Hepion Pharmaceuticals, Inc. (Form: S-1/A, Received: 11/12/2020 17:27:23)

As filed with the Securities and Exchange Commission on November 12, 2020

Registration No. 333- 249724

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Amendment No.1

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

Hepion Pharmaceuticals, 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)

46-2783806
(I.R.S. Employer
Identification Number)

399 Thornall Street, First Floor

Edison, NJ 08837

(732) 902-4000

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

Robert Foster

Chief Executive Officer

Hepion Pharmaceuticals, Inc.

399 Thornall Street, First Floor

Edison, NJ 08837

(732) 902-4000

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Jeffrey J. Fessler, Esq.
Sheppard, Mullin, Richter & Hampton LLP
30 Rockefeller Plaza
New York, NY 10112
Tel.: (212) 634-3067

Brad L. Schiffman, Esq.

Melissa Palat Murawsky, Esq.

Blank Rome LLP

1271 Avenue of the Americas

New York, NY 10020

Tel: (212) 885-5442

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

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, check the following box: ¨

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

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 earliest effective registration statement for the same offering. ¨

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 earliest effective registration statement for the same offering. ¨

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

Large accelerated filer ¨

Accelerated filer ¨

Non-accelerated filer x

Smaller reporting company x

Emerging growth company x

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided to Section 7(a)(2)(B) of the Securities Act. x

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 which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information contained in this preliminary prospectus is not complete and may be changed. These securities may not be sold 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 an offer to buy these securities in any state where the offer or sale is not permitted.

PRELIMINARY PROSPECTUS

SUBJECT TO COMPLETION

DATED November 12, 2020

10,135,135 Shares
Common Stock

Hepion Pharmaceuticals, Inc.

We are offering 10,135,135 shares of our common stock, par value $0.0001 per share, assuming a public offering price of $2.96 per share which was the closing price of our common stock on The Nasdaq Capital Market on November 10, 2020.

Our common stock is listed on The Nasdaq Capital Market, under the symbol “HEPA.” On November 10, 2020, the last reported sale price of our common stock was $2.96 per share.

The final public offering price of the shares of common stock in this offering will be determined through negotiation between us and the underwriters in the offering and the recent market price used throughout this prospectus may not be indicative of the final offering price.

We are an “emerging growth company” under the federal securities laws and have elected to comply with certain reduced public company reporting requirements.

Investing in our common stock involves a high degree of risk. See “Risk Factors” beginning on page 6. 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 and commissions⁽¹⁾	$	$
Proceeds to us, before expenses	$	$

(1)

We refer you to “Underwriting” beginning on page 14 for additional information regarding underwriters’ compensation.

We have granted a 45-day option to the representative of the underwriters to purchase up to 1,520,270 additional shares of common stock solely to cover over-allotments, if any.

The underwriters expect to deliver the shares of common stock to the purchasers on or about , 2020.

ThinkEquity
a division of Fordham Financial Management, Inc.

The date of this prospectus is , 2020

TABLE OF CONTENTS

	Page
About this Prospectus	i
Prospectus Summary	1
The Offering	5
Risk Factors	6
Cautionary Statement Regarding Forward-Looking Statements	8
Use of Proceeds	10
Dilution	11
Capitalization	12
Description of the Securities We are Offering	13
Underwriting	14
Legal Matters	21
Experts	21
Where You Can Find More Information	21
Incorporation of Certain Documents by Reference	21

You should rely only on the information contained or incorporated by reference in this prospectus or in any free writing prospectus that we may authorize to be delivered or made available to you. We and the underwriters have not authorized anyone to provide you with different information. We are offering to sell, and seeking offers to buy, our securities only in jurisdictions where such offers and sales are permitted. The information in this prospectus is accurate only as of its date, regardless of the time of its delivery or any sale of our securities.

Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of our securities and the distribution of the prospectus outside the United States.

ABOUT THIS PROSPECTUS

In this prospectus, “Hepion,” “the Company,” “we,” “us,” and “our” refer to Hepion Pharmaceuticals, Inc., a Delaware corporation, and its subsidiaries, unless the context otherwise requires.

This prospectus describes the specific information about the terms of this offering, the shares of common stock that we are selling and the risks of investing in our common stock. You should read this prospectus, any free writing prospectus and the information incorporated by reference in this prospectus before making your investment decision. See “Where You Can Find More Information.” If any statement in one of these documents is inconsistent with a statement in another document having a later date – for example, a document incorporated by reference in this prospectus – the statement in the document having the later date modifies or supersedes the earlier statement.

Neither we, nor any of our officers, directors, agents or representatives or underwriters, make any representation to you about the legality of an investment in our common stock. You should not interpret the contents of this prospectus or any free writing prospectus to be legal, business, investment or tax advice. You should consult with your own advisors for that type of advice and consult with them about the legal, tax, business, financial and other issues that you should consider before investing in our securities.

PROSPECTUS SUMMARY

This summary highlights certain information appearing elsewhere in this prospectus and the documents incorporated by reference. This summary does not contain all of the information you should consider before investing in our common shares. You should read this entire prospectus and the documents incorporated by reference into this prospectus carefully before making an investment decision. References in this prospectus to “we,” “us,” “our” and “Company” refer to Hepion Pharmaceuticals, Inc. and its consolidated subsidiaries.

Business Overview

We are a biopharmaceutical company headquartered in Edison, New Jersey, focused on the development of pleiotropic drug therapy for treatment of chronic liver disease. This therapeutic approach targets fibrosis and hepatocellular carcinoma (“HCC”) associated with non-alcoholic steatohepatitis (“NASH”), viral hepatitis, and other liver diseases. Our cyclophilin inhibitor, CRV431, is being developed to offer benefits to address these multiple complex pathologies. CRV431 is a cyclophilin inhibitor that targets multiple biochemical pathways involved in the progression of liver disease. Preclinical studies with CRV431 in NASH models demonstrated consistent reductions in liver inflammation, fibrosis, and cancerous tumors. CRV431 additionally shows antiviral activity towards hepatitis B, C, and D viruses which also trigger liver disease.

We have completed a Phase 1 program with CRV431 demonstrating safety, tolerability, and pharmacokinetics (PK). Our program consisted of three different clinical trials with CRV431, administered orally once daily, that included: 1) a Single Ascending Dose (SAD) study; 2) a Multiple Ascending Dose (MAD) study; and 3) a Drug-Drug Interaction (DDI) study. The SAD, MAD, and DDI studies were comprised of 32, 25, and 18 healthy subjects, respectively. Additionally, in the SAD study, 8 of the 32 subjects received placebo (24 received CRV431).

CRV431 appeared to be well-tolerated in the Phase 1 program, and there were no serious adverse effects (SAEs). The few adverse effects (AEs) observed were mild to moderate and mostly unrelated to study drug. The PK profile of each subject was characterized and CRV431 blood exposures were similar to those needed to elicit efficacy in the preclinical studies.

We are currently conducting a Phase 2a study in NASH patients with fibrosis scores of F2 and F3. The first dosing cohort of 75 mg CRV431 once daily orally is underway.

NASH is the form of liver disease that is triggered by what has come to be known as the “Western diet”, characterized especially by high-fat, high-sugar, and processed foods. Among the effects of a prolonged Western diet is fat accumulation in liver cells (steatosis) which is described as non-alcoholic fatty liver disease (“NAFLD”) and can predispose cells to injury. NAFLD may evolve into NASH when the fatty liver begins to progress through stages of cell injury, inflammation, fibrosis, and carcinogenesis. People who develop NASH often have additional predisposing conditions such as diabetes and hypertension, but the exact biochemical events that trigger and maintain the progression are not well known. Many people in the early stages of disease do not have significant symptoms and therefore do not know that they have it. NASH becomes evident and a major concern when the liver becomes fibrotic and puts the individual at increased risk of developing cirrhosis and other complications. Individuals with advanced liver fibrosis have significantly higher risk of developing liver cancer, although cancer may also arise in some patients before significant hepatitis or fibrosis. NASH is increasing worldwide at an alarming rate due to the spread of the Western diet, obesity, and other related conditions. Approximately 4-5% of the global population is estimated to have NASH, and that proportion is higher in the USA. It is predicted that NASH will become the leading reason for individuals requiring a liver transplant in the USA as early as 2020. Considering the serious outcomes linked to advancing NASH, the economic and social burden of the disease is enormous. There are no simple blood tests to diagnose or track the progression of NASH, and no drugs are approved to specifically treat the disease.

HCC is the major type of liver cancer, accounting for 85-90% of all cases. NASH, hepatitis virus infection, and alcohol consumption all are major causes of HCC. Globally, over 700,000 people die each year from liver cancer which is second only to lung cancer among all cancer-related deaths. The high mortality is due to the fact that only around half of all people who develop HCC (in developed countries) receive the diagnosis early enough to have an opportunity for therapeutic intervention. Additionally, recurrence rates are high, and current treatment options remain limited.

HCC is a type of cancer in which the tissue microenvironment plays a major role in its development. In most cases HCC is preceded by significant, long-term damage to liver cells, inflammation and fibrosis. One-third of people with cirrhosis, a very advanced stage of liver disease, will eventually progress to HCC. The chronic injury to the liver leads to many genetic mutations that eventually lead to transformation of cells and formation of tumors. The noxious tissue microenvironment also promotes cancer by altering the function of immune cells and endothelial cells which form tumor-supporting blood vessels. These various events underscore the importance of halting liver injury and scarring as early and effectively as possible to prevent cancer development.

Viral hepatitis may be linked to one or more viruses including hepatitis A, B, C, D, or E. Hepatitis B virus (“HBV”) is one of many hepatitis viruses that selectively infect human liver cells and can establish persistent infections under certain conditions. Chronic infections, especially by HBV, HCV, and HDV, cause progressive liver inflammation, fibrosis, cirrhosis, and cancer. Collectively, these infections represent one of the 3 major triggers of progressive liver disease (NAFLD/NASH and alcohol being the others).

An HBV vaccine is available that, if administered prior to HBV infection, assists the body in neutralizing the virus and blocking infection. However, vaccination is not efficacious for people who are already infected with HBV, and the vaccine has not been historically available to everyone. As a result, an estimated 240 million people worldwide have chronic HBV infection. Anti-HBV medications are used widely by chronically infected individuals but usually are only effective in decreasing viral replication and viremia (virus in the blood), and NOT in eradicating HBV from the liver. This is because HBV, unlike HCV, has evolved clever ways of persisting in liver cells and evading the immune system. Thus, despite vaccines and anti-viral medications, chronic HBV infection remains a huge global health problem. Chronic HBV infection is the leading cause of hepatocellular carcinoma, which kills around 350,000 people per year. A similar number of people die each year from cirrhosis and other complications arising from HBV.

We are developing CRV431 as our lead molecule. CRV431 is a cyclophilin inhibitor that targets specific isomerases that play an important role in protein folding in health and in disease. To date, in vitro and/or in vivo studies have demonstrated reductions in HBV DNA, HBsAg, HBeAg, inhibition of virus uptake (NTCP transport inhibition), and stimulation of innate immunity. Importantly, in vivo studies in a NASH model of fibrosis and HCC have repeatedly demonstrated CRV431 reduces fibrosis scores and overall liver tumor burden. Hence, CRV431 is a pleiotropic molecule that may not only treat liver disease but may also serve to reduce important risk factors (e.g., HBV) for developing the disease.

CRV431

CRV431 is a novel drug candidate designed to target a class of proteins called cyclophilins, of which there are many isoforms. Cyclophilins play a role in health and in the pathogenesis of certain diseases and are known as peptidyl prolyl isomerases. The isomerase activity plays an important role in several biological processes including, for example, folding of proteins to confer certain 3-dimensional configurations. Additionally, specific host cyclophilins (e.g., cyclophilin A, B, C, D) play a role in the pathogenesis of many diseases, including liver disease and viral hepatitis.

Cyclophilins are pleiotropic enzymes that play a role in injury and steatosis through mechanisms including cell death occurring through mitochondrial pore permeability (cyclophilin D). Inhibition of cyclophilin D, therefore, may play an important role in protection from cell death. Cyclophilin A binding to CD147 is known to play a role in inflammation, cyclophilin B plays a role in fibrosis through collagen production, and cyclophilins also play a role in cirrhosis and cancer (e.g., cell proliferation and metastasis). Cyclophilin inhibition with CRV431, therefore, may play an important role in reducing liver disease.

To date, we have completed eight separate preclinical animal efficacy studies of CRV431 to assess antifibrotic activity. Each of these eight studies were conducted by independent laboratory collaborations at The Scripps Research Institute (San Diego, CA), SMC Corporation (Tokyo, Japan), and Physiogenex S.A.S. (France), Each of these studies demonstrated consistent and significant reductions in fibrosis in mice and rats. CRV431 was also tested in Precision Cut Liver Slices and in Precision Cut Lung Slices in ex plants from human donors. Again, CRV431 demonstrated an antifibrotic effect that was consistent with the animal study findings. These studies provide support of advancing CRV431 into clinical trials for NASH, and potentially additional indications where fibrosis plays a role.

Important risk factors for development of liver disease include viral hepatitis (HBV, HCV, HDV), alcohol, and non-alcoholic fatty liver disease and the more aggressive form called non-alcoholic steatohepatitis. The life cycle of certain viruses, including for example, HBV, HIV, and hepatitis C virus (“HCV”) infections are dependent on host proteins (cyclophilins) for the role they play in the virus life cycle and propagation of the virus. CRV431 has been developed to inhibit the role of host cyclophilins and therefore interfere in viral propagation. CRV431 does not directly target the virus and, as such, should be less susceptible to drug resistance, borne from viral mutations.

Data in various cell lines of either transfected or infected HBV demonstrates nanomolar efficacy (EC50 values) and micromolar toxicity (CC50 values). The selective index (“SI”), therefore, is wide and suggests that CRV431 presents a viable clinical drug candidate for the treatment of viral infections, including HBV. Additional testing in a transgenic mouse model of HBV indicated that CRV431 reduced HBV DNA in the liver and HBsAg in serum. CRV431 is orally active and appears to be well tolerated.

On May 10, 2018, we submitted an Investigational New Drug Application (“IND”) to the U.S. Food and Drug Administration (“FDA”) to support initiation of our CRV431 HBV clinical development program in the United States and received approval in June 2018. We completed the first segment of our Phase 1 clinical activities for CRV431 in October 2018 wherein we reached a major clinical milestone of positive data from a Phase I trial of CRV431 in humans. This achievement triggered the first milestone payment, as stated in the Merger Agreement for the acquisition of Ciclofilin Pharmaceuticals, Inc. (“Ciclofilin”) and we paid a related milestone payment of approximately $346,000 to Aurinia Pharmaceuticals, Inc. ("Aurinia") and $654,000 to the former Ciclofilin shareholders along with the issuance of 1,439 shares of our common stock with a fair value of $55,398, representing 2.5% of our issued and outstanding common stock as of June, 2016, to the former Ciclofilin shareholders. Our CEO is a former Ciclofilin shareholder and received approximately $274,000 and 603 shares of common stock and Petrus Wijngaard, a director of our company, received $2,805 and 6 shares of common stock.

Additional milestone payments could potentially be payable to the former Ciclofilin shareholders pursuant to the Ciclofilin Merger Agreement as follows: (i) upon receipt of Phase II positive data from a proof of concept clinical trial of CRV431 in humans - 4,317 shares of common stock and $3,000,000, (ii) upon initiation of a Phase III trial of CRV431 - $5,000,000, and (iii) upon acceptance by the FDA of a new drug application for CRV431 - $8,000,000 . In addition, on February 14, 2014, Ciclofilin had entered into a Purchase and Sale Agreement to acquire Aurinia’s entire interest in CRV431. This agreement contains future milestone payments payable by us based on clinical and marketing milestones of up to CAD $2.45 million. The milestone payments payable to the former Ciclofilin shareholders will be subject to offset by certain of the clinical and marketing milestone payments payable to Aurinia as follows: (a) the payments to the former Ciclofilin shareholders pursuant to (ii) above would be offset by payment to Aurinia of CAD $450,000, and (b) the payments to the former Ciclofilin shareholders pursuant to (iii) above would be subject to offset by payment to Aurinia of up to CAD $2,000,000. In addition to the above clinical and milestone payments, the Aurinia Agreement provides for the following additional contingent payment obligations: (x) a royalty of 2.5% on net sales of CRV431 which is uncapped, (y) a royalty of 5% on license revenue from CRV431 and (z) a payment equal to 30% of the proceeds from a Liquidity Event (as defined in the Purchase and Sale Agreement) with respect to Ciclofilin, of which approximately $150,000 plus interest will be paid to Aurinia upon the closing of this offering. The maximum obligation under both (y) and (z) is CAD $5,000,000.

