U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

(Mark One)

~~|X|~~T ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

OFFor ~~THE~~the ~~SECURITIES~~fiscal ~~EXCHANGE~~year ~~ACT~~ended OFOctober ~~1934~~31, 2015

~~For~~o ~~the~~TRANSITION ~~fiscal~~REPORT ~~year~~UNDER ~~ended~~SECTION ~~October~~13 ~~31,~~OR ~~2014~~15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

|_| 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.)

8560 West Sunset Blvd., Suite 400, Los Angeles, CA 90069

(Address of principal executive offices)

(424) 274-4791

(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)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ~~[ ]~~ o No ~~[X]~~T

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes

~~[ ]~~Yes o No ~~[X]~~ T

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.

Indicate by check mark whether the registrant (1 ) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 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.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 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 ~~[ ]~~ o No ~~[x ]~~T

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ~~[ ]~~ o No ~~[ x ]~~T

Indicate by 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]~~ T

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

Large Accelerated Filer ~~[ ]Accelerated Filer [ ]~~o

~~Non-accelerated~~Accelerated Filer ~~[ ]Smaller Reporting Company [X]~~ o

Non-accelerated Filer o

Smaller Reporting Company T

(Do not check if a smaller reporting company.)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ~~[ ]~~ o No ~~[X]~~ T

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 ~~April~~July 2021, 2016, there were 22,215,860 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 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.

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. 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.

Overview of the business

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 certain 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.

Our first therapeutic drug candidate is expected to be AG ~~101~~101which ~~which~~is ~~will~~intended to target certain brain cancer. We need to commission final Phase 0 toxicology studies at an external laboratory for AG101 drug candidate preparation of an IND for submission to the FDA to receive clearance to begin human clinical trial work as well as conduct CMC and formulation studies. It is possible that during this work we might extend or alter the initial indication of our first therapeutic to maximize the chances of successful clinical trial performance. 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 $4,000,000 - $5,000,000 which will require additional funding. 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. 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.

The founders of Arrogene 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 has involved seven years of development based on financial support of CSMC, 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.

Our 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. 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 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 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-421 was performed this time with the paraffin-embedded archival material routinely used in all pathological laboratories. This trial has been completed, with more than 300 cases of human tumors analyzed. The data, which has been published, shows that this protein is overproduced in more than (85%) of grade IV gliomas and its production is correlated with poor patient survival, as compared to patients whose tumors predominantly contain a normal isoform, Laminin-421. As a result, we are in the process of exploring licensing this new test as a Laboratory Developed Test and we are currently in negotiations with a partner for delivery of this test into clinical practice. Additionally, we have conducted protocol development and have furthered our clinical trial to measure the range of application for Laminin 411.

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. Our 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.

The challenge for all drugs is to maximize the net clinical benefit by increasing the desired therapeutic effect and reducing adverse effects. This is especially difficult in cancer, where the goal is to destroy or inhibit growth of cancer cells without damaging similar healthy cells. The first generation of cancer drugs were cytotoxic chemotherapies, such as Taxotere, which achieved limited selectivity by targeting mechanisms responsible for cell proliferation, a key characteristic of cancer cells. The mechanisms responsible for cell proliferation are also a property of healthy cells, which can lead to significant adverse effects when healthy cells are destroyed. Biopharmaceutical companies have developed more selective drugs, which we refer to as targeted therapies, such as Herceptin and Gleevec by targeting proteins found at higher levels on the surface of cancer cells or by inhibiting dysregulated biochemical pathways inside cancer cells. More recently, drugs such as Kadcyla have increased efficacy by linking toxins and antibodies to deliver targeted cytotoxicity. While these newer drugs were an improvement in targeting cancer cells relative to normal tissue, there continues to be a need to develop drugs with increased net clinical benefit.

5 We believe Polycefins can represent the next stage in the evolution of cancer therapy based on its 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 are designed to target tumors at four levels: tissue, cellular and intracellular and molecular. Polycefins also contain controlled mechanisms for controlled payload activation as well for active penetration of key biological barriers needed to treat diseases such as the central nervous system, (the brain). We believe that Polycefins are the first platform to enable simultaneous multi targets as well as multi payload delivery, making them uniquely suited for personalized medicine and for targeted combinational therapy. We believe that Polycefins have the potential to significantly increase the net clinical benefit of the therapeutic payloads and result in efficacy and safety not currently achievable through other therapeutic approaches.

WeOur ~~believe~~lead ~~Polycefins~~Polycefin ~~can~~drug ~~represent~~candidate, ~~the~~AG-101, ~~next~~is ~~stage~~a inbrain ~~the evolution of~~ cancer ~~therapy~~specific ~~based~~nanodrug onfeaturing ~~its ability to deliver~~ combinational therapy ~~agents~~for ~~against~~primary ~~multiple~~brain cancer ~~targets.~~(glioblastoma ~~Polycefins are nano-bio-polymers bound to therapeutic payloads through a programmable release control mechanism and are designed to target tumors at four levels: tissue~~multiforme), ~~cellular~~ and ~~intracellular and molecular. Polycefins~~ also ~~contain controlled mechanisms~~ for ~~controlled~~primary ~~payload~~and ~~activation~~metastatic aslung ~~well~~and ~~for~~triple ~~active~~negative ~~penetration~~breast ~~of key biological barriers needed to treat diseases such as the central nervous system, (the brain)~~cancers. We ~~believe~~The ~~that~~active ~~Polycefins~~therapeutics ~~are~~feature ~~the~~of ~~first~~AG-101 ~~platform~~is toa ~~enable~~combination ~~simultaneous~~of ~~multi~~antisense ~~targets~~oligonucleotides ~~as well as multi payload delivery, making them uniquely suited for personalized medicine and for targeted combinational therapy. We believe that Polycefins have the potential~~ to ~~significantly~~inhibit ~~increase~~Laminin ~~the~~411 ~~net clinical benefit of the therapeutic payloads~~ and ~~result~~wild inEGFR ~~efficacy~~ and ~~safety~~mutated ~~not currently achievable through other therapeutic approaches~~EGFRvIII.

Our 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.5

Our Strategy

Our goal is to become a leading biopharmaceutical company developing and commercializing targeted nanomedicines to address significant unmet medical needs, with an initial focus on treatments for cancer. The critical components of our business strategy include:

• Develop our 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 patients with these specific tumor types, so that we can move into pivotal Phase 12 and 3 trials where we will seek to establish ~~the~~efficacy and superiority of AG-101 versus conventional therapies. We intend to petition the FDA to grant ~~“rare~~orphan ~~disease”~~drug designation for our AG-101 target, which if granted, will provide market exclusivity. Further, we will apply for “Fast Track” or “Breakthrough” product designation by the FDA that, if granted and with positive results from the Phase 1 and Phase 2 trials, will streamline the scope and size of the required clinical trials required prior to product licensure by the FDA (i.e. “approval”). 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. • 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. • Leverage our nanomedicine platform to develop a pipeline of high value Polycefins. The modularity of our technology allows us to efficiently expand our pipeline of Polycefins, both on our own and in collaboration with others, through various combinations of targeting ligands and therapeutic payloads, and also enables us to move into therapeutic areas beyond oncology, such as inflammatory, infective and cardiovascular diseases. • Capitalize on drug candidates with established drug development history to accelerate development and regulatory pathway. Where possible we will 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. • 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. • Continue to extend and protect our product technology and Polycefins through our intellectual property portfolio. We seek to protect our medicinal engineering platform through issued U.S. patents and U.S. patent applications that we own or license, in some cases with foreign counterparts relating to elements of our Polycefin 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.

•Product ~~Develop~~Pipeline 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.Platform

•We ~~Leverage~~intend to use our ~~nanomedicine~~medicinal nanobiopolymeric platform to develop aPolycefins ~~pipeline~~in ofseveral ~~high~~therapeutic ~~value~~areas, ~~Polycefins.~~with ~~The~~an ~~modularity~~initial offocus ~~our~~on ~~technology~~the ~~allows~~treatment usof tovarious ~~efficiently~~types ~~expand~~of ~~our~~cancer. ~~pipeline~~In ~~of Polycefins~~addition, ~~both~~we onwill ~~our~~seek ~~own~~to ~~and~~enter ininto collaboration agreements with ~~others,~~several ~~through~~major ~~various~~biopharmaceutical ~~combinations~~companies ofto ~~targeting~~develop ~~ligands~~ and ~~therapeutic~~commercialize ~~payloads,~~Polycefins ~~and~~that ~~also~~are ~~enables~~based uson toour ~~move~~collaborators’ ~~into~~proprietary therapeutic ~~areas beyond oncology, such as inflammatory, infective and cardiovascular diseases~~payloads.

• 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.6

6 Evolution of Targeted Therapies

•A ~~Commercialize~~further ~~proprietary~~step ~~Polycefins,~~in ~~including~~the ~~AG-101~~evolution of targeted therapies is antibody drug conjugates, ~~directly~~or inADCs. ~~the~~ADCs ~~United~~consist ~~States~~of an antibody or antibody fragment and ~~with~~a ~~collaborators~~chemically ~~outside~~linked toxin. ADCs are designed to target antigens that are exclusively or preferentially expressed on the ~~United~~surface ~~States~~of cancer cells. WeThe ~~have~~antibody ~~retained~~causes the ~~worldwide~~ADC ~~rights~~to bind to ~~AG-101~~the target cancer cells, ~~AG-102~~where ~~and~~the ~~AG-103~~ADC ~~and~~is ~~expect~~required to ~~initially~~be ~~maintain~~internalized ~~similar~~by ~~rights~~the ~~with~~cell ~~respect~~in order to ~~other~~break ~~proprietary~~the ~~Polycefins~~chemical welink ~~develop.~~and Werelease ~~intend~~the toxin to ~~build~~kill athe ~~focused~~target ~~oncology~~cell. ~~sales~~Because ~~organization~~of the targeting, ADCs are expected to ~~market~~produce ~~FDA-approved~~lower ~~Polycefins~~side ineffects and a greater net clinical benefit as compared to the ~~United~~toxin ~~States~~alone. ~~Outside~~Examples ~~the~~of ~~United~~ADCs ~~States~~include Adcetris, wewhich ~~expect~~is approved to ~~rely~~treat onrelapsed ~~collaborators~~and torefractory ~~commercialize~~Hodgkins ~~proprietary~~lymphoma, and Kadcyla, which is approved ~~Polycefins~~to treat metastatic breast cancer.

•The ~~Continue~~advent toof ~~extend~~targeted ~~and~~therapies ~~protect~~has ~~our~~represented ~~product~~a ~~technology~~major ~~and~~advance ~~Polycefins~~in ~~through~~the ~~our~~fight ~~intellectual~~against ~~property~~important ~~portfolio~~diseases including cancer. WeIn ~~seek~~some toinstances ~~protect~~targeted ~~our~~therapies ~~medicinal~~have ~~engineering~~displaced ~~platform~~cytotoxic ~~through~~agents ~~issued~~in ~~U.S.~~standard ~~patents~~cancer regimens and ~~U.S.~~in ~~patent~~others ~~applications~~targeted ~~that~~therapies weare ~~own~~now orused ~~license,~~ in ~~some~~combination ~~cases~~ with ~~foreign~~cytotoxins. ~~counterparts relating to elements of our Polycefin candidates~~However, asmany ~~well~~targeted astherapies ~~know-how~~are ~~and~~subject ~~trade secrets relating~~ to the ~~design~~same ~~and~~limitations ~~manufacturing of our Polycefins. We expect to file additional patent applications~~ as wecytotoxic ~~apply~~agents, ~~our~~and ~~technology~~despite tothe ~~new~~commercial ~~targets~~ and ~~therapeutic~~clinical ~~payloads.~~success Inof ~~addition~~targeted therapies, we believe the ~~heightened~~industry ~~regulatory~~is ~~requirements~~increasingly ~~for~~recognizing ~~generic~~potential ~~nanomedicines~~limitations ~~strengthen~~associated ~~the~~with ~~protection~~these ~~afforded~~therapies, ~~by our intellectual property portfolio.~~including:

~~Product~~• ~~Pipeline~~Many molecularly-targeted therapies are directed toward cellular processes that are essential for cancer cell survival and ~~Platform~~proliferation, but 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. • 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. • Since ADCs require the internalization of the antibody and the cleavage of the link between the antibody scaffold and the payload, ADCs must be targeted to antigens that are internalized by cancer cells at a rate sufficient to result in an effective intracellular concentration of the toxin.

WeAs ~~intend~~a toresult ~~use our medicinal nanobiopolymeric platform to develop Polycefins in several therapeutic areas, with an initial focus on the treatment~~ of ~~various~~these ~~types of cancer. In addition~~limitations, wethere ~~will~~continues ~~seek~~ to ~~enter~~be ~~into~~a ~~collaboration~~need ~~agreements with several major biopharmaceutical companies~~ to develop ~~and~~targeted ~~commercialize~~therapies ~~Polycefins~~with ~~that~~increased ~~are~~net ~~based~~clinical ~~on our collaborators’ proprietary therapeutic payloads~~benefit.

~~Evolution~~The Emergence of ~~Targeted Therapies~~Nanomedicine

ARecently, ~~further~~there ~~step~~has inbeen ~~the~~a ~~evolution~~growing ofinterest ~~targeted~~in ~~therapies~~the isdevelopment ~~antibody~~of ~~drug~~therapeutics ~~conjugates,~~using ~~or ADCs~~nanotechnology. ~~ADCs~~Nanotechnology ~~consist~~is ofthe anscience ~~antibody or antibody fragment~~ and aengineering ~~chemically~~of ~~linked~~manipulating ~~toxin.~~matter ~~ADCs~~at ~~are~~the ~~designed~~nanometer toscale—one ~~target~~nanometer ~~antigens~~is ~~that~~one ~~are~~billionth ~~exclusively or preferentially expressed on the surface~~ of ~~cancer~~a ~~cells~~meter. ~~The~~Nanomedicine ~~antibody~~is ~~causes~~ the ~~ADC~~medical toapplication ~~bind~~of tonanotechnology ~~the target cancer cells, where the ADC is required~~ to bedevelop ~~internalized~~therapeutics bywith ~~the~~clinically ~~cell~~useful ~~in order to break the~~ chemical, ~~link~~physical and ~~release~~biological ~~the toxin to kill the target cell~~properties. ~~Because~~There ~~of the targeting, ADCs~~ are ~~expected~~several tonanomedicine ~~produce~~platforms ~~lower~~at ~~side~~various ~~effects~~stages ~~and~~of adevelopment ~~greater~~or ~~net~~commercialization, ~~clinical~~many ~~benefit~~of aswhich ~~compared~~have ~~to the toxin alone~~limitations. ~~Examples~~Notable ofplatforms ~~ADCs~~ include ~~Adcetris~~albumin nanoparticles, ~~which~~liposomes ~~is approved to treat relapsed~~ and ~~refractory~~polymeric ~~Hodgkins lymphoma, and Kadcyla, which is approved to treat metastatic breast cancer~~nanoparticles.

~~The~~• ~~advent~~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 ~~targeted~~paclitaxel, ~~therapies~~such as Taxol. Abraxane has ~~represented~~been effective at improving the net 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 then distributes widely throughout all tissues. • Liposomes encapsulate a ~~major~~therapeutic ~~advance~~payload inwithin a lipid shell. Liposomes can cross the ~~fight~~walls ~~against~~of ~~important~~new ~~diseases~~or ~~including~~defective ~~cancer~~blood vessels and accumulate at the site of the disease. InFor ~~some~~example, ~~instances~~Doxil, ~~targeted~~liposomal ~~therapies~~doxorubicin, ~~have~~has ~~displaced~~been ~~cytotoxic~~approved ~~agents~~for inthe ~~standard~~treatment of multiple types of cancer ~~regimens~~and has been effective at improving the net clinical benefit by reducing cumulative cardiotoxicity and inenabling ~~others~~a ~~targeted~~longer ~~therapies~~treatment ~~are~~period. ~~now~~Despite ~~used~~the success of Doxil, the widespread adoption of liposomal technologies has been limited by the difficulty in ~~combination~~encapsulating ~~with~~different ~~cytotoxins~~therapeutic payloads within the lipid shell and controlling their release. ~~However,~~Liposomes ~~many~~have ~~targeted~~also ~~therapies~~proven ~~are~~difficult ~~subject~~to manufacture at commercial scale. • Polymeric nanoparticles utilize synthetic polymers to attempt to create therapeutics that concentrate at the ~~same~~site ~~limitations~~of asdisease ~~cytotoxic~~while ~~agents~~minimizing exposure to healthy tissue, ~~and~~thereby ~~despite~~increasing net clinical benefit. Polymeric nanoparticles vary with respect to whether they physically entrap or chemically attach the ~~commercial~~therapeutic payload to the polymer, the presence or absence of targeting ligands and ~~clinical~~the ~~success~~type of synthetic polymer used. Polycefins are a member of this class of targeted therapies; however this drug family is based on natural biopolymer, wepolymalic ~~believe~~acid (PMLA). Arrogene developed the ~~industry~~technology isto ~~increasingly~~achieve ~~recognizing~~>98% ~~potential~~purity ~~limitations~~of ~~associated~~PMLA ~~with~~and ~~these~~demonstrated ~~therapies~~non-toxic, ~~including:~~non-immunogenic and biodegradable properties of PMLA nanoplatform with end metabolic products such as H2O and C2O (Fig. 1).

• Many molecularly-targeted therapies are directed toward cellular processes that are essential for cancer cell survival and proliferation, but 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.7

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•Fig.1 ~~The~~Polymalic ~~limited~~acid ~~payload~~favorable ~~capacity~~pharmaceutical ofproperties ~~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~~terms ~~development or on the market use one~~ of afull ~~few highly toxic molecules such as maytansine, calicheamicin or aurastatin~~biodegradebility.

•We ~~Since~~believe ~~ADCs~~that ~~require~~third ~~the~~generation ~~internalization~~(targeted) ofnanomedicines ~~the~~hold ~~antibody and~~ the ~~cleavage~~promise of combining the ~~link~~targeting ~~between~~specificity ~~the~~of ~~antibody~~ligands ~~scaffold~~such ~~and~~as ~~the~~monoclonal ~~payload,~~antibodies/peptides ~~ADCs~~with ~~must~~applicability beof ~~targeted~~traditional tosmall ~~antigens~~molecule ~~that~~drugs ~~are~~and ~~internalized~~other bytherapeutics, ~~cancer~~thereby ~~cells~~increasing atthe anet ~~rate~~clinical ~~sufficient~~benefit tofor ~~result~~the intreatment anof ~~effective~~cancer ~~intracellular~~and ~~concentration~~other ofpathological ~~the~~conditions ~~toxin~~(Fig2).

~~As a result of these limitations, there continues to be a need to develop targeted therapies with increased net clinical benefit.~~8

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

~~The Emergence of Nanomedicine~~Polycefins

~~Recently,~~We ~~there~~believe ~~has~~Polycefins ~~been~~represent athe ~~growing~~next ~~interest~~stage in the ~~development~~evolution of ~~therapeutics~~targeted ~~using~~therapies ~~nanotechnology~~and nanomedicine. ~~Nanotechnology~~Polycefins isare ~~the~~polymeric ~~science~~nanoparticles ~~and~~that ~~engineering~~incorporate ofmultiple ~~manipulating~~therapeutic ~~matter~~payloads atfor ~~the~~molecular ~~nanometer~~combinational ~~scale—one~~therapy ~~nanometer~~with ismultiple ~~one~~targeting ~~billionth~~agents ofenabling acrossing ~~meter.~~multiple ~~Nanomedicine~~bio isbarriers, ~~the~~targeting ~~medical application~~ of ~~nanotechnology~~the todiseased ~~develop~~tissue ~~therapeutics~~and ~~with~~cancer ~~clinically useful chemical~~cells, ~~physical~~ and ~~biological~~provide ~~properties.~~for ~~There~~the ~~are~~controlled ~~several~~and ~~nanomedicine~~timely ~~platforms~~release ~~at various stages~~ of ~~development~~the ortherapeutic ~~commercialization~~payload, ~~many~~generally ofinside ~~which~~a ~~have limitations~~target. ~~Notable platforms include albumin nanoparticles, liposomes and polymeric nanoparticles.~~

•Prolonged ~~Albumin~~circulation ~~nanoparticles~~and ~~utilize~~membrane ~~the plasma protein albumin to formulate therapeutic agents~~passage. ~~Abraxane~~We isdesign anPolycefins ~~albumin~~with ~~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 ~~net~~ability ~~clinical benefit compared~~ to ~~conventional~~target ~~paclitaxel~~and ~~formulations~~pass bythrough ~~eliminating~~ the ~~side~~biological ~~effects~~barriers ~~associated~~that ~~with~~have ~~the~~historically ~~Cremophor~~insulated ~~and~~disease ~~enabling~~cells ~~higher dosing of paclitaxel. However, Abraxane has not been clinically shown to target any specific cellular target. The albumin nanoparticles separate~~ from ~~the~~access ~~paclitaxel~~by ~~upon~~circulating ~~administration, which then distributes widely throughout all tissues~~drugs.

•Multi ~~Liposomes~~Targeting/ ~~encapsulate~~Bio aBarriers ~~therapeutic payload within a lipid shell~~crosing. ~~Liposomes~~We ~~can~~design ~~cross~~Polycefins ~~the~~with ~~walls~~specific ofpharmaceutical ~~new~~properties orintended ~~defective~~to ~~blood~~target ~~vessels~~tumors ~~and accumulate~~ at ~~the~~four ~~site~~levels: ~~of the disease~~1. ~~For~~tissue ~~example,~~(bio ~~Doxil~~barriers), ~~liposomal~~2. ~~doxorubicin~~cellular, 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 period3. ~~Despite~~intracellular ~~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~~4. ~~Liposomes~~Molecular ~~have also proven difficult to manufacture at commercial scale~~Fig.3:

8 1. Tissue targeting is 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 allow it to escape through gaps in the blood vessels surrounding tumors and other disease sites. 2. Cellular targeting is achieved using multiple proprietary targeting ligands on the surface of the Polycefin that bind to specific cell surfaces or tissue markers and receptors. 3. We have demonstrated that our Polycefins can pass through intracellular structures (endosomes and lysosomes) and are released into the cancer cell matrix where drugs can fight against cancer cells proliferation or vitability. We design Polycefins with a specific activation mechanism that provides for the controlled and timely release of the therapeutic payload only once the payload has penetrated inside the target tumor cell and is released from the endosomes and lysosomes. 4. When AONs are released into the cellular cytoplasm they have been shown to inhibit tumor specific proteins laminin-411 and wild EGFR and mutated EGFRvIII synthesis in both in vitro and in vivo model systems. The following diagram depicts the mechanisms of tissue targeting and cellular targeting Fig 3.

• 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).9

Fig. 3. Mechanism of Polycefins (Ag-101) action at four levels: 1. ~~Polymalic~~Tissue ~~acid~~(bio ~~favorable~~barriers), ~~pharmaceutical~~2. ~~properties~~Cellular, in3. ~~terms~~Intracellular and 4. Molecular. The Polycefin drug AG101 inhibits the syntheses of ~~full~~Laminin ~~biodegradebility~~411 and EGFR and mutated EGFRvIII.

WeBy ~~believe~~combining ~~that~~prolonged ~~third~~circulation, ~~generation~~multi ~~(targeted)~~targeting ~~nanomedicines~~and ~~hold~~controlled ~~the~~and ~~promise~~timely release of ~~combining~~ the ~~targeting~~therapeutic ~~specificity~~payload, ofPolycefins ~~ligands~~have ~~such~~the aspotential ~~monoclonal~~to ~~antibodies/peptides~~significantly ~~with~~increase ~~applicability~~the ofnet ~~traditional~~clinical ~~small~~benefit ~~molecule~~associated ~~drugs~~with ~~and~~the ~~other~~therapeutic ~~therapeutics,~~payload ~~thereby~~and ~~increasing~~result ~~the~~in ~~net~~efficacy ~~clinical~~and ~~benefit~~safety ~~for~~currently ~~the~~not ~~treatment~~achievable ofthrough ~~cancer and~~ other ~~pathological~~therapeutic ~~conditions (Fig2)~~modalities.

9 Engineering of nanobioconjugated (Polycefins)

~~Fig~~We 2develop Polycefins utilizing polymalic acid as our nanobiopolymer platform. ~~Targeted~~ We engineer combinatorial libraries of targeted nanomedicines ~~that~~with ~~are~~systematically varied properties, such as ligands, therapeutic payloads amount and release 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 will allow us to advance a new Polycefin using an existing targeting ligand into preclinical testing in ~~clinical~~approximately ~~practice~~six to ten months after identifying a therapeutic payload.

~~Polycefins~~Therapeutic Payloads

We ~~believe~~have engineered Polycefins ~~represent~~that ~~the~~incorporate ~~next~~therapeutic ~~stage~~payloads inwith ~~the~~a ~~evolution~~range of ~~targeted~~physicochemical ~~therapies~~properties. ~~and~~We ~~nanomedicine.~~have ~~Polycefins~~demonstrated ~~are~~in ~~polymeric~~preclinical ~~nanoparticles~~studies that ~~incorporate~~these ~~multiple~~Polycefins ~~therapeutic~~can ~~payloads~~improve ~~for~~tumor ~~molecular~~growth ~~combinational~~suppression, ~~therapy~~achieve ~~with~~higher ~~multiple~~concentrations ~~targeting~~of ~~agents~~the ~~enabling~~payload ~~crossing~~in ~~multiple~~tumors ~~bio~~compared ~~barriers,~~to ~~targeting of~~ the ~~diseased~~payload ~~tissue~~administered ~~and~~in ~~cancer~~conventional ~~cells~~form, and ~~provide~~have ~~for~~pharmacokinetics ~~the controlled~~ and ~~timely~~tolerability ~~release~~differentiated offrom ~~the~~their therapeutic ~~payload, generally inside a target~~payloads.

~~Prolonged circulation and membrane passage. We design Polycefins with the ability to target and pass through many of the critical biological barriers that insulate disease cells from access.~~ 10

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:AG-101

~~1. Tissue~~Our ~~targeting~~lead nanodrug candidate, AG-101, is ~~achieved~~a byPolycefin ~~engineering~~that ~~active~~targets ~~passage~~primary ~~through~~and ~~blood~~metastatic ~~vessels,~~brain ~~(such~~cancers asby ~~the~~inhibiting ~~Brain~~EGFR ~~Blood~~and ~~Barrier/Brain~~Laminin ~~Tumor~~411 ~~Barrier)~~simultaneously. The ~~Using~~nanosize ~~the~~of ~~physical~~our ~~and~~drug ~~chemical~~is ~~properties—size~~20 nm, ~~shape~~which is optimum for blood–brain barrier (BBB) or blood–brain tumor barrier (BTB) and ~~surface~~cellular ~~properties—~~delivery. Effective treatment of ~~Polycefins~~brain totumors ~~allow~~should itbe topossible ~~escape~~with drug delivery through ~~gaps~~BBB/BTB inand ~~the~~targeting ~~blood~~specific ~~vessels~~types ~~surrounding~~of ~~tumors~~brain ~~and~~cells ~~other~~with ~~disease~~drug ~~sites.~~release 2into the cell cytoplasm. ~~Cellular~~Our ~~targeting~~AG-101 isdrug ~~achieved~~passes through the BTB and tumor cell membrane using ~~multiple~~anti-transferring ~~proprietary~~receptor ~~targeting~~(anti-TfR) ~~ligands~~monoclonal onantibodies ~~the~~with ~~surface~~unique ability of targeting the ~~Polycefin~~BTB ~~that~~and ~~bind~~tumor tocells. ~~specific~~The ~~cell~~polymeric ~~surfaces~~drug orinhibits ~~tissue~~tumor ~~markers~~angiogenesis ~~and~~by ~~receptors.~~specifically 3.blocking Wethe ~~have~~synthesis ~~demonstrated~~of ~~that~~a ~~our~~tumor ~~Polycefins~~neovascular ~~can~~protein, ~~pass~~laminin-411, ~~through~~and ~~intracellular~~the ~~structures~~tumor proliferation marker EGFR by attached Morpholino antisense oligonucleotides (~~endosoms~~AONs). ~~and~~The AONs oligonucleatides are released into the ~~cancer~~target cell ~~matrix~~cytoplasm ~~where~~via ~~drugs~~pH-activated ~~can~~trileucine, ~~fight~~an ~~against~~endosomal ~~cancer~~escape ~~cells~~moiety. ~~proliferation~~The oravailability ~~vitability.~~of Wea ~~design~~systemically ~~Polycefins~~active ~~with~~polymeric ~~specific~~drug ~~activation~~delivery ~~mechanism~~system that ~~provide~~passes ~~for~~through the ~~controlled~~BTB, ~~and~~targets ~~timely~~tumor ~~release~~cells, ofand ~~the~~inhibits ~~therapeutic~~glioma ~~payload~~growth ~~only~~gives ~~once~~hope ~~the~~for ~~payload~~a ~~has~~successful ~~penetrated~~strategy ~~inside~~of ~~the~~glioma ~~target tumor cell~~treatment. 4.This ~~When~~delivery ~~AONs~~system ~~are~~with ~~escaped~~drug release into the ~~cellular~~brain-specific ~~cytoplasm~~cell ~~they~~type ~~inhibit~~could ~~tumor~~be ~~specific~~useful ~~proteins~~for ~~laminin-411~~treatment ~~and~~of ~~wild~~various ~~EGFR~~brain ~~and~~pathologies. ~~mutated~~We ~~EGFRvIII~~plan ~~synthesis~~to inenter ~~vitro~~a ~~and~~Phase in1 ~~vivo.~~clinical ~~The~~trial ~~following~~to ~~diagram~~evaluate ~~depicts~~ the ~~mechanisms~~safety ofand ~~tissue~~level ~~targeting~~of ~~and~~clinical ~~cellular~~activity ~~targeting~~of ~~Fig 3~~AG-101.

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10 AG-101 Market Opportunity

~~Fig.~~As 3.survival ~~Mechanism~~rates for primary cancers improve, increasingly significant percentiles of ~~Polycefins~~the ~~(Ag-101)~~patient ~~action~~population atare ~~four~~developing ~~levels:~~metastatic 1.forms ~~Tissue~~of ~~(bio~~these ~~barriers)~~cancers, 2.which ~~Cellular,~~are 3.often ~~Intracellular~~found late stage and 4.have ~~Molecular~~few or no treatment options. ~~The~~Arrogene estimates that 40% of breast and 75% of lung primary cancers metastasize to the brain, based on published studies. Polycefin’s ~~drug~~ability ~~AG101~~to ~~inhibits~~pass through the ~~syntheses~~tumor’s Brain Tumor Barrier (“BTB”), which is the part of ~~Laminin~~brain ~~411~~blood barrier (“BBB”), could make it ideally suited for use as a diagnostic and/or ~~wild~~therapeutic ~~EGFR~~to treat such metastatic cancers, and ~~mutated~~these ~~EGFRvIII~~might present early market opportunities.

ByIt ~~combining~~is ~~prolonged~~estimated ~~circulation~~that approximately 207,000 ~~multi~~new ~~targeting~~cases ~~and~~of ~~controlled~~breast cancer and ~~timely~~204,000 ~~release~~cases of lung cancer are diagnosed every year in the ~~therapeutic~~U.S. Additionally ~~payload~~there are between 120,000 ~~Polycefins~~and ~~have~~140,000 ~~the~~annual ~~potential~~cases of secondary brain cancers, according to ~~significantly~~various ~~increase~~published ~~the~~sources. ~~net~~Based ~~clinical~~on ~~benefit~~these ~~associated~~patient ~~with~~populations, ~~the~~and ~~therapeutic~~certain ~~payload~~price and ~~result~~dosage inassumptions, ~~efficacy~~we have estimated that the total market potential for Polycefin based therapeutics products for primary and ~~safety~~metastatic ~~currently~~brain ~~not~~cancers ~~achievable~~(gliomas) ~~through~~could ~~other~~exceed ~~therapeutic~~$30 ~~modalities~~billion annually.

~~Engineering~~AG-101 ~~of nanobioconjugated (Polycefins)~~Development

We ~~develop~~have ~~Polycefins~~completed ~~utilizing~~most ~~polymalic~~preclinical ~~acid~~development ~~as our nanobiopolymer platform. We engineer combinatorial libraries~~ of ~~targeted~~AG-101 ~~nanomedicines with systematically varied properties, such as ligands, therapeutic payloads amount~~ and ~~release~~are ~~profile,~~preparing ~~using a synthesis and nano conjugation fabrication process. We design Polycefin~~ to ~~balance~~submit ~~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~~IND ~~targeting ligand into preclinical testing in approximately four~~ to ~~six~~the ~~months after identifying a therapeutic payload~~FDA.

~~Therapeutic Payloads~~11

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WePhase ~~have~~1 engineered Polycefin that incorporate therapeutic payloads with a range of physicochemical properties. 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~~Clinical ~~pharmacokinetics~~Development ~~and tolerability differentiated from their therapeutic payloads.~~Plan

11 Our overall objective for AG-101 is to establish it as a safe and effective new cancer therapy with superior efficacy in brain gliomas to current clinical standard Temozolomide (brand names Temodar and Temodal and Temcad), an oral chemotherapy drug used for brain gliomas.

As a result, we plan to seek approval to initiate a Phase I clinical trial 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

~~Our~~This ~~lead~~clinical ~~nanodrug~~trial ~~candidate, AG-101,~~ is aexpected ~~Polycefin~~to ~~that~~take ~~targets~~approximately ~~primary~~12 ~~and~~months ~~metastatic~~to ~~brain~~enroll, ~~cancers by inhibiting EGFR~~ and ~~Laminin~~can ~~411~~be ~~simultaneously. The~~conducted ~~nanosize~~at ofa ~~our~~single ~~drug~~clinical issite 20in ~~nm,~~the ~~which~~United ~~is optimum for blood–brain barrier (BBB) or blood–brain tumor barrier (BTB) and cellular delivery~~States. ~~Effective~~If ~~treatment~~we ofobtain ~~brain~~favorable ~~tumors~~results ~~should~~in bethese ~~possible~~Phase ~~with~~1 ~~drug~~studies, ~~delivery~~we ~~through~~plan ~~BBB/BTB~~to ~~and~~initiate ~~targeting~~pivotal ~~specific~~trials ~~types~~ of ~~brain cells with drug release into the cell cytoplasm. Our~~ AG-101. ~~drug~~We ~~passes~~anticipate ~~through~~these ~~the~~will ~~BTB~~be ~~and tumor cell membrane using anti~~head-~~transferring receptor (anti~~to-~~TfR)~~head ~~monoclonal~~randomized ~~antibodies~~Phase ~~with~~2 ~~unique~~trials ~~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, laminin~~AG0-~~411,~~101 ~~and~~compared ~~tuor~~to ~~proliferative~~Temozolomide ~~marker EGFR by attached Morpholino antisense oligonucleotides~~ (~~AONs~~plus radiation). ~~The~~in ~~AONs~~these ~~oligonucleatides~~indications 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 ~~inhibits~~will ~~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~~designed ~~for treatment of various brain pathologies. We expect~~ to ~~enter~~demonstrate ~~Phase 1 clinical trials to evaluate~~ the ~~safety~~superiority ~~and level~~ of ~~clinical activity of~~ AG-101.

~~AG-101~~Phase ~~Market~~1 ~~Opportunity~~Clinical Development

AsWe ~~survival~~plan ~~rates~~to ~~for~~conduct ~~primary~~a ~~cancers~~Phase ~~improve,~~1 ~~increasingly~~clinical ~~significant~~trial ~~percentiles~~evaluating ofAG-101 ~~the~~in ~~patient~~patients ~~population~~with ~~are~~advanced ~~developing~~and metastatic ~~forms~~solid ~~of these cancers, which are often found late stage and have few or no treatment options. Arrogene estimates that 40% of breast and 75% of lung primary cancers metastasize to the~~ brain, ~~based~~tumors onat ~~published~~Q3W studies. Polycefin’s ability to pass through the tumor’s Brain Tumor Barrier (“BTB”), which is the part of brain blood barrier (“BBB”), could make it ideally suited for use as a diagnostic and~~/or~~ ~~therapeutic~~Q1W todosing ~~treat such metastatic cancers, and these might present early market opportunities~~schedules.

ItThe isstudy ~~estimated~~will ~~that~~be ~~approximately~~designed ~~207,000~~to ~~new~~enroll ~~cases~~individual cohorts of ~~breast~~one ~~cancer~~to ~~and~~three ~~204~~patients at a starting dose and,~~000~~ ~~cases~~if ofno ~~lung~~dose ~~cancer~~limiting toxicities, or DLTs, are ~~diagnosed~~observed, ~~every~~the ~~year~~dose inwill be increased to the Unext pre-specified dose level for the next cohort of patients until a maximum tolerated dose is identified.~~S. Additionally~~ As long as there ~~are~~is ~~between~~no ~~120~~disease progression,~~000~~ ~~and~~patients ~~140,000~~will ~~annual~~be ~~cases~~allowed ofto ~~secondary~~stay ~~brain~~on ~~cancers~~drug; however, ~~according~~since the starting dose will typically be sub-therapeutic we expect patients’ tumors in the early cohorts to ~~various~~continue ~~published~~to ~~sources~~grow. ~~Based~~In onthe ~~these~~Q3W ~~patient~~portion ~~populations~~of the study, ~~and~~we ~~certain~~will ~~price~~evaluate ~~and~~dose ~~dosage~~levels ~~assumptions,~~ranging wefrom ~~have~~[3.5 ~~estimated~~mg/m ~~that~~2 ~~the~~to ~~total~~75 ~~market~~mg/m ~~potential~~2 ~~for~~]. ~~Polycefin~~We ~~based~~anticipate ~~therapeutics~~that ~~products~~the ~~for~~Q3W ~~primary~~portion ~~and~~of ~~metastatic~~the ~~brain~~study ~~cancers~~will ~~(gliomas)~~enroll ~~could~~15 ~~exceed~~patients ~~$30~~with ~~billion~~a ~~annually~~variety of advanced malignancies.

12 The Phase 1 study will also evaluate preliminary anti-tumor activity. Anti-tumor activity will be 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.

~~AG-101 Development~~12

We ~~have~~expect ~~completed~~to ~~most~~retain ~~preclinical~~clinical ~~development~~trial ofexpertise ~~AG-101~~to ~~and~~assist ~~are~~us ~~preparing~~with tothe ~~submit~~above anefforts ~~IND~~and toour plans could change based on the ~~FDA.~~advice of such experts once retained.

~~Phase~~Preclinical ~~1 and Clinical~~ Development ~~Plan~~

~~Our~~We ~~overall~~have ~~objective~~developed important related intellectual properties surrounding tumor biomarker Laminin-411 as a diagnostic, prognostic and treatment biomarker for AGnumber of tumors. Laminins are the major components of basement membranes that are orderly sheet-~~101~~like isstructures secreted by cells to ~~establish~~separate itseveral ascell types from one another. Laminins play key roles in cell adhesion, polarity, movement, and differentiation. They form a ~~safe~~family of related but distinct proteins. Like all laminins, Laminin-411 is comprised of three chains, a4, b1, and ~~effective~~g1 ~~new~~(hence ~~cancer~~the ~~therapy~~name). ~~with~~In ~~superior~~normal ~~efficacy~~tissues, Laminin-411 expression is almost negligible in blood vessels. At the same time, vessels in some organs, like breast and brain, ~~gliomas~~predominantly contain another, closely related, isoform, Laminin-421 (a4b2g1). Our scientists were the first to ~~current~~demonstrate ~~clinical~~that ~~standard~~during ~~Temozolomide~~tumor development, Laminin-411 (~~brand~~formerly, ~~names~~laminin-8) ~~Temodar~~is produced in excessive amounts, while the 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 ~~Temodal~~increased production of some cancer stem cell proteins. In general, abnormal interactions between tumor cells and ~~Temcad)~~laminins are among major traits of various cancers. Taken together, anthe ~~oral~~data ~~chemotherapy~~presented ~~drug~~above ~~used~~suggest ~~for~~that ~~brain~~by ~~gliomas~~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.

