1,593,126		491,651

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS’ EQUITY (DEFICIT)

Preferred stock, $.0001 par value 10,000,000 shares authorized, none issued		—		—
Common stock, $.0001 par value; 100,000,000 shares authorized; 21,375,860 and 21,350,860 shares, respectively, issued and outstanding		2,138		2,135
Additional paid-in capital		4,906,008		4,287,289
Accumulated deficit		(6,384,743)		(4,751,839)
Total stockholders’ equity (deficit)		(1,476,597)		(462,415)
Total liabilities and stockholders’ equity (deficit)	$	116,529	$	29,236

~~Commitments~~The ~~and~~accompanying ~~Contingencies~~notes are an integral part of these consolidated financial statements.

~~Litigation~~F-3

~~From time to time~~ARROGENE, ~~we may become party to litigation and other claims in the ordinary course of business~~INC. To the extent that such claims and litigation arise, management would provide for them if upon the advice of counsel, losses are determined to be both probable and estimable. We are currently not party to any litigation.

~~Office~~ STATEMENTS ~~Lease~~OF OPERATIONS

~~Effective~~FOR ~~March~~THE 1,YEARS ~~2012,~~ENDED weOCTOBER ~~entered into a lease agreement for office space with a third party (the “Office Lease”). The Office Lease requires eight monthly payments of $3~~31,~~338~~ ~~plus~~2014 ~~costs~~AND for incidental expenses. We are recognizing rent expense over the lease term using the straight-line method resulting in monthly expense of $2,226. The Office Lease originally expired on February 29, 2013 ~~but subsequent to year end was extended to February 28, 2014 at a payment of $3,642 per month.~~

Commitments under non-cancelable operating leases are as follows inclusive of the renewal period:

		2014		2013

REVENUE:	$	—	$	—

OPERATING EXPENSES:
General and administrative		1,135,519		703,262
Research and development		285,741		452,384
		1,421,260		1,155,646

Loss from operations		(1,421,260)		(1,155,646)

OTHER EXPENSE:
Interest		(211,644)		(839)
		(211,644)		(839)

NET LOSS	$	(1,632,904)	$	(1,156,485)

WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic and diluted		21,371,819		21,304,860

LOSS PER SHARE:
Basic and diluted	$	(0.08)	$	(0.05)

		Year Ended October 31,
2013	$ 39,150
2014	14,568
	$ 53,718

The accompanying notes are an integral part of these consolidated financial statements.

F-164

~~Item~~ARROGENE, 9INC. ~~Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.~~

~~There~~CONSOLIDATED ~~are~~STATEMENTS ~~not~~OF ~~and~~STOCKHOLDERS’ ~~have~~EQUITY ~~not been any disagreements between the Company and its accountants on any matter of accounting principles, practices or financial statement disclosure.~~(DEFICIT)

~~Evaluation~~FOR ofTHE ~~Disclosure~~YEARS ~~Controls~~ENDED ~~and~~OCTOBER ~~Procedures~~31, 2014 AND 2013

The Company’s management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) that is designed to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.




	Preferred Stock		Common Stock			Deficit Accumulated during the Development
	Shares	Amount	Shares	Amount	APIC	Stage	Total
BALANCES, October 31, 2012	--	$ --	21,090,860	$ 2,109	$ 4,059,670	$ (3,595,354)	$ 466,425
Sale of Units at $1.00 per Unit	--	--	260,000	26	227,619	--	227,645
Net loss	--	--	--	--	--	(1,156,485)	(1,156,485)
BALANCES, October 31, 2013	--	--	21,350,860	2,135	4,287,289	(4,751,839)	(462,415)
Sale of Units at $1.00 per Unit	--	--	25,000	3	24,953	--	24,956
Stock option compensation expense	--	--	--	--	217,266	--	217,266
Bridge note warrants	--	--	--	--	205,800	--	205,800
Placement agent warrants	--	--	--	--	35,700	--	35,700
Contributed services	--	--	--	--	135,000	--	135,000
Net loss	--	--	--	--	--	(1,632,904)	(1,632,904)
BALANCES, October 31, 2014	--	$ --	21,375,860	$ 2,138	$ 4,906,008	$ (6,384,743)	$ (1,476,597)

InThe ~~accordance~~accompanying ~~with~~notes ~~Exchange~~are ~~Act Rules 13a-15 and 15d-15,~~ an ~~evaluation~~integral ~~was~~part ~~completed under the supervision and with the participation~~ of ~~the~~these ~~Company’s~~financial management, including the Company’s Chief Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this Annual Reportstatements. Based on that evaluation, the Company’s management concluded that the Company’s disclosure controls and procedures were effective in providing reasonable assurance that information required to be disclosed in the Company’s reports filed or submitted under the Exchange Act was recorded, processed, summarized, and reported within the time periods specified in the Commission’s rules and forms.

~~Evaluation of Internal Controls and Procedures~~ F-5

~~The SEC~~ARROGENE, as required by Section 404 of the Sarbanes-Oxley Act, adopted rules requiring every company that files reports with the SEC to include a management report on the effectiveness of disclosure controls and procedures in its periodic reports and an annual statement of the effectiveness of its internal control over financial reporting in its annual reportINC. As this is our first Annual Report on Form 10-K, we are not including a report of management’s assessment of effectiveness of internal control over financial reporting due to a transition period established by the SEC rules applicable to new public companies. Management will be required to provide an assessment of the effectiveness of internal control over financial reporting as of October 31, 2013, in our Annual Report on Form 10-K for the year ended October 31, 2013.

~~Changes~~STATEMENTS inOF ~~Internal~~CASH ~~Controls over Financial Reporting~~FLOWS

~~There~~FOR ~~have~~THE ~~been~~YEARS noENDED ~~significant~~OCTOBER ~~changes to the Company’s internal controls over financial reporting that occurred during our last fiscal quarter of the year ended October~~ 31, ~~2012,~~2014 ~~that~~AND ~~materially~~2013 ~~affected, or were reasonably likely to materially affect, our internal controls over financial reporting.~~

Item 9B. Other Information.

	2014	2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (1,632,904)	$ (1,156,485)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of debt placement costs and debt discount	170,609	--
Share-based payment expense	403,933	37,333
Contributed services	135,000	--
Depreciation expense	1,019	1,566
(Increase) decrease in prepaids and deposit	117	(689)
Increase in accrued liabilities	350,637	364,725
Net cash used in operating activities	(571,589)	(753,550)


CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from sale of Units	24,956	227,645
Net proceeds from sale of Bridge Notes	569,818	--
Net cash provided by financing activities	594,774	227,645

Net increase (decrease) in cash	23,185	(525,905)
Cash and cash equivalents at the beginning of year	13,822	539,727
Cash and cash equivalents at the end of year	$ 37,007	$ 13,822

~~None~~The accompanying notes are an integral part of these consolidated financial statements.

29F-6

~~PART~~ARROGENE, ~~III~~INC.

~~Item~~NOTES ~~10.~~TO ~~Directors,~~CONSOLIDATED ~~Executive~~FINANCIAL ~~Officers, Promoters and Control Persons; Compliance With Section 16(a) of the Exchange Act.~~STATEMENTS

~~(a) Identification~~OCTOBER of31, ~~Directors~~2014 ~~and~~AND ~~Executive Officers.~~ 2013

~~Upon~~(1)BUSINESS, ~~closing of the Reverse Merger~~OVERVIEW, ~~the~~BASIS ~~following~~OF ~~individuals~~PRESENTATION ~~were~~AND ~~named to the board of directors and executive management of the Company:~~ CONSOLIDATION

Name Robert Stuckelman	Age 80	Position Chairman
Maurizio Vecchione	51	Chief Executive Officer and Director
Julia Ljubimova	52	President and Chief Scientific Officer and Director
Jeffrey Sperber Alex Ljubimov Eggehard Holler	48 59 71	Chief Financial Officer Senior Vice-President, Research of Arrogene Senior Vice-President, Product Development of Arrogene

Arrogene, Inc. (“Arrogene” f/k/a SRKP 16, Inc.), was incorporated under the laws of the State of Delaware on December 7, 2006. On January 11, 2012, we consummated a reverse merger transaction (the “Reverse Merger”) with Arrogene Nanotechnology, Inc. (“ANI”), a company focused on oncology. Hereafter, SRKP 16, Inc., Arrogene and ANI are collectively referred to as the “Company.” Effective September 4, 2012, SRKP 16, Inc. officially changed its name to Arrogene, Inc.

