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TABLE OF CONTENTS
TABLE OF CONTENTS 2

As filed with the Securities and Exchange Commission on July 11, 2013

Registration No. 333-189358

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



PRE-EFFECTIVE
AMENDMENT NO. 1 TO

FORM S-1

REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933



Onconova Therapeutics, Inc.
(Exact name of registrant as specified in its charter)



Delaware
(State or other jurisdiction of
incorporation or organization)
  2834
(Primary Standard Industrial
Classification Code Number)
  22-3627252
(I.R.S. Employer
Identification Number)

375 Pheasant Run
Newtown, PA 18940
(267) 759-3680
(Address, including zip code and telephone number, including
area code, of registrant's principal executive offices)



Ramesh Kumar, Ph.D.
President and Chief Executive Officer
Onconova Therapeutics, Inc.
375 Pheasant Run
Newtown, PA 18940
(267) 759-3680
(Name, address, including zip code and telephone number, including area code, of agent for service)



Copies to:

David S. Rosenthal, Esq.
James J. Marino, Esq.
Dechert LLP
1095 Avenue of the Americas
New York, New York 10036
(212) 698-3500
  Andrew S. Williamson, Esq.
Brent B. Siler, Esq.
Brian F. Leaf, Esq.
Cooley LLP
11951 Freedom Drive
Reston, Virginia 20190
(703) 456-8000



Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this registration statement.

          If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended (the "Securities Act"), check the following box.     o

          If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.     o

          If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.     o

          If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.     o

          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 the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  o   Accelerated filer  o   Non-accelerated filer  ý
(Do not check if a
smaller reporting company)
  Smaller reporting company  o



CALCULATION OF REGISTRATION FEE

               
 
Title of Each Class of Securities
to be Registered

  Amount to be
Registered(1)

  Proposed Maximum
Offering Price Per
Share

  Proposed Maximum
Aggregate Offering
Price(2)

  Amount of
Registration Fee(3)

 

Common Stock, $0.01 par value per share

  5,307,692   $14.00   $74,307,688   $10,136

 

(1)
Includes 692,307 shares of common stock issuable upon exercise of an option to purchase additional shares granted to the underwriters.

(2)
Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(a) under the Securities Act of 1933, as amended, based on an estimate of the proposed maximum aggregate offering price.

(3)
$10,230 was previously paid on June 14, 2013.

           The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment that specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.


Table of Contents

The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting offers to buy these securities in any state or other jurisdiction where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED JULY 11, 2013

PRELIMINARY  PROSPECTUS

GRAPHIC

4,615,385 Shares

Onconova Therapeutics, Inc.

Common Stock
$            per share

        This is the initial public offering of our common stock. We are selling 4,615,385 shares of common stock in this offering. We currently expect the initial public offering price to be between $12.00 and $14.00 per share of common stock.

        We have granted the underwriters an option to purchase up to 692,307 additional shares of common stock to cover over-allotments.

        We have applied to list our common stock on the NASDAQ Global Market under the symbol "ONTX."



         Investing in our common stock involves risks. See "Risk Factors" beginning on page 11.

        We are an "emerging growth company" under applicable Securities and Exchange Commission rules and will be eligible for reduced public company reporting requirements. See "Summary—Implications of Being an Emerging Growth Company."

         Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.



 
  Per Share   Total  

Public Offering Price

  $     $    

Underwriting Discounts(1)

  $     $    

Proceeds to Onconova Therapeutics, Inc. (before expenses)

  $     $    

(1)
We refer you to "Underwriting" beginning on page 168 for additional information regarding underwriting compensation.

        Baxter Healthcare SA, one of our stockholders and collaborators, and our chairman of the board of directors, as well as certain other of our existing stockholders, including certain of our directors, have indicated an interest in purchasing up to an aggregate of $26.0 million of shares of our common stock in this offering at the initial offering price. However, because indications of interest are not binding agreements or commitments to purchase, the underwriters may determine to sell more, less or no shares in this offering to any of these stockholders, and any of these stockholders may determine to purchase more, less or no shares in this offering. The underwriters will receive the same underwriting discount on any shares purchased by these stockholders as they will on any other shares sold to the public in this offering.

        The underwriters expect to deliver the shares to purchasers on or about                                    , 2013 through the book-entry facilities of The Depository Trust Company.



Citigroup   Leerink Swann



Piper Jaffray



Janney Montgomery Scott

   

            , 2013


Table of Contents

         We are responsible for the information contained in this prospectus. We have not authorized anyone to provide you with different information, and we take no responsibility for any other information others may give you. If anyone provides you with different or inconsistent information, you should not rely on it. We are not, and the underwriters are not, making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should not assume that the information contained in this prospectus is accurate as of any date other than the date on the front of this prospectus.




TABLE OF CONTENTS

 
  Page

Summary

  1

Risk Factors

  11

Special Note Regarding Forward-Looking Statements and Industry Data

  48

Use of Proceeds

  50

Dividend Policy

  50

Capitalization

  51

Dilution

  53

Selected Consolidated Financial Data

  55

Management's Discussion and Analysis of Financial Condition and Results of Operations

  56

Business

  85

Management

  122

Executive and Director Compensation

  131

Certain Relationships and Related Party Transactions

  149

Principal Stockholders

  154

Description of Capital Stock

  157

Shares Eligible for Future Sale

  161

Material U.S. Federal Income Tax Considerations for Non-U.S. Holders of our Common Stock

  164

Underwriting

  168

Legal Matters

  175

Experts

  175

Where You Can Find More Information

  175

Index to Consolidated Financial Statements

  F-1

Table of Contents

 


SUMMARY

         This summary highlights certain information about us and this offering contained elsewhere in this prospectus. Because it is only a summary, it does not contain all of the information that you should consider before investing in shares of our common stock and it is qualified in its entirety by, and should be read in conjunction with, the more detailed information appearing elsewhere in this prospectus. Before you decide to invest in our common stock, you should read the entire prospectus carefully, including "Risk Factors" beginning on page 10 and the consolidated financial statements and related notes included in this prospectus.

        Unless the context indicates otherwise, as used in this prospectus, the terms "Onconova," "Onconova Therapeutics," "we," "us," "our," "our company" and "our business" refer to Onconova Therapeutics, Inc.

Overview

        We are a clinical-stage biopharmaceutical company focused on discovering and developing novel small molecule drug candidates to treat cancer. Using our proprietary chemistry platform, we have created an extensive library of targeted anti-cancer agents designed to work against specific cellular pathways that are important to cancer cells. We believe that the drug candidates in our pipeline have the potential to be efficacious in a wide variety of cancers without causing harm to normal cells. We have three clinical-stage product candidates and six preclinical programs.

         Rigosertib , our most advanced product candidate, is being tested in a number of ongoing Phase 2 and Phase 3 clinical trials. We are conducting a pivotal Phase 3 trial of rigosertib under a Special Protocol Assessment, or SPA, from the U.S. Food and Drug Administration, or FDA, for higher risk myelodysplastic syndromes, or MDS. We expect to report top-line overall survival results from this trial in the fourth quarter of 2013 or the first quarter of 2014. We are also evaluating rigosertib in a Phase 3 trial for metastatic pancreatic cancer, in two Phase 2 trials for transfusion-dependent lower risk MDS, and in a Phase 2 trial for head and neck cancers. We have tested rigosertib in more than 850 patients with solid tumors and hematological diseases. Rigosertib has been granted orphan drug status for MDS in both the United States and Europe as well as orphan drug status for pancreatic cancer in the United States. Baxter Healthcare SA, or Baxter, a subsidiary of Baxter International Inc., has commercialization rights for rigosertib in Europe and SymBio Pharmaceuticals Limited, or SymBio, has commercialization rights in Japan and Korea. We have retained development and commercialization rights to rigosertib in the rest of the world, including in the United States.

        Rigosertib is an inhibitor of two important cellular signaling pathways: phosphoinositide 3-kinase, or PI3K, and polo-like kinase, or PLK, both of which are frequently over-active in cancer cells. PI3K signaling promotes the growth and survival of cells under stressful conditions, such as under low oxygen levels that are often found in tumors. By inhibiting the PI3K pathway in cancer cells, rigosertib promotes tumor cell apoptosis, or programmed cell death.

        The PLK pathway has a critical role in maintaining proper chromosome organization and sorting during cell division. By modulating the PLK pathway, rigosertib stops cancer cells at late stages of the cell division cycle, which leads to chromosome disorganization and death in these cells. In normal cells, rigosertib pauses progression of the cell cycle in the early stages, without causing harm or death to these cells.

        Due to this dual effect of inhibiting both the PI3K and PLK pathways, and thereby effecting both tumor cell survival and division, we believe that rigosertib has potential to treat a variety of cancer types, including hematological diseases and solid tumors.

 

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        We are testing both intravenous and oral formulations of rigosertib, referred to as rigosertib IV and rigosertib Oral, in clinical trials.

    Rigosertib IV in higher risk MDS:   We are evaluating rigosertib IV in a multi-center, pivotal Phase 3 trial under an SPA from the FDA in patients with higher risk MDS who failed hypomethylating agent therapy. MDS is a group of blood disorders that affect bone marrow function. We believe that there is a significant medical need for new therapies to treat MDS patients who have failed or cannot tolerate treatment with the hypomethylating drugs azacitidine (Vidaza®) or decitabine (Dacogen®), which represent the current standard of care for higher risk MDS patients. We completed enrollment of 270 patients in this trial in May 2013 and expect to report top-line overall survival results in the fourth quarter of 2013 or the first quarter of 2014. Of the 30 evaluable MDS patients in four early-stage Phase 1/2 trials of rigosertib IV involving 39 refractory MDS patients, we observed objective responses in 12 patients, five of which were complete bone marrow responses. To our knowledge, there are no other current Phase 3 trials in this patient population. If we achieve positive results in this trial, we intend to submit a New Drug Application, or NDA, to the FDA in the second half of 2014, and a Marketing Authorization Application, or MAA, to the European Medicines Agency, or the EMA, by the fourth quarter of 2014 or the first quarter of 2015 for marketing approval of rigosertib IV.

    A provider of marketing analytics and data to the biopharmaceutical industry has estimated that, for 2011 in the United States, the diagnosed incidence of MDS was approximately 15,600 and the prevalence of MDS was approximately 52,000. According to the same marketing analytics firm, approximately 23% of MDS patients are estimated to fall into the categories of MDS characterized as higher risk.

    Rigosertib IV in pancreatic cancer:   We are conducting a multi-center Phase 3 trial of rigosertib IV in combination with gemcitabine, a widely used chemotherapy drug, for the first-line treatment of metastatic pancreatic cancer patients. In March 2013, we completed enrollment of 150 patients in this trial and we expect results of the pre-planned interim analysis for overall survival in the fourth quarter of 2013 or the first quarter of 2014. The American Cancer Society estimates that 45,200 new cases of pancreatic cancer will be diagnosed in the United States in 2013.

    Rigosertib Oral in lower risk MDS:   We are evaluating rigosertib Oral in two Phase 2 trials as a first-line treatment for transfusion-dependent, lower risk MDS patients. The quality of life of these patients could be significantly improved by lowering the number of required blood transfusions or eliminating the need for transfusions altogether. We reported initial response and safety data from the first Phase 2 trial in June 2013 and expect to complete enrollment and present overall results from this trial in December 2013. Upon completion of the first Phase 2 trial, we will meet with the FDA to discuss an approval pathway for rigosertib Oral as a first-line treatment in lower risk MDS patients. We expect to complete enrollment in the second Phase 2 trial in lower risk, transfusion-dependent MDS patients who have failed erythroid stimulating agents in the second half of 2014. Approximately 77% of MDS patients are estimated to fall into the categories of MDS characterized as lower risk.

    Rigosertib Oral in head and neck cancers:   We are evaluating rigosertib Oral in a Phase 2 trial in patients with head and neck cancers. We expect to complete enrollment of 80 patients in this trial in the second half of 2014. The National Cancer Institute estimated that the 2012 incidence of head and neck cancers was more than 52,000 cases in the United States.

        To accelerate and broaden the development of rigosertib, we entered into a development and licensing agreement with Baxter in 2012 to commercialize rigosertib in Europe. In 2011, we entered into a licensing agreement with SymBio to commercialize rigosertib in Japan and Korea. We have retained development and commercialization rights to rigosertib in the rest of the world, including the

 

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United States. We will explore a variety of alternatives for the commercialization of rigosertib in territories we currently retain, including direct commercialization, co-promotion or selective out-licensing of rights to a third party.

        Our second clinical-stage product candidate, ON 013105, is in a Phase 1 trial in patients with relapsed or refractory lymphoma, including an aggressive form of non-Hodgkin's lymphoma identified as mantle cell lymphoma, or MCL, and acute lymphoid leukemia, or ALL. A critical defect in many cancer cells is the uncontrolled expression of cyclin D1, a protein essential for normal cell division. Cyclin D1 is over-expressed in several hematological diseases, including B-cell lymphomas, such as MCL. ON 013105 suppresses the accumulation of cyclin D1 in cancer cells. In 2011, we suspended enrollment in this Phase 1 trial because enrollment of patients was occurring slowly, and as a result, our inventory of ON 013105 clinical trial materials expired. We plan to restart enrollment in this trial with newly manufactured clinical trial materials at a new clinical trial site in the fourth quarter of 2013.

        Our third clinical-stage product candidate, recilisib, is being developed in collaboration with the U.S. Department of Defense, or DoD, for acute radiation syndromes, or ARS. We have conducted animal studies and clinical trials of recilisib under the FDA's Animal Efficacy Rule, which permits marketing approval for new medical countermeasures for which human efficacy studies are not feasible or ethical, by relying on evidence from animal studies in appropriate animal models to support efficacy in humans. We have completed four Phase 1 trials to evaluate the safety and pharmacokinetics of recilisib in healthy human adult subjects using both subcutaneous and oral formulations. We have received orphan drug designation for recilisib for ARS in the United States.

        The development status of our three clinical-stage product candidates is summarized below:


Clinical-Stage Product Candidates

GRAPHIC

        In addition to our three clinical-stage product candidates, we are advancing six preclinical programs that target kinases, cellular metabolism or division.

        We have broad-based capabilities that span drug discovery and clinical development, from medicinal chemistry and evaluation in biochemical, cell-based and animal models, through Phase 3 trials and regulatory filings in the United States, Europe and India. Our discovery program is based on a proprietary chemistry platform comprising more than 150 novel core chemical structures. Our

 

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chemistry and screening approaches aim to discover new drug candidates that increase efficacy and help overcome resistance to therapy in cancer cells, while minimizing their toxicity to normal cells. Our intellectual property portfolio includes more than 100 issued patents and over 90 patent applications, either owned by us or licensed exclusively to us, including patents covering our most advanced product candidate, rigosertib. These patents and licenses cover composition-of-matter, process, formulations and method-of-treatment claims for our clinical-stage product portfolio.

Our Strategy

        We are committed to delivering novel treatments to cancer patients. We are focused on discovering and developing targeted small molecule anti-cancer product candidates. The key components of our strategy are to:

    Seek Regulatory Approval of Rigosertib in Myelodysplastic Syndromes and Solid Tumors

    For higher risk MDS patients who have failed azacitidine or decitabine therapy: We completed enrollment of a 270-patient Phase 3 trial with rigosertib IV in higher risk MDS patients in May 2013 and expect to report top-line overall survival results from this trial in the fourth quarter of 2013 or the first quarter of 2014. If we achieve positive results in this trial, we intend to submit an NDA to the FDA in the second half of 2014, and an MAA to the EMA by the fourth quarter of 2014 or the first quarter of 2015 for marketing approval of rigosertib IV.

    For first-line treatment of transfusion-dependent, lower risk MDS patients: We reported initial response and safety data from the first Phase 2 trial in June 2013 and expect to complete enrollment and present overall results from this trial in December 2013. Upon completion of the first Phase 2 trial, we will meet with the FDA to discuss an approval pathway for rigosertib Oral as a first-line treatment in lower risk MDS patients.

    For first-line treatment of patients with previously untreated metastatic pancreatic cancer: We are conducting a randomized Phase 3 trial with rigosertib IV in combination with gemcitabine and expect the results of the pre-planned interim analysis for overall survival in the fourth quarter of 2013 or the first quarter of 2014. We will use these data to assess further development of rigosertib IV in this indication.

    For patients with head and neck cancers: We are conducting a Phase 2 trial with rigosertib Oral in patients with head and neck cancers. We expect to complete enrollment of 80 patients in this Phase 2 trial in the second half of 2014.

    Continue Development of Our Pipeline

    Advance clinical development of ON 013105 for the treatment of various lymphomas and leukemias: We are conducting a Phase 1 clinical trial of ON 013105 for various lymphomas and leukemias, including MCL and ALL. We believe that this clinical study may provide proof-of-concept of the proposed mechanism of action of ON 013105. We have suspended enrollment in this Phase 1 trial; however, we plan to restart its enrollment in the fourth quarter of 2013.

    Advance recilisib for the treatment of acute radiation syndromes: We are seeking collaborations, grants and government funding to conduct nonhuman primate studies to demonstrate recilisib's safety and efficacy, as well as to identify predictive biomarkers in animals and healthy human volunteers.

    Advance our preclinical programs via collaborations: Building on the experience and knowledge we have gained from our clinical-stage product candidates, we have identified

 

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        several lead molecules in our preclinical pipeline. We intend to explore additional collaborations to further the development of these product candidates.

    Maintain Flexibility in Commercializing and Maximizing the Value of our Programs

    While retaining U.S. and other territorial rights, we have entered into collaborations with Baxter to commercialize rigosertib in Europe and with SymBio to commercialize rigosertib in Japan and Korea. We will explore a variety of alternatives for the commercialization of rigosertib in territories we currently retain, including direct commercialization, co-promotion or selective out-licensing of rights to a third party.

Risks Associated with Our Business

        Our ability to implement our business strategy is subject to numerous risks and uncertainties. As a clinical-stage biopharmaceutical company, we face many risks inherent in our business and our industry generally. You should carefully consider all of the information set forth in this prospectus and, in particular, the information under the heading "Risk Factors," prior to making an investment in our common stock. These risks include, among others, the following:

    our success is primarily dependent on the regulatory approval and commercialization of rigosertib;

    we are subject to regulatory approval processes that are lengthy, time consuming and unpredictable. We may not obtain approval for any of our product candidates from the FDA or foreign regulatory authorities;

    we have no source of commercial revenue, may never become profitable and may incur substantial and increasing net losses for the foreseeable future as we continue development of, seek regulatory approvals for, and potentially begin to commercialize our product candidates;

    we may need to obtain additional funding to continue operations;

    it is difficult and costly to protect our intellectual property rights;

    we may be unable to recruit or retain key employees, including our senior management team;

    we depend on the performance of third parties, including contract research organizations and third-party manufacturers; and

    we will need to successfully remediate a material weakness in our internal control over financial reporting.

Our Corporate Information

        We were formed as Onconova Therapeutics, Inc., a corporation under the laws of the State of Delaware, in December 1998 and commenced operations in January 1999. Our primary executive offices are located at 375 Pheasant Run, Newtown, PA 18940 and our telephone number is (267) 759-3680. Our website address is http://www.onconova.com . The information contained in, or that can be accessed through, our website is not part of this prospectus.

        We have registered several U.S. trademarks, including Onconova Therapeutics, Inc. All other trademarks, trade names or service marks referred to in this prospectus are the property of their respective owners.

Implications of Being an Emerging Growth Company

        We are an "emerging growth company," as defined in Section 2(a) of the Securities Act of 1933, as amended, or the Securities Act, as modified by the Jumpstart Our Business Act, or JOBS Act. As such,

 

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we are eligible to take advantage of 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 of 2002, or the Sarbanes-Oxley Act;

    being permitted to present only two years of audited financial statements and only two years of related Management's Discussion and Analysis of Financial Condition and Results of Operations;

    reduced disclosure obligations regarding executive compensation;

    not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor's report providing additional information about the audit and the financial statements; and

    exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

        We may choose to take advantage of some or all of the available exemptions. We have taken advantage of some of the reduced reporting burdens in this prospectus. Accordingly, the information contained herein may be different than the information you receive from other public companies in which you hold stock. We do not know if some investors will find our shares less attractive as a result of our utilization of these or other exemptions. The result may be a less active trading market for our shares and our share price may be more volatile.

        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. In other words, an "emerging growth company" can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.

        We will remain an "emerging growth company" until the earliest of (a) the last day of the first fiscal year in which our annual gross revenues exceed $1.0 billion, (b) the date that we become a "large accelerated filer" as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, or the Exchange Act, which would occur if the market value of our shares that are held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, (c) the date on which we have issued more than $1.0 billion in nonconvertible debt during the preceding three-year period or (d) the last day of our fiscal year containing the fifth anniversary of the date on which shares of our common stock become publicly traded in the United States.

 

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THE OFFERING

Common stock offered by us

    4,615,385 shares

Common stock to be outstanding after this offering

 

20,062,996 shares

Over-allotment option

 

     692,307 shares

Use of proceeds

 

We estimate that the net proceeds from this offering will be approximately $52.5 million, or approximately $60.9 million if the underwriters exercise their over-allotment option in full, assuming an initial public offering price of $13.00 per share, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. We expect to use the proceeds of this offering to fund the overall development of our product candidates, and for working capital and general corporate purposes. See "Use of Proceeds" for a more complete description of the intended use of proceeds from this offering.

Proposed NASDAQ Global Market symbol

 

ONTX

Risk factors

 

You should read the "Risk Factors" section of, and all of the other information set forth in, this prospectus for a discussion of factors to consider carefully before deciding to invest in shares of our common stock.



        Unless otherwise noted, the information in this prospectus assumes:

    no exercise by the underwriters of their over-allotment option to purchase up to 692,307 additional shares of common stock from us;

    the conversion of all outstanding shares of our preferred stock into shares of our common stock, which will occur immediately prior to consummation of this offering;

    the implementation of a proposed 1-for-1.333 reverse stock split of our common stock, which was effected on July     , 2013; and

    no purchases by Baxter Healthcare SA, our chairman of the board of directors, or certain other of our existing stockholders, including certain of our directors, who have indicated an interest in purchasing up to an aggregate of $26.0 million of shares of our common stock in this offering.

        The number of shares of common stock to be outstanding after this offering is based on 15,447,611 shares of common stock outstanding as of March 31, 2013, after giving effect to the conversion of our outstanding shares of preferred stock into 12,838,127 shares of common stock, and excludes as of that date:

    4,597 shares of common stock issuable upon exercise of warrants;

    2,792,169 shares of common stock issuable upon exercise of outstanding stock options, with a weighted average exercise price of $8.54 per share; and

    3,315,662 shares of common stock that will be reserved for future issuance under our 2013 Equity Compensation Plan, which will become effective immediately prior to the listing of our common stock on the NASDAQ Global Market.

 

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        Baxter Healthcare SA, one of our stockholders and collaborators, and our chairman of the board of directors, as well as certain other of our existing stockholders, including certain of our directors, have indicated an interest in purchasing up to an aggregate of $26.0 million of shares of our common stock in this offering, or 2,000,000 shares at an assumed initial public offering price of $13.00 per share, which is the midpoint of the price range set forth on the cover page of this prospectus. However, because indications of interest are not binding agreements or commitments to purchase, the underwriters may determine to sell more, less or no shares in this offering to any of these stockholders, and any of these stockholders may determine to purchase more, less or no shares in this offering.

 

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SUMMARY CONSOLIDATED FINANCIAL DATA

        The following table summarizes our historical financial data as of the dates indicated and for the periods then ended. We have derived the following statement of operations data for the years ended December 31, 2011 and 2012 from our audited consolidated financial statements included elsewhere in this prospectus. We have derived the following statement of operations data for the three months ended March 31, 2012 and 2013 and balance sheet data as of March 31, 2013 from our unaudited condensed consolidated financial statements included elsewhere in this prospectus. Our historical results are not necessarily indicative of the results that may be expected in the future, and our interim period results are not necessarily indicative of results to be expected for a full year or any other interim period. The summary of our consolidated financial data set forth below should be read together with our consolidated financial statements and the related notes to those statements, as well as "Management's Discussion and Analysis of Financial Condition and Results of Operations," appearing elsewhere in this prospectus.

 
  Year Ended December 31,   Three Months Ended March 31,  
 
  2011   2012   2012   2013  

Consolidated Statement of Operations Data:

                         

Revenue

  $ 1,487,000   $ 46,190,000   $ 198,000   $ 1,116,000  

Operating expenses:

                         

General and administrative

    6,436,000     15,707,000     2,460,000     3,346,000  

Research and development

    22,624,000     52,762,000     8,448,000     12,756,000  
                   

Total operating expenses

    29,060,000     68,469,000     10,908,000     16,102,000  
                   

Loss from operations

    (27,573,000 )   (22,279,000 )   (10,710,000 )   (14,986,000 )

Change in fair value of warrant liability

    1,287,000     367,000     (609,000 )   14,000  

Interest expense

    (19,000 )   (8,608,000 )   (21,000 )    

Other income, net

    11,000     608,000     541,000     127,000  
                   

Net loss before income taxes expense

    (26,294,000 )   (29,912,000 )   (10,799,000 )   (14,845,000 )

Income taxes

                 
                   

Net loss

    (26,294,000 )   (29,912,000 )   (10,799,000 )   (14,845,000 )

Accretion of preferred stock

    (4,020,000 )   (3,953,000 )   (1,231,000 )   (1,019,000 )
                   

Net loss applicable to common stockholders

  $ (30,314,000 ) $ (33,865,000 ) $ (12,030,000 ) $ (15,864,000 )
                   

Per share information:

                         

Net loss per share of common stock, basic and diluted(1)

  $ (14.18 ) $ (15.35 ) $ (5.53 ) $ (6.08 )
                   

Basic and diluted weighted average shares outstanding(1)

    2,137,403     2,206,888     2,173,553     2,607,406  
                   

Pro forma net loss per share of common stock, basic and diluted(1)

        $ (2.36 )       $ (0.96 )
                       

Basic and diluted pro forma weighted average shares outstanding(1)

          12,668,663           15,445,726  
                       

 

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  As of March 31, 2013  
 
  Actual   Pro
Forma(2)
  Pro Forma
As Adjusted(3)(4)
 

Consolidated Balance Sheet Data:

                   

Cash and cash equivalents

  $ 67,307,000   $ 67,307,000     119,807,000  

Total assets

    70,759,000     70,759,000     123,259,000  

Total liabilities

    42,544,000     42,544,000     42,544,000  

Accumulated deficit

    (183,198,000)     (183,198,000)     (183,198,000 )

Total stockholders' (deficit) equity

    (174,119,000)     28,215,000     80,715,000  

(1)
See Note 2 to our audited consolidated financial statements for an explanation of the method used to calculate net loss per share of common stock, basic and diluted, pro forma net loss per share of common stock, basic and diluted, and the basic and diluted pro forma weighted average shares outstanding used to calculate the pro forma per share amounts.

(2)
Gives pro forma effect to the conversion of all outstanding shares of our preferred stock into 12,838,127 shares of our common stock, which will occur immediately prior to consummation of this offering.

(3)
Gives further effect to the sale of 4,615,385 shares of our common stock in this offering, assuming an initial public offering price of $13.00 per share, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting estimated underwritten discounts and commissions and estimated offering expenses payable by us.

(4)
A $1.00 increase or decrease in the assumed initial public offering price of $13.00 per share, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase or decrease the pro forma as adjusted amount of each of cash and cash equivalents, total assets and total stockholders' equity by $4.3 million, assuming the number of shares of common stock offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. Each increase or decrease of 1.0 million shares in the number of shares of common stock offered by us at the assumed public offering price would increase or decrease the pro forma as adjusted amount of each of cash and cash equivalents, total assets and total stockholders' equity by $12.1 million, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

 

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RISK FACTORS

         Investing in our common stock involves a high degree of risk. You should carefully consider the risks described below, together with the other information contained in this prospectus, including our consolidated financial statements and the related notes appearing at the end of this prospectus, before making your decision to invest in shares of our common stock. We cannot assure you that any of the events discussed in the risk factors below will not occur. These risks could have a material and adverse impact on our business, results of operations, financial condition and cash flows and our future prospects would likely be materially and adversely affected. If that were to happen, the trading price of our common stock could decline, and you could lose all or part of your investment.

Risks Related to Our Financial Position and Capital Needs

We have incurred significant losses since our inception and anticipate that we will continue to incur losses in the future.

        We are a clinical-stage biopharmaceutical company. Investment in biopharmaceutical product development is highly speculative because it entails substantial upfront capital expenditures and significant risk that a product candidate will fail to gain regulatory approval or become commercially viable. We do not have any products approved by regulatory authorities for marketing and have not generated any revenue from product sales to date, and we continue to incur significant research, development and other expenses related to our ongoing operations. As a result, we are not profitable and have incurred losses in every reporting period since our inception in 1998. For the year ended December 31, 2012 and the three months ended March 31, 2013, we reported a net loss of $29.9 million and $14.8 million, respectively, and we had an accumulated deficit of $183.2 million at March 31, 2013.

        We expect to continue to incur significant expenses and operating losses for the foreseeable future. We anticipate these losses to increase as we continue the research and development of, and seek regulatory approvals for, our product candidates, and potentially begin to commercialize any products that may achieve regulatory approval. We may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business. The size of our future net losses will depend, in part, on the rate of future growth of our expenses and our ability to generate revenues. If any of our product candidates fail in clinical trials or do not gain regulatory approval, or if approved, fail to achieve market acceptance, we may never become profitable. Even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods.

We have a limited operating history, which may make it difficult for you to evaluate the success of our business to date and to assess our future viability.

        Our operations to date have been limited to organizing and staffing our company, acquiring product and technology rights, discovering novel molecules and conducting product development activities for our product candidates. We have not yet obtained regulatory approval for any of our product candidates. Consequently, any predictions about our future success, performance or viability may not be as accurate as they could be if we had a longer operating history or approved products on the market.

We currently have no source of product revenue and may never become profitable.

        To date, we have not generated any revenues from commercial product sales. Our ability to generate revenue from product sales and achieve profitability will depend upon our ability to successfully commercialize products, including any of our current product candidates, or other product candidates that we may in-license or acquire in the future. Even if we are able to successfully achieve regulatory approval for these product candidates, we do not know when any of these products will

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generate revenue from product sales for us, if at all. Our ability to generate revenue from product sales from our current or future product candidates also depends on a number of additional factors, including our ability to:

        In addition, because of the numerous risks and uncertainties associated with product development, including that our product candidates may not advance through development or achieve the endpoints of applicable clinical trials, we are unable to predict the timing or amount of increased expenses, or when or if we will be able to achieve or maintain profitability. Even if we are able to complete the development and regulatory process for any product candidates, we anticipate incurring significant costs associated with commercializing these products.

        Even if we are able to generate revenues from the sale of our products, we may not become profitable and may need to obtain additional funding to continue operations. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce our operations.

We are likely to require additional capital to fund our operations and if we fail to obtain necessary financing, we may be unable to complete the development and potential commercialization of our product candidates.

        Our operations have consumed substantial amounts of cash since inception. We expect to continue to spend substantial amounts to advance the clinical development of our product candidates and launch and commercialize any product candidates for which we receive regulatory approval, including potentially building our own commercial organization. We believe that the net proceeds from this offering, together with existing cash and cash equivalents and interest thereon, will be sufficient to fund our projected operating requirements for at least the next 12 months. However, we will likely require additional capital for the further development and potential commercialization of our product candidates and may also need to raise additional funds sooner to pursue a more accelerated development of our product candidates.

        Our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement and involves risks and uncertainties, and actual results could vary as a result of a number of factors, including the factors discussed elsewhere in this "Risk Factors" section. We have based this estimate on assumptions that may prove to be wrong, and

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we could utilize our available capital resources sooner than we currently expect. Our future funding requirements, both near and long-term, will depend on many factors, including, but not limited to:

        If we are unable to expand our operations or otherwise capitalize on our business opportunities due to a lack of capital, our ability to become profitable will be compromised.

Raising additional capital may cause dilution to our existing stockholders, restrict our operations or require us to relinquish rights to our technologies or product candidates.

        Until we can generate substantial revenue from product sales, if ever, we expect to seek additional capital through a combination of private and public equity offerings, debt financings, strategic collaborations and alliances and licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interests of existing stockholders will be diluted, and the terms may include liquidation or other preferences that adversely affect the rights of existing stockholders. Debt financing, if available, may involve agreements that include restrictive covenants limiting our ability to take important actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional funds through strategic collaborations and alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies or product candidates, or grant licenses on terms that are not favorable to us. If we are unable to raise additional funds through equity or debt financing when needed, we may be required to delay, limit, reduce or terminate our product development or commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

Unstable market and economic conditions may have serious adverse consequences on our business, financial condition and stock price.

        As has been widely reported, global credit and financial markets have been experiencing extreme disruptions over the past several years, including severely diminished liquidity and credit availability,

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declines in consumer confidence, declines in economic growth, increases in unemployment rates and uncertainty about economic stability. There can be no assurance that further deterioration in credit and financial markets and confidence in economic conditions will not occur. Our general business strategy may be compromised by economic downturns and volatile business environment and unpredictable and unstable market conditions. If the current equity and credit markets deteriorate, or do not improve, it may make any necessary debt or equity financing more difficult to secure, more costly, or more dilutive. Failure to secure any necessary financing in a timely manner and on favorable terms could harm our growth strategy, financial performance and stock price and could require us to delay or abandon our business and clinical development plans. In addition, there is a risk that one or more of our current service providers, manufacturers and other partners may not survive these difficult economic times, which could directly affect our ability to attain our operating goals on schedule and on budget.

Risks Related to Our Business and Industry

Our future success is dependent primarily on the regulatory approval and commercialization of our product candidates, including rigosertib, which is currently undergoing Phase 3 clinical trials.

        We do not have any products that have gained regulatory approval. Currently, our only clinical-stage product candidates are rigosertib, ON 013105 and recilisib, and rigosertib is our only late-stage product candidate.

        As a result, our business is substantially dependent on our ability to obtain regulatory approval for, and, if approved, to successfully commercialize rigosertib and, to a lesser degree, ON 013105 and recilisib in a timely manner. We cannot commercialize product candidates in the United States without first obtaining regulatory approval for the product from the FDA; similarly, we cannot commercialize product candidates outside of the United States without obtaining regulatory approval from comparable foreign regulatory authorities. Before obtaining regulatory approvals for the commercial sale of any product candidate for a target indication, we must demonstrate with substantial evidence gathered in preclinical and well-controlled clinical studies, generally including two well-controlled Phase 3 trials, and, with respect to approval in the United States, to the satisfaction of the FDA, that the product candidate is safe and effective for use for that target indication and that the manufacturing facilities, processes and controls are adequate. Even if rigosertib or another product candidate were to successfully obtain approval from the FDA and comparable foreign regulatory authorities, any approval might contain significant limitations related to use restrictions for specified age groups, warnings, precautions or contraindications, or may be subject to burdensome post-approval study or risk management requirements. If we are unable to obtain regulatory approval for rigosertib in one or more jurisdictions, or any approval contains significant limitations, we may not be able to obtain sufficient funding or generate sufficient revenue to continue the development of ON 013105, recilisib, or any other product candidate that we may discover, in-license, develop or acquire in the future. Furthermore, even if we obtain regulatory approval for rigosertib, we will still need to develop a commercial organization, establish commercially viable pricing and obtain approval for adequate reimbursement from third-party and government payors. If we or our commercialization collaborators are unable to successfully commercialize rigosertib, we may not be able to earn sufficient revenues to continue our business.

Because the results of preclinical testing or earlier clinical studies are not necessarily predictive of future results, rigosertib, which is currently in Phase 3 clinical trials, or any other product candidate we advance into clinical trials may not have favorable results in later clinical trials or receive regulatory approval.

        Success in preclinical testing and early clinical studies does not ensure that later clinical trials will generate adequate data to demonstrate the efficacy and safety of an investigational drug. A number of companies in the pharmaceutical and biotechnology industries, including those with greater resources and experience, have suffered significant setbacks in clinical trials, even after seeing promising results in

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earlier clinical trials. Despite the results reported in earlier clinical trials for rigosertib and our other clinical-stage product candidates, we do not know whether the clinical trials we may conduct will demonstrate adequate efficacy and safety to result in regulatory approval to market any of our product candidates in any particular jurisdiction. If later-stage clinical trials do not produce favorable results, our ability to achieve regulatory approval for any of our product candidates may be adversely impacted.

Clinical drug development involves a lengthy and expensive process with an uncertain outcome.

        Clinical testing is expensive, can take many years to complete, and its outcome is inherently uncertain. Failure can occur at any time during the clinical trial process. Product candidates in later stages of clinical trials may fail to show the desired safety and efficacy traits despite having progressed through preclinical studies and early clinical trials.

        We may experience delays in our ongoing or future clinical trials and we do not know whether planned clinical trials will begin or enroll subjects on time, need to be redesigned or be completed on schedule, if at all. For example, we experienced a clinical hold with our initial IND submission for recilisib based on the need to conduct additional toxicology studies and to revise quality requirements for manufacture of the drug product. While we do not anticipate any future such delays, there can be no assurance that the FDA will not put clinical trials of recilisib or any other of our product candidates on clinical hold in the future. Clinical trials may be delayed, suspended or prematurely terminated for a variety of reasons, such as:

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        Patient enrollment, a significant factor in the timing of clinical trials, is affected by many factors including the size and nature of the patient population, the proximity of subjects to clinical sites, the eligibility criteria for the trial, the design of the clinical trial, ability to obtain and maintain patient consents, risk that enrolled subjects will drop out before completion, competing clinical trials and clinicians' and patients' perceptions as to the potential advantages of the drug being studied in relation to other available therapies, including any new drugs that may be approved for the indications we are investigating. In 2011, we suspended enrollment in our Phase 1 trial of ON 013105 because enrollment of patients was occurring so slowly that our inventory of ON 013105 clinical trial material expired. We intend to restart enrollment in this trial with newly manufactured clinical trial materials at a new clinical trial site in the fourth quarter of 2013. Furthermore, we rely on CROs and clinical trial sites to ensure the proper and timely conduct of our clinical trials, and while we have agreements governing their committed activities, we have limited influence over their actual performance.