On June 17, 2019, we submitted an IND to the FDA to support initiation of our CRV431 NASH clinical development program in the United States and received approval in July 2019. We completed dosing of CRV431 in our MAD clinical trial in September, 2020.

Artificial Intelligence (AI)

We have created a proprietary AI called, “AI-POWR^TM to optimize the outcomes of our current clinical programs and to potentially identify novel indications for CRV431 and possibly identify new targets and new drug molecules to broaden our pipeline.

AI-POWR™ is our acronym for Artificial Intelligence - Precision Medicine; Omics that include genomics, proteomics, metabolomics, transcriptomics, and lipidomics; World database access; and Response and clinical outcomes. AI-POWR™ allows for the selection of novel drug targets, biomarkers, and appropriate patient populations. AI-POWR™ is used to identify responders from big data sources using our multi-omics approach, while modelling inputs and scenarios to increase response rates. The components of AI-POWR™ include access to publicly available databases, and in-house genomic and multi-omic big data, processed via machine learning algorithms. We believe AI outputs will allow for improved response outcomes through enhanced patient selection, biomarker selection and drug target selection. We believe AI outputs will help identify responders a priori and reduce the need for large sample sizes through study design enrichment.

We intend to use AI-POWR™ to help identify which patients will best respond to CRV431 for treatment of NASH patients, currently in a Phase 2a clinical trial. It is anticipated that applying this proprietary platform to our drug development program will ultimately save time, resources and money. In so doing, we believe that AI-POWR™ is a risk-mitigation strategy that should reap benefits all the way through from clinical trials to commercialization.

We believe that NASH is a very heterogenous disease and we need to have a better understanding of interactions between changes to proteins, genes, lipids, and metabolites, to name a few, induced by both drugs and disease. All of this is further complicated by variable drug concentrations, patient traits and temporal factors. AI-POWR™ is designed to address many of these typical challenges, as we believe we can use our proprietary platform to shorten development timelines and increase the delta between placebo and treatment groups. AI-POWR™ will be used to drive our ongoing Phase 2a NASH program and identify additional potential indications for CRV431 to expand our footprint in the cyclophilin inhibition therapeutic space.

Recent Developments

On July 30, 2020, our stockholders approved an amendment to our 2013 Equity Incentive Plan (the "Plan"), increasing the number of shares of common stock issuable under the Plan to 2,500,000 from 40,535. As of September 30, 2020, 2,499,473 shares of our common stock are issuable upon exercise of outstanding options under the Plan and 527 shares of common stock are reserved for future issuance under the Plan.

Risk Factor Summary

An investment in our common stock is subject to numerous risks and uncertainties, including those highlighted and incorporated by reference in the section entitled “Risk Factors” immediately following this prospectus summary. The following is a summary of some of the principal risks related to an investment in our Company.

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Our product candidate, CRV431, is in the early stages of clinical development and its commercial viability remains subject to the successful outcome of current and future clinical trials, regulatory approvals and the risks generally inherent in the development of pharmaceutical product candidates. If we are unable to successfully advance or develop or partner our product candidate, we may be delayed or precluded further development or regulatory approval.

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A pandemic, epidemic or outbreak of an infectious disease, such as COVID-19, may materially and adversely affect our business and operations. The Company cannot estimate the length or gravity of the impact of the COVID-19 outbreak at this time, but if the pandemic continues, it may have a material adverse effect on the Company’s results of future operations, financial position, liquidity, and capital resources, and those of the third parties on which the Company relies in fiscal year 2020.

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We have incurred losses since inception, anticipate that we will incur continued losses for the foreseeable future indicating the possibility that we may not be able to operate in the future.

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We will require substantial additional funding which may not be available to us on acceptable terms, or at all. If we fail to raise the necessary additional capital, we may be unable to complete the development and commercialization of our product candidate, or continue our development programs.

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If we fail to comply with the continued listing requirements of The Nasdaq Capital Market, our common stock may be delisted and the price of our common stock and our ability to access the capital markets could be negatively impacted.

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Our product candidate and any future product candidates may exhibit undesirable side effects when used alone or in combination with other approved pharmaceutical products or investigational new drugs, which may delay or preclude further development or regulatory approval, or limit their use if approved.

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If the results of preclinical studies or clinical trials for our product candidate, including those that are subject to existing or future license or collaboration agreements, are unfavorable or delayed, we could be delayed or precluded from the further development or commercialization of our product candidate, which could materially harm our business.

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Clinical trials involve a lengthy and expensive process with an uncertain outcome, and results of earlier studies and trials may not be predictive of future trial results.

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Our approach to the discovery and development of product candidates based on AI-POWR™ is novel and unproven, and we do not know whether we will be able to develop any products of commercial value.

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AI-POWR™ may fail to help us discover and develop additional potential product candidates.

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

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We currently have no sales and marketing organization. If we are unable to establish a direct sales force in the United States to promote our products, the commercial opportunity for our products may be diminished.

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We may not be able to manufacture our product candidate in commercial quantities, which would prevent us from commercializing our product candidate.

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Our product candidate, if approved for sale, may not gain acceptance among physicians, patients and the medical community, thereby limiting our potential to generate revenues.

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You will experience immediate and substantial dilution in the book value per share of the common stock you purchase.

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Management will have broad discretion as to the use of proceeds from this offering and might not use them effectively.

Corporate History and Information

We were incorporated in Delaware on May 15, 2013 for the purpose of holding certain FV-100 assets of Synergy Pharmaceuticals Inc., or Synergy. We were a majority-owned subsidiary of Synergy Pharmaceuticals Inc. (Synergy) until February 18, 2014, the date Synergy completed the spinout of our shares of common stock. On July 18, 2019, we filed a certificate of amendment to our certificate of incorporation to change the Company’s name from “ContraVir Pharmaceuticals, Inc.” to “Hepion Pharmaceuticals, Inc.” The name change became effective as of July 18, 2019.

Our principal executive offices are located at 399 Thornall Street, First Floor, Edison, New Jersey 08837. Our telephone number is (732) 902-4000 and our website address is www.hepionpharma.com. The information on our website is not a part of, and should not be construed as being incorporated by reference into, this registration statement or the accompanying prospectus.

THE OFFERING

Common stock offered		10,135,135 shares assuming a public offering price of $2.96 per share which was the closing price of our common stock on The Nasdaq Capital Market on November 10, 2020.

Over-allotment option		We have granted a 45-day option to the representative of the underwriters to purchase up to 1,520,270 additional shares of common stock solely to cover over-allotments, if any, at the public offering price less underwriting discounts and commissions.

Common stock to be outstanding after this offering (1)		19,160,196 shares of common stock (or 20,680,466 shares of common stock if the underwriters exercise in full their option to purchase additional shares of common stock).

Use of proceeds		We estimate that the net proceeds to us from this offering from the sale of the shares of our common stock will be approximately $27.5 million, or approximately $31.7 million if the underwriters exercise their option to purchase additional shares in full, assuming a public offering price of $2.96, the closing price of our common stock as reported on The Nasdaq Capital Market on November 10, 2020, and after deducting underwriting discounts and commissions and offering expenses payable by us. We intend to use the net proceeds of this offering to fund our research and development activities and general corporate purposes, including approximately $150,000 plus interest for a milestone payment, working capital, operating expenses and capital expenditures. We may use the net proceeds from this offering to fund possible acquisitions of other companies, products or technologies, though no such acquisitions are currently contemplated. See “Use of Proceeds.”

Risk factors		Investing in our securities involves a high degree of risk. See “Risk Factors” beginning on page 6 of this prospectus and the risk factors included in our Form 10-K for the year ended December 31, 2019, which are incorporated by reference into this prospectus, for a discussion of factors to consider carefully before deciding to invest in shares of our common stock in this offering.

Nasdaq symbol		Our common stock is listed on The Nasdaq Capital Market under the symbol “HEPA.”

(1)	Based on 9,025,061 shares of common stock outstanding as of June 30, 2020 and excludes:

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1,402,771 shares of our common stock issuable upon exercise of outstanding options at a weighted average price of $7.76 per share;

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2,536,566 shares of our common stock issuable upon exercise of outstanding warrants with a weighted-average exercise price of $19.35 per share;

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3,184 shares of our common stock issuable upon conversion of outstanding shares of Series A Convertible Preferred Stock;

•

16,839 shares of our common stock issuable upon conversion of outstanding shares of Series C Convertible Preferred Stock; and

•

304,054 shares of our common stock (or 349,662 shares of our common stock if the underwriters exercise in full their option to purchase additional shares of common stock) issuable upon exercise of the warrant to be issued to the representative in connection with this offering.

RISK FACTORS

An investment in our securities involves a high degree of risk. You should carefully consider the risk factors contained in our periodic reports filed with the SEC, including our Annual Report on Form 10-K for the year ended December 31, 2019 and all of our quarterly reports on Form 10-Q, which are incorporated by reference into this prospectus. Before deciding to invest in our securities, you should carefully consider these risks, as well as other information we include or incorporate by reference in this prospectus.

If any of the events described in these risk factors actually occurs, or if additional risks and uncertainties that are not presently known to us or that we currently deem immaterial later materialize, then our business, prospects, results of operations and financial condition could be materially adversely affected. In that event, the trading price of our securities could decline, and you may lose all or part of your investment in our securities. The risks discussed below include forward-looking statements, and our actual results may differ substantially from those discussed in these forward-looking statements. See “Cautionary Statement Regarding Forward-Looking Statements.”

Risks Related to our Business

The following items supplement the risks related to our business previously reported in Part 1, “Item 1A. Risk Factors – Risks Related to Our Business” of our Annual Report on Form 10-K for the year ended December 31, 2019:

Our approach to the discovery and development of product candidates based on AI-POWR™ is novel and unproven, and we do not know whether we will be able to develop any products of commercial value.

We intend to leverage AI-POWR™ to potentially identify novel indications for CRV431 and possibly identify new targets and new drug molecules to broaden our pipeline for patients whose diseases have not been adequately addressed to date by other approaches and to design and conduct efficient clinical trials with a higher likelihood of success. While we believe that applying AI-POWR™ to create medicines for defined patient populations may potentially enable drug research and clinical development that is more efficient than conventional drug research and development, our approach is both novel and unproven. Because our approach is both novel and unproven, the cost and time needed to develop our product candidates is difficult to predict, and our efforts may not result in the discovery and development of commercially viable medicines. We may also be incorrect about the effects of our product candidates on the diseases of our defined patient populations, which may limit the utility of our approach or the perception of the utility of our approach. Furthermore, our estimates of our defined patient populations available for study and treatment may be lower than expected, which could adversely affect our ability to conduct clinical trials and may also adversely affect the size of any market for medicines we may successfully commercialize. Our approach may not result in time savings, higher success rates or reduced costs as we expect it to, and if not, we may not attract collaborators or develop new drugs as quickly or cost effectively as expected and therefore we may not be able to commercialize our approach as originally expected.

AI-POWR™ may fail to help us discover and develop additional potential product candidates.

Any drug discovery that we are conducting using AI-POWR™ may not be successful in identifying compounds that have commercial value or therapeutic utility. AI-POWR™ may initially show promise in identifying potential product candidates, yet fail to yield viable product candidates for clinical development or commercialization for a number of reasons, including:

research programs to identify new product candidates will require substantial technical, financial and human resources, and we may be unsuccessful in our efforts to identify new product candidates. If we are unable to identify suitable additional compounds for preclinical and clinical development, our ability to develop product candidates and obtain product revenues in future periods could be compromised, which could result in significant harm to our financial position and adversely impact our stock price;

compounds found through AI-POWR™ may not demonstrate efficacy, safety or tolerability;

	·	potential product candidates may, on further study, be shown to have harmful side effects or other characteristics that indicate that they are unlikely to receive marketing approval and achieve market acceptance;

	·	competitors may develop alternative therapies that render our potential product candidates non-competitive or less attractive; or

a potential product candidate may not be capable of being produced at an acceptable cost.

Risks Related to this Offering

Management will have broad discretion as to the use of proceeds from this offering and might not use them effectively.

Our management will have broad discretion as to the application of the net proceeds from this offering and our stockholders will not have the opportunity as part of their investment decisions to assess whether the net proceeds are being used appropriately. You might not agree with our decisions, and our use of the proceeds might not yield any return on your investment. Because of the number and variability of factors that will determine our use of the net proceeds from this offering, their ultimate use may vary substantially from their currently intended use. Our failure to apply the net proceeds of this offering effectively could compromise our ability to pursue our growth strategy and we might not be able to yield a significant return, if any, in our investment of these net proceeds. You will not have the opportunity to influence our decisions on how to use our net proceeds from this offering.

Investors in this offering will experience immediate and substantial dilution and may experience further dilution in the future.

The offering price per share of our common stock being offered will be higher than the net tangible book value per share of our common stock. Therefore, if you purchase shares of common stock in this offering, you will incur immediate and substantial dilution in the as adjusted net tangible book value per share of common stock from the price you pay for the common stock. For a further description of the dilution that investors in this offering will experience, see “Dilution”.

Furthermore, we expect that we will seek to raise additional capital from time to time in the future. Such financings may involve the issuance of equity and/or securities convertible into or exercisable or exchangeable for our equity securities. In addition, investors in this offering will be subject to increased dilution upon the exercise of outstanding stock options or warrants or conversion of outstanding preferred stock. We also expect to continue to utilize equity-based compensation which would further dilute investors. We have in the past issued, and could in the future issue, securities with anti-dilution features which if triggered could result in further dilution to our stockholders.

A delisting of our common stock from The Nasdaq Capital Market could materially reduce the liquidity of our common stock and result in a corresponding material reduction in the price of our common stock. In addition, delisting could harm our ability to raise capital through alternative financing sources on terms acceptable to us, or at all, and may result in the potential loss of confidence by investors, employees and fewer business development opportunities.

A large number of shares issued in this offering may be sold in the market following this offering, which may depress the market price of our common stock.

A large number of shares issued in this offering may be sold in the market following this offering, which may depress the market price of our common stock. Sales of a substantial number of shares of our common stock in the public market following this offering could cause the market price of our common stock to decline. If there are more shares of common stock offered for sale than buyers are willing to purchase, then the market price of our common stock may decline to a market price at which buyers are willing to purchase the offered shares of common stock and sellers remain willing to sell the shares. All of the shares of common stock issued in the offering will be freely tradable without restriction or further registration under the Securities Act.

We have not paid dividends in the past and have no immediate plans to pay dividends.

We plan to reinvest all of our earnings, to the extent we have earnings, in order to further develop our product candidate and to cover operating costs. We do not plan to pay any cash dividends with respect to our securities in the foreseeable future. We cannot assure you that we would, at any time, generate sufficient surplus cash that would be available for distribution to the holders of our common stock as a dividend. Therefore, you should not expect to receive cash dividends on the common stock we are offering.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This prospectus and the documents we incorporate by reference in this prospectus contain forward-looking statements within the meaning of Section 27A of the Securities Act, and Section 21E of the Exchange Act, and may involve material risks, assumptions and uncertainties. Statements that are not purely historical should be considered forward-looking statements. Often they can be identified by the use of forward-looking words and phrases, such as “may,” “will,” “believe,” “anticipate,” “expect,” “should,” “optimistic” or “continue,” “estimate,” “intend,” “plan,” “would,” “could,” “guidance,” “potential,” “opportunity,” “project,” “forecast,” “confident,” “projections,” “schedule,” “designed,” “future” and the like. These forward-looking statements reflect our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements are subject to a number of risks, uncertainties and assumptions described under the section entitled “Risk Factors.”

These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict or are beyond our control. A number of important factors could cause actual outcomes and results to differ materially from those expressed in these forward-looking statements. Consequently, readers should not place undue reliance on such forward-looking statements. In addition, these forward-looking statements relate to the date on which they are made.