~~Robert~~The ~~Stuckelman~~Company was founded to commercialize both new cancer treatments and imaging targeting technology as well as a proprietary molecular delivery platform that interferes with those targets in order to inhibit and finally eradicate tumor progression. ~~Mr.~~The ~~Stuckelman~~Company is the ~~President~~exclusive oflicensee ~~Technical~~to ~~Management~~certain ~~Consultants~~intellectual property rights owned by Cedars Sinai Medical Center (“CSMC”) in Los Angeles, ~~providing~~one ~~consulting~~of ~~services~~the tonation’s ~~technology~~premiere ~~and~~research ~~healthcare~~institutions ~~companies~~(the “License”). The Helicensed ~~founded~~technology ~~CompuMed,~~consists of a ~~public~~family ~~medical~~of ~~technology~~related ~~company~~nano-biopolymers inconjugates ~~1973~~(collectively referred to here as Polycefin™), ~~was~~believed ~~its~~capable ~~President~~of ~~from~~acting ~~1973~~as toa ~~1982~~drug delivery and ~~1990~~targeting toplatform ~~1994~~for cancer therapy and imaging. HeWe ~~has~~also ~~recently~~have ~~been~~developed orimportant isrelated ~~currently~~intellectual onproperties ~~the~~surrounding ~~Board~~tumor ofbiomarker ~~Directors~~Laminin of411. Laminins ~~Roex,~~are ~~Surpluzz,~~the ~~Cyber~~major ~~University,~~components ~~The~~of ~~Worldwide~~basement ~~Web~~membranes ~~Store,~~that ~~HWO~~are ~~and~~orderly ~~BioEnergy~~sheet-like ~~Delivery~~structures ~~Systems.~~secreted Heby ~~holds~~cells anto ~~MSEE~~separate several cell types from ~~the~~one ~~University~~another. Laminins ofplay ~~Southern~~key ~~California~~roles ~~and~~in acell ~~BEE~~adhesion, ~~from~~polarity, ~~Cornell~~movement ~~University~~and differentiation.

~~Maurizio~~Our ~~Vecchione. Mr.~~strategy ~~Vecchione’s~~is ~~career~~to ~~spans~~develop 27Polycefin ~~years as both a scientist~~ and aLaminin ~~high~~411 ~~technology~~into ~~entrepreneur.~~both As a ~~physicist,~~diagnostic/prognostic heproduct ~~was~~line aas ~~pioneer~~well ofas ~~imaging~~therapeutics ~~and~~with ~~computer~~both ~~graphics,~~product ~~and~~lines hetargeting ~~was also member of the research team that resulted in the 1979 Nobel Prize in Physics be awarded to team leader Dr. A. Salam. He co-founded computer graphics and imaging company Modacad~~tumors, ~~which~~with ~~later became Styleclick and completed~~ an initial ~~public~~focus ~~offering~~on ~~in 1996 under his leadership. He led Styleclick until it was sold to InterActive Corp (then USA Networks). Subsequently~~brain, hebreast ~~was CEO of Microwave Photonics, a unit of British Telecom Plc (BT), which he ultimately spun out of BT~~ and ~~was~~lung ~~eventually~~cancers ~~sold~~including ~~to LGC Wireless. He was then CEO of cancer imaging biomarker pioneer company Trestle, a position he held until~~ the ~~sale~~metastatic offorms ~~that company to Clarient Inc. (then a unit~~ of Safeguard Scientific). He then was CEO of CompuMed Inc., a telemedicine and clinical research company in cardiology. He is concurrently Vice President of Global Good at Intellectual Ventures. Global Good is a collaborative effort between Intellectual Ventures and Bill Gates to tackle humanity's problems through new inventions and technologies, with a focus on the ~~developing~~latter ~~world~~two. HeBased ~~also serves as Chairman of a high technology incubator and strategic consultant Synthetica. He currently serves~~ on the ~~CompuMed’s~~pre-clinical ~~Board~~scientific ofresults ~~Directors.~~from Hethese isinitial ~~Chairman of the IDEAS Studio~~indications, anwe ~~educational~~might ~~software~~expand ~~and~~our ~~media~~indications ~~company~~to heother ~~co-founded. He~~types ~~is a founding member~~ of ~~nonprofit~~cancer ~~organization~~indications ~~700~~as ~~For~~well ~~Science.~~as Heother ~~was~~diseases ~~twice~~that acould ~~finalist~~benefit ~~for~~from ~~Ernst & Young~~Polycefin’s ~~Entrepreneur~~ability ofto ~~the~~target ~~Year~~disease ~~award~~cells ~~and~~or ~~received~~pass through the ~~prestigious~~Brain ~~DEMO~~Tumor ~~award in 2003~~Barrier. He isOur aproduct ~~member~~development ofplan ~~the~~focuses ~~Institute~~on ofdelivering ~~Electrical~~a ~~and~~diagnostic ~~Electronic~~product ~~Engineers~~line ~~(“IEEE”)~~first, adue ~~member~~to of the ~~IEEE~~relatively ~~Nanotechnology~~shorter ~~Council~~regulatory ~~and~~approval ~~the~~process ~~IEEE~~associated ~~Engineering~~with indiagnostic ~~Medicine~~imaging ~~and~~agents ~~Biology~~in ~~Society,~~comparison ~~and~~to ~~the Association for Computing Machinery’s Special Interest Group on Computer Graphics and Interactive Technique~~therapeutics.

~~Julia~~Our ~~Ljubimova,~~planned ~~MD,~~products ~~PhD. Dr.~~will ~~Ljubimova~~require isapproval aor ~~Director~~marketing ~~Nanomedicine~~clearance ~~Center~~from ~~and~~the ~~Professor~~United ofStates ~~Neurosurgery~~Food ~~at Cedars-Sinai Medical Center. Her primary research interests involve methods to block human glioma growth, brain~~ and ~~breast~~Drug ~~tumor~~Administration ~~prevention treatments and~~ (the ~~effects of air pollution on the brain~~“FDA”). ~~Dr.~~To ~~Ljubimova~~date ~~has~~we ~~been working at Cedars-Sinai Medical Center since 1993. Dr. Ljubimova's studies~~ have ~~been~~not ~~published~~filed inany ~~numerous~~applications ~~peer-reviewed~~with ~~publications,~~the ~~including Cancer Research~~FDA, ~~Cancer,~~but ~~American~~we ~~Journal~~have ofbegun ~~Pathology, and International Journal of Oncology. She is serving on~~ the ~~National~~process ~~Institute~~ of ~~Health~~validating ~~Study~~our ~~Section~~Laboratory ~~“Nanoscience~~Development ~~for~~Test ~~Biology and Medicine~~(“LDT”~~. Dr.~~) ~~Ljubimova’s~~with ~~research~~applicable ~~is funded by the grants from the National Institutes of Health and other government organizations~~regulators.

~~Jeffrey~~The ~~Sperber. Mr.~~accompanying ~~Sperber~~consolidated ~~has served as Arrogene’s Chief Financial Officer since November 2010. Mr. Sperber is employed on a part-time basis and also serves as the chief~~ financial ~~officer~~statements ofinclude ~~another non-competitive business. From June 2004 through June 2011, Mr. Sperber served as~~ the ~~chief~~accounts ~~financial officer~~ of ~~Ceragenix~~Arrogene ~~Pharmaceuticals,~~ and its ~~predecessor~~wholly ~~companies~~owned ~~where~~subsidiary heANI. All ~~led~~intercompany atransactions ~~successful~~have ~~reverse~~been ~~merger~~eliminated ~~transaction~~in ~~and several rounds of subsequent financing~~consolidation. ~~From~~