        If we experience delays in the completion or termination of, any clinical trial of our product candidates, the commercial prospects of our product candidates will be harmed, and our ability to generate product revenues from any of these product candidates will be delayed. In addition, any delays in completing our clinical trials will increase our costs, slow down our product candidate development and approval process and jeopardize our ability to commence product sales and generate revenues. In addition, many of the factors that could cause a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of our product candidates.

The regulatory approval processes of the FDA and comparable foreign regulatory authorities are lengthy, time consuming and inherently unpredictable, and if we are ultimately unable to obtain regulatory approval for our product candidates, our business will be substantially harmed.

        The time required to obtain approval by the FDA and comparable foreign regulatory authorities is unpredictable, but typically takes many years following the commencement of preclinical studies and clinical trials and depends upon numerous factors, including the substantial discretion of the regulatory authorities. In addition, approval policies, regulations, or the type and amount of clinical data necessary to gain approval may change during the course of a product candidate's clinical development and may vary among jurisdictions. We have not obtained regulatory approval for any product candidate, and it is possible that none of our existing product candidates or any product candidates we may discover, in-license or acquire and seek to develop in the future will ever obtain regulatory approval.

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        Our product candidates could fail to receive regulatory approval from the FDA or a comparable foreign regulatory authority for many reasons, including:

        The FDA or a comparable foreign regulatory authority may require more information, including additional preclinical or clinical data to support approval, which may delay or prevent approval and our commercialization plans, or we may decide to abandon the development program altogether. Even if we do obtain regulatory approval, our product candidates may be approved for fewer or more limited indications than we request, approval contingent on the performance of costly post-marketing clinical trials, or approval with a label that does not include the labeling claims necessary or desirable for the successful commercialization of that product candidate. In addition, if our product candidate produces undesirable side effects or safety issues, the FDA may require the establishment of Risk Evaluation Mitigation Strategies, or REMS, or a comparable foreign regulatory authority may require the establishment of a similar strategy, that may, restrict distribution of our products and impose burdensome implementation requirements on us. Any of the foregoing scenarios could materially harm the commercial prospects for our product candidates.

        We have had limited interactions with foreign regulatory authorities. Approval by the FDA does not ensure approval by foreign regulatory authorities and approval by one or more foreign regulatory authorities does not ensure approval by regulatory authorities in other countries or by the FDA. However, a failure or delay in obtaining regulatory approval in one country may have a negative effect on the regulatory process in others. We may not be able to file for regulatory approvals and even if we file we may not receive the necessary approvals to commercialize our products in any market.

Our product candidates may cause undesirable side effects or have other properties that could delay or prevent their regulatory approval, limit the commercial profile of an approved label, or result in significant negative consequences following any marketing approval.

        Undesirable side effects caused by our product candidates could cause us or regulatory authorities to interrupt, delay or halt clinical trials and could result in a more restrictive label or the delay or denial of regulatory approval by the FDA or other comparable foreign regulatory authority. For example, even though rigosertib IV and rigosertib Oral have generally been well tolerated by patients in our earlier-stage clinical trials, in some cases there were side effects, some of which were severe. The most common drug-related adverse side effects reported by at least 10% of the 79 patients enrolled in the four Phase 1 and 2 trials of rigosertib IV with MDS or acute myeloid leukemia, or AML, were

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gastrointestinal, such as nausea and diarrhea, constitutional, such as fatigue, urinary, such as dysuria and hematuria, or the presence of red blood cells in the urine, or hematologic, such as anemia. These side effects were generally mild or moderate in severity. Drug-related side effects that were Grade 3 or Grade 4, meaning they were more than mild or moderate in severity, that were reported in two or more patients in the four studies were decreased red blood cells, decreased platelets, neutropenia, or decreased neutrophils, leukopenia, or decreased white blood cells, frequent urination, dysuria, low blood sodium, increased blood clotting time, fever, fatigue and diarrhea. In patients enrolled in our rigosertib Oral studies in MDS, the most common side effects were urinary disorders. In our rigosertib Oral Phase 1 MDS study, hematuria was the most frequent dose-limiting toxicity, although some patients did experience decreased appetite, diarrhea or nausea. The most severe side effects, seen in two patients, were neutropenia, which occurred at Grade 3 in one patient and Grade 4 in one other patient, as well as urinary tract infection, fainting and shortness of breath. None of these side effects required interruption of the trial.

        As a result of these side effects or further safety or toxicity issues that we may experience in our clinical trials in the future, we may not receive approval to market any product candidates, which could prevent us from ever generating revenues or achieving profitability. Results of our trials could reveal an unacceptably high severity and prevalence of side effects. In such an event, our trials could be suspended or terminated and the FDA or comparable foreign regulatory authorities could order us to cease further development of or deny approval of our product candidates for any or all targeted indications. The drug-related side effects could affect patient recruitment or the ability of enrolled subjects to complete the trial or result in potential product liability claims.

        Additionally, if any of our product candidates receives marketing approval, and we or others later identify undesirable side effects caused by such product, a number of potentially significant negative consequences could result, including:

        Any of these events could prevent us from achieving or maintaining market acceptance of the particular product candidate, if approved.

Even if our product candidates receive regulatory approval, they may still face future development and regulatory difficulties.

        Even if we obtain regulatory approval for a product candidate, it would be subject to ongoing requirements by the FDA and comparable foreign regulatory authorities governing the manufacture, quality control, further development, labeling, packaging, storage, distribution, safety surveillance, import, export, advertising, promotion, recordkeeping and reporting of safety and other post-market information. The safety profile of any product will continue to be closely monitored by the FDA and comparable foreign regulatory authorities after approval. If the FDA or comparable foreign regulatory authorities become aware of new safety information after approval of any of our product candidates, they may require labeling changes or establishment of a REMS or similar strategy, impose significant restrictions on a product's indicated uses or marketing, or impose ongoing requirements for potentially

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costly post-approval studies or post-market surveillance. For example, the label ultimately approved for rigosertib, if it achieves marketing approval, may include restrictions on use.

        In addition, manufacturers of drug products and their facilities are subject to continual review and periodic inspections by the FDA and other regulatory authorities for compliance with current good manufacturing practices, or cGMP, and other regulations. If we or a regulatory agency discover 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, the manufacturing facility or us, including requiring recall or withdrawal of the product from the market or suspension of manufacturing. If we, our product candidates or the manufacturing facilities for our product candidates fail to comply with applicable regulatory requirements, a regulatory agency may:

        The occurrence of any event or penalty described above may inhibit our ability to commercialize our products and generate revenue.

        Advertising and promotion of any product candidate that obtains approval in the United States will be heavily scrutinized by the FDA, the Department of Justice, or the DOJ, the Office of Inspector General of the Department of Health and Human Services, or HHS, state attorneys general, members of Congress and the public. Violations, including promotion of our products for unapproved or off-label uses, are subject to enforcement letters, inquiries and investigations, and civil and criminal sanctions by the FDA. Additionally, advertising and promotion of any product candidate that obtains approval outside of the United States will be heavily scrutinized by comparable foreign regulatory authorities.

        In the United States, engaging in impermissible promotion of our products for off-label uses can also subject us to false claims litigation under federal and state statutes, which can lead to civil and criminal penalties and fines and agreements that materially restrict the manner in which we promote or distribute our drug products. These false claims statutes include the federal False Claims Act, which allows any individual to bring a lawsuit against a pharmaceutical company on behalf of the federal government alleging submission of false or fraudulent claims, or causing to present such false or fraudulent claims, for payment by a federal program such as Medicare or Medicaid. If the government prevails in the lawsuit, the individual will share in any fines or settlement funds. Since 2004, these False Claims Act lawsuits against pharmaceutical companies have increased significantly in volume and breadth, leading to several substantial civil and criminal settlements based on certain sales practices

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promoting off-label drug uses. This growth in litigation has increased the risk that a pharmaceutical company will have to defend a false claim action, pay settlement fines or restitution, agree to comply with burdensome reporting and compliance obligations, and be excluded from the Medicare, Medicaid and other federal and state healthcare programs. If we do not lawfully promote our approved products, we may become subject to such litigation and, if we are not successful in defending against such actions, those actions could compromise our ability to become profitable.

Failure to obtain regulatory approval in international jurisdictions would prevent our product candidates from being marketed abroad.

        In order to market and sell our products in the European Union and many other jurisdictions, including Japan and Korea, we must obtain separate marketing approvals and comply with numerous and varying regulatory requirements. The approval procedure varies among countries and can involve additional testing. The time required to obtain approval may differ substantially from that required to obtain FDA approval. The regulatory approval process outside the United States generally includes all of the risks associated with obtaining FDA approval. In addition, in many countries outside the United States, it is required that the product be approved for reimbursement before the product can be approved for sale in that country. We may not obtain approvals from regulatory authorities outside the United States on a timely basis, if at all. Approval by the FDA does not ensure approval by regulatory authorities in other countries or jurisdictions, and approval by one regulatory authority outside the United States does not ensure approval by regulatory authorities in other countries or jurisdictions or by the FDA. We may not be able to file for marketing approvals and may not receive necessary approvals to commercialize our products in any market. If we are unable to obtain approval of any of our product candidates by regulatory authorities in the European Union, Japan, Korea or another country, the commercial prospects of that product candidate may be significantly diminished and our business prospects could decline.

Recently enacted and future legislation, including potentially unfavorable pricing regulations or other healthcare reform initiatives, may increase the difficulty and cost for us to obtain marketing approval of and commercialize our product candidates and affect the prices we may obtain.

        The regulations that govern, among other things, marketing approvals, coverage, pricing and reimbursement for new drug products vary widely from country to country. In the United States and some foreign jurisdictions, there have been a number of legislative and regulatory changes and proposed changes regarding the healthcare system that could prevent or delay marketing approval of our product candidates, restrict or regulate post-approval activities and affect our ability to successfully sell any product candidates for which we obtain marketing approval.

        In the United States, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, or Medicare Modernization Act, changed the way Medicare covers and pays for pharmaceutical products. The legislation expanded Medicare coverage for drug purchases by the elderly and introduced a new reimbursement methodology based on average sales prices for physician administered drugs. In recent years, Congress has considered further reductions in Medicare reimbursement for drugs administered by physicians. The Centers for Medicare and Medicaid Services, the agency that runs the Medicare program, also has the authority to revise reimbursement rates and to implement coverage restrictions for some drugs. Cost reduction initiatives and changes in coverage implemented through legislation or regulation could decrease utilization of and reimbursement for any approved products, which in turn would affect the price we can receive for those products. While the Medicare Modernization Act and Medicare regulations apply only to drug benefits for Medicare beneficiaries, private payors often follow Medicare coverage policy and payment limitations in setting their own reimbursement rates. Therefore, any reduction in reimbursement that results from federal legislation or regulation may result in a similar reduction in payments from private payors.

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        In March 2010, President Obama signed into law the Patient Protection and Affordable Care Act and the Health Care and Education Affordability Reconciliation Act of 2010, or the Affordable Care Act, a sweeping law intended to broaden access to health insurance, reduce or constrain the growth of healthcare spending, enhance remedies against fraud and abuse, add new transparency requirements for healthcare and health insurance industries, impose new taxes and fees on pharmaceutical and medical device manufacturers and impose additional health policy reforms. The Affordable Care Act expanded manufacturers' rebate liability to include covered drugs dispensed to individuals who are enrolled in Medicaid managed care organizations increased the minimum rebate due for innovator drugs from 15.1% of average manufacturer price, or AMP, to 23.1% of AMP and capped the total rebate amount for innovator drugs at 100% of AMP. The Affordable Care Act and subsequent legislation also changed the definition of AMP. Furthermore, the Affordable Care Act imposes a significant annual, nondeductible fee on companies that manufacture or import certain branded prescription drug products. Substantial new provisions affecting compliance have also been enacted, which may affect our business practices with healthcare practitioners, and a significant number of provisions are not yet, or have only recently become, effective. Although it is too early to determine the effect of the Affordable Care Act, it appears likely to continue the pressure on pharmaceutical pricing, especially under the Medicare program, and may also increase our regulatory burdens and operating costs.

        In addition, other legislative changes have been proposed and adopted since the Affordable Care Act was enacted. More recently, on August 2, 2011, the President signed into law the Budget Control Act of 2011, which, among other things, creates the Joint Select Committee on Deficit Reduction to recommend to Congress proposals in spending reductions. The Joint Select Committee did not achieve a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, triggering the legislation's automatic reduction to several government programs. This includes aggregate reductions to Medicare payments to providers of up to 2% per fiscal year, starting in 2013. On January 2, 2013, President Obama signed into law the American Taxpayer Relief Act of 2012, which, among other things, reduced Medicare payments to several providers and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. These new laws may result in additional reductions in Medicare and other healthcare funding, which could have a material adverse effect on our customers and accordingly, our financial operations. Legislative and regulatory proposals have been made to expand post-approval requirements and restrict sales and promotional activities for pharmaceutical products. We cannot be sure whether additional legislative changes will be enacted, or whether the FDA regulations, guidance or interpretations will be changed, or what the impact of such changes on the marketing approvals of our product candidates, if any, may be.

        In the United States, the European Union and other potentially significant markets for our product candidates, government authorities and third-party payors are increasingly attempting to limit or regulate the price of medical products and services, particularly for new and innovative products and therapies, which has resulted in lower average selling prices. Furthermore, the increased emphasis on managed healthcare in the United States and on country and regional pricing and reimbursement controls in the European Union will put additional pressure on product pricing, reimbursement and usage, which may adversely affect our future product sales and results of operations. These pressures can arise from rules and practices of managed care groups, judicial decisions and governmental laws and regulations related to Medicare, Medicaid and healthcare reform, pharmaceutical reimbursement policies and pricing in general.

        Some countries require approval of the sale price of a drug before it can be marketed. In many countries, the pricing review period begins after marketing or product licensing approval is granted. In some foreign markets, prescription pharmaceutical pricing remains subject to continuing governmental control even after initial approval is granted. As a result, we might obtain marketing approval for a product candidate in a particular country, but then be subject to price regulations that delay our commercial launch of the product, possibly for lengthy time periods, which could negatively impact the

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revenues we are able to generate from the sale of the product in that particular country. Adverse pricing limitations may hinder our ability to recoup our investment in one or more product candidates even if our product candidates obtain marketing approval.

Laws and regulations governing international operations may preclude us from developing, manufacturing and selling certain product candidates outside of the United States and require us to develop and implement costly compliance programs.

        As we expand our operations outside of the United States, we must comply with numerous laws and regulations in each jurisdiction in which we plan to operate. The creation and implementation of international business practices compliance programs is costly and such programs are difficult to enforce, particularly where reliance on third parties is required.

        The Foreign Corrupt Practices Act, or FCPA, prohibits any U.S. individual or business from paying, offering, authorizing payment or offering of anything of value, directly or indirectly, to any foreign official, political party or candidate for the purpose of influencing any act or decision of the foreign entity in order to assist the individual or business in obtaining or retaining business. The FCPA also obligates companies whose securities are listed in the United States to comply with certain accounting provisions requiring the company to maintain books and records that accurately and fairly reflect all transactions of the corporation, including international subsidiaries, and to devise and maintain an adequate system of internal accounting controls for international operations. The anti-bribery provisions of the FCPA are enforced primarily by the DOJ. The Securities and Exchange Commission, or the SEC, is involved with enforcement of the books and records provisions of the FCPA.

        Compliance with the FCPA is expensive and difficult, particularly in countries in which corruption is a recognized problem. In addition, the FCPA presents particular challenges in the pharmaceutical industry, because, in many countries, hospitals are operated by the government, and doctors and other hospital employees are considered foreign officials. Certain payments to hospitals in connection with clinical studies and other work have been deemed to be improper payments to government officials and have led to FCPA enforcement actions.

        Various laws, regulations and executive orders also restrict the use and dissemination outside of the United States, or the sharing with certain non-U.S. nationals, of information classified for national security purposes, as well as certain products and technical data relating to those products. Our expanding presence outside of the United States will require us to dedicate additional resources to comply with these laws, and these laws may preclude us from developing, manufacturing, or selling certain products and product candidates outside of the United States, which could limit our growth potential and increase our development costs.

        The failure to comply with laws governing international business practices may result in substantial penalties, including suspension or debarment from government contracting. Violation of the FCPA can result in significant civil and criminal penalties. Indictment alone under the FCPA can lead to suspension of the right to do business with the U.S. government until the pending claims are resolved. Conviction of a violation of the FCPA can result in long-term disqualification as a government contractor. The termination of a government contract or relationship as a result of our failure to satisfy any of our obligations under laws governing international business practices would have a negative impact on our operations and harm our reputation and ability to procure government contracts. The SEC also may suspend or bar issuers from trading securities on U.S. exchanges for violations of the FCPA's accounting provisions.

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Even if we are able to commercialize our product candidates, the products may not receive coverage and adequate reimbursement from third-party payors, which could harm our business.

        Our ability to commercialize any products successfully will depend, in part, on the extent to which coverage and adequate reimbursement for these products and related treatments will be available from government health administration authorities, private health insurers and other organizations. Government authorities and third-party payors, such as private health insurers and health maintenance organizations, determine which medications they will cover and establish reimbursement levels. A primary trend in the U.S. healthcare industry and elsewhere is cost containment. Government authorities and third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement for particular medications. Increasingly, third-party payors are requiring that drug companies provide them with predetermined discounts from list prices and are challenging the prices charged for medical products. Third-party payors may also seek additional clinical evidence, beyond the data required to obtain marketing approval, demonstrating clinical benefits and value in specific patient populations before covering our products for those patients. We cannot be sure that coverage and adequate reimbursement will be available for any product that we commercialize and, if reimbursement is available, what the level of reimbursement will be. Coverage and reimbursement may impact the demand for, or the price of, any product candidate for which we obtain marketing approval. If reimbursement is not available or is available only at limited levels, we may not be able to successfully commercialize any product candidate for which we obtain marketing approval.

        There may be significant delays in obtaining coverage and reimbursement for newly approved drugs, and coverage may be more limited than the purposes for which the drug is approved by the FDA or comparable foreign regulatory authorities. Moreover, eligibility for coverage and reimbursement does not imply that any drug will be paid for in all cases or at a rate that covers our costs, including research, development, manufacture, sale and distribution. Interim reimbursement levels for new drugs, if applicable, may also not be sufficient to cover our costs and may only be temporary. Reimbursement rates may vary according to the use of the drug and the clinical setting in which it is used, may be based on reimbursement levels already set for lower cost drugs and may be incorporated into existing payments for other services. Net prices for drugs may be reduced by mandatory discounts or rebates required by government healthcare programs or private payors and by any future relaxation of laws that presently restrict imports of drugs from countries where they may be sold at lower prices than in the United States. Third-party payors often rely upon Medicare coverage policy and payment limitations in setting their own reimbursement policies. Our inability to obtain coverage and profitable reimbursement rates from both government-funded and private payors for any approved products that we develop could have a material adverse effect on our operating results, our ability to raise capital needed to commercialize products and our overall financial condition.

If we are unable to establish sales and marketing capabilities or enter into agreements with third parties to market and sell our product candidates, we may be unable to generate any revenue.

        We do not currently have an organization for the sale, marketing and distribution of pharmaceutical products and the cost of establishing and maintaining such an organization may exceed the cost-effectiveness of doing so. In order to market any products that may be approved by the FDA and comparable foreign regulatory authorities, we must build our sales, marketing, managerial and other non-technical capabilities or make arrangements with third parties to perform these services. If we are unable to establish adequate sales, marketing and distribution capabilities, whether independently or with third parties, we may not be able to generate product revenue and may not become profitable. We will be competing with many companies that currently have extensive and well-funded sales and marketing operations. Without an internal commercial organization or the support of a third party to perform sales and marketing functions, we may be unable to compete successfully against these more established companies.

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Our commercial success depends upon attaining significant market acceptance of our product candidates, if approved, among physicians, patients, healthcare payors and the major operators of cancer clinics.

        Even if we obtain regulatory approval for any of our product candidates that we may develop or acquire in the future, the product may not gain market acceptance among physicians, healthcare payors, patients or the medical community. Market acceptance of any of our product candidates for which we receive approval depends on a number of factors, including:

        If any of our product candidates are approved but fail to achieve market acceptance among physicians, patients, or healthcare payors, we will not be able to generate significant revenues, which would compromise our ability to become profitable.

Our relationships with customers and third-party payors will be subject to applicable anti-kickback, fraud and abuse and other healthcare laws and regulations, which could expose us to criminal sanctions, civil penalties, contractual damages, reputational harm and diminished profits and future earnings.

        Healthcare providers, physicians and third-party payors will play a primary role in the recommendation and prescription of any product candidates for which we obtain marketing approval. Our future arrangements with third-party payors and customers may expose us to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we would market, sell and distribute our products. As a pharmaceutical company, even though we do not and will not control referrals of healthcare services or bill directly to Medicare, Medicaid or other third-party payors, federal and state healthcare laws and regulations pertaining to fraud and abuse and patients' rights are and will be applicable to our business. Restrictions under applicable federal and state healthcare laws and regulations that may affect our ability to operate include the following:

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        Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare laws and regulations will involve substantial costs. It is possible that governmental authorities will conclude that our business practices may not comply with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations. If our operations are found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines, imprisonment, exclusion from government funded healthcare programs, such as Medicare and Medicaid, and the curtailment or restructuring of our operations. If any physicians or other healthcare providers or entities with whom we expect to do business are found to not be in compliance with applicable laws, they may be subject to criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs.

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Our employees may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, which could cause significant liability for us and harm our reputation.

        We are exposed to the risk of employee fraud or other misconduct, including intentional failures to comply with FDA regulations or similar regulations of comparable foreign regulatory authorities, provide accurate information to the FDA or comparable foreign regulatory authorities, comply with manufacturing standards we have established, comply with federal and state healthcare fraud and abuse laws and regulations and similar laws and regulations established and enforced by comparable foreign regulatory authorities, report financial information or data accurately or disclose unauthorized activities to us. Employee misconduct could also involve the improper use of information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to our reputation. We will adopt a code of conduct for our directors, officers and employees, or the Code of Conduct, which will be effective as of consummation of this offering, but it is not always possible to identify and deter employee misconduct, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business and results of operations, including the imposition of significant fines or other sanctions.

We face substantial competition, which may result in others discovering, developing or commercializing products before or more successfully than we do.

        The development and commercialization of new drug products is highly competitive. We face competition with respect to our current product candidates, rigosertib, ON 013105 and recilisib, and will face competition with respect to any product candidates that we may seek to develop or commercialize in the future, from major pharmaceutical companies, specialty pharmaceutical companies and biotechnology companies worldwide. There are a number of large pharmaceutical and biotechnology companies that currently market and sell products or are pursuing the development of products for the treatment of the disease indications for which we are developing our product candidates. Some of these competitive products and therapies are based on scientific approaches that are the same as or similar to our approach, and others are based on entirely different approaches. Potential competitors also include academic institutions, government agencies and other public and private research organizations that conduct research, seek patent protection and establish collaborative arrangements for research, development, manufacturing and commercialization.

        Our product candidates are being developed for cancer therapeutics and radiation protection. There are a variety of available therapies and supportive care products marketed for cancer patients. In many cases, these drugs are administered in combination to enhance efficacy or to reduce side effects. Some of these drugs are branded and subject to patent protection, and others are available on a generic basis. Many of these approved drugs are well established therapies or products and are widely accepted by physicians, patients and third-party payors. Insurers and other third-party payors may also encourage the use of generic products. This may make it difficult for us to achieve market acceptance at desired levels in a timely manner to ensure viability of our business.

        More established companies may have a competitive advantage over us due to their greater size, cash flows and institutional experience. Compared to us, many of our competitors may have significantly greater financial, technical and human resources.

        As a result of these factors, our competitors may obtain regulatory approval of their products before we are able to obtain patent protection or other intellectual property rights which will limit our ability to develop or commercialize our product candidates. Our competitors may also develop drugs that are safer, more effective, more widely used and cheaper than ours, and may also be more

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successful than us in manufacturing and marketing their products. These appreciable advantages could render our product candidates obsolete or non-competitive before we can recover the expenses of development and commercialization.

        Mergers and acquisitions in the pharmaceutical and biotechnology industries may result in even more resources being concentrated among a smaller number of our competitors. Smaller and other early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. These third parties compete with us in recruiting and retaining qualified scientific, management and commercial personnel, establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs.

If we breach the license agreement with Temple University pertaining to our clinical-stage product candidates, we could lose the ability to continue the development and potential commercialization of these product candidates.

        In January 1999, we entered into an agreement with Temple, as subsequently amended, to obtain an exclusive, world-wide license to make, have made, use, sell, offer for sale and import several classes of novel compounds, including all three of our clinical-stage product candidates. If we fail to meet our obligations under this license agreement, Temple has the right to terminate our exclusive license, and upon the effective date of such termination, our right to use the licensed technology would terminate. While we would expect to exercise all rights and remedies available to us, including attempting to cure any breach by us, and otherwise seek to preserve our rights under the patents and other technology licensed to us, we may not be able to do so in a timely manner, at an acceptable cost or at all. Any uncured, material breach under the license agreement could result in our loss of exclusive rights and may lead to a complete termination of our product development and any commercialization efforts for the applicable product candidates.

Product liability lawsuits against us could cause us to incur substantial liabilities and to limit commercialization of any products that we may develop.

        We face an inherent risk of product liability exposure related to the testing of our product candidates in human clinical trials and will face an even greater risk if we commercially sell any products that we may develop. Product liability claims may be brought against us by subjects enrolled in our clinical trials, patients, healthcare providers or others using, administering or selling our products. If we cannot successfully defend ourselves against claims that our product candidates or products caused injuries, we could incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in:

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        We currently hold $10.0 million in product liability insurance coverage in the aggregate, which may not be adequate to cover all liabilities that we may incur. Insurance coverage is increasingly expensive. We may not be able to maintain insurance coverage at a reasonable cost or in an amount adequate to satisfy any liability that may arise. We intend to expand our insurance coverage for products to include the sale of commercial products if we obtain marketing approval for our product candidates in development, but we may be unable to obtain commercially reasonable product liability insurance for any products approved for marketing. Large judgments have been awarded in class action lawsuits based on drugs that had unanticipated side effects. A successful product liability claim or series of claims brought against us, particularly if judgments exceed our insurance coverage, could decrease our cash and adversely affect our business.

We will need to grow the size of our organization, and we may experience difficulties in managing this growth.

        As of July 1, 2013, we had 57 employees. As our development and commercialization plans and strategies develop, or as a result of any future acquisitions, we will need additional managerial, operational, sales, marketing, financial and other resources. Our management, personnel and systems currently in place may not be adequate to support this future growth. Future growth would impose significant added responsibilities on members of management, including:

        As our operations expand, we will need to manage additional relationships with various strategic partners, suppliers and other third parties. Our future financial performance and our ability to commercialize our product candidates and to compete effectively will depend, in part, on our ability to manage any future growth effectively. To that end, we must be able to manage our development efforts and clinical trials effectively and hire, train and integrate additional management, administrative and sales and marketing personnel. Our failure to accomplish any of these tasks could prevent us from successfully growing our company.

Our future success depends on our ability to retain our executive officers and to attract, retain and motivate qualified personnel.

        We are highly dependent upon Ramesh Kumar, Ph.D., President and Chief Executive Officer; Francois Wilhelm, M.D., Ph.D., Chief Medical Officer and Senior Vice President; Manoj Maniar, Ph.D., Senior Vice President, Product Development; Thomas McKearn, M.D., Ph.D., President, Research and Development; Ajay Bansal, Chief Financial Officer; Scott Megaffin, Senior Vice President, Commercial Development; David Stephon, Senior Vice President, Quality Management; and James Altland, Senior Vice President, Finance and Corporate Development. Although we have employment agreements with the persons named above, these agreements are at-will and do not prevent such persons from terminating their employment with us at any time. We do not maintain "key person" insurance for any of our executives or other employees, other than our President and Chief Executive Officer. The loss of the services of any of these persons could impede the achievement of our research, development and commercialization objectives.

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If we are unable to attract and retain highly qualified employees, we may not be able to grow effectively.

        Our future growth and success depend on our ability to recruit, retain, manage and motivate our employees. The loss of any member of our senior management team or the inability to hire or retain experienced management personnel could compromise our ability to execute our business plan and harm our operating results.

        Because of the specialized scientific and managerial nature of our business, we rely heavily on our ability to attract and retain qualified scientific, technical and managerial personnel. The competition for qualified personnel in the pharmaceutical field is intense and as a result, we may be unable to continue to attract and retain qualified personnel necessary for the development of our business.

We may engage in future acquisitions that could disrupt our business, cause dilution to our stockholders and harm our financial condition and operating results.

        While we currently have no specific plans to acquire any other businesses, we may, in the future, make acquisitions of, or investments in, companies that we believe have products or capabilities that are a strategic or commercial fit with our current product candidates and business or otherwise offer opportunities for our company. In connection with these acquisitions or investments, we may:

        We may not be able to complete acquisitions on favorable terms, if at all. If we do complete an acquisition, we cannot assure you that it will ultimately strengthen our competitive position or that it will be viewed positively by customers, financial markets or investors. Furthermore, future acquisitions could pose numerous additional risks to our operations, including:

        We may not be able to complete any acquisitions or effectively integrate the operations, products or personnel gained through any such acquisition.

Our business and operations would suffer in the event of computer system failures.

        Despite the implementation of security measures, our internal computer systems, and those of our CROs and other third parties on which we rely, are vulnerable to damage from computer viruses, unauthorized access, natural disasters, fire, terrorism, war and telecommunication and electrical failures. If such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our drug development programs. For example, the loss of clinical trial data from completed, ongoing or planned clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. To the extent that any disruption or security breach results in a loss of or damage to our data or applications, or inappropriate disclosure

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of confidential or proprietary information, we could incur liability and the further development of our product candidates could be delayed.

If we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could have a material adverse effect on the success of our business.

        We are subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the handling, use, storage, treatment and disposal of hazardous materials and wastes. Our operations involve the use of hazardous and flammable materials, including chemicals and biological materials. Our operations also produce hazardous waste products. We generally contract with third parties for the disposal of these materials and wastes. We cannot eliminate the risk of contamination or injury from these materials. In the event of contamination or injury resulting from our use of hazardous materials, we could be held liable for any resulting damages, and any liability could exceed our resources. We also could incur significant costs associated with civil or criminal fines and penalties.

        Although we maintain workers' compensation insurance to cover us for costs and expenses we may incur due to injuries to our employees resulting from the use of hazardous materials, this insurance may not provide adequate coverage against potential liabilities. We do not maintain insurance for environmental liability or toxic tort claims that may be asserted against us in connection with our storage or disposal of biological or hazardous materials.

        In addition, we may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations. These current or future laws and regulations may impair our research, development or production efforts. Failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions.

Business disruptions could seriously harm our future revenues and financial condition and increase our costs and expenses.

        Our operations could be subject to earthquakes, power shortages, telecommunications failures, water shortages, floods, hurricanes, typhoons, fires, extreme weather conditions, medical epidemics and other natural or manmade disasters or business interruptions, for which we are predominantly self-insured. The occurrence of any of these business disruptions could seriously harm our operations and financial condition and increase our costs and expenses. We rely on third-party manufacturers to produce our product candidates. Our ability to obtain clinical supplies of product candidates could be disrupted, if the operations of these suppliers is affected by a man-made or natural disaster or other business interruption. The ultimate impact on us, our significant suppliers and our general infrastructure of being consolidated in certain geographical areas is unknown, but our operations and financial condition could suffer in the event of a major earthquake, fire or other natural disaster.

We are relying on the FDA's "Animal Efficacy Rule" to demonstrate efficacy of recilisib, which could result in delays or failure at any stage of recilisib's development process, increase our development costs and adversely affect the commercial prospects of recilisib.

        Because humans are not normally exposed to radiation and it would be unethical to expose humans to such, effectiveness of recilisib cannot be demonstrated in humans, but instead, under the FDA's "Animal Efficacy Rule," can be demonstrated, in part, by utilizing animal models. This effect has to be demonstrated in more than one animal species expected to be predictive of a response in humans, but an effect in a single animal species may be acceptable if that animal model is sufficiently well-characterized for predicting a response in humans. The animal study endpoint must be clearly related to the desired benefit in humans and the information obtained from animal studies must allow selection of an effective dose in humans. Safety may be demonstrated in human studies.

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        We may not be able to sufficiently demonstrate the animal correlation to the satisfaction of the FDA, as these correlates are difficult to establish and are often unclear. The FDA may decide that our data are insufficient for approval and require additional preclinical, clinical or other studies, refuse to approve recilisib, or place restrictions on our ability to commercialize recilisib. Furthermore, other countries do not, at this time, have established criteria for review and approval of these types of products outside their normal review process. There is no "Animal Efficacy Rule" equivalent in countries other than the United States, and consequently there can be no assurance that we will be able to make a submission for marketing approval in foreign countries based on such animal data.

Risks Related to Our Dependence on Third Parties

We rely on third parties to conduct our preclinical and clinical trials. If these third parties do not successfully carry out their contractual duties or meet expected deadlines, we may not be able to obtain regulatory approval for or commercialize our product candidates.

        We have relied upon and plan to continue to rely upon third-party CROs to monitor and manage data for our ongoing preclinical and clinical programs. We rely on these parties for execution of our preclinical and clinical trials, and we control only some aspects of their activities. Nevertheless, we are responsible for ensuring that each of our studies is conducted in accordance with the applicable protocol and legal, regulatory and scientific standards, and our reliance on the CROs does not relieve us of our regulatory responsibilities. We also rely on third parties to assist in conducting our preclinical studies in accordance with Good Laboratory Practices, or GLP, and the Animal Welfare Act requirements. We and our CROs are required to comply with federal regulations and current Good Clinical Practices, or GCP, which are international standards meant to protect the rights and health of patients that are enforced by the FDA, the Competent Authorities of the Member States of the European Economic Area, or EEA, and comparable foreign regulatory authorities for all of our products in clinical development. Regulatory authorities enforce GCP through periodic inspections of trial sponsors, principal investigators and trial sites. If we or any of our CROs fail to comply with applicable GCP, the clinical data generated in our clinical trials may be deemed unreliable and the FDA or comparable foreign regulatory authorities may require us to perform additional clinical trials before approving our marketing applications. We cannot assure you that upon inspection by a given regulatory authority, such regulatory authority will determine that any of our clinical trials comply with GCP requirements. In addition, our clinical trials must be conducted with product produced under cGMP requirements. Failure to comply with these regulations may require us to repeat preclinical and clinical trials, which would delay the regulatory approval process.

        Our CROs are not our employees, and except for remedies available to us under our agreements with such CROs, we cannot control whether or not they devote sufficient time and resources to our ongoing clinical, nonclinical and preclinical programs. If CROs do not successfully carry out their contractual duties or obligations or meet expected deadlines or if the quality or accuracy of the clinical data they obtain is compromised due to the failure to adhere to our clinical protocols, regulatory requirements or for other reasons, our clinical trials may be extended, delayed or terminated and we may not be able to obtain regulatory approval for or successfully commercialize our product candidates. As a result, our results of operations and the commercial prospects for our product candidates would be harmed, our costs could increase and our ability to generate revenues could be delayed.

        Because we have relied on third parties, our internal capacity to perform these functions is limited. Outsourcing these functions involves risk that third parties may not perform to our standards, may not produce results in a timely manner or may fail to perform at all. In addition, the use of third-party service providers requires us to disclose our proprietary information to these parties, which could increase the risk that this information will be misappropriated. We currently have a small number of employees, which limits the internal resources we have available to identify and monitor our third-party providers. To the extent we are unable to identify and successfully manage the performance of

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third-party service providers in the future, our business may be adversely affected. Though we carefully manage our relationships with our CROs, there can be no assurance that we will not encounter challenges or delays in the future or that these delays or challenges will not have a material adverse impact on our business, financial condition and prospects.

If we lose our relationships with CROs, our drug development efforts could be delayed.

        We rely on third-party vendors and CROs for preclinical studies and clinical trials related to our drug development efforts. Switching or adding additional CROs would involve additional cost and requires management time and focus. Our CROs have the right to terminate their agreements with us in the event of an uncured material breach. In addition, some of our CROs have an ability to terminate their respective agreements with us if it can be reasonably demonstrated that the safety of the subjects participating in our clinical trials warrants such termination, if we make a general assignment for the benefit of our creditors or if we are liquidated. Identifying, qualifying and managing performance of third-party service providers can be difficult, time consuming and cause delays in our development programs. In addition, there is a natural transition period when a new CRO commences work and the new CRO may not provide the same type or level of services as the original provider. If any of our relationships with our third-party CROs terminate, we may not be able to enter into arrangements with alternative CROs or to do so on commercially reasonable terms.

We have limited experience manufacturing our product candidates on a large clinical or commercial scale and have no manufacturing facility. We are dependent on third-party manufacturers for the manufacture of our most advanced product candidate as well as on third parties for our supply chain, and if we experience problems with any third parties, the manufacturing of our product candidates or products could be delayed.