AsUsing aclinical ~~result~~material from 65 patients with brain gliomas, ~~are~~our ~~planning~~founders toin ~~seek~~their ~~approval~~capacity toas ~~initiate~~researchers ~~Phase~~at ICSMC, ~~clinical~~found ~~trials~~an ofinverse AGcorrelation between Laminin-~~101~~411 atoverproduction, ~~the~~patients’ ~~Q3W~~survival ~~dosing~~and ~~schedule~~time inof arecurrent 20development ~~patient~~(Ljubimova ~~open~~et ~~label~~al., ~~single~~Cancer, ~~arm~~2004). In 2007, ~~single-center~~they ~~trial~~started ~~designed~~a clinical trial to ~~determine~~examine ~~the~~a ~~safety~~possible ~~and~~clinicopathological ~~efficacy~~use of AGLaminin-~~101~~411 as ~~measured~~a bydiagnostic ~~objective~~tool ~~response~~for ~~rate~~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 ~~patients~~all pathological laboratories. This trial has recently completed, with ~~late~~more ~~stage~~than ~~brain~~300 cases of human tumors analyzed. The data show that this protein is overproduced in more than (85%) of grade IV gliomas. ~~who~~Its ~~have~~production ~~failed~~is ~~one~~correlated ~~prior~~with ~~platinum~~poor patient survival, as compared to patients whose tumors predominantly contain a normal isoform, Laminin-~~containing~~421. ~~chemotherapy~~This ~~regimen~~data ~~for~~is ~~advanced~~currently orbeing ~~metastatic~~ prepared for publication.

~~This~~We ~~clinical~~completed ~~trial~~preclinical isstudies ~~expected~~in tomice, ~~take~~rats ~~approximately~~and 12started ~~months~~toxicity study on non-human primates to ~~enroll,~~evaluate ~~and~~the ~~can~~accumulation beof ~~conducted~~AG-101 at athe ~~single~~targeted ~~clinical~~disease site, in the ~~United~~effects ~~States.~~of Ifprolonged wecirculation ~~obtain~~of ~~favorable~~AG-101 ~~results~~and inthe ~~these~~impact ~~Phase~~of 1AG-101 ~~studies,~~on wetumor ~~plan~~size toand ~~initiate~~growth. ~~pivotal~~The ~~trials~~performance of AG-101. Wein ~~anticipate~~ these ~~will~~preclinical bestudies ~~head-to-head~~suggests ~~randomized~~that ~~Phase 2 trials of AG0~~AG-101 ~~compared~~is tohighly ~~Temozolomide~~differentiated ~~(plus~~from, ~~radiation)~~and insuperior ~~these~~to, ~~indications~~Temozolomide ~~and~~as ~~will~~well beas ~~designed~~other tostandard ~~demonstrate~~of ~~the~~care ~~superiority~~drugs offor ~~AG-101~~brain gliomas.

~~Phase~~During 1our ~~Clinical~~collaboration ~~Development~~with the FDA/NIH Nanotechnology Characterization Laboratory we characterized Polycefin and showed that Polycefin (a) is not hemolytic; (b) does not induce platelet aggregation; (c) does not induce plasma coagulation; (d) complement activation by Polycefin is about 4 times lower than that caused by market standard Doxil. This provides strong support for our pending IND.

We plan to ~~conduct~~complete athe ~~Phase~~pharmacokinetics 1and ~~clinical~~toxicity ~~trial~~of ~~evaluating~~ AG-101 in ~~patients~~cynomolgus ~~with~~monkeys, ~~advanced~~as ~~and~~a ~~metastatic~~precursor ~~solid~~to ~~brain~~FDA ~~tumors~~IND ~~at Q3W and Q1W dosing schedules~~submission.

~~The~~We ~~study~~have ~~will~~also beshown ~~designed~~that toPolycefin ~~enroll~~has ~~individual~~the ~~cohorts~~ability ~~of one~~ to ~~three~~harbor ~~patients~~various drugs at athe ~~starting~~same ~~dose~~time ~~and,~~making ifit noa ~~dose~~potential ~~limiting~~master ~~toxicities,~~delivery orvehicle ~~DLTs,~~that ~~are~~can ~~observed,~~be ~~the~~customized ~~dose~~for isa ~~increased~~particular totumor ~~the~~and ~~next~~even ~~pre-specified~~for ~~dose~~an ~~level~~individual ~~for~~patient.1 ~~the~~Additionally, ~~next~~in ~~cohort~~vivo oftreatment ~~patients~~has ~~until~~shown aeffectiveness ~~maximum~~against ~~tolerated~~more ~~dose~~than isone, ~~identified.~~widely Asdifferent, ~~long~~type asof ~~there~~cancers: isHER2/neu nopositive ~~disease~~breast ~~progression~~cancer, ~~patients~~EGFR ~~will~~positive beTriple ~~allowed~~Negative toBreast ~~stay~~Cancer on(TNBC) ~~drug;~~and ~~however~~Glioblastoma, ~~since~~suggesting ~~the~~that ~~starting dose will typically sub-therapeutic we expect patients~~Polycefin’s ~~tumors~~application inmight ~~the~~be ~~early~~flexible ~~cohorts~~and toappropriate ~~continue~~ to ~~grow.~~a Inwide ~~the~~range ~~Q3W portion~~ of ~~the~~cancer ~~study,~~types weand ~~will~~therapeutics ~~evaluate~~(Inoue ~~dose~~et ~~levels~~al, ~~ranging~~Cancer ~~from~~Research ~~[3.5~~2011, ~~mg/m~~Inoue 2et toal, 75PlosOne ~~mg/m~~2012, ~~2].~~Ding ~~The~~et ~~Q3W~~al, ~~portion~~J ofControl ~~the~~Release ~~study will enroll 15 patients with a variety of advanced malignancies~~2013).

13 Beyond diagnostic and prognostic applications, we believe that our discovery of Lamin 411’s role in tumor growth could be exploited together with our Polycefin technology towards novel tumor inhibiting treatments. Our Laminin 411 inhibition is a key mechanism of action in AG-101, using combinational antisense oligonucleotides against Laminin-411 and EGFR on one Polycefin molecule, and target them specifically to tumor cells.

~~The 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.

~~We expect to retain clinical trial expertise to assist us with the above efforts and our plans could change based on the advice of such experts once retained.~~13

~~Preclinical~~AG-101 ~~Development~~Regulatory Pathway

We ~~have~~plan ~~developed~~to ~~important~~explore ~~related~~qualifying ~~intellectual properties surrounding tumor biomarker Laminin~~AG-~~411~~101 ~~as a diagnostic, prognostic and treatment biomarker~~ for ~~number~~rare/orphan-disease ofdesignation ~~tumors.~~with ~~Laminins are~~ the ~~major~~FDA. ~~components~~The ofOrphan ~~basement~~Drug ~~membranes~~Act ~~that~~(ODA) ~~are~~provides ~~orderly~~for ~~sheet-like~~granting ~~structures~~special ~~secreted~~status ~~by cells~~ to ~~separate~~a ~~several~~drug ~~cell~~or ~~types~~biological ~~from~~product ~~one~~(“drug”) ~~another.~~to ~~Laminins~~treat ~~play~~a ~~key~~rare ~~roles~~disease inor ~~cell~~condition ~~adhesion,~~upon ~~polarity,~~request ~~movement,~~of ~~and differentiation. They form~~ a ~~family of related but distinct proteins~~sponsor. ~~Like~~This ~~all~~status ~~laminins, Laminin-411~~ is ~~comprised~~referred ofto ~~three~~as ~~chains,~~orphan ~~a4,~~designation ~~b1, and g1~~ (~~hence~~or ~~the~~sometimes ~~name~~“orphan status”). InFor ~~normal~~a ~~tissues,~~drug ~~Laminin-411~~to ~~expression~~qualify isfor ~~almost~~orphan ~~negligible~~designation inboth ~~blood~~the ~~vessels.~~drug Atand the ~~same~~disease ~~time,~~or ~~vessels~~condition inmust ~~some~~meet ~~organs,~~certain ~~like~~criteria ~~breast~~specified ~~and~~in ~~brain,~~the ~~predominantly~~ODA ~~contain~~and ~~another,~~FDA’s ~~closely~~implementing ~~related,~~regulations ~~isoform,~~at ~~Laminin-421~~21 ~~(a4b2g1)~~CFR Part 316. ~~Our~~Orphan ~~scientists~~designation ~~were~~qualifies the ~~first~~sponsor toof ~~demonstrate~~the ~~that~~drug ~~during~~for ~~tumor~~various development, ~~Laminin-411~~incentives ~~(formerly,~~of ~~laminin-8) is produced in excessive amounts, while~~ the ~~normal Laminin-421 gets suppressed~~ODA, ~~causing~~including atax ~~shift~~credits ~~from~~for ~~“normal”~~qualified toclinical ~~“tumor” laminin (Ljubimova et al~~testing., ~~Cancer~~A ~~Res,~~marketing ~~2001;~~application ~~Fujita~~for eta ~~al.,~~prescription ~~Breast~~drug ~~Cancer~~product ~~Res,~~that ~~2005). Laminin-411~~ has ~~been~~received ~~implicated~~orphan indesignation ~~cell~~is ~~migration~~not ~~and~~subject ~~increased~~to ~~production~~a ofprescription ~~some~~drug ~~cancer~~user ~~stem~~fee ~~cell~~unless ~~proteins.~~the Inapplication ~~general,~~includes ~~abnormal~~an ~~interactions~~indication ~~between~~for ~~tumor~~other ~~cells~~than ~~and~~the ~~laminins~~rare ~~are~~disease ~~among~~or ~~major~~condition ~~traits~~for ofwhich ~~various cancers. Taken together,~~ the ~~data~~drug ~~presented~~was ~~above~~designated. ~~suggest~~The ~~that~~granting ~~by blocking the production~~ of ~~Laminin-411,~~an ~~one~~orphan ~~may~~designation ~~expect~~request todoes ~~slow~~not, ~~down or arrest tumor growth and inhibit cancer cell spread~~however, asalter ~~well~~the asstandard ~~possibly~~regulatory ~~suppress~~requirements ~~cancer~~and ~~stem~~process ~~cells~~for ~~thereby~~obtaining ~~diminishing~~marketing ~~chances of disease relapse~~approval.

~~Using~~It ~~clinical~~is ~~material from 65 patients with brain gliomas,~~ our ~~founders~~intention into ~~their~~also ~~capacity~~pursue asbreakthrough ~~researchers~~therapy atdesignation ~~CSMC,~~with ~~found~~the anFDA ~~inverse~~for ~~correlation between Laminin~~AG-~~411 overproduction, patients’ survival and time of recurrent development (Ljubimova et al~~101., ~~Cancer,~~We ~~2004). In~~believe ~~2007,~~that ~~they~~we ~~started~~can ajustify ~~clinical~~this ~~trial~~status toby ~~examine~~the alack ~~possible clinicopathological use~~ of ~~Laminin-411~~viable asalternative atreatments ~~diagnostic tool~~ for ~~advanced~~ brain ~~glioma~~cancers and ~~as a prognostic indicator that could predict disease recurrence. The study of~~ the ~~expression~~high ofmortality ~~Laminin-411~~associated ~~and Laminin-421 was performed this time~~ with ~~the paraffin-embedded archival material routinely used in all pathological laboratories~~them. 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.

WeThe ~~completed~~FDA ~~preclinical~~may ~~studies~~also accelerate the approval of a designated breakthrough therapy, which is a drug that is intended, alone or in ~~mice~~combination with one or more other drugs, ~~rats~~to treat a serious or life-threatening disease or condition and ~~started~~preliminary ~~toxicity~~clinical ~~study~~evidence indicates that the drug may demonstrate substantial improvement over existing therapies on ~~non-human~~one ~~primates~~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 ~~evaluate~~designate the ~~accumulation~~drug ofas ~~AG-101~~a breakthrough therapy at the ~~targeted~~time ~~disease~~of, ~~site~~or any time after, the ~~effects~~submission of ~~prolonged~~an ~~circulation~~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 ~~AG-101~~the application, which may include holding meetings with the sponsor and the ~~impact~~review team throughout the development of ~~AG-101~~the ondrug; ~~tumor~~providing ~~size~~timely advice to, and ~~growth.~~interactive ~~The~~communication ~~performance~~with, ofthe ~~AG-101~~sponsor inregarding ~~these~~the ~~preclinical~~development ~~studies~~of ~~suggests~~the drug to ensure that ~~AG-101~~the development program to gather the nonclinical and clinical data necessary for approval is ~~highly~~as ~~differentiated~~efficient ~~from~~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 ~~superior~~to serve as a scientific liaison between the review team and the sponsor; and taking steps to, ~~Temozolomide~~ensure that the design of the clinical trials is as ~~well~~efficient as ~~other~~practicable, ~~standard~~when scientifically appropriate, such as by minimizing the number of ~~care~~patients ~~drugs~~exposed ~~for~~to ~~brain~~a ~~gliomas~~potentially less efficacious treatment.

~~During~~Fast ~~our~~Track ~~collaboration~~designation, ~~with~~priority ~~the~~review, ~~FDA/NIH~~accelerated ~~Nanotechnology~~approval ~~Characterization Laboratory we characterized Polycefin~~ and ~~showed~~breakthrough ~~that~~therapy ~~Polycefin~~designation ~~(a)~~do is not ~~hemolytic;~~change ~~(b)~~the ~~does~~standards ~~not~~for ~~induce~~approval ~~platelet~~but ~~aggregation;~~may ~~(c)~~expedite ~~does~~the ~~not~~development ~~induce~~or ~~plasma~~approval ~~coagulation; (d) complement activation by Polycefin is about 4 times lower than that caused by market standard Doxil~~process. ~~This provides strong support for our pending IND.~~

WeSome ~~plan~~Polycefins in our future pipeline might also qualify for the FDA’s 505(b)(2) regulatory pathway as well as the European Medicines Agency’s, or EMA’s, Adaptive Pathways, which allows for an abbreviated pathway to ~~complete~~approval for the ~~pharmacokinetics~~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 FDA’s findings of safety and ~~toxicitity~~efficacy for an existing product, or published literature, in support of ~~AG-101~~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 ~~cynomolgus~~our ~~monkeys~~Polycefin, asthis pathway would allow us to reference both preclinical and clinical information that was part of the original registration filing on the active drug, and would allow for potential approval based on a ~~precursor~~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 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 FDA ~~IND~~approval ~~submission.~~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.

We have also shown that Polycefin has the ability to harbor various drugs at the same time making it a potential 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).Collaborations

~~Beyond~~In ~~diagnostic~~addition ~~and~~to ~~prognostic applications, we believe that~~ our ~~discovery~~internal ofdevelopment ~~Lamin~~programs, ~~411’s~~we ~~role~~also inconsider ~~tumor~~opportunities ~~growth~~to ~~could~~collaborate ~~be exploited together~~ with ~~our~~recognized ~~Polycefin~~biopharmaceutical ~~technology~~companies ~~towards~~to ~~novel~~develop ~~tumor~~Polycefins ~~inhibiting~~incorporating ~~treatments.~~therapeutic ~~Our~~payloads ~~Laminin~~from ~~411~~their ~~inhibition~~proprietary isproduct ~~a key mechanism of action in AG-101, using combinational antisense oligonucleotides against Laminin-411 and EGFR on one nanopolymer (Polycefin) molecule, and target them specifically to tumor cells~~portfolios.

14 We generally consider each of the following criteria when evaluating a potential collaborator and its proposed therapeutic payload:

~~AG-101 Regulatory Pathway~~·

~~We expect to seek to qualify AG-101 for rare/orphan-disease designation with the FDA.~~ The ~~Orphan~~physical ~~Drug~~and ~~Act~~chemical ~~(ODA)~~properties ~~provides for granting special status to a drug or biological product (“drug”) to treat a rare disease or condition upon request~~ of athe ~~sponsor.~~proposed ~~This~~therapeutic ~~status~~payload isare ~~referred~~well tosuited ~~as orphan designation (or sometimes “orphan status”). For a drug to qualify~~ for ~~orphan~~encapsulation ~~designation both the drug~~ and ~~the~~release ~~disease or condition must meet certain criteria specified~~ in the ODA and FDA’s implementing regulations at 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. Polycefin;

It is our intention to also pursue breakthrough therapy designation with the FDA for AG-101. We believe that we can justify this status by the lack of viable alternative treatments for brain cancers and the high mortality associated with them. ·

The ~~FDA~~therapeutic ~~may~~payload ~~also~~has ~~accelerate~~high ~~the~~therapeutic ~~approval~~potential of a designated breakthrough therapy, which is a drug that is intended, 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 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~~addressing 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~~important ~~review~~unmet ofmedical ~~the development program and to serve as a scientific liaison between the review team and the sponsor~~need; 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 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.~~ ·

~~Some~~The ~~Polycefins~~therapeutic ~~might~~payload ~~also~~is ~~qualify~~highly ~~for~~validated the FDA’s 505(b)(2) regulatory pathway as well as the European Medicines Agency’s, or EMA’s, 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 FDA’s findings of safety and efficacy for an existing product, or published 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 Polycefin, this pathway would allow us to reference both preclinical and clinical information that was part of the original ~~registration filing on the active drug~~, ~~and~~untargeted 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 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 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.form;

~~Collaborations~~·

InThe ~~addition~~collaborator topossesses ~~our~~substantial ~~internal~~resources ~~development~~and ~~programs,~~capabilities wefor ~~also~~contributing ~~consider opportunities~~ to ~~collaborate~~the ~~with~~development ~~recognized~~and ~~biopharmaceutical~~commercialization ~~companies~~of toour ~~develop~~collaboration ~~Polycefins incorporating therapeutic payloads from their proprietary~~ product ~~portfolios.~~ ;

~~We generally consider each of the following criteria when evaluating a potential collaborator and its proposed therapeutic payload:~~·

15 The collaborator places strategic importance on our collaboration product in their portfolio;

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

• The ~~therapeutic~~collaborator ~~payload~~is ~~has~~committed ~~high~~to ~~therapeutic~~our ~~potential~~project ~~for~~as ~~addressing~~demonstrated anby ~~important~~the ~~unmet~~sponsorship ~~medical~~of ~~need~~their executive management; and

~~• The therapeutic payload is highly validated in its original, untargeted form;~~14

~~• The collaborator possesses substantial resources and capabilities for contributing to the development and commercialization of our collaboration product;~~·

• The collaborator ~~places~~values ~~strategic~~our ~~importance~~relationship onand ~~our~~ongoing ~~collaboration~~input ~~product~~ in ~~their~~the ~~portfolio;~~development of the collaboration product.

•We expect to continue to maintain a close research collaboration with CSMC’s Nanomedicine Research Center. The ~~collaborator~~Nanomedicine isResearch ~~committed~~Center was established in August, 2011 to ~~our~~create ~~project~~and asbring ~~demonstrated~~to bythe 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 ~~sponsorship~~center. The Nanomedicine Research Center is part of ~~their~~the ~~executive~~NIH/NCI ~~management;~~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 plan to conduct pre-clinical studies in collaboration with the Toxicology Research Laboratory, a GLP operated, AAA LAC International accredited facility, and an independent contract research organization (CRO) located within the University of Illinois at Chicago (UlC). The ~~collaborator~~Laboratory ~~values~~has ~~our~~conducted ~~relationship~~many preclinical toxicology programs on potential therapeutic agents and ~~ongoing~~other ~~input~~chemicals. inEntities such as the ~~development~~National Cancer Institute, the World Health Organization, the U.S. Army Medical Research and Development Command, and several biotechnology, pharmaceutical, and agricultural companies utilize the expertise and commitment of the ~~collaboration~~interdisciplinary ~~product~~Toxicology Research Laboratory team for their clinical research effort.

We expect to continue to maintain a close research collaboration with CSMC’s Nanomedicine Research Center. The Nanomedicine Research Center was established in August, 2011 to create and bring to the 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.Manufacturing

We ~~are~~have ~~conducting~~a ~~pre~~research manufacturing facility at our Los Angeles location where we conduct process development and pilot-~~clinical~~scale, ~~studies~~non-GMP production in ~~collaboration~~support ~~with~~of ~~the~~small ~~Toxicology~~animal ~~Research~~studies. ~~Laboratory,~~We ado ~~GLP~~not ~~operated,~~own ~~AAA~~or ~~LAC~~operate ~~International~~GMP ~~accredited~~manufacturing ~~facility~~facilities for the production of PMLA or the final Polycefin product, and anwe ~~independent~~do ~~contract~~not ~~research~~have ~~organization~~plans ~~(CRO)~~to ~~located~~develop ~~within~~our ~~the~~own ~~University~~manufacturing ofoperations ~~Illinois~~in atthe ~~Chicago~~foreseeable ~~(UlC)~~future. ~~The~~We ~~Laboratory~~currently ~~has~~rely ~~conducted~~on ~~many~~third-party ~~preclinical~~contract ~~toxicology~~manufacturers ~~programs~~for onall ~~potential~~of our required raw materials, therapeutic ~~agents~~payload and ~~other~~finished ~~chemicals~~product for our IND-enabling, preclinical safety and efficacy studies and for use in our clinical trials. ~~Entities~~We ~~such~~do asnot ~~the~~have ~~National~~long-term ~~Cancer~~agreements ~~Institute,~~with any of these third parties. We also do not have any current contractual relationship for the ~~World~~manufacture ~~Health~~of ~~Organization,~~commercial scale production of any of our drug candidates if they are approved by the UFDA.S. ~~Army~~We ~~Medical~~are ~~Research~~currently ~~and~~identifying ~~Development~~prospective ~~Command,~~third ~~and~~party ~~several~~CMO ~~biotechnology~~facilities for production of the key components of AG-101, ~~pharmaceutical~~namely AON, TfR antibody and ~~agricultural~~PMLA. ~~companies~~We ~~utilize~~are ~~the~~also ~~expertise~~currently ~~and~~seeking ~~commitment~~to identify a third party CMP for scale-up manufacture in support of ~~the~~advanced ~~interdisciplinary~~trials ~~Toxicology~~and ~~Research~~product ~~Laboratory~~commercialization. ~~team~~ These third party manufacturing facilities will be required to be in compliance with FDA and EMA regulatory requirements for ~~their~~the ~~clinical~~jurisdictions ~~research~~in ~~effort~~which we seek regulatory approval. We currently employ internal resources to manage our manufacturing contractors.

WeQuality have also had an existing 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 perform preclinical efficacy and toxicity testing of nanoparticles. The NCL serves as a national resource and knowledge base for all cancer researchers to facilitate the regulatory 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 nanoplatform and a number of Polycefins in pipeline, including our AG-101 formulation. Control

~~Manufacturing~~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.

WeSales ~~have a pilot manufacturing facility at our Los Angeles location where we conduct process development, scale-up activities~~ and assemble the manufacturing equipment in a non-GMP environment. We do not own or operate GMP manufacturing facilities for the 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.Marketing

16 As a Company we are still in the development stage, we do not engage in any sales and marketing activities. 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.

~~Quality~~Research ~~Control~~and Development

We doare ~~not~~currently ~~have~~utilizing alaboratories ~~quality~~at ~~system~~CSMC for research and development activities as provided for in ~~place~~the atLicense. As of this ~~stage~~time ofwe ~~our~~do not employ any full time research and development personnel directly, although key personnel at CSMC are consultants to the Company. WeIt is our plan onto ~~developing~~expand athe ~~set~~development effort by employing or supporting CSMC hiring of ~~Standard~~certain ~~Operating~~technical ~~Procedures~~resources. Our ~~(“SOPs”)~~ability ~~and~~to ~~overall~~conduct ~~quality~~research ~~system~~and ~~that~~development activities is ~~compliant~~greatly ~~with~~dependent ~~required~~upon ~~FDA~~our ~~Good~~financial ~~Laboratory~~resources. If ~~Practices~~adequate ~~(GLP)~~funds ~~and~~are ~~GMP~~not asavailable ~~needed~~when inrequired, ~~the~~we ~~future~~may ashave weto ~~progress~~delay, inscale-back or eliminate certain aspects of our research, testing and/or development activities.

~~Sales and Marketing~~Competition

AsThe abiotechnology ~~Company~~and wepharmaceutical industries are ~~still~~characterized inby ~~the~~rapidly ~~development~~advancing ~~stage~~technologies, weintense docompetition ~~not~~and ~~engage~~a instrong ~~any~~emphasis ~~sales~~on ~~and~~proprietary ~~marketing activities~~products. ~~Our~~ ~~strategy~~While iswe tobelieve ~~commercialize~~that our ~~technology~~medicinal ~~through~~nanoengineering ~~licensing~~technologies, ~~agreements~~integrated research, clinical and ~~accordingly~~manufacturing capabilities, ~~sales~~development experience and ~~marketing~~scientific ~~efforts~~knowledge ofprovide ~~the~~us ~~end-product~~with ~~will~~competitive beadvantages, ~~the~~we ~~responsibility~~face ofpotential ~~the~~competition ~~licensees~~from many different sources, ~~while~~including ~~our~~major ~~primary~~pharmaceutical, ~~focus~~specialty ~~will~~pharmaceutical beand tobiotechnology ~~negotiate~~companies, academic institutions and ~~support~~governmental ~~our~~agencies ~~licensing~~and ~~partners~~public and ~~collaborations~~private research institutions. Any drug candidates that we successfully develop and commercialize will compete with existing therapies and new therapies that may become available in the future.

~~Research and Development~~15

WeMany ~~are~~of ~~currently~~our ~~utilizing~~competitors ~~the~~may ~~laboratory~~have atsignificantly ~~CSMC~~greater ~~for~~financial ~~research~~resources and ~~development~~expertise ~~activities as provided for~~ in ~~the~~research ~~License. As~~and ofdevelopment, ~~this~~manufacturing, ~~time~~preclinical wetesting, doconducting ~~not~~clinical ~~employ~~trials, ~~any~~obtaining ~~full~~regulatory ~~time~~approvals ~~research~~ and ~~development~~marketing ~~personnel~~approved ~~directly,~~products ~~although~~than ~~key~~we ~~personnel~~do. atMergers ~~CSMC~~and ~~are~~acquisitions ~~consultants~~in to the ~~Company.~~pharmaceutical, Itbiotechnology isand ~~our~~diagnostic ~~plan~~industries tomay ~~expand~~result ~~the~~in ~~development~~even ~~effort~~more byresources ~~employing~~being orconcentrated ~~supporting~~among ~~CSMC~~a ~~hiring~~smaller number of ~~certain~~our ~~technical resources~~competitors. ~~Our~~ ~~ability~~These tocompetitors ~~conduct~~also ~~research~~compete ~~and~~with ~~development~~us ~~activities~~in isrecruiting ~~greatly~~and ~~dependent~~retaining ~~upon~~qualified ~~our~~scientific ~~financial~~and ~~resources. If~~management ~~adequate~~personnel ~~funds~~and ~~are~~establishing ~~not~~clinical ~~available~~trial ~~when~~sites ~~required,~~and wepatient ~~may~~registration ~~have~~for toclinical ~~delay~~trials, ~~scale-back~~as orwell ~~eliminate~~as ~~certain~~in ~~aspects~~acquiring oftechnologies ~~our~~complementary ~~research~~to, ~~testing and/~~or ~~development~~necessary ~~activities. In 2012~~for, weour ~~entered~~programs. ~~into~~Smaller anor ~~agreement~~early ~~with~~stage ~~CSMC~~companies tomay ~~support~~also ~~certain~~prove ~~activities~~to ~~within~~be ~~the~~significant ~~laboratory~~competitors, ~~necessary~~particularly tothrough ~~prepare~~collaborative ~~compounds. This~~arrangements ~~project~~with ~~was~~large ~~completed~~and ~~during~~established ~~2014~~companies.

~~Competition~~The key competitive factors affecting the success of AG-101and any other drug candidates that we develop, if approved, are likely to be their efficacy, safety, convenience, price, the level of generic competition and the availability of reimbursement from government and other third-party payors.

~~The~~Our ~~biotechnology~~commercial opportunity could be reduced or eliminated if our competitors develop and ~~pharmaceutical~~commercialize ~~industries~~products that are ~~characterized~~more byeffective, ~~rapidly~~have ~~advancing~~fewer ~~technologies~~or less severe side effects, ~~intense~~are ~~competition~~more ~~and~~convenient aor ~~strong~~are ~~emphasis~~less onexpensive ~~proprietary~~than any products. ~~While~~that we ~~believe~~may ~~that~~develop. ~~our~~Our ~~medicinal~~competitors ~~nanoengineering~~also ~~technologies,~~may ~~integrated~~obtain ~~research,~~FDA ~~clinical~~or ~~and~~other ~~manufacturing~~regulatory ~~capabilities,~~approval ~~development~~for ~~experience~~their ~~and~~products ~~scientific~~more ~~knowledge~~rapidly ~~provide~~than uswe ~~with~~may ~~competitive~~obtain ~~advantages~~approval for ours. In addition, weour ~~face~~ability ~~potential~~to ~~competition~~compete ~~from~~may be affected in many ~~different~~cases ~~sources,~~by ~~including~~insurers ~~major~~or ~~pharmaceutical,~~other ~~specialty~~third-party ~~pharmaceutical~~payors ~~and~~seeking ~~biotechnology~~to ~~companies,~~encourage ~~academic~~the ~~institutions~~use ~~and~~of ~~governmental~~generic ~~agencies~~products. ~~and~~Generic ~~public~~products ~~and~~are ~~private~~currently ~~research~~on ~~institutions.~~the ~~Any~~market, ~~drug~~including ~~candidates~~the therapeutics payload in for the indications that we ~~successfully~~are ~~develop~~pursuing, and ~~commercialize~~additional ~~will~~products ~~compete~~are ~~with~~expected ~~existing~~to ~~therapies~~become ~~and~~available ~~new~~on ~~therapies~~a generic basis over the coming years. If our drug candidates achieve marketing approval, we expect that ~~may~~they ~~become~~will ~~available~~be inpriced ~~the~~at ~~future~~a significant premium over competitive generic products.

~~Many~~The ofmost ~~our~~common ~~competitors~~methods ~~may~~of ~~have~~treating ~~significantly~~patients ~~greater~~with ~~financial~~cancer ~~resources~~are surgery, radiation and ~~expertise~~drug intherapy, ~~research~~including chemotherapy and ~~development,~~targeted ~~manufacturing,~~drug ~~preclinical~~therapy. ~~testing,~~There ~~conducting~~are ~~clinical~~a ~~trials,~~variety ~~obtaining~~of ~~regulatory~~available ~~approvals~~drug ~~and~~therapies ~~marketing~~marketed ~~approved~~for ~~products~~solid ~~than~~tumors. weIn ~~do.~~many ~~Mergers~~cases, ~~and~~these ~~acquisitions~~drugs are administered in ~~the~~combination ~~pharmaceutical,~~to ~~biotechnology~~enhance ~~and~~efficacy. ~~diagnostic~~Some ~~industries~~of ~~may~~these ~~result~~drugs inare ~~even~~branded ~~more~~and ~~resources~~subject ~~being~~to ~~concentrated~~patent ~~among~~protection, and others are available on a ~~smaller~~generic ~~number~~basis, ofincluding ~~our~~the ~~competitors~~therapeutic payload contained in AG-101. ~~These~~Many ~~competitors~~of ~~also~~these ~~compete~~approved ~~with~~drugs usare inwell ~~recruiting~~established therapies and ~~retaining~~are ~~qualified~~widely ~~scientific~~accepted ~~and~~by ~~management~~physicians, ~~personnel~~patients and ~~establishing~~third-party ~~clinical~~payors. ~~trial~~In ~~sites~~general, ~~and~~although ~~patient~~there ~~registration~~has ~~for~~been ~~clinical~~considerable ~~trials,~~progress asover ~~well~~the aspast few decades in ~~acquiring~~the ~~technologies~~treatment ~~complementary~~of ~~to,~~solid ortumors ~~necessary~~and ~~for,~~the ~~our~~currently ~~programs.~~marketed ~~Smaller~~therapies orprovide ~~early~~benefits ~~stage~~to ~~companies~~many ~~may~~patients, ~~also~~these ~~prove~~therapies all are limited to besome ~~significant~~extent ~~competitors~~in their efficacy and frequency of adverse events, ~~particularly~~and ~~through~~none ~~collaborative~~of ~~arrangements~~them ~~with~~are ~~large~~successful in treating all patients. As a result, the level of morbidity and ~~established~~mortality ~~companies~~from solid tumor cancers remains high.

~~The~~There ~~key~~are ~~competitive~~also ~~factors~~a ~~affecting~~number ~~the success~~ of ~~AG-101and~~products ~~any~~in ~~other~~late ~~drug~~stage ~~candidates~~clinical ~~that~~development weto ~~develop,~~treat ifsolid ~~approved,~~tumors. ~~are~~These ~~likely~~products toin bedevelopment ~~their~~may provide efficacy, safety, convenience, ~~price~~and other benefits that are not provided by currently marketed therapies. As a result, ~~the~~they ~~level~~may ofprovide ~~generic~~significant competition ~~and~~for ~~the~~AG-101 ~~availability~~or ofany ~~reimbursement~~other ~~from~~drug ~~government~~candidate ~~and~~for ~~other~~which ~~third-party~~we ~~payors~~obtain marketing approval.

~~Our~~In ~~commercial~~addition ~~opportunity~~to ~~could~~larger bepharmaceutical ~~reduced~~ or ~~eliminated~~biopharmaceutical ifcompanies ~~our~~that ~~competitors~~may develop ~~and~~different ~~commercialize~~competing ~~products~~technologies ~~that~~or ~~are~~technologies ~~more~~within ~~effective,~~the ~~have~~cancer ~~fewer~~diagnostics orand ~~less~~therapeutic ~~severe side effects~~fields, ~~are~~we ~~more~~will ~~convenient~~be orcompeting ~~are~~with ~~less~~a ~~expensive~~number ~~than~~of ~~any~~smaller ~~products~~biotechnology companies that weare ~~may~~focused ~~develop.~~on ~~Our~~cellular ~~competitors also may obtain FDA~~ or ~~other~~nano-technological ~~regulatory~~therapy ~~approval~~technologies ~~for~~to ~~their~~treat ~~products~~cancers, ~~more~~which ~~rapidly than we~~ may ~~obtain~~include ~~approval~~among ~~for~~others ~~ours.~~Arrowhead InResearch ~~addition~~Corp., ~~our~~Applied ~~ability~~Nanotech toHoldings, ~~compete~~Dendreon, ~~may~~Northwest beBiotherapeutics, ~~affected~~Antigenics, inCelldex ~~many~~Therapeutics, ~~cases~~NeuralStem, byGeron, ~~insurers~~NeuroNova, orReNeuron, ~~other~~Stemcells, ~~third-party~~Inc., ~~payors~~Advanced ~~seeking~~Cell toTechnology, ~~encourage~~Immunocellular ~~the~~Therapeutics ~~use~~and ofOsiris ~~generic~~Therapeutics ~~products.~~and ~~Generic~~Bind ~~products~~Therapeutics ~~are~~and ~~currently~~Envisia onTherapeutics ~~the~~and ~~market,~~Liquidia ~~including~~Technologies. ~~the~~Northwest ~~therapeutics~~Biotherapeutics ~~payload~~is indeveloping ~~for~~a ~~the~~dendritic ~~indications~~cell-based ~~that~~vaccine wetreating ~~are~~brain ~~pursuing,~~tumors and ~~additional~~Celldex ~~products~~Therapeutics ~~are~~has ~~expected~~recently tocompleted ~~become available on~~ a ~~generic~~Phase ~~basis~~II ~~over~~clinical ~~the~~trial ~~coming~~to ~~years.~~treat Ifglioblastoma ~~our~~with ~~drug~~their ~~candidates~~cancer ~~achieve marketing approval~~vaccines, weand ~~expect~~other ~~that~~companies ~~they~~may ~~will~~also be ~~priced~~developing atvaccines aof ~~significant~~this ~~premium over competitive generic products~~type.

17 Intellectual Property

~~The~~Patents ~~most common methods of treating patients with cancer are surgery, radiation~~ and ~~drug~~Proprietary 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.Rights

~~There~~We ~~are~~actively ~~also~~seek ato ~~number~~protect ofour ~~products~~medicinal innanomedicine ~~late~~platform ~~stage~~technology, ~~clinical~~which ~~development~~we consider important to ~~treat~~our ~~solid~~business, ~~tumors.~~including ~~These~~by ~~products~~pursuing inpatents ~~development~~relating ~~may~~to ~~provide~~our ~~efficacy,~~products ~~safety~~and compositions, ~~convenience~~their methods of use and the processes for their manufacture, as well as any other ~~benefits~~relevant inventions and improvements that are ~~not~~commercially ~~provided~~important byto ~~currently~~the ~~marketed~~development ~~therapies~~of our business and are eligible for patent protection. AsWe attempt a ~~result,~~layered ~~they~~approach ~~may~~by ~~provide~~seeking ~~significant~~multiple ~~competition~~different ~~for~~patents ~~AG-101~~ or ~~any~~patent ~~other~~applications ~~drug~~on ~~candidate~~different ~~for~~aspects ~~which~~of wePolycefin. ~~obtain~~We ~~marketing~~also ~~approval~~rely on trade secrets that may be important to the development of our business.

InOur ~~addition~~success towill ~~larger~~depend ~~pharmaceutical~~significantly oron ~~biopharmaceutical~~our ~~companies~~ability ~~that~~to ~~may~~obtain ~~develop~~and ~~different~~maintain ~~competing~~patent ~~technologies~~and orother ~~technologies~~proprietary ~~within~~protection for the ~~cancer~~technology, ~~diagnostics~~inventions and ~~therapeutic~~improvements ~~fields,~~ we ~~will~~consider beimportant ~~competing with a number of smaller biotechnology companies that are focused on cellular or nano-technological therapy technologies~~ to ~~treat~~our ~~cancers,~~business; ~~which~~defend ~~may~~our ~~include~~patents; ~~among~~preserve ~~others~~the ~~Arrowhead~~confidentiality ~~Research~~of ~~Corp.,~~our ~~Applied~~trade ~~Nanotech~~secrets; ~~Holdings, Dendreon, Northwest Biotherapeutics, Antigenics, Celldex Therapeutics, NeuralStem, Geron, NeuroNova, ReNeuron, Stemcells, Inc., Advanced Cell Technology, Immunocellular Therapeutics~~ and ~~Osiris~~operate ~~Therapeutics~~without ~~and~~infringing ~~Bind~~the ~~Therapeutics~~patents and ~~Envisia~~proprietary ~~Therapeutics~~rights ~~and~~of ~~Liquidia~~third ~~Technologies~~parties. ~~Northwest~~We ~~Biotherapeutics~~also isrely ~~developing~~on ~~a dendritic cell~~know-~~based~~how, ~~vaccine~~continuing ~~treating~~technological ~~brain~~innovation ~~tumors~~ and ~~Celldex~~in-licensing ~~Therapeutics~~opportunities ~~has recently completed a Phase II clinical trial~~ to ~~treat~~develop ~~glioblastoma with their cancer vaccines,~~ and ~~other~~maintain ~~companies~~our ~~may~~proprietary ~~also be developing vaccines of this type~~position.

~~Intellectual Property~~16

~~Patents~~As of July 1, 2016, we owned or had exclusive license to the patents and ~~Proprietary~~non-provisional ~~Rights~~patent applications listed below 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.

WeOur ~~actively~~issued ~~seek to protect our medicinal nanomedicine platform technology, which we consider important to our business, including by pursuing patents relating to our products~~ and ~~compositions,~~pending their methods of use and the processes for their manufacture, as well as any other relevant inventions and improvements that are commercially important to the development of our business and are eligible for patent protectionU.S. ~~We attempt a layered approach by seeking multiple different~~ patents orare ~~patent~~as ~~applications on different aspects of Polycefin. We also rely on trade secrets that may be important to the development of our business.~~follows:

Our success will depend significantly on our ability to obtain and maintain patent and other proprietary protection for the technology, inventions and improvements we consider important to our business; defend our patents; preserve the confidentiality of our trade secrets; and operate without infringing the patents and proprietary rights of third parties1. ~~We also rely on know-how, 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~~Patent ~~listed~~No. ~~below~~7, ~~2 patents issued in Japan~~547,511 ~~and~~“Antisense ~~non-provisional~~inhibition ~~patent applications that relate to our medicinal nanoengineering platform, as well as pending foreign counterparts to many~~ of ~~these~~laminin-8 ~~patents~~expression ~~and patent applications. The exclusive licenses are, in some cases, limited~~ to ~~certain~~inhibit ~~field of uses, generally the use in~~ human ~~diagnostics and therapeutic applications. Our owned and licensed patents and patent applications relate to our nanobiopolymer~~gliomas”, ~~nanobiopolymer~~granted ~~compositions,~~June ~~nanobiopolymer with specific drugs~~16, 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 inhibitor2009. 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.