30(2) GOING CONCERN AND MANAGEMENT’S PLANS

~~January 2004~~The ~~through~~accompanying ~~May 2004,~~consolidated ~~Mr. Sperber~~financial ~~worked~~statements ashave anbeen ~~independent~~prepared ~~consultant~~assuming ~~for~~that ~~various~~the ~~companies. From~~Company ~~March 2001~~will ~~through~~continue ~~January 2004, Mr. Sperber served~~ as ~~the~~a ~~Vice~~going ~~President~~concern. ~~and~~Since ~~Controller~~our ofinception ~~TeleTech~~in ~~Holdings,~~August ~~Inc.~~2007, awe $1have ~~billion,~~not ~~global~~generated revenue, ~~public~~incurred ~~company~~operating ~~which provides outsourced call center services primarily to the Fortune 1000. From October 1997 through March 2001~~losses, heand ~~served~~ as ~~the Chief Financial Officer~~ of ~~USOL~~October ~~Holdings~~31, ~~Inc.,~~ ~~a publicly traded broadband provider focused on multi-family housing communities. At USOL~~2014, ~~Mr. Sperber~~had ~~led~~an aaccumulated ~~successful~~deficit ~~public offering~~ of ~~USOL’s Common Stock. From August 1995 through September 1997~~$6, ~~Mr. Sperber served as a business unit controller for Tele Communications~~384, ~~Inc~~743. Further, ~~which~~as ~~was~~of ~~subsequently~~October ~~acquired by Comcast. From September 1991 through August 1995~~31, ~~he served in various financial positions for Concord Services~~2014, ~~Inc.,~~ anour ~~international~~cash ~~conglomerate,~~balance most recently as the Chief Financial Officer of its manufacturing and processing business unit where he oversaw both public and private entities. From September 1986 through September 1991, Mr. Sperber was ~~employed~~only ~~by Arthur Andersen LLP in Denver~~$37,007 ~~Colorado. Mr. Sperber~~and ~~received~~we had a ~~CPA~~working ~~license~~capital indeficit ~~the State~~ of ~~Colorado~~$1, ~~which has since expired~~477,283. ~~Mr. Sperber~~ ~~formerly~~These ~~served~~conditions asraise ansubstantial ~~outside~~doubt ~~director~~about ofour ~~Omni~~ability ~~Bio Pharmaceuticals, Inc. from October 2009~~ to ~~August~~continue ~~2011where he also served~~ as ~~Audit Committee Chair. Ceragenix Pharmaceuticals, Inc. filed~~ a ~~voluntary~~going ~~petition for bankruptcy pursuant to Chapter 11 of the United States Bankruptcy code in June 2010 which was converted to a Chapter 7 in January 2012~~concern. ~~That proceeding is ongoing.~~

~~Eggehard~~In ~~Holler,~~December ~~PhD. Dr.~~2014 ~~Holler~~and isMarch ~~Professor~~2015, ofwe ~~Biochemistry~~sold atan ~~the~~aggregate ~~University~~ of ~~Regensburg~~$350,000 ~~Regensburg,~~in ~~Germany,~~Bridge ~~where~~Notes ~~he has been employed since 1972. He has authored more than 140 peer reviewed scientific papers. He has worked extensively on the synthesis and purification of polymalic acid~~ (~~PLMA~~defined below) asreceiving anet ~~carrier~~proceeds ~~for drug delivery. Dr. Holler received his Ph.D. from the University~~ of ~~Frankfurt on Main~~$258,675 ~~Germany,~~after ~~and~~payment ~~did his postdoctoral training at Cornell University and University~~ of ~~California,~~offering ~~Berkeley~~expenses. ~~Dr.~~Management ~~Holler~~believes ~~has~~that ~~been~~existing ~~awarded~~cash ~~the Hoerlein-Preis (German Biological Society) for outstanding work~~ on ~~Drosophila.~~hand Hewill ~~served~~be assufficient ato ~~consultant~~fund in the ~~patent~~Company’s ~~dispute~~planned ~~between~~activities ~~Roche~~through ~~against~~at ~~Promega,~~least ~~and~~December ~~has~~31, ~~consulted~~2015. This atassumes ~~Cedars~~that ~~Medical~~we ~~Center~~continue ~~from 2008~~ to ~~the~~defer ~~present.~~payment ~~His~~of ~~scientific~~certain ~~work~~liabilities ~~was~~to ~~supported~~our ~~during~~officers ~~more~~but ~~than~~allows 30for ~~years~~some bypayments ~~the~~to ~~Deutsche~~be ~~Forschungsgemeinschaft,~~made byto ~~the~~CSMC ~~Deutsche~~for ~~Krebshilfe,~~amounts byowed ~~the~~under ~~German~~a ~~Ministry~~research ofand ~~Agriculture-German~~development ~~Industry~~agreement (~~Bayer,~~See ~~ASTA~~Note ~~Medica~~4). Additionally, ~~and~~certain ~~other~~key ~~funding~~professionals ~~agencies.~~such ~~Dr.~~as ~~Holler~~legal iscounsel onhave ~~the~~also ~~board~~had ofpayments ~~examiners~~deferred ~~for Diploma in Biochemistry,~~ and the ~~Ph.D.~~proceeds ~~program~~from ~~in Biology at~~ the ~~University~~Bridge ofNotes ~~Regensburg.~~will Heallow ~~has~~for ~~been~~some apartial ~~member~~payments of ~~the~~these ~~board~~deferred ofbalances ~~Staatsexamen~~but ~~Biology~~not payment in ~~Bavaria, and is a member of India Academic Affairs on Ph~~full.D. While ~~adjudication.~~these Heparties ~~has~~have ~~been~~continued ~~interim~~to ~~chair~~work ~~holder~~with ofthe ~~Biochemistry~~Company atdespite ~~Regensburg.~~this ~~His~~lack ~~scientific career involves enzymology~~ of ~~amino acyl-tRNAsynthetases~~payment, ~~enzymatic~~there ~~synthesis~~is ~~and~~no ~~function~~assurance ofthey ~~nucleoside-oligophosphate-nucleosides,~~will ~~estrogen~~continue ~~receptor~~to ~~mechanisms~~do so, ~~chemistry~~ and ~~biological~~the ~~mechanisms~~loss of ~~platinum~~a ~~drugs,~~key ~~DNA-polymerases~~management ~~and associated proteins~~member, ~~protein~~or ~~affinity labeling. Dr. Holler pioneered~~ the ~~study~~loss ~~and characterization~~ of ~~poly(malic~~CSMC ~~acid).~~as Hea ~~investigated~~research ~~synthesis~~partner, ~~structure,~~could ~~function,~~have ~~metabolism,~~a ~~and~~material ~~established~~adverse ~~semi-industrial~~effect ~~production~~on ~~of highly purified poly(malic acid). He contributed largely to~~ the ~~concept~~Company’s ~~and~~business ~~design of chemical syntheses of the Polycefin drug family~~prospects.

~~Alexander Ljubimov, PhD, DSc. Dr. Ljubimov is Director of the Ophthalmology Research Laboratories and Professor of Surgery and Biomedical Sciences at Cedars~~F-Sinai Medical Center, where he has been employed since 1993. Dr. Ljubimov has a 20-year expertise in cancer research and production of antibodies to cancer markers that are being currently manufactured by more than 15 companies around the world. He has more than 100 publications in both ophthalmology and cancer research and has presented his results at numerous national and international conferences. Dr. Ljubimov joined Cedars-Sinai Medical Center in 1993 to direct the new program in diabetic retinopathy. Since 1998, his research in ocular diabetes is funded by the National Institutes of Health. Dr. Ljubimov currently serves on the editorial boards of Diabetes, Experimental Eye Research, Brain Research Bulletin, The Open Ophthalmology Journal, Journal of Angiogenesis, Experimental Biology and Medicine, and Frontiers in Bioscience. He has served on several National Institutes of Health Study Sections and completed a 3-year term as member of the American Diabetes Association Grant Review Panel. He is member of four professional societies and ARVO Fellow. Dr. Ljubimov is also Professor of Medicine at the David Geffen School of Medicine, University of California Los Angeles.7

In February 2016, we commenced an offering of up to $4,000,000 in convertible promissory notes (b“Convertible Promissory Notes”). ~~Significant~~The ~~Employees~~Convertible Promissory Notes bear interest at 10% per annum, are convertible into shares of common stock at $1.00 per share, and principal and accrued interest are due and payable five years after the initial closing of the offering. In February 2016, we sold $750,000 in Convertible Promissory Notes receiving $750,000 in net proceeds as there were no offering costs associated with this tranche. Management believes that these proceeds will be sufficient to fund our planned operations through at least October 31, 2016.

AsIn ofthe event that we cannot raise sufficient capital within the ~~date~~required ~~hereof~~timeframes, it will have a material adverse effect on the Company’s ~~has~~liquidity, nofinancial ~~significant~~condition ~~employees~~and business prospects or force the Company out of business. The accompanying financial statements do not include adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from an inability of the Company to continue as a going concern.

(c3) ~~Family~~SIGNIFICANT ~~Relationships.~~ ACCOUNTING POLICIES

~~Other~~Use ~~than~~of ~~Julia~~Estimates ~~Ljubimova~~ and ~~Alex Ljubimov being husband and wife, none.~~Assumptions

31The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported periods. Actual results may differ from these estimates.