        We do not own or operate facilities for the manufacture of our product candidates. We currently have no plans to build our own clinical or commercial scale manufacturing capabilities. We currently rely on a single source contract manufacturing organization, or CMO, for the chemical manufacture of active pharmaceutical ingredient for rigosertib, another CMO for the production of the rigosertib intravenous formulation, and a third CMO for the production of the rigosertib oral formulation for Phase 3 clinical trials. To meet our projected needs for clinical supplies to support our activities through regulatory approval and commercial manufacturing, the CMOs with whom we currently work will need to increase the scale of production. We may need to identify additional CMOs for continued production of supply for our product candidates. We have not yet identified alternate suppliers in the event the current CMOs we utilize are unable to scale production, or if we otherwise experience any problems with them. Although alternative third-party suppliers with the necessary manufacturing and regulatory expertise and facilities exist, it could be expensive and take a significant amount of time to arrange for alternative suppliers. If we are unable to arrange for alternative third-party manufacturing sources, or to do so on commercially reasonable terms or in a timely manner, we may not be able to complete development of our product candidates, or market or distribute them.

        Reliance on third-party manufacturers entails risks to which we would not be subject if we manufactured product candidates or products ourselves, including reliance on the third party for regulatory compliance and quality assurance, the possibility of breach of the manufacturing agreement by the third party because of factors beyond our control, including a failure to synthesize and manufacture our product candidates or any products we may eventually commercialize in accordance with our specifications, and the possibility of termination or nonrenewal of the agreement by the third party, based on its own business priorities, at a time that is costly or damaging to us. In addition, the FDA and other regulatory authorities require that our product candidates and any products that we may eventually commercialize be manufactured according to cGMP and similar foreign standards. Any failure by our third-party manufacturers to comply with cGMP or failure to scale up manufacturing processes, including any failure to deliver sufficient quantities of product candidates in a timely manner,

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could lead to a delay in, or failure to obtain, regulatory approval of any of our product candidates. In addition, such failure could be the basis for the FDA to issue a warning letter, withdraw approvals for product candidates previously granted to us, or take other regulatory or legal action, including recall or seizure of outside supplies of the product candidate, total or partial suspension of production, suspension of ongoing clinical trials, refusal to approve pending applications or supplemental applications, detention or product, refusal to permit the import or export of products, injunction, or imposing civil and criminal penalties.

        Any significant disruption in our supplier relationships could harm our business. Any significant delay in the supply of a product candidate or its key materials for an ongoing clinical study could considerably delay completion of our clinical studies, product testing and potential regulatory approval of our product candidates. If our manufacturers or we are unable to purchase these key materials after regulatory approval has been obtained for our product candidates, the commercial launch of our product candidates would be delayed or there would be a shortage in supply, which would impair our ability to generate revenues from the sale of our product candidates.

We have entered into collaboration agreements with SymBio Pharmaceuticals Limited and Baxter Healthcare SA for rigosertib development and commercialization in certain territories and we may elect to enter into additional licensing or collaboration agreements to partner rigosertib in territories currently retained by us. Our dependence on such relationships may adversely affect our business.

        Because we have limited resources, we seek to enter into, and in the past we have entered into, collaboration agreements with other pharmaceutical companies. In July 2011, we entered into a license agreement with SymBio Pharmaceuticals Limited, or SymBio, as subsequently amended, granting an exclusive, royalty-bearing license for the development and commercialization of rigosertib in Japan and Korea. In September 2012, we entered into a development and license agreement with Baxter Healthcare SA, or Baxter, a subsidiary of Baxter International Inc., granting an exclusive, royalty-bearing license for the development and commercialization of rigosertib in Europe. We have also entered into a collaboration agreement for the further development of two of our preclinical oncology programs. Any failure by our partners to perform their obligations or any decision by our partners to terminate these agreements could negatively impact our ability to successfully develop, obtain regulatory approvals for and commercialize the applicable product candidate. In addition, any termination of our collaboration agreements will terminate the funding we may receive under the relevant collaboration agreement and may impair our ability to fund further development efforts and our progress in our development programs.

        Our commercialization strategy for rigosertib in territories currently retained by us may depend on our ability to enter into agreements with collaborators to obtain assistance and funding for the development and potential commercialization of rigosertib in those territories. Despite our efforts, we may be unable to secure additional collaborative licensing or other arrangements that are necessary for us to further develop and commercialize rigosertib. Supporting diligence activities conducted by potential collaborators and negotiating the financial and other terms of a collaboration agreement are long and complex processes with uncertain results. Even if we are successful in entering into one or more collaboration agreements, collaborations may involve greater uncertainty for us, as we have less control over certain aspects of our collaborative programs than we do over our proprietary development and commercialization programs. We may determine that continuing a collaboration under the terms provided is not in our best interest, and we may terminate the collaboration. Our collaborators could delay or terminate their agreements, and as a result rigosertib may never be successfully commercialized.

        Further, our future collaborators may develop alternative products or pursue alternative technologies either on their own or in collaboration with others, including our competitors, and the priorities or focus of our collaborators may shift such that rigosertib receives less attention or resources

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than we would like, or they may be terminated altogether. Any such actions by our collaborators may adversely affect our business prospects and ability to earn revenues. In addition, we could have disputes with our current or future collaborators, such as the interpretation of terms in our agreements. Any such disagreements could lead to delays in the development or commercialization of rigosertib or could result in time-consuming and expensive litigation or arbitration, which may not be resolved in our favor.

        With respect to our programs that are currently not the subject of collaborations, we may enter into agreements with collaborators to share in the burden of conducting clinical trials, manufacturing and marketing these product candidates. In addition, our ability to apply our proprietary technologies to develop proprietary compounds will depend on our ability to establish and maintain licensing arrangements or other collaborative arrangements with the holders of proprietary rights to such compounds. We may not be able to establish such arrangements on favorable terms or at all, and our future collaborative arrangements may not be successful.

Risks Related to Our Intellectual Property

If we are unable to protect our intellectual property rights, our competitive position could be harmed.

        We depend on our ability to protect our proprietary technology. We rely on trade secret, patent, copyright and trademark laws, and confidentiality, licensing and other agreements with employees and third parties, all of which offer only limited protection. Our commercial success will depend in large part on our ability to obtain and maintain patent protection in the United States and other countries with respect to our proprietary technology and products. Where we have the right to do so under our license agreements, we seek to protect our proprietary position by filing patent applications in the United States and abroad related to our novel technologies and products that are important to our business. The patent positions of biotechnology and pharmaceutical companies generally are highly uncertain, involve complex legal and factual questions and have in recent years been the subject of much litigation. As a result, the issuance, scope, validity, enforceability and commercial value of our patents, including those patent rights licensed to us by third parties, are highly uncertain.

        The steps we have taken to protect our proprietary rights may not be adequate to preclude misappropriation of our proprietary information or infringement of our intellectual property rights, both inside and outside the United States. The rights already granted under any of our currently issued patents and those that may be granted under future issued patents may not provide us with the proprietary protection or competitive advantages we are seeking. If we are unable to obtain and maintain patent protection for our technology and products, or if the scope of the patent protection obtained is not sufficient, our competitors could develop and commercialize technology and products similar or superior to ours, and our ability to successfully commercialize our technology and products may be adversely affected.

        With respect to patent rights, we do not know whether any of the pending patent applications for any of our licensed compounds will result in the issuance of patents that protect our technology or products, or if any of our issued patents will effectively prevent others from commercializing competitive technologies and products. Our pending applications cannot be enforced against third parties practicing the technology claimed in such applications unless and until a patent issues from such applications. Further, the examination process may require us or our licensor to narrow the claims for our pending patent applications, which may limit the scope of patent protection that may be obtained if these applications issue. Because the issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, issued patents that we own or have licensed from third parties may be challenged in the courts or patent offices in the United States and abroad. Such challenges may result in the loss of patent protection, the narrowing of claims in such patents or the invalidity or unenforceability of such patents, which could limit our ability to stop others from using or

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commercializing similar or identical technology and products, or limit the duration of the patent protection for our technology and products. Protecting against the unauthorized use of our patented technology, trademarks and other intellectual property rights is expensive, difficult and may in some cases not be possible. In some cases, it may be difficult or impossible to detect third-party infringement or misappropriation of our intellectual property rights, even in relation to issued patent claims, and proving any such infringement may be even more difficult.

We could be required to incur significant expenses to perfect our intellectual property rights, and our intellectual property rights may be inadequate to protect our competitive position.

        The patent prosecution process is expensive and time-consuming, and we or our licensors may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. It is also possible that we or our licensors will fail to identify patentable aspects of inventions made in the course of our development and commercialization activities before it is too late to obtain patent protection on them. Further, given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized. We expect to seek extensions of patent terms in the United States and, if available, in other countries where we are prosecuting patents. In the United States, the Drug Price Competition and Patent Term Restoration Act of 1984 permits a patent term extension of up to five years beyond the expiration of the patent. However, the applicable authorities, including the FDA in the United States, and any equivalent regulatory authority in other countries, may not agree with our assessment of whether such extensions are available, and may refuse to grant extensions to our patents, or may grant more limited extensions than we request. If this occurs, our competitors may be able to take advantage of our investment in development and clinical trials by referencing our clinical and preclinical data and launch their product earlier than might otherwise be the case. Changes in either the patent laws or interpretation of the patent laws in the United States and other countries may diminish the value of our patents or narrow the scope of our patent protection. The laws of foreign countries may not protect our rights to the same extent as the laws of the United States, and these foreign laws may also be subject to change. For example, methods of treatment and manufacturing processes may not be patentable in certain jurisdictions. Publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the United States and other jurisdictions are typically not published until 18 months after filing or in some cases not at all. Therefore we cannot be certain that we or our licensors were the first to make the inventions claimed in our owned or licensed patents or pending patent applications, or that we or our licensors were the first to file for patent protection of such inventions.

Recent patent reform legislation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents.

        On September 16, 2011, the Leahy-Smith America Invents Act, or the Leahy-Smith Act, was signed into law. The Leahy-Smith Act includes a number of significant changes to U.S. patent law. These include provisions that affect the way patent applications will be prosecuted and may also affect patent litigation. In particular, under the Leahy-Smith Act, the United States transitioned in March 2013 to a "first to file" system in which the first inventor to file a patent application will be entitled to the patent. Third parties are allowed to submit prior art before the issuance of a patent by the U.S. Patent and Trademark Office, or the USPTO, and may become involved in opposition, derivation, reexamination, inter-partes review or interference proceedings challenging our patent rights or the patent rights of others. An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate, our patent rights, which could adversely affect our competitive position.

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        The USPTO is currently developing regulations and procedures to govern administration of the Leahy-Smith Act, and many of the substantive changes to patent law associated with the Leahy-Smith Act, and in particular, the first to file provisions, did not become effective until March 16, 2013. Accordingly, it is not clear what, if any, impact the Leahy-Smith Act will have on the operation of our business. However, the Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents.

Obtaining and maintaining our patent protection depends on compliance with various procedural, document submissions, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.

        Periodic maintenance fees on any issued patent are due to be paid to the USPTO and foreign patent agencies in several stages over the lifetime of the patent. The USPTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process. While an inadvertent lapse can in many cases be cured by payment of a late fee or by other means in accordance with the applicable rules, there are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. Non-compliance events that could result in abandonment or lapse of a patent or patent application include, but are not limited to, failure to respond to official actions within prescribed time limits, non-payment of fees and failure to properly legalize and submit formal documents. If we or our licensors fail to maintain the patents and patent applications covering our product candidates, our competitive position would be adversely affected.

We may become involved in lawsuits to protect or enforce our intellectual property, which could be expensive, time consuming and unsuccessful.

        Competitors may infringe our patents or misappropriate or otherwise violate our intellectual property rights. To counter infringement or unauthorized use, litigation may be necessary in the future to enforce or defend our intellectual property rights, to protect our trade secrets or to determine the validity and scope of our own intellectual property rights or the proprietary rights of others. This can be expensive and time consuming. Many of our current and potential competitors have the ability to dedicate substantially greater resources to defend their intellectual property rights than we can. Accordingly, despite our efforts, we may not be able to prevent third parties from infringing upon or misappropriating our intellectual property. Litigation could result in substantial costs and diversion of management resources. In addition, in an infringement proceeding, a court may decide that a patent owned by or licensed to us is invalid or unenforceable, or may refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question. An adverse result in any litigation proceeding could put one or more of our patents at risk of being invalidated, held unenforceable or interpreted narrowly. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation.

Third parties may initiate legal proceedings alleging that we are infringing their intellectual property rights, the outcome of which would be uncertain and could harm our business.

        Our commercial success depends upon our ability and the ability of our collaborators to develop, manufacture, market and sell our product candidates, and to use our proprietary technologies without infringing the proprietary rights of third parties. We may become party to, or threatened with, future adversarial proceedings or litigation regarding intellectual property rights with respect to our products and technology, including interference or derivation proceedings before the USPTO. Third parties may

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assert infringement claims against us based on existing patents or patents that may be granted in the future. If we are found to infringe a third party's intellectual property rights, we could be required to obtain a license from such third party to continue developing and commercializing our products and technology. However, we may not be able to obtain any required license on commercially reasonable terms or at all. Even if we are able to obtain a license, it may be non-exclusive, thereby giving our competitors access to the same technologies licensed to us. We could be forced, including by court order, to cease commercializing the infringing technology or product. In addition, in any such proceeding or litigation, we could be found liable for monetary damages. A finding of infringement could prevent us from commercializing our product candidates or force us to cease some of our business operations, which could materially harm our business. Any claims by third parties that we have misappropriated their confidential information or trade secrets could have a similar negative impact on our business.

We may be subject to claims that our employees have wrongfully used or disclosed alleged trade secrets of their former employers.

        Many of our employees, including our senior management, were previously employed at other biotechnology or pharmaceutical companies, including our competitors or potential competitors. Some of these employees, including each member of our senior management, executed proprietary rights, non-disclosure and non-competition agreements in connection with such previous employment. Although we try to ensure that our employees do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that we or these employees have used or disclosed intellectual property, including trade secrets or other proprietary information, of any such employee's former employer. We are not aware of any threatened or pending claims related to these matters or concerning the agreements with our senior management, but in the future litigation may be necessary to defend against such claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management.

Intellectual property disputes could cause us to spend substantial resources and distract our personnel from their normal responsibilities.

        Even if resolved in our favor, litigation or other legal proceedings relating to intellectual property claims may cause us to incur significant expenses, and could distract our technical and management personnel from their normal responsibilities. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the market price of our common stock. Such litigation or proceedings could substantially increase our operating losses and reduce the resources available for development activities or any future sales, marketing or distribution activities. We may not have sufficient financial or other resources to adequately conduct such litigation or proceedings. Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their greater financial resources. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could compromise our ability to compete in the marketplace.

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If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed.

        In addition to seeking patents for some of our technology and products, we also rely on trade secrets, including unpatented know-how, technology and other proprietary information, to maintain our competitive position. We seek to protect these trade secrets, in part, by entering into non-disclosure and confidentiality agreements with parties who have access to them, such as our employees, corporate collaborators, outside scientific collaborators, CMOs, consultants, advisors and other third parties. We also generally enter into confidentiality and invention or patent assignment agreements with our employees and consultants. Despite these efforts, any of these parties may breach the agreements and disclose our proprietary information, including our trade secrets, and we may not be able to obtain adequate remedies for such breaches. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive and time-consuming, and the outcome is unpredictable. In addition, some courts both within and outside the United States may be less willing or unwilling to protect trade secrets. If any of our trade secrets were to be lawfully obtained or independently developed by a competitor, we would have no right to prevent such competitor from using that technology or information to compete with us, which could harm our competitive position.

        Although we expect all of our employees to assign their inventions to us, and all of our employees, consultants, advisors and any third parties who have access to our proprietary know-how, information or technology to enter into confidentiality agreements, we cannot provide any assurances that all such agreements have been duly executed or that our trade secrets and other confidential proprietary information will not be disclosed or that competitors will not otherwise gain access to our trade secrets or independently develop substantially equivalent information and techniques. Additionally, if the steps taken to maintain our trade secrets are deemed inadequate, we may have insufficient recourse against third parties for misappropriating the trade secret, In addition, others may independently discover our trade secrets and proprietary information. For example, the FDA, as part of its Transparency Initiative, is currently considering whether to make additional information publicly available on a routine basis, including information that we may consider to be trade secrets or other proprietary information, and it is not clear at the present time how the FDA's disclosure policies may change in the future, if at all.

We may not be able to protect our intellectual property rights throughout the world.

        Filing, prosecuting and defending patents on all of our product candidates throughout the world would be prohibitively expensive. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products, and may export otherwise infringing products to territories where we have patent protection, but where enforcement is not as strong as that in the United States. These products may compete with our products in jurisdictions where we do not have any issued patents and our patent claims or other intellectual property rights may not be effective or sufficient to prevent them from so competing.

        Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents and other intellectual property protection, particularly those relating to biopharmaceuticals, which could make it difficult for us to stop the infringement of our patents or marketing of competing products in violation of our proprietary rights generally. Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial cost and divert our efforts and attention from other aspects of our business.

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Intellectual property rights do not necessarily address all potential threats to our competitive advantage.

        The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations, and may not adequately protect our business, or permit us to maintain our competitive advantage. The following examples are illustrative:

Risks Related to This Offering and Ownership of Our Common Stock

We do not know whether an active, liquid and orderly trading market will develop for our common stock or what the market price of our common stock will be and as a result it may be difficult for you to sell your shares of our common stock.

        Prior to this offering there has been no market for shares of our common stock. An active trading market for our shares may never develop or be sustained following this offering. The initial public offering price for our common stock will be determined through negotiations with the underwriters, and the negotiated price may not be indicative of the market price of our common stock after this offering. The market value of our common stock may decrease from the initial public offering price. As a result of these and other factors, you may be unable to resell your shares of our common stock at or above the initial public offering price. The lack of an active market may impair your ability to sell your shares at the time you wish to sell them or at a price that you consider reasonable. The lack of an active market may also reduce the fair market value of your shares. Further, an inactive market may also impair our ability to raise capital by selling shares of our common stock and may impair our ability to enter into collaborations or acquire companies or products by using our shares of common stock as consideration. The market price of our stock may be volatile, and you could lose all or part of your investment.

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        The trading price of our common stock following this offering is likely to be highly volatile and could be subject to wide fluctuations in response to various factors, some of which are beyond our control. In addition to the factors discussed in this "Risk Factors" section and elsewhere in this prospectus, these factors include:

        In addition, the stock market in general, and pharmaceutical and biotechnology companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies. Broad market and industry factors may negatively affect the market price of our common stock, regardless of our actual operating performance. The realization of any of these risks or any of a broad range of other risks, including those described in these "Risk Factors," could have a dramatic and material adverse impact on the market price of our common stock.

We may be subject to securities litigation, which is expensive and could divert management attention.

        The market price of our common stock may be volatile, and in the past companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation. We may be the target of this type of litigation in the future. Securities litigation against us

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could result in substantial costs and divert our management's attention from other business concerns, which could seriously harm our business.

Our principal stockholders and management own a significant percentage of our stock and will be able to exert significant control over matters subject to stockholder approval.

        Prior to this offering, our executive officers, directors, director nominees, holders of 5% or more of our capital stock and their respective affiliates together beneficially owned approximately 57.2% of our voting stock and, upon consummation of this offering, that same group will together hold approximately 44.7% of our outstanding voting stock, assuming no exercise of the underwriters' over-allotment option, no exercise of outstanding options and after giving effect to the issuance of shares in this offering. However, certain of our directors, holders of 5% or more of our capital stock and their respective affiliates, including certain affiliates of our directors, have indicated an interest in purchasing up to an aggregate of $19.7 million of shares of common stock in this offering, or 1,515,384 shares at an assumed initial public offering price of $13.00 per share, which is the midpoint of the price range set forth on the cover page of this prospectus. If these directors, holders of 5% or more of our capital stock and their respective affiliates purchase all such shares of common stock in this offering, our executive officers, directors, director nominees holders, of 5% or more of our capital stock and their respective affiliates would beneficially own 51.8% of our outstanding voting stock, assuming no exercise of the underwriters' over-allotment option, no exercise of outstanding options and after giving effect to the issuance of shares in this offering. These stockholders may be able to determine the outcome of all matters requiring stockholder approval. For example, these stockholders may be able to control elections of directors, amendments of our organizational documents, or approval of any merger, sale of assets, or other major corporate transaction. This may prevent or discourage unsolicited acquisition proposals or offers for our common stock that you may feel are in your best interest as one of our stockholders. The interests of this group of stockholders may not always coincide with your interests or the interests of other stockholders and they may act in a manner that advances their best interests and not necessarily those of other stockholders, including seeking a premium value for their common stock, and might affect the prevailing market price for our common stock.

If you purchase our common stock in this offering, you will incur immediate and substantial dilution in the book value of your shares.

        The initial public offering price is substantially higher than the net tangible book value per share of our common stock. Investors purchasing common stock in this offering will pay a price per share that substantially exceeds the book value of our tangible assets after subtracting our liabilities. As a result, investors purchasing common stock in this offering will incur immediate dilution of $8.98 per share, based on an assumed initial public offering price of $13.00 per share, which is the midpoint of the price range set forth on the cover of this prospectus. Further, investors purchasing common stock in this offering will contribute approximately 26% of the total amount invested by stockholders since our inception, but will own, as a result of such investment, only approximately 23% of the shares of common stock outstanding immediately following this offering.

        The exercise of any of our outstanding options would result in additional dilution. As a result of the dilution to investors purchasing shares in this offering, investors may receive significantly less than the purchase price paid in this offering, if anything, in the event of our liquidation. Further, because we may need to raise additional capital to fund our clinical development programs, we may in the future sell substantial amounts of common stock or securities convertible into or exchangeable for common stock. These future issuances of equity or equity-linked securities, together with the exercise of outstanding options and any additional shares issued in connection with acquisitions, if any, may result in further dilution to investors.

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We are an "emerging growth company" and we intend to take advantage of reduced disclosure and governance requirements applicable to emerging growth companies, which could result in our common stock being less attractive to investors.

        We are an "emerging growth company," as defined in 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 stockholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our common stock 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, which in certain circumstances could be for up to five years. See "Summary—Implications of Being an Emerging Growth Company."

Our status as an "emerging growth company" under the JOBS Act may make it more difficult to raise capital as and when we need it.

        Because of the exemptions from various reporting requirements provided to us as an "emerging growth company" we may be less attractive to investors and it may be difficult for us to raise additional capital as and when we need it. Investors may be unable to compare our business with other companies in our industry if they believe that our financial accounting is not as transparent as other companies in our industry. If we are unable to raise additional capital as and when we need it, our financial condition and results of operations may be materially and adversely affected.

If we fail to maintain an effective system of internal control over financial reporting in the future, we may not be able to accurately report our financial condition, results of operations or cash flows, which may adversely affect investor confidence in us and, as a result, the value of our common stock.

        The Sarbanes-Oxley Act requires, among other things, that we maintain effective internal controls for financial reporting and disclosure controls and procedures. Commencing with our annual report on Form 10-K for the year ending December 31, 2014, we will be required, under Section 404 of the Sarbanes-Oxley Act, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting. This assessment will need to include disclosure of any material weaknesses identified by our management in our internal control over financial reporting. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting that results in more than a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented or detected on a timely basis. Section 404 of the Sarbanes-Oxley Act also generally requires an attestation from our independent registered public accounting firm on the effectiveness of our internal control over financial reporting. However, for as long as we remain an emerging growth company as defined in the JOBS Act, we intend to take advantage of the exemption permitting us not to comply with the independent registered public accounting firm attestation requirement.

        Our compliance with Section 404 will require that we incur substantial accounting expense and expend significant management efforts. We currently do not have an internal audit group, and we will need to hire additional accounting and financial staff with appropriate public company experience and technical accounting knowledge, and compile the system and process documentation necessary to perform the evaluation needed to comply with Section 404. We may not be able to complete our evaluation, testing and any required remediation in a timely fashion. During the evaluation and testing

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process, if we identify one or more material weaknesses in our internal control over financial reporting, we will be unable to assert that our internal control over financial reporting is effective. We cannot assure you that there will not be material weaknesses or significant deficiencies in our internal control over financial reporting in the future. Any failure to maintain internal control over financial reporting could severely inhibit our ability to accurately report our financial condition, results of operations or cash flows. If we are unable to conclude that our internal control over financial reporting is effective, or if our independent registered public accounting firm determines we have a material weakness or significant deficiency in our internal control over financial reporting once that firm begin its Section 404 reviews, we could lose investor confidence in the accuracy and completeness of our financial reports, the market price of our common stock could decline, and we could be subject to sanctions or investigations by the NASDAQ Stock Market, the SEC or other regulatory authorities. Failure to remedy any material weakness in our internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict our future access to the capital markets.

If we are unable to successfully remediate the existing material weakness in our internal control over financial reporting, the accuracy and timing of our financial reporting may be adversely affected.

        In connection with the audit of our consolidated financial statements for the year ended December 31, 2012, our management and independent registered public accounting firm identified control deficiencies in our internal control over financial reporting that together constitute a material weakness in our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis. Our management and independent registered public accounting firm did not perform an evaluation of our internal control over financial reporting as of December 31, 2012 in accordance with the provisions of the Sarbanes-Oxley Act. Had we and our independent registered public accounting firm performed such an evaluation, additional control deficiencies may have been identified by management or our independent registered public accounting firm, and those control deficiencies could have also represented one or more material weaknesses.

        Our management and independent registered public accounting firm identified a material weakness in our control over financial reporting attributable to the combination of our lack of sufficient financial reporting and accounting personnel with appropriate training in generally accepted accounting principles in the United States, or GAAP, and SEC rules and regulations with respect to financial reporting. As such, our controls over financial reporting were not designed or operating effectively, and as a result there were adjustments required in connection with closing our books and records and preparing our 2012 consolidated financial statements. The control deficiencies that we and our independent registered public accounting firm identified, and the adjustments recorded as a result, were as follows:

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        These control deficiencies resulted in more than a remote likelihood that a material misstatement of our annual and interim financial statements would not be prevented or detected.

        In an effort to remediate our material weakness, we have recently hired a Chief Financial Officer and a director of financial reporting. We intend to hire additional finance and accounting personnel with appropriate training, build our financial management and reporting infrastructure, and further develop and document our accounting policies and financial reporting procedures. There can be no assurance that we will be successful in pursuing these measures or that these measures will significantly improve or remediate the material weakness described above. There is also no assurance that we have identified all of our material weaknesses or that we will not in the future have additional material weaknesses. If we fail to remediate the material weakness or to meet the demands that will be placed upon us as a public company, including the requirements of the Sarbanes-Oxley Act, we may be unable to accurately report our financial results, or report them within the timeframes required by law or stock exchange regulations. Failure to comply with Section 404 of the Sarbanes-Oxley Act could also potentially subject us to sanctions or investigations by the SEC or other regulatory authorities. There is no assurance that we will be able to remediate the material weakness in a timely manner, or at all, or that in the future, additional material weaknesses will not exist or otherwise be discovered. If our efforts to remediate the material weakness identified are not successful, or if other material weaknesses or other deficiencies occur, our ability to accurately and timely report our financial position could be impaired, which could result in late filings of our annual and quarterly reports under the Exchange Act, restatements of our consolidated financial statements, a decline in our stock price, suspension or delisting of our common stock from the NASDAQ Global Market, and could adversely affect our reputation, results of operations and financial condition.

Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud.

        Upon consummation of this offering, we will become subject to the periodic reporting requirements of the Exchange Act. Our disclosure controls and procedures are designed to reasonably assure that information required to be disclosed by us in reports we file or submit under the Exchange Act is accumulated and communicated to management, recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. We believe that any disclosure controls and procedures or internal controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

        These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by an

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unauthorized override of the controls. Accordingly, because of the inherent limitations in our control system, misstatements or insufficient disclosures due to error or fraud may occur and not be detected.

We will incur increased costs as a result of operating as a public company, and our management will be required to devote substantial time to new compliance initiatives.

        As a public company, we will incur significant legal, accounting and other expenses that we did not incur as a private company, and these expenses may increase even more after we are no longer an "emerging growth company." We will be subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Protection Act, as well as rules adopted, and to be adopted, by the SEC and NASDAQ Stock Market. Our management and other personnel will need to devote a substantial amount of time to these compliance initiatives. Moreover, we expect these rules and regulations to substantially increase our legal and financial compliance costs and to make some activities more time-consuming and costly. We estimate that we will incur approximately $2.0 to $3.0 million of incremental costs per year associated with being a publicly traded company, although it is possible that our actual incremental costs will be higher than we currently estimate. The increased costs will increase our consolidated net loss. For example, 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 incur substantial costs to maintain the sufficient coverage. We cannot predict or estimate the amount or timing of additional costs we may incur to respond to these requirements. The impact of these requirements could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as executive officers.

Because we do not anticipate paying any cash dividends on our capital stock in the foreseeable future, capital appreciation, if any, will be your sole source of gain.

        We have never declared or paid cash dividends on our capital stock. We currently intend to retain all of our future earnings, if any, to finance the growth and development of our business. In addition, the terms of any future debt agreements may preclude us from paying dividends. As a result, capital appreciation, if any, of our common stock will be your sole source of gain for the foreseeable future.

Sales of a substantial number of shares of our common stock in the public market could cause our stock price to fall.

        Sales of a substantial number of shares of our common stock in the public market could occur at any time. These sales, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market price of our common stock. After this offering, we will have outstanding 20,062,996 shares of common stock based on the number of shares outstanding as of March 31, 2013. This includes the shares that we are selling in this offering, which may be resold in the public market immediately without restriction, unless purchased by our affiliates. Of the remaining shares, 15,447,611 shares of our common stock (or 17,447,611 shares assuming certain of our existing stockholders, including certain of our directors, who have indicated an interest in purchasing up to an aggregate of $26.0 million of shares of our common stock in this offering, or 2,000,000 shares at an assumed initial public offering price of $13.00 per share, which is the midpoint of the price range set forth on the cover page of this prospectus, purchase all of the shares they have indicated an interest in purchasing in this offering), will be restricted as a result of securities laws or lock-up agreements but will be able to be sold after the offering as described in the "Shares Eligible for Future Sale" section of this prospectus. Moreover, after this offering, holders of an aggregate of 12,838,127 shares of our common stock will have rights, subject to certain conditions, to require us to file registration statements covering their shares or to include their shares in registration statements that we may file for ourselves or other stockholders. We also intend to register all shares of common stock that we may issue under

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our equity compensation plans. Once we register these shares, they can be freely sold in the public market upon issuance, subject to volume limitations applicable to affiliates and the lock-up agreements described in the "Underwriting" section of this prospectus.

Future sales and issuances of our common stock or rights to purchase common stock, including pursuant to our equity incentive plans, could result in additional dilution of the percentage ownership of our stockholders and could cause our stock price to fall.

        We expect that significant additional capital will be needed in the future to continue our planned operations. To raise capital, we may sell substantial amounts of common stock or securities convertible into or exchangeable for common stock. These future issuances of common stock or common stock-related securities, together with the exercise of outstanding options and any additional shares issued in connection with acquisitions, if any, may result in material dilution to our investors. Such sales may also result in material dilution to our existing stockholders, and new investors could gain rights, preferences and privileges senior to those of holders of our common stock, including shares of common stock sold in this offering.

        Pursuant to our equity incentive plans, our compensation committee is authorized to grant equity-based incentive awards to our directors, executive officers and other employees and service providers, including officers, employees and service providers of our subsidiaries and affiliates. The number of shares of our common stock available for future grant under our 2007 Equity Compensation Plan, which became effective on December 10, 2007, was 289,475 as of March 31, 2013. Effective immediately prior to the listing of our common stock on the NASDAQ Global Market, our 2007 Equity Compensation Plan will be amended, restated and renamed as our 2013 Equity Compensation Plan. Future option grants and issuances of common stock under our 2013 Equity Compensation Plan may have an adverse effect on the market price of our common stock.

We have broad discretion in the use of the net proceeds from this offering and may not use them effectively.

        Although we currently intend to use the net proceeds from this offering in the manner described in "Use of Proceeds" elsewhere in this prospectus, our management will have broad discretion in the application of the net proceeds from this offering and could spend the proceeds in ways that do not improve our results of operations or enhance the value of our common stock. The failure by our management to apply these funds effectively could result in financial losses that could have a material adverse effect on our business, cause the market price of our common stock to decline and delay the development of our product candidates. Pending their use, we may invest the net proceeds from this offering in a manner that does not produce income or that loses value. If we do not invest the net proceeds from this offering in ways that enhance stockholder value, we may fail to achieve expected financial results, which could cause the price of our common stock to decline.

Some provisions of our charter documents and Delaware law may have anti-takeover effects that could discourage an acquisition of us by others, even if an acquisition would be beneficial to our stockholders and may prevent attempts by our stockholders to replace or remove our current management.

        Provisions in our tenth amended and restated certificate of incorporation, or certificate of incorporation, and amended and restated bylaws, or bylaws, that will become effective in connection with consummation of this offering, as well as provisions of Delaware law, could make it more difficult for a third party to acquire us or increase the cost of acquiring us, even if doing so would benefit our stockholders, or remove our current management. These include provisions that will:

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        These provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors, who are responsible for appointing the members of our management. Because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which may discourage, delay or prevent someone from acquiring us or merging with us whether or not it is desired by or beneficial to our stockholders. Under Delaware law, a corporation may not, in general, engage in a business combination with any holder of 15% or more of its capital stock unless the holder has held the stock for three years or, among other things, the board of directors has approved the transaction. Any provision of our amended and restated certificate of incorporation or amended and restated bylaws or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock, and could also affect the price that some investors are willing to pay for our common stock.

If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.

        The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about us or our business. Securities and industry analysts do not currently, and may never, publish research on our company. If no securities or industry analysts commence coverage of our company, the trading price for our stock would likely be negatively impacted. In the event securities or industry analysts initiate coverage, if one or more of the analysts who cover us downgrade our stock or publish inaccurate or unfavorable research about our business, our stock price would likely decline. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, demand for our stock could decrease, which might cause our stock price and trading volume to decline.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA

        This prospectus includes forward-looking statements. We may, in some cases, use terms such as "believes," "estimates," "anticipates," "expects," "plans," "intends," "may," "could," "might," "will," "should," "approximately" or other words that convey uncertainty of future events or outcomes to identify these forward-looking statements. Forward-looking statements appear in a number of places throughout this prospectus and include statements regarding our intentions, beliefs, projections, outlook, analyses or current expectations concerning, among other things, our ongoing and planned preclinical development and clinical trials, the timing of and our ability to make regulatory filings and obtain and maintain regulatory approvals for our product candidates, our intellectual property position, the degree of clinical utility of our products, particularly in specific patient populations, our ability to develop commercial functions, expectations regarding clinical trial data, our results of operations, cash needs, spending of the proceeds from this offering, financial condition, liquidity, prospects, growth and strategies, the industry in which we operate and the trends that may affect the industry or us.

        By their nature, forward-looking statements involve risks and uncertainties because they relate to events, competitive dynamics and industry change, and depend on the economic circumstances that may or may not occur in the future or may occur on longer or shorter timelines than anticipated. Although we believe that we have a reasonable basis for each forward-looking statement contained in this prospectus, we caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate may differ materially from the forward-looking statements contained in this prospectus. In addition, even if our results of operations, financial condition and liquidity, and events in the industry in which we operate are consistent with the forward-looking statements contained in this prospectus, they may not be predictive of results or developments in future periods.

        Actual results could differ materially from our forward-looking statements due to a number of factors, including risks related to:

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        Any forward-looking statements that we make in this prospectus speak only as of the date of such statement, and we undertake no obligation to update such statements to reflect events or circumstances after the date of this prospectus or to reflect the occurrence of unanticipated events. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless expressed as such, and should only be viewed as historical data.

        You should also read carefully the factors described in the "Risk Factors" section of this prospectus and elsewhere to better understand the risks and uncertainties inherent in our business and underlying any forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements in this prospectus will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified timeframe, or at all. The Private Securities Litigation Reform Act of 1995 and Section 27A of the Securities Act do not protect any forward-looking statements that we make in connection with this offering.

        We obtained the industry, market and competitive position data in this prospectus from our own internal estimates and research as well as from industry and general publications and research surveys and studies conducted by third parties. Industry publications and surveys generally state that the information contained therein has been obtained from sources believed to be reliable. We believe this data is accurate in all material respects as of the date of this prospectus.

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USE OF PROCEEDS

        We estimate that our net proceeds from the sale of the shares of common stock in this offering will be approximately $52.5 million, assuming an initial public offering price of $13.00 per share, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting the estimated underwriting discounts and commissions and estimated offering costs payable by us. If the underwriters exercise their over-allotment option in full, we estimate that our net proceeds from this offering will be approximately $60.9 million.

        We intend to use our net proceeds from this offering for the overall development of our product candidates. We currently estimate that we will use approximately $40.0 million of the net proceeds from this offering to fund the clinical development of rigosertib and approximately $5.0 million to fund the development of our other clinical and preclinical programs. The balance will be used for working capital and general corporate purposes. Pending the application of the net proceeds as described above, we intend to invest the net proceeds of the offering in short-term, investment-grade, interest-bearing securities.

        Our management will have broad discretion to allocate the net proceeds to us from this offering and investors will be relying on the judgment of our management regarding the application of the proceeds from this offering. We reserve the right to change the use of these proceeds as a result of certain contingencies such as competitive developments, the results of our commercialization efforts and investment opportunities and other factors.