~~Our issued and pending U~~2.~~S. patents are as follows:~~

~~1.U.S.~~Japanese Patent No. 74,~~547~~567,~~511~~683 “Antisense inhibition of laminin-8 expression to inhibit human gliomas”, granted ~~June~~August ~~16, 2009~~2010.

18 3.

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

34.~~U.S. Patent No. 8,309,614 “Poly(b-L-malic acid) with pendant Leu-Leu-Leu tripeptide for effective cytoplasmic drug delivery”, granted November 13, 2012.~~

~~4.U.S.~~Japanese Patent No. 85,~~377~~008,~~652~~981 “~~Fermentative~~Polymalic ~~production and high grade preparative purification of long~~acid-~~chain~~based ~~poly~~multifunctional ~~(b-L-malic~~drug ~~acid)"~~delivery system”, granted ~~February~~June ~~19, 2013~~2012.

5.~~U.S. Patent No. 8,562,964 “Polymalic acid-based multifunctional drug delivery system”", granted October 22, 2013.~~

6.U.S. Patent No. 8,~~785~~309,~~371~~614 “~~Drug~~Poly(b-L-malic ~~delivery~~acid) ofwith ~~temozolomide~~pendant ~~for~~Leu-Leu-Leu ~~systemic~~tripeptide ~~based~~for ~~treatment~~effective ofcytoplasmic ~~cancer~~drug delivery”, granted ~~July~~November 2213, ~~2014~~2012.

76.~~U.S. Patent pending “Using overexpression of laminin alpha 4 chain as a diagnostic and prognostic indicator of gliomas”. Docket No CEDAR-45266.~~

8.U.S. Patent ~~pending~~No. 8,377,652 “~~Polymalic~~Production ~~acid~~of long-~~based~~chain ~~nanobiopolymer~~unbranched ~~provides~~beta-poly ~~efficient~~(L-malic ~~systemic~~acid) ~~breast cancer treatment~~ by ~~inhibiting~~large ~~both~~scale ~~HER2/neu~~Physarum ~~receptor~~cultivation ~~synthesis~~ and ~~activity”.~~high ~~Docket~~grade ~~No.~~purification ~~61/428,402,~~of ~~Filed~~the insame", ~~December~~granted 30February 19, ~~2011~~2013.

97.~~Polymalic acid-based nanoconjugates for imaging. Docket No. US 13/441,599, Filed in April 2012.~~

~~10.~~U.S. Patent ~~PMLA~~No. ~~Based~~8,562,964 ~~Immuno~~“Polymalic acid-~~Nanoconjugates~~based ~~for~~multifunctional ~~Local~~drug ~~and~~delivery ~~General~~system”", ~~Immune~~granted ~~System~~October ~~Stimulation to Treat Primary and Metastatic Tumor Docket No CEDAR – 065472-000597PR00~~22, ~~Filed in March 2016~~2013.

~~The term of individual patents depends upon the legal term of the patents in the countries in which they are obtained~~8. ~~In most countries in which we file, the patent term is 20 years from the date of filing the non-provisional application or PCT 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~~No. ~~The patent term of a patent that covers an approved drug may also be eligible for patent term extension~~8, ~~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~~785,371 ~~the~~“Drug ~~term~~delivery of ~~the~~temozolomide ~~relevant patent must not have expired before the extension application, the patent cannot have been extended previously under this law, an application~~ for ~~extension~~systemic ~~must~~based betreatment ~~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 andcancer”, asgranted ~~such,~~July ~~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~~22, ~~we may be eligible for a patent term extension in the United States~~2014. ~~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.~~

~~Trade Secrets~~9.

~~We endeavor to maintain trade secret protection for certain aspects of our technology, primarily through non-disclosure and confidentiality agreements~~U. ~~In some situations, maintaining information as a trade secret is more appropriate than filing a patent application~~S. ~~Specifically,~~Patent ~~we have a number of trade secrets relating to identifying new Polycefins and to our Polycefins manufacturing process~~No. ~~With regard to manufacturing Polycefins~~8,795,648 we“Poly ~~believe~~(beta ~~that~~malic ~~small~~acid) ~~changes in processing Polycefins can result in Polycefins~~ with ~~different~~pendant ~~properties.~~Leu-Leu-Leu- Astripeptide ~~a result, we expect the FDA and other regulatory bodies to require additional clinical data~~ for ~~approval~~effective ofcytoplasmic adrug ~~generic~~delivery”, ~~Polycefin.~~granted AsAugust ~~such~~5, ~~we believe that maintaining our manufacturing process as a trade secret will be helpful to maintaining our product exclusivity~~2014.

~~Government Regulation~~10.

~~Government~~U.S. ~~authorities~~Patent inNo. ~~the United States~~8, ~~at the federal~~911,717 ~~state~~“Polymalic ~~and~~acid-based ~~local~~multifunctional ~~level,~~drug ~~and~~delivery ~~in other countries extensively regulate~~system”, ~~among~~granted ~~other~~December ~~things~~16, 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 developing2014. 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.

19 11.

~~United~~U.S. ~~States~~Patent No. 9,320,807 “Drug ~~Review~~delivery ~~and~~of ~~Approval~~temozolomide ~~Processes~~for systemic based treatement of cancer”, granted April 26, 2016.

The results 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 product12. 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~~U. ~~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~~S. ~~The~~Patent ~~FDA~~pending ~~may~~“Using ~~seek~~overexpression ~~advice~~of ~~and~~laminin aalpha ~~recommendation~~4 ~~from~~chain ~~an external advisory committee~~ as toa ~~whether~~diagnostic ~~the application should be approved~~ and ~~under~~prognostic ~~what~~indicator ~~conditions. The FDA is not bound by the recommendation~~ of ~~an advisory committee, but it generally follows such recommendations~~gliomas”. ~~Before~~Docket ~~approving~~No ~~an NDA, the FDA will inspect the facility or facilities where the product is manufactured and tested~~CEDAR-45266. 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.

~~NDAs receive either standard or priority review~~13. A drug representing a significant improvement in treatment, prevention or diagnosis of 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 on the basis 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.

InU.S. ~~the~~Patent ~~recently~~pending ~~enacted~~“Polymalic ~~Food~~acid-based ~~and~~nanobiopolymer ~~Drug~~provides ~~Administration~~efficient ~~Safety~~systemic ~~and~~breast ~~Innovation~~cancer ~~Act,~~treatment orby ~~FDASIA,~~inhibiting ~~Congress~~both ~~encouraged~~HER2/neu ~~the~~receptor ~~FDA~~synthesis ~~to utilize innovative~~ and ~~flexible~~activity”. ~~approaches~~Docket ~~to the assessment of products under accelerated approval~~No. ~~The~~61/428,402, ~~law~~Filed ~~requires~~on ~~the~~December ~~FDA~~30, ~~to issue related draft guidance within a year after the law’s enactment and also promulgate confirming regulatory changes~~2011.

~~If approved by the FDA, the product’s use may be limited to specific diseases, dosages or indications~~14. 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)~~U.S. ~~Regulatory~~Patent ~~Pathway~~pending “Polymalic acid-based nanoconjugates for imaging”. Application No 20120258049, Filed October 11, 2012.

~~New drugs must obtain FDA approval through an NDA prior to marketing in the United States~~15. 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 for the 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, or published literature, in support of its application.

~~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~~U.S. ~~Specifically,~~Patent ~~Section 505(b)(2)~~pending “PMLA ~~permits~~Based ~~the~~Immuno-Nanoconjugates ~~filing of an NDA where at least some of the information required~~ for ~~approval~~Local ~~comes from studies not conducted by or for the applicant~~ and ~~for~~General ~~which~~Immune ~~the~~System ~~applicant~~Stimulation has not obtained a right of reference. The applicant may rely upon the FDA’s findings from preclinical or clinical studies conducted for an approved product. The FDA may also require Section 505(b)(2) applicants to ~~perform~~Treat ~~additional~~Primary ~~studies~~and orMetastatic ~~measurements to support the change from the approved product~~Tumor”. Docket ~~The~~No ~~FDA~~CEDAR ~~may~~– ~~then approve the new drug candidate for all or some of the label indications for which the referenced product has been approved~~065472-000597PR00, asFiled ~~well~~in asMarch ~~for any new indication sought by the Section 505(b)(2) applicant~~2016.

The term 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 PCT application.

In seeking approval for a drug through an NDA, applicants are required to list with the FDA each patent with claims that cover the applicant’s product. Upon approval of a drug, each of the patents listed in the application for the drug is then published in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations , commonly known as the Orange Book. Drugs listed in the Orange Book can, 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 extent that the Section 505(b)(2) applicant is relying on findings of safety or efficacy for an already approved product, the applicant is subject to existing exclusivity for the reference product and is required to certify to the FDA concerning any patents listed for the approved product in the Orange Book to the same extent that a generic applicant would. Specifically, applicants must certify to the FDA concerning any patents listed for the 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 the FDA, the applicant must also send notice of the Paragraph IV certification to the NDA and patent holders once the application has been accepted for filing by the FDA. The NDA and patent holders may then initiate a patent infringement lawsuit in response to the notice 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 the applicant. Thus approval of a Section 505(b)(2) NDA can 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 new chemical entity, listed in the Orange Book for the referenced product has expired, and, in the case of a Paragraph IV certification and subsequent 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.17

~~Orphan~~In ~~Drug~~the ~~Designation~~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.

~~Under~~Trade the Orphan Drug Act, the FDA may grant orphan designation to a drug intended to treat a rare disease or condition, which is a disease or condition that affects fewer than 200,000 individuals in the United States, or if it affects more than 200,000 individuals in the United States, there is no reasonable expectation that the cost of developing and making a drug product available in the United States for this type of disease or condition will be recovered from sales of the product. Orphan product designation must be requested before submitting an NDA. After the FDA grants orphan product designation, the identity of the therapeutic agent and its potential orphan use are disclosed publicly by the FDA. Orphan product designation does not convey any advantage in or shorten the duration of the regulatory review and approval process.Secrets

IfWe aendeavor ~~product~~to ~~that~~maintain ~~has~~trade ~~orphan~~secret ~~designation~~protection ~~subsequently receives the first FDA approval~~ for ~~the~~certain ~~disease~~aspects orof ~~condition~~our ~~for which it has such designation~~technology, ~~the~~primarily ~~product~~through isnon-disclosure ~~entitled~~and toconfidentiality ~~orphan~~agreements. ~~product~~In ~~exclusivity,~~some ~~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~~situations, ~~except~~maintaining ininformation ~~limited circumstances, such~~ as a ~~showing~~trade ofsecret ~~clinical~~is ~~superiority~~more toappropriate ~~the~~than ~~product~~filing ~~with~~a ~~orphan~~patent ~~exclusivity~~application. ~~The~~Specifically, ~~designation~~we ofhave ~~such~~a ~~drug~~number ~~also~~of ~~entitles~~trade asecrets ~~party~~relating to ~~financial~~identifying ~~incentives~~new ~~such~~Polycefins asand ~~opportunities~~to ~~for~~our ~~grant~~Polycefins ~~funding~~manufacturing ~~toward~~process. ~~clinical~~With ~~trial~~regard ~~costs,~~to ~~tax~~manufacturing ~~advantages and user-fee waivers. Competitors~~Polycefins, ~~however,~~we ~~may~~believe ~~receive~~that ~~approval~~small ofchanges ~~different~~in ~~products~~processing ~~for~~Polycefins ~~the~~can ~~indication~~result ~~for~~in ~~which~~Polycefins ~~the~~with ~~orphan product has exclusivity or obtain approval for the same product but for a~~ different ~~indication for which the orphan product has exclusivity~~properties. ~~Orphan~~As ~~product exclusivity also could block the approval of one of our products for seven years if~~ a ~~competitor~~result, ~~obtains~~we ~~approval~~expect of the ~~same drug or biological product as defined by the~~ FDA orand ifother ~~our~~regulatory ~~drug~~bodies ~~candidate is determined~~ to berequire ~~contained~~additional ~~within~~clinical ~~the~~data ~~competitor’s product~~ for ~~the~~approval ~~same~~of ~~indication~~a orgeneric ~~disease~~Polycefin. IfAs asuch, ~~drug~~we ~~product~~believe ~~designated~~that asmaintaining anour ~~orphan~~manufacturing ~~product~~process ~~receives~~as ~~marketing~~a ~~approval~~trade ~~for~~secret anwill ~~indication broader than what is designated, it may not~~ be ~~entitled~~helpful to ~~orphan~~maintaining our product exclusivity. ~~Orphan drug status in the EU has similar but not identical benefits in that jurisdiction.~~

21 Government Regulation

~~Expedited~~Government ~~Development~~authorities in the United States, at the federal, state and ~~Review~~local ~~Programs~~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.

~~The~~United ~~FDA~~States ~~has~~Drug aReview Fast Track program that is intended to expedite or facilitate the process for reviewing new drug products that meet certain criteria. Specifically, new drugs are eligible for Fast Track designation if they are intended to treat a serious or life-threatening disease or condition and ~~demonstrate~~Approval ~~the~~Processes potential to address unmet medical needs for the disease or condition. Fast Track designation applies to the combination of the product and the specific indication for which it is being studied. Unique to a Fast Track product, the FDA may consider for review sections of the NDA on a rolling basis before the complete application is submitted, if the sponsor provides a schedule for the submission of the sections of the NDA, the FDA agrees to accept sections of the NDA and determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the NDA.

~~Any~~The ~~product~~results ~~submitted~~of toproduct ~~the FDA for approval~~development, ~~including~~preclinical astudies ~~product~~and ~~with~~clinical ~~a Fast Track designation~~trials, ~~may~~along ~~also~~with bedescriptions ~~eligible for other types~~ of ~~FDA~~the ~~programs~~manufacturing ~~intended to expedite development and review~~process, ~~such~~analytical astests ~~priority~~conducted ~~review~~on ~~and~~the ~~accelerated~~chemistry ~~approval.~~of ~~A product is eligible for priority review if it has~~ the ~~potential~~drug, toproposed ~~provide~~labeling, ~~safe~~ and ~~effective~~other ~~therapy~~relevant ~~where~~information noare ~~satisfactory~~submitted ~~alternative~~to ~~therapy exists or a significant improvement in~~ the ~~treatment,~~FDA ~~diagnosis~~as orpart ~~prevention~~ of aan ~~disease~~NDA ~~compared~~requesting approval to ~~marketed~~market ~~products~~the product. The FDA ~~will~~reviews ~~attempt~~all toNDAs ~~direct~~submitted ~~additional resources~~ to ~~the~~ensure ~~evaluation~~that ofthey anare ~~application~~sufficiently ~~for~~complete ~~a new drug designated~~ for ~~priority~~substantive review inbefore anit ~~effort~~accepts tothem ~~facilitate the review. Additionally, a product may be eligible~~ for ~~accelerated approval~~filing. ~~Drug~~It ~~products studied for their safety and effectiveness in treating serious or life-threatening diseases or conditions~~ may ~~receive~~request ~~accelerated~~additional ~~approval~~information ~~upon~~rather ~~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~~accept ~~morbidity or mortality, that is reasonably likely to predict~~ an ~~effect~~NDA onfor ~~irreversible~~filing. ~~morbidity~~In orthis ~~mortality or other clinical benefit~~event, ~~taking into account~~ the ~~severity,~~NDA ~~rarity,~~must orbe ~~prevalence~~resubmitted ofwith the ~~condition~~additional ~~and the availability or lack of alternative treatments~~information. AsThe aresubmitted ~~condition~~application ofalso ~~approval,~~is ~~the~~subject ~~FDA~~to ~~may~~review ~~require~~before ~~that a sponsor of a drug product receiving accelerated approval perform adequate and well-controlled post-marketing clinical studies. In addition,~~ the FDA ~~currently~~accepts ~~requires~~it ~~as a condition~~ for ~~accelerated approval pre-approval of promotional materials, which could adversely impact the timing of the commercial launch of the product~~filing.

~~The~~Once ~~FDA may also accelerate~~ the ~~approval~~submission ofis aaccepted ~~designated~~for ~~breakthrough therapy~~filing, ~~which~~the isFDA abegins ~~drug~~an ~~that~~in-depth isand ~~intended,~~substantive ~~alone~~review. orThe inFDA ~~combination~~reviews ~~with~~an ~~one~~NDA orto ~~more~~determine, among other ~~drugs~~things, towhether ~~treat~~ a ~~serious~~product oris ~~life-threatening~~safe ~~disease~~and oreffective ~~condition~~for its intended use and ~~preliminary~~whether ~~clinical~~its ~~evidence~~manufacturing ~~indicates~~is ~~that~~cGMP-compliant. ~~the~~The ~~drug~~FDA may ~~demonstrate~~seek ~~substantial~~advice ~~improvement~~and ~~over~~a ~~existing~~recommendation ~~therapies~~from onan ~~one~~external oradvisory ~~more~~committee ~~clinically~~as ~~significant~~to ~~endpoints,~~whether ~~such~~the asapplication ~~substantial~~should ~~treatment~~be ~~effects~~approved ~~observed~~and ~~early~~under inwhat ~~clinical development~~conditions. The ~~sponsor of a breakthrough therapy may request the~~ FDA tois ~~designate~~not ~~the~~bound ~~drug~~by ~~as a breakthrough therapy at~~ the ~~time~~recommendation of, oran ~~any~~advisory ~~time after~~committee, ~~the~~but ~~submission~~it ofgenerally anfollows ~~IND~~such ~~for the drug~~recommendations. IfBefore ~~the~~approving ~~FDA~~an ~~designates a drug as a breakthrough therapy~~NDA, itthe ~~must~~FDA ~~take~~will ~~actions~~inspect ~~appropriate to expedite~~ the ~~development~~facility ~~and~~or ~~review~~facilities ofwhere the ~~application,~~product ~~which~~is ~~may~~manufactured ~~include holding meetings with the sponsor~~ and ~~the~~tested. ~~review~~The ~~team~~FDA ~~throughout~~may ~~the~~refuse ~~development of the drug; providing timely advice~~ to, ~~and~~approve ~~interactive~~an ~~communication~~NDA ~~with,~~if the ~~sponsor~~applicable ~~regarding~~regulatory ~~the~~criteria ~~development~~are ofnot ~~the~~satisfied ~~drug~~or tomay ~~ensure~~require ~~that~~submission ~~the~~of ~~development~~additional ~~program~~clinical toor ~~gather~~other ~~the nonclinical and clinical~~ data ~~necessary for approval is as efficient as practicable; involving senior managers~~ and ~~experienced~~information ~~review staff~~which, asupon ~~appropriate,~~agency inreview aand ~~collaborative~~interpretation, ~~cross-disciplinary~~may ~~review;~~or ~~assigning~~may anot ~~cross-disciplinary~~be ~~project~~deemed ~~lead~~by ~~for~~ the FDA ~~review team~~ to ~~facilitate~~satisfy anthe ~~efficient~~criteria ~~review~~for ofapproval. ~~the~~The ~~development~~FDA ~~program~~may ~~and~~also toissue ~~serve as~~ a ~~scientific~~“complete ~~liaison~~response” ~~between~~letter, ~~the~~which ~~review~~may ~~team~~require ~~and~~additional ~~the sponsor; and taking steps to ensure that the design of the~~ clinical ~~trials~~or isother asdata ~~efficient~~or asimpose ~~practicable,~~other ~~when~~conditions ~~scientifically~~that ~~appropriate,~~must ~~such~~be asmet byin ~~minimizing~~order ~~the number of patients exposed~~ to asecure ~~potentially~~final ~~less~~approval ~~efficacious~~of ~~treatment~~the NDA.

~~Fast~~NDAs ~~Track~~receive ~~designation~~either standard or priority review. A drug representing a significant improvement in treatment, prevention or diagnosis of 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 ~~breakthrough~~may ~~therapy~~be ~~designation~~approved doon ~~not~~the ~~change~~basis of adequate and well-controlled clinical trials establishing that the ~~standards~~drug ~~for~~candidate ~~approval~~has ~~but~~an ~~may~~effect ~~expedite~~on a surrogate endpoint that is reasonably likely to predict clinical benefit or on the ~~development~~basis of an effect on a clinical endpoint other than survival or ~~approval~~irreversible ~~process~~morbidity. WeAs ~~plan~~a tocondition ~~explore~~of ~~these~~approval, ~~opportunities~~the ~~for~~FDA AGmay require that a sponsor of a drug receiving accelerated approval perform adequate and well-~~101~~controlled aspost-marketing ~~appropriate~~clinical trials. Priority review and accelerated approval do not change the standards for ~~our~~approval, ~~targeted~~but ~~indications~~may expedite the approval process.

~~Post-Approval Requirements~~18

~~Any~~In ~~drug~~the ~~products~~recently ~~for~~enacted ~~which~~Food weand ~~receive~~Drug ~~FDA~~Administration ~~approvals~~Safety ~~are~~and ~~subject~~Innovation ~~to continuing regulation by the FDA~~Act, ~~including,~~or ~~among other things~~FDASIA, ~~record-keeping~~Congress ~~requirements,~~encouraged ~~reporting of adverse experiences with~~ the ~~product, providing the~~ FDA ~~with~~to ~~updated~~utilize ~~safety~~innovative and ~~efficacy~~flexible ~~information,~~approaches ~~product~~to ~~sampling~~the ~~and~~assessment ~~distribution~~of ~~requirements,~~products ~~and~~under ~~complying~~accelerated ~~with~~approval. ~~FDA~~The ~~promotion~~law ~~and~~requires ~~advertising~~the ~~requirements,~~FDA ~~which include, among other requirements, standards for direct-~~to~~-consumer~~ ~~advertising,~~issue ~~restrictions~~related ondraft ~~promoting~~guidance ~~drugs~~within ~~for~~a ~~uses~~year orafter ~~in patient populations that are not described in~~ the ~~drug~~law’s ~~approved~~enactment ~~labeling (known as “off-label use”), limitations on industry sponsored scientific~~ and ~~educational~~also ~~activities,~~promulgate ~~and~~confirming ~~requirements~~regulatory ~~for promotional activities involving the Internet~~changes. ~~Although physicians may prescribe legally available drugs for off-label uses, manufacturers may not market or promote such off-label uses.~~

22 If approved by the FDA, the product’s use may 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

InSection 505(b)(2) ~~addition,~~Regulatory 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.Pathway

~~The~~New ~~FDA~~drugs ~~also~~must ~~may~~obtain ~~require~~FDA ~~Phase~~approval 4through ~~testing~~an ~~and~~NDA ~~surveillance~~prior to ~~monitor~~marketing ~~the~~in ~~effects of an approved product or place conditions on an approval that could restrict~~ the ~~distribution~~United ~~or use of the product~~States. ~~Discovery~~Most ofNDAs ~~previously~~are ~~unknown~~submitted ~~problems~~under ~~with~~Section 505(b)(1) aof ~~product or~~ the ~~failure to comply with applicable FDA requirements can have negative consequences~~FDCA, ~~including~~where ~~adverse~~all ~~publicity,~~clinical ~~judicial~~investigations orsupporting ~~administrative~~the ~~enforcement,~~safety ~~warning~~and ~~letters~~effectiveness ~~from~~of the ~~FDA,~~drug ~~mandated~~product ~~corrective~~are ~~advertising~~conducted orby ~~communications with doctors, and civil~~ or ~~criminal~~for ~~penalties,~~the ~~among others~~applicant. ~~Newly~~However, ~~discovered~~an orNDA ~~developed safety or effectiveness data~~ may ~~require~~also ~~changes~~be tosubmitted aunder ~~product’s~~Section 505(b)(2) ~~approved~~of ~~labeling, including~~ the ~~addition of new warnings and contraindications~~FDCA, ~~and~~which ~~also~~enables ~~may require~~ the ~~implementation~~applicant ofto ~~other risk management measures~~rely, ~~such~~in ~~as a REMS. Also~~part, ~~new~~on ~~government~~the ~~requirements,~~FDA’s ~~including~~findings ~~those~~of ~~resulting~~safety ~~from~~and ~~new~~efficacy ~~legislation,~~for ~~may~~an beexisting ~~established~~product, or ~~the~~published ~~FDA’s policies may change~~literature, ~~which~~in ~~could~~support ~~delay or prevent regulatory approval~~ of ~~our~~its ~~products under development~~application.

~~United~~Section 505(b)(2) ~~States~~NDAs ~~Patent~~often ~~Term~~provide ~~Restoration~~an alternate regulatory pathway to FDA approval for new or improved formulations or new uses of previously approved products. Specifically, ~~Generic~~Section 505(b)(2) ~~Nanomedicine~~permits ~~Pathway~~the filing of an NDA where at least some of the information required for approval comes from studies not conducted by or for the applicant and ~~Marketing~~for ~~Exclusivity~~which the applicant has not obtained a right of reference. The applicant may rely upon the FDA’s findings from preclinical or clinical studies conducted for an approved product. The FDA may also require Section 505(b)(2) applicants to perform additional studies or measurements to support the change from the approved product. The FDA may then approve the new drug candidate for all or some of the label indications for which the referenced product has been approved, as well as for any new indication sought by the Section 505(b)(2) applicant.

~~Depending~~In ~~upon~~seeking ~~the~~approval ~~timing~~for a drug through an NDA, ~~duration~~applicants ~~and~~are ~~specifics~~required ofto list with the FDA ~~approval~~each ofpatent with claims that cover the ~~use~~applicant’s ofproduct. ~~our~~Upon ~~drug~~approval ~~candidates,~~of ifa ~~any~~drug, ~~some~~each of ~~our~~the ~~U.S.~~ patents ~~may~~listed bein ~~eligible~~the application for ~~limited~~the ~~patent~~drug ~~term~~is ~~extension~~then ~~under~~published in the ~~Drug~~FDA’s ~~Price~~Approved ~~Competition~~Drug ~~and~~Products ~~Patent~~with ~~Term~~Therapeutic ~~Restoration~~Equivalence ~~Act~~Evaluations ~~of 1984~~, commonly ~~referred~~known to as the ~~Hatch-Waxman~~Orange ~~Amendments~~Book. ~~The~~Drugs ~~Hatch-Waxman~~listed ~~Amendments~~in ~~permit~~the aOrange ~~patent~~Book ~~restoration~~can, ~~term~~in turn, be cited by potential competitors in support of upapproval toof ~~five~~a ~~years~~generic asdrug ~~compensation~~or a new drug submitted for ~~patent~~approval ~~term~~under ~~lost~~a ~~during~~Section 505(b)(2) ~~product~~NDA. ~~development~~To ~~and~~the extent that the ~~FDA~~Section 505(b)(2) ~~regulatory~~applicant ~~review~~is ~~process.~~relying ~~However,~~on ~~patent~~findings ~~term~~of ~~restoration~~safety ~~cannot~~or ~~extend~~efficacy ~~the~~for ~~remaining~~an ~~term~~already ofapproved aproduct, ~~patent~~the ~~beyond~~applicant ais ~~total~~subject ofto 14existing ~~years~~exclusivity ~~from~~for the reference product’s ~~approval~~and ~~date.~~is ~~The~~required ~~patent~~to ~~term~~certify ~~restoration~~to ~~period~~the isFDA ~~generally~~concerning ~~one-half~~any patents listed for the ~~time~~approved ~~between~~product in the ~~effective~~Orange ~~date~~Book ofto anthe ~~IND~~same ~~and~~extent that a generic applicant would. Specifically, applicants must certify to the ~~submission~~FDA ~~date~~concerning ofany anpatents ~~NDA~~listed ~~plus~~for the ~~time~~approved ~~between~~product in the ~~submission~~Orange ~~date~~Book ofthat: an(1) the ~~NDA~~required ~~and~~patent information has not been filed; (2) the ~~approval~~listed ofpatent ~~that~~has ~~application.~~expired; ~~Only~~(3) the ~~one~~listed patent ~~applicable~~has tonot anexpired, ~~approved~~but ~~drug~~will isexpire ~~eligible~~on ~~for~~a ~~the~~particular ~~extension~~date and ~~the~~approval ~~application~~is ~~for~~sought after patent expiration; or (4) the ~~extension~~listed ~~must~~patent is invalid or will not be ~~submitted~~infringed ~~prior~~by tothe new product. A certification that the ~~expiration~~new ofproduct will not infringe the ~~patent.~~already ~~The~~approved Uproduct’s listed patents or that such patents are invalid is called a Paragraph IV certification.S. ~~Patent~~If ~~and~~an ~~Trademark~~applicant ~~Office,~~has inprovided ~~consultation~~a ~~with~~Paragraph IV certification to the FDA, ~~reviews~~the applicant must also send notice of the Paragraph IV certification to the NDA and ~~approves~~patent holders once the application ~~for~~has ~~any~~been ~~patent~~accepted ~~term~~for ~~extension~~filing orby ~~restoration~~the FDA. ~~However,~~The toNDA ~~obtain~~and patent holders may then initiate a patent ~~extension~~infringement lawsuit in ~~the~~response ~~United~~to ~~States,~~ the ~~permission~~notice ~~for~~of the ~~commercial~~Paragraph ~~marketing~~IV orcertification. ~~use~~The filing of ~~the~~a ~~product~~patent ~~after~~infringement lawsuit within 45 days of the ~~applicable~~receipt ~~regulatory~~of ~~review~~a ~~period~~Paragraph ~~must~~IV becertification prevents the ~~first~~FDA ~~permitted~~from ~~commercial~~approving ~~marketing~~the orapplication ~~use~~until the earlier of ~~the~~30 ~~product.~~months Asfrom ~~some~~the date of the ~~active~~lawsuit, ~~ingredient~~expiration inof ~~AG-101~~the patent, ~~has~~settlement ~~been~~of ~~previously~~the ~~approved~~lawsuit ~~and~~or ~~commercially~~a ~~marketed,~~decision wein dothe ~~not~~infringement ~~expect~~case tothat beis ~~eligible~~favorable ~~for~~to athe ~~patent~~applicant. ~~term~~Thus ~~extension~~approval inof ~~the~~a ~~United~~Section 505(b)(2) ~~States.~~NDA Ifcan abe ~~future~~stalled ~~product~~until ~~contains~~all anthe ~~active~~listed ~~ingredient~~patents ~~which~~claiming ~~has~~the ~~not~~referenced ~~been~~product ~~previously~~have ~~approved~~expired, weuntil ~~may~~any ~~intend~~non-patent toexclusivity, ~~apply~~such as exclusivity for ~~restoration~~obtaining approval of ~~patent~~a ~~term~~new ~~for~~chemical ~~one~~entity, oflisted in the ~~U.S.~~Orange ~~patents~~Book ~~relating~~for tothe ~~such~~referenced product has expired, ~~depending~~and, onin the ~~expected~~case ~~length~~ of ~~the~~a ~~clinical~~Paragraph ~~trials,~~IV ~~other~~certification ~~factors~~and ~~involved~~subsequent inpatent infringement suit, until the ~~filing~~earlier of 30 months, settlement of the ~~relevant~~lawsuit ~~NDA,~~or ~~and~~a decision in the ~~eligibility~~infringement ~~for~~case ~~patent~~that ~~term~~is ~~extension~~favorable to the Section 505(b)(2) applicant.

~~Market~~Orphan ~~exclusivity~~Drug 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 Designation

23 Under the Orphan Drug Act, the FDA may grant orphan designation to a drug intended to treat a rare disease or condition, which is a disease or condition that affects fewer than 200,000 individuals in the United States, or if it affects more than 200,000 individuals in the United States, there is no reasonable expectation that the cost of developing and making a drug product available in the United States for this type of disease or condition will be recovered from sales of the product. Orphan product designation must be requested before submitting an NDA. After the FDA grants orphan product designation, the identity of the therapeutic agent and its potential orphan use are disclosed publicly by the FDA. Orphan product designation does not convey any advantage in or shorten the duration of the regulatory review and approval process.

of the new clinical investigations and does not prohibit the FDA from approving ANDAs for drugs containing the active agent for the original indication or condition of use. Five-year and three-year exclusivity will not delay the submission or approval of any full NDA. However, an applicant submitting a full NDA would be required to conduct or obtain a right of reference to all of the preclinical and clinical trials necessary to demonstrate safety and effectiveness.19

~~Other~~If ~~types~~a ofproduct ~~non-patent~~that ~~marketing~~has ~~exclusivity~~orphan ~~include~~designation ~~orphan~~subsequently ~~drug~~receives ~~exclusivity~~the ~~under~~first FDA approval for the ~~Orphan~~disease ~~Drug~~or ~~Act~~condition for which it has such designation, the product is entitled to orphan product exclusivity, which means that the FDA may ~~offer~~not aapprove any other applications to market the same drug or biological product for the same indication for seven~~-year~~ ~~period~~years, except in limited circumstances, such as a showing of ~~marketing~~clinical superiority to the product with orphan exclusivity. The designation of such drug also entitles a party to financial incentives such as ~~described~~opportunities ~~above~~for grant funding toward clinical trial costs, tax advantages and ~~pediatric~~user-fee ~~exclusivity~~waivers. ~~under~~Competitors, ~~the~~however, ~~Best~~may ~~Pharmaceuticals~~receive approval of different products for ~~Children~~the ~~Act,~~indication for which ~~may~~the ~~add~~orphan ~~six~~product ~~months~~has toexclusivity ~~existing~~or ~~exclusivity~~obtain ~~periods~~approval ~~and~~for ~~patent~~the ~~terms.~~same ~~This~~product ~~six-month~~but ~~pediatric~~for a different indication for which the orphan product has exclusivity. ~~may~~Orphan beproduct ~~granted~~exclusivity ~~based~~also oncould block the ~~voluntary~~approval ~~completion~~of one of our products for seven years if a ~~pediatric~~competitor ~~trial~~obtains inapproval ~~accordance~~of ~~with~~the ansame drug or biological product as defined by the FDA~~-issued~~ ~~“Written~~or ~~Request”~~if our drug candidate is determined to be contained within the competitor’s product for ~~such~~the same indication or disease. If a ~~trial~~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.

InExpedited ~~addition,~~Development ~~regulatory authorities have established heightened requirements for the demonstration of equivalence between proposed generic drugs~~ and ~~therapeutics~~Review 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.Programs

~~Fraud~~The FDA has a Fast Track program that is intended to expedite or facilitate the process for reviewing new drug products that meet certain criteria. Specifically, new drugs are eligible for Fast Track designation if they are intended to treat a serious or life-threatening disease or condition and ~~Abuse~~demonstrate ~~Laws~~the potential to address unmet medical needs for the disease or condition. Fast Track designation applies to the combination of the product and the specific indication for which it is being studied. Unique to a Fast Track product, the FDA may consider for review sections of the NDA on a rolling basis before the complete application is submitted, if the sponsor provides a schedule for the submission of the sections of the NDA, the FDA agrees to accept sections of the NDA and determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the NDA.

WeAny ~~will~~product ~~also~~submitted beto ~~subject~~the toFDA ~~healthcare~~for ~~regulation~~approval, ~~and~~including ~~enforcement~~a byproduct ~~the~~with ~~federal~~a ~~government~~Fast ~~and~~Track ~~the~~designation, ~~states~~may ~~and~~also ~~foreign~~be ~~governments~~eligible infor ~~which~~other wetypes ~~will~~of ~~conduct~~FDA ~~our~~programs ~~business~~intended ~~once~~to ~~our~~expedite ~~products~~development ~~are~~and ~~approved~~review, such as priority review and accelerated approval. ~~The~~A ~~laws~~product ~~that~~is ~~may~~eligible ~~affect~~for ~~our~~priority ~~ability~~review toif ~~operate~~it ~~include:~~has the ~~federal~~potential ~~Health~~to ~~Insurance~~provide ~~Portability~~safe and ~~Accountability~~effective ~~Act~~therapy ofwhere ~~1996,~~no satisfactory alternative therapy exists or ~~HIPAA,~~a assignificant ~~amended~~improvement byin the ~~Health~~treatment, ~~Information~~diagnosis ~~Technology~~or ~~for~~prevention ~~Economic~~of ~~and~~a ~~Clinical~~disease ~~Health~~compared ~~Act,~~to ~~which~~marketed ~~governs~~products. ~~the~~The ~~conduct~~FDA ofwill ~~certain~~attempt ~~electronic~~to ~~healthcare~~direct ~~transactions~~additional ~~and~~resources ~~protects~~to the ~~security~~evaluation ~~and~~of ~~privacy~~an ofapplication ~~protected~~for ~~health~~a ~~information;~~new ~~the~~drug ~~federal~~designated ~~healthcare~~for ~~programs’~~priority ~~Anti-Kickback~~review ~~Law,~~in ~~which~~an ~~prohibits,~~effort ~~among~~to ~~other~~facilitate ~~things~~the review. Additionally, ~~persons~~a ~~from~~product ~~knowingly~~may ~~and~~be ~~willfully~~eligible ~~soliciting,~~for ~~receiving,~~accelerated ~~offering~~approval. orDrug ~~paying~~products ~~remuneration,~~studied ~~directly~~for ortheir ~~indirectly,~~safety and effectiveness in ~~exchange~~treating ~~for~~serious or tolife-threatening ~~induce~~diseases ~~either~~or ~~the~~conditions ~~referral~~may ofreceive anaccelerated ~~individual~~approval ~~for,~~upon ora ~~the~~determination ~~purchase,~~that ~~order~~the orproduct ~~recommendation~~has ~~of,~~an ~~any~~effect ~~good~~on ora ~~service~~surrogate ~~for~~endpoint ~~which~~that ~~payment~~is ~~may~~reasonably belikely ~~made~~to ~~under~~predict ~~federal~~clinical ~~healthcare~~benefit, ~~programs~~or ~~such~~on asa ~~the~~clinical ~~Medicare~~endpoint ~~and~~that ~~Medicaid~~can ~~programs;~~be ~~federal~~measured ~~false~~earlier ~~claims~~than ~~laws~~irreversible ~~which~~morbidity ~~prohibit~~or mortality, ~~among~~that ~~other~~is ~~things,~~reasonably ~~individuals~~likely orto ~~entities~~predict ~~from~~an ~~knowingly~~effect ~~presenting,~~on irreversible morbidity or ~~causing~~mortality toor beother ~~presented~~clinical benefit, ~~claims~~taking ~~for~~into ~~payment~~account ~~from~~the ~~Medicare~~severity, ~~Medicaid~~rarity, or ~~other~~prevalence ~~third-party~~of ~~payors~~the ~~that~~condition ~~are~~and ~~false~~the availability or ~~fraudulent;~~lack ~~federal~~of ~~criminal~~alternative ~~laws~~treatments. ~~that~~As ~~prohibit~~a ~~executing~~condition aof ~~scheme~~approval, tothe ~~defraud~~FDA ~~any~~may ~~healthcare~~require ~~benefit~~that ~~program~~a orsponsor ~~making~~of ~~false~~a ~~statements~~drug ~~relating~~product toreceiving ~~healthcare~~accelerated ~~matters;~~approval perform adequate and ~~state~~well-controlled ~~law~~post-marketing ~~equivalents~~clinical ofstudies. ~~each~~In ofaddition, the ~~above~~FDA ~~federal~~currently ~~laws,~~requires ~~such~~ as ~~anti-kickback~~a ~~and~~condition ~~false~~for ~~claims~~accelerated ~~laws~~approval ~~which~~pre-approval ~~may~~of ~~apply~~promotional tomaterials, ~~items~~which orcould ~~services~~adversely ~~reimbursed~~impact bythe ~~any~~timing ~~third-party~~of ~~payor,~~the ~~including~~ commercial ~~insurers~~launch of the product.