~~(d) Involvement~~Cash inand ~~Certain~~cash ~~Legal Proceedings.~~ equivalents

~~There~~We ~~have~~consider ~~been~~all noinvestments ~~events~~with ~~under~~original ~~any~~maturities ~~bankruptcy~~of ~~act,~~three nomonths ~~criminal proceedings and no judgments, injunctions, orders~~ or ~~decrees~~less ~~material~~ to ~~the~~be ~~evaluation~~cash of the ability and integrity of any director, executive officer, promoter or control person of the Company during the past five years except for the voluntary Chapter 11 filing by Ceragenix Pharmaceuticals, Incequivalents.~~, of which Mr. Sperber served as an officer and director.~~

~~There~~Property ~~have~~and been no material proceedings to which any director, officer or affiliate of the Company, any owner of record or beneficially of more than five percent of any class of voting securities of the Company, or any associate of any such director, officer, affiliate of the Company, or security holder is a party adverse to the Company or any of its subsidiaries or has a material interest adverse to the Company or any of its subsidiaries. Equipment

~~Compliance~~Property ~~with~~and ~~Section~~equipment ~~16(a)~~is recorded at historical cost, and is comprised of computer equipment and software. Depreciation and amortization of property and equipment is provided in amounts sufficient to relate the ~~Exchange~~cost ~~Act~~of the related assets to operations over their estimated service lives using the straight-line method. The useful lives of the assets are three years. Depreciation and amortization expense amounted to $1,019 and $1,566 for the years ended October 31, 2014 and 2013, respectively.

~~Section 16(a)~~Revenue of the Exchange Act requires the Company’s directors and officers, and persons who beneficially own more than 10% of a registered class of the Company’s equity securities, to file reports of beneficial ownership and changes in beneficial ownership of the Company’s securities with the SEC on Forms 3, 4 and 5. Officers, directors and greater than 10% stockholders are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file. Recognition

~~Based~~While ~~solely~~we onhave ~~the~~not ~~Company’s~~generated ~~review~~revenue ofto ~~the~~date, ~~copies~~we ofwill ~~the~~recognize ~~forms~~revenue ~~received~~when bythere itis ~~during~~persuasive ~~the~~evidence ~~fiscal~~that ~~year~~an ~~ended~~arrangement ~~October 31~~exists, ~~2012~~when ~~and~~title ~~written~~has ~~representations~~passed, ~~that~~the noprice ~~other~~is ~~reports~~fixed ~~were~~or ~~required~~determinable, and we are reasonably assured of collecting the ~~Company~~resulting ~~believes~~receivable. Revenue arrangements that noinclude ~~person~~multiple ~~who,~~deliverables atare ~~any~~divided ~~time~~into ~~during~~separate ~~such~~units ~~fiscal~~of ~~year,~~accounting ~~was~~if athe ~~director~~deliverables meet certain criteria. If applicable, ~~officer~~we orwill ~~beneficial~~record ~~owner~~product revenues net of ~~more~~revenue ~~than~~reserves ~~10%~~such ofas ~~the~~sales ~~Company’s~~returns ~~common~~and ~~stock~~allowances. This ~~failed~~accounting topolicy ~~comply~~for ~~with~~revenue ~~all~~recognition ~~Section 16(~~may have a) ~~filing~~substantial ~~requirements~~impact ~~during~~on ~~such~~our ~~fiscal~~reported ~~years~~results and relies on certain estimates that can require difficult, subjective and complex judgments on the part of management.

~~Code~~Research ofand ~~Ethics~~Development Costs

OnResearch ~~December 20, 2007, Company adopted a formal code of ethics statement for senior officers~~ and ~~directors~~development ~~(the~~costs ~~“Code~~are ofexpensed Ethics”) that is designed to deter wrongdoing and to promote ethical conduct and full, fair, accurate, timely and understandable reports that the Company files or submits to the Securities and Exchange Commission and others. A form of the Code of Ethics has been filed as ~~an exhibit to the Company’s Form 10-KSB filed with the Securities and Exchange Commission on March 5, 2008 and is incorporated herein by reference~~incurred. ~~Requests for copies of the Code of Ethics should be sent in writing to Arrogene, Inc., Attention: Secretary, 2500 Broadway, Building F, Suite F-125, Santa Monica, CA 90404.~~

~~Nominating~~Income ~~Committee~~Taxes

We account for income taxes by recognizing deferred tax assets and liabilities for the expected future income tax consequences of transactions that have ~~not~~been ~~adopted~~included ~~any~~in ~~procedures~~the byfinancial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which ~~security~~the ~~holders~~differences are expected to reverse. Deferred tax assets then may ~~recommend~~be ~~nominees~~reduced toby ~~our~~a ~~Board~~valuation ofallowance ~~Directors~~for amounts that do not satisfy specified realization criteria.

~~Audit and Compensation Committee~~F-8

~~The~~Accounting ~~Board~~rules also ofprescribe ~~Directors~~a ~~has~~recognition ~~not~~threshold ~~appointed~~and ameasurement ~~standing~~attribute ~~audit~~for ~~committee~~the financial statement recognition and ~~acts~~measurement asof a ~~whole~~tax asposition ~~the~~taken ~~audit~~or ~~committee.~~expected ~~The~~to ~~Company~~be ~~does~~taken ~~not~~in ~~have~~ a ~~qualified~~tax ~~financial~~return. We ~~expert~~are atrequired ~~this~~to ~~time~~recognize ~~because~~a itliability ~~has~~in ~~not~~the ~~been~~financial ~~able~~statements tofor ~~hire~~the aimpact ~~qualified~~of ~~candidate.~~a ~~Further,~~tax ~~the~~position ~~Company~~if ~~believes~~ that itposition ~~has~~is ~~inadequate~~more ~~financial~~likely ~~resources~~than atnot ~~this~~of ~~time~~not tobeing ~~hire~~sustained ~~such~~on anaudit, ~~expert. None~~based ofon ~~our~~the ~~current~~technical ~~directors~~merits ~~would~~of bethe ~~deemed~~position. We ~~“independent”~~currently ~~within~~do ~~the~~not ~~meaning~~have ofany ~~Item~~tax ~~407(a)~~positions ofthat ~~Regulation~~meet ~~S-K.~~this threshold.

~~Item~~We 11currently have a full valuation allowance against our net deferred tax assets and have not recognized any benefits from tax positions in earnings. We ~~Executive~~will ~~Compensation~~recognize potential interest and penalties related to income tax positions as a component of the provision for income taxes on the statements of operations in any future periods in which we must record a liability. Interest and penalties totaled $0 and $0 for the years ended October 31, 2014 and 2013, respectively. We file income tax returns in the U.S. federal jurisdiction and with the State of California. We have not filed income tax returns for the years ended October 31, 2012 and 2013, however, as no taxes are due, we do not believe these non-filings will have a material impact on our financial statements. We are still subject to income tax examinations by the State of California and the IRS for all tax years since the date of inception. Since we have not recorded liabilities at October 31, 2014 and 2013, there is no impact to our effective tax rate. We do not believe there will be any material changes in our unrecognized tax positions over the next 12 months. Our review of prior year tax positions using the criteria and provisions presented by the FASB did not result in a material impact on the Company’s financial position or results of operations.

~~Executive~~Share-Based ~~Compensation~~Payments

~~The~~We ~~following~~account ~~information~~for ~~relates~~share-based topayment ~~all~~costs ~~aspects~~at fair value on the date of ~~executive~~grant and recognition of compensation ~~currently~~over ~~paid~~the byservice ~~Arrogene~~period for awards expected to ~~its~~vest. ~~executive~~For ~~officers~~stock options, the estimation of stock awards that will ultimately vest requires judgment, and ~~directors~~to the extent actual results differ from our estimates, such amounts will be recorded as a cumulative adjustment in the period estimates are revised. We consider various factors when estimating expected forfeitures, including historical experience. Actual results may differ substantially from these estimates.

~~The~~We ~~following~~determine ~~tables~~the fair value of warrants and ~~discussion~~stock ~~set~~options ~~forth~~using ~~information~~the ~~with~~Black-Scholes ~~respect~~valuation tomodel, ~~all~~which ~~plan~~considers ~~and~~the ~~non-plan~~exercise ~~compensation~~price ~~awarded~~relative to, ~~earned~~the bymarket orvalue ~~paid~~of tothe underlying stock, the ~~Chief~~expected ~~Executive~~stock ~~Officer~~price ~~("CEO")~~volatility, the risk-free interest rate and ~~Chief~~the ~~Financial~~dividend ~~Officer~~yield, ~~(“CFO”)~~and the estimated period of ~~Arrogene~~time ~~for~~option ~~all~~grants ~~services~~will ~~rendered~~be inoutstanding ~~all~~before ~~capacities~~they toare ~~Arrogene~~ultimately ~~for~~exercised. Significant ~~each~~management ofjudgment ~~its~~is ~~last~~required ~~two~~in ~~(2)~~making ~~completed~~certain ~~fiscal~~of ~~years.~~these assumptions.