        A $1.00 increase or decrease in the assumed initial public offering price of $13.00 per share, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase or decrease our net proceeds from this offering by approximately $4.3 million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions. Each increase or decrease of 1.0 million shares in the number of shares offered by us at the assumed initial public offering price would increase or decrease the net proceeds to us in this offering by approximately $12.1 million. We do not expect that a change in the offering price or the number of shares by these amounts would have a material effect on our uses of the proceeds from this offering, although it might affect the amount of time prior to which we will need to seek additional capital.


DIVIDEND POLICY

        We have never declared or paid any cash dividends on our capital stock. We currently intend to retain all available funds and any future earnings to support our operations and finance the growth and development of our business. We do not intend to pay cash dividends on our common stock for the foreseeable future.

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CAPITALIZATION

        The following table sets forth our cash and cash equivalents and capitalization as of March 31, 2013:

        You should read the information in this table together with our consolidated financial statements and accompanying notes and "Management's Discussion and Analysis of Financial Condition and Results of Operations" appearing elsewhere in this prospectus.

 
  As of March 31, 2013  
 
  Actual   Pro
Forma
  Pro Forma
As Adjusted
 

Cash and cash equivalents

  $ 67,307,000   $ 67,307,000   $ 119,807,000  
               

Preferred stock, $0.01 par value per share:

                   

Series A convertible preferred stock: 400,000 shares authorized, 107,000 shares issued and outstanding, actual; no shares authorized, issued or outstanding, pro forma and pro forma as adjusted

  $ 535,000   $   $  

Series B convertible preferred stock: 1,200,000 shares authorized, 1,107,189 shares issued and outstanding, actual; no shares authorized, issued or outstanding, pro forma and pro forma as adjusted

    12,733,000          

Series C convertible preferred stock: 1,200,000 shares authorized, 1,069,946 shares issued and outstanding, actual; no shares authorized, issued or outstanding, pro forma and pro forma as adjusted

    7,618,000          

Series D convertible preferred stock: 1,625,000 shares authorized, 1,583,568 shares issued and outstanding, actual; no shares authorized, issued or outstanding, pro forma and pro forma as adjusted

    18,211,000          

Series E convertible preferred stock: 1,650,000 shares authorized, 1,633,082 shares issued and outstanding, actual; no shares authorized, issued or outstanding, pro forma and pro forma as adjusted

    18,780,000          

Series F convertible preferred stock: 2,000,000 shares authorized, 2,000,000 shares issued and outstanding, actual; no shares authorized, issued or outstanding, pro forma and pro forma as adjusted

    23,000,000          

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  As of March 31, 2013  
 
  Actual   Pro
Forma
  Pro Forma
As Adjusted
 

Series G convertible preferred stock: 2,700,000 shares authorized, 1,934,359 shares issued and outstanding, actual; no shares authorized, issued or outstanding, pro forma and pro forma as adjusted

    22,819,000          

Series H convertible preferred stock: 2,042,950 shares authorized, 2,013,424 shares issued and outstanding, actual; no shares authorized, issued or outstanding, pro forma and pro forma as adjusted

    22,385,000          

Series I convertible preferred stock: 2,700,000 shares authorized, 2,433,328 shares issued and outstanding, actual; no shares authorized, issued or outstanding, pro forma and pro forma as adjusted

    27,033,000          

Series J convertible preferred stock: 3,030,303 shares authorized, 3,030,303 shares issued and outstanding, actual; no shares authorized, issued or outstanding, pro forma and pro forma as adjusted

    49,220,000          

Total preferred stock

    202,334,000          

Stockholders' (deficit) equity:

                   

Common stock, $0.01 par value per share: 30,145,155 shares authorized, 2,609,484 shares issued and outstanding, actual; 30,145,155 shares authorized, 15,447,611 shares issued and outstanding, pro forma; and 75,000,000 shares authorized, 20,062,996 shares issued and outstanding, pro forma as adjusted

    26,000     154,000     201,000  

Additional paid-in capital

    9,046,000     211,252,000     263,705,000  

Accumulated other comprehensive income

    7,000     7,000     7,000  

Accumulated deficit

    (183,198,000 )   (183,198,000 )   (183,198,000 )
               

Total stockholders' (deficit) equity

    (174,119,000 )   28,215,000     80,715,000  
               

Total capitalization

  $ (174,119,000 ) $ 28,215,000   $ 80,715,000  
               

        The number of shares of common stock to be outstanding after this offering is based on 15,447,611 shares of common stock outstanding as of March 31, 2013, and excludes as of that date:

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DILUTION

        If you invest in our common stock in this offering, your ownership interest will be diluted to the extent of the difference between the initial public offering price per share of our common stock and the pro forma as adjusted net tangible book value per share of our common stock upon consummation of this offering. The historical net tangible book value (deficit) of our common stock as of March 31, 2013 was $(174.1) million, or $(66.73) per share. Historical net tangible book value (deficit) per share is determined by dividing the number of our outstanding shares of common stock into our total tangible assets (total assets less intangible assets) less total liabilities.

        On a pro forma basis, after giving effect to the conversion of all outstanding shares of our preferred stock into 12,838,127 shares of our common stock immediately prior to consummation of this offering, our net tangible book value at March 31, 2013 would have been $28.2 million, or $1.83 per share.

        Investors purchasing in this offering will incur immediate and substantial dilution. After giving effect to the sale of common stock offered in this offering assuming an initial public offering price of $13.00 per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us, our pro forma as adjusted net tangible book value as of December 31, 2012 would have been $80.7 million, or $4.02 per share. This represents an immediate increase in pro forma net tangible book value of $2.19 per share to existing stockholders, and an immediate dilution in the pro forma net tangible book value of $8.98 per share to investors purchasing in this offering. The following table illustrates this per share dilution:

Assumed initial public offering price per share

        $ 13.00  

Historical net tangible book value (deficit) per share as of March 31, 2013

  $ (66.73 )      

Pro forma increase in net tangible book value per share attributable to the conversion of all outstanding shares of our preferred stock into 12,838,127 shares of our common stock immediately prior to consummation of this offering

    68.56        
             

Pro forma net tangible book value per share March 31, 2013

    1.83        

Increase in pro forma net tangible book value per share attributable to investors purchasing in this offering

    2.19        

Pro forma as adjusted net tangible book value per share after this offering

          4.02  
             

Dilution per share to investors purchasing in this offering

        $ 8.98  

        The following table summarizes, on the pro forma as adjusted basis described above as of March 31, 2013, the differences between the number of shares of common stock purchased from us, the total consideration paid and the average price per share paid by existing stockholders and by investors purchasing in this offering at an assumed initial public offering price of $13.00 per share, before deducting estimated underwriting discounts and commissions and estimated offering costs payable by us.

 
  Shares Purchased   Total Consideration    
 
 
  Average Price
Per Share
 
 
  Number   Percent   Amount   Percent  

Existing stockholders before this offering

    15,447,611     77 % $ 174,018,000     74 % $ 11.27  

Investors purchasing in this offering

    4,615,385     23     60,000,000     26   $ 13.00  
                         

Total

    20,062,996     100 % $ 234,018,000     100 %      

        A $1.00 increase or decrease in the assumed initial public offering price of $13.00 per share, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase or decrease the pro forma as adjusted net tangible book value per share by $0.21, assuming the number of

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shares of common stock offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. Each increase or decrease of 1.0 million shares in the number of shares of common stock offered by us at the assumed public offering price would increase or decrease our pro forma as adjusted net tangible book value by $12.1 million, our pro forma as adjusted net tangible book value per share after this offering by $0.60 per share and the dilution per share to new investors in this offering by $2.62.

        Except as otherwise indicated, the discussion and tables above assume no exercise of the underwriters' over-allotment option and no exercise of any outstanding options or warrants. If the underwriters' over-allotment option is exercised in full, the number of shares of common stock held by existing stockholders will be reduced to 74% of the total number of shares of common stock to be outstanding upon consummation of this offering, and the number of shares of common stock held by investors purchasing in this offering will be increased to 5,307,692 shares or 26% of the total number of shares of common stock to be outstanding upon consummation of this offering.

        As of March 31, 2013, there were 2,792,169 shares of common stock issuable upon exercise of options under the 2007 Equity Compensation Plan, with a weighted average exercise price of $8.54 per share, and an aggregate of 289,475 shares of common stock were reserved for future issuance under our 2007 Equity Compensation Plan. Effective immediately prior to the listing of our common stock on the NASDAQ Global Market, our 2007 Equity Compensation Plan will be amended, restated and renamed as our 2013 Equity Compensation Plan. As of March 31, 2013, there were 4,597 shares of common stock issuable upon exercise of warrants. We may choose to raise additional capital through the sale of equity or convertible debt securities due to market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. To the extent that any of these options or warrants are exercised, new options are issued under our 2013 Equity Compensation Plan or we issue additional shares of common stock or other equity securities in the future, there will be further dilution to investors purchasing in this offering.

        Baxter Healthcare SA, one of our stockholders and collaborators, and our chairman of the board of directors, as well as certain of our existing stockholders, including certain of our directors, have indicated an interest in purchasing up to an aggregate of $26.0 million of shares of our common stock in this offering, or 2,000,000 shares at an assumed initial public offering price of $13.00 per share, which is the midpoint of the price range set forth on the cover page of this prospectus. However, because indications of interest are not binding agreements or commitments to purchase, the underwriters may determine to sell more, less or no shares in this offering to any of these stockholders, and any of these stockholders may determine to purchase more, less or no shares in this offering. The foregoing discussion and tables do not reflect any potential purchases by these stockholders.

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SELECTED CONSOLIDATED FINANCIAL DATA

        The following selected consolidated financial data should be read together with our consolidated financial statements and accompanying notes and "Management's Discussion and Analysis of Financial Condition and Results of Operations" appearing elsewhere in this prospectus.

        We have derived the following statement of operations data for the years ended December 31, 2011 and 2012 and balance sheet data as of December 31, 2012 from our audited consolidated financial statements included elsewhere in this prospectus. We have derived the following statement of operations data for the three months ended March 31, 2012 and 2013 and balance sheet data as of March 31, 2013 from our unaudited condensed consolidated financial statements included elsewhere in this prospectus. Our historical results are not necessarily indicative of the results that may be expected in the future, and our interim period results are not necessarily indicative of results to be expected for a full year or any other interim period.

 
  Year Ended December 31,   Three Months Ended March 31,  
 
  2011   2012   2012   2013  

Consolidated Statement of Operations Data:

                         

Revenue

  $ 1,487,000   $ 46,190,000   $ 198,000   $ 1,116,000  

Operating expenses:

                         

General and administrative

    6,436,000     15,707,000     2,460,000     3,346,000  

Research and development

    22,624,000     52,762,000     8,448,000     12,756,000  
                   

Total operating expenses

    29,060,000     68,469,000     10,908,000     16,102,000  
                   

Loss from operations

    (27,573,000 )   (22,279,000 )   (10,710,000 )   (14,986,000 )

Change in fair value of warrant liability

    1,287,000     367,000     (609,000 )   14,000  

Interest expense

    (19,000 )   (8,608,000 )   (21,000 )    

Other income, net

    11,000     608,000     541,000     127,000  
                   

Net loss before income taxes expense

    (26,294,000 )   (29,912,000 )   (10,799,000 )   (14,845,000 )

Income taxes

                 
                   

Net loss

    (26,294,000 )   (29,912,000 )   (10,799,000 )   (14,845,000 )

Accretion of preferred stock

    (4,020,000 )   (3,953,000 )   (1,231,000 )   (1,019,000 )
                   

Net loss applicable to common stockholders

  $ (30,314,000 ) $ (33,865,000 ) $ (12,030,000 ) $ (15,864,000 )
                   

Per share information:

                         

Net loss per share of common stock, basic and diluted(1)

  $ (14.18 ) $ (15.35 ) $ (5.53 ) $ (6.08 )
                   

Basic and diluted weighted average shares outstanding(1)

    2,137,403     2,206,888     2,173,553     2,607,406  
                   

Pro forma net loss per share of common stock, basic and diluted(1)

        $ (2.36 )       $ (0.96 )
                       

Basic and diluted pro forma weighted average shares outstanding(1)

          12,668,663           15,445,726  
                       

 
  As of
December 31,
2012
  As of
March 31,
2013
 

Consolidated Balance Sheet Data:

             

Cash and cash equivalents

  $ 81,527,000   $ 67,307,000  

Total assets

    83,852,000     70,759,000  

Total liabilities

    40,843,000     42,544,000  

Accumulated deficit

    (168,353,000 )   (183,198,000 )

Total stockholders' deficit

    (158,306,000 )   (174,119,000 )

(1)
See Note 2 to our consolidated financial statements for an explanation of the method used to calculate net loss per share of common stock, basic and diluted, pro forma net loss per share of common stock, basic and diluted, and the basic and diluted pro forma weighted average shares outstanding used to calculate the pro forma per share amounts.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

         You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and related notes appearing in this prospectus. Some of the information contained in this discussion and analysis or set forth elsewhere in this prospectus, including information with respect to our plans and strategy for our business and related financing, includes forward looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the "Risk Factors" section of this prospectus, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Overview

        We are a clinical-stage biopharmaceutical company focused on discovering and developing novel small molecule drug candidates to treat cancer. Using our proprietary chemistry platform, we have created an extensive library of targeted anti-cancer agents designed to work against specific cellular pathways that are important to cancer cells. We believe that the drug candidates in our pipeline have the potential to be efficacious in a wide variety of cancers without causing harm to normal cells. We have three clinical-stage product candidates and six preclinical programs.

        Rigosertib, our most advanced product candidate, is being tested in a number of ongoing Phase 2 and Phase 3 clinical trials. We are conducting a pivotal Phase 3 trial of rigosertib under an SPA from the FDA for higher risk myelodysplastic syndromes, or MDS. We expect to report top-line overall survival results from this trial in the fourth quarter of 2013 or the first quarter of 2014. We are also evaluating rigosertib in a Phase 3 trial for metastatic pancreatic cancer, in two Phase 2 trials for transfusion-dependant lower risk MDS, and in a Phase 2 trial for head and neck cancers. Baxter has commercialization rights for rigosertib in Europe and SymBio has commercialization rights in Japan and Korea. We have retained development and commercialization rights to rigosertib in the rest of the world, including in the United States.

        Our second clinical-stage product candidate, ON 013105, is in a Phase 1 trial in patients with relapsed or refractory lymphoma, including an aggressive form of non-Hodgkin's lymphoma known as mantle cell lymphoma, or MCL, and acute lymphoid leukemia, or ALL. We have suspended enrollment in this Phase 1 trial; however, we plan to restart its enrollment in the fourth quarter of 2013.

        Our third clinical-stage product candidate, recilisib, is being developed in collaboration with the U.S. Department of Defense for acute radiation syndromes. We have conducted animal studies and clinical trials of recilisib under the FDA's Animal Efficacy Rule, which permits marketing approval for new medical countermeasures for which human efficacy studies are not feasible or ethical, by relying on evidence from animal studies in appropriate animal models to support efficacy in humans. We have completed four Phase 1 trials to evaluate the safety and pharmacokinetics of recilisib in healthy human adult subjects using both subcutaneous and oral formulations.

        In addition to our three clinical-stage product candidates, we are advancing six preclinical programs that target kinases, cellular metabolism or division. We intend to explore additional collaborations to further the development of these product candidates as we focus internally on our more advanced programs.

        We were incorporated in Delaware in December 1998 and commenced operations in January 1999. Our operations to date have included our organization and staffing, business planning, raising capital, in-licensing technology from research institutions, identifying potential product candidates, developing product candidates and building strategic alliances, as well as undertaking preclinical studies and clinical trials of our product candidates.

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        Since commencing operations we have dedicated a significant portion of our resources to our development efforts for our clinical-stage product candidates, particularly rigosertib. We incurred research and development expenses of $22.6 million and $52.8 million during the years ended December 31, 2011 and 2012, respectively, and $12.8 million during the three months ended March 31, 2013. We anticipate that a significant portion of our operating expenses will continue to be related to research and development as we continue to advance our preclinical programs and our clinical-stage product candidates. We have funded our operations primarily through the sale of preferred stock amounting to $144.7 million, including $50.0 million that Baxter invested in our preferred stock in 2012, as well as proceeds from the issuance of convertible debt and a stockholder loan amounting to $26.8 million in the aggregate, all of which was later converted into shares of our preferred stock, and upfront payments of $7.5 million from SymBio and $50.0 million from Baxter in connection with our collaboration agreements. We have also received an aggregate of $8.0 million from LLS under a funding agreement. Under our collaboration agreements with Baxter and SymBio, we are also eligible to receive an aggregate of up to $545.5 million upon the achievement of specified development and regulatory milestones and up to $280.0 million upon the achievement of specified commercialization milestones, as well as tiered royalties, at percentage rates ranging from the low-teens to low-twenties, on any future net sales of products resulting from these collaborations. As of December 31, 2012 and March 31, 2013, we had $81.5 million and $67.3 million in cash and cash equivalents, respectively.

        Our net losses were $26.3 million and $29.9 million for the years ended December 31, 2011 and 2012, respectively, and $14.8 million for the three months ended March 31, 2013. We recognized revenues of $1.5 million and $46.2 million for the years ended December 31, 2011 and 2012, respectively, and $1.1 million for the three months ended March 31, 2013. As of March 31, 2013, we had an accumulated deficit of $183.2 million. We expect to incur significant expenses and operating losses for the foreseeable future as we continue the development and clinical trials of, and seek regulatory approval for, our product candidates, even as milestones under our license and collaboration agreements may be met. If we obtain regulatory approval for any of our product candidates, we expect to incur significant commercialization expenses. We do not currently have an organization for the sales, marketing and distribution of pharmaceutical products. We may rely on licensing and co-promotion agreements with strategic or collaborative partners for the commercialization of our products in the United States and other territories. If we choose to build a commercial infrastructure to support marketing in the United States for any of our product candidates that achieve regulatory approval, such commercial infrastructure could be expected to include a targeted, oncology sales force supported by sales management, internal sales support, an internal marketing group and distribution support. To develop the appropriate commercial infrastructure internally, we would have to invest financial and management resources, some of which would have to be deployed prior to having any certainty about marketing approval.

        Furthermore, following consummation of this offering, we expect to incur additional costs associated with operating as a public company. Accordingly, we will seek to fund our operations primarily through public or private equity or debt financings or other sources. Other additional financing may not be available to us on acceptable terms, or at all. Our failure to raise capital as and when needed could have a material adverse effect on our financial condition and our ability to pursue our business strategy.

Collaboration Agreements

        In September 2012, we entered into a development and license agreement with Baxter, granting Baxter an exclusive, royalty-bearing license for the research, development, commercialization and manufacture (in specified instances) of rigosertib in all therapeutic indications in Europe. Under the Baxter agreement, we are obligated to use commercially reasonable efforts to, in accordance with a development plan agreed upon by the parties, direct, coordinate and manage the development of

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rigosertib for MDS and pancreatic cancer. Under the agreement, if after a specified development event we elect not to move forward with the development of rigosertib for pancreatic cancer, Baxter may, at its own expense, develop rigosertib for pancreatic cancer on its own for the purposes of obtaining marketing approval. In addition, there is a specified mechanism set forth in the agreement to expand the scope of the collaboration for additional indications. Our agreement with Baxter is guided by a joint steering committee. If the joint steering committee is not able to make a decision by consensus, then any dispute would be resolved by specified executive officers of both parties.

        Under the terms of the agreement, Baxter made an upfront payment of $50.0 million. We are eligible to receive pre-commercial milestone payments of up to an aggregate of $512.5 million if specified development and regulatory milestones are achieved. The potential pre-commercial development milestone payments to us include the following:

        We may also receive up to $337.5 million in milestone payments for regulatory approvals of the three rigosertib indications specified in the arrangement with Baxter, each of which may be up to and in excess of $100.0 million. We are also potentially eligible to receive an additional $20.0 million pre-commercial milestone payment related to the timing of regulatory approval of rigosertib IV in higher risk MDS patients in Europe. In addition to these pre-commercial milestones, we are eligible to receive up to an aggregate of $250.0 million in milestone payments based on Baxter's achievement of pre-specified threshold levels of annual net sales of rigosertib. We are also entitled to receive royalties at percentage rates ranging from the low-teens to the low-twenties on net sales of rigosertib by Baxter in the licensed territory. In July 2012, Baxter also purchased $50.0 million of our Series J convertible preferred stock.

        In July 2011, we entered into a license agreement with SymBio, as subsequently amended, granting SymBio an exclusive, royalty-bearing license for the development and commercialization of rigosertib in Japan and Korea. Under the SymBio license agreement, SymBio is obligated to use commercially reasonable efforts to develop and obtain market approval for rigosertib inside the licensed territory and we have similar obligations outside of the licensed territory. We have also entered into an agreement with SymBio providing for us to supply them with development-stage product. Under the SymBio license agreement, we also agreed to supply commercial product to SymBio under specified terms that will be included in a commercial supply agreement to be negotiated prior to first commercial sale of rigosertib. We have also granted SymBio a right of first negotiation to license or obtain the rights to develop and commercialize compounds having a chemical structure similar to rigosertib in the licensed territory.

        Under the terms of the SymBio license agreement, we received an upfront payment of $7.5 million. We are eligible to receive milestone payments of up to an aggregate of $33.0 million from SymBio upon the achievement of specified development and regulatory milestones for specified indications. Of the development milestones, $3.0 million is due after enrollment of the first patient in the event a decision is made, after our interim analysis, to start a Phase 3 clinical trial of rigosertib IV in combination with gemcitabine for pancreatic cancer patients in the United States. Of the regulatory milestones, $5.0 million is due upon receipt of marketing approval in the United States for rigosertib IV in higher risk MDS patients, $3.0 million is due upon receipt of marketing approval in Japan for

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rigosertib IV in higher risk MDS patients, $5.0 million is due upon receipt of marketing approval in the United States for rigosertib Oral in lower risk MDS patients, $5.0 million is due upon receipt of marketing approval in Japan for rigosertib Oral in lower risk MDS patients, $5.0 million is due upon receipt of marketing approval in the United States for rigosertib IV in combination with gemcitabine in pancreatic cancer patients, and $3.0 million is due upon receipt of marketing approval in Japan for rigosertib IV in combination with gemcitabine in pancreatic cancer patients. Furthermore, upon receipt of marketing approval in the United States and Japan for an additional specified indication of rigosertib, which we are currently not pursuing, an aggregate of $4.0 million would be due. In addition to these pre-commercial milestones, we are eligible to receive tiered milestone payments of up to an aggregate of $30.0 million based upon annual net sales of rigosertib by SymBio in the licensed territory. Further, under the terms of the SymBio license agreement, SymBio is obligated to make royalty payments to us at percentage rates ranging from the mid-teens to 20% based on net sales of rigosertib by SymBio in the licensed territory.

        In May 2010, we entered into a funding agreement with LLS to fund the development of rigosertib. Under the LLS funding agreement, we are obligated to use the funding received exclusively for the payment or reimbursement of the costs and expenses for clinical development activities for rigosertib. Under this agreement, we retain ownership and control of all intellectual property pertaining to works of authorship, inventions, know-how, information, data and proprietary material.

        Under the LLS funding agreement, as amended, we received funding of $8.0 million from LLS through 2012. We have not received any funding in 2013 and we terminated the funding agreement effective as of March 2013. We are required to make specified payments to LLS, including payments payable upon execution of the first out-license; first approval for marketing by a regulatory body; completion of the first commercial sale of rigosertib; and achieving specified annual net sales levels of rigosertib. The extent of these payments and our obligations will depend on whether we out-license rights to develop or commercialize rigosertib to a third party, we commercialize rigosertib on our own or we combine with or are sold to another company. In addition, we will pay to LLS a single-digit percentage royalty of our net sales of rigosertib, if any. The sum of our payments to LLS is capped at three times the total funding received from LLS, or $24.0 million.

Financial Overview

    Revenue

        To date, we have derived revenue principally from activities pursuant to our collaboration arrangements with Baxter and SymBio as well as from grants and research agreements. The following table sets forth a summary of revenue recognized from our collaboration agreements and research agreements for the years ended December 31, 2011 and 2012 and for the three months ended March 31, 2012 and 2013:

 
  Year Ended December 31,  
 
  2011   2012  

Baxter license and collaboration revenue

  $   $ 45,490,000  

SymBio license and collaboration revenue

    227,000     503,000  

Research funding

    1,260,000     197,000  
           

  $ 1,487,000   $ 46,190,000  
           

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  Three Months Ended
March 31,
 
 
  2012   2013  

Baxter license and collaboration revenue

  $   $ 978,000  

SymBio license and collaboration revenue

    113,000     138,000  

Research funding

    85,000      
           

  $ 198,000   $ 1,116,000  
           

        The following table sets forth our primary sources of research funding for the years ended December 31, 2011 and 2012:

 
  Year Ended December 31,  
 
  2011   2012  

Department of Defense Grant for recilisib

  $ 1,182,000   $  

National Institute of Health Grant for ON 1231320

    78,000     197,000  
           

  $ 1,260,000   $ 197,000  
           

        We have not generated any revenue from commercial product sales. In the future, if any of our product candidates currently under development are approved for commercial sale in the United States and Canada, we may generate revenue from product sales, or alternatively, we may choose to select a collaborator to commercialize our product candidates in these markets.

        The Baxter collaboration agreement is considered to be a multiple-element arrangement for accounting purposes. We determined that there are two deliverables under the Baxter agreement; specifically, the license to rigosertib for Europe and the related research and development services that we are obligated to provide. We concluded that $42.4 million of the fixed and determinable $50.0 million upfront payment was associated with the license and $7.6 million was associated with the research and development services. We recognized the entire $42.4 million associated with the upfront license as revenue during the third quarter of 2012 upon the execution of the Baxter agreement, and we are recognizing the research and development services revenue of $7.6 million on the proportional performance method over the period of commitment and development, which we estimate to be through March 31, 2014, the period of our non-contingent obligations to perform research and development services sufficient to advance rigosertib. For the year ended December 31, 2012 and for the three months ended March 31, 2013, we recognized $3.1 million and $1.0 million, respectively, of research and development services revenue under the Baxter agreement.

        The SymBio collaboration agreement is also considered to be a multiple-element arrangement for accounting purposes. We determined that there were three deliverables under the SymBio collaboration agreement; specifically, the license to rigosertib for Japan and Korea, our obligation to perform research and development services necessary for SymBio to seek approval in its territory and our obligation to participate on a joint steering committee. We concluded that these deliverables should be accounted for as a single unit of accounting. We determined that the $7.5 million upfront payment received in 2011 should be deferred and recognized as revenue on a straight-line basis through December 2027, reflecting our estimate of when we will complete our obligations under the agreement. For the years ended December 31, 2011 and 2012, we recognized revenues of $227,000 and $455,000, respectively, under the SymBio collaboration agreement. In addition, we recognized revenues of $48,000 for the year ended December 31, 2012 related to the supply agreement with SymBio. For the three months ended March 31, 2013, we recognized revenues of $113,000 under the SymBio collaboration agreement. In addition, we recognized revenues of $25,000 for the three months ended March 31, 2013 related to the supply agreement with SymBio.

        The remaining revenue recognized during the years ended December 31, 2011 and 2012 of $1,260,000 and $197,000, respectively, pertained to research and development services provided under research grants.

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        Pursuant to our funding agreement with LLS, during the year ended December 31, 2012, we paid $1.0 million to LLS, which we recorded as research and development expenses. This payment reduced the maximum milestone and royalty payment obligation under this agreement to $23.0 million at December 31, 2012.

        In addition, some of our obligations under the LLS funding agreement will remain in effect until the completion of specified milestones and payments to LLS. Assuming the successful outcome of the development activities covered by the LLS funding agreement and our receipt of necessary regulatory approvals, we will be required to take commercially reasonable steps through March 2018 to advance the development of rigosertib in clinical trials and to bring rigosertib to practical application for MDS in a major market country, provided that we believe the product is safe and effective. We believe that we can satisfy our obligation by out-licensing rigosertib to, or partnering rigosertib with, a third party. We are required to report to LLS on our efforts and results with respect to continuing development of rigosertib. Our failure to perform these diligence obligations, even if we successfully achieve the specified development milestones, would require us to pay back to LLS the total amount of the funding we received from them, unless an exception applies. If LLS were to claim that such failure occurred and we disagreed with such claim, the dispute would be settled through binding arbitration.

        As a result of the potential obligation to pay back to LLS the total amount of funding received under this arrangement, the $8.0 million of milestone payments we received through March 31, 2013 has been recorded as deferred revenue.

        We recently entered into a joint venture with GVK Biosciences Private Limited, or GVK, a CRO based in India, to collaborate on the development of two of our preclinical programs. GVK will initially make a capital contribution of $500,000 in exchange for a 10% interest in the joint venture and we will contribute a sub-license to the intellectual property related to the two programs in exchange for a 90% interest. GVK will be required to make additional capital contributions over time, subject to specified conditions, and its interest in the joint venture will increase to as much as 50%. At specified times, we will be entitled to buy back from GVK the rights to either of these two programs.

        We currently anticipate that the joint venture will be consolidated in our financial statements, which means that we will include its assets and liabilities in our balance sheets and its expenses in our statements of operations. We do not expect the consolidation of the joint venture will initially have a material affect on our consolidated financial position or results of operations.

    Operating Expenses

        The following table summarizes our operating expenses for the years ended December 31, 2011 and 2012 and for the three months ended March 31, 2012 and 2013:

 
  Year Ended December 31,  
 
  2011   2012  

General and administrative

  $ 6,436,000   $ 15,707,000  

Research and development

    22,624,000     52,762,000  
           

Total operating expenses

  $ 29,060,000   $ 68,469,000  
           

 
  Three Months Ended
March 31,
 
 
  2012   2013  

General and administrative

  $ 2,460,000   $ 3,346,000  

Research and development

    8,448,000     12,756,000  
           

Total operating expenses

  $ 10,908,000   $ 16,102,000  
           

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    General and Administrative Expenses

        General and administrative expenses consist principally of salaries and related costs for executive and other administrative personnel, including stock-based compensation and travel expenses. Other general and administrative expenses include facility-related costs, communication expenses and professional fees for legal, patent review, consulting and accounting services.

        For the years ended December 31, 2011 and 2012 and for the three months ended March 31, 2012 and 2013, our general and administrative expenses totaled approximately $6.4 million, $15.7 million, $2.5 million and $3.3 million, respectively. We anticipate that our general and administrative expenses will increase in the future with the continued research and development and potential commercialization of our product candidates and as we operate as a public company. These increases will likely include increased costs for insurance, costs related to the hiring of additional personnel and payments to outside consultants, investor relations, lawyers and accountants, among other expenses. Additionally, if and when we believe a regulatory approval of a product candidate appears likely, we anticipate an increase in payroll and expense as a result of our preparation for commercial operations, especially as it relates to the sales and marketing of our product candidates.

    Research and Development Expenses

        Our research and development expenses consist primarily of costs incurred for the development of our product candidates, which include:

    employee-related expenses, including salaries, benefits, travel and stock-based compensation expense;

    expenses incurred under agreements with CROs and investigative sites that conduct our clinical trials and preclinical studies;

    the cost of acquiring, developing and manufacturing clinical trial materials;

    facilities, depreciation and other expenses, which include direct and allocated expenses for rent and maintenance of facilities, insurance and other supplies; and

    costs associated with preclinical activities and regulatory operations.

        Research and development costs are expensed as incurred. License fees and milestone payments we make related to in-licensed products and technology are expensed if it is determined that they have no alternative future use. We record costs for some development activities, such as clinical trials, based on an evaluation of the progress to completion of specific tasks using data such as patient enrollment, clinical site activations or information provided to us by our vendors.

        Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We plan to increase our research and development expenses for the foreseeable future.

        To date, our research and development expenses have related primarily to the development of rigosertib. In the years ended December 31, 2011 and 2012 and for the three months ended March 31, 2012 and 2013, we recorded approximately $22.6 million, $52.8 million, $8.4 million and $12.8 million, respectively, of research and development expenses. We do not currently utilize a formal time allocation system to capture expenses on a project-by-project basis because we are organized and record expense by functional department and our employees may allocate time to more than one development project. Accordingly, we do not allocate expenses to individual projects or product candidates, although we do allocate some portion of our research and development expenses by functional area and by compound, as shown below.

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        The following table summarizes our research and development expenses by functional area for the years ended December 31, 2011 and 2012:

 
  Year Ended
December 31,
 
 
  2011   2012  

Clinical development

  $ 10,926,000   $ 19,285,000  

Personnel related

    4,020,000     4,876,000  

Consulting fees

    1,949,000     3,422,000  

Milestone payments

    1,875,000     13,500,000  

Manufacturing and formulation

    1,584,000     1,752,000  

Institutional research

    1,234,000     1,417,000  

Pre-clinical research

    667,000     1,672,000  

Laboratory costs

    366,000     193,000  

Stock-based compensation

    3,000     6,645,000  
           

  $ 22,624,000   $ 52,762,000  
           

        The following table summarizes our research and development expenses by functional area for the three months ended March 31, 2012 and 2013:

 
  Three Months Ended
March 31,
 
 
  2012   2013  

Clinical development

  $ 4,194,000   $ 6,831,000  

Personnel related

    1,193,000     1,882,000  

Consulting fees

    809,000     1,496,000  

Manufacturing and formulation

    624,000     152,000  

Institutional research

    255,000     359,000  

Pre-clinical research

    145,000     835,000  

Laboratory costs

    58,000     43,000  

Stock-based compensation

    1,170,000     1,158,000  
           

  $ 8,448,000   $ 12,756,000  
           

        The following table summarizes our research and development expenses by compound for the years ended December 31, 2011 and 2012:

 
  Year Ended
December 31,
 
 
  2011   2012  

Rigosertib

  $ 15,915,000   $ 38,683,000  

Recilisib

    876,000     286,000  

ON 013105

    202,000     274,000  

Other research and development

    1,608,000     1,998,000  

Personnel related and stock-based compensation

    4,023,000     11,521,000  
           

  $ 22,624,000   $ 52,762,000  
           

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        The following table summarizes our research and development expenses by compound for the three months ended March 31, 2012 and 2013:

 
  Three Months Ended
March 31,
 
 
  2012   2013  

Rigosertib

  $ 5,435,000   $ 9,183,000  

Recilisib

    221,000     20,000  

ON 013105

    68,000     58,000  

Other research and development

    361,000     455,000  

Personnel related and stock-based compensation

    2,363,000     3,040,000  
           

  $ 8,448,000   $ 12,756,000  
           

        It is difficult to determine with certainty the duration and completion costs of our current or future preclinical programs and clinical trials of our product candidates, or if, when or to what extent we will generate revenues from the commercialization and sale of any of our product candidates that obtain regulatory approval. We may never succeed in achieving regulatory approval for any of our product candidates. The duration, costs and timing of clinical trials and development of our product candidates will depend on a variety of factors, including the uncertainties of future clinical and preclinical studies, uncertainties in clinical trial enrollment rate and significant and changing government regulation. In addition, the probability of success for each product candidate will depend on numerous factors, including competition, manufacturing capability and commercial viability. We will determine which programs to pursue and how much to fund each program in response to the scientific and clinical success of each product candidate, as well as an assessment of each product candidate's commercial potential.

    Change in Fair Value of Warrant Liability

        We have issued warrants for the purchase of our Series G convertible preferred stock that we believe are financial instruments that may require a transfer of assets because of the redemption features of the underlying preferred stock. Therefore, we have classified these warrants as liabilities that we re-measure to fair value at each balance sheet date and we record the changes in the fair value of the warrant liability as either income or expense. Upon consummation of this offering, the underlying preferred stock will be converted to common stock, and the fair value of the warrant liability at that time will be reclassified to additional paid-in capital.

    Interest Expense and Other Income, Net

        Other income, net consists principally of interest income earned on cash and cash equivalent balances and income earned on our sale of New Jersey state net operating losses in 2012.

        Interest expense for the years ended December 31, 2011 and 2012 consisted of cash paid and non-cash interest expense related to our prior loan from a stockholder and convertible promissory notes payable, as well as a charge for the unamortized contingent beneficial conversion feature upon conversion of those promissory notes into shares of Series I convertible preferred stock.

    Accretion of Preferred Stock

        We account for the redemption of premium and issuance costs on our preferred stock using the interest method, accreting such amounts to preferred stock from the date of issuance to the earliest date of redemption.

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Critical Accounting Policies and Significant Judgments and Estimates

        This management's discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in our consolidated financial statements. On an ongoing basis, we evaluate our estimates and judgments, including those related to accrued expenses, revenue recognition, deferred revenue and stock-based compensation. We base our estimates on historical experience, known trends and events and various other factors that we believe to be reasonable under the circumstances, the results of which form the 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.

        While our significant accounting policies are described in the notes to our consolidated financial statements appearing elsewhere in this prospectus, we believe the following accounting policies to be most critical to the judgments and estimates used in the preparation of our consolidated financial statements.

    Revenue Recognition

        We generate revenue primarily through collaborative research and license agreements. The terms of these agreements contain multiple deliverables, which may include licenses, research and development activities, participation in joint steering committees and product supply. The terms of these agreements may include nonrefundable upfront license fees, payments for research and development activities, payments based upon the achievement of specified milestones, royalty payments based on product sales derived from the collaboration, and payments for supplying product. In all instances, we recognize revenue only when the price is fixed or determinable, persuasive evidence of an arrangement exists, delivery has occurred or the services have been rendered, collectability of the resulting receivable is reasonably assured and we have fulfilled our performance obligations under the contract.