The forward-looking statements reflect our current expectations and are based on information currently available to us and on assumptions we believe to be reasonable. Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause our actual results, activities, performance or achievements to be materially different from that expressed or implied by such forward-looking statements. Some of the risks, uncertainties, and other factors that could cause actual results to differ materially from estimates or projections contained in the forward-looking statements include, but are not limited to:

•

Market conditions;

•

Our capital position;

•

The impact of COVID-19 on our operations;

•

Our ability to compete with larger, better financed pharmaceutical companies;

•

Our uncertainty of developing marketable products;

•

Our ability to develop and commercialize our products;

•

Our ability to obtain regulatory approvals;

•

Our ability to maintain and protect intellectual property rights;

•

The inability to raise additional future financing and lack of financial and other resources;

•

Our ability to control product development costs;

•

We may not be able to attract and retain key employees;

•

We may not be able to compete effectively;

•

We may not be able enter into new strategic collaborations;

•

Changes in government regulation affecting product candidates could increase our development costs;

•

Our involvement in patent and other intellectual property litigation could be expensive and could divert management’s attention;

•

The possibility that there will be no market acceptance for our products; and

•

Changes in third-party reimbursement policies could adversely affect potential future sales of any of our products that are approved for marketing.

Although we have attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking information, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. Other than as required by law, we do not assume any obligation to update any forward-looking information, whether as a result of new information, future events or results or otherwise.

You should also read the matters described in “Risk Factors” and the other cautionary statements made in this prospectus and the documents incorporated by reference into this prospectus. The forward-looking statements in this prospectus and the documents incorporated by reference into this prospectus may not prove to be accurate and therefore you are encouraged not to place undue reliance on forward-looking statements. You should read this prospectus and the documents incorporated by reference into this prospectus completely.

This prospectus and the documents incorporated by reference into this prospectus also include estimates and other statistical data made by independent parties and by us relating to market size and growth and other data about our industry. This data involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. In addition, projections, assumptions and estimates of our future performance and the future performance of the markets in which we operate are necessarily subject to a high degree of uncertainty and risk.

USE OF PROCEEDS

We estimate that the net proceeds to us from this offering from the sale of the shares of our common stock will be approximately $27.5 million, or approximately $31.7 million if the underwriters exercise their option to purchase additional shares in full, assuming a public offering price of $2.96, the closing price of our common stock as reported on The Nasdaq Capital Market on November 10, 2020, and after deducting underwriting discounts and commissions and offering expenses payable by us.

We intend to use the net proceeds from this offering to fund our research and development activities and general corporate purposes, including approximately $150,000 plus interest for a milestone payment, working capital, operating expenses and capital expenditures. We may use the net proceeds from this offering to fund possible acquisitions of other companies, products or technologies, though no such acquisitions are currently contemplated.This expected use of our net proceeds from this offering represents our intentions based upon our current plans and business conditions, which could change in the future as our plans and business conditions evolve. The amounts and timing of our actual expenditures may vary significantly depending on numerous factors, including the progress of our drug candidate development, the status of and results from clinical trials, as well as any collaborations that we may enter into with third parties for our drug candidate, and any unforeseen cash needs.

As a result, our management will retain broad discretion over the allocation of the net proceeds from this offering, and investors will be relying on the judgment of our management regarding the application of the net proceeds from this offering. The timing and amount of our actual expenditures will be based on many factors, including cash flows from operations and the anticipated growth of our business.

DILUTION

If you purchase securities in this offering, your interest will be diluted to the extent of the difference between the public offering price and the net tangible book value per share of our common stock after this offering. Our net tangible book value as of June 30, 2020 was $13.2 million or $1.47 per share of common stock based on 9,025,061 shares of our common stock outstanding as of that date. “Net tangible book value” is total assets minus the sum of liabilities and intangible assets. “Net tangible book value per share” is net tangible book value divided by the total number of shares of common stock outstanding.

After giving effect to the sale by us in this offering of 10,135,135 shares of common stock assuming a public offering price of $2.96 per share, which was the closing price of our common stock on The Nasdaq Capital Market on November 10, 2020, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us, our as adjusted net tangible book value as of June 30, 2020 would have been approximately $40.8 million, or $2.13 per share of common stock. This amount represents an immediate increase in net tangible book value of $0.66 per share to existing stockholders and an immediate dilution of $0.83 per share to purchasers in this offering.

The following table illustrates the dilution:

Assumed public offering price per share			$	2.96
Net tangible book value per share as of June 30, 2020	$	1.47
Assumed increase in net tangible book value per share attributable to this offering	$	0.66
Assumed as adjusted net tangible book value per share as of June 30, 2020 after giving effect to this offering			$	2.13
Assumed dilution per share to new investors			$	0.83

The actual price at which shares are sold in this offering and the actual amount of underwriting discounts and commissions and offering expenses payable by us may be lesser or greater than the assumed amounts reflected in the table above. We may also increase or decrease the number of shares of common stock we are offering from the assumed number of shares of common stock set forth above.

The dilution information set forth in the table above is illustrative only and will be adjusted based on the actual public offering price, the actual number of securities sold in this offering and other terms of this offering determined at pricing.

The above table is based on 9,025,061 shares of common stock outstanding as of June 30, 2020, does not give effect to any exercise of the underwriters’ option to purchase additional shares and excludes:

•

1,402,771 shares of our common stock issuable upon exercise of outstanding options at a weighted average price of $7.76 per share;

•

2,536,566 shares of our common stock issuable upon exercise of outstanding warrants with a weighted-average exercise price of $19.35 per share;

•

3,184 shares of our common stock issuable upon conversion of outstanding shares of Series A Convertible Preferred Stock;

•

16,839 shares of our common stock issuable upon conversion of outstanding shares of Series C Convertible Preferred Stock; and

•

If we issue any additional shares in connection with outstanding options or warrants or issue shares upon conversion of outstanding preferred stock there will be additional dilution. In addition, we may choose to raise additional capital. To the extent that additional capital is raised through the sale of equity or convertible debt securities, the issuance of these securities could result in further dilution to our stockholders.

CAPITALIZATION

The following table sets forth our cash and our capitalization as of June 30, 2020 on:

•

an actual basis;

•

an as adjusted basis to give effect to this offering (assuming no exercise of the underwriters’ option to purchase additional shares) assuming a public offering price of $2.96 per share, which was the closing price of our common stock on The Nasdaq Capital Market on November 10, 2020, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

The following data is qualified in its entirety by, and should be read in conjunction with, our unaudited condensed consolidated financial statements and notes thereto incorporated by reference in this prospectus. The as adjusted information set forth in the table below is illustrative only and will be adjusted based on the actual public offering price and other terms of this offering determined at pricing.

	As of June 30, 2020
	Actual			As adjusted
Cash	$	17,561,813		$	45,080,374
Total long-term debt	$	176,585		$	176,585
Stockholders’ equity:
Preferred Stock, stated value $10.00 per share; 85,581 shares of Series A Convertible Preferred Stock issued and outstanding		855,808			855,808
Preferred Stock, stated value $1,000; 1,827 shares of Series C Convertible Preferred Stock issued and outstanding		861,033			861,033
Common Stock, par value $0.0001; 120,000,000 shares authorized; 9,025,061 shares issued and outstanding, actual; 19,160,196 shares issued and outstanding, as adjusted		901			1,915
Additional paid-in capital		108,923,663			136,441,210
Accumulated deficit		(92,349,327	)		(92,349,327	)
Total stockholders’ equity		18,292,078			45,810,639
Total capitalization	$	18,468,663		$	45,987,224

The capitalization table above is based on the number of shares outstanding as of June 30, 2020, does not give effect to any exercise of the underwriters’ option to purchase additional shares. The number of shares of our common stock that will be outstanding after this offering is based on 9,025,061shares of common stock outstanding as of June 30, 2020 and excludes:

•

1,402,771 shares of our common stock issuable upon exercise of outstanding options at a weighted average price of $7.76 per share;

•

2,536,566 shares of our common stock issuable upon exercise of outstanding warrants with a weighted-average exercise price of $19.35 per share;

•

3,184 shares of our common stock issuable upon conversion of outstanding shares of Series A Convertible Preferred Stock;

•

16,839 shares of our common stock issuable upon conversion of outstanding shares of Series C Convertible Preferred Stock; and

•

DESCRIPTION OF THE SECURITIES WE ARE OFFERING

General

We are authorized to issue up to 120,000,000 shares of common stock, $0.0001 par value per share, and 20,000,000 shares of preferred stock, $0.0001 par value per share.

As of June 30, 2020, there were 9,025,061 shares of our common stock issued and outstanding, 85,581 shares of Series A convertible preferred stock outstanding, and 1,827 shares of Series C convertible preferred stock outstanding. As of June 30, 2020, we had outstanding warrants to purchase an aggregate of 2,536,566 shares of our common stock at an average weighted exercise price of $19.35 per share.

Common Stock

Holders of common stock are entitled to receive ratably dividends out of funds legally available, if and when declared from time to time by our Board. We have never paid any cash dividends on our common stock and our Board does not anticipate that we will pay cash dividends in the foreseeable future. The future payment of dividends, if any, on our common stock is within the discretion of the Board and will depend upon earnings, capital requirements, financial condition and other relevant factors. Holders of common stock are entitled to one vote for each share held on each matter to be voted on by stockholders. There is no cumulative voting in the election of directors. In the event of liquidation, dissolution or winding up of the affairs of us, holders of common stock are to share in all assets remaining after the payment of liabilities and any preferential distributions payable to preferred stockholders, if any. The holders of common stock have no preemptive or conversion rights and are not subject to further calls or assessments. There are no redemption or sinking fund provisions applicable to the common stock. The rights of the holders of the common stock are subject to any rights that may be fixed for holders of preferred stock, if any. All of the outstanding shares of common stock are fully paid and non-assessable. Our common stock is listed on the Nasdaq Capital Market under the symbol “HEPA.”

Anti-Takeover Effects of Certain Provisions of Hepion Certificate of Incorporation, Bylaws and the DGCL

Certain provisions of our certificate of incorporation and bylaws, which are summarized in the following paragraphs, may have the effect of discouraging potential acquisition proposals or making a tender offer or delaying or preventing a change in control, including changes a stockholder might consider favorable. Such provisions may also prevent or frustrate attempts by our stockholders to replace or remove our management. In particular, our certificate of incorporation and bylaws and Delaware law, as applicable, among other things:

• provide the Board of Directors with the ability to alter the bylaws without stockholder approval; and

• provide that vacancies on the Board of Directors may be filled by a majority of directors in office, although less than a quorum.

These provisions are expected to discourage certain types of coercive takeover practices and inadequate takeover bids and to encourage persons seeking to acquire control of Hepion to first negotiate with its board. These provisions may delay or prevent someone from acquiring or merging with Hepion, which may cause the market price of Hepion common stock to decline.

Blank Check Preferred. Our Board of Directors is authorized to create and issue from time to time, without stockholder approval, up to an aggregate of 20,000,000 shares of preferred stock in one or more series and to establish the number of shares of any series of preferred stock and to fix the designations, powers, preferences and rights of the shares of each series and any qualifications, limitations or restrictions of the shares of each series.

The authority to designate preferred stock may be used to issue series of preferred stock, or rights to acquire preferred stock, that could dilute the interest of, or impair the voting power of, holders of the common stock or could also be used as a method of determining, delaying or preventing a change of control.

Advance Notice Bylaws. The Bylaws contain an advance notice procedure for stockholder proposals to be brought before any meeting of stockholders, including proposed nominations of persons for election to our Board of Directors. Stockholders at any meeting will only be able to consider proposals or nominations specified in the notice of meeting or brought before the meeting by or at the direction of our Board of Directors or by a stockholder who was a stockholder of record on the record date for the meeting, who is entitled to vote at the meeting and who has given Hepion's corporate secretary timely written notice, in proper form, of the stockholder's intention to bring that business before the meeting. Although the Bylaws do not give our Board of Directors the power to approve or disapprove stockholder nominations of candidates or proposals regarding other business to be conducted at a special or annual meeting, the Bylaws may have the effect of precluding the conduct of certain business at a meeting if the proper procedures are not followed or may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect its own slate of directors or otherwise attempting to obtain control of us.

UNDERWRITING

We have entered into an underwriting agreement, dated , 2020, with ThinkEquity, a division of Fordham Financial Management, Inc., acting as the sole book-running manager (sometimes referred to as the “representative”). Subject to the terms and conditions of the underwriting agreement, we have agreed to sell to each underwriter named below, and each underwriter named below has severally agreed to purchase, at the public offering price less the underwriting discounts set forth on the cover page of this prospectus, the number of shares of common stock listed next to its name in the following table:

Underwriters		Number of Shares
ThinkEquity, a division of Fordham Financial Management, Inc.
Total

The underwriting agreement provides that the obligations of the underwriters to pay for and accept delivery of the shares of common stock offered by this prospectus are subject to various conditions and representations and warranties, including the approval of certain legal matters by their counsel and other conditions specified in the underwriting agreement. The shares of common stock are offered by the underwriters, subject to prior sale, when, as and if issued to and accepted by them. The underwriters reserve the right to withdraw, cancel or modify the offer to the public and to reject orders in whole or in part. The underwriters are obligated to take and pay for all of the shares of common stock offered by this prospectus if any such shares of common stock are taken, other than those shares of common stock covered by the over-allotment option described below.

We have agreed to indemnify the underwriters and certain of their affiliates and controlling persons (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act), among others, against specified liabilities, including liabilities under the Securities Act, and to contribute to payments the underwriters may be required to make in respect thereof.

Discounts, Commissions and Reimbursement

The underwriters propose to offer the shares of common stock directly to the public at the public offering price set forth on the cover page of this prospectus. After the offering to the public, the offering price and other selling terms may be changed by the underwriters without changing the proceeds we will receive from the underwriters.

The following table summarizes the public offering price, underwriting discounts and commissions and proceeds before expenses to us. The underwriting commissions are 7.0% of the public offering price. The information assumes either no exercise or full exercise of the over-allotment option we granted to the representative of the underwriters.

	Per Share	Total Without Over-allotment Option	Total With Over-allotment Option
Public offering price	$	$	$
Underwriting discounts and commissions (7.0%)	$	$	$
Proceeds, before expenses, to us	$	$	$

We have paid an expense deposit of $25,000 to the representative, which will be applied against out-of-pocket accountable expenses that will be paid by us to the underwriters in connection with this offering, and will be reimbursed to us to the extent not actually incurred in compliance with FINRA Rule 5110(g)(4)(A).

We have also agreed to pay certain of the representative’s expenses relating to the offering, including (a) all filing fees and communication expenses relating to the registration of the shares of common stock to be sold in the offering (including the share’s subject to the underwriters’ over-allotment option) with the Commission; (b) all public filing system filing fees associated with the review of the offering by FINRA; (c) all fees and expenses relating to the listing of such shares of common stock on The Nasdaq Capital Market and such other stock exchanges as we and the representative together determine; (d) all fees, expenses and disbursements relating to background checks of our officers and directors in an amount not to exceed $15,000 in the aggregate; (e) all fees, expenses and disbursements relating to the registration or qualification of the common stock under the “blue sky” securities laws of such states and other jurisdictions as the representative may reasonably designate; (f) all fees, expenses and disbursements relating to the registration, qualification or exemption of the common stock under the securities laws of such foreign jurisdictions as the representative may reasonably designate; (g) the costs of all mailing and printing of the underwriting documents (including, without limitation, the underwriting agreement, any blue sky surveys and, if appropriate, any agreement among underwriters, selected dealers’ agreement, underwriters’ questionnaire and power of attorney), registration statements, prospectuses and all amendments, supplements and exhibits thereto and as many preliminary and final prospectuses as the representative may reasonably deem necessary; (h) the costs and expenses of a public relations firm; (i) the costs of preparing, printing and delivering certificates representing the common stock; (j) fees and expenses of the transfer agent for the shares of common stock; (k) stock transfer and/or stamp taxes, if any, payable upon the transfer of securities from us to the underwriters; (l) the costs associated with post-closing advertising the offering in the national editions of the Wall Street Journal and New York Times; (m) the costs associated with bound volumes of the public offering materials as well as commemorative mementos and lucite tombstones, each of which us or our designee shall provide within a reasonable time after the closing date in such quantities as the representative may reasonably request, in an amount not to exceed $3,000; (n) the fees and expenses of our accountants; (o) the fees and expenses of our legal counsel and other agents and representatives; (p) fees and expenses of the representative’s legal counsel not to exceed $100,000; and (q) the $29,500 cost associated with the underwriters’ use of Ipreo’s book-building, prospectus tracking and compliance software for the offering.

Our total estimated expenses of the offering, including registration, filing and listing fees, printing fees and legal and accounting expenses, but excluding underwriting discounts and commissions, are approximately $381,439.

Over-allotment Option

We have granted a 45-day option to the representative of the underwriters to purchase up to 1,520,270 additional shares of common stock (equal to 15% of the common stock sold in this offering) from us solely to cover over-allotments, if any, at the public offering price less underwriting discounts and commissions.