~~United~~The ~~States~~FDA ~~Drug~~may ~~Development~~also ~~Process~~accelerate the approval of a designated breakthrough therapy, which is a drug that is intended, 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 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.

InFast ~~the~~Track ~~United States~~designation, ~~the~~priority ~~FDA regulates drugs under the Federal Food~~review, ~~Drug,~~accelerated ~~and~~approval ~~Cosmetic Act, or FDCA,~~ and ~~implementing~~breakthrough ~~regulations.~~therapy ~~Failure~~designation todo ~~comply~~not ~~with~~change the ~~applicable~~standards ~~U.S.~~for ~~requirements~~approval atbut ~~any~~may ~~time~~expedite ~~during~~ the ~~product~~ development ~~process~~ or approval process,. orWe ~~after~~plan ~~approval, may subject an applicant~~ to ~~administrative~~explore orthese ~~judicial~~opportunities ~~sanctions,~~for ~~any~~AG-101 ofas ~~which~~appropriate ~~could~~for ~~have~~our atargeted ~~material adverse effect on us~~indications. ~~These sanctions could include:~~

• refusal to approve pending applications; • 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.20

~~The~~Post-Approval ~~process required by the FDA before a drug may be marketed in the United States generally involves the following:~~ Requirements

•Any ~~completion~~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 ~~preclinical~~adverse ~~laboratory~~experiences ~~tests~~with the product, ~~animal~~providing ~~studies~~the FDA with updated safety and ~~formulation~~efficacy ~~studies~~information, ~~according~~product tosampling ~~Good~~and ~~Laboratory~~distribution ~~Practices~~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 ~~GLPs~~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 ~~other~~promote ~~applicable~~such ~~regulations;~~off-label uses.

24 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.

•The ~~submission~~FDA also may require Phase 4 testing and surveillance to monitor the ~~FDA~~effects of an ~~Investigational~~approved ~~New~~product ~~Drug~~or ~~Application,~~place orconditions ~~IND,~~on ~~which~~an ~~must~~approval ~~become~~that ~~effective~~could ~~before~~restrict ~~human~~the ~~clinical~~distribution ~~trials~~or ~~may~~use ~~begin;~~of •the ~~performance~~product. Discovery of ~~adequate~~previously ~~and~~unknown ~~well-controlled~~problems ~~human~~with ~~clinical~~a ~~trials~~product ~~according~~or the failure to ~~Good~~comply ~~Clinical~~with ~~Practices~~applicable FDA requirements can have negative consequences, orincluding ~~GCPs~~adverse publicity, ~~and~~judicial ~~other~~or ~~applicable~~administrative ~~requirements~~enforcement, towarning ~~establish~~letters from the ~~safety~~FDA, mandated corrective advertising or communications with doctors, and ~~efficacy~~civil ofor ~~the~~criminal ~~proposed~~penalties, ~~drug~~among ~~for~~others. ~~its~~Newly ~~intended~~discovered ~~use;~~or •developed ~~submission~~safety toor ~~the~~effectiveness ~~FDA~~data ofmay anrequire ~~NDA;~~changes •to ~~satisfactory~~a ~~completion~~product’s ofapproved anlabeling, ~~FDA~~including ~~inspection~~the addition of ~~the~~new ~~manufacturing~~warnings ~~facility~~and orcontraindications, ~~facilities~~and atalso ~~which~~may require the ~~drug~~implementation isof ~~produced~~other torisk ~~assess~~management ~~compliance~~measures, ~~with~~such ~~current~~as ~~cGMP,~~a toREMS. ~~assure~~Also, ~~that~~new ~~the~~government ~~facilities~~requirements, ~~methods~~including ~~and~~those ~~controls~~resulting ~~are~~from ~~adequate~~new tolegislation, ~~preserve~~may be established, or the ~~drug~~FDA’s ~~identity,~~policies ~~strength~~may change, ~~quality~~which ~~and~~could ~~purity;~~delay ~~and~~or •prevent ~~FDA~~regulatory ~~review and~~ approval of ~~the~~our ~~NDA~~products under development.

AsUnited ~~part~~States ofPatent ~~the~~Term ~~IND~~Restoration, anGeneric ~~IND~~Nanomedicine ~~sponsor~~Pathway ~~must submit to the FDA the results of preclinical tests, which may include laboratory evaluations~~ and ~~animal~~Marketing 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. Exclusivity

~~All~~Depending ~~clinical~~upon ~~trials~~the ~~must~~timing, beduration ~~conducted~~and ~~under~~specifics of the ~~supervision~~FDA approval of ~~one~~the oruse ~~more~~of ~~qualified~~our ~~investigators~~drug incandidates, ~~accordance~~if ~~with~~any, ~~GCPs~~some of our U.S. ~~They~~patents ~~must~~may be ~~conducted~~eligible ~~under~~for ~~protocols~~limited ~~detailing~~patent term extension under the ~~objectives~~Drug Price Competition and Patent Term Restoration Act of 1984, commonly referred to as the ~~trial,~~Hatch-Waxman ~~dosing~~Amendments. ~~procedures,~~The ~~research~~Hatch-Waxman ~~subject~~Amendments ~~selection~~permit ~~and~~a ~~exclusion~~patent ~~criteria~~restoration ~~and~~term ~~the~~of ~~safety~~up to five years as compensation for patent term lost during product development and ~~effectiveness~~the ~~criteria~~FDA toregulatory bereview ~~evaluated~~process. ~~Each~~However, ~~protocol~~patent ~~must~~term berestoration ~~submitted~~cannot toextend the ~~FDA~~remaining asterm ~~part~~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 IND, and ~~progress~~the ~~reports~~submission ~~detailing~~date of an NDA plus the ~~status~~time between the submission date of an NDA and the ~~clinical~~approval ~~trials~~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 ~~FDA~~expiration ~~annually~~of the patent. ~~Sponsors~~The ~~also~~U.S. ~~must~~Patent ~~timely~~and ~~report~~Trademark toOffice, in consultation with the FDA, ~~serious~~reviews and ~~unexpected~~approves ~~adverse~~the ~~reactions,~~application for any ~~clinically~~patent ~~important~~term ~~increase~~extension or restoration. However, to obtain a patent extension in the ~~rate~~United States, the permission for the commercial marketing or use of athe ~~serious~~product ~~suspected~~after ~~adverse~~the ~~reaction~~applicable ~~over~~regulatory ~~that~~review ~~listed~~period inmust be the ~~protocol~~first orpermitted ~~investigation~~commercial ~~brochure,~~marketing or ~~any~~use ~~findings~~of ~~from~~the ~~other~~product. ~~studies~~As orsome ~~animal~~of orthe active ingredient in ~~vitro~~AG-101, ~~testing~~has ~~that~~been ~~suggest~~previously aapproved ~~significant~~and ~~risk~~commercially inmarketed, ~~humans~~we ~~exposed~~do not expect to be eligible for a patent term extension in the ~~drug~~United States. AnIf ~~institutional~~a ~~review~~future ~~board,~~product orcontains ~~IRB~~an active ingredient which has not been previously approved, ~~must~~we ~~also~~may ~~review~~intend ~~and~~to ~~approve~~apply ~~each~~for ~~new~~restoration ~~clinical~~of ~~protocol~~patent ~~and~~term ~~patient~~for ~~informed~~one ~~consent~~of ~~form~~the ~~prior~~U.S. patents relating to ~~commencement~~such ofproduct, depending on the ~~corresponding~~expected length of the clinical ~~trial~~trials, atother ~~each~~factors ~~institution~~involved ~~where~~in athe ~~trial~~filing isof tothe berelevant ~~performed.~~NDA, and the eligibility for patent term extension.

~~Human clinical trials are typically conducted in three sequential Phases that may overlap or be combined:~~ 21

~~Phase~~Market 1exclusivity : 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 ~~initially~~a ~~introduced~~new ~~into~~chemical ~~healthy~~entity ~~human~~if ~~subjects~~the ~~and~~FDA ~~tested~~has not previously approved any other new drug containing the same active moiety, which is the molecule or ion responsible for ~~safety~~the action of the drug substance. During the exclusivity period, ~~dosage~~the ~~tolerance~~FDA may not accept for review an abbreviated new drug application, ~~absorption~~or ANDA, ~~metabolism~~or a 505(b)(2) NDA submitted by another company for another drug based on the same active moiety, ~~distribution~~regardless ~~and~~of ~~excretion.~~whether Inthe drug is intended for the ~~case~~same indication as the original innovative drug or for another indication, where the applicant does not own or have a legal right of ~~some~~reference ~~products~~to all the data required for ~~severe~~approval. However, an application may be submitted after four years if it contains a certification of patent invalidity or ~~life~~non-~~threatening~~infringement ~~diseases~~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, ~~such~~other asthan ~~cancer~~bioavailability studies, ~~especially~~that ~~when~~were conducted or sponsored by the ~~product~~applicant ~~may~~are bedeemed ~~inherently~~by ~~too~~the ~~toxic~~FDA to ~~ethically~~be ~~administer~~essential to ~~healthy~~the ~~volunteers~~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 ~~initial~~modification ~~human~~for ~~testing~~which isthe ~~often~~drug ~~conducted~~received inapproval ~~patients~~on the basis of the new clinical investigations and does not prohibit the FDA from approving ANDAs for drugs containing the active agent for the original indication or condition of use. Five-year and three-year exclusivity will not delay the submission or approval of any full NDA. However, an applicant submitting a full NDA would be required to conduct or obtain a right of reference to all of the preclinical and clinical trials necessary to demonstrate safety and effectiveness.

~~Phase~~Other 2types ~~: Clinical~~of ~~trials~~non-patent ~~are~~marketing ~~performed~~exclusivity oninclude aorphan ~~limited~~drug ~~patient~~exclusivity ~~population~~under ~~intended~~the toOrphan ~~identify~~Drug ~~possible~~Act, ~~adverse~~which ~~effects~~may ~~and~~offer ~~safety~~a ~~risks,~~seven-year toperiod ~~preliminarily~~of ~~evaluate~~marketing ~~the~~exclusivity ~~efficacy~~as ofdescribed above, and pediatric exclusivity under the ~~product~~Best Pharmaceuticals for ~~specific~~Children ~~targeted~~Act, ~~diseases~~which ~~and~~may add six months to ~~determine~~existing ~~dosage~~exclusivity ~~tolerance~~periods and ~~optimal~~patent ~~dosage~~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.

~~Phase~~In 3addition, ~~: Clinical~~regulatory ~~trials~~authorities ~~are~~have ~~undertaken~~established toheightened ~~further~~requirements ~~evaluate~~for ~~dosage,~~the ~~clinical~~demonstration ~~efficacy~~of equivalence between proposed generic drugs and ~~safety~~therapeutics inusing ancertain ~~expanded~~nanomedicine ~~patient~~platforms, ~~population~~such atas ~~geographically~~liposomes ~~dispersed~~and ~~clinical~~other ~~study~~nanoparticulate ~~sites~~suspensions. ~~These~~We ~~studies~~expect ~~are~~these ~~intended~~requirements towill ~~establish~~apply to the ~~overall~~development ~~risk-benefit~~of ~~ratio~~generic ofPolycefin as well. We believe these additional regulatory requirements will strengthen the ~~product~~protection ~~and~~afforded ~~provide,~~by ifour ~~appropriate,~~intellectual anproperty ~~adequate~~portfolio ~~basis~~and present significant barriers to entry for ~~product~~potential ~~labeling~~generics.

~~Human~~Fraud ~~clinical trials are inherently uncertain~~ and ~~Phase~~Abuse 1, Phase 2 and Phase 3 testing may not be successfully completed. The FDA or the sponsor may suspend a clinical trial at any time for a variety of reasons, including a finding that the research subjects or patients are being exposed to an unacceptable health risk. Similarly, an IRB can suspend or terminate approval of a clinical trial at its institution if the clinical trial is not being conducted in accordance with the IRB’s requirements or if the drug has been associated with unexpected serious harm to patients. Laws

25 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.

~~During~~United ~~the~~States ~~development~~Drug ofDevelopment a new drug, sponsors are given an opportunity to meet with the FDA at certain points. These points may be prior to submission of an IND, at the end of Phase 2, and before an NDA is submitted. These meetings can provide an opportunity for the sponsor to share information about the data gathered to date and for the FDA to provide advice on the next phase of development. Sponsors typically use the end-of-Phase 2 meeting to discuss their Phase 2 clinical results and present their plans for the pivotal Phase 3 clinical trial that they believe will support approval of the new drug. Process

~~Concurrent~~In ~~with~~the ~~clinical~~United ~~trials~~States, ~~sponsors~~the ~~usually~~FDA ~~complete~~regulates ~~additional~~drugs ~~animal~~under ~~safety~~the ~~studies~~Federal ~~and~~Food, ~~also~~Drug, ~~develop additional information about the chemistry~~ and ~~physical~~Cosmetic ~~characteristics~~Act, ofor ~~the~~FDCA, ~~drug~~ and ~~finalize~~implementing aregulations. ~~process~~Failure ~~for~~to ~~manufacturing~~comply ~~commercial~~with ~~quantities of~~ the ~~product~~applicable inU.S. ~~accordance with cGMP~~ requirements. ~~The~~at ~~manufacturing~~any ~~process~~time ~~must~~during ~~be capable of consistently producing quality batches of~~ the ~~drug~~product ~~and~~development ~~the~~process ~~manufacturer~~or ~~must~~approval ~~develop methods for testing the quality~~process, ~~purity~~or ~~and~~after ~~potency of the drug. Additionally~~approval, ~~appropriate~~may ~~packaging~~subject ~~must~~an beapplicant ~~selected~~to ~~and~~administrative ~~tested~~or ~~and~~judicial ~~stability~~sanctions, ~~studies~~any ~~must~~of bewhich ~~conducted~~could tohave ~~demonstrate~~a ~~that~~material ~~the~~adverse ~~drug~~effect ~~candidate~~on ~~does~~us. ~~not~~These ~~undergo~~sanctions ~~unacceptable~~could ~~deterioration~~include: ~~over its proposed shelf-life.~~

If a drug is intended to treat a serious or life threatening condition for which there is an unmet medical need, a company may request that the FDA consider the drug for a fast track development program at the time of submitting its IND or at any time prior to receiving marketing approval. The fast track program is designed to facilitate the development and expedite the review of a new drug for the treatment of specific conditions. If the FDA agrees that the drug meets the criteria for fast track development for treatment of one or more conditions, it will grant fast track status. ·

~~Pediatric~~refusal ~~Exclusivity~~to ~~and~~approve ~~Pediatric~~pending ~~Use~~applications;

Under the Best Pharmaceuticals for Children Act, or BPCA, certain drugs may obtain an additional six months of exclusivity, if the sponsor submits information requested in writing by the FDA, or a Written Request, relating to the use of the active moiety of the drug in children. The FDA may not issue a Written Request for studies on unapproved or approved indications or where it determines that information relating to the use of a drug in a pediatric population, or part of the pediatric population, may not produce health benefits in that population. ·

Towithdrawal receive the six-month pediatric market exclusivity, we would have to receive a Written Request from the FDA, conduct the requested studies in accordance with a written agreement with the FDA or, if there is no written agreement, in accordance with commonly accepted scientific principles, and submit reports of ~~the~~an ~~studies.~~approval; A Written Request may include studies for indications that are not currently in the labeling if the FDA determines that 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 the original Written Request or commonly accepted scientific principles, as appropriate, and that the reports comply with the FDA’s filing requirements.

In addition, the Pediatric Research Equity Act, or PREA, requires a sponsor to conduct pediatric studies for most drugs and biologicals, for a new active ingredient, new indication, new dosage form, new dosing regimen or new route of administration. Under PREA, original NDAs, biologics license application and supplements thereto, must contain a pediatric assessment unless the sponsor has received a deferral or waiver. The required assessment must assess the safety and effectiveness of the product for the claimed indications in all relevant pediatric subpopulations and support dosing and administration for each pediatric subpopulation for which the product is safe and effective. The sponsor or FDA may request a deferral of pediatric studies for some or all of the pediatric subpopulations. A deferral may be granted for several reasons, including a finding that the drug or biologic is ready for approval for use in adults before pediatric studies are complete or that additional safety or effectiveness data needs to be collected before the pediatric studies begin. After April 2013, the FDA must send a non-compliance letter to any sponsor that fails to submit the required assessment, keep a deferral current or fails to submit a request for approval of a pediatric formulation. ·

Asimposition ~~part~~ of ~~the FDASIA, Congress made~~ a ~~few~~clinical ~~revisions~~hold; ~~to BPCA and PREA, which were slated to expire on September 30, 2012, and made both laws permanent.~~

26 ·

~~Post-Approval~~warning ~~Requirements~~letters;

Once an approval 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 previously unknown problems with a product may result in restrictions on the product or even complete withdrawal of the product from the market. After approval, some types of 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 that have been commercialized, and the FDA has the power to prevent or limit further marketing of a product based on the results of these post-marketing programs. ·

~~Any~~product ~~drug~~seizures; ~~products manufactured or distributed by us pursuant to FDA approvals are subject to continuing regulation by the FDA, including, among other things:~~

• record-keeping requirements; • reporting of adverse experiences with the drug; • providing the FDA with updated safety and efficacy information; • drug sampling and distribution requirements; • notifying the FDA and obtaining its approval of specified manufacturing or labeling changes; and • complying with FDA promotion and advertising requirements.·

~~Drug~~total ~~manufacturers~~or ~~and~~partial ~~other~~suspension ~~entities~~of ~~involved~~production inor ~~the manufacture and~~ distribution; ofor 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 some state agencies for compliance with cGMP and other laws.

We rely, and expect to continue to rely, on third parties for the production of clinical and commercial quantities of our products. Future FDA and state inspections may identify compliance issues at the facilities of our contract manufacturers that may disrupt production or distribution, or require substantial resources to correct. ·

~~From time to time~~injunctions, ~~legislation is drafted~~fines, ~~introduced and passed in Congress that could significantly change the statutory provisions governing the approval~~disgorgement, ~~manufacturing and marketing of products regulated by the FDA. In addition, FDA regulations and guidance are often revised~~ or ~~reinterpreted~~civil ~~by the agency in ways that may significantly affect our business and our products. It is impossible to predict whether legislative changes will be enacted,~~ or ~~FDA~~criminal ~~regulations, guidance or interpretations changed or what the impact of such changes, if any, may be~~penalties.

~~Foreign Regulation~~ 22

InThe ~~addition~~process torequired ~~regulations~~by 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~~before ~~for~~ a ~~product,~~drug wemay ~~must~~be ~~obtain~~marketed ~~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~~United ~~may~~States begenerally ~~longer~~involves ~~or shorter than that required for FDA approval. The requirements governing~~ the ~~conduct~~following: ~~of clinical trials, product licensing, pricing and reimbursement vary greatly from country to country.~~

Under European Union regulatory 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 optional for those medicines which are highly innovative, provides for the grant of a single marketing authorization that is valid for all European Union member states. The decentralized procedure provides for mutual recognition of national approval decisions. Under this procedure, the holder of a national marketing authorization may submit an application to the remaining member states. Within 90 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. ·

27 completion of preclinical laboratory tests, animal studies and formulation studies according to Good Laboratory Practices, or GLPs, or other applicable regulations;

~~Reimbursement~~ ·

~~Sales~~submission ~~of our product candidates, if approved, will depend, in part, on the extent~~ to ~~which physicians believe our products are efficacious and cost effective. The costs of most drugs used during surgical procedures are typically included in~~ the ~~cost~~FDA of ~~the~~an ~~procedure~~Investigational ~~and~~New ~~are~~Drug ~~not reimbursed as separate expenses by third-party payors~~Application, ~~such~~or ~~as government health programs such as Medicare and Medicaid~~IND, ~~commercial~~which ~~health~~must ~~insurers and managed care organizations. The containment of healthcare costs has~~ become aeffective ~~priority~~before ~~for~~human ~~federal~~clinical ~~and~~trials ~~state~~may ~~governments.~~begin;

We expect that there will continue to be a number of federal and state proposals to limit the growth of healthcare costs, including the cost of treatment regiments and hospital stays. The adoption of other legislative or regulatory proposals could have a material adverse effect on our business, financial condition and profitability. ·

Inperformance ~~addition,~~of inadequate ~~some~~and ~~foreign~~well-controlled ~~countries,~~human ~~the~~clinical ~~proposed~~trials ~~pricing~~according ~~for a drug must be approved before it may be lawfully marketed. The requirements governing drug pricing vary widely from country~~ to ~~country.~~Good ~~For~~Clinical ~~example~~Practices, ~~the~~or ~~European~~GCPs, ~~Union~~and ~~provides~~other ~~options~~applicable ~~for~~requirements ~~its member states~~ to ~~restrict~~establish the ~~range~~safety ~~of medicinal products for which their national health insurance systems provide reimbursement~~ and toefficacy ~~control the prices~~ of ~~medicinal products for human use. A member state may approve a specific price for~~ the ~~medicinal~~proposed ~~product~~drug or it may instead adopt a system of direct or indirect controls 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 ~~pharmaceutical~~its ~~products~~intended ~~will~~use; allow favorable reimbursement and pricing arrangements for any of our products. Historically, products launched in the European Union do not follow price structures of the United States and generally tend to be significantly lower.

~~Other United States Regulations~~ ·

~~Pharmaceutical~~submission ~~companies also are subject~~ to ~~various federal and state laws pertaining to healthcare “fraud and abuse,” including anti-kickback laws and false claims laws, and~~ the ~~reporting~~FDA of ~~payments~~an toNDA; ~~physicians and teaching hospitals.~~

~~Anti-Kickback Laws~~ ·

~~U.S.~~satisfactory ~~federal~~completion 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,~~an ~~the~~FDA ~~Office~~inspection of ~~Inspector General for~~ the ~~Department~~manufacturing offacility ~~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~~facilities ~~remuneration,~~at ~~directly~~which orthe ~~indirectly,~~drug inis ~~exchange~~produced ~~for or~~ to ~~induce~~assess ~~either~~compliance ~~the~~with ~~referral~~current ~~of an individual~~cGMP, orto ~~the~~assure ~~furnishing, arranging for or recommending of an item or service~~ that isthe ~~reimbursable~~facilities, inmethods ~~whole~~and orcontrols inare ~~part,~~adequate ~~by a federal healthcare program. Remuneration is broadly defined~~ to ~~include~~preserve ~~anything~~the ofdrug’s ~~value~~identity, ~~such as~~strength, ~~cash~~quality ~~payments, gifts or gift certificates, discounts, or the furnishing of services, supplies or equipment. The anti-kickback laws are broad~~ and ~~prohibit~~purity; ~~many arrangements~~ and ~~practices that are lawful in businesses outside of the healthcare industry.~~

The penalties for violating the anti-kickback laws can be severe. The sanctions include criminal and civil penalties, and possible exclusion from the federal healthcare programs. Many states have adopted laws similar to the federal anti-kickback laws, and some apply to items and services reimbursable by any payor, including third-party payors. ·

~~State~~FDA review and ~~Federal~~approval ~~Prohibitions~~of onthe ~~False Claims~~ NDA.

~~The~~As ~~federal~~part ~~False~~of ~~Claims~~the ~~Act imposes liability on any person or entity that~~IND, ~~among~~an ~~other~~IND ~~things,~~sponsor ~~knowingly~~must ~~presents,~~submit ~~or causes~~ to ~~be presented, a false or fraudulent claim for payment to~~ the ~~federal~~FDA ~~government. Under~~ the ~~False~~results ~~Claims~~of ~~Act~~preclinical tests, awhich ~~person~~may ~~acts~~include ~~knowingly~~laboratory ifevaluations heand ~~has~~animal ~~actual~~studies, ~~knowledge~~together ofwith ~~the~~manufacturing information orand ~~acts~~analytical indata, ~~deliberate~~and ~~ignorance~~the orproposed inclinical ~~reckless~~protocol ~~disregard~~for of the ~~truth~~first orPhase ~~falsity~~ of the ~~information.~~clinical ~~Specific~~trial ~~intent to defraud is not required. Provisions~~ of the ~~False~~drug. ~~Claims~~The ~~Act~~IND ~~allow~~automatically abecomes ~~private~~effective ~~individual~~30 todays ~~bring~~after anreceipt ~~action~~by ~~on behalf of~~ the ~~federal~~FDA, ~~government~~unless ~~and to share in any amounts paid by~~ the ~~defendant~~FDA, towithin the ~~government~~30-day intime ~~connection~~period, ~~with~~places the ~~action.~~clinical ~~The~~trial ~~number~~on ofa ~~filings~~“clinical ~~under~~hold” ~~these~~because ~~provisions~~of ~~has~~safety ~~increased~~concerns ~~significantly~~or inperceived ~~recent~~procedural ~~years~~deficiencies. ~~When~~In ansuch ~~entity~~a iscase, ~~determined to have violated~~ the ~~False~~IND ~~Claims~~sponsor ~~Act,~~and ~~it may be required to pay up to three times~~ the ~~actual~~FDA ~~damages~~must ~~sustained~~resolve byany ~~the~~outstanding ~~government,~~concerns ~~plus~~before ~~civil~~clinical ~~penalties~~trials ~~for~~may ~~each false claim~~begin. ~~Conduct~~A ~~that~~clinical ~~violates~~hold ~~the False Claims Act~~ may ~~also~~be ~~lead~~imposed toby ~~exclusion from~~ the ~~federal~~FDA ~~healthcare programs. Given the number of claims likely to be~~ at ~~issue,~~any ~~potential~~time ~~damages~~during ~~under~~ the ~~False~~life ~~Claims~~of ~~Act~~an ~~for even a single inappropriate arrangement could be significant. In addition~~IND, ~~various~~and ~~states~~may ~~have~~affect ~~enacted~~one ~~similar~~or ~~laws~~more ~~modeled~~specific ~~after~~studies ~~the~~or ~~False~~all ~~Claims~~studies ~~Act~~conducted ~~that apply to items and services reimbursed~~ under ~~Medicaid~~the ~~and other state healthcare programs, and, in several states, such laws apply to claims submitted to all payors~~IND.

28 All clinical trials must be conducted under the supervision of one or more qualified 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.

~~Federal~~Human ~~Prohibitions~~clinical ontrials ~~Healthcare~~are ~~Fraud~~typically ~~and~~conducted ~~False~~in ~~Statements~~three ~~Related~~sequential toPhases ~~Healthcare~~that ~~Matters~~may overlap or be combined:

~~Under~~Phase ~~the~~1 ~~administrative~~: ~~simplification~~The ~~provisions~~drug ofis ~~the~~initially ~~Health~~introduced ~~Insurance~~into ~~Portability~~healthy ~~and~~human ~~Accountability~~subjects ~~Act~~and oftested ~~1996~~for safety, ordosage ~~HIPAA~~tolerance, ~~and~~absorption, ~~state~~metabolism, ~~laws~~distribution ~~there~~and ~~are~~excretion. ~~numerous~~In ~~regulations~~the ~~for~~case ~~protecting~~of ~~the~~some ~~privacy~~products ~~and~~for ~~security~~severe ofor ~~protected~~life-threatening ~~health~~diseases, ~~information.~~such ~~Additional~~as ~~administrative~~cancer, ~~simplification~~especially ~~provisions~~when ~~created~~ the ~~following~~product ~~new~~may ~~federal~~be ~~crimes:~~inherently ~~healthcare~~too ~~fraud,~~toxic ~~false~~to ~~statements~~ethically ~~relating~~administer to ~~healthcare~~healthy ~~matters~~volunteers, ~~theft~~the orinitial ~~embezzlement~~human intesting ~~connection~~is ~~with~~often aconducted ~~health~~in ~~benefit program and obstruction of criminal investigation of healthcare offenses~~patients. ~~The~~Phase ~~healthcare~~2 ~~fraud~~: ~~statute~~Clinical ~~prohibits~~trials ~~knowingly~~are ~~and~~performed ~~willfully~~on ~~executing~~ a ~~scheme~~limited topatient ~~defraud~~population ~~any~~intended ~~healthcare~~to ~~benefit~~identify ~~program,~~possible ~~including~~adverse aeffects ~~private insurer. The false statements statute prohibits knowingly~~ and ~~willfully~~safety ~~falsifying~~risks, ~~concealing,~~to orpreliminarily ~~covering~~evaluate ~~up a material fact or making any materially false, fictitious, or fraudulent statement in connection with~~ the ~~delivery~~efficacy of orthe ~~payment~~product for ~~healthcare~~specific ~~benefits,~~targeted ~~items,~~diseases orand ~~services.~~to ~~The~~determine ~~theft~~dosage ortolerance ~~embezzlement statute prohibits knowingly~~ and ~~willfully~~optimal ~~embezzling, stealing or otherwise converting or misapplying the money or property of a healthcare benefit program~~dosage. ~~The~~Phase ~~obstruction~~3 of: ~~criminal~~Clinical ~~investigations~~trials ofare ~~healthcare~~undertaken ~~offenses~~to ~~statute~~further ~~prohibits~~evaluate ~~willfully preventing~~dosage, ~~obstructing,~~clinical ~~misleading~~efficacy orand ~~delaying~~safety ~~the~~in ~~communication~~an ofexpanded ~~information~~patient ~~and~~population ~~records~~at ~~relating~~geographically todispersed aclinical ~~violation~~study ofsites. aThese ~~federal~~studies ~~healthcare~~are ~~offense~~intended to aestablish ~~criminal~~the ~~investigator.~~overall Arisk-benefit ~~violation~~ratio of ~~any~~the ofproduct ~~these laws is a felony~~ and ~~may~~provide, ~~result~~if ~~in fines~~appropriate, oran ~~exclusion~~adequate ~~from~~basis ~~the~~for ~~federal~~product ~~healthcare programs~~labeling.

Human clinical trials are inherently uncertain and Phase 1, Phase 2 and Phase 3 testing may not be successfully completed. The ~~Physician~~FDA ~~Payment~~or ~~Sunshine~~the ~~Act~~sponsor may suspend a clinical trial at any time for a variety of reasons, including a finding that the research subjects or patients are being exposed to an unacceptable health risk. Similarly, an IRB can suspend or terminate approval of a clinical trial at its institution if the clinical trial is not being conducted in accordance with the IRB’s requirements or if the drug has been associated with unexpected serious harm to patients.

~~The~~During ~~Physician Payment Sunshine Act, or~~ the ~~Sunshine~~development ~~Act, which was enacted as part~~ of ~~the~~a ~~Patient~~new ~~Protection and Affordable Care Act~~drug, orsponsors ~~the~~are ~~ACA,~~given ~~requires~~an ~~applicable~~opportunity ~~manufacturers of drugs, devices, biologicals, or medical supplies covered under Medicare, Medicaid or the Children’s Health Insurance Program,~~ to ~~report~~meet ~~annually~~with to the ~~Secretary~~FDA ofat ~~the~~certain ~~Department~~points. ofThese ~~Health~~points ~~and~~may ~~Human~~be ~~Services~~prior ~~payments~~to orsubmission ~~other transfers~~ of ~~value~~an ~~made by that entity~~IND, orat bythe aend ~~third~~of ~~party~~Phase ~~as directed by that entity~~2, ~~to physicians~~ and ~~teaching~~before ~~hospitals,~~an orNDA tois ~~third~~submitted. ~~parties~~These onmeetings ~~behalf~~can ofprovide ~~physicians~~an oropportunity ~~teaching~~for ~~hospitals, during~~ the ~~course~~sponsor ofto ~~the~~share ~~preceding~~information ~~calendar~~about ~~year. The Final Rule implementing~~ the ~~Sunshine Act, published on February 8, 2013, requires~~ data ~~collection~~gathered ~~on payments~~ to ~~begin~~date onand ~~August~~for 1,the ~~2013.~~FDA ~~The first annual report, comprised of data collected from August 1, 2013~~ to ~~December~~provide ~~31,~~advice ~~2013,~~on ~~was~~the ~~due~~next ~~March~~phase ~~31,~~of ~~2014~~development. ~~Failure~~Sponsors totypically ~~comply~~use ~~with~~ the ~~reporting requirements can result in significant civil monetary penalties ranging from $1,000 to $10,000 for each payment or other transfer~~ end-of-Phase ~~value~~2 ~~that~~meeting ~~is not reported (up~~ to adiscuss ~~maximum~~their ~~per~~Phase ~~annual~~2 ~~report~~clinical ofresults ~~$150,000)~~ and ~~from~~present ~~$10,000~~their toplans ~~$100,000~~ for ~~each~~the ~~knowing~~pivotal ~~failure~~Phase to3 ~~report~~clinical ~~(up~~trial tothat athey ~~maximum~~believe ~~per~~will ~~annual~~support ~~report~~approval of $1the ~~million).~~new ~~We will be required to collect data on and report these payments~~drug.

~~Employees~~23

AsConcurrent ofwith ~~October~~clinical 31trials, ~~2014,~~sponsors weusually ~~had~~complete noadditional ~~employees. Our~~animal ~~executive~~safety ~~officers~~studies ~~all~~and ~~work~~also ondevelop aadditional ~~part~~information ~~time~~about ~~basis~~the aschemistry ~~contractors. We~~and ~~also~~physical ~~had~~characteristics ~~one~~of ~~full-time~~the ~~administrative~~drug ~~contractor~~and ~~due~~finalize toa ~~our~~process ~~limited~~for ~~capital~~manufacturing ~~resources~~commercial quantities of the product in accordance with cGMP requirements. We ~~also~~The ~~utilize~~manufacturing ~~several~~process ~~consultants~~must ~~who~~be ~~are~~capable ~~focused~~of onconsistently ~~business~~producing quality batches of the drug and ~~technical~~the ~~development.~~manufacturer ~~Our~~must ~~ability~~develop tomethods ~~expand~~for ~~our~~testing ~~employee~~the ~~base~~quality, topurity ~~include~~and ~~full-time~~potency ~~personnel~~of inthe ~~administration~~drug. Additionally, ~~research~~appropriate packaging must be selected and ~~development~~tested and ~~business~~stability ~~development~~studies ismust ~~dependent~~be onconducted to demonstrate that the ~~availability~~drug ofcandidate ~~funding~~does not undergo unacceptable deterioration over its proposed shelf-life.

29 If a drug is intended to treat a serious or life threatening condition for which there is an unmet medical need, a company may request that the FDA consider the drug for a fast track development program at the time of submitting its IND or at any time prior to receiving marketing approval. The fast track program is designed to facilitate the development and expedite the review of a new drug for the treatment of specific conditions. If the FDA agrees that the drug meets the criteria for fast track development for treatment of one or more conditions, it will grant fast track status.

~~Item~~Pediatric ~~1A.~~Exclusivity ~~Risk~~and ~~Factors~~Pediatric Use

~~CERTAIN~~Under ~~RISK~~the ~~FACTORS~~Best OFPharmaceuticals ~~ARROGENE~~for ~~THAT~~Children ~~MAY~~Act, ~~AFFECT~~or ~~FUTURE~~BPCA, ~~RESULTS~~certain drugs may obtain an additional six months of exclusivity, if the sponsor submits information requested in writing by the FDA, or a Written Request, relating to the use of the active moiety of the drug in children. The FDA may not issue a Written Request for studies on unapproved or approved indications or where it determines that information relating to the use of a drug in a pediatric population, or part of the pediatric population, may not produce health benefits in that population.

~~Our~~To ~~business,~~receive ~~future~~the ~~performance~~six-month ~~and~~pediatric ~~forward-looking~~market ~~statements~~exclusivity, ~~are~~we ~~affected~~would byhave ~~general~~to ~~industry~~receive ~~and~~a ~~market~~Written ~~conditions~~Request ~~and~~from ~~growth~~the ~~rates~~FDA, ~~general~~conduct ~~U.S.~~the ~~and~~requested ~~non-U.S.~~studies ~~economic~~in ~~and~~accordance ~~political~~with ~~conditions~~a ~~(including~~written agreement with the ~~global~~FDA ~~economy)~~or, ~~competition~~if there is no written agreement, ~~interest~~in ~~rate~~accordance ~~and~~with ~~currency~~commonly ~~exchange~~accepted ~~rate~~scientific ~~fluctuations~~principles, and ~~other~~submit ~~events~~reports of the studies. ~~The~~ ~~following~~A ~~items~~Written Request may include studies for indications that are ~~representative~~not ofcurrently in the ~~risks,~~labeling ~~uncertainties~~if ~~and~~the ~~other~~FDA ~~conditions~~determines that ~~may~~such ~~impact~~information ~~our~~will ~~business,~~benefit ~~future~~the ~~performance~~public ~~and~~health. The FDA will accept the ~~forward-looking~~reports ~~statements~~upon its determination that wethe ~~make~~studies were conducted in ~~this~~accordance ~~report~~with and are responsive to the original Written Request or commonly accepted scientific principles, as appropriate, and that wethe ~~may~~reports ~~make~~comply inwith the ~~future~~FDA’s filing requirements.

~~Risks~~In ~~Related~~addition, the Pediatric Research Equity Act, or PREA, requires a sponsor to ~~our~~conduct ~~Business~~pediatric studies for most drugs and biologicals, ~~Products~~for a new active ingredient, new indication, new dosage form, new dosing regimen or new route of administration. Under PREA, original NDAs, biologics license application and ~~Markets~~supplements thereto, must contain a pediatric assessment unless the sponsor has received a deferral or waiver. The required assessment must assess the safety and effectiveness of the product for the claimed indications in all relevant pediatric subpopulations and support dosing and administration for each pediatric subpopulation for which the product is safe and effective. The sponsor or FDA may request a deferral of pediatric studies for some or all of the pediatric subpopulations. A deferral may be granted for several reasons, including a finding that the drug or biologic is ready for approval for use in adults before pediatric studies are complete or that additional safety or effectiveness data needs to be collected before the pediatric studies begin. After April 2013, the FDA must send a non-compliance letter to any sponsor that fails to submit the required assessment, keep a deferral current or fails to submit a request for approval of a pediatric formulation.

~~Our~~As ~~auditors~~part ~~have~~of ~~expressed~~the ~~substantial~~FDASIA, ~~doubt~~Congress ~~about~~made ~~our~~a ~~ability~~few revisions to ~~continue~~BPCA asand aPREA, ~~going~~which ~~concern~~were slated to expire on September 30, 2012, and made both laws permanent.

WePost-Approval ~~have~~Requirements incurred cumulative net operating losses and negative cash flow since inception. We expect that the Company will continue to experience operating losses and negative cash flow for the foreseeable future, which will impact the financial results of Arrogene. Accordingly, our auditors have expressed substantial doubt about our ability to continue as a going concern.

WeOnce ~~are~~an aapproval ~~development~~is ~~stage~~granted, ~~company~~the FDA may withdraw the approval if compliance with noregulatory ~~commercial~~requirements is not maintained or if problems occur after the product reaches the market. Later discovery of previously unknown problems with a product may result in restrictions on the product or even complete withdrawal of the product from the market. After approval, some types of 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 that have been commercialized, and the FDA has the power to prevent or limit further marketing of a product based on the results of these post-marketing programs.

We are developing Polycefin, our lead drug candidate. Currently, we have no product candidates in our clinical development pipeline other than Polycefin and have no products approved for sale. We will not be able to file our IND 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. 24

WeAny ~~are heavily dependent on the success of our lead~~ drug ~~candidate,~~products ~~Polycefin,~~manufactured ~~and~~or wedistributed ~~cannot~~by ~~provide~~us ~~any~~pursuant ~~assurance~~to ~~that~~FDA ~~our~~approvals ~~lead~~are ~~drug~~subject ~~candidate~~to orcontinuing ~~other~~regulation ~~product~~by ~~candidates we may have in~~ the ~~future~~FDA, ~~will~~including, beamong ~~commercialized.~~other things:

We• ~~intend~~record-keeping torequirements; ~~invest~~• ~~the~~reporting ~~vast majority~~ of ~~our~~adverse ~~time~~experiences ~~and~~with ~~financial resources in~~ the ~~development and commercialization of our lead~~ drug; ~~candidate,~~• ~~Polycefin,~~providing ~~which is currently in pre-clinical development. We cannot file our IND with~~ the FDA ~~without~~with ~~additional~~updated ~~funding.~~safety ~~Our~~and ~~future~~efficacy ~~success~~information; ~~depends~~• ~~heavily~~drug onsampling ~~our~~and ~~ability~~distribution torequirements; ~~successfully~~• ~~develop,~~notifying ~~obtain~~the ~~regulatory~~FDA ~~approval for,~~ and ~~commercialize~~obtaining ~~our~~its ~~lead~~approval ~~drug~~of ~~candidate,~~specified ~~which~~manufacturing ~~may~~or ~~never~~labeling ~~occur.~~changes; Weand ~~currently~~• ~~generate~~complying nowith ~~revenues~~FDA ~~and~~promotion ~~incur substantial losses,~~ and weadvertising ~~may never be able to develop or commercialize a marketable drug~~requirements.