        Effective January 1, 2011, we adopted the Financial Accounting Standards Board, or FASB, Accounting Standards Update, or ASU, No. 2009-13, Multiple-Deliverable Revenue Arrangements , or ASU 2009-13. This guidance, which applies to multiple-element arrangements entered into or materially modified on or after January 1, 2011, amends the criteria for separating and allocating consideration in a multiple-element arrangement by modifying the fair value requirements for revenue recognition and eliminating the use of the residual value method. The selling prices of deliverables under an arrangement may be derived using third-party evidence, or TPE, or a best estimate of selling price, or BESP, if vendor-specific objective evidence of fair value, or VSOE, is not available. The objective of BESP is to determine the price at which we would transact a sale if the element within the license agreement was sold on a standalone basis. Establishing BESP involves management's judgment and takes into account multiple factors, including market conditions and company-specific factors, such as those factors contemplated in negotiating the agreements as well as internally developed models that include assumptions related to market opportunity, discounted cash flows, estimated development costs, probability of success, and the time needed to commercialize a product candidate pursuant to the license. In validating the BESP, management considers whether changes in key assumptions used to determine the BESP will have a significant effect on the allocation of the arrangement consideration between the multiple deliverables. We may use third-party valuation specialists to assist us in determining BESP. Deliverables under the arrangement are separate units of accounting if (i) the delivered item has value to the customer on a standalone basis and (ii) if the arrangement includes a general right of return relative to the delivered item, delivery or performance of the undelivered item is considered probable and substantially within our control. The arrangement consideration that is fixed

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or determinable at the inception of the arrangement is allocated to the separate units of accounting based on their relative selling prices. The appropriate revenue recognition model is applied to each element and revenue is accordingly recognized as each element is delivered. Management exercises significant judgment in determining whether a deliverable is a separate unit of accounting.

        In determining the separate units of accounting, we evaluate whether the license has standalone value to the collaborator based on consideration of the relevant facts and circumstances for each arrangement. Factors considered in this determination include the research and development capabilities of the collaborator and the availability of relevant research expertise in the marketplace. In addition, we consider whether or not (i) the collaborator can use the license for its intended purpose without the receipt of the remaining deliverables, (ii) the value of the license is dependent on the undelivered items and (iii) the collaborator or other vendors can provide the undelivered items.

        Under a collaborative research and license agreement, a steering committee is typically responsible for overseeing the general working relationships, determining the protocols to be followed in the research and development performed, and evaluating the results from the continued development of the product. We evaluate whether our participation in joint steering committees is a substantive obligation or whether the services are considered inconsequential or perfunctory. The factors we consider in determining if our participation in a joint steering committee is a substantive obligation include: (i) which party negotiated or requested the steering committee, (ii) how frequently the steering committee meets, (iii) whether or not there are any penalties or other recourse if we do not attend the steering committee meetings, (iv) which party has decision making authority on the steering committee and (v) whether or not the collaborator has the requisite experience and expertise associated with the research and development of the licensed intellectual property.

        For all periods presented, whenever we determine that an element is delivered over a period of time, we recognize revenue using either a proportional performance model or a straight-line model over the period of performance, which is typically the research and development term. We typically use progress achieved under our various CRO contracts as the measure of performance. At each reporting period, we reassess our cumulative measure of performance and make appropriate adjustments, if necessary. We recognize revenue using the proportional performance model whenever we can make reasonably reliable estimates of the level of effort required to complete our performance obligations under an arrangement. We recognize revenue under the proportional performance model at each reporting period by multiplying the total expected payments under the contract, excluding royalties and payments contingent upon achievement of milestones, by the ratio of the level of effort incurred to date to the estimated total level of effort required to complete the performance obligations under the arrangement. Revenue is limited to the lesser of the cumulative amount of payments received or the cumulative amount of revenue earned, as determined using the proportional performance model as of each reporting period. Alternatively, if we cannot make reasonably reliable estimates of the level of effort required to complete our performance obligations under an arrangement, then we recognize revenue under the arrangement on a straight-line basis over the period expected to complete our performance obligations.

        Incentive milestone payments may be triggered either by the results of our research efforts or by events external to us, such as regulatory approval to market a product. We recognize consideration that is contingent upon achievement of a milestone in its entirety as revenue in the period in which the milestone is achieved, but only if the consideration earned from the achievement of a milestone meets all the criteria for the milestone to be considered substantive at the inception of the arrangement. For a milestone to be considered substantive, the consideration earned by achieving the milestone must be commensurate with either our performance to achieve the milestone or the enhancement of the value of the item delivered as a result of a specific outcome resulting from our performance to achieve the milestone, relate solely to our past performance and be reasonable relative to all deliverables and payment terms in the collaboration agreement.

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        For events for which the occurrences are contingent solely upon the passage of time or are the result of performance by a third party, we will recognize the contingent payments as revenue when payments are earned, the amounts are fixed and determinable and collectability is reasonably assured.

        We will recognize royalty revenue, if any, as earned in accordance with the contract terms when third-party sales can be reliably measured and collectability is reasonably assured.

        We recognized revenue of $45.5 million and $1.0 million during the year ended December 31, 2012 and during the three months ended March 31, 2013, respectively, under our license and collaboration agreement with Baxter. We recognized revenue of $227,000, $503,000 and $138,000 during the years ended December 31, 2011 and 2012 and for the three months ended March 31, 2013, respectively, under our license and collaboration agreement with SymBio. The remaining revenue recognized during the years ended December 31, 2011 and 2012 of $1,260,000 and $197,000, respectively, pertained to research and development services provided under research grants. The Baxter and SymBio agreements are the only agreements that are being accounted for under ASU 2009-13.

    Research and Development Expenses

        Research and development costs are charged to expense as incurred and include, but are not limited to, license fees related to the acquisition of in-licensed products, employee-related expenses, including salaries, benefits and travel, expenses incurred under agreements with CROs and investigative sites that conduct clinical trials and preclinical studies, the cost of acquiring, developing and manufacturing clinical trial materials, facilities, depreciation and other expenses, which include direct and allocated expenses for rent and maintenance of facilities, insurance and other supplies and costs associated with preclinical activities and regulatory operations.

        We record costs for certain development activities, such as clinical trials, based on our evaluation of the progress to completion of specific tasks using data such as patient enrollment, clinical site activations, or information provided to us by our vendors on their actual costs incurred. Payments for these activities are based on the terms of the individual arrangements, which may differ from the pattern of costs incurred, and are reflected in the consolidated financial statements as prepaid or accrued research and development expense, as the case may be.

    Income Taxes

        We recorded deferred tax assets of $55.3 million as of December 31, 2012, which have been fully offset by a valuation allowance due to uncertainties surrounding our ability to realize these tax benefits. The deferred tax assets are primarily composed of federal and state tax net operating loss, or NOL, carry forwards and research and development tax credit carry forwards. As of December 31, 2012, we had federal NOL carry forwards of $91.3 million, state NOL carry forwards of $75.1 million and research and development tax credit carry forwards of $13.9 million available to reduce future taxable income, if any. These federal NOL carry forwards will begin to expire at various dates starting in 2019. The state NOL carry forwards will begin to expire at various dates starting in 2016. In general, if we experience a greater than 50 percentage point aggregate change in ownership of specified significant stockholders over a three-year period, utilization of our pre-change NOL carry forwards will be subject to an annual limitation under Section 382 of the U.S. Internal Revenue Code of 1986, as amended, or the Code, and similar state laws. Such limitations may result in expiration of a portion of the NOL carry forwards before utilization and may be substantial. We have determined that we have experienced ownership changes in the past and approximately $30.7 million of our NOL carry forwards are subject to an annual limitation under Section 382 of the Code. If we experience a Section 382 ownership change in connection with this offering or as a result of future changes in our stock ownership, some of which changes are outside our control, the tax benefits related to the NOL carry forwards may be further limited or lost.

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    Preferred Stock

        We account for the redemption of premium and issuance costs on our preferred stock using the interest method, accreting such amounts to our preferred stock from the date of issuance to the earliest date of redemption.

    Preferred Stock Warrants

        Our outstanding warrants to purchase shares of preferred stock are classified as liabilities and recorded at fair value, regardless of the timing of the redemption feature or the redemption price or the likelihood of redemption of the underlying preferred stock. The warrants are subject to re-measurement at each balance sheet date and we recognize any change in fair value in our consolidated statements of operations as a change in fair value of warrant liability. Pursuant to the terms of these warrants, upon the conversion of the series of preferred stock underlying the warrants, the warrants automatically become exercisable for shares of common stock based upon the conversion ratio of the underlying series of preferred stock. The consummation of this offering will result in the conversion of all series of our preferred stock into common stock. Upon such conversion of the underlying series of preferred stock, the warrants will be classified as a component of equity and no longer be subject to re-measurement. We will continue to adjust the liability for changes in fair value until the earlier of the exercise or expiration of the warrants or the conversion of the underlying preferred stock. Our consolidated statements of operations for the period in which this offering occurs will be affected by any change in the fair value of the warrants from the end of the prior period through the time of conversion.

    Stock-Based Compensation

        Our stock option awards have been accounted for as liability awards as we, through our chairman of the board of directors, who is also a significant stockholder, have established a pattern of settling these awards for cash in the past. Accordingly, we have measured stock-based compensation expense at the end of each reporting period based on the intrinsic value of all outstanding vested stock options on each reporting date and recognize expense based on any increases in their intrinsic value since the last measurement date to the extent the stock options have vested. The intrinsic value represents the difference between the current fair value of our common stock and the contractual exercise prices of the awards.

        Stock-based compensation expense totaled $6,000, $13.8 million and $2.5 million for the years ended December 31, 2011 and 2012 and for the three months ended March 31, 2013, respectively. We record stock-based compensation expense as a component of research and development expenses or general and administrative expenses, depending on the function performed by the optionee. For the years ended December 31, 2011 and 2012 and the three months ended March 31, 2012 and 2013, we allocated stock-based compensation as follows:

 
  Year Ended December 31,  
 
  2011   2012  

General and administrative

  $ 3,000   $ 7,199,000  

Research and development

    3,000     6,645,000  
           

Total

  $ 6,000   $ 13,844,000  
           

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  Three Months Ended
March 31,
 
 
  2012   2013  

General and administrative

  $ 1,267,000   $ 1,306,000  

Research and development

    1,170,000     1,158,000  
           

Total

  $ 2,437,000   $ 2,464,000  
           

        On April 23, 2013, we distributed a notification letter to all holders of stock options under our 2007 Equity Compensation Plan advising them that cash settlement transactions will no longer occur, unless, at the time of a cash settlement transaction, the option holder has held the common stock issued upon exercise of options for a period of greater than six months prior to such cash settlement transaction and that any such settlement would be at the fair value of the common stock on the date of such sale. Following this notification, we reclassified options outstanding under our 2007 Equity Compensation Plan from liabilities to stockholders' deficit within our consolidated balance sheets.

        Upon issuing the notification, a modification to the liability awards occurred and the awards will be accounted for as equity awards from the date of modification with compensation expensed fixed at fair value at the modification date. As a result, we classified the amount previously recorded as a stock-based compensation liability to additional paid-in capital. In addition, we will recognize the remaining modified date fair value over the remaining service period, generally the vesting period, which we will recognize on a straight-line basis. The fair value of the modified awards will be estimated using the Black-Scholes valuation model. Awards granted to non-employees will also be valued using the Black-Scholes valuation model and will be subject to periodic adjustment until the underlying equity instruments vest.

    Fair Value Estimates

        We are required to estimate the fair value of the common stock underlying our stock-based awards when performing the fair value calculations using the intrinsic value method at each reporting date. We engaged an independent third-party valuation firm to assist our board of directors in determining the fair value of the common stock underlying our stock-based awards. All options to purchase shares of our common stock have been granted with an exercise price per share no less than the fair value per share of our common stock underlying those options on the date of grant, based on the information known to us on the date of grant. Accordingly, under the liability method of accounting, we have not recorded any stock-based compensation expense on the grant dates of our options. However, under the liability method, the liability for all outstanding vested stock-based awards is adjusted through our statement of operations, based on the current estimated fair value of our common stock at each reporting date. As of March 31, 2013, the liability for all outstanding vested stock-based awards has been recorded based on the fair value of our common stock on March 31, 2013 as determined by our board of directors with the assistance of an independent third-party valuation.

        In the absence of a public trading market for our common stock, on each grant date, we develop an estimate of the fair value of our common stock in order to determine an exercise price for the option grants based in part on input from the independent third-party valuation firm. We determined the fair value of our common stock using methodologies, approaches and assumptions consistent with the American Institute of Certified Public Accountants, or AICPA, Audit and Accounting Practice Aid Series: Valuation of Privately Held Company Equity Securities Issued as Compensation, or the AICPA Practice Guide. In addition, our board of directors considered various objective and subjective factors, along with input from management and the independent third-party valuation firm, to determine the fair value of our common stock, including external market conditions affecting the biotechnology industry, trends within the biotechnology industry, the prices at which we sold shares of our different series of preferred stock, the superior rights and preferences of each series of preferred stock relative

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to our common stock at the time of each grant, our results of operations and financial position, the status of our research and development efforts, our stage of development and business strategy, the lack of an active public market for our common and our preferred stock, and the likelihood of achieving a liquidity event such as an initial public offering or sale of our company in light of prevailing market conditions.

        The per share estimated fair value of common stock in the table below represents the determination by our board of directors of the fair value of our common stock as of the date of grant, taking into consideration the various objective and subjective factors described above, including the conclusions, if applicable, of contemporaneous valuations of our common stock as discussed below. The following table presents the grant dates and related exercise prices of stock options granted to employees and non-employees from January 1, 2011 through March 20, 2013:

Date of issuance
  Number of
shares
underlying
option
grants
  Exercise
price per
option
  Per share
estimated
fair value
of common
stock
  Per share
grant date
intrinsic
value of
options
 

January 1, 2011 to February 1, 2012

    414,777   $ 6.13   $ 6.13   $  

March 1, 2012 to July 11, 2012

    35,719     7.53     7.53      

August 31, 2012 to March 20, 2013

    1,182,330     13.28     13.28      

        In determining the exercise prices of the options set forth in the table above granted from January 1, 2011 through March 20, 2013, our board of directors considered the most recent valuations of our common stock, which were prepared as of September 30, 2010, February 29, 2012, and July 31, 2012, and based its determination in part on the analyses summarized below. On May 16, 2013, an independent third-party valuation was prepared as of March 31, 2013 to assist our board of directors in determining the exercise price of options to be issued after that date and to calculate the liability for our outstanding vested stock awards as of March 31, 2013.

        Our board of directors granted stock options from January 1, 2011 through February 1, 2012, with each having an exercise price of $6.13 per share. The exercise price per share was supported by an independent third-party valuation as of September 30, 2010 that was performed in connection with our Series H convertible preferred stock financing. In conducting this valuation, we estimated the value of our common stock using the income approach to estimate our equity value. The income approach involves applying an appropriate risk-adjusted discount rate to projected cash flows based on forecasted revenue and costs. For the September 30, 2010 valuation, we used a risk-adjusted discount rate of 17% to discount our projected cash flows to the valuation date. To corroborate our equity value calculated under the income approach, we used the option-pricing back solve method, or OPM-BS, to estimate the equity value that corresponded to the pricing and terms of the Series H convertible preferred stock financing. The lead investor in the financing was an unrelated investor, and the price for the Series H convertible preferred stock of $9.79 per share, which is the equivalent of $13.05 per share of common stock on an as converted basis, was determined through negotiations with the investors. We then allocated the equity value among our preferred stock and common stock using the OPM-BS. For our OPM-BS analysis, we estimated the time to liquidity as three years and assumed an annual volatility rate of 64.0%. Our estimate of volatility was based on historical share price trading data for a group of 13 companies we considered comparable to ours. We applied a discount for lack of marketability of 34.0% to our common stock. The income approach and OPM-BS methodologies resulted in a similar equity value. Based on these factors, we concluded that our common stock had a fair value of $6.13 per share as of September 30, 2010.

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        We concluded that the value of our company remained relatively unchanged from September 30, 2010 through February 1, 2012. This was primarily attributable to our continued efforts to obtain financing to support our liquidity needs and funding of operating expenses. The specific facts and circumstances considered by our board of directors included the following:

        Our board of directors granted stock options from March 1, 2012 through July 11, 2012, with each having an exercise price of $7.53 per share. The exercise price per share was supported by an independent third-party valuation as of February 29, 2012. The specific facts and circumstances considered by our board of directors for the February 29, 2012 valuation included the following:

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        Our board of directors granted stock options from August 31, 2012 through March 20, 2013, with each having an exercise price of $13.28 per share. The exercise price per share was supported by an independent third-party valuation as of July 31, 2012. The specific facts and circumstances considered by our board of directors for the July 31, 2012 valuation included the following:

        We completed a valuation as of March 31, 2013 and determined the fair value of our common stock to be $14.74 per share. The specific facts and circumstances considered by our board of directors for this valuation included the following:

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Determination of Estimated Offering Price

        The midpoint of the price range for this offering as determined by us and the underwriters is $13.00 per share. In comparison, our estimate of the fair value of our common stock was $14.74 per share as of the March 31, 2013 valuation, which was used for stock option grants subsequent to March 20, 2013. We note that, as is typical in initial public offerings, the price range was not derived using a formal determination of fair value, but was determined based upon discussions between us and the underwriters. Among the factors that were considered in setting this range were our prospects and the history of and prospects for our industry, the general condition of the securities markets and the recent market prices of, and the demand for, publicly traded common stock of generally comparable companies. We believe that the difference between the fair value of our common stock as of March 31, 2013 and the midpoint of the price range for this offering is the result of these factors. See "—Critical Accounting Policies and Significant Judgment and Estimates—Stock-Based Compensation—Valuation as of March 31, 2013."

        There is inherent uncertainty in our forecasts and projections and, if we had made different assumptions and estimates than those described previously, the amount of our stock-based compensation expense, net loss, and net loss per share amounts could have been materially different.

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        As part of the process of preparing our consolidated financial statements, we are required to estimate our accrued expenses. Our clinical trial accrual process seeks to account for expenses resulting from our obligations under contracts with vendors, consultants and CROs and clinical site agreements in connection with conducting clinical trials. The financial terms of these contracts are subject to negotiations, which vary from contract to contract and may result in payment flows that do not match the periods over which materials or services are provided to us under such contracts. Our objective is to reflect the appropriate clinical trial expenses in our consolidated financial statements by matching the appropriate expenses with the period in which services and efforts are expended. We account for these expenses according to the progress of the trial as measured by patient progression and the timing of various aspects of the trial. We determine accrual estimates through financial models that take into account discussion with applicable personnel and outside service providers as to the progress or state of completion of trials, or the services completed. During the course of a clinical trial, we adjust our clinical expense recognition if actual results differ from our estimates. We make estimates of our accrued expenses as of each balance sheet date in our consolidated financial statements based on the facts and circumstances known to us at that time. Our clinical trial accrual and prepaid assets are dependent, in part, upon the receipt of timely and accurate reporting from CROs and other third-party vendors. Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in us reporting amounts that are too high or too low for any particular period.

        We compute basic net loss per share of common stock by dividing net loss applicable to common stockholders by the weighted-average number of shares of common stock outstanding during the period, excluding the dilutive effects of preferred stock, warrants to purchase preferred stock and stock options. We compute diluted net loss per share of common stock by dividing the net loss applicable to common stockholders by the sum of the weighted-average number of shares of common stock outstanding during the period plus the potential dilutive effects of preferred stock and warrants to purchase preferred stock, and stock options outstanding during the period calculated in accordance with the treasury stock method, but such items are excluded if their effect is anti-dilutive. Because the impact of these items is anti-dilutive during periods of net loss, there was no difference between our basic and diluted net loss per share of common stock for the years ended December 31, 2011 and 2012 and for the three months ended March 31, 2012 and 2013.

JOBS Act

        In April 2012, the JOBS Act was enacted. Section 107 of the JOBS Act provides that an "emerging growth company" can take advantage of an extended transition period for complying with new or revised accounting standards. Thus, an "emerging growth company" can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected not to avail ourselves of this extended transition period and, as a result, we will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for other companies.

Internal Control Over Financial Reporting

        In preparing our consolidated financial statements as of and for the year ended December 31, 2012, we and our independent registered public accounting firm identified control deficiencies in the design and operation of our internal control over financial reporting that together constituted a material weakness in our internal control over financial reporting. A material weakness is a deficiency,

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or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis. The material weakness identified was that we did not have sufficient financial reporting and accounting staff with appropriate training in GAAP and SEC rules and regulations with respect to financial reporting. As such, our controls over financial reporting were not designed or operating effectively, and as a result there were adjustments required in connection with closing our books and records and preparing our 2012 consolidated financial statements. The control deficiencies that we and our independent registered public accounting firm identified, and the adjustments recorded as a result, were as follows:

        The material weakness in our internal control over financial reporting was attributable to our lack of sufficient financial reporting and accounting personnel with appropriate training in GAAP and SEC rules and regulations. In response to this material weakness, we have recently hired a Chief Financial Officer and a director of financial reporting, each with public company financial reporting experience. We intend to hire additional finance and accounting personnel with appropriate training, build our financial management and reporting infrastructure, and further develop and document our accounting policies and financial reporting procedures. However, we cannot assure you that we will be successful in pursuing these measures or that these measures will significantly improve or remediate the material weakness described above. We also cannot assure you that we have identified all of our existing material weaknesses, or that we will not in the future have additional material weaknesses.

        We have not yet remediated the material weakness described above, and the remediation measures that we have implemented and intend to implement may be insufficient to address our existing material weakness or to identify or prevent additional material weaknesses. See "Risk Factors—Risks Relating to this Offering and Ownership of Our Common Stock—If we are unable to successfully remediate the existing material weakness in our internal control over financial reporting, the accuracy and timing of our financial reporting may be adversely affected."

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        Neither we nor our independent registered public accounting firm has performed an evaluation of our internal control over financial reporting during any period in accordance with the provisions of the Sarbanes-Oxley Act. In light of the control deficiencies and the resulting material weakness that were identified as a result of the limited procedures performed, we believe that it is possible that, had we and our independent registered public accounting firm performed an evaluation of our internal control over financial reporting in accordance with the provisions of the Sarbanes-Oxley Act, additional material weaknesses and significant control deficiencies may have been identified. However, for as long as we remain an "emerging growth company" as defined in the JOBS Act, we intend to take advantage of the exemption permitting us not to comply with the requirement that our independent registered public accounting firm provide an attestation on the effectiveness of our internal control over financial reporting.

Results of Operations

    Comparison of the Three Months Ended March 31, 2012 and 2013

 
  Three Months Ended March 31,    
 
 
  2012   2013   Change  

Revenue

  $ 198,000   $ 1,116,000   $ 918,000  

Operating expenses:

                   

General and administrative

    2,460,000     3,346,000     886,000  

Research and development

    8,448,000     12,756,000     4,308,000  
               

Total operating expenses

    10,908,000     16,102,000     5,194,000  
               

Loss from operations

    (10,710,000 )   (14,986,000 )   (4,276,000 )

Change in fair value of warrant liability

    (609,000 )   14,000     623,000  

Interest expense

    (21,000 )       21,000  

Other income, net

    541,000     127,000     (414,000 )
               

Net loss before income taxes

    (10,799,000 )   (14,845,000 )   (4,046,000 )

Income taxes

             
               

Net loss

    (10,799,000 )   (14,845,000 )   (4,046,000 )

Accretion of preferred stock

    (1,231,000 )   (1,019,000 )   212,000  
               

Net loss applicable to common stockholders

  $ (12,030,000 ) $ (15,864,000 ) $ (3,834,000 )
               

        Revenues increased by $0.9 million for the first quarter of 2013 when compared to the same period in 2012 primarily as a result of entering into the Baxter agreement in the third quarter of 2012.

        General and administrative expenses increased by $0.9 million, or 36.0%, from $2.5 million for the three months ended March 31, 2012 to $3.3 million for the three months ended March 31, 2013. The increase was primarily attributable to an increase of $0.1 million related to stock-based compensation due to the increase in the fair value of our common stock, an increase of $0.5 million in professional fees, an increase of $0.1 million in travel expenses and an increase of $0.1 million as a result of the increase in general and administrative headcount from nine at the end of March 31, 2012 to 11 at March 31, 2013.

        Research and development expenses increased by $4.3 million, or 51.0%, from $8.5 million for the three months ended March 31, 2012 to $12.8 million for the three months ended March 31, 2013. This

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increase was driven by an increase in clinical trial expenses of $3.0 million for rigosertib, an increase of $0.7 million related to consulting services and an increase of $0.8 million related to an increase in research and development headcount from 25 at March 31, 2012 to 37 at March 31, 2013 as a result of our expanded research and development activities.

        The fair value of the warrant liability increased by $0.6 million during the three months ended March 31, 2012 compared to a decrease of $14,000 during the three months ended March 31, 2013, which resulted in a commensurate increase in other expense and other income, respectively. The decrease in the fair value of the warrant liability in 2013 was primarily due to a slight change in the value of the liability related to the revaluation of the warrants outstanding. The increase in the fair value of the warrant liability in 2012 was related to the revaluation of the outstanding warrants.

        Interest expense decreased from $21,000 during the three months ended March 31, 2012 to zero for the three months ended March 31, 2013, as the promissory note outstanding in 2012 converted into shares of Series I convertible preferred stock in July 2012.

        Other income, net, decreased by $0.4 million during the three months ended March 31, 2013 compared to the three months ended March 31, 2012. This decrease was largely the result of a $0.5 million gain recognized on our sale of New Jersey state NOL carry forwards in 2012.

    Comparison of Years Ended December 31, 2011 and 2012

 
  Year Ended December 31,    
 
 
  2011   2012   Change  

Revenue

  $ 1,487,000   $ 46,190,000   $ 44,703,000  

Operating expenses:

                   

General and administrative

    6,436,000     15,707,000     9,271,000  

Research and development

    22,624,000     52,762,000     30,138,000  
               

Total operating expenses

    29,060,000     68,469,000     39,409,000  
               

Loss from operations

    (27,573,000 )   (22,279,000 )   5,294,000  

Change in fair value of warrant liability

   
1,287,000
   
367,000
   
(920,000

)

Interest expense

    (19,000 )   (8,608,000 )   (8,589,000 )

Other income, net

    11,000     608,000     597,000  
               

Net loss before income taxes

    (26,294,000 )   (29,912,000 )   (3,618,000 )

Income taxes

             
               

Net loss

    (26,294,000 )   (29,912,000 )   (3,618,000 )

Accretion of preferred stock

    (4,020,000 )   (3,953,000 )   67,000  
               

Net loss applicable to common stockholders

  $ (30,314,000 ) $ (33,865,000 ) $ (3,551,000 )
               

        Revenues increased by $44.7 million in 2012 when compared to 2011 primarily as a result of entering into the Baxter agreement in 2012. Of this increase, $42.4 million related to the value ascribed to the license, and was therefore recognized immediately upon signing of the agreement, and

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$3.1 million related to the portion of development services revenue recognized in 2012 under the Baxter agreement. Those increases attributable to the Baxter agreement were partially offset by a $1.1 million reduction in research funding.

        General and administrative expenses increased by $9.3 million, or 144.0%, from $6.4 million for the year ended December 31, 2011 to $15.7 million for the year ended December 31, 2012. The increase was primarily attributable to an increase of $7.2 million related to stock-based compensation due to the increase in the fair value of our common stock during the year, an increase of $1.7 million in professional fees related to the negotiation of the Baxter agreement in 2012, and an increase of $0.4 million as a result of the increase in general and administrative headcount from six at the end of 2011 to nine at the end of 2012.

        Research and development expenses increased by $30.1 million, or 133.0%, from $22.6 million for the year ended December 31, 2011 to $52.8 million for the year ended December 31, 2012. This increase was driven by a $12.5 million milestone due to Temple University, or Temple, in 2012 as a result of entering into the Baxter agreement in 2012 compared to a $1.9 million payment to Temple in 2011 as a result of entering into the SymBio agreement. The change was also due to an increase in clinical trial expenses of $8.4 million for rigosertib, $6.6 million in additional stock-based compensation due to the increase in the fair value of our common stock during the year, an increase of $1.4 million related to consulting services in connection with the rigosertib clinical trials, an increase of $1.5 million in nonclinical trial-related costs for rigosertib and an increase of $0.9 million related to a change in research and development headcount from 25 at the end of 2011 to 36 at the end of 2012 as a result of our expanded research and development activities.

        The fair value of the warrant liability decreased by $1.3 million during the year ended December 31, 2011 compared to a decrease of $0.4 million during the year ended December 31, 2012, which in both cases resulted in a commensurate increase in other income. The decrease in the fair value of the warrant liability in 2012 was primarily due to the expiration of Series G convertible preferred stock warrants in 2012, which accounted for a decrease of $1.0 million in the value of the liability, which was partially offset by an increase of $0.6 million in the value of the liability related to the revaluation of the warrants outstanding. The decrease in the fair value of the warrant liability in 2011 was primarily due to the revaluation of the warrants outstanding.

        Interest expense increased by $8.6 million during the year ended December 31, 2012 compared to the year ended December 31, 2011. In July 2012, the holders of our convertible notes elected to convert their outstanding principal and accrued interest into shares of Series I convertible preferred stock. At the time of the conversion, there was $8.2 million in unamortized contingent beneficial conversion features that we immediately expensed.

        Other income, net, increased by $0.6 million during the year ended December 31, 2012 compared to the year ended December 31, 2011. This increase was driven by a $0.5 million gain recognized on our sale of New Jersey state NOL carry forwards.

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Liquidity and Capital Resources

        Since our inception, we have incurred net losses and generally negative cash flows from our operations. We incurred net losses of $26.3 million and $29.9 million for the years ended December 31, 2011 and 2012, respectively, and $10.8 million and $14.8 million for the three months ended March 31, 2012 and 2013, respectively. Our operating activities used $6.1 million and $13.9 million of cash flows during the three months ended March 31, 2012 and 2013, respectively. At March 31, 2013, we had an accumulated deficit of $183.2 million, working capital of $41.7 million and cash and cash equivalents of $67.3 million. Historically, we have financed our operations principally through private placements of preferred stock and convertible debt. Through March 31, 2013, we have received gross proceeds of $171.5 million from the issuance of preferred stock and convertible debt. We have also financed our operations with the $57.5 million in upfront payments we received from SymBio and Baxter in 2011 and 2012.

    Cash Flows

        The following table summarizes our cash flows for the years ended December 31, 2011 and 2012 and the three months ended March 31, 2012 and 2013:

 
  Year Ended December 31,  
 
  2011   2012  

Net cash (used in) provided by:

             

Operating activities

  $ (14,171,000 ) $ 1,633,000  

Investing activities

    (241,000 )   (279,000 )

Financing activities

    9,785,000     77,460,000  
           

Net (decrease) increase in cash and cash equivalents

  $ (4,627,000 ) $ 78,814,000  
           

 

 
  Three Months Ended March 31,  
 
  2012   2013  

Net cash (used in) provided by:

             

Operating activities

  $ (6,088,000 ) $ (13,949,000 )

Investing activities

    (4,000 )   (284,000 )

Financing activities

    3,637,000     6,000  

Effect of foreign currency translation on cash

        7,000  
           

Net decrease in cash and cash equivalents

  $ (2,455,000 ) $ (14,220,000 )
           

    Net cash (used in) provided by operating activities

        Net cash used in operating activities was $14.2 million for the year ended December 31, 2011 and consisted primarily of a net loss of $26.3 million and $0.9 million of noncash decreases primarily related to the change in fair value of our warrant liabilities. The cash used in operating activities was offset by the $7.7 million increase in deferred revenues primarily related to receipt of the upfront payment from SymBio under the research and collaboration agreement and the $5.4 million increase related to the change in operating assets and liabilities. The significant items in the change in operating assets and liabilities included a decrease in grant receivable of $1.7 million, a $2.2 million increase in accounts payable, and a $1.1 million increase in accrued expenses. The decrease in grant receivable was attributable to our receipt in 2011 of the grant payment from LLS. The increase in accounts payable and accrued expenses was primarily due to the timing of our payment of clinical trial costs related to the ongoing trials and development of our product candidates.

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        Net cash provided by operating activities was $1.6 million for the year ended December 31, 2012 and consisted primarily of noncash increases of $22.0 million and a $9.6 million increase related to the change in operating assets and liabilities that were offset by a net loss of $29.9 million. The noncash increases were primarily attributable to increases in stock-based compensation and recognition of debt discounts and beneficial conversion features of $8.2 million upon conversion of our convertible promissory notes into preferred stock. The significant items in the change in operating assets and liabilities included an increase in prepaid expenses and other current assets of $1.1 million, offset by increases in accrued expenses of $2.6 million and an increase in deferred revenues of $8.2 million. The increase in prepaid expenses and other current assets was primarily due to the prepayment of upfront costs for our Phase 3 clinical trials and continued development activities. The increase in accrued expenses was primarily due to the costs for our Phase 3 clinical trial activities. The increase in deferred revenues was primarily due to the receipt of payments from Baxter and LLS of $7.6 million and $4.1 million, respectively, pursuant to the terms of our agreements with such parties. These increases were partially offset by the recognition of the unamortized portions of upfront payments under our collaboration agreements with Baxter and SymBio for $3.1 million and $0.5 million, respectively.

        Net cash used in operating activities was $6.1 million for the three months ended March 31, 2012 and consisted primarily of a net loss of $10.8 million, offset by $3.1 million of noncash items primarily related to the change in fair value of our warrant liabilities and stock-based compensation. The cash used in operating activities was further offset by the $1.0 million increase in deferred revenue primarily related to receipt of an upfront payment from LLS under the research and collaboration agreement and the $0.6 million increase related to the change in operating assets and liabilities. The significant items in the change in operating assets and liabilities included a decrease in prepaid expenses of $0.2 million, a $0.2 million increase in accounts payable and a $0.2 million increase in accrued expenses.

        Net cash used in operating activities was $14.0 million for the three months ended March 31, 2013 and consisted primarily of a net loss of $14.8 million, partially offset by $2.5 million of stock-based compensation expense. A $1.6 million decrease related to the change in operating assets and liabilities drove the balance of cash used in operations. The significant items in the change in operating assets and liabilities included an increase in prepaid expenses and other current assets of $0.9 million and a decrease in deferred revenue of $1.1 million, offset by a net increase in accounts payable and accrued expenses of $0.4 million. The increase in prepaid expenses and other current assets was primarily due to the prepayment of upfront manufacturing costs and filing fees. The decrease in deferred revenue was due to the recognition of the unamortized portions of upfront payments under our collaboration agreements with Baxter and SymBio in the amounts of $1.0 million and $0.1 million, respectively.

    Net cash used in investing activities

        Net cash used in investing activities for the years ended December 31, 2011 and 2012 was $0.2 million and $0.3 million, respectively. Cash used in investing activities primarily consisted of purchases of fixed assets.

        Net cash used in investing activities for the three months ended March 31, 2012 and 2013 was $4,000 and $0.3 million, respectively. Cash used in investing activities consisted of purchases of fixed assets.

    Net cash provided by financing activities

        Net cash provided by financing activities was $9.8 million for the year ended December 31, 2011, which was primarily due to $7.2 million in proceeds from the issuance of Series H convertible preferred stock, $1.9 million in proceeds from the issuance of Series G convertible preferred stock, $0.8 million in proceeds from our loan and security agreement with a bank that were restricted and to be used for

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future debt repayment, $0.6 million in proceeds from a loan from our chairman of the board of directors, who is also a significant stockholder, and $0.2 million in proceeds upon the exercise of stock options. These proceeds were partially offset by $0.9 million in principal payments made under our loan and security agreement with a bank.

        Net cash provided by financing activities was $77.5 million for the year ended December 31, 2012, which was primarily due to $47.8 million in proceeds from the issuance of Series J convertible preferred stock in connection with the Baxter equity investment, $25.8 million in proceeds upon the issuance of convertible debt that was subsequently converted into shares of Series I convertible preferred stock, $2.2 million in proceeds upon the exercise of warrants in exchange for shares of Series G convertible preferred stock, $0.4 million in proceeds from collection of a subscription receivable for our issuance of Series H convertible preferred stock and $1.3 million in proceeds upon the exercise of stock options.

        Net cash provided by financing activities was $3.6 million for the three months ended March 31, 2012, which was primarily due to $0.4 million in proceeds from the issuance of Series H convertible preferred stock, $0.4 million in proceeds upon the exercise of warrants in exchange for shares of Series G convertible preferred stock and $2.8 million in proceeds from a loan from our chairman of the board of directors, who is also a significant stockholder.

        Net cash provided by financing activities was $6,000 for the three months ended March 31, 2013, resulting from the exercise of stock options.

Operating and Capital Expenditure Requirements

        We have not achieved profitability since our inception and we expect to continue to incur net losses for the foreseeable future. We expect our cash expenditures to increase in the near term as we fund our Phase 2 and Phase 3 clinical trials of rigosertib, as well as our clinical trials of our other earlier-stage product candidates and continuing preclinical activities. Following this offering, we will be a publicly traded company and will incur significant legal, accounting and other expenses that we were not required to incur as a private company. In addition, the Sarbanes-Oxley Act, as well as rules adopted by the SEC and the NASDAQ Stock Market, require public companies to implement specified corporate governance practices that are currently inapplicable to us as a private company. We expect these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. We estimate that we will incur approximately $2.0 to $3.0 million of incremental costs per year associated with being a publicly traded company, although it is possible that our actual incremental costs will be higher than we currently estimate.