Representative’s Warrants

Upon closing of this offering, we have agreed to issue to the representative as compensation warrants to purchase a number of shares of common stock equal to 3% of the aggregate number of shares of common stock sold in this offering, or the Representative’s Warrants. The Representative’s Warrants will be exercisable at a per share exercise price equal to 125% of the public offering price per share in this offering. The Representative’s Warrants are exercisable at any time and from time to time, in whole or in part, during the four and one half year period commencing 180 days from the effective date of the registration statement of which this prospectus is a part.

The Representative’s Warrants have been deemed compensation by FINRA. The warrants provide for registration rights upon request, in certain cases. The one-time demand registration right provided will not be greater than five years from the effective date of the registration statement in compliance with FINRA Rule 5110(g)(8)(A). The unlimited piggyback registration right provided will not be greater than seven years from the effective date of the registration statement in compliance with FINRA Rule 5110(g)(8)(D). We will bear all fees and expenses attendant to registering the securities issuable on exercise of the warrants other than underwriting commissions incurred and payable by the holders. The exercise price and number of shares issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend or our recapitalization, reorganization, merger or consolidation. However, the warrant exercise price or underlying shares will not be adjusted for issuances of shares of common stock at a price below the warrant exercise price.

Right of First Refusal

Until , 2021 (six (6) months from the closing date), the representative will have an irrevocable right of first refusal to act as sole investment banker, sole book-runner and/or sole placement agent, at its sole discretion, for each and every of our future public equity and debt offerings, including all equity linked financings, for us, or any of our successors or subsidiaries, on terms customary to the representative. The representative in conjunction with us, has the sole right to determine whether or not any other broker-dealer shall have the right to participate in any such offering and the economic terms of any such participation.

Lock-Up Agreements

Pursuant to “lock-up” agreements, we, our executive officers and directors, have agreed, without the prior written consent of the representative, not to, directly or indirectly, offer pledge, sell, contract to sell, grant, lend or otherwise transfer or dispose of any of shares of (or enter into any transaction or device that is designed to, or could be expected to, result in the transfer or disposition by any person at any time in the future of) our common stock, enter into any swap or other derivatives transaction that transfers to another, in whole or in part, any of the economic benefits or risks of ownership of shares of our common stock, make any demand for or exercise any right or cause to be filed a registration statement, including any amendments thereto, with respect to the registration of any shares of common stock or securities convertible into or exercisable or exchangeable for common stock or any other securities of ours or publicly disclose the intention to do any of the foregoing, subject to customary exceptions, for a period of (i) six months after the date of this prospectus in the case of directors and officers and (ii) three months after the date of this prospectus in the case of the Company.

Determination of Offering Price

The public offering price of the securities we are offering was negotiated between us and the underwriters based on the trading of our common stock prior to the offering, among other things. Other factors considered in determining the public offering price of the shares include the history and prospects of the Company, the stage of development of our business, our business plans for the future and the extent to which they have been implemented, an assessment of our management, general conditions of the securities markets at the time of the offering and such other factors as were deemed relevant.

Other Relationships

Certain of the underwriters and their affiliates have, from time to time, provided and may in the future provide, various investment banking and other financial services for us for which they may receive customary fees. In particular, ThinkEquity provided advisory services to us from July 2019 through February 2020 for which we paid ThinkEquity $17,000. In the course of their businesses, the underwriters and their affiliates may actively trade our securities or loans for their own account or for the accounts of customers, and, accordingly, the underwriters and their affiliates may at any time hold long or short positions in such securities or loans.

In 2020, we engaged B. Riley FBR, Inc. (“B. Riley”) to act as a placement agent. In connection with such engagement, we granted B. Riley a right for a tail fee equal to 7% of the gross proceeds raised by us from certain investors in connection with certain financing transactions consummated by us within a three-month period ending November 17, 2020.

Listing

Our common stock is listed on The Nasdaq Capital Market under the symbol “HEPA”.

Price Stabilization, Short Positions and Penalty Bids

In connection with this offering, the underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of our common stock. The underwriters may elect to stabilize the price of our common stock by bidding for, and purchasing, common stock in the open market.

The underwriters may also impose a penalty bid. This occurs when a particular underwriter or dealer repays selling concessions allowed to it for distributing a security in this offering because the underwriter repurchases that security in stabilizing or short covering transactions.

Finally, the underwriters may bid for, and purchase, shares of our common stock in market making transactions, including “passive” market making transactions as described below.

These activities may stabilize or maintain the market price of our common stock at a price that is higher than the price that might otherwise exist in the absence of these activities. The underwriters are not required to engage in these activities, and may discontinue any of these activities at any time without notice. These transactions may be effected on the Nasdaq Capital Market, in the over-the-counter market, or otherwise.

In connection with this offering, the underwriters or their affiliates may engage in passive market making transactions in our common stock immediately prior to the commencement of sales in this offering, in accordance with Rule 103 of Regulation M under the Exchange Act. Rule 103 generally provides that:

●

a passive market maker may not effect transactions or display bids for our common stock in excess of the highest independent bid price by persons who are not passive market makers;

●

net purchases by a passive market maker on each day are generally limited to 30% of the passive market maker’s average daily trading volume in our common stock during a specified two-month prior period or 200 shares of common stock, whichever is greater, and must be discontinued when that limit is reached; and

●

passive market making bids must be identified as such.

Electronic Distribution

This prospectus in electronic format may be made available on websites or through other online services maintained by one or more of the underwriters, or by their affiliates. Other than this prospectus in electronic format, the information on any underwriter’s website and any information contained in any other website maintained by an underwriter is not part of this prospectus or the registration statement of which this prospectus forms a part, has not been approved and/or endorsed by us or any underwriter in its capacity as underwriter, and should not be relied upon by investors.

Offer Restrictions Outside The United States

Other than in the United States, no action has been taken by us or the underwriters that would permit a public offering of the securities offered by this prospectus in any jurisdiction where action for that purpose is required. The securities offered by this prospectus may not be offered or sold, directly or indirectly, nor may this prospectus or any other offering material or advertisements in connection with the offer and sale of any such securities be distributed or published in any jurisdiction, except under circumstances that will result in compliance with the applicable rules and regulations of that jurisdiction. Persons into whose possession this prospectus comes are advised to inform themselves about and to observe any restrictions relating to this offering and the distribution of this prospectus. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities offered by this prospectus in any jurisdiction in which such an offer or a solicitation is unlawful.

Australia

This prospectus is not a disclosure document under Chapter 6D of the Australian Corporations Act, has not been lodged with the Australian Securities and Investments Commission and does not purport to include the information required of a disclosure document under Chapter 6D of the Australian Corporations Act. Accordingly, (i) the offer of the securities under this prospectus is only made to persons to whom it is lawful to offer the securities without disclosure under Chapter 6D of the Australian Corporations Act under one or more exemptions set out in section 708 of the Australian Corporations Act, (ii) this prospectus is made available in Australia only to those persons as set forth in clause (i) above, and (iii) the offeree must be sent a notice stating in substance that by accepting this offer, the offeree represents that the offeree is such a person as set forth in clause (i) above, and, unless permitted under the Australian Corporations Act, agrees not to sell or offer for sale within Australia any of the securities sold to the offeree within 12 months after its transfer to the offeree under this prospectus.

China

The information in this document does not constitute a public offer of the securities, whether by way of sale or subscription, in the People’s Republic of China (excluding, for purposes of this paragraph, Hong Kong Special Administrative Region, Macau Special Administrative Region and Taiwan). The securities may not be offered or sold directly or indirectly in the PRC to legal or natural persons other than directly to “qualified domestic institutional investors.”

European Economic Area — Belgium, Germany, Luxembourg and Netherlands

The information in this document has been prepared on the basis that all offers of securities will be made pursuant to an exemption under the Directive 2003/71/EC, or the Prospectus Directive, as implemented in Member States of the European Economic Area, or a Relevant Member State, from the requirement to produce a prospectus for offers of securities.

An offer to the public of securities has not been made, and may not be made, in a Relevant Member State except pursuant to one of the following exemptions under the Prospectus Directive as implemented in that Relevant Member State:

• to legal entities that are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities;

• to any legal entity that has two or more of (i) an average of at least 250 employees during its last fiscal year; (ii) a total balance sheet of more than €43,000,000 (as shown on its last annual unconsolidated or consolidated financial statements) and (iii) an annual net turnover of more than €50,000,000 (as shown on its last annual unconsolidated or consolidated financial statements);

• to fewer than 100 natural or legal persons (other than qualified investors within the meaning of Article 2(1)(e) of the Prospectus Directive) subject to obtaining the prior consent of our company or any underwriter for any such offer; or

• in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of securities shall result in a requirement for the publication by us of a prospectus pursuant to Article 3 of the Prospectus Directive.

France

This document is not being distributed in the context of a public offering of financial securities (offre au public de titres financiers) in France within the meaning of Article L.411-1 of the French Monetary and Financial Code (Code monétaire et financier) and Articles 211-1 et seq. of the General Regulation of the French Autorité des marchés financiers, or AMF. The securities have not been offered or sold and will not be offered or sold, directly or indirectly, to the public in France.

This document and any other offering material relating to the securities have not been, and will not be, submitted to the AMF for approval in France and, accordingly, may not be distributed or caused to distributed, directly or indirectly, to the public in France.

Such offers, sales and distributions have been and shall only be made in France to (i) qualified investors (investisseurs qualifiés) acting for their own account, as defined in and in accordance with Articles L.411-2-II-2° and D.411-1 to D.411-3, D. 744-1, D.754-1 and D.764-1 of the French Monetary and Financial Code and any implementing regulation and/or (ii) a restricted number of non-qualified investors (cercle restreint d’investisseurs) acting for their own account, as defined in and in accordance with Articles L.411-2-II-2° and D.411-4, D.744-1, D.754-1 and D.764-1 of the French Monetary and Financial Code and any implementing regulation.

Pursuant to Article 211-3 of the General Regulation of the AMF, investors in France are informed that the securities cannot be distributed (directly or indirectly) to the public by the investors otherwise than in accordance with Articles L.411-1, L.411-2, L.412-1 and L.621-8 to L.621-8-3 of the French Monetary and Financial Code.

Ireland

The information in this document does not constitute a prospectus under any Irish laws or regulations and this document has not been filed with or approved by any Irish regulatory authority as the information has not been prepared in the context of a public offering of securities in Ireland within the meaning of the Irish Prospectus (Directive 2003/71/EC) Regulations 2005, or the Prospectus Regulations. The securities have not been offered or sold, and will not be offered, sold or delivered directly or indirectly in Ireland by way of a public offering, except to (i) qualified investors as defined in Regulation 2(l) of the Prospectus Regulations and (ii) fewer than 100 natural or legal persons who are not qualified investors.

Israel

The securities offered by this prospectus have not been approved or disapproved by the Israeli Securities Authority, or the ISA, nor have such securities been registered for sale in Israel. The shares may not be offered or sold, directly or indirectly, to the public in Israel, absent the publication of a prospectus. The ISA has not issued permits, approvals or licenses in connection with this offering or publishing the prospectus; nor has it authenticated the details included herein, confirmed their reliability or completeness, or rendered an opinion as to the quality of the securities being offered. Any resale in Israel, directly or indirectly, to the public of the securities offered by this prospectus is subject to restrictions on transferability and must be effected only in compliance with the Israeli securities laws and regulations.

Italy

The offering of the securities in the Republic of Italy has not been authorized by the Italian Securities and Exchange Commission (Commissione Nazionale per le Societ-$$-Aga e la Borsa), or CONSOB, pursuant to the Italian securities legislation and, accordingly, no offering material relating to the securities may be distributed in Italy and such securities may not be offered or sold in Italy in a public offer within the meaning of Article 1.1(t) of Legislative Decree No. 58 of 24 February 1998, or Decree No. 58, other than:

• to Italian qualified investors, or Qualified Investors, as defined in Article 100 of Decree no.58 by reference to Article 34-ter of CONSOB Regulation no. 11971 of 14 May 1999, or Regulation no. 1197l, as amended; and

• in other circumstances that are exempt from the rules on public offer pursuant to Article 100 of Decree No. 58 and Article 34-ter of Regulation No. 11971 as amended.

Any offer, sale or delivery of the securities or distribution of any offer document relating to the securities in Italy (excluding placements where a Qualified Investor solicits an offer from the issuer) under the paragraphs above must be:

• made by investment firms, banks or financial intermediaries permitted to conduct such activities in Italy in accordance with Legislative Decree No. 385 of 1 September 1993 (as amended), Decree No.58, CONSOB Regulation No. 16190 of 29 October 2007 and any other applicable laws; and

• in compliance with all relevant Italian securities, tax and exchange controls and any other applicable laws.

Any subsequent distribution of the securities in Italy must be made in compliance with the public offer and prospectus requirement rules provided under Decree No. 58 and the Regulation No. 11971 as amended, unless an exception from those rules applies. Failure to comply with such rules may result in the sale of such securities being declared null and void and in the liability of the entity transferring the securities for any damages suffered by the investors.

Japan

The securities have not been and will not be registered under Article 4, paragraph 1 of the Financial Instruments and Exchange Law of Japan (Law No. 25 of 1948), as amended, or the FIEL, pursuant to an exemption from the registration requirements applicable to a private placement of securities to Qualified Institutional Investors (as defined in and in accordance with Article2, paragraph 3 of the FIEL and the regulations promulgated thereunder). Accordingly, the securities may not be offered or sold, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan other than Qualified Institutional Investors. Any Qualified Institutional Investor who acquires securities may not resell them to any person in Japan that is not a Qualified Institutional Investor, and acquisition by any such person of securities is conditional upon the execution of an agreement to that effect.

Portugal

This document is not being distributed in the context of a public offer of financial securities (oferta pública de valores mobiliários) in Portugal, within the meaning of Article 109 of the Portuguese Securities Code (Código dos Valores Mobiliários). The securities have not been offered or sold and will not be offered or sold, directly or indirectly, to the public in Portugal. This document and any other offering material relating to the securities have not been, and will not be, submitted to the Portuguese Securities Market Commission (Comissăo do Mercado de Valores Mobiliários) for approval in Portugal and, accordingly, may not be distributed or caused to distributed, directly or indirectly, to the public in Portugal, other than under circumstances that are deemed not to qualify as a public offer under the Portuguese Securities Code. Such offers, sales and distributions of securities in Portugal are limited to persons who are “qualified investors” (as defined in the Portuguese Securities Code). Only such investors may receive this document and they may not distribute it or the information contained in it to any other person.

Sweden

This document has not been, and will not be, registered with or approved by Finansinspektionen (the Swedish Financial Supervisory Authority). Accordingly, this document may not be made available, nor may the securities be offered for sale in Sweden, other than under circumstances that are deemed not to require a prospectus under the Swedish Financial Instruments Trading Act (1991:980) (Sw. lag (1991:980) om handel med finansiella instrument). Any offering of securities in Sweden is limited to persons who are “qualified investors” (as defined in the Financial Instruments Trading Act). Only such investors may receive this document and they may not distribute it or the information contained in it to any other person.

Switzerland

The securities may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange, or SIX, or on any other stock exchange or regulated trading facility in Switzerland. This document has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland. Neither this document nor any other offering material relating to the securities may be publicly distributed or otherwise made publicly available in Switzerland.

Neither this document nor any other offering material relating to the securities have been or will be filed with or approved by any Swiss regulatory authority. In particular, this document will not be filed with, and the offer of securities will not be supervised by, the Swiss Financial Market Supervisory Authority.

This document is personal to the recipient only and not for general circulation in Switzerland.

United Arab Emirates

Neither this document nor the securities have been approved, disapproved or passed on in any way by the Central Bank of the United Arab Emirates or any other governmental authority in the United Arab Emirates, nor have we received authorization or licensing from the Central Bank of the United Arab Emirates or any other governmental authority in the United Arab Emirates to market or sell the securities within the United Arab Emirates. This document does not constitute and may not be used for the purpose of an offer or invitation. No services relating to the securities, including the receipt of applications and/or the allotment or redemption of such shares, may be rendered within the United Arab Emirates by us.

No offer or invitation to subscribe for securities is valid or permitted in the Dubai International Financial Centre.

United Kingdom

Neither the information in this document nor any other document relating to the offer has been delivered for approval to the Financial Services Authority in the United Kingdom and no prospectus (within the meaning of section 85 of the Financial Services and Markets Act 2000, as amended, or FSMA) has been published or is intended to be published in respect of the securities. This document is issued on a confidential basis to “qualified investors” (within the meaning of section 86(7) of FSMA) in the United Kingdom, and the securities may not be offered or sold in the United Kingdom by means of this document, any accompanying letter or any other document, except in circumstances which do not require the publication of a prospectus pursuant to section 86(1) FSMA. This document should not be distributed, published or reproduced, in whole or in part, nor may its contents be disclosed by recipients to any other person in the United Kingdom.