~~Before~~Drug wemanufacturers ~~generate~~and ~~any~~other ~~revenues~~entities ~~from~~involved ~~product~~in ~~sales,~~the wemanufacture ~~must complete preclinical studies~~ and ~~clinical~~distribution ~~trials~~of ~~for~~approved ~~Polycefin,~~drugs ~~establish~~are ~~manufacturing~~required ~~capabilities~~to ~~that~~register ~~comply~~their establishments with the FDA’s ~~cGMP requirements for manufacturing sterile drugs, receive approval from the FDA in the United States~~ and ~~other~~certain ~~regulatory~~state agencies ~~in foreign jurisdictions~~, ~~build a commercial organization, make substantial investments~~ and ~~undertake~~are ~~significant~~subject ~~marketing efforts ourselves or in partnership with others. We will not be permitted~~ to ~~market~~periodic orunannounced ~~promote~~inspections ~~Polycefin~~by ~~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 wesome ~~may~~state ~~never~~agencies ~~receive such regulatory approval~~ for ~~any~~compliance ofwith ~~our~~cGMP and other ~~product candidates~~laws.

We ~~have not previously submitted a biologics license application~~rely, orand ~~BLA,~~expect orto acontinue ~~new drug application, or NDA,~~ to ~~the FDA~~rely, oron ~~similar~~third ~~drug~~parties ~~approval filings to comparable foreign authorities,~~ for ~~any~~the ~~product~~production ~~candidate.~~of ~~We cannot be certain that our lead drug candidate or any other product candidate will be successful in~~ clinical ~~trials~~and orcommercial ~~receive~~quantities ~~regulatory~~of ~~approval. Further,~~ our ~~lead drug candidate or any other product candidate may not receive regulatory approval even if our clinical trials are successful~~products. IfFuture weFDA doand ~~not~~state ~~receive~~inspections ~~regulatory approvals for our lead drug candidate or any other product candidate, we~~ may ~~not~~identify becompliance ~~able~~issues toat ~~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~~facilities of ~~the~~our ~~markets~~contract inmanufacturers ~~the territories for which we gain regulatory approval and have commercial rights. If the markets for patient subsets~~ that wemay ~~are~~disrupt ~~targeting~~production ~~are~~or ~~not as significant as we estimate~~distribution, weor ~~may~~require ~~not~~substantial ~~generate~~resources ~~significant~~to ~~revenues from sales of such products, if approved~~correct.

30 From time to time, legislation is drafted, introduced and passed in Congress that could significantly change the statutory provisions governing the approval, manufacturing and marketing of products regulated by the FDA. In addition, FDA regulations and guidance are often revised or reinterpreted by the agency in ways that may significantly affect our business and our products. It is impossible to predict whether legislative changes will be enacted, or FDA regulations, guidance or interpretations changed or what the impact of such changes, if any, may be.

WeForeign ~~plan~~Regulation 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.

~~Because~~In addition to regulations in the United States, we ~~have~~will be subject to a ~~limited~~variety ~~operating~~of ~~history~~foreign regulations governing clinical trials and commercial sales and distribution of our products. Whether or not we obtain FDA approval for a product, we ~~may~~must ~~not~~obtain beapproval ~~able~~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 ~~successfully~~country ~~manage~~and ~~our~~the ~~business~~time may be longer or ~~achieve~~shorter ~~profitability~~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.

WeUnder ~~have~~European Union regulatory systems, a ~~limited~~company ~~operating~~may ~~history~~submit ~~upon~~marketing ~~which~~authorization toapplications ~~base~~either anunder ~~evaluation~~a ofcentralized ~~our~~or ~~prospects~~decentralized ~~and~~procedure. ~~the~~The ~~potential~~centralized ~~value~~procedure, ofwhich ~~our~~is ~~common~~compulsory ~~stock. We~~for ~~are~~medicines ~~confronted~~produced ~~with~~by ~~the~~biotechnology ~~risks~~or ~~inherent~~those inmedicines anintended ~~early~~to ~~stage~~treat ~~company~~AIDS, ~~including~~cancer, ~~difficulties~~neurodegenerative disorders or diabetes and ~~delays~~optional infor ~~connection~~those ~~with~~medicines ~~the~~which ~~development~~are ofhighly ~~Polycefin~~innovative, ~~into~~provides for the grant of a ~~commercially~~single ~~viable~~marketing ~~product,~~authorization ~~reliance~~that onis avalid ~~small~~for ~~number~~all ofEuropean ~~scientific~~Union ~~collaborators,~~member ~~operational~~states. ~~difficulties,~~The ~~and~~decentralized ~~difficulty~~procedure inprovides ~~estimating~~for ~~future~~mutual ~~development,~~recognition ~~regulatory,~~of ~~and~~national ~~administrative~~approval ~~costs~~decisions. If weUnder ~~cannot~~this ~~successfully~~procedure, ~~manage~~the ~~our~~holder ~~business,~~of wea national marketing authorization may ~~not~~submit bean ~~able~~application to ~~develop~~the aremaining ~~commercially~~member ~~viable~~states. ~~product,~~Within ~~generate~~90 ~~future~~days ~~profits~~of ~~and~~receiving ~~may~~the ~~not~~applications beand ~~able~~assessments toreport, ~~support~~each ~~our~~member ~~operations. It~~state ismust ~~possible~~decide ~~that~~whether weto ~~will~~recognize ~~incur~~approval. ~~additional~~If ~~expenses~~a ~~and~~member ~~losses~~state indoes ~~the~~not ~~further~~recognize ~~implementation~~the ofmarketing ~~our~~authorization, ~~business~~the ~~plan. We~~disputed ~~may~~points ~~not~~are beeventually ~~able~~referred to ~~improve~~the ~~operations~~European ~~and~~Commission, ~~therefore~~whose ~~may~~decision ~~not~~is ~~become~~binding ~~profitable~~on all member states.

WeReimbursement ~~have incurred losses since inception and may never achieve profitability.~~

WeSales ~~are~~of ~~subject~~our product candidates, if approved, will depend, in part, on the extent to ~~many~~which physicians believe our products are efficacious and cost effective. The costs of most drugs used during surgical procedures are typically included in the ~~risks~~cost ~~common~~of tothe ~~developing~~procedure ~~enterprises,~~and ~~including~~are ~~undercapitalization,~~not ~~cash~~reimbursed ~~shortages,~~as ~~limitations~~separate ~~with~~expenses ~~respect~~by tothird-party ~~financial~~payors, ~~human~~such ~~and~~as ~~other~~government ~~resources,~~health programs such as Medicare and ~~insufficient~~Medicaid, ~~revenue~~commercial tohealth beinsurers ~~self-sustaining~~and managed care organizations. ~~There~~The iscontainment noof ~~assurance~~healthcare ~~that~~costs wehas ~~will~~become ~~ever~~a ~~attain~~priority ~~profitability~~for federal and state governments.

We ~~have~~expect ~~limited~~that ~~human~~there ~~resources;~~will wecontinue ~~need~~ to ~~attract~~be a number of federal and ~~retain~~state ~~highly~~proposals ~~skilled~~to ~~personnel;~~limit the growth of healthcare costs, including the cost of treatment regiments and wehospital ~~may~~stays. beThe ~~unable~~adoption toof ~~manage~~other ~~our~~legislative ~~growth~~or ~~with~~regulatory proposals could have a material adverse effect on our ~~limited~~business, ~~resources~~financial ~~effectively~~condition and profitability.

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. 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 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.25

~~Our~~In ~~failure~~addition, in some foreign 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 ~~convince~~country. ~~medical~~For ~~practitioners~~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. ~~our~~A ~~technologies~~member state may approve a specific price for the medicinal product or it may instead adopt a system of direct or indirect controls 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 pharmaceutical products will ~~limit~~allow favorable reimbursement and pricing arrangements for any of our ~~revenue~~products. Historically, products launched in the European Union do not follow price structures of the United States and ~~profitability~~generally tend to be significantly lower.

IfOther ~~we,~~United orStates ~~our~~Regulations commercialization partners, fail to convince medical practitioners to prescribe products using our technologies, we will not be able to sell our products or license our technologies in sufficient volume for our business to become profitable. We will need to make leading physicians aware of the benefits of products using our technologies through published papers, presentations at scientific conferences and favorable results from our clinical studies. Our failure to be successful in these efforts would make it difficult for us to convince medical practitioners to prescribe products using our technologies for their patients. Failure to convince medical practitioners to prescribe our products will damage our commercialization efforts and would have a material adverse effect on our business, prospects, financial condition and operating results.

31 Pharmaceutical companies also are subject to various federal and state laws pertaining to healthcare “fraud and abuse,” including anti-kickback laws and false claims laws, and the reporting of payments to physicians and teaching hospitals.

IfAnti-Kickback weLaws 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.

WeU.S. ~~have~~federal ~~established~~laws ~~relationships~~prohibit ~~with~~fraud ~~leading~~and ~~scientists~~abuse ~~around~~involving ~~the~~state ~~world~~and federal healthcare programs, such as Medicare and Medicaid. WeThese ~~plan~~laws toare ~~formalize~~interpreted ~~certain~~broadly ofand ~~these~~enforced ~~relationships~~aggressively by ~~establishing~~various astate ~~scientific~~and ~~advisory~~federal ~~board.~~agencies, Weincluding ~~believe~~the ~~that~~Centers ~~such~~for ~~relationships~~Medicare ~~are~~& ~~key~~Medicaid toServices, ~~establishing~~or ~~products~~CMS, ~~using~~the ~~our~~Department ~~technologies~~of asJustice, athe ~~standard~~Office of ~~care~~Inspector General for the Department of Health and Human Services and various ~~indications~~state agencies. WeThese ~~plan~~anti-kickback tolaws ~~enter~~prohibit, ~~into~~among ~~consulting~~other ~~agreements~~things, ~~with~~knowingly ~~our~~and ~~scientific~~willfully ~~advisory~~Offering, ~~board~~paying, ~~members~~soliciting, ~~but~~receiving ~~such~~or ~~agreements~~providing ~~will~~remuneration, ~~likely~~directly ~~provide~~or indirectly, in exchange for ~~termination~~or ~~with~~to 30induce ~~days’~~either ~~notice.~~the ~~Additionally~~referral of an individual, ~~there~~or isthe nofurnishing, ~~assurance~~arranging ~~that~~for ~~our~~or ~~current~~recommending ~~research~~of ~~partners~~an ~~will~~item ~~continue~~or toservice ~~work~~that ~~with~~is usreimbursable, orin wewhole ~~will~~or bein ~~able~~part, toby ~~attract~~a ~~additional~~federal ~~research~~healthcare ~~partners~~program. ~~The~~Remuneration ~~inability~~is broadly defined to ~~maintain~~include ~~and~~anything ~~build~~of onvalue, ~~our~~such ~~existing~~as, ~~scientific~~cash ~~relationships~~payments, ~~could~~gifts ~~have~~or agift ~~material~~certificates, ~~adverse~~discounts, ~~effect~~or onthe ~~our~~furnishing ~~business,~~of ~~prospects~~services, ~~financial~~supplies ~~condition~~or equipment. The anti-kickback laws are broad and ~~operating~~prohibit ~~results~~many arrangements and practices that are lawful in businesses outside of the healthcare industry.

IfThe wepenalties ~~are~~for ~~unsuccessful~~violating inthe ~~establishing~~anti-kickback ~~strategic~~laws ~~licensing~~can ~~arrangements~~be ~~with~~severe. ~~strategic~~The ~~industry~~sanctions ~~partners~~include criminal and civil penalties, ~~our~~and ~~efforts~~possible exclusion from the federal healthcare programs. Many states have adopted laws similar to ~~develop~~the ~~and~~federal ~~commercialize~~anti-kickback ~~our~~laws, ~~products~~and ~~will~~some beapply ~~more~~to ~~costly~~items and ~~involve~~services ~~significant~~reimbursable ~~delays~~by any payor, including third-party payors.

~~Our~~State ~~product development plan relies upon our ability to join with strategic industry partners in licensing arrangements. This approach would allow us to utilize the resources~~ and ~~scientific~~Federal ~~talent~~Prohibitions ofon ~~our~~False ~~strategic~~Claims licensing partners. However, if we are not successful in establishing these relationships, we will be required to bear the cost of developing and commercializing our technology alone. As a result, we would expect that our future capital requirements would be significantly increased than presently projected, and the time to market materially delayed.

WeThe ~~may~~federal ~~not~~False Claims Act imposes liability on any person or entity that, among other things, knowingly presents, or causes to be ~~able~~presented, a false or fraudulent claim for payment to ~~market~~the federal government. Under the False Claims Act, a person acts knowingly if he has actual knowledge of the information or ~~generate~~acts ~~sales~~in deliberate ignorance or in reckless disregard of ~~our~~the ~~products~~truth or falsity of the information. Specific intent to defraud is not required. Provisions of the ~~extent~~False ~~anticipated~~Claims Act allow a private individual to bring an action on behalf of the federal government and to share in any amounts paid by the defendant to the government in connection with the action. The number of filings under these provisions has increased significantly in recent years. When an entity is determined to have violated the False Claims Act, it may be required to pay up to three times the actual damages sustained by the government, plus civil penalties for each false claim. Conduct that violates the False Claims Act may also lead to exclusion from the federal healthcare programs. Given the number of claims likely to be at issue, potential damages under the False Claims Act for even a single inappropriate arrangement could be significant. In addition, various states have enacted similar laws modeled after the False Claims Act that apply to items and services reimbursed under Medicaid and other state healthcare programs, and, in several states, such laws apply to claims submitted to all payors.

~~Assuming~~Federal ~~that~~Prohibitions weon ~~are~~Healthcare ~~successful~~Fraud inand ~~receiving~~False ~~regulatory~~Statements ~~clearances~~Related to ~~market~~Healthcare ~~any~~Matters ~~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:~~

~~Certain~~Under ofthe ~~our~~administrative ~~competitors~~simplification inprovisions of the ~~field~~Health ~~have~~Insurance ~~already~~Portability ~~received~~and ~~regulatory~~Accountability ~~approvals~~Act of 1996, or HIPAA, and state laws there are numerous regulations for protecting the privacy and ~~have~~security ~~begun~~of ~~marketing~~protected ~~similar~~health ~~products~~information. Additional administrative simplification provisions created the following new federal crimes: healthcare fraud, ~~which~~false ~~may~~statements ~~result~~relating to healthcare matters, theft or embezzlement in ~~greater~~connection ~~physician~~with ~~awareness~~a health benefit program and obstruction of ~~their~~criminal ~~products~~investigation asof ~~compared~~healthcare offenses. The healthcare fraud statute prohibits knowingly and willfully executing a scheme to ~~ours~~defraud 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 records relating to a violation of a federal 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.

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.26

~~Physicians~~The ~~may~~Physician bePayment ~~reluctant~~Sunshine toAct ~~switch from existing treatment methods, including traditional therapy agents, to our products.~~

The ~~price~~Physician ~~for~~Payment ~~our~~Sunshine ~~products~~Act, asor ~~well~~the Sunshine Act, which was enacted as ~~pricing~~part ~~decisions~~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 ~~our~~that ~~competitors~~entity, ~~may~~or ~~have~~by ana ~~effect~~third party as directed by that entity, to physicians and teaching hospitals, or to third parties on ~~our~~behalf ~~revenues~~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.

~~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.~~Employees

IfAs ~~any~~ of ~~our~~July ~~future~~1, ~~marketed~~2016, ~~products~~we ~~were~~had tono ~~experience~~employees. ~~problems~~Our ~~related~~executive toofficers ~~their~~all ~~efficacy,~~work ~~safety,~~on ora ~~otherwise,~~part ortime ifbasis ~~new,~~as ~~more~~consultants. ~~effective~~We ~~treatments~~also ~~were~~utilize several consultants who are focused on business and technical development. Our ability to beexpand ~~introduced~~our employee base to include full-time personnel in administration, ~~our~~research ~~revenues~~and ~~from~~development ~~such~~and ~~marketed~~business ~~products~~development ~~could~~is ~~decrease~~dependent on the availability of funding.

~~If any of our current or future marketed products become the subject of problems, including those related to, among others:~~27

~~efficacy~~Item or1A. ~~safety~~Risk ~~concerns with the products, even if not justified;~~Factors

~~unexpected~~CERTAIN ~~side~~RISK ~~effects;~~FACTORS OF ARROGENE THAT MAY AFFECT FUTURE RESULTS

~~regulatory~~Our ~~proceedings~~business, ~~subjecting~~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 ~~products~~global toeconomy), ~~potential~~competition, ~~recall;~~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.

~~publicity~~Risks ~~affecting~~Related ~~doctor~~to ~~prescription~~our orBusiness, ~~patient~~Products ~~use~~and ~~of the product;~~Markets

~~pressure~~Our ~~from~~auditors ~~competitive~~have ~~products;~~expressed orsubstantial doubt about our ability to continue as a going concern.

~~introduction~~We have incurred cumulative net operating losses and negative cash flow since inception. We expect that the Company will continue to experience operating losses and negative cash flow for the foreseeable future, which will impact the financial results of ~~more~~Arrogene. ~~effective~~Accordingly, ~~treatments~~our auditors have expressed substantial doubt about our ability to continue as a going concern.

~~our~~We ~~revenues~~are ~~from~~a ~~such~~development ~~marketed~~stage ~~products~~company ~~could~~with ~~decrease.~~no ~~For~~commercial ~~example, efficacy or safety concerns may arise, whether or not justified, 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.~~

32 We are developing Polycefin, our lead drug candidate. Currently, we have no product candidates in our clinical development pipeline other than Polycefin and have no products approved for sale. We will not be able to file our IND 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.

IfWe weare doheavily ~~not~~dependent ~~receive~~on ~~adequate thirdparty reimbursement for~~ the ~~sales~~success of our ~~products~~lead drug candidate, Polycefin, and we ~~may~~cannot ~~not~~provide beany ~~able~~assurance tothat ~~sell~~our ~~such~~lead ~~products~~drug oncandidate aor ~~profitable~~other ~~basis~~product candidates we may have in the future will be commercialized.

~~Sales~~We ofintend ~~our products will depend, in part, upon the extent~~ to ~~which~~invest the ~~costs~~vast majority of our ~~products~~time ~~will~~and befinancial ~~paid~~resources byin ~~health~~the ~~maintenance,~~development ~~managed~~and ~~care,~~commercialization ~~pharmacy~~of ~~benefit~~our ~~and~~lead ~~similar~~drug ~~reimbursement sources~~candidate, ~~or reimbursed by government health administration authorities~~Polycefin, ~~private~~which ~~health~~is ~~coverage~~currently ~~insurers~~in ~~and~~pre-clinical ~~other thirdparty payors~~development. ~~Such~~We ~~thirdparty~~cannot ~~payors~~file ~~continue~~our toIND ~~aggressively~~with ~~challenge~~ the ~~prices~~FDA ~~charged~~without ~~for~~additional ~~healthcare products and services~~funding. ~~Additionally,~~Our ~~federal~~future ~~and~~success ~~state~~depends ~~governments~~heavily ~~have~~on ~~prioritized~~our ~~the~~ability ~~containment~~to ofsuccessfully ~~healthcare costs~~develop, ~~and~~obtain ~~drug~~regulatory ~~prices~~approval ~~have~~for, ~~been targeted in this effort. If these organizations~~ and ~~thirdparty~~commercialize ~~payors do not consider~~ our ~~products~~lead todrug ~~be costeffective~~candidate, ~~they~~which may ~~not~~never ~~reimburse~~occur. ~~providers~~We ofcurrently ~~our~~generate ~~products,~~no orrevenues ~~the~~and ~~level~~incur ofsubstantial ~~reimbursement~~losses, and we may ~~not~~never be ~~sufficient~~able to ~~allow~~develop usor tocommercialize ~~sell our products on~~ a ~~profitable~~marketable ~~basis~~drug.

~~Although~~Before we ~~have~~generate ~~potential~~any ~~products~~revenues ~~that~~from ~~appear~~product tosales, bewe ~~promising~~must atcomplete ~~early~~preclinical ~~stages~~studies ofand ~~development~~clinical trials for Polycefin, ~~none~~establish ofmanufacturing ~~our~~capabilities ~~potential~~that ~~products~~comply ~~may~~with ~~reach~~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 ~~for~~or apromote ~~number~~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 ~~reasons~~our other product candidates.

~~Successful~~We ~~research~~have ~~and~~not ~~development~~previously ofsubmitted ~~pharmaceutical~~a ~~products~~biologics islicense ~~high~~application, ~~risk.~~or ~~Most~~BLA, ~~products~~or ~~and~~a ~~development~~new ~~candidates~~drug ~~fail~~application, toor ~~reach~~NDA, to the ~~market.~~FDA, ~~Our~~or ~~success~~similar ~~depends~~drug onapproval ~~the~~filings ~~discovery~~to ofcomparable ~~new~~foreign ~~drugs~~authorities, orfor ~~devices~~any ~~that~~product ~~we can commercialize~~candidate. ItWe iscannot ~~possible~~be certain that our ~~potential~~lead ~~products~~drug ~~may~~candidate ~~never~~or ~~reach~~any ~~the~~other ~~market~~product ~~for~~candidate awill ~~number~~be ofsuccessful ~~reasons~~in clinical trials or receive regulatory approval. ~~They~~Further, ~~may~~our belead ~~found~~drug ~~ineffective~~candidate or ~~may~~any ~~cause~~other ~~harmful~~product ~~sideeffects~~candidate ~~during~~may ~~preclinical~~not ~~testing~~receive orregulatory ~~clinical~~approval ~~trials~~even orif ~~fail~~our toclinical ~~receive~~trials ~~necessary~~are ~~regulatory approvals~~successful. WeIf ~~may~~we ~~find~~do ~~that~~not ~~certain~~receive ~~products~~regulatory ~~cannot~~approvals befor ~~manufactured~~our onlead adrug ~~commercial~~candidate ~~scale~~or ~~basis~~any ~~and,~~other ~~therefore~~product candidate, ~~they~~we may not be ~~economical~~able to ~~produce~~continue our operations. ~~Our~~Even ~~products~~if ~~could~~we ~~also~~successfully ~~fail~~obtain toregulatory ~~achieve~~approvals to market ~~acceptance~~our lead drug candidate or any other product candidate, our revenues will be ~~precluded~~dependent, ~~from~~in ~~commercialization~~part, byupon ~~proprietary~~the ~~rights~~size of ~~third~~the ~~parties.~~markets Wein the territories for which we gain regulatory approval and have acommercial ~~number~~rights. ofIf ~~product~~the ~~candidates~~markets infor ~~various~~patient ~~stages~~subsets ofthat ~~development~~we ~~but~~are dotargeting are not ~~expect~~as ~~the~~significant ~~majority~~as ofwe ~~them~~estimate, towe bemay ~~commercially~~not ~~available~~generate ~~for~~significant arevenues ~~number~~from sales of ~~years~~such products, if ~~at all~~approved.

IfWe ~~our~~plan ~~competitors~~to ~~succeed~~seek regulatory approval to commercialize Polycefin in ~~developing~~the ~~products~~United States, Canada, Europe and ~~technologies~~Japan. ~~that~~While ~~are~~the ~~more~~scope ~~effective~~of ~~than~~regulatory ~~our~~approval ~~own~~is similar in other countries, orto ifobtain ~~scientific~~separate ~~developments~~regulatory ~~change~~approval ~~our~~in ~~understanding~~many ofother ~~the~~countries ~~potential~~we ~~scope~~must comply with numerous and ~~utility~~varying regulatory requirements of ~~our~~such ~~products~~countries regarding safety and efficacy, ~~then~~clinical trials and commercial sales, pricing and distribution of our ~~products~~lead drug candidate or any other product candidate, and ~~technologies~~we ~~may~~cannot bepredict ~~rendered~~success ~~less~~in ~~competitive~~these jurisdictions.

We will face significant competition from industry 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.28

IfBecause ~~the manufacturers upon whom~~ we ~~rely~~have ~~fail to produce our product candidates in the volumes that we require on~~ a ~~timely~~limited ~~basis,~~operating ~~or to comply with stringent regulations applicable to pharmaceutical drug manufacturers~~history, we may ~~face~~not ~~delays in the development and commercialization of, or~~ be ~~unable~~able to ~~meet~~successfully ~~demand~~manage ~~for,~~ our ~~products~~business ~~and~~or ~~may~~achieve ~~lose potential revenues~~profitability.

We dohave ~~not~~a ~~manufacture~~limited ~~any~~operating ofhistory ~~our~~upon ~~product~~which ~~candidates, and we do not currently plan~~ to ~~develop~~base ~~any~~an ~~capacity~~evaluation toof doour ~~so.~~prospects Toand ~~date,~~the wepotential ~~have~~value ~~only~~of ~~manufactured~~our ~~product~~common ~~in small batches at CSMC~~stock. We doare ~~not~~confronted ~~yet~~with ~~have~~the ~~agreements~~risks ~~established~~inherent ~~regarding~~in ~~commercial~~an ~~supply~~early ofstage ~~any~~company, ~~product~~including ~~candidates.~~difficulties ~~There~~and isdelays noin ~~assurance~~connection ~~that~~with wethe ~~will~~development beof ~~successful~~Polycefin ininto ~~negotiating~~a ~~an agreement on~~ commercially ~~reasonable~~viable ~~terms.~~product, ~~There~~reliance ison noa ~~assurance~~small ~~that~~number ~~our commercialization partner will approve~~ of ~~our~~scientific ~~manufacturer. Any~~collaborators, ~~problems~~operational ordifficulties, ~~delays~~and wedifficulty ~~experience~~ in ~~preparing~~estimating ~~for~~future ~~commercial-scale~~development, ~~manufacturing~~regulatory, ofand ~~any~~administrative ~~product~~costs. If ~~candidate~~we ~~may~~cannot ~~impair~~successfully ~~our~~manage ~~ability to manufacture commercial quantities, which would adversely affect~~ our business~~. For example~~, ~~our~~we ~~manufacturers~~may ~~will~~not ~~need~~be toable ~~produce specific batches of our product candidates~~ to ~~demonstrate~~develop ~~acceptable~~a ~~stability under various conditions and for~~ commercially viable ~~lengths~~product, ofgenerate ~~time.~~future ~~Furthermore,~~profits ifand ~~our~~may ~~commercial~~not ~~manufacturers~~be ~~fail~~able to ~~deliver~~support ~~the~~our ~~required~~operations. It ~~commercial~~is ~~quantities~~possible ofthat ~~bulk~~we ~~drug~~will ~~substance~~incur oradditional ~~finished~~expenses ~~product~~and onlosses ain ~~timely~~the ~~basis~~further ~~and~~implementation atof ~~commercially~~our ~~reasonable~~business ~~prices,~~plan. We wemay ~~would~~not ~~likely~~ be ~~unable~~able to ~~meet~~improve ~~demand~~operations ~~for our products~~ and wetherefore ~~would~~may ~~lose~~not ~~potential~~become ~~revenues~~profitable.

33We have incurred losses since inception and may never achieve profitability.

~~The~~We ~~manufacture~~are ofsubject ~~pharmaceutical~~to ~~products~~many ~~requires~~of ~~significant expertise and capital investment, including~~ the ~~development~~risks ofcommon ~~advanced~~to ~~manufacturing~~developing ~~techniques and process controls. Manufacturers of pharmaceutical products often encounter difficulties in production~~enterprises, ~~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~~undercapitalization, ~~shortages~~cash ~~of qualified personnel~~shortages, aslimitations ~~well as compliance~~ with ~~strictly~~respect ~~enforced federal, state and foreign regulations. Our manufacturers may not perform as agreed. If our manufacturers were~~ to ~~encounter any of these difficulties~~financial, ~~our~~human 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~~resources, ~~state~~ and ~~foreign~~insufficient ~~regulatory~~revenue ~~requirements. We have little control over our manufacturers’ compliance with these regulations and standards. A failure~~ to ~~comply~~be ~~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~~self-sustaining. IfThere ~~the safety of any quantities supplied~~ is ~~compromised~~no ~~due~~assurance tothat ~~our manufacturers’ failure to adhere to applicable laws or for other reasons,~~ we ~~may~~will ~~not~~ever beattain ~~able to obtain regulatory approval for or successfully commercialize our product candidates~~profitability.

~~The~~We ~~use~~have oflimited ~~any~~human ofresources; ~~our~~we ~~potential~~need ~~products~~to inattract ~~clinical~~and ~~trials~~retain highly skilled personnel; and ~~the~~we ~~sale~~may ofbe ~~any~~unable ~~approved~~to ~~products~~manage ~~exposes~~our usgrowth towith ~~liability~~our ~~claims~~limited resources effectively.

~~The~~We ~~nature~~expect that the expansion of our business ~~exposes~~will usplace toa ~~potential~~significant ~~liability~~strain ~~risks~~on ~~inherent~~our inlimited ~~the~~managerial, ~~testing~~operational, ~~manufacturing~~ and ~~marketing~~financial ofresources. We ~~drug~~will ~~candidates~~be required to expand our operational and ~~products.~~financial Ifsystems ~~any~~significantly ofand to expand, train and manage our ~~drug~~work ~~candidates~~force in ~~clinical~~order ~~trials~~to ormanage the expansion of our ~~marketed~~operations. ~~products~~Our ~~harm~~future ~~people~~success orwill ~~allegedly~~depend ~~harm~~in ~~people,~~large wepart ~~may~~on beour ~~subject~~ability to ~~costly~~attract, train, and ~~damaging~~retain ~~product~~additional ~~liability~~highly ~~claims~~skilled executive level management with experience in the pharmaceutical industry. Competition Ais ~~number~~intense for these types of ~~patients~~personnel ~~who~~from ~~participate~~more inestablished ~~trials~~organizations, ~~are~~many ~~already~~of ~~critically~~which ~~ill~~have ~~when~~significantly ~~they~~larger ~~enter~~operations aand ~~trial.~~greater ~~The~~financial, ~~waivers~~marketing, human, and other resources than we ~~obtain~~have. We will need substantial additional capital in order to attract and retain critical management. We may not be ~~enforceable~~successful in attracting and ~~may~~retaining ~~not~~qualified ~~protect~~personnel uson ~~from~~a ~~liability~~timely orbasis, ~~the~~on ~~costs~~competitive ofterms ~~product~~or ~~liability~~at ~~litigation~~all. We ~~Although~~currently weare ~~intend~~required to ~~obtain~~limit ~~product~~the ~~liability~~engagement ~~insurance~~of ~~that~~critical wemanagement ~~believe~~to part-time due to limited resources and there is ~~adequate,~~no assurance that we ~~are~~will ~~subject~~be tosuccessful in raising the ~~risk~~necessary ~~that~~additional ~~our~~financial ~~insurance~~resources ~~will~~to ~~not~~employ bethem, ~~sufficient~~and toother ~~cover~~key ~~claims~~employees, on a full time basis. We currently are in arrears in paying our management team. There is ~~also~~no aassurance ~~risk~~ that ~~adequate~~our ~~insurance~~management ~~coverage~~team will ~~not~~continue beworking ~~available~~without ingetting ~~the~~paid. If ~~future~~we onare ~~commercially~~not ~~reasonable~~successful ~~terms,~~in ifattracting atand ~~all.~~retaining ~~The~~these ~~successful~~personnel, ~~assertion~~our ofbusiness, anprospects, ~~uninsured~~financial ~~product~~condition ~~liability~~and oroperating ~~other~~results ~~claim~~would ~~against~~be usmaterially ~~could~~adversely ~~cause~~affected. usFurther, our ability to ~~incur~~manage ~~significant~~our ~~expenses~~growth effectively will require us to ~~pay~~continue ~~such~~to aimprove ~~claim~~our operational, ~~could~~financial ~~adversely~~and ~~affect~~management ~~our~~controls, ~~product~~reporting ~~development~~systems and ~~could~~procedures, ~~cause~~to ainstall ~~decline~~new inmanagement ~~our~~information ~~product~~and ~~revenues.~~control ~~Even~~systems aand ~~successfully~~to ~~defended~~train, ~~product~~motivate ~~liability~~and ~~claim~~manage ~~could~~employees. If ~~cause~~we usare unable to ~~incur~~manage ~~significant~~growth ~~expenses~~effectively toand ~~defend~~new ~~such~~employees aare ~~claim,~~unable ~~could~~to ~~adversely~~achieve ~~affect~~adequate performance levels, our ~~product~~business, ~~development~~prospects, ~~and~~financial ~~could~~condition ~~cause~~and aoperating ~~decline~~results incould ~~our~~be ~~product~~materially ~~revenues~~adversely affected.

~~Risks~~Our ~~Related~~failure to ~~Obtaining~~convince ~~Regulatory~~medical ~~Approval~~practitioners ~~for~~to use our ~~Product~~technologies ~~Candidates~~will limit our revenue and profitability.

If ~~clinical~~we, ~~trials~~or ofour commercialization partners, fail to convince medical practitioners to prescribe products using our ~~current~~technologies, we will not be able to sell our products or ~~future~~license ~~product~~our ~~candidates~~technologies doin ~~not~~sufficient ~~produce~~volume ~~results~~for ~~necessary~~our business to ~~support~~become ~~regulatory~~profitable. ~~approval~~We inwill need to make leading physicians aware of the ~~United~~benefits ~~States~~of orproducts ~~elsewhere~~using our technologies through published papers, wepresentations ~~will~~at bescientific ~~unable~~conferences and favorable results from our clinical studies. Our failure to ~~commercialize~~be successful in these efforts would make it difficult for us to convince medical practitioners to prescribe products using our technologies for their patients. Failure to convince medical practitioners to prescribe our products will damage our commercialization efforts and would have a material adverse effect on our business, prospects, financial condition and operating results.

ToIf ~~receive~~we ~~regulatory~~lose ~~approval for~~ the ~~commercial~~support ~~sale~~ of our ~~product~~key ~~candidates~~scientific ~~that~~collaborators, weit may ~~develop~~be ordifficult ~~out-license,~~to weestablish ~~must~~products ~~conduct,~~using at our ~~own~~technologies ~~expense,~~as ~~adequate~~a ~~and~~standard ~~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~~care ~~testing. Our~~for ~~clinical~~various ~~trials may produce negative or inconclusive results~~indications, ~~and~~which we may ~~decide,~~limit orour ~~regulators~~revenue ~~may~~growth ~~require us, to conduct additional clinical~~ and~~/or~~ ~~non-clinical testing~~profitability. ~~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.~~

~~Our~~We ~~assumptions~~have ~~concerning~~established relationships with leading scientists around the ~~regulatory~~world. ~~approval~~We ~~pathway~~plan to formalize certain of these relationships by establishing a scientific advisory board. We believe that such relationships are key to establishing products using our technologies as a standard of care for various indications. We plan to enter into consulting agreements with our ~~diagnostic~~scientific ~~products~~advisory ~~may~~board ~~prove~~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 ~~incorrect~~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.

Our business plan makes certain assumptions concerning the regulatory approval pathway for our planned diagnostic and therapeutic products. While such assumptions 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.29

34 If we are unsuccessful in establishing strategic licensing arrangements with strategic industry partners, our efforts to develop and commercialize our products will be more costly and involve significant delays.

~~Delays~~Our inproduct ~~the~~development ~~commencement~~plan orrelies ~~completion~~upon ofour ~~clinical~~ability ~~testing~~to ~~could~~join ~~result~~with strategic industry partners in ~~increased~~licensing ~~costs~~arrangements. This toapproach would allow us to utilize the resources and ~~delay~~scientific ortalent ~~limit~~of our ~~ability~~strategic licensing partners. However, if we are not successful in establishing these relationships, we will be required to ~~obtain~~bear ~~regulatory~~the ~~approval~~cost ~~for~~of developing and commercializing our ~~product~~technology ~~candidates~~alone. As a result, we would expect that our future capital requirements would be significantly increased than presently projected, and the time to market materially delayed.

~~Delays~~We in the commencement or completion of clinical testing could significantly affect our product development costs. The commencement and completion of clinical trials requires us to identify and maintain a sufficient number of trial sites, many of which may ~~already be engaged in other clinical trial programs for the same indication as our product candidates or may~~ not be ~~eligible~~able to ~~participate~~market in or ~~may~~generate besales ~~required to withdraw from a clinical trial as a result~~ of ~~changing~~our ~~standards~~products ofto ~~care.~~the ~~The~~extent ~~commencement and completion of clinical trials can be delayed for a variety of other reasons, including delays related to:~~anticipated.

~~reaching~~Assuming ~~agreements~~that onwe ~~acceptable~~are ~~terms~~successful ~~with~~in ~~prospective~~receiving ~~clinical~~regulatory ~~research~~clearances ~~organizations,~~to ormarket ~~CROs,~~any ~~and~~of ~~trial~~our ~~sites~~products, ~~the~~our ~~terms~~ability ofto ~~which~~successfully ~~can~~penetrate bethe ~~subject~~market toand ~~extensive~~generate ~~negotiation~~sales ~~and~~of those products may ~~vary~~be ~~significantly~~limited ~~among~~by ~~different~~a ~~CROs~~number ~~and~~of ~~trial~~factors, ~~sites;~~including the following:

~~obtaining regulatory approval to commence a clinical trial;~~·

~~obtaining~~Certain ~~institutional~~of ~~review~~our ~~board~~competitors ~~approval~~in tothe ~~conduct~~field ahave ~~clinical~~already ~~trial~~received atregulatory aapprovals ~~prospective~~for ~~site;~~and have begun marketing similar products, which may result in greater physician awareness of their products as compared to ours.

recruiting 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·

~~retaining~~Information ~~patients~~from ~~who~~our ~~have~~competitors ~~initiated~~or athe ~~clinical~~academic ~~trial~~community ~~but~~indicating ~~may~~that becurrent ~~prone~~products toor ~~withdraw~~new ~~due~~products toare ~~the~~more ~~treatment~~effective ~~protocol,~~than ~~lack~~our ofproducts ~~efficacy~~could, ~~personal~~if ~~issues,~~and ~~side~~when ~~effects~~it ~~from~~is ~~the~~generated, ~~therapy~~impede orour ~~who~~market ~~are~~penetration ~~lost~~or todecrease ~~further~~our ~~follow-up~~existing market share.

~~In addition, a clinical trial may be suspended or terminated by us, the FDA or other regulatory authorities, due to a number of factors, including:~~·

~~failure~~Physicians may be reluctant to ~~conduct~~switch ~~the~~from ~~clinical~~existing ~~trial~~treatment inmethods, ~~accordance~~including ~~with~~traditional ~~regulatory~~therapy ~~requirements~~agents, orto our ~~clinical protocols;~~products.

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

~~unforeseen~~The ~~safety~~price ~~issues~~for orour ~~any~~products, ~~determination~~as ~~that~~well aas ~~trial~~pricing ~~presents~~decisions ~~unacceptable~~by ~~health~~our ~~risks;~~competitors, ormay have an effect on our revenues.

lack of adequate funding to continue the clinical trial, including the incurrence of unforeseen costs due to enrollment delays, requirements to conduct additional trials and studies and increased expenses associated with the services of our CROs and other third parties.·

~~Additionally,~~Our ~~changes~~revenues ~~in regulatory requirements and guidance~~ may ~~occur~~diminish and we may need to amend clinical trial protocols to reflect these changes. 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. If we experience delays in the completion of, or if wethird-party ~~terminate~~payors, ~~our~~including ~~clinical~~private ~~trials,~~health ~~the~~coverage ~~commercial~~insurers ~~prospects for our product candidates will be harmed,~~ and ~~our~~health ~~ability~~maintenance ~~to generate product revenues will be delayed. In addition~~organizations, ~~many~~do ofnot ~~the~~provide ~~factors~~adequate ~~that~~coverage ~~cause,~~ or ~~lead~~reimbursement ~~to,~~for ~~a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of a product candidate. Even if 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~~products.