        We believe that our existing capital resources, together with the net proceeds from this offering, will be sufficient to fund our operations for at least the next 12 months. However, we anticipate that we will need to raise substantial additional financing in the future to fund our operations. In order to meet these additional cash requirements, we may seek to sell additional equity or convertible debt securities that may result in dilution to our stockholders. If we raise additional funds through the issuance of convertible debt securities, these securities could have rights senior to those of our common stock and could contain covenants that restrict our operations. There can be no assurance that we will be able to obtain additional equity or debt financing on terms acceptable to us, if at all. Further, the achievement of milestones and receipt from Baxter and SymBio of milestone payments and royalties, even if rigosertib is approved for commercial use in Baxter's and SymBio's licensed territories, are not assured. Our failure to obtain sufficient funds on acceptable terms when needed could have a negative impact on our business, results of operations, and financial condition. Our future capital requirements will depend on many factors, including:

    the results of our Phase 2 and Phase 3 clinical trials;

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    whether Baxter and SymBio continue to pursue or terminate our collaboration arrangements for the development and commercialization of rigosertib in their licensed territories;

    the amount and timing of any milestone payments or royalties we may receive pursuant to our collaboration arrangements;

    the number and characteristics of any other product candidates we develop or may acquire;

    the scope, progress, results and costs of researching and developing our product candidates or any future product candidates, and conducting preclinical and clinical trials;

    the timing of, and the costs involved in, obtaining regulatory approvals for our product candidates or any future product candidates;

    the cost of commercialization activities if any future product candidates are approved for sale, including marketing, sales and distribution costs;

    the cost of manufacturing rigosertib and our other product candidates and any products that may achieve regulatory approval;

    our ability to establish and maintain strategic collaborations, licensing or other arrangements and the financial terms of such agreements;

    any product liability or other lawsuits related to our products;

    the expenses needed to attract and retain skilled personnel;

    the costs associated with being a public company;

    the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent claims, including litigation costs and the outcome of such litigation; and

    the timing, receipt and amount of sales of, or royalties on, future approved products, if any.

Please see "Risk Factors" for additional risks associated with our substantial capital requirements.

Contractual Obligations and Commitments

        The following is a summary of our long-term contractual cash obligations as of December 31, 2012:

 
  Total   Less than
one year
  1-3 Years   3-5
Years
  More than
5 Years
 

Operating lease obligations

  $ 365,000   $ 256,000   $ 109,000   $   $  
                       

Total contractual obligations

  $ 365,000   $ 256,000   $ 109,000   $   $  
                       

    Purchase Commitments

        We have no material non-cancelable purchase commitments with contract manufacturers or service providers as we have generally contracted on a cancelable purchase order basis.

    Milestone, Royalty-Based and Other Commitments

        Under our license agreement with Temple to develop, manufacture, market and sell rigosertib related compounds and derivatives, we are obligated to pay annual license maintenance payments, as well as 25% of any sublicensing fees we receive. We are also required to pay a low-single digit percentage of our net sales of rigosertib as a royalty. During the year ended December 31, 2011, in connection with the execution of the SymBio agreement, we made a payment to Temple in the amount of $1.9 million. During the year ended December 31, 2012, in connection with the execution of the

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Baxter agreement, we became obligated to make a payment to Temple in the amount of $12.5 million. Both of these payments were recorded as research and development expenses. There were no expenses related to this agreement during the three months ended March 31, 2013.

        In May 2010, we entered into an agreement with LLS under which we were to conduct research in return for milestone payments, up to $10.0 million through 2013. This milestone payment amount was subsequently reduced to $8.0 million pursuant to an amendment signed in January 2013. In the event that the research is successful, we must proceed with commercialization of the product or repay the amount funded. In addition, we will owe to LLS regulatory and commercial milestone payments and royalties based on net sales of the product not to exceed three times the aggregate amount funded, or $24.0 million. During the year ended December 31, 2012, in connection with the execution of the Baxter agreement, we paid $1.0 million to LLS and we have recorded this amount in research and development expenses. This payment reduced the maximum contingent payment obligation under this agreement to $23.0 million at December 31, 2012, and there were no changes during the three months ended March 31, 2013.

        Because the achievement and timing of these milestones and net sales is not fixed and determinable, our commitments under these agreements have not been included on our consolidated balance sheets or in the Contractual Obligations table above.

Off-Balance Sheet Arrangements

        We do not have any off-balance sheet arrangements, as defined by applicable SEC regulations.

Quantitative and Qualitative Disclosure About Market Risk

        We are exposed to market risks in the ordinary course of our business. These market risks are principally limited to interest rate fluctuations.

        We had cash and cash equivalents of $81.5 million and $67.3 million at December 31, 2012 and March 31, 2013, respectively, consisting primarily of funds in cash and money market accounts. The primary objective of our investment activities is to preserve principal and liquidity while maximizing income without significantly increasing risk. We do not enter into investments for trading or speculative purposes. Due to the short-term nature of our investment portfolio, we do not believe an immediate 10% increase in interest rates would have a material effect on the fair market value of our portfolio, and accordingly we do not expect our operating results or cash flows to be materially affected by a sudden change in market interest rates.

Segment Reporting

        We view our operations and manage our business in one segment, which is the identification and development of oncology therapeutics.

Recent Accounting Pronouncements

        Effective January 1, 2011, we prospectively adopted ASU 2009-13, which amended the guidance for revenue recognition related to multiple-deliverable revenue arrangements. The amendments in this guidance enabled vendors to account for products or services separately rather than as a combined unit upon meeting certain criteria and establish a hierarchy for determining the selling price of a deliverable. In addition, a vendor can determine a best estimate of selling price, in a manner that is consistent with that used to determine the price to sell the deliverable on a standalone basis, if a vendor does not have vendor-specific objective evidence or third party evidence of selling price. This guidance also eliminated the use of the residual method and requires a vendor to allocate revenue using the relative selling price method. The amendments were effective prospectively, with an option

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for retrospective restatement of the financial statements, for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010 with early adoption permitted at the beginning of an entity's fiscal year. Our adoption of this new accounting standard did not have a significant impact on our consolidated financial position, results of operations or cash flows.

        In June 2011, FASB issued ASU No. 2011-05, "Comprehensive Income (ASC Topic 220): Presentation of Comprehensive Income," or ASU 2011-05, which amended current comprehensive income guidance. This accounting update eliminated the option to present the components of other comprehensive income as part of the statement of stockholders' equity. Instead, comprehensive income must be presented in either a single continuous statement of comprehensive income, which contains two sections, net income and other comprehensive income, or in two separate but consecutive statements. ASU 2011-05 was effective for fiscal periods beginning after December 15, 2011 with early adoption permitted. Our retrospective adoption of ASU 2011-05 did not have a significant impact on our consolidated financial position, results of operations or cash flows.

        In February 2013, FASB issued ASU No. 2013-02, "Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income," or ASU 2013-02. ASU 2013-02 requires companies to present either in a single note or parenthetically on the face of the financial statements, the effect of significant amounts reclassified from each component of accumulated other comprehensive income based on its source and the income statement line items affected by the reclassification. This guidance is effective for annual reporting periods beginning after December 15, 2012. We believe the adoption of this standard will not have a significant impact on our consolidated financial position, results of operations or cash flows.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

        In connection with this offering, Ernst & Young LLP became our independent registered public accounting firm effective as of February 27, 2013, and EisnerAmper LLP was dismissed as our independent registered public accounting firm effective as of December 17, 2012. The decision to appoint Ernst & Young LLP and dismiss EisnerAmper LLP was recommended by our audit committee and subsequently approved by our board of directors.

        The report of EisnerAmper LLP on our financial statements for the year ended December 31, 2011 did not contain an adverse opinion or a disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope or accounting principles.

        In connection with the audit of our financial statements for the year ended December 31, 2011 and through EisnerAmper LLP's dismissal, there were no disagreements with EisnerAmper LLP on any matters of accounting principles or practices, financial statement disclosures or auditing scope or procedures, which if not resolved to EisnerAmper LLP's satisfaction would have caused EisnerAmper LLP to make reference to the matter in their report.

        In connection with our audited financial statements for the year ended December 31, 2011 through EisnerAmper LLP's dismissal, there have been no reportable events with us as set forth in Item 304(a)(1)(v) of Regulation S-K.

        We requested that EisnerAmper LLP furnish us with a letter addressed to the SEC stating whether it agrees with the above statements. A copy of the letter, dated June 14, 2013, is filed as an exhibit to the registration statement of which this prospectus forms a part.

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BUSINESS

Overview

        We are a clinical-stage biopharmaceutical company focused on discovering and developing novel small molecule drug candidates to treat cancer. Using our proprietary chemistry platform, we have created an extensive library of targeted anti-cancer agents designed to work against specific cellular pathways that are important to cancer cells. We believe that the drug candidates in our pipeline have the potential to be efficacious in a wide variety of cancers without causing harm to normal cells. We have three clinical-stage product candidates and six preclinical programs.

         Rigosertib , our most advanced product candidate, is being tested in a number of ongoing Phase 2 and Phase 3 clinical trials. We are conducting a pivotal Phase 3 trial of rigosertib under a Special Protocol Assessment, or SPA, from the U.S. Food and Drug Administration, or FDA, for higher risk myelodysplastic syndromes, or MDS. We expect to report top-line overall survival results from this trial in the fourth quarter of 2013 or the first quarter of 2014. We are also evaluating rigosertib in a Phase 3 trial for metastatic pancreatic cancer, in two Phase 2 trials for transfusion-dependent lower risk MDS, and in a Phase 2 trial for head and neck cancers. We have tested rigosertib in more than 850 patients with solid tumors and hematological diseases. Rigosertib has been granted orphan drug status for MDS in both the United States and Europe as well as orphan drug status for pancreatic cancer in the United States. Baxter Healthcare SA, or Baxter, a subsidiary of Baxter International Inc., has commercialization rights for rigosertib in Europe and SymBio Pharmaceuticals Limited, or SymBio, has commercialization rights in Japan and Korea. We have retained development and commercialization rights to rigosertib in the rest of the world, including in the United States.

        Rigosertib is an inhibitor of two important cellular signaling pathways: phosphoinositide 3-kinase, or PI3K, and polo-like kinase, or PLK, both of which are frequently over-active in cancer cells. PI3K signaling promotes the growth and survival of cells under stressful conditions, such as under low oxygen levels that are often found in tumors. By inhibiting the PI3K pathway in cancer cells, rigosertib promotes tumor cell apoptosis, or programmed cell death.

        The PLK pathway has a critical role in maintaining proper chromosome organization and sorting during cell division. By modulating the PLK pathway, rigosertib stops cancer cells at late stages of the cell division cycle, which leads to chromosome disorganization and death in these cells. In normal cells, rigosertib pauses progression of the cell cycle in the early stages, without causing harm or death to these cells.

        Due to this dual effect of inhibiting both the PI3K and PLK pathways, and thereby effecting both tumor cell survival and division, we believe that rigosertib has potential to treat a variety of cancer types, including hematological diseases and solid tumors.

        We are testing both intravenous and oral formulations of rigosertib, referred to as rigosertib IV and rigosertib Oral, in clinical trials.

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        To accelerate and broaden the development of rigosertib, we entered into a development and licensing agreement with Baxter in 2012 to commercialize rigosertib in Europe. In 2011, we entered into a licensing agreement with SymBio to commercialize rigosertib in Japan and Korea. We have retained development and commercialization rights to rigosertib in the rest of the world, including the United States. We will explore a variety of alternatives for the commercialization of rigosertib in territories we currently retain, including direct commercialization, co-promotion or selective out-licensing of rights to a third party.

        Our second clinical-stage product candidate, ON 013105, is in a Phase 1 trial in patients with relapsed or refractory lymphoma, including an aggressive form of non-Hodgkin's lymphoma identified as mantle cell lymphoma, or MCL, and acute lymphoid leukemia, or ALL. A critical defect in many cancer cells is the uncontrolled expression of cyclin D1, a protein essential for normal cell division. Cyclin D1 is over-expressed in several hematological diseases, including B-cell lymphomas, such as MCL. ON 013105 suppresses the accumulation of cyclin D1 in cancer cells. In 2011, we suspended enrollment in this Phase 1 trial because enrollment of patients was occurring slowly, and as a result, our inventory of ON 013105 clinical trial materials expired. We plan to restart enrollment in this trial with newly manufactured clinical trial materials at a new clinical trial site in the fourth quarter of 2013.

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        Our third clinical-stage product candidate, recilisib, is being developed in collaboration with the U.S. Department of Defense, or DoD, for acute radiation syndromes, or ARS. We have conducted animal studies and clinical trials of recilisib under the FDA's Animal Efficacy Rule, which permits marketing approval for new medical countermeasures for which human efficacy studies are not feasible or ethical, by relying on evidence from animal studies in appropriate animal models to support efficacy in humans. We have completed four Phase 1 trials to evaluate the safety and pharmacokinetics of recilisib in healthy human adult subjects using both subcutaneous and oral formulations, referred to as recilisib SC and recilisib Oral. We have received orphan drug designation for recilisib for ARS in the United States.

        In addition to our three clinical-stage product candidates, we are advancing six preclinical programs that target kinases, cellular metabolism or division.

        We have broad-based capabilities that span drug discovery and clinical development, from medicinal chemistry and evaluation in biochemical, cell-based and animal models, through Phase 3 trials and regulatory filings in the United States, Europe and India. Our discovery program is based on a proprietary chemistry platform comprising more than 150 novel core chemical structures. Our chemistry and screening approaches aim to discover new drug candidates that increase efficacy and help overcome resistance to therapy in cancer cells, while minimizing their toxicity to normal cells. Our intellectual property portfolio includes more than 100 issued patents and over 90 patent applications, either owned by us or licensed exclusively to us, including patents covering our most advanced product candidate, rigosertib. These patents and licenses cover composition-of-matter, process, formulations and method-of-treatment claims for our clinical-stage product portfolio.

Our Strategy

        We are committed to delivering novel treatments to cancer patients. We are focused on discovering and developing targeted small molecule anti-cancer product candidates. The key components of our strategy are to:

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Our Product Candidates

        The development status of our three clinical-stage product candidates is summarized below:


Clinical-Stage Product Candidates

GRAPHIC

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        Rigosertib is our most advanced product candidate and has been extensively tested in clinical trials, which have collectively enrolled more than 850 patients. We believe that rigosertib has the potential to become the first approved second-line therapy for higher risk MDS patients. Also, we believe that rigosertib has the potential to be a first-line therapy for transfusion-dependent lower risk MDS patients and for metastatic pancreatic cancer patients.

        Rigosertib IV is currently in several late-stage clinical trials, including a pivotal Phase 3 trial being conducted under an SPA from the FDA and Scientific Advice from the EMA for adult MDS patients whose disease has failed azacitidine or decitabine therapy. We completed enrollment in this trial in May 2013 and expect to report top-line overall survival results in the fourth quarter of 2013 or the first quarter of 2014.

        Rigosertib IV is also being studied as a combination therapy with gemcitabine in a Phase 3 trial for treatment of patients with metastatic pancreatic cancer who have not previously received any chemotherapy. We have enrolled 150 patients in the first phase of this trial and expect results of the pre-planned interim analysis for overall survival in the fourth quarter of 2013 or the first quarter of 2014.

        In addition, rigosertib Oral is being studied in Phase 2 trials in patients with transfusion-dependent lower risk MDS and in patients with head and neck cancers. We reported initial response and safety data from the first Phase 2 trial in lower risk MDS in June 2013 and expect to complete enrollment and present overall results from this trial in December 2013. We expect to complete enrollment for the head and neck cancers trial in the second half of 2014.

        Rigosertib is an inhibitor of two important cellular signaling pathways, PI3K and PLK, both of which are frequently over-active in cancer cells. PI3K signaling promotes the growth and survival of cells under stressful conditions, such as under low oxygen levels that are often found in tumors. If the PI3K pathway is over-active, apoptosis of cancer cells is diminished, leading to excessive cellular growth. By inhibiting the PI3K pathway, rigosertib promotes tumor cell apoptosis. Rigosertib also influences signals along the PI3K pathway, such as those leading to the production of cyclin D1.

        The PLK pathway plays a critical role in maintaining proper organization and sorting of chromosomes during cell division. Too much PLK activity in cancer cells results in uncontrolled proliferation. By modulating PLK pathway activity, rigosertib stops cancer cells at late stages of the cell division cycle, which leads to chromosome disorganization and death in these cells. In normal cells rigosertib pauses progression of the cell cycle in the early stages, without causing harm or death to these cells.

        Due to this dual effect of inhibiting both the PI3K and PLK pathways, and thereby effecting both tumor cell survival and division, we believe that rigosertib has potential to treat a variety of cancer types, including hematological diseases and solid tumors.

        MDS is a group of blood disorders that affect bone marrow function. MDS typically affects patients over the age of 65. In MDS, bone marrow becomes dysplastic, or defective. The blood cells produced do not develop normally, such that too few healthy blood cells are released into the blood stream, which leads to low blood cell counts, or cytopenias. Thus, many patients with MDS require frequent blood transfusions. In most cases, the disease worsens and the patient develops progressive bone marrow failure. In advanced stages of the disease, immature blood cells, or blasts, leave the bone

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marrow and enter the blood stream, leading to acute myelogenous leukemia, or AML, which occurs in approximately one-third of patients with MDS.

        Based on Surveillance Epidemiology and End Results (SEER) data from the National Cancer Institute, a marketing analytics firm has estimated the 2011 incidence of MDS at approximately 15,600 cases and the prevalence of MDS at approximately 52,000 cases in the United States. We believe that the actual incidence numbers may be higher, due to underdiagnosing and underreporting of new cases of MDS to centralized cancer registries, and that the incidence of MDS in the United States is likely to increase, due to an aging population, improved disease awareness and diagnostic precision, and an increase in the number of cases of secondary, often chemotherapy-induced, MDS.

        MDS is typically diagnosed using routine blood tests or by observing symptoms, such as shortness of breath, weakness, easy bruising or bleeding, or fever with frequent infections. A diagnosis of MDS is confirmed by evaluating a bone marrow biopsy/aspirate showing dysplastic changes, and, in more advanced cases, the presence of excess blasts, meaning that blasts account for more than 5% of the total number of cells in the bone marrow. Because the bone marrow and blood cells in MDS patients can undergo different kinds of abnormal changes, several classification systems have been developed to gauge the severity of disease and help determine prognosis and treatment strategy. We use two standard classification systems, the French-American-British morphological classification system, or the FAB system, as modified by the World Health Organization, or WHO, and the International Prognostic Scoring System, or IPSS, to define patient inclusion criteria for our rigosertib trials in MDS:

        Patients with RAEB-1, RAEB-2 or RAEB-t under the FAB/WHO criteria or patients with IPSS risk scores of Intermediate-2 or High are generally considered to have higher risk MDS, with a median survival of less than two years. According to a marketing analytics firm, approximately 23% of MDS patients are classified in these higher risk categories.

        Patients with IPSS scores of Low and Intermediate-1 are generally considered to have lower risk MDS, with an overall survival of approximately three to six years. Approximately 77% of MDS patients are classified in these lower risk categories.

        Stem cell or bone marrow transplantation is a potentially curative therapy for MDS. However, since most patients with MDS are elderly and therefore ineligible for transplantation, this option is generally considered only for the small proportion of younger MDS patients.

        We believe that most higher risk and some lower risk MDS patients are treated with hypomethylating drugs, azacitidine and decitabine, the hypomethylating drugs approved in the United States for treatment of MDS. A provider of information, services and technology for the healthcare industry estimates that in the year ended June 2012, approximately 12,500 MDS patients received treatment with hypomethylating agents. For 2012, revenues of azacitidine have been reported to be

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approximately $327 million in the United States and revenues for decitabine have been reported to be approximately $225 million in North America.

        A significant number of higher risk MDS patients fail or cannot tolerate treatment with azacitidine or decitabine, which represent the current standard of care for higher risk MDS patients, and almost all patients who initially respond to therapy eventually relapse. Median survival time of MDS patients who have failed hypomethylating drugs is less than six months. Accordingly, we believe that a new therapy that would extend survival in these refractory patients would represent a major contribution in the treatment of MDS.

        Hypomethylating drugs work by inhibiting the methylation of DNA. Methylation is a biochemical process involving the addition of a methyl group to DNA and plays an important role in gene expression during cell division and differentiation. By inhibiting methylation, hypomethylating drugs cause the death of rapidly dividing cells, including cancer cells that are no longer responsive to normal growth control mechanisms. Hypomethylation may also restore normal function to genes that are critical for differentiation and proliferation. The mechanisms underlying resistance to hypomethylating agents in patients is not well understood. Studies performed with decitabine in cultured cell lines revealed lowered expression of enzymes required for drug transport and activation.

        By contrast, rigosertib works by inhibiting the PI3K pathway, a cellular signaling pathway that promotes the growth and survival of cells under stressful conditions, such as under low oxygen levels that are often found in tumors, and by modulating PLK pathway activity, which leads to chromosome disorganization and death in cancer cells. We believe that, because rigosertib has a mechanism of action that is different from hypomethylating agents, it may be effective in patients who have failed treatment with those drugs. We have observed that rigosertib treatment resulted in bone marrow responses in some patients whose bone marrow blast cell counts had increased during prior treatment with hypomethylating agents.

        In the case of lower risk MDS patients, those categorized as Low or Intermediate-1 risk with transfusion-dependent anemia and del(5q) cytogenetic abnormality are generally treated with lenalidomide (Revlimid®). For all other lower risk MDS patients, supportive care employing blood products, such as red blood cell and platelet transfusions, and erythroid stimulating agents, is the mainstay of therapy. Frequent transfusions are subject to many risks, including iron overload, blood borne infections and immune-related reactions. We believe that a therapeutic agent that could lower or eliminate the need for transfusions over an extended period of time would fulfill a significant unmet medical need for this patient population.

        We filed an investigational new drug application, or IND, amendment with the FDA for rigosertib in MDS in July 2008. We are conducting a multi-center Phase 3 trial with rigosertib IV as a single agent in patients with MDS who have failed prior azacitidine or decitabine therapy, which we refer to as our "ONTIME" trial. The protocol for this trial was reviewed and agreed upon with the FDA under an SPA. The EMA has also provided Scientific Advice, indicating that the study design should be adequate to meet the scientific and regulatory requirements to support efficacy claims for a marketing application.

        The ONTIME trial is a randomized, controlled study, where eligible patients must have failed azacitidine or decitabine treatment, have excess blasts (5-30% blasts) and have at least one cytopenia. There is currently no approved drug for this group of patients and the current standard treatment consists of best supportive care, which is treatment intended to manage disease-related symptoms. In the ONTIME trial, both groups of patients receive best supportive care, with the treatment group of patients also receiving rigosertib. The study employs a 2:1 randomization in which two-thirds of the patients receive rigosertib plus best supportive care, and one-third of patients receive only best supportive care. The key assumption used to calculate the required size of the ONTIME trial was

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based on hypothesized median survival of 30 weeks in the rigosertib treatment group and 17 weeks in the best supportive care group. A total sample size of 270 patients, with 180 patients in the rigosertib group and 90 patients in the best supportive care group, and a total number of 223 deaths yields greater than 95% statistical power to detect a significant difference in overall survival between the two groups.

        The primary objective of the ONTIME trial is to ascertain whether treatment with rigosertib leads to an overall survival benefit. Secondary objectives include evaluation of other responses, such as improvements in bone marrow and cytogenetic and blood profiles, according to standard response criteria for MDS defined by the 2006 WHO International Working Group, and to measure patients' quality of life scores and times to transition to AML. In this study, rigosertib is administered as a continuous intravenous infusion over a period of three days with a bag change every 24 hours. Patients use an ambulatory pump, avoiding the need for hospital stays. We completed enrollment of 270 patients in the ONTIME trial in May 2013.

        The ONTIME trial is being conducted at 42 sites in the United States and at 47 sites in Belgium, France, Germany, Italy and Spain. Among the 270 patients enrolled as of May 2013, 179 are enrolled at U.S. sites. The safety and conduct of the trial is being reviewed by a data safety monitoring committee at fixed intervals. Three such reviews have been held to date, each with the recommendation to continue the trial without change to the study protocol. We expect to report top-line overall survival results from this trial in the fourth quarter of 2013 or the first quarter of 2014.

        We conducted two Phase 1 studies, one Phase 2 study and one Phase 1/2 study at four sites, where we enrolled 79 patients with MDS or AML. Of these 79 patients, 39 were RAEB-1, RAEB-2, or RAEB-t MDS patients who had previously failed treatment with hypomethylating agents. There were encouraging signs of activity, as determined by survival and bone marrow analyses, in this group of patients. The following graph is a probability-of-survival curve, known as a Kaplan-Meier curve, showing the length of survival of these 39 patients after initiation of rigosertib IV treatment. In this intent-to-treat analysis, the median survival was 35 weeks. Twenty-three patients survived at least six months, 11 patients lived more than one year and three patients lived more than two years, including one alive at 142 weeks. According to several peer-reviewed published reports, median overall survival for MDS patients who have failed treatment with hypomethylating agents is less than six months.

Survival Data for 39 Refractory MDS Patients Receiving Rigosertib IV:
Intent-to-Treat Analysis: Median Overall Survival = 35 Weeks

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        A follow-up bone marrow biopsy, to assess the effects of treatment on blast counts, was available for 30 of the 39 patients. The percentage change in bone marrow, or BM, blast count is shown in the graph below. Of the 30 evaluable patients, 21 had a reduction in BM blast count, and 12 patients in this subset demonstrated an objective response, meaning that they had a 50% or more reduction in BM blasts. Of the 12 patients with objective responses, five patients were determined to have a complete BM blast response, meaning that their blast count was reduced to 5% or less of BM cells present. Nine of the 30 evaluable patients had an increase in BM blast count, with three patients showing progression, meaning that they experienced an increase of 50% or more in BM blasts. During the period these patients received treatment, a subset of 37 patients had between one and four follow-up bone marrow biopsies. These biopsies showed that the cellularity, or distribution of normal cell types, was not decreased, suggesting that rigosertib was selectively reducing the BM blast counts in these patients, while being nontoxic to normal bone marrow cells.

        Not all patients in a study may have follow-up bone marrow biopsies because these are invasive procedures and represent a risk of profuse bleeding, particularly in patients with severe thrombocytopenia, a condition in which the body does not produce enough platelets and a common occurrence in higher risk MDS patients. Such biopsies are also uncomfortable and sometimes painful procedures and patients may withhold consent for such procedures. Finally, early worsening of the overall clinical condition toward leukemia or death may cause follow-up bone marrow biopsies to be deferred. Since the primary endpoint of the ONTIME trial is overall survival, we anticipate that unavailable bone marrow biopsies would not have a material impact on the results of the trial.

Best Bone Marrow (BM) Responses After Rigosertib IV in
30 RAEB-1, -2, -t MDS Patients Previously Treated with
Hypomethylating Agents

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        Further analysis, tabulated below, of BM results in comparison with the overall survival of these patients revealed a positive correlation between BM blast response and overall survival, with a statistically significant p-value of 0.003. The p-value is a widely used, conventional parameter for indicating statistical significance. A p-value of 0.05 or less represents statistical significance, meaning that there is a less than one-in-twenty likelihood that the observed results occurred by chance. Those patients with objective BM response and patients who had stable BM counts, meaning they had a less than 50% increase or decrease in BM blast count, exhibited a higher survival rate than patients who progressed during treatment or who were not evaluable for BM analysis. These initial results suggest that BM blast counts have predictive value for estimating overall survival in this group of patients.

Preliminary Analysis of BM Response and Overall Survival Data from
39 MDS Patients in Four Single-Arm Phase 1, Phase 2 and
Phase 1/2 Trials of Rigosertib IV in Patients with MDS

 
  Objective BM
Response
( ³ 50% blast
decrease)
  Stable BM
Response
(< 50% increase
or decrease in
blasts)
  Progressive
Disease
( ³ 50% blast
increase)
  Not
Assessed
(no biopsy)
  P-value  

Number of patients

    12     15     3     9      

Median overall survival (weeks)

    40     40     10     11     0.003  

        This observation is further elaborated in the following Kaplan-Meier graph, in which survival curves for groups of patients are shown based on their BM response category. Treated patients with a stable BM response or an objective BM response survived significantly longer than those patients who experienced progression or who could not be evaluated for BM response.

Overall Survival Data from 39 Refractory MDS Patients Receiving Rigosertib IV:
Grouped by Bone Marrow Responses

GRAPHIC

        In these exploratory trials, we also compared the relationship between duration of rigosertib exposure and BM response. Overall, more patients who received three-day infusions of rigosertib every two weeks achieved improved BM blast responses compared to patients who received two-day infusions every week for three weeks of a four week cycle. Extending infusion duration beyond three days did

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not result in further improvements of BM blast responses. As a result, we chose a three-day dosing regimen for the Phase 3 trial.

        Safety data for the 79 patients with MDS or AML in four Phase 1 and 2 trials are available. Rigosertib IV was generally well tolerated in these trials. The most frequent drug-related adverse events, occurring in at least 10% of patients, were nausea, diarrhea, fatigue, anemia, dysuria and hematuria. Drug-related adverse events that were Grade 3 or Grade 4 in severity, meaning that they were more than mild or moderate in toxicity, observed in at least two patients included anemia, thrombocytopenia, neutropenia, decreased white blood cells, urinary frequency, dysuria, decreased blood sodium, increased clotting time, fatigue, fever and diarrhea.

        We filed an IND amendment with the FDA for rigosertib Oral in MDS in February 2009. Based on Phase 1 trial results with rigosertib Oral, we believe that rigosertib has the potential to significantly reduce the transfusion needs and improve the quality of life for patients with lower risk MDS. Although median survival for these transfusion-dependent patients is five or more years, frequent transfusions are subject to risks and limitations, including iron overload, blood borne infections and immune related reactions. We believe that an oral therapeutic agent that could lower or eliminate the need for transfusions over an extended period of time would fulfill a significant unmet medical need for this patient population.

        We are enrolling transfusion-dependent lower risk MDS patients in two Phase 2 trials. We reported an interim analysis of initial response and safety data from the first Phase 2 trial, which we refer to as our "ONTARGET" trial, at the June 2013 Annual Meeting of the American Society for Clinical Oncology, or ASCO. We expect to complete enrollment in this trial and to present overall results at the American Society of Hematology, or ASH, Annual Meeting in December 2013.

        The ONTARGET trial is an open-label, multi-site trial testing the effect of rigosertib Oral on transfusion-dependent lower risk MDS patients. To be eligible for this study, patients must have received transfusions of at least four units of red blood cells during the eight weeks before randomization and patients can continue to receive transfusions and erythroid stimulating agents while in the trial. The primary objectives of this trial are to evaluate efficacy, as measured by transfusion independence, as well as safety. The study has a target enrollment of 60 patients, with enrollment open at four trial sites in the United States. Initially, patients were randomized 1:1 on an outpatient basis to one of two dosing regimens, receiving either 560 mg of rigosertib twice a day for 14 consecutive days of a 21-day cycle, which we refer to as the intermittent dosing arm, or 560 mg of rigosertib twice a day for 21 days of a 21-day circle, which we refer to as the uninterrupted dosing arm. We were able to evaluate interim data from 26 evaluable patients in the intermittent dosing arm and eight evaluable patients in the uninterrupted dosing arm.

        Evaluation of the interim safety data indicated that rigosertib Oral was generally well tolerated, with the most frequently observed drug-related side effects being urologic in nature and believed to be related to the dosing regimen. In the uninterrupted dosing arm of the study, five of the first nine patients experienced drug-related urinary side effects of Grade 2 or higher, meaning that they were more than mild in toxicity. Accordingly, the study protocol was amended to allow all patients to be treated with the intermittent dosing regimen. The most frequent urinary adverse events of Grade 2 or higher in the intermittent dosing arm were urinary urgency/frequency, which occurred in 38% of patients, dysuria, which occurred in 18%, and hematuria, or the presence of red blood cells in the urine, which occurred in 15%. Several of the patients who experienced dysuria reported improvements after they were administered oral hydration or sodium bicarbonate. Other adverse events of Grade 2 or higher included intermittent neutrophenia, or an abnormally low number of white blood cells that serve as the primary defense against infections, which occurred at Grade 3 in one patient and at Grade 4 in one other patient. Median onset of drug-related adverse events of Grade 2 or higher was 28 weeks in

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the intermittent dosing arm, compared with 12 weeks in the uninterrupted dosing arm. Median duration of the treatment in the uninterrupted dosing arm was 24 weeks. Because the trial is ongoing, median duration of the treatment in the intermittent dosing arm has not yet been determined. Renal function was unaffected and gastrointestinal adverse events and fatigue were infrequently observed. We are investigating ways to mitigate or eliminate urinary symptoms by employing oral hydration and sodium bicarbonate and adjusting the administered rigosertib dose and schedule, with the goal of reducing exposure of bladder mucosa to excreted rigosertib.

        Initial response results showed that 13 of the 26 evaluable patients in the intermittent dosing arm and two of the eight evaluable patients in the uninterrupted dosing arm achieved transfusion independence, defined as a period of at least eight consecutive weeks without any red blood cell transfusions. As shown in the figure below (left panel), in the 13 patients who achieved transfusion independence in the intermittent dosing arm, the duration of transfusion independence ranged from eight weeks to more than 48 weeks. Onset of independence ranged from one week to 24 weeks following the initiation of rigosertib dosing and two patients continued to benefit from therapy more than nine months after starting rigosertib. Rigosertib Oral was well tolerated in this patient population, as evidenced by the long duration of treatment for lower risk MDS patients receiving rigosertib Oral (right panel).


Interim Analysis of Lower Risk Transfusion-Dependent MDS Patients Treated with
Rigosertib Oral in the Intermittent Dosing Arm

Transfusion Independence (13 of 26 Evaluable Patients)*   Duration of Treatment (34 Patients)


GRAPHIC

 


GRAPHIC

    *
    Horizontal arrows indicate patients who continued to meet the criteria for transfusion independence at the time this data analysis was conducted. Transfusion independence is defined as a minimum of 8 consecutive weeks without red blood cell transfusions.

        One of the aims of our ongoing trials is to correlate patient characteristics with transfusion response, thus potentially allowing for the selection of appropriate patients for future trials with rigosertib. Eleven of the 13 transfusion-independent patients in the intermittent dosing arm received one or more injections of erythroid stimulating agents during the time of rigosertib Oral administration, and the patterns of hemoglobin responses observed in some patients suggest a possible synergy between rigosertib Oral and erythroid stimulating agents.

        We initiated a second multi-center Phase 2 trial in May 2013 in lower risk, transfusion-dependent MDS patients who have failed treatment with erythroid stimulating agents, in which all patients will receive the intermittent dosing schedule. We expect to complete enrollment for this trial in the second half of 2014.

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        Previously, we conducted a Phase 1 trial of rigosertib Oral to determine drug safety and tolerability and to monitor plasma levels of rigosertib Oral in Low, Intermediate-1, Intermediate-2 and High Risk MDS patients who had failed prior azacitidine, decitabine or lenalidomide therapy or injection of an erythroid stimulating agent. Pharmacokinetic analysis showed that plasma levels of rigosertib could be achieved that were at or above levels predicted to be pharmacodynamically active. Encouraging preliminary signs of activity were observed. Safety data are available in 33 patients from this trial. The most frequent drug-related adverse events, occurring in at least 10% of patients, were decreased appetite, diarrhea, nausea and dysuria. Drug-related adverse events that were Grade 3 or greater in severity occurred in two patients and included urinary tract infection, syncope, or fainting, and dyspnea, or shortness of breath. Hematuria was identified as the most frequent dose-limiting toxicity, occurring in two patients.

    Metastatic Pancreatic Cancer

        The American Cancer Society estimates that 45,220 new cases of pancreatic cancer will be diagnosed in the United States in 2013, and that 38,460 people are expected to die in the United States from the disease in 2013. Deaths from pancreatic cancer ranked fourth among cancer-related deaths in the United States in 2012 according to the American Cancer Society. At diagnosis, 50% of pancreatic cancer patients already have metastasis to the liver or peritoneal surface in the abdomen. Since 1975, the five-year survival rate of pancreatic cancer patients has only marginally improved, from 2% to 6%. The median survival for locally advanced and for metastatic disease, which collectively represent over 80% of cases, is about ten months and six months, respectively.

        Currently, the best therapeutic option for pancreatic cancer patients is surgical resection to remove tumor-laden tissue. However, only 15% of newly diagnosed patients are candidates for this treatment option, and of these patients only about 20% survive to five years. For the remaining 85% of pancreatic cancer patients, gemcitabine is one of two currently prescribed, FDA approved therapies, but it provides only a marginal survival benefit over best supportive care, from five and a half to six months. The epidermal growth factor receptor inhibitor erlotinib (Tarceva®) has also received approval in the United States and Europe for metastatic pancreatic cancer, and has shown a modest increase of median survival and a 6% increase in one-year survival rates. Fluorouracil and mitomycin-C, older cytotoxic drugs, are also approved for the treatment of pancreatic cancer. Unapproved combination therapies like FOLFIRINOX, a chemotherapy regimen, are becoming a part of standard care, especially in patients with good performance status who can tolerate the toxic side effects associated with this regimen. We believe that metastatic pancreatic cancer remains an area of significant unmet medical need and presents a large market opportunity for the development of additional targeted therapies.

    Clinical Development Rigosertib IV in Metastatic Pancreatic Cancer

        We filed an original IND with the FDA for rigosertib in pancreatic cancer in December 2011. We are studying rigosertib as first-line therapy in a Phase 3 trial in advanced pancreatic cancer. In this trial, we are comparing a treatment combination of rigosertib IV and gemcitabine to a treatment with gemcitabine alone. After reviewing our Phase 1 results in 24 advanced pancreatic cancer patients and proposing a clinical plan to the FDA, the FDA authorized us to move directly from the Phase 1 trial to a two-stage Phase 3 trial, which we refer to as our "ONTRAC" trial.