Any invitation or inducement to engage in investment activity (within the meaning of section 21 of FSMA) received in connection with the issue or sale of the securities has only been communicated or caused to be communicated and will only be communicated or caused to be communicated in the United Kingdom in circumstances in which section 21(1) of FSMA does not apply to us.

In the United Kingdom, this document is being distributed only to, and is directed at, persons (i) who have professional experience in matters relating to investments falling within Article 19(5) (investment professionals) of the Financial Services and Markets Act 2000 (Financial Promotions) Order 2005, or FPO, (ii) who fall within the categories of persons referred to in Article 49(2)(a) to (d) (high net worth companies, unincorporated associations, etc.) of the FPO or (iii) to whom it may otherwise be lawfully communicated (together “relevant persons”). The investments to which this document relates are available only to, and any invitation, offer or agreement to purchase will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents.

Canada

The securities may be sold in Canada only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are permitted clients, as defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. Any resale of the securities must be made in accordance with an exemption from, or in a transaction not subject to, the prospectus requirements of applicable securities laws. Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this prospectus (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser’s province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province or territory for particulars of these rights or consult with a legal advisor. Pursuant to section 3A.3 of National Instrument 33-105 Underwriting Conflicts (NI 33-105), the underwriters are not required to comply with the disclosure requirements of NI33-105 regarding underwriter conflicts of interest in connection with this offering.

LEGAL MATTERS

The validity of the shares of our common stock offered hereby will be passed upon for us by Sheppard, Mullin, Richter & Hampton LLP, New York, New York. Blank Rome LLP, New York, New York has acted as counsel for the underwriters in connection with certain legal matters related to this offering.

EXPERTS

The consolidated financial statements as of December 31, 2019 and December 31, 2018 and for the years ended December 31, 2019 and 2018, incorporated by reference in this prospectus and in the registration statement have been so incorporated in reliance on the report of BDO USA, LLP, an independent registered public accounting firm, incorporated by reference herein, given on the authority of said firm as experts in auditing and accounting. The report on the consolidated financial statements contains an explanatory paragraph regarding the Company’s ability to continue as a going concern.

WHERE YOU CAN FIND MORE INFORMATION

This prospectus, which constitutes a part of the registration statement on Form S-1 that we have filed with the SEC under the Securities Act, does not contain all of the information in the registration statement and its exhibits. For further information with respect to us and the common stock offered by this prospectus, you should refer to the registration statement and the exhibits filed as part of that document. Statements contained in this prospectus as to the contents of any contract or any other document referred to are not necessarily complete, and in each instance, we refer you to the copy of the contract or other document filed as an exhibit to the registration statement. Each of these statements is qualified in all respects by this reference.

We are subject to the reporting requirements of the Exchange Act and file annual, quarterly and current reports, proxy statements and other information with the SEC. You can read our SEC filings, including the registration statement, over the Internet at the SEC’s website at http://www.sec.gov. We also maintain a website at http://www.hepionpharma.com, at which you may access these materials free of charge as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC. The information contained in, or that can be accessed through, our website is not part of this prospectus.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The SEC allows us to “incorporate by reference” information that we file with them. Incorporation by reference allows us to disclose important information to you by referring you to those other documents. The information incorporated by reference is an important part of this prospectus, and information that we file later with the SEC will automatically update and supersede this information. We filed a registration statement on Form S-1 under the Securities Act with the SEC with respect to the securities being offered pursuant to this prospectus. This prospectus omits certain information contained in the registration statement, as permitted by the SEC. You should refer to the registration statement, including the exhibits, for further information about us and the securities being offered pursuant to this prospectus. Statements in this prospectus regarding the provisions of certain documents filed with, or incorporated by reference in, the registration statement are not necessarily complete and each statement is qualified in all respects by that reference. Copies of all or any part of the registration statement, including the documents incorporated by reference or the exhibits, may be obtained upon payment of the prescribed rates at the offices of the SEC listed above in “Where You Can Find More Information”. We are incorporating by reference the documents listed below, which we have already filed with the SEC.

1. The Company’s Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on May 14, 2020;

2. Amendment Number 1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on June 15, 2020;

3. The Company Quarterly Reports on Form 10-Q for (i) the quarter ended March 31, 2020, filed with the SEC on June 29, 2020 and (ii) the quarter ended June 30, 2020, filed with the SEC on August 12, 2020;

4. The Company’s Definitive Proxy Statement filed with the SEC on June 12, 2020;

5. The Company’s Current Reports on Form 8-K filed with the SEC on January 6, 2020, January 9, 2020, January 28, 2020, February 12, 2020 (two reports), February 20, 2020, March 12, 2020, March 27, 2020, March 30, 2020, April 17, 2020, May 14, 2020, May 19, 2020, May 20, 2020, June 10, 2020, June 22, 2020, June 29, 2020, July 7, 2020, July 30, 2020, August 5, 2020, August 12, 2020, August 27, 2020, September 1, 2020, September 17, 2020, September 29, 2020, October 5, 2020, October 27, 2020, November 10, 2020 and November 12, 2020; and

6. The description of the Company’s common stock contained in the registration statement on Form 8-A filed with the SEC on February 24, 2015 pursuant to Section 12 of the Exchange Act of 1934, as amended (the “Exchange Act”), including any amendment or report filed for the purpose of updating that description.

We also incorporate by reference all documents (other than Current Reports furnished under Item 2.02 or Item 7.01 of Form 8-K and exhibits filed on such form that are related to such items) that are subsequently filed by us with the Securities and Exchange Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the termination of the offering of the securities made by this prospectus (including documents filed after the date of the initial Registration Statement of which this prospectus is a part and prior to the effectiveness of the Registration Statement). These documents include periodic reports, such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as well as proxy statements.

Any statement contained in this prospectus or in a document incorporated or deemed to be incorporated by reference into this prospectus will be deemed to be modified or superseded to the extent that a statement contained in this prospectus or any subsequently filed document that is deemed to be incorporated by reference into this prospectus modifies or supersedes the statement

You may request, and we will provide you with, a copy of these filings, at no cost, by calling us at (732) 902-4000 or by writing to us at the following address:

Hepion Pharmaceuticals, Inc.

399 Thornall Street, First Floor

Edison, New Jersey, 08837

Attn.: Secretary

10,135,135 Shares of Common Stock

Hepion Pharmaceuticals, Inc.

PRELIMINARY PROSPECTUS

ThinkEquity

a division of Fordham Financial Management, Inc.

, 2020

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution

The following table provides information regarding the various actual and anticipated expenses (other than underwriting fees and expenses) payable by us in connection with the issuance and distribution of the securities being registered hereby. All amounts shown are estimates except the SEC registration fee.

Item	Amount
SEC registration fee	$	3,764
FINRA filing fee		5,675
Printing and engraving expenses		*
Legal fees and expenses		*
Accounting fees and expenses		*
Transfer agents’ fees and expenses		*
Miscellaneous costs		*
Total		*

*	To be provided by amendment

Item 14. Indemnification of Directors and Officers

The DGCL authorizes corporations to limit or eliminate the personal liability of directors to corporations and their stockholders for monetary damages for breaches of directors’ fiduciary duties as directors and our amended and restated certificate of incorporation includes such an exculpation provision. Our certificate of incorporation and by-laws include provisions that indemnify, to the fullest extent allowable under the DGCL, the personal liability of directors or officers for monetary damages for actions taken as a director or officer of us, or for serving at our request as a director or officer or another position at another corporation or enterprise, as the case may be. Our certificate of incorporation and by-laws also provide that we must indemnify and advance reasonable expenses to our directors and officers, subject to our receipt of an undertaking from the indemnified party as may be required under the DGCL. Our certificate of incorporation expressly authorizes us to carry directors’ and officers’ insurance to protect us, our directors, officers and certain employees for some liabilities. The limitation of liability and indemnification provisions in our amended and restated certificate of incorporation and by-laws may discourage stockholders from bringing a lawsuit against directors for breach of their fiduciary duty. These provisions may also have the effect of reducing the likelihood of derivative litigation against our directors and officers, even though such an action, if successful, might otherwise benefit us and our stockholders. However, these provisions do not limit or eliminate our rights, or those of any stockholder, to seek non-monetary relief such as injunction or rescission in the event of a breach of a director’s duty of care. The provisions do not alter the liability of directors under the federal securities laws. In addition, your investment may be adversely affected to the extent that, in a class action or direct suit, we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions. There is currently no pending material litigation or proceeding against any of our directors, officers or employees for which indemnification is sought.

Item 15. Recent Sales of Unregistered Securities

The Company has sold the securities described below within the past three years which were not registered under the Securities Act. All of the sales listed below were made pursuant to an exemption from registration afforded by Section 4(a)(2) of the Securities Act and Regulation D thereunder.

On March 13, 2019, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with an accredited investor. Pursuant to the Securities Purchase Agreement, the Company issued to the investor in a private placement (i) 47,429 shares of Company common stock and (ii) an unsecured $1.25 million aggregate principal amount debenture.

II-1

On May 8, 2018, the Company entered into a securities purchase agreement with Iliad Research and Trading, L.P. (“IRT”), pursuant to which the Company issued to IRT a secured convertible promissory note in the aggregate principal amount of $3,325,000 for an aggregate purchase price of $2,000,000 cash and $1,000,000 aggregate principal amount of investor notes payable to the Company in four tranches of $250,000 upon request by the Company. Closing occurred on May 9, 2018.

Item 16. Exhibits and Financial Statement Schedules

(a)

Exhibits. See Exhibit Index set forth on page II-4 to this Registration Statement.

(b)

Financial Statements. Incorporated by reference into this registration statement.

Item 17. Undertakings.

(a) The undersigned registrant hereby undertakes as follows:

(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and

(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

provided, however, that paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that are incorporated by reference in the Registration Statement

(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(4) That, for the purpose of determining any liability under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

(i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;

(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;

(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or our securities provided by or on behalf of the undersigned registrant; and

II-2

(iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

(b) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the undersigned pursuant to the foregoing provisions, or otherwise, the undersigned has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the undersigned of expenses incurred or paid by a director, officer or controlling person of the undersigned in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the undersigned will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

(d) The undersigned tegistrant hereby undertakes that:

(1) for purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this Registration Statement as of the time it was declared effective.

(2) for the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

II-3

EXHIBIT INDEX

Exhibit Number		Exhibit Description
1.1**		Form of Underwriting Agreement.
3.1(a)		Certificate of Incorporation of the Company (filed as Exhibit 3.1 to the Company’s registration statement on Form 10-12G filed with the Securities and Exchange Commission on August 8, 2013 and incorporated herein by reference).
3.1(b)		Certificate of Designation, Preferences and Rights of the Series A Convertible Preferred Stock of the Company filed with the Secretary of State of the State of Delaware on October 14, 2014 (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 15, 2014 and incorporated herein by reference).
3.1(c)		Certificate of Designation, Preferences and Rights of the Series B Convertible Preferred Stock of the Company filed with the Secretary of State of the State of Delaware on December 18, 2014 (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 18, 2014 and incorporated herein by reference).
3.1(d)		Certificate of Designation of Preferences, Rights and Limitations of Series C Convertible Preferred Stock filed with the Secretary of State of the State of Delaware on July 2, 2018 (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 5, 2018 and incorporated herein by reference).
3.1(e)		Certificate of Designation of Preferences, Rights and Limitations of Series D Convertible Preferred Stock filed with the Secretary of State of the State of Delaware on April 26, 2019 (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 8, 2019 and incorporated herein by reference).
3.1(f)		Certificate of Amendment of Certificate of Incorporation of Company dated May 25, 2018 (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 29, 2018 and incorporated herein by reference);
3.1(g)		Certificate of Designation of Preference, Rights and Limitations of Series E Convertible Preferred Stock, filed with the Secretary of State of the State of Delaware on June 18, 2019 (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 20, 2019 and incorporated herein by reference).
3.1(h)		Certificate of Amendment to the Certificate of Incorporation, filed with the Secretary of State of the State of Delaware on dated May 28, 2019 (incorporated by reference filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 31, 2019 and incorporated herein by reference)
3.1(i)		Certificate of Amendment to the Certificate of Incorporation, dated July 18, 2019 (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 23, 2019 and incorporated herein by reference).
3.2		By Laws of the Company (filed as Exhibit 3.2 to the Company’s registration statement on Form 10-12G filed with the Securities and Exchange Commission on August 8, 2013 and incorporated herein by reference).
4.1		Warrant Agency Agreement, dated as of July 2, 2018, by and between the Company and Philadelphia Stock Transfer, Inc. (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 5, 2018 and incorporated herein by reference).
4.2		Form of Warrant issued in April 2019 Offering (filed as Exhibit 4.1 to Form S-1 filed with the Securities and Exchange Commission on April 18, 2019 and incorporated herein by reference).
4.3		Form of Warrant issued in June 2019 Offering (filed as Exhibit 4.1 to Form S-1 filed with the Securities and Exchange Commission on June 5, 2019 and incorporated herein by reference).
4.4		Form of Warrant to be issued to the Investors (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 30, 2016 and incorporated herein by reference).
4.5		Form of Warrant to be issued to the Investors (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 25, 2017 and incorporated herein by reference).
4.6**		Form of Representative’s Warrant

II-4

Exhibit Number		Exhibit Description
5.1**		Opinion of Sheppard, Mullin, Richter & Hampton LLP.
10.1		Executive Agreement, dated April 1, 2016, between the Company and John Cavan (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 31, 2016 and incorporated herein by reference).
10.2		2013 Equity Incentive Plan (filed as Exhibit 10.1 to the Company’s Form S-8 filed with the Securities and Exchange Commission on May 4, 2015 and incorporated herein by reference).
10.3		Executive Agreement, dated June 1, 2016, between the Company and Dr. Robert T. Foster (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 13, 2016 and incorporated herein by reference).
10.4*		Promissory Note dated April 13, 2020.
10.5*		Agreement and Plan of Merger by and among the Company, Ciclofilin Acquisition Corp., Ciclofilin Pharmaceuticals, Inc. and Robert Foster, Pharm.D., PH.D., as Stockholder Representative, dated as of May 26, 2016.
10.6		Amendment to 2013 Equity Incentive Plan (filed as Appendix A to the Company's Definitive Proxy Statement filed with the Securities and Exchange Commission on June 12, 2020 and incorporated herein by reference).
10.7#		Form of Common Stock Purchase Warrant dated June 14, 2018.
10.8#+		NICAMS Purchase and Sale Agreement by and between Ciclofilin Pharmaceuticals Corp. and Aurinia Pharmaceuticals, Inc. dated February 14, 2014.
10.9#+		Amendment No. 1 to NICAMS Purchase and Sale Agreement by and between Aurinia Pharmaceuticals Inc., Ciclofilin Pharmaceuticals Inc., an Alberta Corporation and Ciclofilin Pharmaceuticals, Inc., a Delaware corporation dated as of May 26, 2016.
21.1		List of Subsidiaries. (filed as Exhibit 21.1 to the Company’s Form 10-K filed with the Securities and Exchange Commission on May 14, 2020 and incorporated herein by reference).
23.1#		Consent of BDO USA, LLP, Independent Registered Public Accounting Firm.
23.2**		Consent of Sheppard, Mullin, Richter & Hampton, LLP (included as part of Exhibit 5.1).
24*		Power of Attorney (included on signature page hereto).

Previously Filed.

**	To be filed by amendment.

#	Filed herewith

+	Portions of this exhibit (indicated by asterisks) have been redacted in compliance with Regulation S-K Item 601(b)(10)(iv).

II-5

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-1 and has duly caused this registration statement on Form S-1 to be signed on its behalf by the undersigned, thereunto duly authorized, in Edison, New Jersey, on the 12th day of November 2020.

	HEPION PHARMACEUTICALS, INC.

	By:	/s/ Robert Foster
		Robert Foster
		President, Chief Executive Officer and Director

POWER OF ATTORNEY

Pursuant to the requirements of the Securities Act of 1933, the following persons in the capacities and on the dates indicated have signed this Registration Statement below.