32Earnings (Loss) Per Share

~~SUMMARY~~Earnings ~~COMPENSATION~~(loss) ~~TABLE~~per share are computed by dividing the Company’s income (loss) attributable to common shareholders by the weighted average number of common shares outstanding. The impact of any potentially dilutive securities is excluded. Diluted earnings per share are computed by dividing the Company’s income (loss) attributable to common shareholders by the weighted average number of common shares and dilutive potential common shares outstanding during the period. In calculating diluted earnings per share, we utilize the “treasury stock method” for all stock options and warrants and the “if converted method” for all other convertible securities. For all periods presented, the basic and diluted loss per share is the same as the impact of potential dilutive common shares is anti-dilutive.

Name and Principal Position	Year	Salary ($)	Bonus	Stock Awards	Options Awards	Non equity Incentive Plan Compensation	Nonqualified Deferred Compensation Earnings	All Other Compensation	Total
Maurizio Vecchione, CEO(1)	2012 2011	$180,000 $180,000							$180,000 $180,000
Jeffrey Sperber, CFO	2012 2011	$ 46,909 $ 61,802							$ 46,909 $ 61,802

Shares of common stock from the exercise of warrants and convertible securities excluded from the calculation of diluted loss per share are as follows:

(1)

	Years ended October 31,
	2014	2013

Convertible debt*	766,667	66,667
Warrants	6,358,358	6,308,358
Stock Options	1,450,000	--
Common shares issuable under investor relations agreement	440,000	--

~~Consists~~* ofAssumes ~~compensation~~Bridge ~~earned~~Note byconversion ~~Synthetica,~~price ~~Ltd.,~~of ~~a management consulting firm controlled by Mr~~$1.00 ~~Vecchione~~per ~~and~~share ~~with~~see ~~whom~~Note ~~Arrogene~~5 ~~has contracted~~ for ~~the~~conversion ~~services~~price ~~of Mr~~calculations. ~~Vecchione.~~

Doctors Ljubimova, Ljubimov and Holler are employed by CSMC and receive their compensation from CSMC and are not deemed employees of the Company. The Company has entered into compensation agreements with these officers and directors to secure their services. The following table reflects the basic terms of the agreements. Each individual is to be paid as a consultant, at agreed upon consulting fee rates, for providing services pursuant to agreed operating budgets and timelines for the services to be rendered:F-9

Name	Title	Hourly Consulting Fee	Maximum Fee per Month
M. Vecchione	CEO	$300.00	$15,000.00
J. Ljubimova	President	$250.00	Set by Company through budget every 90 days
J. Sperber	CFO	$120.00	$10,000.00
A. Ljubimov	SVP – Research	$200.00	Set by Company through budget every 90 days
E. Holler	SVP – Product Development	$200.00	Set by Company through budget every 90 days

Segment Information

~~Under~~We ~~the~~operate ~~agreements,~~in ~~the~~one ~~Company’s~~business board of directors has sole discretion to request the full time employment of each senior executive and upon giving of notice, each executive has a 30-day time period within which to agree to become a full time employeesegment. InThe ~~the~~determination ~~absence~~ of ~~such~~reportable ~~acceptance,~~segments ~~the~~is ~~previously~~based ~~executed~~on ~~agreements can be terminated by~~ the ~~Company~~way ~~without~~management ~~any~~organizes ~~obligation~~financial toinformation ~~pay~~for ~~any~~making ~~termination~~operating ordecisions ~~severance benefits. Additionally the contracts include non-compete, confidentiality~~ and ~~other~~assessing ~~customary provisions protecting the Company and its intellectual properties~~performances. ~~The~~All ~~agreements~~of ~~include~~our aoperations 6are ~~month~~located ~~severance clause for termination for reasons other than cause (as defined~~ in the ~~agreements)~~United States.

AtConcentration ~~the discretion~~ of ~~the~~Credit Board, the officers/directors are eligible to participate in certain annual bonuses, payable in stock, relating to achieving certain milestones as set annually by the Board, with such bonuses not to exceed 40% of the annual compensation.Risk

ItWe ~~should~~maintain bea ~~noted~~checking ~~that~~account ~~certain~~with ~~key~~Wells ~~executives,~~Fargo iBank (“Wells”).~~e.,~~ The ~~Doctors~~account ~~Ljubimova,~~is ~~Ljubimov~~insured ~~and Holler, are all currently employed~~ by ~~CSMC~~the inFederal ~~various~~Deposit ~~capacities~~Insurance inCorporation ~~conjunction~~(“FDIC”) ~~with~~for ~~pre-clinical~~up ~~and~~to ~~clinical~~$250,000. At ~~development~~times ofour ~~the~~cash ~~technology~~balance ~~which~~may isexceed the ~~subject~~FDIC ofinsurance ~~the License obtained by the Company from CSMC~~coverage. Management ~~The Company~~ believes that ~~their continued work at CSMC benefits~~ the Company asis wenot ~~are~~exposed ~~the~~to ~~recipients~~significant ofcredit ~~the~~risk ~~license~~due to ~~exploit~~the ~~such~~financial ~~technology~~position of Wells.

~~Outside~~Fair ~~directors~~Value ~~may~~of beFinancial ~~paid a meeting stipend and/or granted options; however, there is no commitment to do so.~~Instruments

AtThe ~~the~~fair ~~end~~value of ~~the~~cash, ~~most~~accounts ~~recently~~payable ~~completed~~and ~~fiscal~~accrued ~~year~~liabilities, ~~there~~and ~~were~~notes nopayable ~~unexercised~~approximate ~~options,~~their ~~stock~~carrying ~~that~~amounts ~~has~~due ~~not~~to ~~vested,~~the orshort-term ~~equity~~maturities ~~incentive~~of ~~plan~~these ~~awards outstanding~~instruments.

~~Compensation~~Fair ~~Committee~~Value ~~Interlocks and Insider Participation~~Measurements

33We measure our financial assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., exit price) in an orderly transaction between market participants at the measurement date. Additionally, we are required to provide disclosure and categorize assets and liabilities measured at fair value into one of three different levels depending on the assumptions (i.e., inputs) used in the valuation. Level 1 provides the most reliable measure of fair value while Level 3 generally requires significant management judgment. Financial assets and liabilities are classified in their entirety based on the lowest level of input significant to the fair value measurement. The fair value hierarchy is defined as follows:

~~The~~Level ~~Company~~1—Inputs ~~does~~are not have a standing compensation committee or a committee performing similar functions. We anticipate that our board of directors will establish a compensation committee in the future that will be comprised of non-employee members of our board of directors. Our current expectation is that the compensation committee of our board of directors will performunadjusted, atquoted ~~least~~prices annually, a strategic review of the compensation program for our executive officers to determine whether it provides adequate incentives and motivation to our executive officers and whether it adequately compensates our executive officers relative to comparable officers in ~~other~~active ~~companies~~markets ~~with which we compete~~ for ~~executives. Those~~identical ~~companies~~assets ~~may~~ or ~~may not be public companies or companies located in California or even, in all cases, companies in a similar business~~liabilities.

~~Until~~Level ~~such~~2—Inputs ~~time~~other asthan aLevel ~~formal~~1 ~~compensation~~that ~~program~~are ~~and committee is established~~observable, ~~our~~either ~~board~~directly ofor ~~directors~~indirectly, ~~will~~such ~~structure~~as ~~compensation~~quoted ~~and~~prices ~~bonus~~for ~~levels~~similar ~~and~~assets ~~our~~or ~~board~~liabilities; ofquoted ~~directors~~prices ~~will~~in ~~approve~~markets ~~the~~that ~~structure. After~~are ~~the~~not ~~compensation~~active; ~~committee~~or isother ~~formed,~~inputs itthat ~~will~~are ~~determine~~observable ~~the~~or ~~structure. Our~~can ~~board~~be ofcorroborated ~~directors~~by ~~has~~observable ~~established~~market adata ~~compensation program~~ for ~~executive~~substantially ~~officers~~the ~~for~~full ~~2013~~term ~~that~~of ~~is designed to attract, as needed, individuals with~~ the ~~skills~~assets ~~necessary for us achieve our business plan, to motivate those individuals, to reward those individuals fairly over time, and to retain those individuals who continue to perform at~~ or ~~above the levels that we expect~~liabilities.