        ONTRAC is a multi-center, open-label, randomized controlled clinical trial in patients with histologically confirmed metastatic pancreatic cancer who received no prior chemotherapy, with overall survival as the primary endpoint. In March 2013, we completed enrollment of 150 patients in the first portion of this trial. Once 100 deaths have been reported in this patient population, a data safety monitoring committee will compare overall survival between the two arms of the trial and will also review the adequacy of the proposed sample size. This committee may recommend adjusting the target

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enrollment for the second portion of the study, beyond the initially planned 364 patients, or it may recommend early termination of the study. We believe that this study, if successful, could support an NDA submission for this indication. We expect results of the pre-planned interim analysis for overall survival of the 150 patients enrolled in the first portion of this trial in the fourth quarter of 2013 or the first quarter of 2014.

        Rigosertib has been evaluated in combination with gemcitabine in 40 patients in a two-site Phase 1 trial. Of the patients we studied, 25 had advanced pancreatic cancer and 15 had other tumors. Efficacy was assessed according to a set of published international rules that define when cancer patients improve, or respond, stay the same, or stabilize, or worsen, or progress, during treatments, called Response Evaluation Criteria in Solid Tumors. Of the 37 patients with measurable disease, three achieved partial response, including one with metastatic pancreatic cancer previously treated with gemcitabine, and a fourth patient with gemcitabine-naive pancreatic cancer had an unconfirmed partial response. Sixteen patients, including nine patients with metastatic pancreatic cancer, had an overall response of stable disease.

        All 40 patients were evaluable for safety. A total of 37 patients in this study had drug-related adverse events. The most frequent drug-related adverse events, occurring in at least 10% of patients, were nausea, thrombocytopenia, fatigue, neutropenia, diarrhea, vomiting, anemia, leukopenia, pyrexia, constipation, abdominal pain, lymphopenia, aspartate transaminase increase and decreased appetite. Twenty-two patients had drug-related adverse events of Grade 3 or greater in severity, the most common of which were the hematological adverse events of neutropenia, thrombocytopenia, and lymphopenia. Hematological adverse events following administration of gemcitabine are well documented, including anemia, neutropenia, leukopenia and thrombocytopenia.

    Clinical Development of Rigosertib Oral in Head and Neck Cancers

        According to the National Cancer Institute, head and neck cancers accounts for approximately 3% of all new cancer cases in the United States, with approximately 52,000 cases diagnosed in 2012. Single-modality treatment with surgery or radiation is generally recommended for the 30% to 40% of patients with early-stage disease. Combined modality therapy with surgery, radiation or concurrent chemotherapy and radiation is utilized for patients with locally or regionally advanced disease. Patients with very advanced or recurrent disease are treated with platinum-based chemotherapy, cetuximab (Erbitux®) or both in combination. Expected overall survival in patients with head and neck cancers who have failed platinum-based therapy is about six months.

        We filed an IND amendment with the FDA for rigosertib in head and neck cancer in November 2012. We conducted a Phase 1 trial with rigosertib Oral in 48 patients with various advanced solid tumors refractory to standard therapy, including six patients with head and neck cancers who had previously failed on platinum-based therapy. Two of these six head and neck cancers patients achieved durable responses to rigosertib therapy. One patient had a confirmed complete response, defined as the disappearance of chest and lung disease, and the other patient had a partial response, with a 53% decrease of liver metastasis. Both patients remained on therapy for an extended period of time, over 98 weeks for one and over 48 weeks for the other. We believe that these observations are encouraging for this patient population.

        Rigosertib Oral is currently in a Phase 2 trial in relapsed or metastatic squamous cell carcinoma, with a focus on enrolling patients with head and neck cancers. The study will evaluate both human papilloma virus, or HPV, positive and HPV negative groups of patients. HPV infection presents a significant new therapeutic challenge in head and neck cancer patients. We expect to complete enrollment of 80 patients in this trial in the second half of 2014.

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    ON 013105—Targeted Anti-cancer Agent Modulating Cyclin D1

    Overview

        ON 013105 suppresses cyclin D1 accumulation in cancer cells. Cyclin D1 is a protein required for normal progression through the cell reproduction cycle, and it is over-expressed in several hematological diseases, including B-cell lymphomas, such as MCL. Based on the activity of ON 013105 in preclinical in vitro and in vivo models of MCL, we are currently evaluating ON 013105 in a Phase 1 trial in patients with relapsed or refractory lymphomas and ALL.

    Cyclin D1 in Lymphoma

        Lymphomas are a collection of blood cancers that develop in the lymphatic system, including the B and T lymphocytes. Lymphoma is the most common form of hematological disease in the developed world. Approximately 75,000 people in the United States were diagnosed with lymphoma in 2011. MCL is an aggressive subset of non-Hodgkin's lymphoma with a poor prognosis and high frequency of cyclin D1 overexpression. Studies conducted in patients with MCL have shown that levels of cyclin D1 correlate with the proliferative rate of the malignant cells as well as decrease in overall survival.

    Clinical Development in Lymphoma and Acute Lymphoid Leukemia

        We filed an original IND with the FDA for ON 013105 in November 2008. We are conducting a Phase 1 dose-escalation study of ON 013105 in patients with relapsed or refractory lymphomas and ALL, in which we are evaluating the safety, pharmacokinetics and activity of a once-weekly intravenous infusion regimen. In the first two complete dose cohorts, ON 013105 was readily detectible in plasma and had a half-life of less than one hour. In 2011, we suspended enrollment in our Phase 1 trial of ON 013105 because enrollment of patients was occurring slowly and, as a result, our inventory of ON 013105 clinical trial materials expired. We plan to restart enrollment in this trial with newly manufactured clinical trial materials at a new clinical trial site in the fourth quarter of 2013.

    Recilisib—Acute Radiation Syndromes Treatment

    Overview

        Recilisib is a small molecule with radiation protection properties. We are developing recilisib SC and recilisib Oral to address a need for medical countermeasures to treat the effects of ARS, specifically radiation-induced cytopenia. The DoD provided $10.2 million in government funding to us pursuant to a number of programs through 2011. All agreements relating to the government funding of recilisib have expired and no funding or other obligations on the part of the DoD remain outstanding. Our strategy is to continue to seek support from government agencies and to develop recilisib under the FDA Animal Efficacy Rule.

    Novel Mechanism of Action

        Recilisib employs a novel mechanism of action that involves intracellular signaling and DNA damage repair pathways. In preclinical studies, cells treated with recilisib sustained less DNA damage upon exposure to ionizing radiation in comparison to untreated cells.

    Clinical Development for Acute Radiation Syndromes

        We filed original INDs with the FDA for recilisib SC and for recilisib Oral in April 2008 and May 2011, respectively. We have completed four Phase 1 trials with recilisib, three trials with recilisib SC in more than 50 healthy adults and one trial with recilisib Oral in nine healthy adults.

    In these Phase 1 trials, recilisib SC was generally well tolerated without significant drug-related systemic toxicity. Main adverse events were mild, self-limited injection site reactions, generally

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      subsiding in a few hours. No clinically significant trends were noted in plasma cytokines between recilisib and placebo-treated groups. In one study, subjects successfully self-administered recilisib using an auto-injector system.

    Recilisib Oral displayed good bioavailability and was well tolerated. No drug-related systemic side-effects were observed. Drug concentration and overall exposure increased more than dose-proportionately, with corresponding decreases in the rate of clearance of recilisib.

    Preclinical Development for Acute Radiation Syndromes

        We have conducted preclinical studies to evaluate the radioprotective effects of recilisib SC and recilisib Oral in collaboration with the Armed Forces Radiobiology Research Institute and Georgetown University. In these studies, protection from radiation injury by recilisib was observed when administered prophylactically prior to ionizing radiation exposure in cellular and animal models. In irradiated mice, the protective benefits included increased overall survival and an enhanced rate of recovery of the hematopoietic system and crypt cells lining the gut. We are also working with the Biomedical Advanced Research and Development Authority on this program.

    Preclinical Programs

        In addition to our three clinical-stage programs, we have developed a pipeline of preclinical programs. Our preclinical pipeline includes six programs that target kinases, cellular metabolism or division. We intend to explore additional collaborations to further the development of these product candidates as we focus internally on our more advanced programs.

        ON 1231320—Inhibitor of Polo-like Kinase 2, or PLK2:     PLK2 is critical for centriole duplication during cell division, or mitosis. ON 1231320 is a specific inhibitor of PLK2, and in preclinical studies, it induced mitotic arrest and reduced tumor burden in mice injected subcutaneously with colon tumor and triple-negative breast cancer cells.

        ON 123300—Inhibitor of the Cell Cycle and Cancer Cell Metabolism:     ON 123300 inhibits the activity of two kinases, cyclin-dependent kinase 4, or CDK4, and AMP-activated protein kinase 5, or ARK5. CDK4 is an essential component of the cell division machinery and is a well-established target for therapeutic development. ARK5 is believed to be involved in the regulation of cancer cell metabolic activity. We believe that ON 123300 may have promise as a brain tumor therapy. We observed that ON 123300 can kill glioblastoma tumor cells in vitro and we also observed that, in mouse brain tumor models, ON 0123300 can cross the blood-brain barrier.

        ON 108600—Inhibitor of Cyclin-dependent Kinase 9 and Casein Kinase 2:     ON 108600 is a dual inhibitor of two growth-regulatory kinases. Cyclin-dependent kinase 9 is over expressed in several cancers, including leukemias and lymphomas. Casein kinase 2 is overexpressed in a variety of tumor types and plays a role in oncogenic processes including DNA damage and repair. We believe that ON 108600 may invoke a novel mechanism of cancer cell lethality by inhibiting these two targets.

        ON 044580—Non-ATP Dual Inhibitor of Janus Kinase 2, or JAK-2, and Bcr-Abl Kinase:     ON 044580 inhibits mutant forms of the two target kinases, including JAK2 V617F and imatinib-resistant Bcr-Abl T315I . Three major myeloproliferative disorders, a group of diseases of the bone marrow in which excess cells are produced, are polythycemia vera, essential thrombocythemia and myeloid metaplasia with myelofibrosis. These disorders harbor mutations in JAK2, making this enzyme a potentially attractive therapeutic target for treating these disorders. Philadelphia chromosome-positive chronic myeloid leukemia cells make an abnormal protein called Bcr-Abl kinase, which is the clinical target of the approved inhibitor, imatinib (Gleevec®).

        ON 24 Series of Compounds—Oral Anti-Tubulin Agents:     Microtubules are organelles composed of a protein known as tubulin that help maintain cell shape, assist in cell movement and guide cell division. Interference with microtubule formation is an established anti-cancer strategy. ON 24 compounds cause tubulin to depolymerize, inducing mitotic arrest in cultured tumor cell lines.

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        ON 146 Series—Selective Inhibitors of PI3K alpha/delta Isoforms:     Gain-of-function mutations in alpha and delta isoforms of PI3K are critical drivers of growth in several cancers. ON 146040 inhibits the growth of a variety of blood cancer cell lines, including Burkitt's lymphoma, MCL, multiple myeloma and chronic myeloid leukemia.

Our Proprietary Drug Discovery Platform

        Our product candidates, designed for targeting cancer while protecting healthy cells, are derived from a novel chemistry platform and cell-based differential screening, which together define our discovery approach. Our chemical library contains more than 150 novel core chemical structures and thousands of unique compounds. Most are simple two-ring or three-ring structures that are built around a common core or signature element. Most kinase enzymes require the binding of adenosine triphosphate, or ATP, to function. Unlike most kinase inhibitors, our proprietary library includes many molecules that do not compete with the ATP binding site of kinases, which we believe may provide a more selective way to inhibit these enzymes.

Research and Development

        Since commencing operations, we have dedicated a significant portion of our resources to the development of our clinical-stage product candidates, particularly rigosertib. We incurred research and development expenses of $22.6 million, $52.8 million and $12.8 million during the years ended December 31, 2011 and 2012 and the three months ended March 31, 2013, respectively. We anticipate that a significant portion of our operating expenses will continue to be related to research and development as we continue to advance our clinical-stage product candidates.

Collaborations

    Baxter Healthcare SA

        In September 2012, we entered into a development and license agreement with a subsidiary of Baxter International Inc., Baxter Healthcare SA, or Baxter, granting Baxter an exclusive, royalty-bearing license for the research, development, commercialization and manufacture (in specified instances) of rigosertib in all therapeutic indications in Europe. Under the Baxter agreement, we are obligated to use commercially reasonable efforts to, in accordance with a development plan agreed upon by the parties, direct, coordinate and manage the development of rigosertib for MDS and pancreatic cancer. Under the agreement, if after a specified development event we elect not to move forward with the development of rigosertib for pancreatic cancer, Baxter may, at its own expense, develop rigosertib for pancreatic cancer on its own for the purposes of obtaining marketing approval. In addition, there is a specified mechanism set forth in the agreement to expand the scope of the collaboration for additional indications. Our agreement with Baxter is guided by a joint steering committee. If the joint steering committee is not able to make a decision by consensus, then any dispute would be resolved by specified executive officers of both parties.

        Under the terms of the agreement, Baxter made an upfront payment of $50.0 million. We are eligible to receive pre-commercial milestone payments of up to an aggregate of $512.5 million if specified development and regulatory milestones are achieved. The potential pre-commercial development milestone payments to us include the following:

    $50.0 million for successful completion of a Phase 3 clinical trial for rigosertib IV in higher risk MDS patients;

    $25.0 million for each of the two joint decisions to proceed with the development of rigosertib for certain indications specified in the arrangement with Baxter; and

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    $25.0 million for each drug approval application filed for indications specified in the arrangement with Baxter.

        We may also receive up to $337.5 million in milestone payments for regulatory approvals of the three rigosertib indications specified in the arrangement with Baxter, each of which may be up to and in excess of $100.0 million. We are also potentially eligible to receive an additional $20.0 million pre-commercial milestone payment related to the timing of regulatory approval of rigosertib IV in higher risk MDS patients in Europe. In addition to these pre-commercial milestones, we are eligible to receive up to an aggregate of $250.0 million in milestone payments based on Baxter's achievement of pre-specified threshold levels of annual net sales of rigosertib. We are also entitled to receive royalties at percentage rates ranging from the low-teens to the low-twenties on net sales of rigosertib by Baxter in the licensed territory.

        Under the agreement, Baxter is obligated to pay us royalties, on a country-by-country basis in the licensed territory, until the later of the expiration of all valid claims of the patent rights licensed to Baxter that cover the manufacture, use, sale or importation of rigosertib in such country, and the expiration of regulatory-based exclusivity for rigosertib in such country. If the patent rights and regulatory-based exclusivity expire in a particular country before a specified period of time after first commercial sale of rigosertib in that country, Baxter will pay us royalties at a reduced rate until the end of the specified period. In addition, unless we receive marketing approval for the use of rigosertib IV for MDS from the EMA or specified European Union countries without undertaking additional specified clinical-trials, the royalty rates may be reduced depending on when we receive marketing approval for the use of rigosertib IV for MDS from the EMA or specified European Union countries, and whether or not a competing product for refractory MDS has been approved within a specified period after our receipt of approval for rigosertib IV for MDS.

        The agreement with Baxter will remain in effect until the expiration of all applicable royalty terms and satisfaction of all payment obligations in each licensed country, unless terminated earlier due to the uncured material breach or bankruptcy of a party, force majeure, or in the event of a specified commercial failure. We may terminate the agreement in the event that Baxter brings a challenge against us in relation to the licensed patents. Baxter may terminate the agreement without cause commencing after a specified period of time from the execution of the agreement.

        In July 2012, Baxter also purchased $50.0 million of our Series J convertible preferred stock.

    SymBio Pharmaceuticals Limited

        In July 2011, we entered into a license agreement with SymBio Pharmaceuticals Limited, or SymBio, as subsequently amended, granting SymBio an exclusive, royalty-bearing license for the development and commercialization of rigosertib in Japan and Korea. Under the SymBio license agreement, SymBio is obligated to use commercially reasonable efforts to develop and obtain market approval for rigosertib inside the licensed territory and we have similar obligations outside of the licensed territory. We have also entered into an agreement with SymBio to supply them with development-stage product. Under the SymBio license agreement we also agreed to supply commercial product to SymBio under specified terms that will be included in a commercial supply agreement to be negotiated prior to the first commercial sale of rigosertib. We have also granted SymBio a right of first negotiation to license or obtain the rights to develop and commercialize compounds having a chemical structure similar to rigosertib in the licensed territory.

        Under the terms of the SymBio license agreement, we received an upfront payment of $7.5 million. We are eligible to receive milestone payments of up to an aggregate of $33.0 million from SymBio upon the achievement of specified development and regulatory milestones for specified indications. Of the development milestones, $3.0 million is due after enrollment of the first patient in the event a decision is made, after our interim analysis, to start a Phase 3 clinical trial of rigosertib IV

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in combination with gemcitabine for pancreatic cancer patients in the United States. Of the regulatory milestones, $5.0 million is due upon receipt of marketing approval in the United States of rigosertib IV in higher risk MDS patients, $3.0 million is due upon receipt of marketing approval in Japan for rigosertib IV in higher risk MDS patients, $5.0 million is due upon receipt of marketing approval in the United States for rigosertib Oral in lower risk MDS patients, $5.0 million is due upon receipt of marketing approval in Japan for rigosertib Oral in lower risk MDS patients, $5.0 million is due upon receipt of marketing approval in the United States for rigosertib IV in combination with gemcitabine in pancreatic cancer patients, and $3.0 million is due upon receipt of marketing approval in Japan for rigosertib IV in combination with gemcitabine in pancreatic cancer patients. Furthermore, upon receipt of marketing approval in the United States and Japan for an additional specified indication of rigosertib, which we are currently not pursuing, an aggregate of $4.0 million would be due. In addition to these pre-commercial milestones, we are eligible to receive tiered milestone payments of up to an aggregate of $30.0 million based upon annual net sales of rigosertib by SymBio in the licensed territory. Further, under the terms of the SymBio license agreement, SymBio is obligated to make royalty payments to us at percentage rates ranging from the mid-teens to 20% based on net sales of rigosertib by SymBio in the licensed territory.

        Royalties will be payable under the SymBio agreement on a country-by-country basis in the licensed territory, until the later of the expiration of marketing exclusivity in those countries, a specified period of time after first commercial sale of rigosertib in such country, or the expiration of all valid claims of the licensed patents covering rigosertib or the manufacture or use of rigosertib in such country. If no valid claim exists covering the composition of matter of rigosertib or the use of or treatment with rigosertib in a particular country before the expiration of the royalty term, and specified competing products achieve a specified market share percentage in such country, SymBio's obligation to pay us royalties will continue at a reduced royalty rate until the end of the royalty term. In addition, the applicable royalties payable to us may be reduced if SymBio is required to pay royalties to third parties for licenses to intellectual property rights necessary to develop, use, manufacture or commercialize rigosertib in the licensed territory.

        The license agreement with SymBio will remain in effect until the expiration of the royalty term. However, the SymBio license agreement may be terminated earlier due to the uncured material breach or bankruptcy of a party, or force majeure. If SymBio terminates the license agreement in these circumstances, its licenses to rigosertib will survive, subject to SymBio's milestone and royalty obligations, which SymBio may elect to defer and offset against any damages that may be determined to be due from us. In addition, we may terminate the license agreement in the event that SymBio brings a challenge against us in relation to the licensed patents, and SymBio may terminate the license agreement without cause by providing us with written notice a specified period of time in advance of termination.

    The Leukemia and Lymphoma Society

        In May 2010, we entered into a funding agreement with The Leukemia and Lymphoma Society, or LLS, to fund the development of rigosertib. Under the LLS funding agreement, we are obligated to use the funding received exclusively for the payment or reimbursement of the costs and expenses for clinical development activities for rigosertib. Under this agreement, we retain ownership and control of all intellectual property pertaining to works of authorship, inventions, know-how, information, data and proprietary material.

        Under the LLS funding agreement, as amended, we received funding of $8.0 million from LLS through 2012. We have not received any funding from LLS in 2013 and we terminated the funding agreement effective as of March 2013. We are required to make specified payments to LLS, including payments payable upon execution of the first out-license; first approval for marketing by a regulatory body; completion of the first commercial sale of rigosertib; and achieving specified annual net sales

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levels of rigosertib. The extent of these payments and our obligations will depend on whether we out-license rights to develop or commercialize rigosertib to a third party, we commercialize rigosertib on our own or we combine with or are sold to another company. In addition, we will pay to LLS a single-digit percentage royalty of our net sales of rigosertib, if any. The sum of our payments to LLS is capped at three times the total funding received from LLS, or $24.0 million.

        In addition, some of our obligations under the funding agreement will remain in effect until the completion of specified milestones and payments to LLS. Assuming the successful outcome of the development activities covered by the LLS funding agreement and our receipt of necessary regulatory approvals, we will be required to take commercially reasonable steps through March 2018 to advance the development of rigosertib in clinical trials and to bring rigosertib to practical application for MDS in a major market country, provided that we reasonably believe the product is safe and effective. We believe that we can satisfy our obligation by out-licensing rigosertib to, or partnering rigosertib with, a third party. We are required to report to LLS on our efforts and results with respect to continuing development of rigosertib. Our failure to perform these diligence obligations, even if we successfully achieve the specified development milestones, would require us to pay back to LLS the total amount of the funding we received from them, unless an exception applies. If LLS were to claim that such failure occurred and we disagreed with such claim, the dispute would be settled through binding arbitration.

    Preclinical Collaboration

        We recently formed a joint venture with GVK Biosciences Private Limited, or GVK, a contract research organization based in India, to collaborate on the development of our ON 1231320 and ON 108600 preclinical programs through the submission of an IND with the FDA or conducting proof of concept studies. GVK will initially make a monetary capital contribution in exchange for a 10% interest in the joint venture and we will contribute a sub-license to the intellectual property related to the two programs in exchange for a 90% interest. GVK will be required to make additional capital contributions over time, subject to specified conditions, and its interest in the joint venture will increase to as much as 50%. At specified times, we will be entitled to buy back from GVK the rights to either of these two programs.

Intellectual Property

    Patents and Proprietary Rights

        We have access to intellectual property through our internal research, a licensing agreement with Temple University, or Temple, and a research agreement with the Mount Sinai School of Medicine, or Mount Sinai.

    License Agreement with Temple University

        In January 1999, we entered into a license agreement with Temple as subsequently amended, to obtain an exclusive, world-wide license to certain Temple patents and technical information to make, have made, use, sell, offer for sale and import several classes of novel compounds, including our three clinical-stage product candidates, rigosertib, ON 013105 and recilisib.

        Under the terms of the license agreement, we paid Temple a non-refundable up-front payment, and are required to pay annual license maintenance fees, as well as a low single-digit percentage of net sales as a royalty. In addition, we agreed to pay Temple 25% of any consideration received from any sublicensee of the licensed Temple patents and technical information, which does not include any royalties on sales, funds received for research and development or proceeds from any equity or debt investment.

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        The license agreement with Temple can be terminated by mutual agreement or due to the material breach or bankruptcy of either party. We may terminate the license agreement for any reason by giving Temple prior written notice.

    Research Agreement with Mount Sinai School of Medicine

        In May 2010, we entered into a research agreement with Mount Sinai. This agreement is described in more detail under the caption "Certain Relationships and Related Party Transactions—Research Agreement."

    Rigosertib Patents

        As of May 6, 2013, we owned or exclusively licensed 64 issued patents and 18 pending patent applications covering composition-of-matter, process, formulation and various indications for method-of-use for rigosertib filed worldwide, including five patents and three patent applications in the United States. The U.S. composition-of-matter patent for rigosertib, which we in-license pursuant to the license agreement with Temple, expires in 2026. The U.S. method of treatment patent for rigosertib, which we also in-license from Temple, expires in 2025.

    ON 013105 Patents

        As of May 6, 2013, we owned or exclusively licensed eight issued patents and five pending patent applications covering composition-of-matter, process, formulation and various indications for method-of-use for ON 013105 filed worldwide, including one patent in the United States. The U.S. composition-of-matter patent for ON 013105 expires in 2025.

    Recilisib Patents

        As of May 6, 2013, we owned or exclusively licensed 43 issued patents and 38 pending patent applications covering composition of matter, formulation and various indications for method-of-use for recilisib filed worldwide, including four patents and five patent applications in the United States. The U.S. composition-of-matter patent for recilisib expires in 2020.

    General Considerations

        As with other biotechnology and pharmaceutical companies, our ability to maintain and solidify a proprietary position for our product candidates will depend upon our success in obtaining effective patent claims and enforcing those claims once granted.

        Our commercial success will depend in part upon not infringing upon the proprietary rights of third parties. It is uncertain whether the issuance of any third-party patent would require us to alter our development or commercial strategies, or our product candidates or processes, obtain licenses or cease certain activities. The biotechnology and pharmaceutical industries are characterized by extensive litigation regarding patents and other intellectual property rights. If a third party commences a patent infringement action against us, or our collaborators, it could consume significant financial and management resources, regardless of the merit of the claims or the outcome of the litigation.

        The term of a patent that covers an FDA-approved drug may be eligible for patent term extension, which provides patent term restoration as compensation for the patent term lost during the FDA regulatory review process. The Drug Price Competition and Patent Term Restoration Act of 1984, or the Hatch-Waxman Act, permits a patent term extension of up to five years beyond the expiration of the patent. The length of the patent term extension is related to the length of time the drug is under regulatory review. Patent extension cannot extend the remaining term of a patent beyond a total of 14 years from the date of product approval and only one patent applicable to an approved drug may be

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extended. Similar provisions are available in Europe and other foreign jurisdictions to extend the term of a patent that covers an approved drug. In the future, if and when our pharmaceutical products receive FDA approval, we expect to apply for patent term extensions on patents covering those products.

        Furthermore, we may be able to obtain extension of patent term by adjustment of the said term under the provisions of 35 U.S.C. § 154 if the issue of an original patent is delayed due to the failure of the U.S. Patent and Trademark Office. For example, we have received adjustments of 1,139 days extension to the patent term for the rigosertib composition of matter patent (US 7,598,232), 1,155 days extension for the patent covering the process for making rigosertib (US 8,143,453) and 751 days extension for rigosertib formulation patent (US 8,063,109) under the provisions of 35 U.S.C. §154.

        Many pharmaceutical companies, biotechnology companies and academic institutions are competing with us in the field of oncology and filing patent applications potentially relevant to our business. Even when a third party patent is identified, we may conclude upon a thorough analysis, that we do not infringe upon the patent or that the patent is invalid. If the third-party patent owner disagrees with our conclusion and we continue with the business activity in question, we may be subject to patent litigation. Alternatively, we might decide to initiate litigation in an attempt to have a court declare the third-party patent invalid or non-infringed by our activity. In either scenario, patent litigation typically is costly and time-consuming, and the outcome can be favorable or unfavorable.

        In addition to patents, we rely upon unpatented trade secrets, know-how and continuing technological innovation to develop and maintain a competitive position. We seek to protect our proprietary information, in part, through confidentiality agreements with our employees, collaborators, contractors and consultants, and invention assignment agreements with our employees. We also have agreements requiring assignment of inventions with selected consultants and collaborators. The confidentiality agreements are designed to protect our proprietary information and, in the case of agreements or clauses requiring invention assignment, to grant us ownership of technologies that are developed through a relationship with a third party.

Competition

        The pharmaceutical industry is highly competitive and subject to rapid and significant technological change. While we believe that our development experience and scientific knowledge provide us with competitive advantages, we face competition from both large and small pharmaceutical and biotechnology companies. There are a number of pharmaceutical companies, biotechnology companies, public and private universities and research organizations actively engaged in the research and development of products that may compete with our products. Many of these companies are multinational pharmaceutical or biotechnology organizations, which are pursuing the development of, or are currently marketing, pharmaceuticals that target the key oncology indications or cellular pathways on which we are focused.

        It is probable that the increasing incidence and prevalence of cancer will lead to many more companies seeking to develop products and therapies for the treatment of unmet needs in oncology. Many of our competitors have significantly greater financial, technical and human resources than we have. Many of our competitors also have a significant advantage with respect to experience in the discovery and development of product candidates, as well as obtaining FDA and other regulatory approvals of products and the commercialization of those products. We anticipate intense and increasing competition as new drugs enter the market and as more advanced technologies become available. Our success will be based in part on our ability to identify, develop and manage a portfolio of drugs that are safer and more effective than competing products in the treatment of cancer patients.

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    Myelodysplastic Syndromes

        There are several ongoing clinical trials aimed at expanding the use of approved chemotherapeutic and immunomodulatory agents in higher risk MDS. Companies competing in this space include Eisai Inc. (decitabine alone and in combination with clofarabine), Celgene Corporation (azacitidine in combination with lenalidomide or vorinostat (Zolinza®)), Genentech, Inc. (erlotinib), Cell Therapeutics, Inc. (tosedostat in combination with decitabine or cytarabine) and Cyclacel Pharmaceuticals, Inc. (sapacitabine). To our knowledge, there are no Phase 3 trials other than our trial for rigosertib being conducted for higher risk MDS patients who have failed treatment with hypomethylating agents. In the lower risk MDS market, we face competition from a number of companies in early-stage clinical trials, such as Celgene Corporation (lenalidomide), Telik, Inc. (ezatiostat (Telintra®)), Spectrum Pharmaceuticals, Inc. (belinostat as monotherapy and in combination with bortezomib (Velcade®)), Astex (SG-110) and Array BioPharma Inc (ARRY-614).

    Pancreatic Cancer

        There are a number of ongoing clinical programs for the treatment of pancreatic cancer. Companies competing in this space include Celgene Corporation, Astellas Pharma, Inc. and Threshold Pharmaceuticals, Inc. Recently, the FOLFIRINOX chemotherapy regimen, combining fluorouracil, leucovorin, irinotecan and oxaliplatin, showed survival improvement over gemcitabine alone in metastatic pancreatic cancer. However, patients receiving FOLFIRINOX reported higher frequency of toxicities including febrile neutropenia that render its use restricted to selected patients with good performance status. In addition, recent studies have shown that albumin-bound paclitaxel (Abraxane®) in combination with gemcitabine helped patients with advanced pancreatic cancer live a median of 1.8 months longer than those given chemotherapy alone. Gemcitabine and erlotinib are two FDA-approved therapies for this disease. Fluorouracil and mitomycin-C are also approved for the treatment of pancreatic cancer, but these drugs are rarely used as single agents.

    Refractory Lymphomas

        Chemotherapy and radiation therapy are the two principal forms of treatment for non-Hodgkin's lymphoma. Stem cell transplantation is also used to treat some subtypes of non-Hodgkin's lymphoma. Other forms of treatment are emerging, and some are already approved for specific forms of non-Hodgkin's lymphoma. Most patients with refractory or relapsed disease receive second-line therapy, in some cases followed by stem cell transplantation. A number of targeted therapies have been approved for MCL, including bortezomib as a second-line treatment and lenalidomide for patients whose disease relapsed or progressed after two prior therapies, one of which included bortezomib. In addition, there are multiple programs currently in late-stage clinical development for this disease. Ibrutinib, which is a Bruton's tyrosine kinase inhibitor being developed by Pharmacyclics Inc., is being tested in Phase 2 and 3 trials for MCL.

    Acute Radiation Syndromes

        Competitors developing products to address ARS include Soligenix, Inc., Cellerant Therapeutics, Inc., and Cleveland BioLabs, Inc. Each of these companies is working with the U.S. government to develop its products through federal contracts and grants.

Manufacturing

        Our product candidates are synthetic small molecules. Manufacturing activities must comply with FDA current good manufacturing practices, or cGMP, regulations. We conduct our manufacturing activities under individual purchase orders with third-party contract manufacturers, or CMOs. We have in place quality agreements with our key CMOs and are negotiating supply agreements with them. We

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have also established an internal quality management organization, which audits and qualifies CMOs in the United States and abroad.

        One of our CMOs is currently validating its manufacturing process to synthesize the rigosertib active pharmaceutical ingredient, which we believe will enable us to launch and commercialize rigosertib IV if and when marketing approval is obtained. Another CMO produces rigosertib IV for use in our ongoing clinical trials. A third CMO produces rigosertib Oral for use in our ongoing clinical trials. We believe that the manufacturing processes for the active pharmaceutical ingredient and finished drug products for rigosertib have been developed to adequately support future development and commercial demands. We believe that our existing suppliers of the rigosertib active pharmaceutical ingredient and drug products would be capable of providing sufficient quantities of the rigosertib active pharmaceutical ingredient and drug products to meet anticipated full-scale commercial demands.

        The FDA regulates and inspects equipment, facilities and processes used in manufacturing pharmaceutical products prior to approval. If we fail to comply with applicable cGMP requirements and conditions of product approval, the FDA may seek sanctions, including fines, civil penalties, injunctions, suspension of manufacturing operations, operating restrictions, withdrawal of FDA approval, seizure or recall of products and criminal prosecution. Although we periodically monitor the FDA compliance of our third-party CMOs, we cannot be certain that our present or future third-party CMOs will consistently comply with cGMP and other applicable FDA regulatory requirements.

Commercial Operations

        We do not currently have an organization for the sales, marketing and distribution of pharmaceutical products. We may rely on licensing and co-promotion agreements with strategic partners for the commercialization of our products in the United States and other territories. If we choose to build a commercial infrastructure to support marketing in the United States, such commercial infrastructure could be expected to include a targeted, oncology sales force supported by sales management, internal sales support, an internal marketing group and distribution support. To develop the appropriate commercial infrastructure internally, we would have to invest financial and management resources, some of which would have to be deployed prior to any confirmation that rigosertib will be approved.

Government Regulation

        As a pharmaceutical company that operates in the United States, we are subject to extensive regulation by the FDA, and other federal, state, and local regulatory agencies. The Federal Food, Drug, and Cosmetic Act, or the FDC Act, and its implementing regulations set forth, among other things, requirements for the research, testing, development, manufacture, quality control, safety, effectiveness, approval, labeling, storage, record keeping, reporting, distribution, import, export, advertising and promotion of our products. Although the discussion below focuses on regulation in the United States, we anticipate seeking approval for, and marketing of, our products in other countries. Generally, our activities in other countries will be subject to regulation that is similar in nature and scope as that imposed in the United States, although there can be important differences. Additionally, some significant aspects of regulation in Europe are addressed in a centralized way through the EMA, but country-specific regulation remains essential in many respects. The process of obtaining regulatory marketing approvals and the subsequent compliance with appropriate federal, state, local and foreign statutes and regulations require the expenditure of substantial time and financial resources.

    United States Government Regulation

        The FDA is the main regulatory body that controls pharmaceuticals in the United States, and its regulatory authority is based in the FDC Act. Pharmaceutical products are also subject to other federal,

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state and local statutes. A failure to comply explicitly with any requirements during the product development, approval, or post-approval periods, may lead to administrative or judicial sanctions. These sanctions could include the imposition by the FDA or an institutional review board, or IRB, of a hold on clinical trials, refusal to approve pending marketing applications or supplements, withdrawal of approval, warning letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, civil penalties or criminal prosecution.

        The steps required before a new drug may be marketed in the United States generally include:

    Completion of preclinical laboratory tests, animal studies and formulation studies in compliance with the FDA's GLP regulations;

    Submission to the FDA of an IND to support human clinical testing;

    Approval by an IRB at each clinical site before each trial may be initiated;

    Performance of adequate and well-controlled clinical trials in accordance with federal regulations and with current good clinical practices, or GCPs, to establish the safety and efficacy of the investigational drug product for each targeted indication;

    Submission of an NDA to the FDA;

    Satisfactory completion of an FDA Advisory Committee review, if applicable;

    Satisfactory completion of an FDA inspection of the manufacturing facilities at which the investigational product is produced to assess compliance with cGMP, and to assure that the facilities, methods and controls are adequate; and

    FDA review and approval of the NDA.

    Clinical Trials

        An IND is a request for authorization from the FDA to administer an investigational drug product to humans. This authorization is required before interstate shipping and administration of any new drug product to humans that is not the subject of an approved NDA. A 30-day waiting period after the submission of each IND is required prior to the commencement of clinical testing in humans. If the FDA has neither commented on nor questioned the IND within this 30-day period, the clinical trial proposed in the IND may begin. Clinical trials involve the administration of the investigational drug to patients under the supervision of qualified investigators following GCPs, an international standard meant to protect the rights and health of patients and to define the roles of clinical trial sponsors, administrators and monitors. Clinical trials are conducted under protocols that detail the parameters to be used in monitoring safety, and the efficacy criteria to be evaluated. Each protocol involving testing on U.S. patients and subsequent protocol amendments must be submitted to the FDA as part of the IND. The informed written consent of each participating subject is required. The clinical investigation of an investigational drug is generally divided into three phases. Although the phases are usually conducted sequentially, they may overlap or be combined. The three phases of an investigation are as follows:

    Phase 1.  Phase 1 includes the initial introduction of an investigation drug into humans. Phase 1 clinical trials may be conducted in patients with the target disease or condition or healthy volunteers. These studies are designed to evaluate the safety, metabolism, pharmacokinetics and pharmacologic actions of the investigational drug in humans, the side effects associated with increasing doses, and if possible, to gain early evidence on effectiveness. During Phase 1 clinical trials, sufficient information about the investigational product's pharmacokinetics and pharmacological effects may be obtained to permit the design of Phase 2 clinical trials. The total

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      number of participants included in Phase 1 clinical trials varies, but is generally in the range of 20 to 80.

    Phase 2.  Phase 2 includes the controlled clinical trials conducted to evaluate the effectiveness of the investigational product for a particular indication(s) in patients with the disease or condition under study, to determine dosage tolerance and optimal dosage, and to identify possible adverse side effects and safety risks associated with the drug. Phase 2 clinical trials are typically well-controlled, closely monitored, and conducted in a limited patient population, usually involving no more than several hundred participants.