Signature	Title	Date

/s/ Robert Foster	President, Chief Executive Officer and Director
Robert Foster	(Principal Executive Officer)	November 12, 2020

*	Chief Financial Officer (Principal Financial and
John Cavan	Accounting Officer)	November 12, 2020

*	Chairman of the Board
Gary S. Jacob		November 12, 2020

*	Director
Timothy Block		November 12, 2020

*	Director
Thomas H. Adams		November 12, 2020

*	Director
John Brancaccio		November 12, 2020

*	Director
Arnold Lippa		November 12, 2020

*	Director
Petrus Wijngaard		November 12, 2020

* By:	/s/ Robert Foster
	Robert Foster
	Attorney - In - Fact

II-6

Exhibit 10.7

NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

COMMON STOCK PURCHASE WARRANT

CONTRAVIR PHARMACEUTICALS, INC.

Warrant Shares:	Original Issue Date: June 14, 2018
	Initial Exercise Date: December 14, 2018

THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the six month anniversary of the Original Issue Date (the “Initial Exercise Date”) and on or prior to 5:00 p.m. (New York City time) on June 14, 2023 (the “Termination Date”) but not thereafter, to subscribe for and purchase from ContraVir Pharmaceuticals, Inc., a Delaware corporation (the “Company”), up to shares (as subject to adjustment hereunder, the “Warrant Shares”) of Common Stock. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).

Section 1. Definitions. Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Dealer Manager Agreement (the “Dealer Manager Agreement”), dated June 14, 2018, among the Company and the purchasers’ signatory thereto.

Section 2. Exercise.

a) Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed facsimile copy (or e-mail attachment) of the Notice of Exercise in the form annexed hereto (the “Notice of Exercise”). Within the earlier of (i) two (2) Trading Days (as hereinafter defined) and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined in Section 2(d)(i) herein) following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank unless the cashless exercise procedure specified in Section 2(c) below is specified in the applicable Notice of Exercise. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise be required. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date on which the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise within one (1) business day of receipt of such notice. For purposes of this Warrant, “Trading Day” means a day on which the Trading Market is open for trading and “Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange, OTCQX or OTCQB (or any successors to any of the foregoing). The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.

b) Exercise Price. The exercise price per share of Common Stock under this Warrant shall be $1.705, subject to adjustment hereunder (the “Exercise Price”).

c) Cashless Exercise. If at any time after the Initial Exercise Date there is no effective registration statement registering, or the prospectus contained therein is not available for the issuance or resale of, the Warrant Shares to the Holder, then this Warrant may also be exercised, in whole or in part, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

(A) = as applicable: (i) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise if such Notice of Exercise is (1) both executed and delivered pursuant to Section 2(a) hereof on a day that is not a Trading Day or (2) both executed and delivered pursuant to Section 2(a) hereof on a Trading Day prior to the opening of “regular trading hours” (as defined in Rule 600(b)(64) of Regulation NMS promulgated under the federal securities laws) on such Trading Day, (ii) at the option of the Holder, either (y) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise or (z) the Bid Price of the Common Stock on the principal Trading Market as reported by Bloomberg L.P. as of the time of the Holder’s execution of the applicable Notice of Exercise if such Notice of Exercise is executed during “regular trading hours” on a Trading Day and is delivered within two (2) hours thereafter (including until two (2) hours after the close of “regular trading hours” on a Trading Day) pursuant to Section 2(a) hereof or (iii) the VWAP on the date of the applicable Notice of Exercise if the date of such Notice of Exercise is a Trading Day and such Notice of Exercise is both executed and delivered pursuant to Section 2(a) hereof after the close of “regular trading hours” on such Trading Day;

(B) = the Exercise Price of this Warrant, as adjusted hereunder; and

(X) = the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise.

If Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the Securities Act, the Warrant Shares shall take on the characteristics of the Warrants being exercised, and the holding period of the Warrants being exercised may be tacked on to the holding period of the Warrant Shares. The Company agrees not to take any position contrary to this Section 2(c).

Notwithstanding anything herein to the contrary, on the Termination Date, this Warrant shall be automatically exercised via cashless exercise pursuant to this Section 2(c).

“Bid Price” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the bid price of the Common Stock for the time in question (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported in the “Pink Sheets” published by OTC Markets Group, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holder and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported in the “Pink Sheets” published by OTC Markets Group, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holder and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

d) Mechanics of Exercise.

i. Delivery of Warrant Shares Upon Exercise. The Company shall cause the Warrant Shares purchased hereunder to be transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s or its designee’s balance account with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”), provided Holder’s broker has properly initiated said DWAC, and if the Company is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by Holder or (B) this Warrant is being exercised via cashless exercise, and otherwise by physical delivery of a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by the date that is the earliest of (i) two (2) Trading Days after the delivery to the Company of the Notice of Exercise, provided that the Holder has then delivered the aggregate Exercise Price to the Company, if applicable, (ii) one (1) Trading Day after delivery of the aggregate Exercise Price to the Company and (iii) the number of Trading Days comprising the Standard Settlement Period after the delivery to the Company of the Notice of Exercise, provided that the Holder has then delivered the aggregate Exercise Price to the Company, if applicable (such date, the “Warrant Share Delivery Date”). Upon delivery of the Notice of Exercise, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the Warrant Shares, provided that payment of the aggregate Exercise Price (other than in the case of a cashless exercise) is received within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period following delivery of the Notice of Exercise. If the Company fails for any reason to deliver to the Holder the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based on the VWAP of the Common Stock on the date of the applicable Notice of Exercise), $10 per Trading Day (increasing to $20 per Trading Day on the fifth Trading Day after such liquidated damages begin to accrue) for each Trading Day after such Warrant Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise. The Company agrees to maintain a transfer agent that is a participant in the FAST program so long as this Warrant remains outstanding and exercisable. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery of the Notice of Exercise.

ii. Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

iii. Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.

iv. Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions of Section 2(d)(i) above pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.

v. No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.

vi. Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares.

vii. Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

e) Holder’s Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates and Attribution Parties shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Common Stock Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates or Attribution Parties. Except as set forth in the preceding sentence, for purposes of this Section 2(e), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 2(e), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within one Trading Day confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates or Attribution Parties since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. The Holder, upon notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2(e), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions of this Section 2(e) shall continue to apply. Any increase in the Beneficial Ownership Limitation will not be effective until the 61^st day after such notice is delivered to the Company. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(e) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.

Section 3. Certain Adjustments.

a) Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

b) Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

c) Pro Rata Distributions. During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise, other than cash (including, without limitation, any distribution of stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided, however, to the extent that the Holder's right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

d) Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in Section 2(e) on the exercise of this Warrant), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(e) on the exercise of this Warrant). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant and the Dealer Manager Agreement in accordance with the provisions of this Section 3(d) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant and the Dealer Manager Agreement referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant and the Dealer Manager Agreement with the same effect as if such Successor Entity had been named as the Company herein.

e) Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.

f) Notice to Holder.

i. Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly deliver to the Holder by facsimile or email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.

ii. Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be delivered by facsimile or email to the Holder at its last facsimile number or email address as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided in this Warrant constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.

Section 4. Transfer of Warrant.

a) Transferability. Pursuant to FINRA Rule 5110(g)(1) and the Dealer Manager Agreement, neither this Warrant nor any Warrant Shares issued upon exercise of this Warrant shall be sold, transferred, assigned, pledged or hypothecated, or be the subject of any hedging, short sale, derivative, put or call transaction that would result in the effective economic disposition of the securities by any person for a period of six (6) months immediately following the date of effectiveness or commencement of sales of the offering pursuant to which this Warrant is being issued, except the transfer of any security:

(i)

by operation of law or by reason of reorganization of the Company;

(ii)

to any FINRA member firm participating in the offering and the officers and partners thereof, if all securities so transferred remain subject to the lock-up restriction in this Section 4(a) for the remainder of the time period;

(iii)

that is beneficially owned on a pro-rata basis by all equity owners of an investment fund, provided that no participating member manages or otherwise directs investments by the fund, and participating members in the aggregate do not own more than 10% of the equity in the fund; or

(iv)

the exercise or conversion of any security, if all securities received remain subject to the lock-up restriction in this Section 4(a) for the remainder of the time period.

Subject to the foregoing restrictions, compliance with any applicable securities laws, and the conditions set forth in Section 4(d) hereof, this Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company unless the Holder has assigned this Warrant in full, in which case, the Holder shall surrender this Warrant to the Company within three (3) Trading Days of the date the Holder delivers an assignment form to the Company assigning this Warrant in full. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

b) New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the Original Issue Date and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.

c) Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

d) Representation by the Holder. The Holder, by the acceptance hereof, represents and warrants that it is acquiring this Warrant and, upon any exercise hereof, will acquire the Warrant Shares issuable upon such exercise, for its own account and not with a view to or for distributing or reselling such Warrant Shares or any part thereof in violation of the Securities Act or any applicable state securities law, except pursuant to sales registered or exempted under the Securities Act.

Section 5. Piggy-Back Registration Rights.

(a) If, at any time on or after the Closing through the Termination Date, the Company proposes to file any Registration Statement under the Securities Act (a “Registration Statement”) with respect to any offering of equity securities, or securities or other obligations exercisable or exchangeable for, or convertible into, equity securities, by the Company for its own account or for shareholders of the Company for their account (or by the Company and by shareholders of the Company), other than a Registration Statement in connection with a merger or acquisition, then the Company shall (x) give written notice of such proposed filing to the Holder as soon as practicable but in no event less than ten (10) days before the anticipated filing date of the Registration Statement, which notice shall describe the amount and type of securities to be included in such Registration Statement, the intended method(s) of distribution, and the name of the proposed managing underwriter or underwriters, if any, of the offering, and offer to the Holder in such notice the opportunity to register the sale of up to such number of shares of Common Stock equal to the number of shares of Common Stock issuable upon exercise of this Warrant as such Holder may request in writing within five (5) days following receipt of such notice (a “Piggy-Back Registration” and such shares of Common Stock, the “Registrable Securities”). The Company shall cause the Registrable Securities to be included in such registration and shall cause the managing underwriter or underwriters of a proposed underwritten offering to permit the Registrable Securities requested to be included in a Piggy-Back Registration on the same terms and conditions as any similar securities of the Company and to permit the sale or other disposition of such Registrable Securities in accordance with the intended method(s) of distribution thereof. A Holder proposing to distribute its securities through a Piggy-Back Registration that involves an underwriter or underwriters shall enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such Piggy-Back Registration. Notwithstanding anything to the contrary in this Section 5(a), the Company shall not be required to register such Registrable Securities pursuant to this Section 5(a) that are eligible for resale pursuant to Rule 144 promulgated under the Securities Act or that are the subject of a then effective Registration Statement.

(b) Any Holder may elect to withdraw its request for inclusion of Registrable Securities in any Piggy-Back Registration by giving written notice to the Company of such request to withdraw prior to the effectiveness of the Registration Statement. The Company (whether on its own determination or as the result of a withdrawal by persons making a demand pursuant to written contractual obligations) may withdraw a Registration Statement at any time prior to the effectiveness of such Registration Statement. Notwithstanding any such withdrawal, the Company shall pay all expenses incurred by the Holder in connection with such Piggy-Back Registration (including but not limited to any legal fees).

(c) The Company shall notify the Holder at any time when a prospectus relating to its Registrable Securities is required to be delivered under the Securities Act, upon discovery that, or upon the happening of any event as a result of which, the prospectus included in such Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing. At the request of Holder, the Company shall also prepare, file and furnish to Holder a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the purchasers of the Registrable Securities, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing. The Holder shall not offer or sell any Registrable Securities covered by the Registration Statement after receipt of such notification until the receipt of such supplement or amendment.

(d) The Company may request Holder to furnish the Company such information with respect to such Holder and such Holder’s proposed distribution of the Registrable Securities pursuant to the Registration Statement as the Company may from time to time reasonably request in writing or as shall be required by law or by the Commission in connection therewith, and such Holders shall furnish the Company with such information.

(e) All fees and expenses incident to the performance of or compliance with this Section 5 by the Company shall be borne by the Company whether or not any Registrable Securities are sold pursuant to a Registration Statement. The fees and expenses referred to in the foregoing sentence shall include, without limitation, (i) all registration and filing fees (including, without limitation, fees and expenses of the Company’s counsel and independent registered public accountants) (A) with respect to filings made with the Commission, (B) with respect to filings required to be made with any trading market on which the Common Stock are then listed for trading, (C) in compliance with applicable state securities or Blue Sky laws reasonably agreed to by the Company in writing (including, without limitation, fees and disbursements of counsel for the Company in connection with Blue Sky qualifications or exemptions of the Registrable Securities) and (D) with respect to any filing that may be required to be made by any broker through which Holder intends to make sales of Registrable Securities with FINRA, (ii) printing expenses, (iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of counsel for the Company, (v) Securities Act liability insurance, if the Company so desires such insurance, and (vi) fees and expenses of all other persons or entities retained by the Company in connection with the actions contemplated by this Section 5.

(f) The Company and its successors and assigns shall indemnify and hold harmless Holder, the officers, directors, members, partners, agents and employees (and any other individuals or entities with a functionally equivalent role of a person holding such titles, notwithstanding a lack of such title or any other title) of each of them, each individual or entity who controls Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, members, stockholders, partners, agents and employees (and any other individuals or entities with a functionally equivalent role of a person holding such titles, notwithstanding a lack of such title or any other title) of each such controlling individual or entity (each, an “Indemnified Party”), to the fullest extent permitted by applicable law, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation, reasonable attorneys’ fees) and expenses (collectively, “Losses”), as incurred, arising out of or relating to (1) any untrue or alleged untrue statement of a material fact contained in a Registration Statement, any related prospectus or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any such prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading or (2) any violation or alleged violation by the Company of the Securities Act, the Exchange Act or any state securities law, or any rule or regulation thereunder, in connection with the performance of its obligations under this Section 5, except to the extent, but only to the extent, that such untrue statements or omissions are based upon information regarding Holder furnished to the Company by such party for use therein. The Company shall notify Holder promptly of the institution, threat or assertion of any proceeding arising from or in connection with the transactions contemplated by this Section 5 of which the Company is aware. If the indemnification hereunder is unavailable to an Indemnified Party or insufficient to hold an Indemnified Party harmless for any Losses, then the Company shall contribute to the amount paid or payable by such Indemnified Party, in such proportion as is appropriate to reflect the relative fault of the Company and Indemnified Party in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of the Company and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by, or relates to information supplied by, the Company or the Indemnified Party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission. The amount paid or payable by a party as a result of any Losses shall be deemed to include any reasonable attorneys’ or other fees or expenses incurred by such party in connection with any proceeding to the extent such party would have been indemnified for such fees or expenses if the indemnification provided for herein was available to such party in accordance with its terms. It is agreed that it would not be just and equitable if contribution pursuant to this Section 5(f) were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding sentence. Notwithstanding the provisions of this Section 5(f), Holder shall not be required to contribute, in the aggregate, any amount in excess of the amount by which the net proceeds actually received by such party from the sale of all of their Registrable Securities pursuant to such Registration Statement or related prospectus exceeds the amount of any damages that such party has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission.

Section 6. Miscellaneous.

a) No Rights as Stockholder Until Exercise. This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth in Section 3.

b) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

c) Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a business day, then, such action may be taken or such right may be exercised on the next succeeding business day.

d) Authorized Shares.

The Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of issuing the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.

Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

e) Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with the provisions of the Dealer Manager Agreement.

f) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, and the Holder does not utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.

g) Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. Without limiting any other provision of this Warrant or the Dealer Manager Agreement, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

h) Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Dealer Manager Agreement.

i) Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

j) Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.

k) Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.

l) Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.

m) Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

n) Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

********************

(Signature Page Follows)

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.

	CONTRAVIR PHARMACEUTICALS, INC.

	By:
		Name:
		Title:

NOTICE OF EXERCISE

To: CONTRAVIR PHARMACEUTICALS, INC.

(1) The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

(2) Payment shall take the form of (check applicable box):

[ ] in lawful money of the United States; or

[ ] if permitted the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).

(3) Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:

_______________________________

The Warrant Shares shall be delivered to the following DWAC Account Number:

_______________________________

[SIGNATURE OF HOLDER]

Name of Investing Entity: _____________________________________________________________________________________________________

Signature of Authorized Signatory of Investing Entity: _______________________________________________________________________________

Name of Authorized Signatory: _________________________________________________________________________________________________

Title of Authorized Signatory: __________________________________________________________________________________________________

Date: _____________________________________________________________________________________________________________________

EXHIBIT B

ASSIGNMENT FORM

(To assign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.)