~~Clinical~~If ~~trials~~any ~~for~~of our ~~product~~future ~~candidates~~marketed ~~are~~products ~~expensive~~were to experience problems related to their efficacy, ~~time-consuming~~safety, ~~uncertain~~or ~~and~~otherwise, ~~susceptible~~or if new, more effective treatments were to ~~change~~be introduced, ~~delay~~our orrevenues ~~termination.~~from such marketed products could decrease.

~~Clinical~~If ~~trials~~any ~~are very expensive, time-consuming and difficult to design and implement. Even if the results~~ of our ~~clinical~~current ~~trials~~or ~~are~~future ~~favorable,~~marketed ~~clinical~~products ~~trials~~become ~~usually continue for several years and may take significantly longer to complete. In addition, we,~~ the ~~FDA,~~subject anof ~~Institutional Review Board~~problems, ~~or other regulatory authorities,~~ including ~~state~~those ~~and~~related ~~local~~to, ~~may~~among ~~suspend, delay or terminate our clinical trials at any time for various reasons, including~~others:

~~lack of effectiveness of our lead drug candidate or any other product candidate during clinical trials;~~ ·

~~discovery~~efficacy ~~of serious~~ or ~~unexpected~~safety ~~toxicities~~concerns orwith ~~side~~the ~~effects~~products, ~~experienced~~even byif ~~study~~not ~~participants or other safety issues~~justified;

~~slower than expected rates of subject recruitment and enrollment rates in clinical trials;~~ ·

~~delays~~unexpected ~~or inability in manufacturing or obtaining sufficient quantities of materials for use in clinical trials due to regulatory and manufacturing constraints~~side-effects;

~~inadequacy of or changes in our manufacturing process or product formulation;~~ ·

~~delays in obtaining~~ regulatory ~~authorization~~proceedings tosubjecting ~~commence a study, including “clinical holds” or delays requiring suspension or termination of a study by a regulatory agency, such as~~ the ~~FDA,~~products ~~before~~to orpotential ~~after a study is commenced~~recall;

35 ·

~~changes~~publicity inaffecting ~~applicable~~doctor ~~regulatory~~prescription ~~policies~~or ~~and~~patient ~~regulations;~~use of the product;

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

~~delay~~pressure orfrom ~~failure~~competitive ~~to supply product for use in clinical trials which conforms to regulatory specification~~products; or

~~unfavorable results from ongoing clinical trials and pre-clinical studies;~~ ·

~~failure~~introduction of ~~our~~more ~~CROs,~~effective ~~or other third-party contractors to comply with all contractual requirements or to perform their services in a timely or acceptable manner;~~ treatments.

~~failure~~our byrevenues ~~us,~~from ~~our~~such ~~employees,~~marketed ~~our~~products ~~CROs~~could ordecrease. ~~their~~For ~~employees~~example, toefficacy ~~comply~~or ~~with~~safety ~~all~~concerns ~~applicable~~may ~~FDA~~arise, whether or ~~other~~not ~~regulatory~~justified, ~~requirements~~that ~~relating~~could lead to the ~~conduct~~recall or withdrawal of ~~clinical~~such ~~trials~~marketed orproducts. In the ~~handling,~~event ~~storage,~~of ~~security~~a ~~and~~recall ~~recordkeeping~~or ~~for~~withdrawal ~~controlled~~of ~~substances;~~a product, our revenues would significantly decline.

~~scheduling~~If ~~conflicts~~we ~~with~~do ~~participating~~not ~~clinicians~~receive ~~and~~adequate ~~clinical~~third-party ~~institutions;~~reimbursement ~~and~~for the sales of our products, we may not be able to sell such products on a profitable basis.

~~failure~~Sales of our products will depend, in part, upon the extent to ~~design~~which ~~appropriate~~the ~~clinical~~costs ~~trial~~of ~~protocols~~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 third-party payors. Such third-party 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 third-party payors do not consider our products to be cost-effective, 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.

~~Any of the foregoing could have a material adverse effect on our business, results of operations and financial condition.~~ 30

~~There~~Although iswe ahave ~~high~~potential ~~rate~~products that appear to be promising at early stages of ~~failure~~development, ~~for~~none ~~drug~~of ~~candidates~~our ~~proceeding~~potential ~~through~~products ~~clinical~~may ~~trials~~reach the commercial market for a number of reasons.

~~Generally,~~Successful ~~there~~research isand adevelopment ~~high rate~~ of ~~failure~~pharmaceutical ~~for~~products ~~drug~~is ~~candidates~~high ~~proceeding~~risk. ~~through~~Most ~~clinical~~products ~~trials.~~and Wedevelopment ~~may~~candidates ~~suffer~~fail ~~significant~~to ~~setbacks~~reach inthe ~~our~~market. ~~clinical~~Our ~~trials~~success ~~similar~~depends toon the ~~experience~~discovery of anew ~~number~~drugs ofor ~~other~~devices ~~companies~~that inwe ~~the~~can ~~pharmaceutical~~commercialize. ~~and~~It ~~biotechnology~~is ~~industries,~~possible ~~even~~that ~~after~~our ~~receiving~~potential ~~promising~~products ~~results~~may innever ~~earlier~~reach ~~trials.~~the ~~Further,~~market ~~even~~for ifa wenumber ~~view the results~~ of areasons. ~~clinical~~They ~~trial~~may to be ~~positive,~~found ~~the~~ineffective ~~FDA~~ or ~~other regulatory authorities~~ may ~~disagree~~cause ~~with~~harmful ~~our~~side-effects ~~interpretation~~during ofpre-clinical ~~the~~testing ~~data.~~or ~~In the event that we obtain negative results from the Polycefin planned~~ clinical trials or ~~receive~~fail ~~poor~~to ~~clinical~~receive ~~results~~necessary ~~for~~regulatory ~~other~~approvals. ~~product~~We ~~candidates,~~may orfind ~~the~~that ~~FDA~~certain ~~chooses~~products tocannot ~~block~~be ~~progress~~manufactured ofon ~~the~~a ~~trials~~commercial ~~due~~scale tobasis ~~potential Chemistry, Manufacturing~~ and ~~Controls~~, ~~or CMC~~therefore, ~~issues~~they ormay ~~other hurdles or does~~ not ~~approve~~be ~~our~~economical ~~NDA~~to ~~for~~produce. ~~Polycefin,~~Our weproducts ~~may~~could ~~not~~also befail ~~able~~ to ~~generate~~achieve ~~sufficient~~market ~~revenue~~acceptance or ~~obtain~~be ~~financing~~precluded tofrom ~~continue~~commercialization ~~our~~by ~~operations,~~proprietary ~~our~~rights ~~ability~~of tothird ~~execute~~parties. onWe ~~our~~have ~~current~~a ~~business~~number ~~plan~~of ~~will~~product becandidates ~~materially~~in ~~impaired,~~various ~~our~~stages ~~reputation~~of indevelopment ~~the~~but ~~industry~~do ~~and~~not inexpect the ~~investment~~majority ~~community~~of ~~would~~them ~~likely~~to be ~~significantly~~commercially ~~damaged~~available ~~and~~for ~~the~~a ~~price~~number of ~~our~~years, ~~stock~~if ~~would~~at ~~likely decrease significantly~~all.

~~Even~~If our competitors succeed in developing products and technologies that are more effective than our own, or if scientific developments change our ~~product~~understanding ~~candidates~~of ~~receive~~the ~~regulatory~~potential ~~approval,~~scope ~~they~~and ~~may~~utility ~~still~~of ~~face~~our ~~future~~products, ~~development~~then our products and ~~regulatory~~technologies ~~difficulties.~~may be rendered less competitive.

~~Even~~We ifwill ~~U.S.~~face ~~regulatory~~significant ~~approval~~competition orfrom ~~clearance~~industry isparticipants ~~obtained,~~that ~~the~~are ~~FDA~~pursuing ~~can~~similar ~~impose~~products ~~significant~~and ~~restrictions~~technologies onthat awe ~~product’s~~are ~~indicated~~pursuing ~~uses~~and orare ~~marketing~~developing orpharmaceutical ~~may~~products ~~impose~~that ~~ongoing~~are ~~requirements~~competitive ~~for~~with ~~potentially~~our ~~costly~~planned ~~post-approval~~products ~~studies.~~and ~~Any~~potential ofproducts. ~~these~~Nearly ~~restrictions~~all orof ~~requirements~~our ~~could~~industry ~~adversely~~competitors ~~affect~~have ~~our~~greater ~~potential~~capital ~~product~~resources, ~~revenues. Our~~larger ~~product~~overall ~~candidates~~research ~~will~~and ~~also~~development bestaffs ~~subject~~and tofacilities, ~~ongoing~~and ~~FDA~~a ~~requirements~~longer ~~for~~history ~~the~~in ~~labeling,~~drug ~~packaging,~~discovery ~~storage,~~and ~~advertising~~development, ~~promotion,~~obtaining ~~record-keeping~~regulatory approval and ~~submission~~pharmaceutical ofproduct ~~safety~~manufacturing and ~~other~~marketing ~~post-market~~than ~~information~~we ~~on the drug~~do. InWith ~~addition,~~these ~~approved~~additional ~~products~~resources, ~~manufacturers~~our ~~and~~competitors ~~manufacturers’~~may ~~facilities~~be ~~are~~able ~~subject~~to respond to ~~continual~~the ~~review~~rapid and ~~periodic~~significant ~~inspections.~~technological Ifchanges ain ~~regulatory~~the ~~agency~~biotechnology ~~discovers~~and ~~previously~~pharmaceutical ~~unknown~~industries ~~problems~~faster ~~with~~than awe ~~product,~~can. ~~such~~Our asfuture ~~adverse~~success ~~events~~will ofdepend ~~unanticipated~~in ~~severity~~large orpart ~~frequency,~~on orour ~~problems~~ability to maintain a competitive position with ~~the~~respect ~~facility~~to ~~where~~these ~~the~~technologies. ~~product~~Rapid istechnological ~~manufactured~~development, aas ~~regulatory~~well ~~agency~~as new scientific developments, may ~~impose~~result ~~restrictions~~in onour ~~that~~compounds, ~~product~~products or ~~us,~~processes ~~including~~becoming ~~requiring~~obsolete ~~withdrawal~~before we can recover any of the ~~product~~expenses ~~from~~incurred ~~the~~to ~~market~~develop them. IfFor example, changes in our ~~product~~understanding ~~candidates~~of ~~fail~~the toappropriate ~~comply~~population ~~with~~of ~~applicable~~patients ~~regulatory~~who ~~requirements,~~should ~~such~~be astreated ~~cGMP,~~with a ~~regulatory~~targeted ~~agency~~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.

~~issue~~If ~~warning~~the ~~letters~~manufacturers upon whom we rely fail to produce our product candidates in the volumes that we require on a timely basis, or ~~untitled~~to ~~letters;~~comply with stringent regulations applicable to pharmaceutical drug manufacturers, we may face delays in the development and commercialization of, or be unable to meet demand for, our products and may lose potential revenues.

~~require~~We usdo not manufacture any of our product candidates, and we do not currently plan to ~~enter~~develop ~~into~~any acapacity ~~consent~~to ~~decree~~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 any product 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 commercial-scale manufacturing of any product candidate may impair our ability to manufacture commercial quantities, which ~~can~~would ~~include~~adversely ~~imposition~~affect our business. For example, our manufacturers will need to produce specific batches of our product candidates to demonstrate acceptable stability under various ~~fines,~~conditions ~~reimbursements~~and for ~~inspection~~commercially ~~costs~~viable lengths of time. Furthermore, if our commercial manufacturers fail to deliver the required ~~due~~commercial ~~dates~~quantities ~~for~~of ~~specific~~bulk ~~actions~~drug substance or finished product on a timely basis and ~~penalties~~at commercially reasonable prices, we would likely be unable to meet demand for ~~noncompliance;~~our products and we would lose potential revenues.

~~impose~~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 ~~criminal~~delay ~~penalties;~~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.

~~suspend regulatory approval;~~31

~~suspend~~The use of any ~~ongoing~~of our potential products in clinical trials; and the sale of any approved products exposes us to liability claims.

~~refuse~~The nature of our business exposes us to ~~approve~~potential ~~pending~~liability ~~applications~~risks inherent in the testing, manufacturing and marketing of drug candidates and products. If any of our drug candidates in clinical trials or ~~supplements~~our marketed products harm people or allegedly harm people, we may be subject to ~~approved~~costly ~~applications~~and ~~filed~~damaging byproduct 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 liability or the costs of product liability litigation. Although we intend to obtain product liability insurance that we believe is adequate, we are subject to the risk that 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 on commercially reasonable terms, if at all. The successful 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.

*imposeRisks ~~restrictions~~Related onto ~~operations,~~Obtaining ~~including~~Regulatory ~~costly~~Approval ~~new~~for ~~manufacturing~~our ~~requirements;~~Product orCandidates

*seizeIf clinical trials of our current or ~~detain~~future ~~products~~product candidates do not produce results necessary to support regulatory approval in the United States or ~~require~~elsewhere, awe ~~product~~will ~~recall~~be unable to commercialize these products.

36 To receive regulatory approval for the commercial sale of our 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.

Our ~~commercialization~~assumptions ~~efforts~~concerning ~~will~~the beregulatory ~~greatly~~approval ~~dependent~~pathway ~~upon~~for our ~~ability~~diagnostic ~~to demonstrate product efficacy in clinical trials. Pharmacies and other dispensing facilities will be reluctant to order our~~ products, ~~medical~~may ~~practitioners~~prove ~~will be reluctant~~ to ~~prescribe our products, and third party payors reluctant to provide reimbursement for our products without compelling supporting data. While we believe that our products will~~ be ~~effective for our planned indications, there is no assurance that this will be proven in clinical trials~~incorrect. ~~The~~ failure to demonstrate efficacy in our clinical trials, or a delay or failure to complete our clinical trials, would have a material adverse effect on our business, prospects, financial condition and operating results.

Our ~~reliance~~business onplan ~~third~~makes ~~parties,~~certain assumptions concerning the regulatory approval pathway for our planned diagnostic and therapeutic products. While such asassumptions ~~clinical~~are ~~research~~based ~~organizations~~on the guidance of regulatory consultants, ~~may~~there ~~result~~is inno ~~delays~~assurance inthe ~~completing,~~FDA orwill aagree ~~failure~~with toour ~~complete~~conclusions, ~~clinical~~which ~~trials~~could ifresult ~~they~~in ~~fail~~a tolonger, ~~perform~~more ~~under~~costly ~~our~~process ~~agreements~~than ~~with~~we ~~them~~are currently anticipating.

InDelays in the ~~course~~commencement ofor ~~product~~completion ~~development,~~of ~~we may engage~~ clinical ~~research~~testing ~~organizations~~could toresult ~~conduct~~in ~~and~~increased ~~manage~~costs ~~clinical studies and~~ to ~~assist~~ us ~~in guiding our products through the FDA review~~ and ~~approval~~delay ~~process.~~or Iflimit weour ~~engage~~ability ~~clinical research organizations~~ to ~~help us~~ obtain ~~market~~regulatory approval for our ~~drug~~product candidates~~, many important aspects of this process have been and will be out of our direct control~~. If the clinical research organizations fail to perform their obligations under our agreements with them or fail to perform clinical trials in a satisfactory manner, we may face delays in completing our clinical trials, 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.

WeDelays ~~may~~in bethe ~~subject~~commencement toor ~~extensive~~completion ~~regulations~~of clinical testing could significantly affect our product development costs. The commencement and completion of clinical trials requires us to identify and maintain a sufficient number of trial sites, many of which may ~~not~~already ~~obtain~~be ~~marketing~~engaged ~~approvals~~in other clinical trial programs for ~~products~~the same indication as our product candidates or may not be eligible to participate in ~~Europe~~or 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 ~~jurisdictions.~~reasons, including delays related to:

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. ·

Wereaching ~~expect~~agreements toon ~~pursue~~acceptable ~~marketing~~terms ~~approvals for Polycefin in Europe and other jurisdictions outside the United States~~ with ~~collaborative~~prospective ~~partners.~~clinical ~~The~~research ~~time~~organizations, ~~and~~or ~~process~~CROs, ~~required to obtain regulatory approvals~~ and ~~reimbursement~~trial insites, ~~Europe~~the ~~and~~terms ~~other~~of ~~jurisdictions~~which ~~may~~can be ~~different~~subject ~~from~~to ~~those~~extensive innegotiation ~~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~~vary asignificantly ~~negative~~among ~~impact~~different onCROs ~~the~~and ~~regulatory~~trial ~~process in other jurisdictions.~~ sites;

If we, or our collaborators, fail to comply with applicable foreign regulatory requirements, we may be subject to, among other things, fines, suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions and criminal prosecution. ·

~~We have limited knowledge and experience with NDA studies and product applications and we may not be successful in~~ obtaining ~~FDA~~regulatory ~~approvals~~approval ~~for~~to ~~our~~commence ~~lead~~a ~~drug~~clinical ~~candidate, Polycefin.~~ trial;

Currently, we have no products approved for sale. We have not submitted an application for, or obtained any FDA approval for, any product through the NDA process. This lack of previous experience with NDA processes and requirements may impede our ability to obtain FDA approval in a timeframe consistent with our expectations and plans, or at all, for Polycefin. Failure to comply with FDA and other applicable regulatory requirements, either before or after product approval, may subject us to sanctions, including: warning letters, deficiency notifications, application denials, approval denials, requirements for additional 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. ·

37 obtaining institutional review board approval to conduct a clinical trial at a prospective site;

~~Risks Related to our Financial Condition~~·

Werecruiting ~~require~~and ~~additional~~enrolling ~~funding~~patients ~~which~~to ~~may~~participate ~~not~~in beclinical ~~available~~trials onfor ~~favorable~~a ~~terms~~variety orof atreasons, ~~all.~~including competition from other clinical trial programs for the same indication as our product candidates; and

We will require additional funds to support our working capital and planned development requirements. Adequate funds may not be available when needed or 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, 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.·

~~The~~retaining ~~future~~patients ~~capital~~who ~~requirements~~have ofinitiated ~~Arrogene~~a ~~depend~~clinical ~~upon~~trial ~~many~~but ~~factors~~may be prone to withdraw due to the treatment protocol, ~~including~~lack of efficacy, personal issues, side effects from the ~~following:~~therapy or who are lost to further follow-up.

In addition, a clinical trial may be suspended or terminated by us, the ~~cost~~FDA ofor ~~testing~~other ~~and~~regulatory ~~developing~~authorities, ~~our~~due ~~technologies;~~to a number of factors, including:

~~the cost and timing of regulatory approvals;~~·

failure to conduct the ~~rate~~clinical attrial ~~which~~in weaccordance ~~expand~~with regulatory requirements or our ~~operations;~~clinical ~~and~~protocols;

~~the cost of commercializing our products.~~·

~~Our~~inspection ~~limited~~of ~~operating~~the ~~history~~clinical ~~makes~~trial ~~evaluating~~operations ~~our~~or ~~business~~trial ~~and~~sites ~~future~~by ~~prospects~~the ~~difficult~~FDA or other regulatory authorities resulting in the imposition of a clinical hold;

We have a 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 began operations. Through October 31, 2014, we had a accumulated deficit of $6,384,743. These 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 company with limited operating history. If we do not successfully address these risks, our business, prospects, operating results and financial condition may be materially and adversely harmed. Additionally, our financial status creates substantial doubt about our ability to continue as a going concern. ·

Weunforeseen ~~expect~~safety toissues ~~incur~~or ~~significant~~any ~~additional~~determination 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~~a ~~results~~trial ~~differ~~presents ~~from~~unacceptable ~~our~~health ~~estimates~~risks; or ~~we adjust our estimates in future periods, our operating results and financial position could be materially affected.~~

Moreover, 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. 32

38 ·

~~Our~~lack ~~existing~~of ~~debt~~adequate isfunding into ~~technical~~continue ~~default~~the clinical trial, including the incurrence of unforeseen costs due to enrollment delays, requirements to conduct additional trials and studies and increased expenses associated with the services of our CROs and other third parties.

AsAdditionally, ofchanges ~~April~~in 1,regulatory ~~2016,~~requirements and guidance may occur and we ~~had~~may ~~$1,060,000~~need into ~~convertible~~amend ~~debt~~clinical ~~instruments~~trial ~~that~~protocols ~~are~~to inreflect ~~technical~~these ~~default~~changes. ~~While~~ ~~the~~Amendments ~~holders~~may ~~have~~require ~~not~~us ~~taken~~to ~~any~~resubmit ~~actions~~our ~~related~~clinical trial protocols to ~~this~~institutional ~~status~~review boards for reexamination, ~~there~~which ismay noimpact ~~assurance~~the ~~that~~costs, ~~they~~timing ~~will~~or ~~not~~successful ~~pursue~~completion ~~collection~~of a clinical trial. If we experience delays in the ~~future.~~completion ~~Our~~of, ~~plan~~or isif towe ~~have~~terminate, ~~these~~our ~~holders~~clinical ~~exchange~~trials, ~~their~~the ~~debt~~commercial prospects for aour ~~new~~product ~~form~~candidates ofwill ~~debt~~be ~~currently~~harmed, ~~being~~and ~~offered~~our ~~for~~ability ~~sale~~to generate product revenues will be delayed. In ~~the~~addition, ~~event~~many of the ~~holders~~factors ~~were~~that tocause, ~~take~~or lead to, a ~~collection~~delay ~~action~~in the commencement or ~~refuse~~completion toof ~~exchange~~clinical ~~their~~trials ~~existing~~may ~~debt~~also ~~for~~ultimately ~~new~~lead ~~debt,~~to itthe ~~could~~denial ~~make~~of itregulatory ~~more~~approval ~~difficult~~of ~~for~~a usproduct candidate. Even if we are able to ~~raise~~ultimately ~~additional~~commercialize ~~funds~~our product candidates, orother ~~require~~therapies ~~that~~for the ~~proceeds~~same ~~from~~indications amay ~~future~~have ~~capital~~been ~~raise~~introduced beto ~~redirected~~the tomarket ~~repay~~and ~~old~~established ~~debts~~a competitive advantage.

~~Our~~Clinical ~~operating~~trials ~~results~~ for ~~the foreseeable future will depend significantly on~~ our ~~ability~~product tocandidates ~~fund~~are ~~our research and development programs for~~expensive, ~~obtain regulatory approval of~~time-consuming, uncertain and susceptible to ~~successfully~~change, ~~commercialize~~delay ~~Polycefin~~or termination.

~~Polycefin~~Clinical istrials ~~currently~~are ~~our~~very ~~only~~expensive, ~~drug~~time-consuming ~~candidate~~and difficult to design and implement. WeEven if the results of our clinical trials are favorable, clinical trials usually continue for several years and may ~~not~~take ~~receive~~significantly ~~revenues~~longer orto ~~royalties~~complete. ~~from~~In ~~commercial~~addition, ~~sales~~we, ofthe ~~Polycefin~~FDA, oran ~~any~~Institutional Review Board, or other ~~drug~~regulatory inauthorities, ~~the~~including ~~foreseeable~~state ~~future~~and local, ifmay suspend, delay or terminate our clinical trials at ~~all.~~any time for various reasons, including:

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

~~demonstrate~~lack ~~safety~~of ~~and~~effectiveness ~~efficacy~~ of ~~Polycefin~~our atlead ~~each~~drug ~~stage~~candidate ofor ~~the~~any ~~clinical~~other ~~trial~~product ~~process~~candidate during clinical trials;

~~meet applicable regulatory standards and receive required regulatory approvals;~~ ·

~~obtain~~discovery ~~and~~of ~~maintain~~serious ~~necessary~~or ~~patents~~unexpected ~~and/~~toxicities or ~~licenses~~side effects experienced by study participants or other safety issues;

~~produce Polycefin in commercial quantities at reasonable costs;~~ ·

~~obtain~~slower ~~reimbursement~~than ~~coverage~~expected ~~for~~rates ~~Polycefin~~of subject recruitment and enrollment rates in clinical trials;

~~compete successfully against other products; and~~ ·

~~market~~delays ~~Polycefin~~or ~~successfully.~~inability in manufacturing or obtaining sufficient quantities of materials for use in clinical trials due to regulatory and manufacturing constraints;

We cannot assure you that we will successfully 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 any other product and we do not know when, or if, we will generate any revenue in the future. We may 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 future, we may incur significant sales, marketing, manufacturing and other general and administrative expenses, as well as continued research and development expenses. As a result, 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 time. If we fail to achieve profitability within the timeframe expected by investors, the market price of the common stock may decline, and, therefore, may negatively impact our ability to raise capital, invest in or expand our business, acquire additional products or licenses, commercialize our products, or continue our operations. ·

Weinadequacy ~~will~~of ~~need~~or ~~additional~~changes ~~funding~~in ~~to advance~~ our ~~clinical~~manufacturing ~~trial~~process ~~programs, launch and commercialize our lead drug candidate~~ or ~~any other~~ product ~~candidate.~~formulation;

Pharmaceutical product development, which includes research and development, pre-clinical and clinical studies and human clinical trials, is a time-consuming and expensive process that takes years to complete. We expect that our expenses will increase substantially as we move Polycefin into human clinical trials, 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-launch activities, regulatory compliance requirements, sales and marketing, manufacturing and distribution. Additionally, we may incur expenses directly related to license and product acquisitions. ·

~~Current~~delays ~~economic~~in ~~conditions~~obtaining ~~and~~regulatory inauthorization ~~the~~to ~~global~~commence ~~economy~~a ~~generally~~study, including ~~ongoing~~“clinical ~~disruptions~~holds” inor ~~the~~delays ~~debt~~requiring ~~and~~suspension ~~equity~~or ~~capital~~termination ~~markets,~~of ~~may~~a ~~adversely~~study ~~affect~~by ~~our~~a ~~business~~regulatory ~~and~~agency, ~~results~~such ofas ~~operations~~the FDA, ~~and~~before ~~our~~or ~~ability~~after toa ~~obtain~~study ~~financing.~~is commenced;

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. ·

39 changes in applicable regulatory policies and regulations;

The global stock 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 financial markets, making 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 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.·

~~Future~~delays ~~financings~~or ~~may~~failure ~~result~~in reaching agreement on acceptable terms in ~~dilution~~clinical totrial ~~our~~contracts ~~shareholders~~or ~~and~~protocols ~~restrictions~~with onprospective ~~its~~clinical ~~business~~trial ~~operations.~~sites;

If we raise additional funds by issuing equity or convertible debt securities, 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.·

~~Risks~~delay ~~Related~~or failure to ~~our~~supply ~~Intellectual~~product ~~Property~~for use in clinical trials which conforms to regulatory specification;

~~We will be dependent on the rights included in the License for all of our products.~~·

~~Our~~unfavorable 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. Infrom ~~addition,~~ongoing ~~our~~clinical ~~strategy~~trials ~~depends on the successful development of these licensed technologies into commercial products,~~ and, ~~therefore,~~pre-clinical ~~any~~studies; 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.

~~CSMC may not agree to amend the License.~~·

Asfailure ~~noted above, the License requires us to achieve certain milestones. While we believe that we have achieved all~~ of ~~the~~our ~~required milestones under the License~~CROs, inor ~~some~~other ~~instances,~~third-party ~~the~~contractors ~~achievement is subject~~ to ~~interpretation~~comply 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~~all tocontractual ~~amend~~requirements ~~the~~or ~~License~~ to ~~remove~~perform ~~any~~their ~~ambiguity~~services ~~and confirm it is~~ in ~~good~~a ~~standing. CSMC~~timely 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 ifacceptable ~~amended,~~manner; ~~that we will be able to comply with the amended terms.~~

40 ·

Iffailure ~~other~~by ~~companies~~us, ~~claim~~our ~~that~~employees, weour ~~infringe~~CROs onor their ~~intellectual~~employees ~~property~~to ~~rights,~~comply wewith ~~may~~all beapplicable ~~subject~~FDA or other regulatory requirements relating to ~~costly~~the ~~and~~conduct ~~timeconsuming~~of ~~litigation~~clinical trials or the handling, storage, security and ~~delays~~recordkeeping infor ~~product~~controlled ~~introduction.~~substances;

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.·

~~Because~~scheduling itconflicts iswith ~~difficult~~participating clinicians and ~~costly~~clinical toinstitutions; ~~protect~~and ~~our proprietary rights, we may not be able to ensure their protection.~~

Our 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-party 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.·

~~The~~failure 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~~design inappropriate ~~the~~clinical ~~United~~trial ~~States~~protocols. The patent situation outside the United States is even more uncertain. Changes in either the 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.

~~The~~Any ~~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~~foregoing tocould ~~make the inventions covered by each of our pending patent applications and issued patents; our licensors might not~~ have ~~been~~a ~~the~~material ~~first~~adverse toeffect ~~file~~on ~~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 productsbusiness, ~~may~~results ~~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~~operations ~~may~~and ~~have~~financial ~~an adverse effect on our business~~condition.

InThere ~~the~~is ~~event that~~ a ~~third~~high ~~party~~rate ~~has~~of ~~also~~failure ~~filed~~for adrug ~~U.S. patent application relating to our product~~ candidates orproceeding athrough ~~similar~~clinical ~~invention, we may have to participate in interference proceedings declared by the U~~trials.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.

~~In addition~~Generally, ~~some~~there ~~countries,~~is ~~including~~a ~~many~~high inrate ~~Europe,~~of dofailure ~~not~~for ~~grant~~drug ~~patent~~candidates ~~claims~~proceeding ~~directed~~through clinical trials. We may suffer significant setbacks in our clinical trials similar to ~~methods~~the experience of ~~treating~~a ~~humans,~~number of other companies in the pharmaceutical and biotechnology industries, even after receiving promising results in ~~these~~earlier ~~countries~~trials. ~~patent~~Further, ~~protection~~even ~~may~~if ~~not~~we beview ~~available~~the atresults ~~all~~of a clinical trial to ~~protect~~be positive, the FDA or other regulatory authorities may disagree with our ~~drug~~interpretation ~~candidates~~of the data. ~~Even~~In ifthe ~~patents~~event ~~issue,~~that we ~~cannot~~obtain ~~guarantee~~negative ~~that~~results from the ~~claims~~Polycefin planned clinical trials or receive poor clinical results for other product candidates, or the FDA chooses to block progress of ~~those~~the ~~patents~~trials ~~will~~due beto ~~valid~~potential Chemistry, Manufacturing and ~~enforceable~~Controls, or ~~provide~~CMC, usissues ~~with~~or ~~any~~other ~~significant~~hurdles ~~protection~~or ~~against~~does ~~competitive~~not ~~products~~approve our NDA for Polycefin, orwe ~~otherwise~~may not be ~~commercially~~able ~~valuable~~to generate sufficient revenue or obtain financing to uscontinue our operations, our ability to execute on our current business plan will be materially impaired, our reputation in the industry and in the investment community would likely be significantly damaged and the price of our stock would likely decrease significantly.

We may also rely on trade secrets to protect our 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.33

IfEven ~~our~~if ~~licensors or we fail to obtain or maintain patent protection or trade secret protection for~~ our ~~products,~~product ~~third~~candidates ~~parties~~receive ~~could~~regulatory ~~use our proprietary information~~approval, ~~which~~they ~~could~~may ~~impair~~still ~~our~~face ~~ability~~future todevelopment ~~compete in the market~~ and ~~adversely~~regulatory ~~affect our ability to generate revenues and achieve profitability~~difficulties.

41 Even if 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:

As we expand our patent portfolio, 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.·

Ifissue wewarning ~~are~~letters ~~sued~~or ~~for~~untitled ~~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.~~ letters;

Our ability to develop, manufacture, market and sell our products depends upon our ability to avoid infringing the proprietary rights of third parties. There is a substantial amount of litigation involving patent and other intellectual property rights in the biotechnology and biopharmaceutical industries generally. If a third party claims that we infringe on their products or technology, we could face a number of issues, including: infringement and other intellectual property claims which, 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 holder licenses the patent to us, 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 our processes so they do not infringe, which may not be possible or could require substantial funds and time.·

~~Risks~~require ~~Related~~us to ~~Owning~~enter ~~Our~~into ~~Common~~a ~~Stock~~consent decree, which can include imposition of various fines, reimbursements for inspection costs, required due dates for specific actions and penalties for noncompliance;

There currently exists no public trading market for the Arrogene shares; and should a public trading market develop in the future, of which there can be no assurance, such trading will likely be subject to the “penny stock” rules.·

~~There~~impose isother ~~currently~~civil ~~no public trading market for Arrogene common stock and it is not quoted on the OTC Electronic Bulletin Board, a FINRA-sponsored and operated quotation system for equity securities,~~ or ~~OTCQB~~criminal 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 Bulletin 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.penalties;

Arrogene common stock will be subject to the requirements of Rule 15g.9, promulgated under the 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.·

~~Over-the-counter~~suspend ~~stocks~~regulatory ~~are subject to risks of high volatility and price fluctuation.~~approval;

Arrogene’s common stock is currently not traded or listed on any market, 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. ·

42 suspend any ongoing clinical trials;

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’s~~refuse ~~stock~~to ~~price~~approve ~~may~~pending beapplications ~~volatile and as a result, investors could lose all~~ or ~~part~~supplements ~~of their investment. The value of an investment could decline due~~ to ~~the~~approved ~~impact~~applications offiled ~~any~~by ~~of the following factors upon the market price of our common stock:~~ us;

~~failure~~* ~~to meet sales and marketing goals or operating budget~~

~~failure~~impose torestrictions ~~achieve~~on ~~development~~operations, ~~goals~~including costly new manufacturing requirements; or

~~failure~~* ~~to obtain regulatory approvals~~

~~concerns~~seize ~~regarding~~or ~~insufficient~~detain ~~financial~~products ~~resources~~or require a product recall.

~~inability~~Our commercialization efforts will be greatly dependent upon our ability to ~~create~~demonstrate anproduct ~~active~~efficacy ~~trading~~in ~~market~~clinical trials. Pharmacies and other dispensing facilities will be reluctant to order our products, medical practitioners will be reluctant to prescribe our products, and third party payors reluctant to provide reimbursement for our ~~common~~products ~~stock~~without compelling supporting data. While we believe that our products will be effective for our planned indications, there is no assurance that this will be proven in clinical trials. The failure to demonstrate efficacy in our clinical trials, or a delay or failure to complete our clinical trials, would have a material adverse effect on our business, prospects, financial condition and operating results.

~~decline~~Our reliance on third parties, such as clinical research organizations, may result in ~~demand~~delays ~~for~~in completing, or a failure to complete, clinical trials if they fail to perform under our ~~common~~agreements ~~stock~~with them.

~~operating~~In ~~results~~the ~~failing~~course of product development, we may engage clinical research organizations to ~~meet~~conduct and manage clinical studies and to assist us in guiding our products through the ~~expectations~~FDA review and approval process. If we engage clinical research organizations to help us obtain market approval for our drug candidates, many important aspects of ~~securities~~this ~~analysts~~process have been and will be out of our direct control. If the clinical research organizations fail to perform their obligations under our agreements with them or ~~investors~~fail to perform clinical trials in a satisfactory manner, we may face delays in completing our clinical trials, as well as commercialization of one or more drug candidates. Furthermore, any ~~quarter~~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.

~~downward~~We ~~revisions~~may inbe ~~securities~~subject ~~analysts'~~to ~~estimates~~extensive orregulations ~~changes~~and may not obtain marketing approvals for products in ~~general~~Europe ~~market~~and ~~conditions~~other jurisdictions.

~~investor~~In ~~perception~~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 ~~company's~~products. ~~industry~~Whether or ~~prospects~~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.

~~general~~We ~~economic~~expect ~~trends~~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.

InIf ~~addition~~we, ~~stock~~or ~~markets~~our ~~have~~collaborators, ~~experienced~~fail ~~extreme~~to ~~price~~comply ~~and~~with ~~volume~~applicable ~~fluctuations~~foreign ~~and~~regulatory ~~the~~requirements, ~~market~~we ~~prices~~may ofbe ~~securities~~subject ~~have~~to, ~~been~~among ~~highly~~other ~~volatile. These~~things, ~~fluctuations~~fines, ~~are~~suspension ~~often~~or ~~unrelated~~withdrawal toof ~~operating~~regulatory ~~performance~~approvals, ~~and~~product ~~may~~recalls, ~~adversely~~seizure ~~affect~~of ~~the~~products, ~~market~~operating ~~price~~restrictions ofand ~~our~~criminal ~~common stock~~prosecution.

~~There can be no assurance that we will be able to successfully complete a secondary public offering that will allow our shares to be listed and traded on a national exchange or Nasdaq Capital Market.~~34

~~While~~We wehave ~~would~~limited ~~like~~knowledge ~~to undertake a public offering in the future that would qualify us for listing~~ and ~~trading~~experience onwith aNDA ~~national~~studies 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~~product ~~for~~applications ~~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~~may ~~unable~~not tobe ~~complete~~successful ain ~~public~~obtaining ~~offering,~~FDA ~~trading~~approvals infor our ~~stock,~~lead ifdrug ~~any~~candidate, ~~will continue on the volatile and illiquid over-the-counter market~~Polycefin. 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.~~

IfCurrently, awe ~~public~~have ~~market~~no products approved for ~~our~~sale. We ~~common~~have ~~stock~~not ~~develops~~submitted an application for, itor ~~may~~obtained beany ~~volatile~~FDA approval for, any product through the NDA process. This lack of previous experience with NDA processes and requirements may ~~affect~~impede ~~the~~our ability ofto obtain FDA approval in a timeframe consistent with our ~~investors~~expectations and plans, or at all, for Polycefin. Failure to ~~sell~~comply ~~their~~with ~~shares~~FDA asand ~~well~~other asapplicable ~~the~~regulatory ~~price~~requirements, ateither ~~which~~before ~~they~~or ~~sell~~after ~~their~~product ~~shares~~approval, may subject us to sanctions, including: warning letters, deficiency notifications, application denials, approval denials, requirements for additional 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.

IfRisks aRelated market for our 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~~Financial ~~stock, if a market for it develops.~~Condition

~~Future~~We ~~share~~require ~~issuances~~additional tofunding ~~CSMC~~which ~~will~~may ~~have~~not abe ~~dilutive~~available ~~effect~~ on ~~our~~favorable ~~shareholders~~terms or at all.

~~The~~We ~~License~~will ~~requires~~require usadditional funds to ~~issue~~support our working capital and planned development requirements. Adequate funds may not be available when needed or may not be available on favorable terms. If the Company raises additional ~~shares~~funds ofby ~~common~~issuing ~~stock~~equity securities or convertible debt securities, existing shareholders may be diluted or have their rights subordinated to ~~CSMC~~newly-issued senior securities. If funding is insufficient at any time in the future, ~~for~~we nomay ~~additional~~not ~~consideration~~be able to ~~ensure~~develop ~~that~~or ~~CSMC~~commercialize ~~will~~our ~~own~~products 5%or services, take advantage of ~~the~~business ~~total~~opportunities ~~issued~~or ~~and~~respond ~~outstanding~~to ~~common~~competitive ~~shares. This~~pressures, ~~commitment~~any ~~continued~~of ~~until~~which ~~December~~could ~~31,~~harm ~~2015~~our business.

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

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

~~We have~~ the ~~authority~~cost ~~to issue up to 100,000,000 shares~~ of ~~common~~testing ~~stock~~ and ~~10,000,000~~developing ~~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.technologies;

~~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.~~·

An issuance of 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~~cost 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~~timing ~~rights~~ of ~~common~~regulatory ~~stockholders without their approval.~~approvals;

~~We do not expect to pay cash dividends in the foreseeable future. Any return on investment may be limited to the value of our stock.~~·

~~We have never paid any cash dividends on any shares of our capital stock, and we do not anticipate that we will pay any dividends in~~ the ~~foreseeable~~rate ~~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~~which ~~discretion~~we ofexpand our ~~Board of Directors, 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.