~~Except~~Level as3—Unobservable ~~noted~~inputs ~~above,~~that ~~the~~are ~~above~~supported ~~persons~~by dolittle ~~not~~or ~~hold~~no ~~any~~market ~~other~~activity ~~directorships~~and inthat ~~any~~are ~~company~~significant ~~with a class of securities registered pursuant~~ to ~~Section 12 of~~ the ~~Exchange~~fair ~~Act~~value ~~or subject to the requirements~~ of ~~Section 15(d) of~~ the ~~Exchange~~assets ~~Act.~~or liabilities.

~~None~~We ofhad ~~our~~no ~~current~~financial ~~directors~~assets ~~would~~or beliabilities ~~deemed~~subject ~~“independent”~~to ~~within~~fair ~~the~~value ~~meaning~~measurement ofat ~~Item~~October 31, ~~407(a)~~2014 ofor ~~Regulation S-K~~2013.

~~Under~~Supplemental ~~the~~Disclosures ~~terms~~ of ~~the~~Cash ~~Reverse~~Flow ~~Merger, the placement agents were entitled to designate one member of the Board of Directors. As of the date of this Report, the placement agents have not made such designation.~~ Information

Under the terms of our License agreement with CSMC, CSMC has the right to designate an observer to our Board of Directors. As of the date of this Report, CSMC has not exercised this right.

Cash paid during the year for:	Years ended October 31,
	2014	2013
Interest	$453	$839
Income taxes	--	--

~~Compensation~~Recently ~~Committee~~Issued ~~Report~~Accounting Pronouncements

~~The~~In ~~Company~~June ~~does~~2014, ~~not~~the ~~have~~Financial Accounting Standards Board (“FASB”) issued ASU 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance (“ASU 2014-10”), which eliminates the financial reporting distinction between development stage entities and other reporting entities from U.S. GAAP. Additionally, ASU 2014-10 eliminates the separate requirements for development stage entities to (1) present inception-to-date information in the statements of income, cash flow and shareholders’ equity, (2) label the financial statements as those of a ~~standing~~development ~~compensation~~stage ~~committee~~entity, or(3) disclose a ~~committee~~description ~~performing~~of ~~similar~~the ~~functions;~~development ~~therefore~~stage activities in which the entity is engaged, itand ~~does~~(4) ~~not~~disclose ~~have~~in the first year in which the entity is no longer a ~~compensation~~development ~~committee~~stage ~~report~~entity that in prior years it had been in the development stage. ASU 2014-10 is effective for fiscal years beginning after December 15, 2014 and interim periods therein, with early adoption permitted. We adopted ASU 2014-10 during the third quarter of our year ended October 31, 2014.

~~Scientific Advisory Board~~F-10

~~We plan to constitute a Scientific Advisory Board~~ (~~the “Advisory Board”~~4)~~. The~~LICENSE Advisory Board will not exercise any of the authority of the Board of Directors, but rather will serve at the pleasure of the Board of Directors to consult on matters pertaining to the Company’s scientific developments and product strategy. It is currently intended that the Advisory Board will consist of up to five persons and will be chaired by Dr. Keith Black, one of our founders, and principal shareholders and a team leader at CSMC overseeing the development of our technology. Dr. Black has agreed to be the Chairman of our Advisory Board. No commitment has been made regarding possible future compensation for Advisory Board members.AGREEMENT

~~Keith~~On L.December ~~Black~~23, MD2009, ~~serves~~we asentered ~~Chairman~~into the License with CSMC for all underlying intellectual properties, including patents, patents pending and ~~Professor~~future ofpatent ~~the~~rights ~~Department~~related ofto ~~Neurosurgery~~Polycefin. Pursuant to the License, ~~Director~~CSMC ofwill ~~Maxine~~participate ~~Dunitz~~in ~~Neurosurgical~~the ~~Institute~~future ~~and~~revenue ~~Director~~of the Company by virtue of ~~Johnnie~~a L3.5% ~~Cochran~~royalty on gross revenues, ~~Jr.~~as ~~Brain~~defined ~~Tumor~~in ~~Center~~the atLicense, ~~Cedars-Sinai~~realized ~~Medical~~by ~~Center~~the Company directly related to the licensed intellectual properties. AnFurther, ~~internationally~~we ~~renowned~~have ~~neurosurgeon~~the ~~and~~ability ~~scientist,~~to Drenter into sub-licenses of the technology. We ~~Black~~have ~~joined~~also ~~Cedars-Sinai~~been ~~Medical~~granted ~~Center~~certain inadditional ~~July~~rights ~~1997~~on ~~and~~future ~~was~~derivative ~~awarded~~intellectual ~~the~~properties ~~Ruth~~developed ~~and~~by ~~Lawrence~~CSMC. The ~~Harvey~~CSMC ~~Chair~~Agreement inexpires ~~Neurosciences~~on ina ~~November~~country-by-country ofbasis on the date that ~~year~~the last patent covered under the agreement expires (currently 2030).

~~Prior~~The toCSMC ~~joining Cedars-Sinai~~Agreement, ~~Dr.~~as ~~Black served on the University of California~~amended, ~~Los~~requires ~~Angeles~~us ~~(UCLA)~~to ~~faculty~~achieve ~~for~~certain 10other ~~years~~milestones ~~where~~in heorder ~~was~~to ~~Professor~~maintain ofthe ~~Neurosurgery~~agreement. InThese ~~1992~~include ~~he was awarded~~ the ~~Ruth~~following: ~~and Raymond Stotter Chair in the Department of Surgery and was head of the UCLA Comprehensive Brain Tumor Program.~~

~~Dr.~~Begin ~~Black~~development ~~pioneered~~or ~~research~~enter oninto ~~designing~~a ~~ways~~joint ~~to open the blood-brain barrier~~venture, ~~enabling~~licensing ~~chemotherapeutic~~or drugs to be delivered directly into the tumor. His work in this field received the Jacob Javits award from the National Advisory Neurological Disorders and Stroke Council of the National Institutes of Health in June of 2000. Dr. Black and patients undergoing the first clinical trials of the drug, RMPsub-7,licensing ~~were profiled in 1996 on the PBS program~~agreement, ~~The~~or ~~New Explorers, in an episode called Outsmarting the Brain. Dr. Black’s~~ other ~~groundbreaking~~business ~~research~~arrangement ~~has~~with ~~focused~~a onthird ~~developing~~party anot ~~vaccine~~an toaffiliate ~~enhance~~of the ~~body’s~~Company ~~immune response~~ to ~~brain~~cause ~~tumors,~~development ~~use~~ of ~~gene~~at ~~arrays~~least toone ~~develop~~product ~~molecular~~consistent ~~profiles~~with ofsound ~~tumors,~~business ~~the~~practices ~~use~~by ofDecember 31, 2012;

34Expend at least $500,000 in the aggregate toward the development or promotion of the sale of products based on the licensed patent rights or technical information commencing from the effective date of the agreement and continuing through and including December 31, 2012, and at least $1,000,000 annually thereafter, for further development or promotion of the sale of products through and including December 31, 2013;

~~optical~~Provide ~~technology for brain mapping, and the use of focused microwave energy~~ to ~~non-invasively~~CSMC ~~destroy~~at ~~brain~~least ~~tumors. He~~$150,000 ~~was~~(in ~~featured~~aggregate) onwithin ~~the~~at ~~cover~~least ofa ~~Time~~four ~~magazine~~year inperiod ~~the~~to ~~Fall~~fund ~~1997~~research ~~special~~and ~~edition~~development of ~~Heroes in Medicine. In March 2009, he authored~~ the ~~book~~licensed ~~Brain~~patent ~~Surgeon:~~rights ~~A Doctor’s Inspiring Encounters with Mortality~~ and ~~Miracles.~~technical information;

~~Dr.~~On ~~Black~~or ~~serves~~before onDecember ~~the editorial boards of Gene Therapy and Molecular Biology~~31, ~~Neurosurgery Quarterly~~2014, ~~Frontiers in Bioscience, and Public Library of Science (PLoS). He was on~~ the ~~National~~Company ~~Institutes~~shall ofhave ~~Health’s~~commenced Board of Scientific Counselors for Neurological Disorders and Stroke and was appointed to the National Advisory Neurological Disorders and Stroke Council of the National Institutes of Health from 2000-2004. He was also selected as committee member of the California Institute for Regenerative Medicine Independent Citizens Oversight Committee from 2004-2006. He is also a ~~member~~clinical oftrial ~~numerous~~or ~~professional~~trials ~~societies~~in ~~including~~connection ~~the~~with ~~American~~at ~~Association~~least ofone ~~Neurological~~intended ~~Surgeons,~~commercial ~~Neurosurgical Society of America and the Academy of Neurological Surgery. He also is a Founding Member of the North American Skull Base Society.~~use;