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to

Name:
	(Please Print)
Address:
	(Please Print)

Phone Number:

Email Address:

Dated: _______________ __, ______

Holder’s Signature:

Holder’s Address:

Exhibit 10.8

[*] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.

Confidential

NICAMs Purchase and Sale Agreement

by and between

Ciclofilin Pharmaceuticals Corp.

and

Aurinia Pharmaceuticals Inc.

February 14, 2014

NICAMs Purchase and Sale Agreement

Summary of Contents

Article 1 Interpretation	1

Article 2 Assignment of Rights and Asset Purchase	10

Article 3 Liabilities	12

Article 4 Consideration	12

Article 5 Reporting and Payment Terms	15

Article 6 Allocation of Risk	18

Article 7 Confidentiality	22

Article 8 Indemnification, Release and Insurance	23

Article 9 Miscellaneous	25

Table of Contents

Article 1 Interpretation		1
1.1	Definitions	1
1.2	Construction	9

Article 2 Assignment of Rights and Asset Purchase		10
2.1	Assignment of Subject Assets	10
2.2	Excluded Assets	10
2.3	Physical Asset Transfer	11
2.4	Timeline to Transfer the Subject Assets	11
2.5	Government Approvals	11
2.6	Covenant Not to Sue	11

Article 3 Liabilities		12
3.1	Assumed Liabilities	12
3.2	Excluded Liabilities	12

Article 4 Consideration		12
4.1	Near-Term Milestone Payments	12
4.2	Later-Term Milestone Payments	13
4.3	Provisions Applicable to all Milestone Events	13
4.4	Royalty on Net Sales	13
4.5	Royalty on License Revenue	13
4.6	Liquidity Event	14
4.7	No Duplication	14
4.8	Timing of the Grant of a License or a Liquidity Event	14

Article 5 Reporting and Payment Terms		15
5.1	Royalty Term and Adjustments	15
5.2	Reports of Royalties on Net Sales; Payments	15
5.3	Reports of License Revenue or Liquidity Event Proceeds; Payments	16
5.4	Reports of Milestone Events; Payments	16
5.5	Audits	16
5.6	Tax Matters	17
5.7	Currency Exchange	17
5.8	Blocked Payments	18
5.9	Late Payments	18
5.10	Security for Payments	18
5.11	Ciclofilin Pharmaceuticals Inc.	18

Article 6 Allocation of Risk		18
6.1	Representations and Warranties of Each Party	18
6.2	Additional Representations and Warranties by Aurinia	19
6.3	Sole Remedy	19
6.4	Additional Representations and Warranties by CPC	20
6.5	CPC Acknowledgements	20
6.6	Anti-Sandbagging	21
6.7	NO OTHER WARRANTY	21

- ii -

6.8	LIMITATION ON AURINIA’S LIABILITY	21

Article 7 Confidentiality		22
7.1	Non-Disclosure and Use Restrictions	22
7.2	Public Filings	22
7.3	Public Statements	22
7.4	Consequence of Transfer of the Subject Assets	23

Article 8 Indemnification, Release and Insurance		23
8.1	General Indemnification By Aurinia	23
8.2	General Indemnification By CPC	23
8.3	Procedure for Indemnification	24
8.4	Release	25
8.5	Insurance	25

Article 9 Miscellaneous		25
9.1	Amendment	25
9.2	Assignment	25
9.3	Counterparts	26
9.4	Descriptive Headings	26
9.5	Entire Agreement of the Parties	26
9.6	Expenses	26
9.7	Further Actions	26
9.8	Governing Law; Dispute Resolution	26
9.9	Independent Contractors	27
9.10	No Trademark Rights	27
9.11	Notices	27
9.12	Representation by Legal Counsel	28
9.13	Severability	28
9.14	Waiver	28

NICAMs Purchase and Sale Agreement

This NICAMs Purchase and Sale Agreement (the “Agreement”) dated February 14, 2014 (the “Effective Date”) by and between Aurinia Pharmaceuticals Inc., a Canadian corporation with an office at #1203 - 4464 Markham Street, Victoria, BC V8Z 7X8 Canada (“Aurinia”) and Ciclofilin Pharmaceuticals Corp., an Alberta corporation with an address at 34 Westbrook Drive, Edmonton, Alberta T6J 2C9 Canada (“CPC”), and Ciclofilin Pharmaceuticals Inc., a California corporation with an address at 3525 Del Mar Heights Road, Suite 427, San Diego, CA, USA 92130 (“CPI”). Aurinia, CPI and CPC may each be referred to herein individually as a “Party” and collectively as the “Parties”.

A. WHEREAS Aurinia, a publicly listed pharmaceutical development company, has a discovery stage library of molecules of NICAMS as defined herein to bind various cyclophilin targets for an undefined indication(s);

B. WHEREAS CPC desires to conduct the necessary discovery and development for the purposes of clinical and corporate development of one or more NICAMs in various indications;

C. WHEREAS, CPI is the sole legal and beneficial shareholder of CPC and owns all of the outstanding shares of CPC;

D. WHEREAS Aurinia desires to sell to CPC and CPC desires to buy from Aurinia (in each case, subject to any applicable third party consents), Aurinia’s entire interest(s) in the NICAMs, and CPI desires to guarantee certain obligations of CPC to Aurinia;

NOW THEREFORE, in consideration of the foregoing premises and the promises, mutual covenants and obligations set forth below, and other good and valuable consideration, the Parties agree as follows:

Article 1 Interpretation

1.1

Definitions

1.1.1

“$” shall mean, except as expressly set out otherwise in this Agreement,

Canadian dollars.

1.1.2

“Affiliate” shall mean, with respect to any person or entity, any other person or entity which controls, is controlled by or is under common control with such person or entity. A person or entity shall be regarded as in control of another entity if it owns or controls at least fifty percent (50%) of the equity securities of the subject entity entitled to vote in the election of directors (or, in the case of an entity that is not a corporation, for the election of the corresponding managing authority), provided, however, that the term “Affiliate” shall not include subsidiaries or other entities in which a Party or its Affiliates owns a majority of the ordinary voting power necessary to elect a majority of the board of directors or other governing board, but is restricted from electing such majority by contract or otherwise, until such time as such restrictions are no longer in effect.

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1.1.3

“Applicable Law” shall mean all laws, statutes, ordinances, codes, rules, and regulations that have been enacted by a Regulatory Authority and which are in force as of the Effective Date or come into force during the term of this Agreement, in each case to the extent that the same are applicable to the performance by the Parties of their respective obligations under this Agreement, including, with respect to the United States, the Prescription Drug Marketing Act, the Federal Food, Drug and Cosmetics Act of 1938, as amended, the Health Insurance Portability and Accountability Act, the Federal Anti-Kickback Statute, and any applicable FDA regulations relating to sampling practices, and with respect to Canada, the Food and Drugs Act, Food and Drug Regulations, and the Canadian Environmental Protection Act.

1.1.4

“Assignment” shall have the meaning set out in Section 2.1.

1.1.5

“Assumed Contracts” shall mean the agreements related to the NICAM

Program set out in Exhibit 1.1.5.

1.1.6

“Assumed Liabilities” shall have the meaning set out in Section 3.1.

1.1.7

“Aurinia Indemnified Parties” shall have the meaning set out in Section 8.2.

1.1.8

“Bill of Sale” shall have the meaning set out in Section 2.1.3.

1.1.9

“Change of Control” shall be deemed to have occurred if any of the following occurs after the Effective Date:

(a)

any “person” or “group” (as such terms are defined below) (a) is or becomes the “beneficial owner” (as defined below, except that a “person” or “group” shall be deemed to have “beneficial ownership” of all shares of capital stock or other equity interests if such person or group has the right to acquire such shares or interests, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, in a transaction or series of related transactions, of shares of capital stock or other interests (including partnership interests) of CPC or any of its Controlling Affiliates then outstanding and normally entitled (without regard to the occurrence of any contingency) to vote in the election of the directors, managers or similar supervisory positions (“Voting Stock”) of CPC, or its Controlling Affiliate, as applicable, representing more than fifty percent (50%) of the total voting power of all outstanding classes of Voting Stock or (b) has the power, directly or indirectly, for reasons other than solely for investment purposes, to elect a majority of the members of CPC’s board of directors or similar governing body (“Board of Directors”); or

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(b)

CPC or its Controlling Affiliate, as applicable, enters into a merger, reverse-merger, amalgamation, arrangement, consolidation or other form of business combination, share exchange, reorganization, recapitalization, transfer or other similar transaction with another person (whether or not CPC (or its Controlling Affiliate, as applicable) is the surviving entity) and as a result of such transaction (a) the members of the Board of Directors of CPC (or its Controlling Affiliate, as applicable) immediately prior to such transaction constitute less than a majority of the members of the Board of Directors of CPC (or its Controlling Affiliate, as applicable) or such surviving entity immediately following such transaction or (b) the persons that beneficially owned, directly or indirectly, the shares of Voting Stock of CPC (or its Controlling Affiliate, as applicable) immediately prior to such transaction cease to beneficially own, directly or indirectly, shares of Voting Stock of CPC representing at least a majority of the total voting power of all outstanding classes of Voting Stock of the surviving entity immediately following such transaction.

For the purpose of this definition of Change of Control: (a) “person” and “group” have the meanings given such terms under Section 13(d) and 14(d) of the United States Securities Exchange Act of 1934 and the term “group” includes any group acting for the purpose of acquiring, holding or disposing of securities within the meaning of Rule 13d-5(b)(1) under the said Act; (b) a “beneficial owner” shall be determined in accordance with Rule 13d-3 under the aforesaid Act; and (c) the terms “beneficially owned” and “beneficially own” shall have meanings correlative to that of “beneficial owner”; and (c) “Controlling Affiliate” means, with respect to CPC, an Affiliate of CPC that controls (within the meaning given under the definition of “Affiliate”) CPC, and is deemed to include CPI. A Change of Control of CPI shall be a Change of Control for the purposes of this Agreement.

1.1.10

“Confidential Information” shall mean, with respect to a Party, all non-public proprietary data or information that is disclosed by such Party to the other Party in connection with this Agreement or information designated as “Confidential Information” of such Party hereunder.

1.1.11

“Control” or “Controlled” shall mean with respect to any (a) item of information or know-how, or (b) intellectual property right, the possession (whether by ownership or license, other than pursuant to this Agreement) by a Party of the lawful right to grant to the other Party access and/or assign as provided herein such item or right without violating the terms of any agreement with or lawful right of any Third Party existing as of the date such Party is obligated under this Agreement to grant such access and/or license.

1.1.12

“Cover” shall mean that, with respect to any NICAM, the composition, manufacture, use, sale, offer for sale, importation, or other exploitation of such NICAM is claimed to infringe at least one claim of the applicable patent application or issued patent absent a license or other authorization from the owner of such rights.

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1.1.13

“Disclosing Party” shall have the meaning set out in Section 7.1

1.1.14

“EMA” shall mean the European Medicines Agency or its successor from time to time.

1.1.15

“Encumbrance” shall mean claims, security interests, liens, pledges, charges, escrows, options, proxies, rights of first refusal, preemptive rights, covenants not to sue, mortgages, hypothecations, assessments, prior assignments, reversionary rights, reversionary titles, reversionary interests, title retention agreements, conditional sales agreements, indentures, deeds of trust, leases, levies or security agreements of any kind whatsoever, or any other agreements to give any of the foregoing in the future, imposed upon the subject property or item.

1.1.16

“Equity Financing” shall mean at least $1,000,000 in capital secured for, and accepted and received by, CPC, including without limitation through any purchase, transfer or other disposition of any debt, equity or other securities of CPC in which CPC receives and retains all of the proceeds of the transaction primarily for the purposes of the development and commercialization of the NICAMs and related corporate purposes.

1.1.17

“Excluded Assets” shall mean all assets and properties (other than the Subject Assets) of Aurinia and its Affiliates, including:

(a)

any assets owned by Paladin;

(b)

the assets and properties related to the development and exploitation of voclosporin.

1.1.18

“Excluded Liabilities” shall have the meaning set out in Section 3.2.

1.1.19

“FDA” shall mean the United States Food and Drug Administration or its successor from time to time.

1.1.20

“First Commercial Sale” means, with respect to the Product in a country, the first commercial sale to a Third Party of the Product in such country. Sales for clinical study purposes or compassionate, named patient or similar use shall not constitute a First Commercial Sale.

1.1.21

“General Notice” shall have the meaning set out in Section 2.1.3.

1.1.22

“Health Canada” shall mean Health Canada or its successor from time to time.

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1.1.23

“Indemnified Parties” means in respect of a Party, such Party and its Affiliates and their respective directors, officers, employees and agents (and each of them is an “Indemnified Party”).

1.1.24

“Indemnifying Party” shall have the meaning set out in Section 8.3.1.

1.1.25

“Indication” means any human disease or condition which can be treated, prevented, or cured or the progression of which can be delayed. Without limiting the generality of the foregoing, a use of the Product in a new Indication requires an approval by a Regulatory Authority, whether through a label expansion or separate Regulatory Approval. The Parties agree that label changes or Regulatory Approvals to market a new dosage or strength of a drug, or change the way it manufactures a drug, shall not be a separate Indication.

1.1.26

“Knowledge” of a Party means the actual knowledge of:

(a)

in respect of Aurinia, Richard Glickman, Stephen Zaruby, Michael Martin, and Neil Solomons; and

(b)

in respect of CPC, Robert Foster and the executive officers of CPC.

1.1.27

“Liability” shall mean, collectively, any liability, indebtedness, guaranty, endorsement, claim, loss, damage, deficiency, cost, expense, obligation, responsibility, or product liability, whether fixed or unfixed, known or unknown, choate or inchoate, liquidated or unliquidated, secured or unsecured, direct or indirect, matured or unmatured, or absolute, contingent or otherwise.

1.1.28

“License Revenue” shall mean, except as otherwise specified in this Agreement, all revenues, receipts, monies, and the fair market value of any shares or other securities and all other consideration directly or indirectly collected or received whether by way of cash, credit or other value received by CPC in respect of a License of intellectual property rights relating to the NICAMS, excluding royalties calculated on the Net Sales of Products sold by a licensee. For greater clarity, it is confirmed that License Revenue will include all:

(a)

option fees (including any payments for any covenant of CPC referred to in Section 4.8.1), license fees, milestone payments, and royalties; and

(b)

research or development fees in excess of the direct reimbursement for the actual costs of such research and development incurred by CPC; and

(c)

loans to CPC by a Licensee to the extent that the interest charged for same is less than fair market value (in which case such difference shall be License Revenue) or to the extent that the principal of same is forgiven (in which case such forgiven amount shall be License Revenue); and

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(d)

investments in CPC by a Licensee to the extent that such investments are made at greater than fair market value (in which case such premium shall be License Revenue).

1.1.29

“Licensee” shall mean a Third Party to whom CPC has granted a right to sell, market, distribute and/or promote a Product in the Territory and “License” shall mean an agreement or arrangement between CPC and a Licensee granting such rights. As used in this Agreement, “Licensee” includes a licensee of a Licensee, but shall not include a wholesaler or reseller of a Product who does not market or promote such Product, or a Third Party manufactures Product solely for CPC or its Licensee.

1.1.30

“Liquidity Event” shall mean: (i) a Change of Control of CPC, CPI or any Controlling Affiliate of CPC or CPI; or (ii) CPC sells, leases, exclusively licenses, transfers or otherwise conveys or disposes of to any Third Party, in one or more related transactions, all or substantially all of the Subject Assets or the NICAM Program; provided that a financing for the purposes of raising capital for CPC in which CPC receives and retains all of the proceeds of the transaction primarily for the purposes of the development and commercialization of the NICAMs and related corporate purposes shall be deemed not to be a “Liquidity Event”.

1.1.31

“Losses” means any and all actions, causes of action, in law or in equity, suits, debts, liens, Liabilities, claims, demands, losses, costs (including costs of investigation, defense and enforcement of this Agreement), damages, fines, penalties, government orders, taxes, expenses or amounts paid in settlement (in each case, including reasonable attorneys’ and experts fees and expenses), of any nature whatsoever, whether known or unknown, fixed or contingent, involving a claim or action of a Third Party or Regulatory Authority.

1.1.32

“Major Market Country” means a country in the European Union, the United States, Japan, Australia, Canada or China.