    Phase 3.  Phase 3 clinical trials are controlled clinical trials conducted in an expanded patient population at geographically dispersed clinical trial sites. They are performed after preliminary evidence suggesting effectiveness of the investigational product has been obtained, and are intended to further evaluate dosage, clinical effectiveness and safety, to establish the overall benefit-risk relationship of the product, and to provide an adequate basis for product approval. Phase 3 clinical trials usually involve several hundred to several thousand participants. In most cases, the FDA requires two adequate and well controlled Phase 3 clinical trials to demonstrate the efficacy of the drug. A single Phase 3 trial with other confirmatory evidence may be sufficient in rare instances where the study is a large multicenter trial demonstrating internal consistency and a statistically very persuasive finding of a clinically meaningful effect on mortality, irreversible morbidity or prevention of a disease with a potentially serious outcome and confirmation of the result in a second trial would be practically or ethically impossible.

        The decision to terminate development of an investigational drug product may be made by either a health authority body, such as the FDA or IRB/ethics committees, or by a company for various reasons. The FDA may order the temporary, or permanent, discontinuation of a clinical trial at any time, or impose other sanctions, if it believes that the clinical trial either is not being conducted in accordance with FDA requirements or presents an unacceptable risk to the clinical trial patients. In some cases, clinical trials are overseen by an independent group of qualified experts organized by the trial sponsor, or the clinical monitoring board. This group provides authorization for whether or not a trial may move forward at designated check points. These decisions are based on the limited access to data from the ongoing trial. The suspension or termination of development can occur during any phase of clinical trials if it is determined that the participants or patients are being exposed to an unacceptable health risk. In addition, there are requirements for the registration of ongoing clinical trials of drugs on public registries and the disclosure of certain information pertaining to the trials as well as clinical trial results after completion.

        A sponsor may be able to request an SPA, the purpose of which is to reach agreement with the FDA on the Phase 3 clinical trial protocol design and analysis that will form the primary basis of an efficacy claim. A sponsor meeting the regulatory criteria may make a specific request for an SPA and provide information regarding the design and size of the proposed clinical trial. An SPA request must be made before the proposed trial begins, and all open issues must be resolved before the trial begins. If a written agreement is reached, it will be documented and made part of the record. The agreement will be binding on the FDA and may not be changed by the sponsor or the FDA after the trial begins except with the written agreement of the sponsor and the FDA or if the FDA determines that a substantial scientific issue essential to determining the safety or efficacy of the product candidate was identified after the testing began. An SPA is not binding if new circumstances arise, and there is no guarantee that a study will ultimately be adequate to support an approval even if the study is subject to an SPA. Rigosertib is being tested in several advanced stage clinical trials, including a pivotal Phase 3 trial under an SPA. Having an SPA agreement does not guarantee that a product will receive FDA approval.

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        Assuming successful completion of all required testing in accordance with all applicable regulatory requirements, detailed investigational drug product information is submitted to the FDA in the form of a NDA to request market approval for the product in specified indications.

    New Drug Applications

        In order to obtain approval to market a drug in the United States, a marketing application must be submitted to the FDA that provides data establishing the safety and effectiveness of the drug product for the proposed indication. The application includes all relevant data available from pertinent preclinical and clinical trials, including negative or ambiguous results as well as positive findings, together with detailed information relating to the product's chemistry, manufacturing, controls and proposed labeling, among other things. Data can come from company-sponsored clinical trials intended to test the safety and effectiveness of a product, or from a number of alternative sources, including studies initiated by investigators. To support marketing approval, the data submitted must be sufficient in quality and quantity to establish the safety and effectiveness of the investigational drug product to the satisfaction of the FDA.

        In most cases, the NDA must be accompanied by a substantial user fee (currently exceeding $1,958,000); there may be some instances in which the user fee is waived. The FDA will initially review the NDA for completeness before it accepts the NDA for filing. The FDA has 60 days from its receipt of an NDA to determine whether the application will be accepted for filing based on the agency's threshold determination that it is sufficiently complete to permit substantive review. After the NDA submission is accepted for filing, the FDA begins an in-depth review. The FDA has agreed to certain performance goals in the review of NDAs. Most such applications for standard review drug products are reviewed within ten to twelve months. The FDA can extend this review by three months to consider certain late-submitted information or information intended to clarify information already provided in the submission. The FDA reviews the NDA to determine, among other things, whether the proposed product is safe and effective for its intended use, and whether the product is being manufactured in accordance with cGMP. The FDA may refer applications for novel drug products which present difficult questions of safety or efficacy to an advisory committee, typically a panel that includes clinicians and other experts, for review, evaluation and a recommendation as to whether the application should be approved and under what conditions. The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions.

        Before approving an NDA, the FDA will inspect the facilities at which the product is manufactured. The FDA will not approve the product unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within required specifications. Additionally, before approving an NDA, the FDA will typically inspect one or more clinical sites to assure compliance with GCP. After the FDA evaluates the NDA and the manufacturing facilities, it issues either an approval letter or a complete response letter. A complete response letter generally outlines the deficiencies in the submission and may require substantial additional testing or information in order for the FDA to reconsider the application. If, or when, those deficiencies have been addressed to the FDA's satisfaction in a resubmission of the NDA, the FDA will issue an approval letter. The FDA has committed to reviewing such resubmissions in two or six months depending on the type of information included. Notwithstanding the submission of any requested additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval.

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        An approval letter authorizes commercial marketing of the drug with specific prescribing information for specific indications. As a condition of NDA approval, the FDA may require a risk evaluation and mitigation strategy, or REMS, to help ensure that the benefits of the drug outweigh the potential risks. REMS can include medication guides, communication plans for healthcare professionals, and elements to assure safe use, or ETASU. ETASU can include, but are not limited to, special training or certification for prescribing or dispensing, dispensing only under certain circumstances, special monitoring, and the use of patient registries. The requirement for a REMS can materially affect the potential market and profitability of the drug. Moreover, product approval may require substantial post-approval testing and surveillance to monitor the drug's safety or efficacy. Once granted, product approvals may be withdrawn if compliance with regulatory standards is not maintained or problems are identified following initial marketing.

        Changes to some of the conditions established in an approved application, including changes in indications, labeling, or manufacturing processes or facilities, require submission and FDA approval of a new NDA or NDA supplement before the change can be implemented. An NDA supplement for a new indication typically requires clinical data similar to that in the original application, and the FDA uses the same procedures and actions in reviewing NDA supplements as it does in reviewing NDAs.

    Advertising and Promotion

        The FDA and other federal regulatory agencies closely regulate the marketing and promotion of drugs through, among other things, standards and regulations for direct-to-consumer advertising, communications regarding unapproved uses, industry-sponsored scientific and educational activities, and promotional activities involving the Internet. A product cannot be commercially promoted before it is approved. After approval, product promotion can include only those claims relating to safety and effectiveness that are consistent with the labeling approved by the FDA. Healthcare providers are permitted to prescribe drugs for "off-label" uses—that is, uses not approved by the FDA and therefore not described in the drug's labeling—because the FDA does not regulate the practice of medicine. However, FDA regulations impose stringent restrictions on manufacturers' communications regarding off-label uses. Broadly speaking, a manufacturer may not promote a drug for off-label use, but may engage in non-promotional, balanced communication regarding off-label use under specified conditions. Failure to comply with applicable FDA requirements and restrictions in this area may subject a company to adverse publicity and enforcement action by the FDA, the DOJ, or the Office of the Inspector General of HHS, as well as state authorities. This could subject a company to a range of penalties that could have a significant commercial impact, including civil and criminal fines and agreements that materially restrict the manner in which a company promotes or distributes drug products.

    Post-Approval Regulations

        After regulatory approval of a drug is obtained, a company is required to comply with a number of post-approval requirements. For example, as a condition of approval of an NDA, the FDA may require post-marketing testing, including Phase 4 clinical trials, and surveillance to further assess and monitor the product's safety and effectiveness after commercialization. Regulatory approval of oncology products often requires that patients in clinical trials be followed for long periods to determine the overall survival benefit of the drug. In addition, as a holder of an approved NDA, a company would be required to report adverse reactions and production problems to the FDA, to provide updated safety and efficacy information, and to comply with requirements concerning advertising and promotional labeling for any of its products. Also, quality control and manufacturing procedures must continue to conform to cGMP after approval to assure and preserve the long term stability of the drug or biological product. The FDA periodically inspects manufacturing facilities to assess compliance with cGMP, which imposes extensive procedural and substantive record keeping requirements. In addition, changes to the

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manufacturing process are strictly regulated, and, depending on the significance of the change, may require prior FDA approval before being implemented. FDA regulations also require investigation and correction of any deviations from cGMP and impose reporting and documentation requirements upon a company and any third-party manufacturers that a company may decide to use. Accordingly, manufacturers must continue to expend time, money and effort in the area of production and quality control to maintain compliance with cGMP and other aspects of regulatory compliance.

        We rely, and expect to continue to rely, on third parties for the production of clinical and commercial quantities of our product candidates. Future FDA and state inspections may identify compliance issues at our facilities or at the facilities of our contract manufacturers that may disrupt production or distribution, or require substantial resources to correct. In addition, discovery of previously unknown problems with a product or the failure to comply with applicable requirements may result in restrictions on a product, manufacturer or holder of an approved NDA, including withdrawal or recall of the product from the market or other voluntary, FDA-initiated or judicial action that could delay or prohibit further marketing.

        Newly discovered or developed safety or effectiveness data may require changes to a product's approved labeling, including the addition of new warnings and contraindications, and also may require the implementation of other risk management measures. Also, new government requirements, including those resulting from new legislation, may be established, or the FDA's policies may change, which could delay or prevent regulatory approval of our products under development.

    FDA Animal Efficacy Rule for Approval of Medical Countermeasures

        Marketing approval by the FDA for new medical countermeasures in situations for which human efficacy testing is not feasible or ethical, such as for ARS, is based on the so-called "Animal Efficacy Rule." Under this rule, FDA can rely on the evidence from animal studies to provide substantial prediction of effectiveness of an agent in humans, when coupled with:

    a reasonably well understood pathophysiological mechanism for the toxicity of the radiological or nuclear substance and its amelioration or prevention by the agent;

    protective effect is demonstrated in generally more than one animal species expected to react with a response predictive for humans, and hence be a reliable indicator of its effectiveness in humans;

    animal study endpoint is clearly related to the desired benefit in humans; and

    data or information on the pharmacokinetics and pharmacodynamics of the product in animals and humans is sufficiently well understood to allow selection of a dose predicted to be effective in humans.

    The Hatch-Waxman Amendments to the FDC Act

    Orange Book Listing

        In seeking approval for a drug through an NDA, applicants are required to list with the FDA each patent whose claims 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 generic competitors in support of approval of an abbreviated new drug application, or ANDA. An ANDA provides for marketing of a drug product that has the same active ingredients in the same strengths and dosage form as the listed drug and has been shown through bioequivalence testing to be therapeutically equivalent to the listed drug. Other than the requirement for bioequivalence testing, ANDA applicants are not required to conduct, or submit results of, pre-clinical or clinical tests to prove the safety or effectiveness of their drug product. Drugs approved in this way are commonly referred to as "generic equivalents" to the listed drug, and can often be substituted by pharmacists under prescriptions written for the original listed drug.

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        The ANDA applicant is required to certify to the FDA concerning any patents listed for the approved product in the FDA's Orange Book. Specifically, the applicant must certify that: (i) the required patent information has not been filed; (ii) the listed patent has expired; (iii) the listed patent has not expired, but will expire on a particular date and approval is sought after patent expiration; or (iv) the listed patent is invalid or will not be infringed by the new product. The ANDA applicant may also elect to submit a statement certifying that its proposed ANDA label does not contain (or carves out) any language regarding the patented method-of-use rather than certify to a listed method-of-use patent. If the applicant does not challenge the listed patents, the ANDA application will not be approved until all the listed patents claiming the referenced product have expired.

        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 the ANDA 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 ANDA 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 automatically prevents the FDA from approving the ANDA until the earlier of 30 months, expiration of the patent, settlement of the lawsuit, or a decision in the infringement case that is favorable to the ANDA applicant.

        The ANDA application also will not be approved until any applicable non-patent exclusivity listed in the Orange Book for the referenced product has expired.

    Exclusivity

        Upon NDA approval of a new chemical entity, or NCE, which is a drug that contains no active moiety that has been approved by the FDA in any other NDA, that drug receives five years of marketing exclusivity during which the FDA cannot receive any ANDA seeking approval of a generic version of that drug. Certain changes to a drug, such as the addition of a new indication to the package insert, are associated with a three-year period of exclusivity during which the FDA cannot approve an ANDA for a generic drug that includes the change.

        An ANDA may be submitted one year before NCE exclusivity expires if a Paragraph IV certification is filed. If there is no listed patent in the Orange Book, there may not be a Paragraph IV certification, and, thus, no ANDA may be filed before the expiration of the exclusivity period.

    Patent Term Extension

        After NDA approval, owners of relevant drug patents may apply for up to a five year patent extension. The allowable patent term extension is calculated as half of the drug's testing phase—the time between IND application and NDA submission—and all of the review phase—the time between NDA submission and approval up to a maximum of five years. The time can be shortened if the FDA determines that the applicant did not pursue approval with due diligence. The total patent term after the extension may not exceed 14 years.

    The Foreign Corrupt Practices Act

        The Foreign Corrupt Practices Act, or FCPA, prohibits any U.S. individual or business from paying, offering, or authorizing payment or offering of anything of value, directly or indirectly, to any foreign official, political party or candidate for the purpose of influencing any act or decision of the foreign entity in order to assist the individual or business in obtaining or retaining business. The FCPA also obligates companies whose securities are listed in the United States to comply with accounting provisions requiring the company to maintain books and records that accurately and fairly reflect all transactions of the corporation, including international subsidiaries, and to devise and maintain an adequate system of internal accounting controls for international operations.

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    Europe and Other International Government Regulation

        In addition to regulations in the United States, we 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 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. Some countries outside of the United States have a similar process that requires the submission of a clinical trial application, or CTA, much like the IND prior to the commencement of human clinical trials. In Europe, for example, a CTA must be submitted to each country's national health authority and an independent ethics committee, much like the FDA and IRB, respectively. Once the CTA is approved in accordance with a country's requirements, clinical trial development may proceed.

        To obtain regulatory approval to commercialize a new drug under European Union regulatory systems, we must submit a marketing authorization application, or MAA. The MAA is similar to the NDA, with the exception of, among other things, country-specific document requirements.

        For other countries outside of the European Union, such as countries in Eastern Europe, Latin America or Asia, the requirements governing the conduct of clinical trials, product licensing, pricing and reimbursement vary from country to country. In all cases, again, the clinical trials are conducted in accordance with GCP and the applicable regulatory requirements and the ethical principles that have their origin in the Declaration of Helsinki.

    Compliance

        During all phases of development (pre- and post-marketing), failure to comply with applicable regulatory requirements may result in administrative or judicial sanctions. These sanctions could include the FDA's imposition of a clinical hold on trials, refusal to approve pending applications, withdrawal of an approval, warning letters, product recalls, product seizures, total or partial suspension of production or distribution, product detention or refusal to permit the import or export of products, injunctions, fines, civil penalties or criminal prosecution. Any agency or judicial enforcement action could have a material adverse effect on us.

    Other Special Regulatory Procedures

    Orphan Drug Designation

        The FDA may grant Orphan Drug Designation to drugs intended to treat a rare disease or condition that affects fewer than 200,000 individuals in the United States, or, if the disease or condition affects more than 200,000 individuals in the United States, there is no reasonable expectation that the cost of developing and making the drug would be recovered from sales in the United States. In the European Union, the EMA's Committee for Orphan Medicinal Products, or COMP, grants Orphan Drug Designation to promote the development of products that are intended for the diagnosis, prevention or treatment of life-threatening or chronically debilitating conditions affecting not more than five in 10,000 persons in the European Union community. Additionally, designation is granted for products intended for the diagnosis, prevention or treatment of a life- threatening, seriously debilitating or serious and chronic condition and when, without incentives, it is unlikely that sales of the drug in the European Union would be sufficient to justify the necessary investment in developing the drug.

        In the United States, Orphan Drug Designation entitles a party to financial incentives, such as opportunities for grant funding towards clinical trial costs, tax credits for certain research and user fee waivers under certain circumstances. In addition, if a product receives the first FDA approval for the indication for which it has orphan designation, the product is entitled to seven years of market exclusivity, which means the FDA may not approve any other application for the same drug for the

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same indication for a period of seven years, except in limited circumstances, such as a showing of clinical superiority over the product with orphan exclusivity. Orphan drug exclusivity does not prevent the FDA from approving a different drug for the same disease or condition, or the same drug for a different disease or condition.

        In the European Union, Orphan Drug Designation also entitles a party to financial incentives such as reduction of fees or fee waivers and ten years of market exclusivity is granted following drug approval. This period may be reduced to six years if the Orphan Drug Designation criteria are no longer met, including where it is shown that the product is sufficiently profitable not to justify maintenance of market exclusivity.

        Orphan drug designation must be requested before submission of an application for marketing approval. Orphan drug designation does not convey any advantage in, or shorten the duration of the regulatory review and approval process.

    Priority Review (United States) and Accelerated Review (European Union)

        Based on results of the Phase 3 clinical trial(s) submitted in an NDA, upon the request of an applicant, a priority review designation may be granted to a product by the FDA, which sets the target date for FDA action on the application at six months from FDA filing, or eight months from the sponsor's submission. Priority review is given where preliminary estimates indicate that a product, if approved, has the potential to provide a safe and effective therapy where no satisfactory alternative therapy exists, or a significant improvement compared to marketed products is possible. If criteria are not met for priority review, the standard FDA review period is ten months from FDA filing, or 12 months from sponsor submission. Priority review designation does not change the scientific/medical standard for approval or the quality of evidence necessary to support approval.

        Under the Centralized Procedure in the European Union, the maximum timeframe for the evaluation of a marketing authorization application is 210 days (excluding clock stops, when additional written or oral information is to be provided by the applicant in response to questions asked by the CHMP). Accelerated evaluation might be granted by the CHMP in exceptional cases, when a medicinal product is expected to be of a major public health interest, defined by three cumulative criteria: the seriousness of the disease (e.g., heavy disabling or life-threatening diseases) to be treated; the absence or insufficiency of an appropriate alternative therapeutic approach; and anticipation of high therapeutic benefit. In this circumstance, EMA ensures that the opinion of the CHMP is given within 150 days.

    Pediatric Information

        Under the Pediatric Research Equity Act, or PREA, NDAs or supplements to NDAs must contain data to assess the safety and effectiveness of the drug for the claimed indications in all relevant pediatric subpopulations and to support dosing and administration for each pediatric subpopulation for which the drug is safe and effective. The FDA may grant full or partial waivers, or deferrals, for submission of data. Unless otherwise required by regulation, PREA does not apply to any drug for an indication for which orphan designation has been granted.

        The Best Pharmaceuticals for Children Act, or BPCA, provides NDA holders a six-month extension of any exclusivity—patent or non-patent—for a drug if certain conditions are met. Conditions for exclusivity include the FDA's determination that information relating to the use of a new drug in the pediatric population may produce health benefits in that population, the FDA making a written request for pediatric studies, and the applicant agreeing to perform, and reporting on, the requested studies within the statutory timeframe. Applications under the BPCA are treated as priority applications, with all of the benefits that designation confers.

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    Healthcare Reform

        In March 2010, the President of the United States signed one of the most significant healthcare reform measures in decades. The Affordable Care Act, substantially changes the way healthcare will be financed by both governmental and private insurers, and significantly impacts the pharmaceutical industry. The Affordable Care Act will impact existing government healthcare programs and will result in the development of new programs. For example, the Affordable Care Act provides for Medicare payment for performance initiatives and improvements to the physician quality reporting system and feedback program.

        Among the Affordable Care Act's provisions of importance to the pharmaceutical industry are the following:

    an annual, nondeductible fee on any entity that manufactures or imports specified branded prescription drugs and biologic agents apportioned among these entities according to their market share in some government healthcare programs, beginning in 2011;

    an increase in the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program, retroactive to January 1, 2010, to 23% and 13% of the average manufacturer price for most branded and generic drugs, respectively;

    expansion of healthcare fraud and abuse laws, including the False Claims Act and the Anti-Kickback Statute, new government investigative powers, and enhanced penalties for noncompliance;

    a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 50% point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturers' outpatient drugs to be covered under Medicare Part D;

    extension of manufacturers' Medicaid rebate liability to covered drugs dispensed to individuals who are enrolled in Medicaid managed care organizations;

    expansion of eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to additional individuals beginning in 2014 and by adding new mandatory eligibility categories for individuals with income at or below 133% of the Federal Poverty Level, thereby potentially increasing manufacturers' Medicaid rebate liability;

    expansion of the entities eligible for discounts under the Public Health Service pharmaceutical pricing program;

    new requirements to report annually specified financial arrangements with physicians and teaching hospitals, as defined in the Affordable Care Act and its implementing regulations, including reporting any "payments or transfers of value" made or distributed to prescribers, teaching hospitals, and other healthcare providers and reporting any ownership and investment interests held by physicians and other healthcare providers and their immediate family members and applicable group purchasing organizations during the preceding calendar year, with data collection to be required beginning August 1, 2013 and reporting to the Centers for Medicare and Medicaid Services to be required by March 31, 2014 and by the 90th day of each subsequent calendar year;

    a new requirement to annually report drug samples that manufacturers and distributors provide to physicians; and

    a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research.

        The Affordable Care Act also establishes an Independent Payment Advisory Board, or IPAB, to reduce the per capita rate of growth in Medicare spending. Beginning in 2014, IPAB is mandated to

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propose changes in Medicare payments if it determines that the rate of growth of Medicare expenditures exceeds target growth rates. The IPAB has broad discretion to propose policies to reduce expenditures, which may have a negative impact on payment rates for pharmaceutical products. A proposal made by the IPAB is required to be implemented by the U.S. government's Centers for Medicare & Medicaid Services unless Congress adopts a proposal with savings greater than those proposed by the IPAB. IPAB proposals may impact payments for physician and free-standing services beginning in 2015 and for hospital services beginning in 2020.

        In addition, other legislative changes have been proposed and adopted since the Affordable Care Act was enacted. On August 2, 2011, the President signed into law the Budget Control Act of 2011, which, among other things, created the Joint Select Committee on Deficit Reduction to recommend proposals in spending reductions to Congress. The Joint Select Committee did not achieve its targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, triggering the legislation's automatic reductions to several government programs. These reductions include aggregate reductions to Medicare payments to providers of up to 2% per fiscal year, starting in 2013. On January 2, 2013, President Obama signed into law the American Taxpayer Relief Act of 2012, which, among other things, reduced Medicare payments to several providers and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. These new laws may result in additional reductions in Medicare and other healthcare funding, which could have a material adverse effect on our customers and accordingly, our financial operations.

        We anticipate that the Affordable Care Act will result in additional downward pressure on coverage and the price that we receive for any approved product, and could seriously harm our business. Any reduction in reimbursement from Medicare and other government programs may result in a similar reduction in payments from private payors. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability, or commercialize our products. In addition, it is possible that there will be further legislation or regulation that could harm our business, financial condition, and results of operations.

    Coverage and Reimbursement

        Significant uncertainty exists as to the coverage and reimbursement status of any drug products for which we obtain regulatory approval. In the United States and markets in other countries, sales of any products for which we receive regulatory approval for commercial sale will depend in part on the availability of reimbursement from third-party payors. Third-party payors include government health administrative authorities, managed care providers, private health insurers and other organizations. The process for determining whether a payor will provide coverage for a drug product may be separate from the process for setting the price or reimbursement rate that the payor will pay for the drug product. Third-party payors may limit coverage to specific drug products on an approved list, or formulary, which might not include all of the FDA-approved drugs for a particular indication. Third-party payors are increasingly challenging the price and examining the medical necessity and cost-effectiveness of medical products and services, in addition to their safety and efficacy. We may need to conduct expensive pharmacoeconomic studies in order to demonstrate the medical necessity and cost-effectiveness of our products, in addition to the costs required to obtain FDA approvals. Our product candidates may not be considered medically necessary or cost-effective. A payor's decision to provide coverage for a drug product does not imply that an adequate reimbursement rate will be approved. Adequate third party reimbursement may not be available to enable us to maintain price levels sufficient to realize an appropriate return on our investment in product development.

        In 2003, the U.S. government enacted legislation providing a partial prescription drug benefit for Medicare recipients, which became effective at the beginning of 2006. Government payment for some of the costs of prescription drugs may increase demand for any products for which we receive marketing approval. However, to obtain payments under this program, we would be required to sell

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products to Medicare recipients through prescription drug plans operating pursuant to this legislation. These plans will likely negotiate discounted prices for our products. Federal, state and local governments in the U.S. continue to consider legislation to limit the growth of healthcare costs, including the cost of prescription drugs. Future legislation could limit payments for pharmaceuticals such as the drug candidates that we are developing.

        Different pricing and reimbursement schemes exist in other countries. In the European Union, governments influence the price of pharmaceutical products through their pricing and reimbursement rules and control of national healthcare systems that fund a large part of the cost of those products to consumers. Some jurisdictions operate positive and negative list systems under which products may only be marketed once a reimbursement price has been agreed upon. To obtain reimbursement or pricing approval, some of these countries may require the completion of clinical trials that compare the cost-effectiveness of a particular product candidate to currently available therapies. Other member states allow companies to fix their own prices for medicines, but monitor and control company profits. The downward pressure on healthcare costs in general, particularly prescription drugs, has become more intense. As a result, increasingly high barriers are being erected to the entry of new products. The European Union provides options for its member states to restrict the range of medicinal products for which their national health insurance systems provide reimbursement and to control the prices of medicinal products for human use. A member state may approve a specific price for the medicinal product or it may instead adopt a system of direct or indirect controls on the profitability of the company placing the medicinal product on the market. We may face competition for our product candidates from lower-priced products in foreign countries that have placed price controls on pharmaceutical products. In addition, in some countries, cross-border imports from low-priced markets exert a commercial pressure on pricing within a country.

        The marketability of any products for which we receive regulatory approval for commercial sale may suffer if the government and third-party payors fail to provide adequate coverage and reimbursement. In addition, an increasing emphasis on managed care in the United States has increased and will continue to increase the pressure on pharmaceutical pricing. Coverage policies and third party reimbursement rates may change at any time.

        Even if favorable coverage and reimbursement status is attained for one or more products for which we receive regulatory approval, less favorable coverage policies and reimbursement rates may be implemented in the future.

    Other Healthcare Laws and Compliance Requirements

        The federal Anti-Kickback Statute prohibits, among other things, knowingly and willfully offering, paying, soliciting or receiving remuneration to induce or in return for purchasing, leasing, ordering or arranging for the purchase, lease or order of any healthcare item or service reimbursable under Medicare, Medicaid or other federally financed healthcare programs. This statute has been interpreted to apply to arrangements between pharmaceutical manufacturers on one hand and prescribers, purchasers, and formulary managers on the other. Although there are a number of statutory exemptions and regulatory safe harbors protecting some business arrangements from prosecution, the exemptions and safe harbors are drawn narrowly and practices that involve remuneration intended to induce prescribing, purchasing or recommending may be subject to scrutiny if they do not qualify for an exemption or safe harbor. Our practices may not in all cases meet all of the criteria for safe harbor protection from federal Anti-Kickback Statute liability. The reach of the Anti-Kickback Statute was broadened by the Affordable Care Act, which, among other things, amends the intent requirement of the federal Anti-Kickback Statute. Pursuant to the statutory amendment, a person or entity no longer needs to have actual knowledge of this statute or specific intent to violate it in order to have committed a violation. In addition, the Affordable Care Act provides that the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute

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constitutes a false or fraudulent claim for purposes of the civil False Claims Act (discussed below) or the civil monetary penalties statute, which imposes penalties against any person who is determined to have presented or caused to be presented a claim to a federal health program that the person knows or should know is for an item or service that was not provided as claimed or is false or fraudulent.

        The federal False Claims Act prohibits any person from knowingly presenting, or causing to be presented, a false claim for payment to the federal government or knowingly making, using, or causing to be made or used a false record or statement material to a false or fraudulent claim to the federal government. As a result of a modification made by the Fraud Enforcement and Recovery Act of 2009, a claim includes "any request or demand" for money or property presented to the U.S. government. Recently, several pharmaceutical and other healthcare companies have been prosecuted under these laws for allegedly providing free product to customers with the expectation that the customers would bill federal programs for the product. Other companies have been prosecuted for causing false claims to be submitted because of the companies' marketing of the product for unapproved, and thus non-reimbursable, uses. HIPAA created new federal criminal statutes that prohibit knowingly and willfully executing a scheme to defraud any healthcare benefit program, including private third-party payors and 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. Also, many states have similar fraud and abuse statutes or regulations that apply to items and services reimbursed under Medicaid and other state programs, or, in several states, apply regardless of the payor.

        In addition, we may be subject to data privacy and security regulation by both the federal government and the states in which we conduct our business. HIPAA, as amended by HITECH, and its implementing regulations, imposes requirements relating to the privacy, security and transmission of individually identifiable health information. Among other things, HITECH makes HIPAA's privacy and security standards directly applicable to "business associates"—independent contractors or agents of covered entities that receive or obtain protected health information in connection with providing a service on behalf of a covered entity. HITECH also increased the civil and criminal penalties that may be imposed against covered entities, business associates and possibly other persons, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorney's fees and costs associated with pursuing federal civil actions. In addition, state laws govern the privacy and security of health information in specified circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.

        In the United States, our activities are potentially subject to additional regulation by various federal, state and local authorities in addition to the FDA, including the Centers for Medicare and Medicaid Services, other divisions of HHS (e.g., the Office of Inspector General), the DOJ and individual U.S. Attorney offices within the DOJ, and state and local governments. If a drug product is reimbursed by Medicare or Medicaid, pricing and rebate programs must comply with, as applicable, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 as well as the Medicaid rebate requirements of the Omnibus Budget Reconciliation Act of 1990, or the OBRA, and the Veterans Health Care Act of 1992, each as amended. Among other things, the OBRA requires drug manufacturers to pay rebates on prescription drugs to state Medicaid programs and empowers states to negotiate rebates on pharmaceutical prices, which may result in prices for our future products that will likely be lower than the prices we might otherwise obtain. If products are made available to authorized users of the Federal Supply Schedule of the General Services Administration, additional laws and requirements apply. Under the Veterans Health Care Act, or VHCA, drug companies are required to offer some drugs at a reduced price to a number of federal agencies including the U.S. Department of Veterans Affairs and DoD, the Public Health Service and some private Public Health Service designated entities in order to participate in other federal funding programs including Medicaid. Recent legislative changes require that discounted prices be offered for specified DoD purchases for its

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TRICARE program via a rebate system. Participation under the VHCA requires submission of pricing data and calculation of discounts and rebates pursuant to complex statutory formulas, as well as the entry into government procurement contracts governed by the Federal Acquisition Regulation.

        Because of the breadth of these laws and the narrowness of available statutory and regulatory exemptions, it is possible that some of our business activities could be subject to challenge under one or more of such laws. If our operations are found to be in violation of any of the federal and state laws described above or any other governmental regulations that apply to us, we may be subject to penalties, including criminal and significant civil monetary penalties, damages, fines, imprisonment, exclusion from participation in government programs, injunctions, recall or seizure of products, total or partial suspension of production, denial or withdrawal of pre-marketing product approvals, private "qui tam" actions brought by individual whistleblowers in the name of the government or refusal to allow us to enter into supply contracts, including government contracts, and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations. To the extent that any of our products are sold in a foreign country, we may be subject to similar foreign laws and regulations, which may include, for instance, applicable post-marketing requirements, including safety surveillance, anti-fraud and abuse laws, and implementation of corporate compliance programs and reporting of payments or transfers of value to healthcare professionals.

        In order to distribute products commercially, we must comply with state laws that require the registration of manufacturers and wholesale distributors of pharmaceutical products in a state, including, in some states, manufacturers and distributors who ship products into the state even if such manufacturers or distributors have no place of business within the state. Some states also impose requirements on manufacturers and distributors to establish the pedigree of product in the chain of distribution, including some states that require manufacturers and others to adopt new technology capable of tracking and tracing product as it moves through the distribution chain. Several states have enacted legislation requiring pharmaceutical companies to, among other things, establish marketing compliance programs, file periodic reports with the state, make periodic public disclosures on sales, marketing, pricing, clinical trials and other activities, and/ or register their sales representatives, as well as to prohibit pharmacies and other healthcare entities from providing specified physician prescribing data to pharmaceutical companies for use in sales and marketing, and to prohibit other specified sales and marketing practices. All of our activities are potentially subject to federal and state consumer protection and unfair competition laws.

Employees

        As of July 1, 2013, we had 57 employees, of whom 17 hold Ph.D. degrees and five hold M.D. degrees. We have no collective bargaining agreements with our employees and have not experienced any work stoppages. We believe that relations with our employees are good.

Facilities

        Our corporate headquarters and research facilities are located in Newtown, Pennsylvania, where we lease an aggregate of approximately 9,500 square feet of office and laboratory space, pursuant to lease agreements, the terms of which expire in March 2014 and September 2013, respectively. We have a second office located in Pennington, New Jersey, where we lease an aggregate of approximately 5,200 square feet of office space pursuant to lease agreements, the terms of which expire in February 2015 and October 2014, respectively. This facility houses our clinical development, clinical operations, regulatory and commercial personnel.

        We believe that our existing facilities are adequate for our near-term needs. When our leases expire, we may exercise renewal options or look for additional or alternate space for our operations. We believe that suitable additional or alternative space would be available if required in the future on commercially reasonable terms.

Legal Proceedings

        We are not a party to any legal proceedings.

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MANAGEMENT

Executive Officers, Directors, Director Nominees and Other Significant Employees

        The following table sets forth information regarding our executive officers, the directors to be serving following the listing of our common stock on the NASDAQ Global Market and other significant employees, including their respective ages as of July 1, 2013:

Name
  Age   Position(s)

Executive Officers, Directors and Director Nominees

         

Ramesh Kumar, Ph.D. 

    57   Director, President and Chief Executive Officer

Michael B. Hoffman

    62   Chairman of the Board of Directors

Thomas McKearn, M.D., Ph.D. 

    64   President, Research and Development

François E. Wilhelm, M.D., Ph.D. 

    58   Chief Medical Officer and Senior Vice President

Manoj Maniar, Ph.D. 

    50   Senior Vice President, Product Development

Ajay Bansal

    51   Chief Financial Officer

Henry S. Bienen, Ph.D. 

    74   Director

Viren Mehta

    63   Director

E. Premkumar Reddy, Ph.D. 

    69   Director

Jerome E. Groopman, M.D.

    61   Director Nominee

Anne M. VanLent

    65   Director Nominee

Other Significant Employees

         

James Altland

    64   Senior Vice President, Finance & Corporate Development

Scott Megaffin

    50   Senior Vice President, Commercial Development

David Stephon

    52   Senior Vice President, Quality Management

        Ramesh Kumar, Ph.D.     Dr. Kumar is one of our co-founders, and is currently our President and Chief Executive Officer, a position he has held since 1998, as well as a member of our board of directors. Prior to founding our company, Dr. Kumar held positions in research and development or management at Princeton University, Bristol-Myers Squibb Company, or Bristol-Myers Squibb, DNX Corp. (later Nextran Corp., a subsidiary of Baxter International Inc.) and Kimeragen, Inc. (later ValiGen Inc.), a genomics company, where he was President of the Genomics and Transgenics Division. Dr. Kumar received his Ph.D. in Molecular Biology from the University of Illinois, Chicago, and trained at the National Cancer Institute. Additionally, Dr. Kumar received his B.Sc. and M.Sc., both with honors, in Microbiology from Panjab University.

        Our board of directors believes Dr. Kumar's perspective and experience as our co-founder, President and Chief Executive Officer, as well as his depth of operating and senior management experience in our industry, provide him with the qualifications and skills to serve as a director.

        Michael B. Hoffman.     Mr. Hoffman has served as Chairman of our board of directors since 2006 and as a member of our board of directors since December 2002. Since 2003, Mr. Hoffman has been a managing director of Riverstone Holdings LLC, or Riverstone, where he is principally responsible for investments in power and renewable energy. Before joining Riverstone, Mr. Hoffman was senior managing director and head of the mergers and acquisitions advisory business of The Blackstone Group L.P., or Blackstone, where he also served on the firm's principal group investment committee as

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well as its executive committee. Prior to joining Blackstone, Mr. Hoffman was managing director and co-head of the mergers and acquisitions department at Smith Barney, Harris Upham & Co. Mr. Hoffman received his Bachelor's and Master's Degrees from Northwestern University and his M.B.A. from the Harvard Business School.

        Our board of directors believes Mr. Hoffman's perspective and experience as an investor, as well as his educational background, provide him with the qualifications and skills to serve as a director.

        Thomas McKearn, M.D., Ph.D.     Dr. McKearn has served as our President, Research & Development since September 2012. Prior to joining us, Dr. McKearn served as Vice President, Medical Affairs and then as Vice President, Strategic Clinical Affairs at Agennix AG (formerly GPC Biotech GP), a biopharmaceutical company, from April 2002 to August 2012. Prior to joining Agennix AG, Dr. McKearn held several executive positions both in biotech and pharmaceutical organizations, including Executive Director of Strategic Science & Medicine at Bristol-Myers Squibb. Dr. McKearn was a founder of Cytogen Corporation in 1981 and later served as its Chief Executive Officer. He has served as a director of Advaxis, Inc., a publicly held biotechnology company focused on oncology, since 2004. Dr. McKearn has served on the faculty of the Medical School at the University of Pennsylvania. Dr. McKearn rece