~~Item~~We ~~12.~~believe ~~Security~~that ~~Ownership~~we have achieved all of ~~Certain~~the ~~Beneficial~~required ~~Owners~~milestones under the CSMC Agreement but in some instances the achievement is subject to interpretation and ~~Management~~ambiguous, including our belief that administrative expenses incurred in support of the Company’s business activities meet the definition of “development and ~~Related~~promotion” ~~Stockholder~~of ~~Matters~~the licensed technology. We are in negotiations with CSMC to amend the CSMC Agreement to remove any ambiguity and confirm it is in good standing. CSMC has provided us no notice indicating that they believe we are not in compliance with the CSMC Agreement. Additionally, as discussed further in Note 9, we entered into a research and development agreement with CSMC that satisfies the milestone requirement described above regarding funded research at CSMC. However, in order to extend the Company’s cash on hand, we have been deferring payment to CSMC of our obligations under the agreement. During 2014, we resumed making periodic payments to CSMC but our outstanding balance with them remains delinquent. Despite our delinquency, CSMC completed work under the agreement during 2014. As of October 31, 2014, we had an outstanding liability to CSMC of $158,391 under the research and development agreement.

~~(a)~~Further, in the event the Company issues or sells shares of common stock, the CSMC Agreement requires that the Company issue to CSMC additional shares of common stock for no additional consideration so as to assure CSMC will own 5% of the total issued and outstanding shares of the Company until December 31, 2015.

The following tables set forth certain information as of December 31, 2012, regarding (i) each person known by the Company to be the beneficial owner of more than 5% of the outstanding shares of common stock, (ii) each director, nominee and executive officer of the Company and (iii) all officers and directors as a group. F-11

Unless otherwise indicated, the persons and entities named in the table have sole voting and sole investment power with respect to the shares set forth opposite the stockholder’s name, subject to community property laws, where applicable. Unless otherwise indicated, the address of each stockholder listed in the table is 2500 Broadway, Building F, Suite F-125, Santa Monica, CA(5) ~~90404.~~BRIDGE NOTES

~~Name~~During 2014, we sold an aggregate of $700,000 in bridge notes (the “Bridge Notes”), receiving net proceeds of $569,818 after payment of fees and ~~Address~~offering costs. The Bridge Notes are due and payable one year after the close of ~~Beneficial~~the ~~Owners~~offering (the “Maturity Date”), bear interest at 10% per annum, and are convertible into shares of our common stock at a conversion price of either (i) 50% of the price per share of our common stock as sold through a qualified initial public offering as defined in the terms of the Bridge Notes, or (ii) in the event a Qualified IPO has not taken place prior to the Maturity Date but there has otherwise developed a public trading market for the Company’s common stock, then the conversion price shall be 50% of the 30 day Volume Weighted Average Price per share as quoted on the over-the-counter market, or (iii) in the event a public trading market has not been established for our common stock prior to the Maturity Date, then the conversion price shall be $1.00 per share. Accrued and unpaid interest on the Bridge Notes will be payable in shares of common stock at the conversion price on the earlier of (i) the date of conversion of the Bridge Notes or (ii) the Maturity Date. Further, for every $1.00 of Bridge Note principal that an investor elects to convert into shares of common stock, the investor will receive one warrant (the “Bridge Note Warrant”). Each warrant shall be exercisable to purchase shares of common stock at a price equal to the conversion price of the Bridge Notes and shall have a life of 5 years from the close of the offering. If the investor elects not to convert their Bridge Notes prior to the Maturity Date, then the note holder will receive one warrant for every $2.00 in Bridge Note principal.

Name and Address of Beneficial Owner	Number of Shares (1)	Percent
Julia Ljubimova (2)	3,869,259	18.2%
Keith Black	2,560,900	12.1%
Alex Ljubimov (2)	745,347	3.5%
Robert Stuckelman	899,444	4.2%
Eggehard Holler	832,777	3.9%
Maurizio Vecchione (3)	1,415,832	6.7%
Jeffrey Sperber	20,000	0.1%
Richard Rappaport (4)	1,274,389	6.0%
Cedars-Sinai Medical Center (5)	1,500,000	7.1%
Executive Officers and Directors as a Group (6 persons)	7,782,658	36.7%

We evaluated the conversion feature of the Bridge Notes within the context of ASC 815 and determined that it did not meet the definition of an embedded derivative due to the Company having no active market for its common stock. We further evaluated the conversion feature of the Bridge Notes within the context of ASC 470-20 and determined that the Bridge Notes did not contain a beneficial conversion feature as the default conversion price of $1.00 per share is greater than the current fair value of the Company’s common stock based on the most recent price paid for the Units.

(We evaluated the Bridge Note Warrants using the guidelines established by ASC 815 and determined that it did not meet the definition of a derivative due to the Company having no active market for its common stock. We valued these warrants at $205,800 using the Black-Scholes option pricing model which we recorded as debt discount with a corresponding increase to additional paid in capital using the following assumptions: expected life 5 years, risk free interest rate 1).69% and annualized volatility 78.9%. We are amortizing the debt discount over the life of the Bridge Notes. For the year ended October 31, 2014, we amortized $106,470 of debt discount which is included in interest expense on the accompanying consolidated financial statements.

~~There~~We ~~were~~are ~~21,220,860~~also obligated to issue to the placement agents warrants to acquire shares of ~~Common~~common ~~Stock~~stock ~~issued~~equal ~~and~~to ~~outstanding~~10% as of ~~December~~the ~~31,~~securities ~~2012.~~underlying ~~That~~the ~~number~~Bridge ~~does~~Notes ~~not~~and ~~give~~Bridge ~~effect~~Note toWarrants (athe “PA Bridge Note Warrants”). The ~~$10,000~~PA inBridge ~~Convertible~~Note ~~Notes~~Warrants ~~that~~have a life of 5 years and are ~~convertible~~exercisable ~~into~~at anthe ~~aggregate~~conversion price of ~~66,667~~the ~~shares~~Bridge ~~(b)~~Notes and the exercise price of 6the Bridge Note Warrants,~~009,358~~ respectively. We evaluated the PA Bridge Note Warrants using the guidelines established by ASC 815 and determined that they did not meet the definition of ~~outstanding~~a ~~warrants~~derivative due to the Company having no active trading market for its common stock. We valued the PA Bridge Note Warrants at $35,700 orusing ~~(c)~~the 1Black-Scholes pricing model using the following assumptions: expected life 5 years,~~500,000~~ ~~shares~~risk ~~reserved~~free ~~for~~interest ~~issuance~~rate ~~under~~1.69% anand ~~employee~~annualized ~~incentive~~volatility ~~plan~~78.9%. ~~Also~~We ~~excludes~~recorded ~~shares~~the ~~issuable~~PA Bridge Note Warrants as ~~part~~a debt offering cost on the accompanying consolidated balance sheet. We are amortizing the PA Bridge Note Warrants over the life of ~~Units~~the inBridge Notes. For the ~~Private~~year ~~Placement~~ended October 31, 2014, we amortized $19,117, of PA Bridge Note Warrants which is ~~continuing.~~included in interest expense on the accompanying condensed consolidated financial statements.

~~(2)~~The effective rate of the Bridge Notes after taking into account the Bridge Note Warrants and PA Bridge Note Warrants is 44.5%.

~~Ms.Ljubimova~~Subsequent ~~and~~to ~~Mr.~~year ~~Ljubimov~~end, ~~are~~we ~~husband~~sold ~~and~~an ~~wife~~additional $350,000 in Bridge Notes. See Note 10.

~~(3)~~F-12

~~Shares~~(6)CONVERTIBLE ~~are held by Synthetica, Ltd. of which Mr. Vecchione is the sole beneficial owner.~~NOTES

Commencing October 2010 through April 2011, we sold in private transactions an aggregate of $726,550 of Convertible Notes. The Convertible Notes were initially convertible into shares of our common stock at $.30 per share (4the “Conversion Price”). The Convertible Notes do not bear interest and were originally payable on October 19, 2011. The Convertible Notes are secured by a first lien security interest on all of our tangible and intangible assets. We did not repay the Convertible Notes by the maturity date and the notes were therefore technically in default. During the year ended October 31, 2012, agreed to reduce the conversion price of the Convertible Notes to $.15 per share. $10,000 of Convertible Notes remains outstanding as of October 31, 2014. On an as converted basis, as of October 31, 2014, the estimated value of the Convertible Notes exceeds the principal balance by $27,333.