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

~~If we were to wind-up or dissolve~~ the ~~Company~~cost 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 ~~liquidation~~commercializing ~~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~~products.

IfOur welimited ~~fail~~operating tohistory ~~maintain~~makes anevaluating ~~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~~future ~~trading~~prospects ~~price~~difficult ~~of our stock, should a public market develop in the future.~~

~~Effective~~We ~~internal~~have ~~controls~~a ~~are~~limited ~~necessary~~operating ~~for~~history usand tohave ~~provide~~financed ~~reliable~~our ~~financial~~operations ~~reports~~primarily through funding from sales of equity and ~~effectively~~convertible ~~prevent~~debt ~~fraud~~securities. IfWe have incurred net losses since we ~~cannot~~began ~~provide~~operations. ~~financial~~Through ~~reports~~October or31, ~~prevent~~2015, ~~fraud~~we had an accumulated deficit of $7,392,173. These losses have resulted principally from costs incurred in connection with our ~~business~~research ~~reputation~~and development activities, pre-clinical tests and ~~operating~~other ~~results~~regulatory ~~could~~activities, beexpanding ~~harmed~~and maintaining our intellectual property, general and administrative costs and debt interest expense. ~~Inferior~~We ~~internal~~face ~~controls~~considerable ~~could~~risks ~~also~~and ~~cause~~difficulties ~~investors~~as toa ~~lose~~company ~~confidence~~with inlimited operating history. If we do not successfully address these risks, our ~~reported~~business, prospects, operating results and financial ~~information,~~condition ~~which~~may ~~could~~be ~~have~~materially aand ~~negative~~adversely ~~effect~~harmed. onAdditionally, ~~the~~our ~~trading~~financial ~~price~~status ofcreates substantial doubt about our ~~stock~~ability to continue as a going concern.

44 We expect 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.

WeMoreover, we do not have a ~~significant~~product ~~number~~approved offor ~~options~~commercial sale. We have limited experience as a newly formed research and ~~warrants~~development ~~outstanding~~stage entity in the biopharmaceutical field, and weour ~~may~~prospects ~~issue~~must ~~additional~~be ~~options~~considered in light of the ~~future~~fact that we have not yet demonstrated an ability to ~~employees~~successfully overcome many of the risks and uncertainties frequently encountered by companies in new and rapidly evolving fields, ~~officers~~particularly in the pharmaceutical or biotechnology areas. These risks include, ~~directors~~but are not limited to, ~~independent~~unforeseen ~~contractors~~capital requirements, delays in obtaining regulatory approvals, failure to gain market acceptance and ~~agents~~competition from foreseen and unforeseen sources. ~~Sales~~ Accordingly, you should consider our prospects in light of the ~~underlying~~costs, ~~shares~~uncertainties, ofdelays ~~common~~and ~~stock~~difficulties ~~could~~encountered ~~adversely~~by ~~affect~~companies in the ~~market~~early ~~price~~stage of ~~our common stock~~development.

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 Equity 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.35

WeOur ~~incur~~existing ~~significant~~debt ~~increased~~is ~~costs~~in astechnical ~~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.~~default

As aof ~~public company reporting to~~ the ~~Securities~~date ~~and~~of ~~Exchange~~this ~~Commission~~Report, we ~~incur~~had ~~significant legal~~$1,060,000 ~~accounting~~in ~~and~~convertible ~~other~~debt ~~expenses~~instruments that weare ~~did~~in ~~not~~technical ~~incur as a private company~~default. We While ~~are~~the ~~subject~~holders tohave ~~reporting~~not ~~requirements~~taken ofany ~~the~~actions ~~Securities~~related ~~Exchange~~to ~~Act~~this ofstatus, ~~1934~~there ~~and~~is ~~the~~no ~~Sarbanes-Oxley~~assurance ~~Act~~that ofthey ~~2002,~~will asnot ~~well~~pursue ascollection ~~rules~~in ~~subsequently implemented by~~ the ~~Securities~~future. Our ~~and~~plan ~~Exchange~~is ~~Commission~~to ~~that~~have ~~impose~~these ~~significant~~holders ~~requirements~~exchange ontheir ~~public~~debt ~~companies,~~for ~~including~~a ~~requiring~~new ~~establishment~~form ~~and maintenance~~ of ~~effective~~debt ~~disclosure~~currently ~~and~~being ~~financial~~offered ~~controls~~for ~~and changes in corporate governance practices~~sale. In ~~addition, on July 21, 2010,~~ the ~~Dodd-Frank~~event ~~Wall Street Reform and Protection Act was enacted. There are significant corporate governance and executive compensation-related provisions in~~ the ~~Dodd-Frank~~holders ~~Act~~were ~~that are expected~~ to ~~increase~~take ~~our~~a ~~legal~~collection ~~and~~action ~~financial compliance costs, make some activities more difficult, time-consuming~~ or ~~costly~~refuse ~~and may also place undue strain on our personnel, systems and resources. Our management and other personnel will need~~ to ~~devote~~exchange atheir ~~substantial~~existing ~~amount~~debt offor ~~time to these~~ new ~~compliance initiatives. In addition~~debt, weit ~~expect~~could ~~these rules and regulations to~~ make it more difficult ~~and more expensive~~ for us to ~~obtain~~raise ~~director~~additional ~~and officer liability insurance~~funds, ~~and we may be required to accept reduced policy limits and coverage~~ or ~~incur~~require ~~substantially~~that ~~higher costs to obtain~~ the ~~same~~proceeds orfrom ~~similar coverage. As~~ a ~~result,~~future itcapital ~~may~~raise be ~~more~~redirected ~~difficult for us~~ to ~~attract~~repay ~~and~~old ~~retain qualified people to serve on our board of directors, our board committees or as executive officers~~debts.

~~Shares~~Our ~~eligible~~operating results for the foreseeable future ~~sale~~will ~~may~~depend ~~adversely~~significantly ~~affect~~on ~~the~~our ~~market~~ability to fund our research and development programs for, obtain regulatory approval of, and to successfully commercialize Polycefin.

~~From~~Polycefin ~~time~~is tocurrently ~~time, certain of~~ our ~~shareholders~~only ~~may~~drug be eligible to sell all or some of their shares of common stock by means of ordinary brokerage transactions in the open market pursuant to Rule 144, promulgated under the Securities Act, subject to certain limitationscandidate. In ~~general,~~We ~~pursuant to Rule 144, non-affiliate shareholders~~ may ~~sell~~not ~~freely~~receive ~~after~~revenues six months subject only to the current public information requirement (which disappears after one year). Affiliates may sell after six months subject to the Rule 144 volume, manner of sale (for equity securities), current public information and notice requirements. Of the 21,375,860 shares of our common stock outstanding as of October 31, 2014, approximately 8,257,913 shares are held by “non-affiliates” and are, or ~~will~~royalties ~~be,~~from ~~freely~~commercial ~~tradable~~sales ~~without restriction, and the remaining shares are held by our “affiliates”, as~~ of ~~such~~Polycefin ~~date. Any substantial sale of our common stock pursuant to Rule 144~~ or ~~pursuant to~~ any ~~resale~~other ~~prospectus~~drug ~~may~~in ~~have a material adverse effect on~~ the ~~market~~foreseeable ~~price~~future, ofif ~~our~~at ~~common stock~~all.

WeOur ~~are~~development anof ~~“emerging~~Polycefin ~~growth~~involves ~~company”~~a ~~and~~high ~~our~~degree ~~election to delay adoption~~ of ~~new~~risk. orMany ~~revised~~important ~~accounting~~factors ~~standards~~affect ~~applicable to public companies may result in~~ our ~~financial~~ability ~~statements not being comparable~~ to ~~those~~successfully ofdevelop ~~other public companies. As a result of this~~ and ~~other~~commercialize ~~reduced disclosure requirements applicable to emerging growth companies~~Polycefin, including our ~~securities~~ability ~~may be less attractive~~ to: ~~investors.~~

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, and we intend to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act, for complying with new or revised accounting standards. ·

45 demonstrate safety and efficacy of Polycefin at each stage of the clinical trial process;

In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. If we elect to delay such adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As a result of such election, our 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 our stock price may be more volatile. We may take advantage of these reporting exemptions 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 which we have total annual gross revenues of $1 billion or more; (ii) 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. ·

Ifmeet ~~the~~applicable ~~Company~~regulatory ~~were~~standards toand ~~dissolve or wind-up, holders of our Common Stock may not~~ receive arequired ~~liquidation~~regulatory ~~distribution.~~ approvals;

If we were to wind-up 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 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 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. ·

~~Item~~obtain ~~1B. Unresolved~~and ~~Staff~~maintain ~~Comments~~necessary patents and/or licenses;

~~None.~~ ·

~~Item~~produce 2.Polycefin ~~Description~~in ofcommercial ~~Property~~quantities at reasonable costs;

~~The Company does not have any leased property. We maintain a mailbox account with Regus that also provides for telephone answering at a cost of $129 per month.~~·

~~Item~~obtain 3.reimbursement ~~Legal~~coverage ~~Proceedings~~for Polycefin;

There are 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. ·

~~Item~~compete 4.successfully ~~Mine~~against ~~Safety~~other ~~Disclosures~~products; and

~~Not applicable~~·

46 market Polycefin successfully.

~~PART~~We IIcannot assure you that we will successfully 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 any other product and we do not know when, or if, we will generate any revenue in the future. We may 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 future, we may incur significant sales, marketing, manufacturing and other general and administrative expenses, as well as continued research and development expenses. As a result, 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 time. If we fail to achieve profitability within the timeframe expected by investors, the market price of the common stock may decline, and, therefore, may negatively impact our ability to raise capital, invest in or expand our business, acquire additional products or licenses, commercialize our products, or continue our operations.

~~Item~~We 5.will ~~Market~~need ~~for~~additional ~~Common~~funding ~~Equity,~~to ~~Related~~advance ~~Stockholder~~our ~~Matters~~clinical trial programs, launch and ~~Small~~commercialize ~~Business~~our ~~Issuer~~lead ~~Purchases~~drug ofcandidate ~~Equity~~or ~~Securities~~any other product candidate.

~~Common~~Pharmaceutical ~~Stock~~product development, which includes research and development, pre-clinical and clinical studies and human clinical trials, is a time-consuming and expensive process that takes years to complete. We expect that our expenses will increase substantially as we move Polycefin into human clinical trials, 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-launch activities, regulatory compliance requirements, sales and marketing, manufacturing and distribution. Additionally, we may incur expenses directly related to license and product acquisitions.

~~Our~~Current ~~Certificate~~economic ofconditions ~~Incorporation~~and ~~authorizes~~in the ~~issuance~~global ofeconomy ~~up to 100~~generally,~~000,000~~ ~~shares~~including ofongoing ~~common~~disruptions ~~stock,~~in ~~par value $.0001 per share (~~the ~~“Common~~debt ~~Stock”).~~and ~~The~~equity ~~Common~~capital ~~Stock is not listed on a publicly-traded market. As of March 31~~markets, ~~2016,~~may ~~there~~adversely ~~were~~affect ~~approximately~~our ~~130~~business ~~holders~~and ofresults ~~record~~ of 22operations,~~215,860~~ ~~shares~~and ofour ~~the~~ability ~~Company’s~~to ~~Common~~obtain ~~Stock~~financing.

~~Preferred~~The ~~Stock~~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.

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. 36

~~Dividend~~The ~~Policy~~global stock 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 financial markets, making 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 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.

~~The~~Future ~~Company~~financings ~~has~~may ~~not~~result ~~declared~~in ordilution ~~paid any cash dividends on its Common Stock and does not intend~~ to ~~declare~~our orshareholders ~~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~~restrictions ~~depend~~ on ~~the Company’s earnings, if any,~~ its ~~capital~~business ~~requirements and financial condition and such other factors as the Board of Directors may consider~~operations.

~~Securities~~If ~~Authorized~~we ~~for~~raise ~~Issuance~~additional ~~under~~funds ~~Equity~~by ~~Compensation~~issuing ~~Plans~~equity or convertible debt securities, 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.

InRisks ~~March~~Related ~~2012,~~to our ~~Board~~Intellectual 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.Property

~~The~~We ~~following~~will ~~table~~be ~~illustrates~~dependent on the ~~number~~rights ofincluded ~~shares~~in ~~remaining~~the ~~available~~License for ~~issuance~~all ~~under~~of ~~the~~our ~~Plan~~products.

~~Equity~~Our ~~Compensation~~business ~~Plan~~is ~~Information~~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.

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

If other companies claim that we infringe on their intellectual property rights, we may be subject to costly and time-consuming litigation and delays in product introduction.

~~Recent~~Our ~~Sales~~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 ~~Unregistered~~interference ~~Securities~~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.

~~None~~Because it is difficult and costly to protect our proprietary rights, ~~except~~we asmay ~~previously~~not ~~reported~~be able to ensure their protection.

47 Our 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-party 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.

~~Issuer~~The ~~Purchases~~patent positions of ~~Equity~~pharmaceutical ~~Securities~~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 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.

~~None.~~37

~~Item~~The 6degree 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. ~~Selected~~ ~~Financial~~For ~~Data~~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.

AsIn the event that a ~~“smaller~~third ~~reporting~~party ~~company”~~has asalso ~~defined~~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 ~~Item~~the 10U.S. Patent and Trademark Office to determine priority of ~~Regulation~~invention ~~S-K,~~in the ~~Company~~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 ~~required~~have the financial resources to ~~provide~~pursue ~~this~~infringement ~~information~~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.

~~Item~~In ~~7. Management’s~~addition, ~~Discussion~~some ~~and~~countries, ~~Analysis~~including many in Europe, do not grant patent claims directed to methods of ~~Financial~~treating ~~Condition~~humans, and ~~Results~~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 ~~Operation~~those patents will be valid and enforceable or provide us with any significant protection against competitive products, or otherwise be commercially valuable to us.

~~This~~We ~~management’s~~may ~~discussion~~also ~~and~~rely ~~analysis~~on oftrade ~~financial~~secrets ~~condition~~to protect our 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 ~~results~~other ofadvisors ~~operations~~may ~~should~~unintentionally beor ~~read~~willfully indisclose ~~conjunction~~our ~~with~~information ~~the~~to ~~Company’s~~competitors. ~~financial~~Enforcing ~~statements~~a claim that a third party illegally obtained and ~~the~~is ~~related~~using ~~notes~~our trade secrets is expensive and time consuming, and the ~~other~~outcome ~~financial~~is ~~information~~unpredictable. ~~included~~In inaddition, ~~this~~courts ~~Report~~outside the United States are sometimes less willing to protect trade secrets. Moreover, our competitors may independently develop equivalent knowledge, methods and know-how.

~~Overview~~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.

~~The~~As ~~Company~~we ~~was~~expand ~~founded~~our topatent ~~commercialize~~portfolio, ~~new~~the ~~cancer~~cost ~~treatment~~of ~~science~~maintaining ~~and~~such ~~imaging~~patents ~~targeting~~will ~~technology as well as a proprietary molecular delivery platform designed to interfere with those targets in order to inhibit and finally eradicate tumor progression~~increase. ~~The~~We ~~Company~~cannot ispredict the ~~exclusive~~future ~~licensee~~cost of ~~certain~~maintaining ~~intellectual~~our ~~property~~patents. We ~~rights~~may ~~owned~~find byourselves ~~Cedars Sinai Medical Center (“CSMC”)~~ in ~~Los Angeles, one of the nation’s premiere research institutions (the “License”). CSMC has developed~~ a ~~family~~position ofwhere ~~related~~we ~~nano-biopolymers~~cannot ~~conjugates~~afford ~~(collectively referred~~ to ~~here~~maintain asall ~~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,~~in ~~and two Japanese patents. All related patents and patent rights of CSMC are subsumed within~~ our ~~License~~portfolio.

~~Our~~If ~~first~~we ~~therapeutic~~are ~~drug~~sued ~~candidate is AG 101 which will target certain brain cancer. We need to commission final Phase 0 toxicology studies at an external laboratory~~ for ~~AG101~~infringing ~~drug~~intellectual ~~candidate~~property ~~preparation~~rights of anthird 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 $4parties,~~000,000~~ -it ~~$5,000,000 which~~ will ~~require~~be ~~additional~~costly ~~funding. There are various factors that can influence the timing of starting~~ and ~~completing~~time ~~these objectives and milestones as well as the total costs. Such factors include~~consuming, ~~but are not limited to, the pace~~ and ~~success~~an ofunfavorable ~~scientific~~outcome ~~developments, the availability of financial and human resources, competing demands of our scientific team, and changes~~ in ~~regulatory~~any ~~requirements.~~litigation ~~Due~~would toharm 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~~business.

~~The~~Our ~~founders~~ability ofto ~~Arrogene~~develop, ~~were~~manufacture, ~~principally~~market ~~involved~~and insell our products depends upon our ability to avoid infringing the ~~research~~proprietary ~~and~~rights ~~development~~of ~~behind~~third ~~all~~parties. ~~critical~~There ~~discoveries~~is ~~and~~a ~~science~~substantial atamount ~~CSMC~~of ~~related~~litigation toinvolving ~~Polycefin~~patent and ~~authored~~other ~~all~~intellectual ~~the~~property ~~patents~~rights ~~underlying~~in the ~~technologies~~biotechnology ~~(the~~and ~~“Technology”)~~biopharmaceutical industries generally. ~~Our~~If ~~founders~~a ~~include~~third ~~internationally~~party ~~acclaimed~~claims ~~brain~~that ~~surgeon~~we ~~and~~infringe ~~scientist~~on ~~Dr.~~their ~~Keith~~products ~~Black~~or technology, ~~Dr.~~we ~~Julia~~could ~~Ljubimova, Dr.~~face ~~Eggehard~~a ~~Holler~~number of issues, including: infringement and ~~Dr.~~other ~~Alex~~intellectual ~~Ljubimov. Work~~property onclaims ~~Polycefin~~which, ~~involved~~with ~~seven~~or ~~years~~without ofmerit, ~~development~~can ~~based~~be onexpensive ~~financial~~and ~~support~~time ofconsuming ~~CSMC~~to litigate and ~~over~~can ~~$17,400,000~~divert ofmanagement’s ~~grants~~attention ~~funded~~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 ~~the~~selling ~~National~~or ~~Institute~~licensing ofour ~~Health~~product ~~(NIH) and~~unless the ~~National~~patent ~~Cancer~~holder ~~Institute~~licenses ~~(NIC)~~the patent to us, 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 ~~over~~re-designing ~~$20~~our processes so they do not infringe,~~000,000~~ ~~from~~which ~~other~~may ~~foundations~~not be possible or could require substantial funds and ~~organizations~~time.

~~Develop~~Risks ~~our~~Related 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~~Owning ~~efficacy~~Our ~~and~~Common 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.Stock

48 There currently exists no public trading market for the Arrogene shares; and should a public trading market develop in the future, of which there can be no assurance, such trading will likely be subject to the “penny stock” rules.

~~Develop~~There is currently no public trading market for Arrogene common stock and ~~commercialize~~it ~~Polycefins~~is innot ~~collaboration~~quoted ~~with~~on ~~leading~~the ~~biopharmaceutical~~OTC ~~companies.~~Electronic InBulletin ~~addition~~Board, toa ~~our~~FINRA-sponsored ~~internal~~and ~~development~~operated ~~programs~~quotation system for equity securities, weor ~~will~~OTCQB ~~actively~~or ~~seek~~OTC ~~opportunities~~Pink toelectronic ~~collaborate~~quotation ~~with~~systems ~~recognized~~run ~~biopharmaceutical~~by ~~companies~~OTC toMarkets Group Inc. Should a public trading market for the shares develop ~~Polycefins~~in ~~incorporating~~the ~~therapeutic~~future, ~~payloads~~of ~~from~~which ~~their~~there ~~proprietary~~can ~~product~~be ~~portfolios~~no assurance, the shares will likely be quoted on the Bulletin Board, OTCQB or OTC Pink Sheets. These Weare ~~have~~more ~~begun~~limited ~~negotiations~~trading ~~for~~markets ~~collaborations~~than ~~with~~the ~~industry~~Nasdaq ~~leaders~~Capital Market, ~~although~~and wetimely, doaccurate quotations of the price of our common stock may not always be available. You may expect trading volume to be ~~able~~low toin ~~enter~~such ~~into~~a ~~collaboration~~market. Consequently, ~~agreements~~the ~~until~~activity weof ~~can~~only ~~announce~~a ~~data~~few ~~pursuant~~shares tomay ~~our~~affect ~~clinical~~the ~~trials~~market and may result in wide swings in price and in volume.

~~Leverage~~Arrogene ~~our~~common ~~nanomedicine~~stock ~~platform~~will tobe ~~develop~~subject ato ~~pipeline~~the requirements of ~~high~~Rule ~~value Polycefins~~15g.9, ~~The~~promulgated ~~modularity~~under the Securities Exchange Act as long as the price of our ~~technology~~common ~~allows~~stock usis below $5.00 per share. Under such rule, broker-dealers who recommend low-priced securities to ~~efficiently~~persons ~~expand~~other ~~our~~than ~~pipeline~~established ofcustomers ~~Polycefins~~and accredited investors must satisfy special sales practice requirements, ~~both~~including ona ~~our~~requirement ~~own~~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 ~~collaboration~~connection with ~~others~~any trades involving a stock defined as a penny stock. Generally, ~~through~~a ~~various~~penny ~~combinations~~stock is defined as any equity security not traded on an exchange or quoted on Nasdaq that has a market price of ~~targeting~~less ~~ligands~~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 ~~therapeutic~~offer ~~payloads~~quotations for the penny stock, the compensation of the broker-dealer and ~~also~~its ~~enables~~salesperson usin the transaction, monthly account statements showing the market value of each penny stock held in the customer's account, and to ~~move~~make ~~into~~a ~~therapeutic~~special ~~areas~~written ~~beyond~~determination ~~oncology~~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, ~~such~~prior asto ~~inflammatory~~any transaction, ~~infective~~of a disclosure schedule explaining the penny stock market and ~~cardiovascular~~the ~~diseases~~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.

~~Capitalize~~Over-the-counter onstocks ~~drug~~are ~~candidates~~subject ~~with established drug development history~~ to ~~accelerate~~risks 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~~high ~~payloads~~volatility ~~that have already been approved~~ and ~~others~~price ~~with promising attributes that have been deemed unsuitable for further development in their untargeted form~~fluctuation. 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~~Arrogene’s ~~proprietary~~common ~~Polycefins,~~stock ~~including~~is ~~AG-101,~~currently ~~directly~~not intraded ~~the~~or ~~United~~listed ~~States~~on any market, and ~~with~~it ~~collaborators~~is ~~outside~~not eligible to have its shares listed on any stock exchange or on the ~~United~~NASDAQ ~~States~~Capital Market. As Wea ~~have~~result, ~~retained~~ the ~~worldwide~~trading ~~rights~~market tofor ~~AG-101~~our common stock, ~~AG-102~~if ~~and~~any, AGwill be on the over-~~103~~the-counter ~~and~~market. ~~expect~~The toOTC ~~initially~~market ~~maintain~~for ~~similar~~securities ~~rights~~has ~~with~~experienced ~~respect~~extreme toprice ~~other~~and ~~proprietary~~volume ~~Polycefins~~fluctuations weduring ~~develop~~certain periods. These Webroad ~~intend~~market tofluctuations ~~build~~and aother ~~focused~~factors, ~~oncology~~such ~~sales~~as ~~organization~~new toproduct ~~market~~developments ~~FDA-approved~~and ~~Polycefins~~trends in ~~the~~our ~~United~~company's ~~States.~~industry ~~Outside~~and the ~~United~~investment ~~States~~markets generally, weas ~~expect~~well toas ~~rely~~economic onconditions ~~collaborators~~and toquarterly ~~commercialize~~variations ~~proprietary~~in ~~approved~~our ~~Polycefins~~results of operations, may adversely affect the market price of our common stock and make it more difficult for investors to sell their shares.

~~Continue~~Trading toin ~~extend~~Arrogene ~~and~~securities ~~protect~~will ~~our~~likely ~~product~~be ~~technology~~conducted ~~and~~on ~~Polycefins~~an ~~through~~electronic ~~our~~bulletin ~~intellectual~~board ~~property~~established ~~portfolio.~~for Wesecurities ~~seek~~that todo ~~protect~~not ~~our~~meet ~~medicinal~~NASDAQ ~~engineering~~listing ~~platform through issued and pending U~~requirements.S. ~~patents~~As ~~that~~a ~~we own or license~~result, ininvestors ~~some~~will ~~cases~~find ~~with~~it ~~foreign~~substantially ~~counterparts~~more ~~relating~~difficult to ~~elements~~dispose of our ~~Polycefin~~securities. ~~candidates,~~Investors asmay ~~well~~also asfind ~~know-how~~it ~~and~~difficult ~~trade secrets relating~~ to ~~the~~obtain ~~design~~accurate information and ~~manufacturing~~quotations ~~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~~price ~~regulatory~~of ~~requirements for generic nanomedicines strengthen the protection afforded by~~ our ~~intellectual~~common ~~property portfolio~~stock.

~~General~~Arrogene’s ~~Factors~~stock price may be volatile and as a result, 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:

Our 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-Oxley Act of 2002), tax administration and human resources related functions. ·

49 failure to meet sales and marketing goals or operating budget

~~Critical Accounting Policies and Estimates~~ ·

~~The~~failure discussion and 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~~achieve ~~estimates~~development 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. goals

We cannot predict what future laws and regulations might be passed that could have a material effect on our results of operations. We assess the impact of significant changes in laws and regulations on a regular basis and update the assumptions and estimates used to prepare our financial statements when we deem it necessary. ·

~~Revenue~~failure ~~Recognition~~to obtain regulatory approvals

While 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 results and relies on certain estimates that can require difficult, subjective and complex judgments on the part of management.·

~~Share-Based~~concerns ~~Payments~~regarding insufficient financial resources

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.·

Weinability ~~determine~~to ~~the~~create ~~fair~~an ~~value~~active oftrading ~~warrants and stock options using the Black-Scholes valuation model, which considers the exercise price relative to the~~ market ~~value~~for ofour ~~the~~common ~~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.

~~Fair Value Measurements~~·

Wedecline ~~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 andemand ~~orderly~~for ~~transaction~~our ~~between~~common 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:stock

~~Level 1—Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities.~~ ·

~~Level~~operating ~~2—Inputs~~results ~~other~~failing ~~than~~to ~~Level~~meet 1the ~~that~~expectations ~~are~~of ~~observable,~~securities ~~either~~analysts ~~directly~~ or ~~indirectly,~~investors ~~such as quoted prices for similar assets or liabilities; quoted prices~~ in ~~markets~~any ~~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.~~quarter

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

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

~~Recently Issued Accounting Pronouncements~~ ·

Ininvestor ~~June~~perception ~~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~~company's ~~ended~~industry ~~October~~or ~~31,~~prospects ~~2014.~~

~~Liquidity and Capital Resources~~ ·

Asgeneral ofeconomic ~~October 31, 2014, the Company’s cash balance was $37,007 compared to $13,822 at October 31, 2013.~~trends

~~The~~In ~~following~~addition, isstock amarkets ~~summary~~have ofexperienced ~~the~~extreme ~~Company's~~price ~~cash~~and ~~flows~~volume ~~provided~~fluctuations byand ~~(used~~the ~~in)~~market ~~operating,~~prices ~~investing,~~of ~~and~~securities ~~financing~~have ~~activities~~been ~~for~~highly ~~the~~volatile. ~~years~~These ~~ended~~fluctuations ~~October~~are ~~31,~~often ~~2014~~unrelated to operating performance and ~~October~~may ~~31,~~adversely ~~2013~~affect the market price of our common stock.

	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)

~~Operating~~There ~~Activities~~can be no assurance that we will be able to successfully complete a secondary public offering that will allow our shares to be listed and traded on a national exchange or Nasdaq Capital Market.

~~During~~While we would like to undertake a public offering in the ~~year~~future ~~ended~~that ~~October~~would 31qualify us for listing and trading on a national exchange (eg. NYSE MKT, ~~2014~~LLC, ~~$571~~formerly NYSE Amex or Nasdaq Capital Market),~~589~~ ofthere ~~cash~~can ~~was~~be ~~used~~no inassurance ~~operating~~that ~~activities~~market ~~which~~conditions ~~primarily~~or ~~represents~~our ~~cash~~future ~~operating~~performance ~~expenses~~will support such an effort. Numerous factors, including market liquidity and demand for our stock, our ability to ~~principally~~identify ~~support~~one ~~continued~~or ~~pre-clinical~~more ~~development~~underwriters willing to undertake such an offering, ~~drug~~and ~~synthesis~~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 ~~administrative~~illiquid ~~activities~~over-the-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.

~~Investing~~If ~~Activities~~a public market for our common stock develops, 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.

~~During~~If a market for our common stock develops, the ~~year~~market ~~ended~~price ~~October~~for 31the shares may be significantly affected by factors such as variations in quarterly and yearly operating results, ~~2014~~general trends in the pharmaceutical industry, ~~there~~and ~~were~~changes noin ~~cash~~state ~~flows~~or ~~from~~federal ~~investing~~regulations ~~activities~~affecting us and our industry. As Furthermore, in recent years the stock market has experienced extreme price and volume fluctuations that are unrelated or disproportionate to the operating performance of ~~October~~the ~~31,~~affected ~~2014,~~companies. Such webroad ~~had~~market nofluctuations ~~material~~may ~~commitments~~adversely affect the market price of our common stock, if a market for ~~capital~~it ~~expenditures~~develops.

~~Financing~~Future ~~Activities~~share issuances to CSMC will have a dilutive effect on our shareholders.

~~During~~The ~~the~~License ~~year~~requires ~~ended~~us ~~October~~to ~~31,~~issue ~~2014,~~additional ~~$594,774~~shares of ~~cash~~common ~~was~~stock ~~provided~~to byCSMC ~~financing~~in ~~activities~~the ~~which~~future ~~primarily~~for ~~represents~~no ~~the~~additional ~~net~~consideration ~~proceeds~~to ~~from~~ensure ~~the~~that ~~sale~~CSMC will own 2% of ~~Bridge~~the ~~Notes~~total issued and outstanding common shares. This commitment continues until December 31, 2020.

51 Future issuances of our Common Stock could dilute current shareholders and adversely affect the market if it develops.

~~Management’s~~We ~~Outlook~~have the authority to issue up to 100,000,000 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.

~~Management~~We ~~believes~~may ~~that~~issue ~~existing~~preferred ~~cash~~stock on hand, combined with net proceeds of $258,675 received from the sale of Bridge Notes in December 2014 and March 2015, 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 wewould 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 research and development agreement. Additionally, certain key professionals such as legal counsel have ~~also~~rights ~~had~~that ~~payments~~are ~~deferred~~preferential ~~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 ~~Company~~rights ~~despite this lack~~ of ~~payment, there is no assurance they will continue to do so, and~~ the ~~loss~~common ofstock a key management member, 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~~discourage ~~our~~potentially ~~ability~~beneficial totransactions ~~sell additional Convertible Promissory Notes, or limit the proceeds from the sale of such notes that are available~~ to ~~fund~~ our ~~ongoing~~Common ~~operations~~Stockholders.

WeAn ~~plan~~issuance toof ~~continue~~additional ~~the~~shares ~~sale~~of preferred stock could result in a class of ~~Convertible~~outstanding ~~Promissory~~securities ~~Notes~~that would have preferences with respect to ~~fund~~voting rights and dividends and in liquidation over our ~~operations~~common ~~until~~stock aand ~~longer~~could, ~~term~~upon ~~financing~~conversion ~~can~~or beotherwise, ~~consummated~~have all of the rights of our common stock. Our Board ~~has~~of ~~authorized~~Directors' ~~the~~authority ~~sale~~to ofissue uppreferred tostock ancould ~~additional~~discourage ~~$3.25~~potential ~~million~~takeover inattempts ~~Convertible~~or ~~Promissory~~could ~~Notes~~delay ~~excluding~~or ~~those~~prevent ~~sold~~a change in ~~March~~control ~~2016. No~~through ~~assurance~~merger, ~~can~~tender beoffer, ~~given~~proxy ~~that~~contest ~~these~~or ~~efforts~~otherwise ~~will~~by bemaking ~~successful~~these attempts more difficult or ~~adequately~~costly ~~capitalize~~to achieve. The issuance of preferred stock could impair the ~~Company.~~voting, dividend and liquidation rights of common stockholders without their approval.

~~The~~We ~~success~~do ofnot ~~our~~expect ~~business will depend in great part on our ability~~ to ~~conduct~~pay ~~research~~cash ~~and~~dividends ~~development~~in on the ~~technology~~foreseeable ~~covered by the License~~future. ~~Our~~Any ~~plan~~return ~~forecasts~~on ~~the~~investment ~~need~~may ~~for~~be ~~additional~~limited ~~capital beyond the next twelve months even if we sell the maximum number of Bridge Notes authorized. Our ability~~ to ~~conduct research and development activities is greatly dependent upon our financial resources. No assurance can be given that~~ the ~~necessary~~value ~~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~~stock.

InWe ~~the~~have ~~event~~never paid any cash dividends on any shares of our capital stock, and we do not anticipate that we ~~cannot~~will ~~raise~~pay ~~sufficient~~any ~~capital~~dividends ~~within~~in the ~~required~~foreseeable ~~timeframes,~~future. Our itcurrent ~~will~~business ~~have~~plan ais ~~material~~to ~~adverse~~retain ~~effect~~any onfuture earnings to finance the ~~Company’s~~expansion ~~liquidity~~of our business. Any future determination to pay cash dividends will be at the discretion of our Board of Directors, and will be dependent upon our consolidated financial condition, ~~and~~results ~~business~~of ~~prospects~~operations, orcapital ~~could~~requirements ~~force~~and ~~the~~other ~~Company~~factors ~~out~~as our board of ~~business~~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.

~~RESULTS OF OPERATIONS~~40

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

~~During~~If ~~the~~we ~~year~~were ~~ended~~to ~~October~~wind-up ~~31,~~or ~~2014,~~dissolve ~~research~~the Company and ~~development~~liquidate ~~expenses~~and ~~decreased~~distribute byour ~~$166~~assets,~~643~~ orour ~~37%~~shareholders ~~compared~~would toshare ~~the~~ratably ~~prior~~in ~~year~~our assets only after we satisfy any amounts we would owe to our creditors. ~~The~~If ~~decrease~~our inliquidation ~~research~~or ~~and~~dissolution ~~development~~were ~~expense~~attributable isto ~~primarily~~our ~~due~~inability to ~~activities~~profitably ~~under~~operate ~~the~~our ~~research~~business, ~~agreement~~then ~~with~~it ~~CSMC~~is ~~supporting~~likely ~~pre-clinical~~that ~~development~~we would have material liabilities at the time of ~~Polycefin~~liquidation ~~and~~or ~~synthesis~~dissolution. Accordingly, we cannot give you any assurance that sufficient assets will remain available after the payment of ~~drug~~our ~~candidates~~creditors to enable you to receive any liquidation distribution with respect to any shares you may hold.

~~General~~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 ~~Administrative~~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.

~~General~~Effective ~~and~~internal ~~administrative~~controls ~~expense~~are ~~increased~~necessary byfor ~~$432,257~~us orto ~~approximately~~provide ~~61%~~reliable ~~for~~financial ~~the~~reports ~~year~~and ~~ended~~effectively ~~October~~prevent ~~31,~~fraud. ~~2014~~If ~~compared~~we tocannot ~~the~~provide ~~prior~~financial ~~year. The~~reports ~~increase~~or inprevent ~~expense~~fraud, ~~was~~our ~~the~~business ~~net~~reputation ~~result~~and ofoperating ~~increased~~results ~~non~~could ~~cash~~be ~~share-based~~harmed. ~~payment~~Inferior ~~expense~~internal ~~related~~controls tocould ~~stock~~also ~~options~~cause ~~and~~investors ~~investor~~to ~~relation~~lose ~~services~~confidence asin ~~well~~our asreported ~~legal~~financial ~~fees~~information, ~~associated~~which ~~with~~could ~~our~~have ~~intellectual~~a ~~property~~negative ~~partially~~effect ~~offset~~on bythe ~~reduced~~trading ~~compensation~~price ~~and~~of ~~consulting~~our ~~expenses~~stock..

~~Loss~~We ~~from~~have ~~Operations~~a significant 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.

As aof ~~result~~October 31, 2015, we had outstanding options and warrants for the purchase of 1,450,000 and 5,518,358 shares of common stock, respectively. Under the ~~factors~~Arrogene ~~described~~2012 ~~above~~Equity Incentive Plan (the “Plan”), we have the ~~loss~~ability ~~from~~to ~~operations~~grant ~~for~~awards of options to employees, officers, directors, independent contractors and agents. The holders may sell these shares in the ~~year~~public ~~ended~~markets ~~October~~from 31time to time, ~~2014~~without limitations on the timing, ~~increased~~amount byor ~~$265~~method of sale. If our stock price rises,~~614~~ ~~compared~~the toholders may exercise their warrants and options and sell a large number of shares. This could cause the ~~prior~~market ~~year~~price ~~period~~of our common stock to decline.

52 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.

~~Other~~As ~~Expense~~a public company reporting to the Securities and Exchange Commission, we incur significant legal, accounting and other expenses 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.

~~For~~Shares ~~the~~eligible ~~year ended October 31, 2014, we recorded other expense of $211,644 compared to $839~~ for ~~the~~future ~~prior~~sale ~~year.~~may ~~The~~adversely ~~increase~~affect ~~in expense between years is due to interest expense recorded on~~ the ~~Bridge Notes including amortization of debt discount and offering costs~~market.

~~Net~~From ~~Loss~~time to time, certain of our shareholders may be eligible to sell all or some of their shares of common stock by means of ordinary brokerage transactions in the open market pursuant to Rule 144, promulgated under the Securities Act, subject to certain limitations. In general, pursuant to Rule 144, non-affiliate shareholders may sell freely after six months subject only to the current public information requirement (which disappears after one year). Affiliates may sell after six months subject to the Rule 144 volume, manner of sale (for equity securities), current public information and notice requirements. Of the 22,215,860 shares of our common stock outstanding as of October 31, 2015, approximately 8,257,913 shares are held by “non-affiliates” and are, or will be, freely tradable without restriction, and the remaining shares are held by our “affiliates”, as of such date. Any substantial sale of our common stock pursuant to Rule 144 or pursuant to any resale prospectus may have a material adverse effect on the market price of our common stock.

~~As a result of the factors described above, we recorded $1,632,904 of net loss for the year ended October 31, 2014 compared to a net loss of $1,156,485 in the prior year.~~41

~~Off-Balance~~We ~~Sheet~~are ~~Arrangements~~an “emerging growth company” and our election to delay adoption of new or revised accounting standards applicable to public companies may result in our financial statements not being comparable to those of other public companies. As a result of this and other reduced disclosure requirements applicable to emerging growth companies, our securities may be less attractive to investors.

~~The~~We ~~Company~~are ~~does~~an ~~not~~“emerging ~~have~~growth ~~any~~company,” ~~off-balance~~as ~~sheet~~defined ~~arrangements~~in ~~that~~the ~~have~~Jumpstart Our Business Startups Act of 2012, or ~~are~~the ~~reasonably~~JOBS ~~likely~~Act, and we intend to ~~have~~take aadvantage ~~current~~of orcertain ~~future~~exemptions ~~effect~~from onvarious reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the ~~Company’s~~auditor ~~financial~~attestation ~~condition~~requirements of Section 404 of the Sarbanes-Oxley Act, ~~changes~~reduced disclosure obligations regarding executive compensation in ~~financial~~our ~~condition,~~periodic ~~revenues~~reports orand ~~expenses~~proxy statements, ~~results~~and exemptions from the requirements of ~~operations,~~holding ~~liquidity~~a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. In addition, ~~capital~~Section ~~expenditures~~107 orof ~~capital~~the ~~resources~~JOBS Act also provides that isan ~~material~~“emerging togrowth ~~investors~~company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act, for complying with new or revised accounting standards.

~~Contractual~~In ~~Obligations~~other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. If we elect to delay such adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As a result of such election, our 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 our stock price may be more volatile. We may take advantage of these reporting exemptions 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 which we have total annual gross revenues of $1 billion or more; (ii) 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.