~~Consists of shares of Arrogne that Mr. Rappaport owns or controls. Mr. Rappaport~~(7)STOCKHOLDERS’s ~~address is WestPark Capital, Inc., 1900 Avenue of the Stars, Suite 310, Los Angeles, CA 90067~~EQUITY

~~(5)~~Common Stock

~~Mr.~~On ~~Edward~~August M29, 2013, we entered into an agreement for investor relation services that required us to issue up to 400,000 shares of common stock as a component of the consideration for the services. The ~~Prunchunas~~shares were issuable in 100,000 ~~Senior~~increments ~~Vice~~for ~~President~~each quarter of ~~Finance~~service rendered. We valued these shares at $224,000 using the Black-Scholes option pricing model and ~~Chief~~recognized ~~Financial~~expense ~~Officer~~over isthe ~~deemed~~12 tomonths ~~control~~the services were rendered. For the ~~voting~~years ended October 31, 2014 and ~~dispositive~~2013, ~~power~~we ~~associated~~recorded $186,667 and $37,333, respectively, of stock compensation expense which is included in general and administrative expense in the accompanying consolidated statements of operations with ~~these~~a ~~securities~~corresponding entry to liabilities on the accompanying consolidated balance sheet.

~~Item 13. Certain Relationships and Related Transactions.~~Units

35During the years ended October 31, 2014 and 2013, we sold 25,000 and 260,000 units (the “Units”), respectively, for $1.00 per Unit, receiving net proceeds of $24,956 and $227,645, respectively. Each Unit consists of (i) one share of common stock, and (ii) two warrants with one warrant exercisable at $1.50 per share and one warrant exercisable at $2.00 per share. (the “Unit Warrants”). The Unit Warrants expire five years from the date of issuance.

~~Advances~~Warrants

~~During~~In connection with the sale of the Units during the year ended October 31, ~~2009~~2013, ~~certain~~the ~~directors~~placement ~~advanced~~agents earned warrants to acquire 78,000 shares of common stock consisting of 26,000 warrants exercisable at $1.00 per share,~~300~~ to26,000 warrants exercisable at $1.50 per share and 26,000 warrants exercisable at $2.00 per share. Each warrant expires five years from the ~~Company~~date inof ~~order~~issuance. toWe ~~fund~~valued ~~operating~~these ~~expenses~~warrants at $17,160 using the Black Scholes option-pricing model. ~~The~~ ~~advances~~We ~~were~~recorded ~~made~~the onwarrants anas ~~informal~~a ~~basis~~reduction ~~and~~to ~~not~~the ~~pursuant~~net proceeds from the sale of the Units with a corresponding increase to ~~any~~additional ~~documented~~paid ~~agreement~~in capital. ~~Accordingly,~~ ~~there~~The isplacement noagents ~~stated~~voluntarily ~~repayment~~agreed ~~term~~to orforgo ~~interest~~the ~~rate. These~~earning ~~advances~~of ~~were~~warrants ~~repaid~~in connection with the Unit sale that took place during the year ended October 31, ~~2012~~2014.

~~Consulting~~As ~~Agreements~~of October 31, 2014, we had 6,358,358 warrants outstanding with weighted average remaining lives of 28 months and a weighted average exercise price of $1.44.

In December 2008, we entered into an agreement with an entity controlled by our chief executive officer for his services (the “Synthetica Agreement”). The Synthetica Agreement was replaced by a second agreement for the personal services of our chief executive officer in July 2011. Under the Synthetica Agreement, there was no monthly retainer or minimum billing amount but the maximum that could be charged to us in any given month could not exceed $15,000. During the years ended October 31, 2012 and 2011, we were billed $180,000 and $180,000, respectively, under these agreements. In October 2011, we issued 100,000 shares of common stock to Synthetica, Ltd (“Synthetica”) in satisfaction of $100,000 in accrued compensation that had been earned under the agreement. At October 31, 2012 and 2011, $15,000 and $60,000, respectively, is included in accrued compensation for amounts owed to Synthetica on the accompanying consolidated balance sheets. F-13

InStock September 2010, we entered into a business and financial consulting agreement with an entity controlled by our Board chairman. The agreement was for an initial term of 12 months with an automatic 12 month renewal period unless terminated by either party upon 30 days written notice. The agreement is now on a month-to-month basis. There is no monthly retainer or minimum billing amount but the maximum that can be billed to us in a given month cannot exceed $10,000. During the years ended October 31, 2012 and 2011, we were charged $120,000 and $120,000, respectively, under this agreement which is included in general and administrative expense on the accompanying consolidated statements of operations. At October 31, 2012 and October 31, 2011, $10,000 and $40,000, respectively, is included in related party payables on the accompanying consolidated balance sheets.Options

~~CSMC~~On November 1, 2013, we issued a non-statutory stock option to acquire up to 200,000 shares of common stock with an exercise price of $1.00 per share to a consultant for providing certain services as defined in the consulting agreement. The option expires 7 years from the date of grant. The options vest as follows: (i) as to 100,000 options, vesting shall occur 1/3 on each one year anniversary date of the consulting agreement (“Vesting 1”) and (ii) as to 100,000 options, vesting shall occur upon the closing of certain transactions as defined in the agreement at a rate of 2 stock options for each $100 received by the Company in a deal or transaction resulting from the efforts of the consultant (“Vesting 2”). We valued this option at $58,400 using the Black Scholes option-pricing model using the following assumptions: option life 5 years, risk free interest rate 1.37%, and annualized volatility of 78.9% based on a peer group of publicly traded common stocks. Stock options issued to non-employees are remeasured at each reporting date and the cumulative expense is adjusted based on the remeasured grant. We are recognizing expense for this option as the underlying services are provided, ratably over 36 months for Vesting 1, and upon the occurrence of a vesting event for Vesting 2. For the year ended October 31, 2014, we recognized $9,733 of expense for this option which is included in general and administrative expense on the accompanying consolidated statements of operations.

~~Certain~~In ~~founders~~April ~~and~~2014, ~~directors~~we issued stock options to acquire 1,200,000 shares of ~~the~~common ~~Company~~stock ~~are~~to certain employees and consultants with an exercise price of ~~CSMC~~$1.00 per share. ~~These~~The ~~individuals~~options ~~are~~expire ~~also~~7 years from the ~~inventors~~date of grant. The options vest under terms ranging from immediately to 1/3 on each anniversary date from the ~~Polycefin~~date ~~technology~~of grant. We valued these options at $352,800 using the Black Scholes option-pricing model using the following assumptions: option life 5 years, risk free interest rate 1.65%, and annualized volatility of 78.9% based on a peer group of publicly traded stocks. We are ~~primarily~~recognizing ~~responsible~~expense for ~~its~~these ~~development~~options over the respective vesting periods. AsFor ~~described~~the ~~further~~year inended ~~Note~~October 431, ~~above~~2014, we ~~have~~recognized a$ ~~right~~185,483 toof anexpense ~~exclusive~~for ~~license~~these ~~agreement~~options ~~with~~which ~~CSMC~~is ~~for~~included ~~this~~in ~~technology~~general and administrative expense on the accompanying consolidated statements of operations.

~~The~~In ~~License~~August ~~requires~~2014, ~~royalty~~we ~~payments~~issued ~~equal~~75,000 stock options to 3a board member for his services as a director as well as certain consulting services provided. The options have an exercise price of $1.00 per share, vested immediately and expire 5% years from the date of grant. We valued these option at $22,050 using the ~~gross~~Black ~~sales~~Scholes ~~price~~option-pricing model using the following assumptions: option life 5 years, risk free interest rate 1.63%, and ~~other~~annualized ~~forms~~volatility of ~~consideration~~78.9% ~~(such~~based ason ~~milestone~~a ~~and~~peer ~~sublicense~~group ~~payments),~~of aspublicly ~~defined~~traded incommon stocks. For the ~~agreement~~year ended October 31, on2014, ~~all~~we ~~products~~recognized ~~using~~$22,050 of expense for these options which is included in general and administrative expense on the ~~licensed~~accompanying ~~technology~~consolidated statements of operations.

~~Sublease~~A ~~Agreement~~summary of stock option activity for the year ended October 31, 2014 follows below:

	Number of Shares	Avg. Weighted Exercise Price
Shares outstanding, October 31, 2013	--
Shares granted	1,475,000	$1.00
Shares exercised	--	--
Shares forfeited	(25,000)	$1.00
Shares outstanding, October 31, 2014	1,450,000	$1.00
Exercisable at October 31, 2014	575,000

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