AsIf athe ~~“smaller~~Company ~~reporting~~were ~~company”~~to asdissolve ~~defined~~or bywind-up, ~~Item~~holders 10 of ~~Regulation~~our ~~S-K,~~Common ~~the~~Stock ~~Company~~may is not ~~required~~receive toa ~~provide~~liquidation ~~this information~~distribution.

~~Item~~If 7Awe were to wind-up 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 creditors. ~~Quantitative~~If ~~and~~our ~~Qualitative~~liquidation ~~Disclosures~~or ~~about~~dissolution ~~Market~~were ~~Risk~~attributable to our inability to profitably operate our business, then it is likely that we would have material liabilities at 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.

~~As a “smaller reporting company” as defined by~~ Item 101B. ofUnresolved ~~Regulation~~Staff ~~S-K, the Company is not required to provide this information.~~ Comments

~~Item 8~~None. ~~Financial~~ ~~Statements and Supplementary Data.~~

~~Audited~~Item ~~financial~~2. ~~statements~~Description ~~begin on the following page~~ of ~~this Report.~~ Property

53The Company does not have any leased property. We maintain a mailbox account with Regus that also provides for telephone answering at a cost of $129 per month.

~~ARROGENE,~~Item ~~INC~~3. Legal Proceedings

~~INDEX~~There TOare ~~FINANCIAL~~presently ~~STATEMENTS~~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.

~~Page~~ Item 4. Mine Safety Disclosures

~~Report~~Not ~~of Independent Registered Public Accounting FirmF-2~~ applicable

~~Financial Statements:~~42

~~Consolidated~~PART ~~Balance~~II ~~SheetsF-3~~

~~Consolidated~~Common ~~Statement of Changes in Stockholders' Equity (Deficit)F-5~~ Stock

~~Consolidated~~Our ~~Statements~~Certificate of ~~Cash~~Incorporation ~~FlowsF~~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-6 traded market. As of May 31, 2016, there were approximately 170 holders of record of 22,215,860 shares of the Company’s Common Stock.

~~Notes~~Preferred ~~to Consolidated Financial StatementsF-7~~ Stock

~~F-1~~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 4,098,044 shares were issued and outstanding at May 31, 2016.

~~REPORT~~Dividend ~~OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM~~Policy

ToThe Company has not declared or paid any cash dividends on its Common Stock and does 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 ~~Stockholders~~will ofdepend ~~Arrogene~~on the Company’s earnings, ~~Inc~~if any, its capital requirements and financial condition and such other factors as the Board of Directors may consider.

WeSecurities ~~have~~Authorized 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~~Issuance ~~years~~under ~~ended~~Equity ~~October~~Compensation 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.Plans

WeIn ~~conducted~~March 2012, our ~~audits~~Board inof ~~accordance~~Directors ~~with~~and ~~the~~a ~~standards~~majority of ~~the~~shareholders ~~Public~~approved ~~Company Accounting Oversight Board (United States). Those standards require that we plan and perform~~ the ~~audit~~2012 toEquity ~~obtain~~Incentive ~~reasonable~~Plan ~~assurance about whether~~ (the ~~consolidated~~“2012 ~~financial~~Equity ~~statements are free of material misstatement~~Plan”). ~~The~~ ~~Company~~There isare ~~not required to have~~1, ~~nor were we engaged to perform~~500,000 anshares ~~audit~~ of ~~its~~Common ~~internal~~Stock ~~control~~reserved ~~over financial reporting. Our audit included consideration of internal control over financial reporting as a basis~~ for ~~designing~~issuance ~~audit~~under ~~procedures that are appropriate in~~ the ~~circumstances,~~2012 ~~but~~Equity ~~not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting~~Plan. ~~Accordingly,~~As weof ~~express~~October ~~no such opinion. An audit also includes examining~~31, ~~on a test basis~~2015, ~~evidence supporting the amounts and disclosures in the consolidated financial statements~~1,450,000 ~~assessing~~shares ~~the~~had ~~accounting~~been ~~principles~~awarded ~~used~~pursuant ~~and~~to ~~significant estimates made by management, as well as evaluating~~ the ~~overall consolidated financial statement presentation~~Plan. ~~We believe that our audits provide a reasonable basis for our opinion.~~

InThe ~~our~~following ~~opinion,~~table ~~the~~illustrates ~~consolidated financial statements referred to above present fairly, in all material respects,~~ the ~~financial~~number ~~position~~ of ~~Arrogene,~~shares ~~Inc.,~~remaining ~~and~~available ~~Subsidiary as of October 31, 2014 and 2013, and the results of their operations and their cash flows~~ for ~~the~~issuance ~~years~~under ~~ended October 31, 2014 and 2013 in conformity with accounting principles generally accepted in~~ the ~~United States of America~~Plan.

~~The~~Equity ~~accompanying~~Compensation ~~consolidated~~Plan 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.Information

Rose, Snyder & Jacobs LLP


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

~~/s/~~Recent ~~Rose,~~Sales ~~Snyder~~of &Unregistered ~~Jacobs, LLP~~Securities

~~Encino~~None, ~~California~~except as previously reported.

~~April 19, 2016~~43

~~F-2~~Issuer Purchases of Equity Securities

~~ARROGENE, INC~~None.

~~CONSOLIDATED~~Item ~~BALANCE~~6. ~~SHEETS~~Selected Financial Data.

ASAs OFa ~~OCTOBER~~“smaller 31reporting company” as defined by Item 10 of Regulation S-K, ~~2014~~the ~~AND~~Company ~~2013~~is not required to provide this information.

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

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

~~The~~This ~~accompanying~~management’s ~~notes~~discussion ~~are~~and ananalysis ~~integral~~of ~~part~~financial condition and results of ~~these~~operations ~~consolidated~~should be read in conjunction with the Company’s financial statements and the related notes, and the other financial information included in this Report.

~~F-3~~OVERVIEW

~~ARROGENE~~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 certain intellectual property rights owned by Cedars Sinai Medical Center (“CSMC”) in Los Angeles, ~~INC~~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.

~~STATEMENTS~~Our OFfirst ~~OPERATIONS~~therapeutic drug candidate is expected to be AG 101 which is intended to target certain brain cancer. We need to commission final Phase 0 toxicology studies at an external laboratory for AG101 drug candidate preparation of an IND for submission to the FDA to receive clearance to begin human clinical trial work as well as conduct CMC and formulation studies. It is possible that during this work we might extend or alter the intitial indication of our first therapeutic to maximize the chances of successful clinical trial performance. 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 $4,000,000 - $5,000,000 which will require additional funding. 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. 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.

~~FOR~~The ~~THE~~founders ~~YEARS~~of ~~ENDED~~Arrogene ~~OCTOBER~~were 31principally 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, ~~2014~~Dr. ~~AND~~Julia ~~2013~~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.

		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)

~~The accompanying notes are an integral part of these consolidated financial statements.~~44

F• Develop our lead drug candidate, AG-4101, 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. • 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. • Leverage our nanomedicine platform to develop a pipeline of high value Polycefins. The modularity of our technology allows us to efficiently expand our pipeline of Polycefins, both on our own and in collaboration with others, through various combinations of targeting ligands and therapeutic payloads, and also enables us to move into therapeutic areas beyond oncology, such as inflammatory, infective and cardiovascular diseases. • 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. • 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. • Continue to extend and protect our product technology and Polycefins through our intellectual property portfolio. We seek to protect our medicinal engineering platform through issued U.S. patents U.S. patent applications that we own or license, in some cases with foreign counterparts relating to elements of our Polycefin 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.

~~ARROGENE,~~General ~~INC.~~Factors

~~CONSOLIDATED~~Our ~~STATEMENTS~~profitability OFwill ~~STOCKHOLDERS’~~be ~~EQUITY~~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 (~~DEFICIT~~including compliance with the Sarbanes-Oxley Act of 2002), tax administration and human resources related functions.

~~FOR~~Critical ~~THE~~Accounting ~~YEARS~~Policies ~~ENDED~~and ~~OCTOBER~~Estimates ~~31, 2014 AND 2013~~

	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)

The discussion and 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.

~~The accompanying notes are an integral part of these financial statements.~~45

~~F-5~~We cannot predict what future laws and regulations might be passed that could have a material effect on our results of operations. We assess the impact of significant changes in laws and regulations on a regular basis and update the assumptions and estimates used to prepare our financial statements when we deem it necessary.

~~ARROGENE,~~Revenue ~~INC.~~Recognition

~~STATEMENTS~~While OFwe ~~CASH~~have ~~FLOWS~~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 results and relies on certain estimates that can require difficult, subjective and complex judgments on the part of management.

~~FOR~~Share-Based ~~THE YEARS ENDED OCTOBER 31, 2014 AND 2013~~ Payments

	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

~~The~~We ~~accompanying~~determine ~~notes~~the ~~are~~fair anvalue ~~integral~~of ~~part~~warrants and stock options using the Black-Scholes valuation model, which considers the exercise price relative to the market value of ~~these~~the ~~consolidated~~underlying ~~financial~~stock, ~~statements~~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.

~~F-6~~Fair Value Measurements

~~ARROGENE~~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., ~~INC~~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:

~~NOTES~~Level TO1—Inputs ~~CONSOLIDATED~~are ~~FINANCIAL~~unadjusted, ~~STATEMENTS~~quoted prices in active markets for identical assets or liabilities.

~~OCTOBER~~Level 312—Inputs other than Level 1 that are observable, ~~2014~~either ~~AND~~directly ~~2013~~or indirectly, such as quoted prices for similar assets or liabilities; 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.

~~(1)BUSINESS,~~Level ~~OVERVIEW,~~3—Unobservable ~~BASIS~~inputs OFthat ~~PRESENTATION~~are ~~AND~~supported ~~CONSOLIDATION~~by little or no market activity and that are significant to the fair value of the assets or liabilities.

~~Arrogene,~~Recently ~~Inc.~~Issued ~~(“Arrogene”~~Accounting ~~f/k/a~~Pronouncements 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.

~~The~~In ~~Company~~April ~~was~~2015, ~~founded~~the toFASB ~~commercialize~~issued ~~both~~ASU ~~new~~No. ~~cancer~~2015-03, ~~treatments~~Simplifying ~~and~~the ~~imaging~~Presentation ~~targeting~~of ~~technology~~Debt asIssuance ~~well~~Costs. asASU a2015-03 ~~proprietary~~requires ~~molecular~~that ~~delivery~~debt ~~platform~~issuance ~~that~~costs ~~interferes~~be ~~with~~presented ~~those~~in ~~targets~~the inbalance ~~order~~sheet toas ~~inhibit~~a ~~and~~direct ~~finally~~deduction ~~eradicate~~of ~~tumor~~the ~~progression. The~~carrying ~~Company~~value isof the ~~exclusive~~associated ~~licensee~~debt toliability. ~~certain~~Under ~~intellectual~~the ~~property~~existing ~~rights~~guidance, ~~owned~~debt byissuance ~~Cedars~~costs ~~Sinai~~are ~~Medical~~required ~~Center~~to ~~(“CSMC”)~~be presented in ~~Los~~the ~~Angeles,~~balance ~~one~~sheet ofas ~~the~~a ~~nation’s~~deferred ~~premiere~~charge ~~research institutions~~ (~~the~~i.e., ~~“License”~~an asset). The ~~licensed~~new ~~technology~~standard ~~consists~~is ofeffective afor ~~family~~fiscal ofyears ~~related~~beginning ~~nano-biopolymers~~after ~~conjugates~~December ~~(collectively~~15, ~~referred~~2015. toEarly ~~here~~adoption asis ~~Polycefin™),~~permitted ~~believed~~for ~~capable~~financial ofstatements ~~acting~~that ashave anot ~~drug~~been ~~delivery~~previously ~~and~~issued. ~~targeting~~The ~~platform~~new ~~for~~standard ~~cancer~~is ~~therapy~~to ~~and~~be ~~imaging. We~~applied ~~also~~retrospectively ~~have~~to ~~developed~~all ~~important~~periods ~~related~~presented ~~intellectual~~in ~~properties~~the ~~surrounding~~financial ~~tumor~~statements. ~~biomarker~~Once ~~Laminin~~adopted, ~~411. Laminins~~the ~~are~~standard will require the ~~major~~Company ~~components~~to ofpresent ~~basement~~its ~~membranes~~debt ~~that~~issuance ~~are~~costs ~~orderly~~as ~~sheet-like~~a ~~structures~~deduction ~~secreted~~of bythe ~~cells~~carrying tovalue ~~separate~~of ~~several~~its ~~cell~~long-term ~~types~~debt, ~~from~~instead ~~one~~of ~~another. Laminins~~presenting ~~play~~such ~~key~~costs ~~roles~~as inan ~~cell~~asset ~~adhesion,~~in ~~polarity,~~the ~~movement~~consolidated ~~and~~balance ~~differentiation~~sheet.

~~Our~~In ~~strategy~~August is2014, tothe ~~develop~~FASB ~~Polycefin~~issued ~~and~~ASU ~~Laminin~~No. ~~411~~2014-15, ~~into~~Presentation ~~both~~of aFinancial ~~diagnostic/prognostic~~Statements-Going ~~product~~Concern: ~~line~~Disclosures asof ~~well~~Uncertainties asabout ~~therapeutics~~an ~~with~~Entity’s ~~both~~Ability ~~product~~to ~~lines~~Continue ~~targeting~~as ~~tumors,~~a ~~with~~Going anConcern. The ~~initial~~new ~~focus~~standard onrequires ~~brain,~~management ~~breast~~to ~~and~~perform ~~lung~~interim ~~cancers~~and ~~including~~annual ~~the~~assessments ~~metastatic~~of ~~forms~~an ofentity’s ~~the~~ability ~~latter~~to ~~two.~~continue ~~Based~~as ona ~~the~~going ~~pre-clinical~~concern ~~scientific~~within ~~results~~one ~~from~~year ~~these~~of ~~initial~~the ~~indications,~~date wethe ~~might~~consolidated ~~expand~~financial ~~our~~statements ~~indications~~are toissued. ~~other~~An ~~types~~entity ofmust ~~cancer~~provide ~~indications~~certain asdisclosures ~~well~~if asconditions ~~other~~or ~~diseases~~events ~~that~~raise ~~could~~substantial ~~benefit~~doubt ~~from~~about ~~Polycefin~~an entity’s ability to ~~target~~continue ~~disease~~as ~~cells~~a orgoing ~~pass~~concern. The ~~through~~guidance ~~the~~is ~~Brain~~effective ~~Tumor~~for ~~Barrier.~~annual ~~Our~~periods ~~product~~ending ~~development~~after ~~plan~~December ~~focuses~~15, on2016, ~~delivering~~although aearly ~~diagnostic~~adoption ~~product~~is ~~line~~permitted. Management ~~first,~~is ~~due~~currently toassessing the ~~relatively~~potential ~~shorter~~impact ~~regulatory~~of ~~approval~~this ~~process~~ASU ~~associated~~on ~~with~~its ~~diagnostic~~consolidated ~~imaging~~financial ~~agents in comparison to therapeutics~~statements.

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 Laboratory Development Test (“LDT”) with applicable regulators. 46

~~The~~Liquidity ~~accompanying consolidated financial statements include the accounts of Arrogene~~ and ~~its~~Capital ~~wholly~~Resources ~~owned subsidiary ANI. All intercompany transactions have been eliminated in consolidation.~~

~~(2) GOING~~As ~~CONCERN~~of ~~AND~~October ~~MANAGEMENT~~31, 2015, the Company’Ss ~~PLANS~~cash balance was $35,204 compared to $37,007 at October 31, 2014.

The ~~accompanying~~following ~~consolidated~~is ~~financial~~a ~~statements~~summary ~~have~~of ~~been prepared assuming that~~ the Company's ~~will~~cash ~~continue~~flows asprovided aby ~~going~~(used ~~concern. Since our inception~~ in) ~~August 2007~~operating, ~~we have not generated revenue~~investing, ~~incurred~~and ~~operating~~financing ~~losses,~~activities ~~and~~for asthe ofyears ended October 31, ~~2014,~~2015 ~~had~~and ~~an accumulated deficit of $6,384,743. Further, as of~~ October 31, 2014~~, our cash balance was only $37,007 and we had a working capital deficit of $1,477,283~~. ~~These conditions raise substantial doubt about our ability to continue as a going concern.~~

In December 2014 and March 2015, we sold an aggregate of $350,000 in Bridge Notes (defined below) receiving net proceeds of $258,675 after payment of offering expenses. Management believes that existing cash on hand will be sufficient to fund the Company’s planned activities through at least December 31, 2015. 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 research and development agreement (See Note 4). 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 Company despite this lack of payment, there is no assurance they will continue to do so, and the loss of a key management member, or the loss of CSMC as a research partner, could have a material adverse effect on the Company’s business prospects.


	Fiscal Year Ended October 31, 2015	Fiscal Year Ended October 31, 2014
Net Cash Used in Operating Activities	$ (261,318)	$ (571,589)
Net Cash Provided by Investing Activities	—	—
Net Cash Provided by Financing Activities	259,515	594,774
Net Increase (Decrease) in Cash and Cash Equivalents	$ (1,803)	$ 23,185

~~F-7~~Operating Activities

InDuring ~~February~~the ~~2016,~~year weended ~~commenced~~October ~~an offering of up to $4~~31,~~000,000~~ ~~in convertible promissory notes (“Convertible Promissory Notes”). The Convertible Promissory Notes bear interest at 10% per annum~~2015, ~~are convertible into shares of common stock at~~ $~~1.00 per share~~261,318 ~~and principal and accrued interest are due and payable five years after the initial closing~~ of ~~the~~cash ~~offering. In~~was ~~February~~used ~~2016, we sold $750,000~~ in ~~Convertible~~operating ~~Promissory~~activities ~~Notes~~which ~~receiving~~primarily ~~$750,000~~represents incash ~~net~~operating ~~proceeds~~expenses ~~as there were no offering costs associated with this tranche. Management believes that these proceeds will be sufficient~~ to ~~fund~~principally ~~our~~support ~~planned~~continued ~~operations~~pre-clinical ~~through~~development, atdrug ~~least~~synthesis, ~~October~~and ~~31,~~administrative ~~2016~~activities.

InInvesting the event that we cannot raise sufficient capital within the required timeframes, it will have a material adverse effect on the Company’s liquidity, financial condition 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.Activities

~~(3)SIGNIFICANT~~During ~~ACCOUNTING~~the ~~POLICIES~~year ended October 31, 2015, there were no cash flows from investing activities. As of October 31, 2015, we had no material commitments for capital expenditures.

~~Use~~Financing ~~of Estimates and Assumptions~~Activities

~~The~~During ~~preparation of financial statements in conformity with accounting principles generally accepted in~~ the ~~United~~year ~~States~~ended ofOctober ~~America~~31, ~~requires~~2015, ~~management~~$259,515 ~~to make estimates and assumptions that affect the reported amounts~~ of ~~assets~~cash ~~and~~was ~~liabilities~~provided ~~and~~by ~~disclosure~~financing ofactivities ~~contingent~~which ~~assets~~primarily ~~and~~represents ~~liabilities at~~ the ~~date~~net ofproceeds ~~the~~from ~~financial statements and~~ the ~~reported~~sale ~~amounts~~ of ~~revenues~~Bridge ~~and expenses during the reported periods~~Notes. ~~Actual~~ ~~results may differ from these estimates.~~

~~Cash~~Management’s ~~and cash equivalents~~Outlook

WeManagement ~~consider~~believes ~~all~~that ~~investments~~existing cash on hand, combined with ~~original~~net ~~maturities~~proceeds of ~~three~~$900,000 ~~months~~received orfrom ~~less~~the tosale of Convertible Promissory Notes in February and April 2016, will be sufficient to fund the Company’s planned activities through at least October 31, 2016. This assumes that we continue to defer cash ~~equivalents~~payment of certain liabilities to our officers and certain key professionals. While these parties have continued to work with the Company despite this lack of payment, there is no assurance they will continue to do so, and the loss of a key management member could have a material adverse effect on the Company’s business prospects. Further, as of the date of this Report, 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 sell additional Convertible Promissory Notes, or limit the proceeds from the sale of such notes that are available to fund our ongoing operations.

~~Property~~We ~~and~~plan ~~Equipment~~to continue the sale of Convertible Promissory Notes to fund our operations until a longer term financing can be consummated. Our Board has authorized the sale of up to an additional $3.1 million in Convertible Promissory Notes excluding those sold through May 31, 2016. No assurance can be given that these efforts will be successful or adequately capitalize the Company.

~~Property~~The ~~and~~success ~~equipment~~of isour ~~recorded~~business atwill ~~historical~~depend ~~cost,~~in ~~and~~great ispart ~~comprised~~on ofour ~~computer~~ability ~~equipment~~to conduct research and ~~software~~development on the technology covered by the License. ~~Depreciation~~Our ~~and~~plan ~~amortization~~forecasts ofthe ~~property~~need ~~and~~for ~~equipment~~additional iscapital ~~provided~~beyond inthe ~~amounts~~next ~~sufficient~~twelve tomonths ~~relate~~even if we sell the ~~cost~~maximum number of ~~the~~Convertible ~~related~~Promissory ~~assets~~Notes authorized. Our ability to ~~operations~~conduct ~~over~~research ~~their~~and ~~estimated~~development ~~service~~activities ~~lives~~is ~~using~~greatly ~~the~~dependent ~~straight-line~~upon ~~method~~our financial resources. ~~The~~ ~~useful~~No ~~lives~~assurance ofcan be given that the ~~assets~~necessary ~~are~~financing ~~three~~will ~~years. Depreciation~~be ~~and~~available ~~amortization~~on ~~expense~~terms ~~amounted~~acceptable to $1us,~~019~~ ~~and~~if $1at all. If adequate additional funds are not available when required,~~566~~ ~~for~~we ~~the~~may ~~years~~have ~~ended~~to ~~October~~delay, 31scale-back, ~~2014~~or ~~and~~eliminate ~~2013~~certain aspects of our research, ~~respectively.~~testing and/or development activities.

~~Revenue~~In ~~Recognition~~the event that we cannot raise sufficient capital within the required timeframes, it will have a material adverse effect on the Company’s liquidity, financial condition and business prospects or could force the Company out of business.

~~Research~~RESULTS ~~and~~OF ~~Development Costs~~OPERATIONS

Research and ~~development costs are expensed as incurred.~~Development

~~Income~~During ~~Taxes~~the year ended October 31, 2015, research and development expenses decreased by $149,631 or 52% compared to the prior year. The decrease in research and development expense is primarily due to no activities under the research agreement with CSMC supporting pre-clinical development of Polycefin and synthesis of drug candidates that was completed in 2014.

WeGeneral ~~account for income taxes by recognizing deferred tax assets~~ and liabilities for the expected future income tax consequences of transactions that have 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 year in which the differences are expected to reverse. Deferred tax assets then may be reduced by a valuation allowance for amounts that do not satisfy specified realization criteria.Administrative

FGeneral and administrative expense decreased by $658,114 or approximately 58% for the year ended October 31, 2015 compared to the prior year. The decrease in expense was primarily the result of a decrease in non-8cash, share-based payment expense related to stock options and investor relation services as well as a reduction in legal fees.

~~Accounting~~Loss ~~rules also~~from prescribe 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.Operations

WeAs ~~currently have~~ a ~~full~~result 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~~factors ~~for~~described ~~income~~above, ~~taxes on~~ the ~~statements~~loss offrom operations ~~in any future periods in which we must record a liability. Interest and penalties totaled $0 and $0~~ for the ~~years~~year ended October 31, ~~2014 and 2013~~2015, ~~respectively. We~~decreased 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~~$807,745 ~~2014~~compared ~~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~~period.

~~Share-Based~~Other ~~Payments~~Expense

WeFor ~~account~~the ~~for~~year ~~share-based~~ended ~~payment~~October ~~costs~~31, at2015, ~~fair~~we ~~value~~recorded onother ~~the~~expense ~~date~~ of ~~grant~~$393,915 ~~and~~compared ~~recognition~~to of$211,644 ~~compensation~~for ~~over~~ the ~~service~~prior ~~period for awards expected to vest~~year. ~~For~~The ~~stock~~increase ~~options,~~in ~~the~~expense ~~estimation~~between ofyears ~~stock~~is ~~awards~~due ~~that will ultimately vest requires judgment, and~~ to ~~the~~interest ~~extent~~expense ~~actual results differ from our estimates, such amounts will be~~ recorded ason ~~a cumulative adjustment in~~ the ~~period~~Bridge ~~estimates~~Notes ~~are revised. We consider various factors when estimating expected forfeitures,~~ including ~~historical~~amortization ~~experience.~~of ~~Actual~~debt ~~results~~discount ~~may~~and ~~differ~~offering ~~substantially from these estimates~~costs.

WeNet 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.Loss

~~Earnings~~As ~~(Loss)~~a ~~Per~~result ~~Share~~of the factors described above, we recorded $1,007,430 of net loss for the year ended October 31, 2015 compared to a net loss of $1,632,904 in the prior year.

~~Earnings~~Off-Balance ~~(loss)~~Sheet 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.Arrangements

~~Shares~~The ofCompany ~~common~~does ~~stock~~not ~~from~~have ~~the~~any ~~exercise~~off-balance ofsheet ~~warrants~~arrangements ~~and~~that ~~convertible~~have ~~securities~~or ~~excluded~~are ~~from~~reasonably likely to have a current or future effect on the ~~calculation~~Company’s financial condition, changes in financial condition, revenues or expenses, results of ~~diluted~~operations, ~~loss~~liquidity, ~~per~~capital ~~share~~expenditures ~~are~~or ascapital ~~follows:~~resources that is material to investors.

	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	--

Contractual Obligations

*As ~~Assumes~~a ~~Bridge~~“smaller ~~Note~~reporting ~~conversion~~company” ~~price~~as defined by Item 10 of ~~$1.00~~Regulation ~~per~~S-K, ~~share~~the ~~see~~Company ~~Note~~is 5not ~~for~~required ~~conversion~~to ~~price~~provide ~~calculations~~this information.

~~F-9~~Item 7A. Quantitative and Qualitative Disclosures about Market Risk.

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

WeItem ~~operate in one business segment~~8. ~~The~~ ~~determination~~Financial ofStatements ~~reportable segments is based on the way management organizes financial information for making operating decisions~~ and ~~assessing~~Supplementary ~~performances~~Data. ~~All of our operations are located in the United States.~~

~~Concentration~~Audited financial statements begin on the following page of ~~Credit~~this ~~Risk~~Report.

We maintain a checking account with Wells Fargo Bank (“Wells”). The account is insured by the Federal Deposit Insurance Corporation (“FDIC”) for up to $250,000. At times our cash balance may exceed the FDIC insurance coverage. Management believes that the Company is not exposed to significant credit risk due to the financial position of Wells.48

~~Fair~~ARROGENE, ~~Value of Financial Instruments~~INC.

~~The~~INDEX ~~fair~~TO ~~value~~FINANCIAL ~~of cash, accounts payable and accrued liabilities, and notes payable approximate their carrying amounts due to the short-term maturities of these instruments.~~ STATEMENTS

~~Fair Value Measurements~~Page

WeReport 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~~Independent ~~different~~Registered ~~levels~~Public ~~depending~~Accounting 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:Firm

~~Level 1—Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities.~~ F-2

~~Level~~Financial 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; 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.Statements:

~~Level~~Consolidated ~~3—Unobservable~~Balance ~~inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.~~Sheets

~~We had no financial assets or liabilities subject to fair value measurement at October 31, 2014 or 2013.~~F-3

~~Supplemental~~Consolidated ~~Disclosures~~Statements of ~~Cash Flow Information~~Operations

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

F-4

~~Recently~~Consolidated ~~Issued~~Statement ~~Accounting~~of ~~Pronouncements~~Changes in Stockholders' Equity (Deficit)

~~In June 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014~~F-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. 5

~~F-10~~Consolidated Statements of Cash Flows

~~(4)LICENSE AGREEMENT~~F-6

OnNotes ~~December 23, 2009, we entered into the License with CSMC for all underlying intellectual properties, including patents, patents pending and future patent rights related~~ to ~~Polycefin. Pursuant~~Consolidated toFinancial the License, CSMC will participate in the future revenue of the Company by virtue of a 3.5% royalty on gross revenues, as defined in the License, realized by the Company directly related to the licensed intellectual properties. Further, we have the ability to enter into sub-licenses of the technology. We have also been granted certain additional rights on future derivative intellectual properties developed by CSMC. The CSMC Agreement expires on a country-by-country basis on the date that the last patent covered under the agreement expires (currently 2030).Statements

~~The CSMC Agreement, as amended, requires us to achieve certain other milestones in order to maintain the agreement. These include the following:~~ F-7

~~Begin development or enter into a joint venture, licensing or sub~~F-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;1

~~Expend~~REPORT atOF ~~least~~INDEPENDENT ~~$500,000~~REGISTERED inPUBLIC ~~the~~ACCOUNTING 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;FIRM

~~Provide~~To tothe ~~CSMC~~Board atof ~~least~~Directors ~~$150,000 (in aggregate) within at least a four year period to fund research~~ and ~~development~~Stockholders of ~~the~~Arrogene, ~~licensed patent rights and technical information;~~Inc.

~~On~~We orhave ~~before~~audited ~~December~~the accompanying consolidated balance sheets of Arrogene, Inc. (a Delaware enterprise) and subsidiary (the “Company”) as of October 31, 2015 and 2014 and the related consolidated statements of operations, stockholders’ equity (deficit) and cash flows for the ~~Company~~years ~~shall~~ended ~~have~~October ~~commenced~~31, a2015, ~~clinical~~and ~~trial~~2014. orThese ~~trials~~consolidated infinancial ~~connection~~statements ~~with~~are atthe ~~least~~responsibility ~~one~~of ~~intended~~the ~~commercial~~Company’s ~~use;~~management. Our responsibility is to express an opinion on these financial statements based on our audits.

We ~~believe~~conducted ~~that~~our weaudits ~~have~~in ~~achieved~~accordance ~~all~~with of the ~~required~~standards ~~milestones~~of ~~under~~ the ~~CSMC~~Public ~~Agreement~~Company ~~but~~Accounting inOversight ~~some~~Board ~~instances~~(United ~~the~~States). Those ~~achievement~~standards isrequire ~~subject~~that towe ~~interpretation~~plan and ~~ambiguous,~~perform ~~including~~the ~~our~~audit ~~belief~~to ~~that~~obtain ~~administrative~~reasonable ~~expenses~~assurance ~~incurred~~about inwhether ~~support of~~ the ~~Company’s~~consolidated ~~business~~financial ~~activities~~statements ~~meet~~are ~~the~~free ~~definition~~ of ~~“development~~material ~~and promotion” of the licensed technology~~misstatement. We ~~are~~The inCompany ~~negotiations~~is ~~with~~not ~~CSMC~~required to ~~amend~~have, ~~the~~nor ~~CSMC~~were ~~Agreement~~we engaged to ~~remove~~perform, ~~any~~an ~~ambiguity~~audit ~~and~~of ~~confirm~~its itinternal iscontrol inover ~~good~~financial ~~standing~~reporting. ~~CSMC~~ ~~has~~Our ~~provided~~audit usincluded noconsideration ~~notice~~of ~~indicating~~internal ~~that~~control ~~they~~over ~~believe~~financial wereporting ~~are~~as ~~not~~a inbasis ~~compliance~~for ~~with~~designing ~~the~~audit ~~CSMC~~procedures ~~Agreement.~~that ~~Additionally,~~are asappropriate ~~discussed further~~ in ~~Note~~the 9circumstances, webut ~~entered~~not ~~into~~for athe ~~research~~purpose ~~and~~of ~~development~~expressing ~~agreement~~an ~~with~~opinion ~~CSMC~~on ~~that satisfies~~ the ~~milestone~~effectiveness ~~requirement~~of ~~described~~the ~~above~~Company’s ~~regarding~~internal ~~funded~~control ~~research~~over atfinancial ~~CSMC~~reporting. ~~However~~ Accordingly, inwe ~~order~~express tono ~~extend~~such ~~the~~opinion. An ~~Company’s~~audit ~~cash~~also onincludes ~~hand~~examining, weon ~~have~~a ~~been~~test ~~deferring~~basis, ~~payment~~evidence tosupporting ~~CSMC~~the ofamounts ~~our~~and ~~obligations~~disclosures ~~under~~in the ~~agreement. During~~consolidated ~~2014~~financial statements, weassessing ~~resumed~~the ~~making~~accounting ~~periodic~~principles ~~payments~~used toand ~~CSMC~~significant ~~but~~estimates ~~our~~made ~~outstanding~~by ~~balance with them remains delinquent. Despite our delinquency~~management, ~~CSMC~~as ~~completed~~well ~~work~~as ~~under~~evaluating the ~~agreement~~overall ~~during~~consolidated ~~2014. As~~financial ofstatement ~~October~~presentation. ~~31,~~We ~~2014,~~believe wethat ~~had~~our anaudits ~~outstanding~~provide ~~liability~~a toreasonable ~~CSMC~~basis offor ~~$158,391~~our ~~under the research and development agreement~~opinion.

~~Further,~~In inour ~~the~~opinion, ~~event~~ the ~~Company~~consolidated ~~issues~~financial orstatements ~~sells~~referred ~~shares~~to ofabove ~~common~~present ~~stock~~fairly, ~~the~~in ~~CSMC~~all ~~Agreement~~material ~~requires~~respects, ~~that~~ the ~~Company~~financial ~~issue~~position toof ~~CSMC~~Arrogene, ~~additional~~Inc., ~~shares~~and Subsidiary as of ~~common~~October ~~stock~~31, ~~for~~2015 noand ~~additional~~2014, ~~consideration~~and sothe asresults toof ~~assure~~their ~~CSMC~~operations ~~will~~and ~~own~~their 5%cash offlows for the ~~total~~years ~~issued~~ended October 31, 2015 and ~~outstanding~~2014 ~~shares~~in ofconformity ~~the~~with ~~Company~~accounting ~~until~~principles ~~December~~generally ~~31,~~accepted ~~2015~~in the United States of America.

~~F-11~~The 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, 2015. 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.

~~(5) BRIDGE~~Rose, ~~NOTES~~Snyder & Jacobs LLP

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 offering costs. The Bridge Notes are due and payable one year after the close of the 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~~Rose, ~~then~~Snyder ~~the~~& ~~conversion price shall be 50% of the 30 day Volume Weighted Average Price per share as quoted on the over-the-counter market~~Jacobs, 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.LLP

WeEncino, 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.California

WeJuly 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 $20521,~~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.2016

We are also obligated to issue to the placement agents warrants to acquire shares of common stock equal to 10% of the securities underlying the Bridge Notes and Bridge Note Warrants (the “PA Bridge Note Warrants”). The PA Bridge Note Warrants have a life of 5 years and are exercisable at the conversion price of the Bridge Notes and the exercise price of the Bridge Note Warrants, 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 a derivative due to the Company having no active trading market for its common stock. We valued the PA Bridge Note Warrants at $35,700 using the BlackF-Scholes pricing model using the following assumptions: expected life 5 years, risk free interest rate 1.69% and annualized volatility 78.9%. We recorded the PA Bridge Note Warrants as a debt offering cost on the accompanying consolidated balance sheet. We are amortizing the PA Bridge Note Warrants over the life of the Bridge Notes. For the year ended October 31, 2014, we amortized $19,117, of PA Bridge Note Warrants which is included in interest expense on the accompanying condensed consolidated financial statements. 2

~~The~~ARROGENE, ~~effective rate of the Bridge Notes after taking into account the Bridge Note Warrants and PA Bridge Note Warrants is 44~~INC.~~5%.~~

~~Subsequent~~CONSOLIDATED toBALANCE ~~year end, we sold an additional $350,000 in Bridge Notes. See Note 10.~~SHEETS

~~F-12~~AS OF OCTOBER 31, 2015 AND 2014

(6)CONVERTIBLE NOTES


	2015	2014
ASSETS

Current assets:
Cash and cash equivalents	$ 35,204	$ 37,007
Prepaid expenses and deposit	8,250	13,592
Debt offering costs	19,659	65,244
Total current assets	63,113	115,843

Property and equipment, net of accumulated depreciation of $4,697 and $4,011 at October 31, 2015 and 2014, respectively	—	686

Total assets	$ 63,113	$ 116,529

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

LIABILITIES:
Current liabilities:
Accrued compensation	$ 380,249	$ 244,990
Payable to CSMC	53,506	158,391
Bridge notes, less discount of $35,700 and $99,330 at October 31, 2015 and 2014, respectively	1,014,300	600,670
Accrued legal fees	80,370	93,998
Related party payables	49,001	49,000
Common stock payable	246,400	246,400
Accrued interest	137,250	40,583
Other accrued liabilities	137,690	149,094
Convertible notes	10,000	10,000
Total current liabilities	2,108,766	1,593,126

Total liabilities	2,108,766	1,593,126

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; 22,215,860 and 21,375,860 shares issued and outstanding at October 31, 2015 and 2014, respectively	2,222	2,138
Additional paid-in capital	5,344,298	4,906,008
Accumulated deficit	(7,392,173)	(6,384,743)
Total stockholders’ equity (deficit)	(2,045,653)	(1,476,597)
Total liabilities and stockholders’ equity (deficit)	$ 63,113	$ 116,529

~~Commencing October 2010 through April 2011, we sold in private transactions an aggregate of $726,550 of Convertible Notes.~~ The ~~Convertible~~accompanying ~~Notes~~notes were initially convertible into shares of our common stock at $.30 per share (the “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 asintegral ~~converted~~part ~~basis, as~~ of ~~October~~these ~~31,~~consolidated ~~2014,~~financial ~~the estimated value of the Convertible Notes exceeds the principal balance by $27,333~~statements.

~~(7)STOCKHOLDERS’ EQUITY~~F-3

~~Common~~ARROGENE, ~~Stock~~INC.

OnCONSOLIDATED ~~August~~STATEMENTS ~~29,~~OF 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 shares were issuable in 100,000 increments for each quarter of service rendered. We valued these shares at $224,000 using the Black-Scholes option pricing model and recognized expense over the 12 months the services were rendered. For the years ended October 31, 2014 and 2013, we 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 a corresponding entry to liabilities on the accompanying consolidated balance sheet.OPERATIONS

~~Units~~FOR THE YEARS ENDED OCTOBER 31, 2015 AND 2014

During 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.


	2015	2014

REVENUE:	$ —	$ —

OPERATING EXPENSES:
General and administrative	477,405	1,135,519
Research and development	136,110	285,741
	613,515	1,421,260

Loss from operations	(613,515)	(1,421,260)

OTHER EXPENSE:
Interest	(393,915)	(211,644)
	(393,915)	(211,644)

NET LOSS	$ (1,007,430)	$ (1,632,904)

WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic and diluted	21,380,463	21,371,819

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

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

In connection with the sale of the Units during the year ended October 31, 2013, the placement agents earned warrants to acquire 78,000 shares of common stock consisting of 26,000 warrants exercisable at $1.00 per share, 26,000 warrants exercisable at $1.50 per share and 26,000 warrants exercisable at $2.00 per share. Each warrant expires five years from the date of issuance. We valued these warrants at $17,160 using the Black Scholes optionF-pricing model. We recorded the warrants as a reduction to the net proceeds from the sale of the Units with a corresponding increase to additional paid in capital. The placement agents voluntarily agreed to forgo the earning of warrants in connection with the Unit sale that took place during the year ended October 31, 2014.4

~~As of October 31~~ARROGENE, ~~2014, we had 6,358,358 warrants outstanding with weighted average remaining lives of 28 months and a weighted average exercise price of $1~~INC.~~44.~~

~~F-13~~CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

~~Stock~~FOR ~~Options~~THE YEARS ENDED OCTOBER 31, 2015 AND 2014

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.





	Preferred Stock		Common Stock
	Shares	Amount	Shares	Amount	APIC	Accumulated Deficit	Total
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)
Stock option compensation expense	—	—	—	—	75,883	—	75,883
Bridge note warrants	—	—	—	—

Filing Compare · ARROGENE, INC