1.1.33

“Net Sales” shall mean the gross amount invoiced by CPC or its Affiliates and its Licensees to non-Licensee Third Parties for Product sales, less: (i) reasonable and customary cash discounts consistent with CPC’s past practices, (ii) customary rebates and chargebacks actually allowed, and (iii) sales credits, refunds, returns and allowances accrued by CPC, acting reasonably. Such amounts shall be determined from books and records maintained by CPC in accordance with applicable accounting standards, consistently applied. To the extent that any accrual contemplated by the foregoing clause (iii) is subsequently adjusted in accordance with applicable accounting standards, CPC shall notify Aurinia thereof in writing and the royalty owing hereunder in respect of the Net Sales corresponding to such accrued amounts shall be adjusted accordingly and the next payment hereunder shall be increased or decreased accordingly.

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Sales of Product by and between a Party and its Affiliates and Licensees are deemed not to be sales to Third Parties and shall be excluded from Net Sales calculations for all purposes. Sales of Product for use in conducting clinical trials of Product in a country in order to obtain the first regulatory approval of Product in such country shall be excluded from Net Sales calculations for all purposes.

In the event the Product is sold as part of a Combination Product (as defined below) in a country, the Net Sales of the Product, for the purposes of determining payments based on Net Sales, shall be determined by a formula to be agreed in good faith between the Parties, provided, however, such formula shall consider the relative value and contribution of the Product to the overall value of the Combination Product. “Combination Product” shall mean any pharmaceutical product that consists of a Product and other active compounds and/or active ingredients or any combination of the Product sold together with another pharmaceutical product for a single invoiced price. For the avoidance of doubt, any composition of matter or article of manufacture sold with a Product (other than another active ingredient), including any medical device including a drug delivery device, shall not be subject to the “Combination Product” provision provided for herein, but rather all amounts derived directly or indirectly from sale, lease or transfer of such composition of matter or article of manufacture shall be included in the definition of Net Sales as if they were Net Sales of such Product.

1.1.34

“CPC Indemnified Parties” shall have the meaning set out in Section 8.1.

1.1.35

“NICAM Program” shall mean the manufacturing, using, developing, promoting, advertising, marketing, distributing, selling, offering to sell, importing and/or exporting of the Product in the Territory.

1.1.36

“NICAMs” shall mean any and all Non-Immunosuppressive Cyclophilin Antagonist Molecules derived from Cyclosporin A.

1.1.37

“Paladin” means Paladin Labs Inc.

1.1.38

“Patent Rights” means all patents, patent applications, divisional applications, and continuation applications covering NICAMs and listed in Exhibit 1.1.38, along with any office actions.

1.1.39

“Permitted Encumbrances” shall mean (i) Encumbrances for taxes, assessments and other governmental charges not yet due and payable or, if due, either (a) not delinquent or (b) being contested in good faith by appropriate proceedings, (ii) mechanics’, workmen’s, repairmen’s, warehousemen’s, carriers’ or other similar Encumbrances, including all statutory Encumbrances, arising or incurred in the ordinary course of business and not yet delinquent or, (iii) Encumbrances that do not materially affect the ownership, value or use of the underlying Subject Asset for the purpose it is being utilized by Aurinia or its Affiliates on the Effective Date.

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1.1.40

“Product Related Assets” shall mean to the extent owned or Controlled by Aurinia without any obligation to make any payment to any Third Party on the Effective Date:

(a)

all NICAMs know how listed in Exhibit 1.1.40(a);

(b)

all data sets and documentation resulting from all discovery and non-clinical testing of NICAMs generated either in-house or by Third Parties; and

(c)

all Patent Rights.

1.1.41

“Product” shall mean a pharmaceutical product incorporating NICAMs.

1.1.42

“Receiving Party” shall have the meaning set out in Section 7.1

1.1.43

“Regulatory Approval” shall mean all governmental and regulatory approvals required to commercialize a Product for a particular Indication in a country, including any permit, authorization, license or approval (or waiver) from any Regulatory Authority required for the commercialization of Product (excluding pricing and/or reimbursement approvals if not legally required for the commercialization of Product.

1.1.44

“Regulatory Assets” shall mean all regulatory correspondence of Aurinia respecting NICAMs, if any, existing as of the Effective Date for the Product to the extent reasonably necessary or useful for CPC’s use of the Subject Assets as contemplated hereby.

1.1.45

“Regulatory Authority” shall mean any federal, national, multinational, state, provincial or local regulatory agency, department, bureau or other governmental entity with authority over the clinical testing, marketing and/or sale of a pharmaceutical product in a country, including the FDA in the United States, Health Canada in Canada and EMA in the EU.

1.1.46

“Regulatory Notices” shall have the meaning set out in Section 2.1.2.

1.1.47

“Subject Assets” shall mean the Assumed Contracts, Product Related Assets and the Regulatory Assets.

1.1.48

“Taxes” shall mean all federal, state, local, foreign and other income, net income, gross income, gross receipts, sales, use, ad valorem, transfer, capital stock, franchise, profits, license, service, add on or alternative minimum tax, occupancy, withholding, payroll, fringe benefits, employment, employees’ income withholding, foreign or domestic withholding, unemployment, disability, excise, severance, stamp, value added, occupation, premium, property (including, real property and personal property taxes and any assessments, special or otherwise), environmental, windfall profits, customs, duties or other taxes, and any fees, assessments, levies, tariffs or charges of any kind that are in the nature of a tax, together with any interest and any penalties, additions to tax or additional amounts with respect thereto (and “Tax” means any one of the foregoing Taxes).

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1.1.49

“Territory” shall mean all countries of the world.

1.1.50

“Third Party Notices” shall have the meaning set out in Section 2.1.3.

1.1.51

“Third Party” shall mean any person or entity other than Aurinia, CPC or any of their respective Affiliates.

1.2

Construction

1.2.1

The words “hereof,” “herein” and “hereunder” and words of like import used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.

1.2.2

The captions herein are included for convenience of reference only and shall be ignored in the construction or interpretation hereof. References to Articles, Sections, Exhibits, and Schedules are to Articles, Sections, Exhibits, and Schedules of this Agreement unless otherwise specified.

1.2.3

All Exhibits and Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein. Any capitalized terms used in any Exhibit or Schedule but not otherwise defined therein, shall have the meaning as defined in this Agreement.

1.2.4

Any singular term in this Agreement shall be deemed to include the plural, and any plural term the singular, and words denoting either gender shall include both genders as the context requires. Where a word or phrase is defined herein, each of its other grammatical forms shall have a corresponding meaning.

1.2.5

Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation,” whether or not they are in fact followed by those words or words of like import.

1.2.6

The use of the word “or” shall not be exclusive.

1.2.7

A reference to any legislation or to any provision of any legislation shall include any modification, amendment, re-enactment thereof, any legislative provision substituted therefore and all rules, regulations and statutory instruments issued or related to such legislation.

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1.2.8

Any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be applied in the construction or interpretation of this Agreement. No prior draft of this Agreement nor any course of performance or course of dealing shall be used in the interpretation or construction of this Agreement. No parol evidence shall be introduced in the construction or interpretation of this Agreement unless the ambiguity or uncertainty in issue is plainly discernable from a reading of this Agreement without consideration of any extrinsic evidence.

Article 2 Assignment of Rights and Asset Purchase

2.1

Assignment of Subject Assets

2.1.1

Subject to the terms and conditions set forth in this Agreement and in partial consideration for the payments to be made by CPC to Aurinia pursuant to Article 4 hereof, Aurinia hereby assigns to CPC and CPC hereby purchases and assumes from Aurinia all of Aurinia’ right, title and interest in and to the Subject Assets, free and clear of all Encumbrances other than Permitted Encumbrances.

2.1.2

Aurinia agrees to promptly upon request deliver to the FDA and all other Regulatory Authorities having jurisdiction written notice (collectively, the “Regulatory Notices”) confirming the transfer of the Regulatory Assets to CPC in such form as may be prepared and requested by and at the expense of CPC, and to promptly provide CPC with true copies of the Regulatory Notices and their delivery particulars, and all original acknowledgements of receipt and any other communication received by Aurinia from such regulatory authorities in response to any of the Regulatory Notices.

2.1.3

Aurinia agrees to promptly upon request execute and deliver to CPC a bill of sale confirming the transfer to CPC of title to the Subject Assets (the “Bill of Sale”) and a written notice on Aurinia letterhead (the “General Notice”) addressed “To Whom it May Concern” in a form prepared by and at the expense of CPC. Promptly after the Effective Date, Aurinia shall deliver to all Third Parties who have possession of any Subject Assets, original written notices (the “Third Party Notices”) confirming that ownership of those Subject Assets has been transferred to CPC, and Aurinia shall promptly deliver to CPC true copies of such Notices and of any responses thereto received by Aurinia.

2.2

Excluded Assets

The Parties acknowledge and agree that Aurinia is not selling, conveying, transferring, assigning, or delivering, or assigning any rights whatsoever to the Excluded Assets to CPC, and CPC is not purchasing, taking delivery of or acquiring any rights whatsoever to the Excluded Assets from Aurinia. Nothing in this Section 2.2 shall be construed as limiting the covenant not to sue set out in Section 2.6.1.

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2.3

Physical Asset Transfer

Unless otherwise noted herein, CPC will be solely responsible for making all necessary arrangements for the physical transfer of the Product Related Assets and the documentation relating to the Regulatory Assets from Aurinia or Third Party storage facilities to CPC or to a Third Party designated by CPC. Delivery of the Product Related Assets and the documentation relating to the Regulatory Assets shall be in accordance with INCOTERMS 2010, EXW Aurinia’s premises, which premises shall be deemed to include Third Party storage facilities such that CPC will assume title and risk of loss and responsibility for transport from the Aurinia or Third Party facility. Aurinia agrees to facilitate transfer of Subject Assets directly to CPC or to a Third Party selected by CPC. CPC will endeavour to minimize impact on Aurinia resources.

2.4

Timeline to Transfer the Subject Assets

Within 30 days from the Effective Date, CPC may draft and Aurinia will make available to CPC executed copies of all Third Party Notices and Regulatory Notices. Thereafter, on one week’s request from Aurinia, CPC shall remove all of the Subject Assets from Aurinia’s premises. At any time following the Effective Date, CPC may propose to Aurinia a sublease of Aurinia premises.

2.5

Government Approvals

CPC and Aurinia will cooperate and use respectively all reasonable efforts to make all registrations, filings and applications, to give all notices and to obtain as soon as practicable all governmental or other consents, transfers, approvals, orders, qualifications authorizations, permits and waivers, if any, and to do all other things necessary or desirable for the consummation of the transactions as contemplated hereby.

2.6

Covenant Not to Sue

2.6.1

Aurinia, its successors and assigns shall not assert nor cause to be asserted against: CPC, its Affiliates, Licensees or any of their respective Affiliates; any patient, doctor, other health professional, medical facility; collaborator, contractor or Third Party which has entered into an agreement with CPC relating to the Product; any Regulatory Authority; any Third Party which exploits or supplies any product or service for use with the Product, including the delivery or administration of any Product; any distributor and any Third Party that has obtained Product directly or indirectly from any of the foregoing; any patents Controlled by Aurinia as of the Effective Date that are infringed by the synthesis of intermediates of NICAMs, for the synthesis of intermediates of NICAMs in the Territory.

2.6.2

CPC, its successors and assigns shall not assert nor cause to be asserted against: Aurinia, its Affiliates, Licensees or any of their respective Affiliates; any patient, doctor, other health professional, medical facility; collaborator, contractor or Third Party which has entered into an agreement with Aurinia relating to any voclosporin product; any Regulatory Authority; any Third Party which exploits or supplies any product or service for use with any voclosporin product, including the delivery or administration of any voclosporin product; any distributor and any Third Party that has obtained voclosporin product directly or indirectly from any of the foregoing; any Patent Rights that are infringed by the exploitation of voclosporin products in the Territory.

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Article 3 Liabilities

3.1

Assumed Liabilities

Upon the terms and subject to the conditions set forth in this Agreement, and except as set out in Section 3.2, CPC shall assume and agree to pay, perform or otherwise discharge, in accordance with their respective terms and subject to the respective conditions thereof, all Liabilities associated with the NICAM Program, including the following Liabilities (collectively, the “Assumed Liabilities”):

3.1.1

all Liability, whether arising before or after the Effective Date, in respect of the Subject Assets and the NICAM Program; and

3.1.2

all Liability arising out of the conduct of the NICAM Program by CPC on or after the Effective Date.

3.2

Excluded Liabilities

Upon the terms and subject to the conditions set forth in this Agreement, Aurinia shall remain liable for, pay, perform or otherwise discharge, in accordance with their respective terms and subject to the respective conditions thereof, the Liabilities set out in Exhibit 3.2 (collectively, the “Excluded Liabilities”). The Parties hereby acknowledge and agree that CPC shall not be responsible for, assume, or be obligated to pay, perform or otherwise discharge any Excluded Liabilities.

Article 4 Consideration

4.1

Near-Term Milestone Payments

4.1.1

CPC will pay the milestone payments set forth in the table below within thirty (30) days of the first achievement of each of the following events:

Event	Milestone Payment
Upon dosing of first patient in a clinical trial, regardless of Indication	$	450,000
Upon dosing of first patient in a Phase III clinical trial, regardless of Indication	$		*
Total Milestones	$		*

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4.2

Later-Term Milestone Payments

4.2.1

CPC will pay the milestone payments set forth in the table below within thirty (30) days of the first achievement of each of the following events:

Event	Milestone Payment
First Regulatory Approval in a Major Market Country	$		*
First Regulatory Approval in a Major Market Country in a second Indication	$		*
Total Later-term milestones	$	2,000,000

4.3

Provisions Applicable to all Milestone Events

4.3.1

Except as otherwise set out: (i) all milestones will be paid in cash only; and (ii) all payments will be made within 30 days of the occurrence of the event.

4.3.2

All milestone payments set forth in this Article are non-refundable and non-creditable.

4.3.3

Each milestone payment shall occur only once.

4.3.4

Occurrence of the milestones and payments made on account of the occurrence of the milestones contemplated in this Article shall not be publicly announced by a Party without the express written consent of the other Party, unless a Party reasonably determines that announcement or disclosure of such payment is required by Applicable Law.

4.4

Royalty on Net Sales

Subject to Section 5.1, CPC shall pay to Aurinia a royalty of 2.5% of Net Sales by CPC or its Licensee(s). The amount payable under the foregoing royalty obligation is uncapped.

4.5

Royalty on License Revenue

CPC shall pay to Aurinia a royalty on License Revenue received by CPC in the amounts set out below. If the License is granted:

4.5.1

prior to 12 months after the first Equity Financing, 30% of License Revenue to a maximum of $5,000,000;

	4.5.2	later than 12 months and before 24 months following the first Equity Financing, 15% of License Revenue to a maximum of $5,000,000;

	4.5.3	thereafter, 5% of License Revenue to a maximum of $5,000,000.

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4.6

Liquidity Event

CPC shall pay to Aurinia a milestone payment in the amounts set out below upon the occurrence of a Liquidity Event. If the Liquidity Event occurs:

4.6.1

prior to 12 months following the first Equity Financing, CPC will pay Aurinia 30% of proceeds to a maximum of $5,000,000;

4.6.2

later than 12 months and before 24 months following the first Equity Financing, CPC will pay Aurinia 15% of proceeds to a maximum of $5,000,000;

4.6.3

thereafter, 5% of proceeds to a maximum of $5,000,000.

The occurrence of a Liquidity Event and the related payments will not affect the obligation to pay milestone payments. CPC may not receive all consideration for the Liquidity Event in cash at the time of closing of a Liquidity Event. CPC shall pay the foregoing shares of proceeds to Aurinia in the form and at the time they are received by CPC. Liquidity Event proceeds shall include any payments for any covenant of CPC referred to in Section 4.8.2.

4.7

No Duplication

In no event shall any payment made to CPC be counted for the purposes of this Agreement as both License Revenue and Liquidity Event proceeds. Any payments made on account of License Revenue or Liquidity Event proceeds shall be credited against the caps on License Revenue and Liquidity Event proceeds so that CPC’s maximum obligation in respect of both License Revenue and Liquidity Event proceeds is a total of $5,000,000.

4.8

Timing of the Grant of a License or a Liquidity Event

For the purposes of calculating the applicable rates in Sections 4.5 and 4.6 of this Agreement, a License is granted on the date of the exercise of earliest grant of rights related to that License; and a Liquidity Event occurs on the date of the earliest obligation of CPC in respect of such Liquidity Event. For example:

4.8.1

the date of the grant of a License is the earliest of:

(a)

the date the License becomes effective;

(b)

the date of the execution of the License;

(c)

the date of the grant of any option to obtain a License; and

(d)

the earliest date on which CPC agrees with a potential Licensee to restrict CPC’s ability to: disclose information to; negotiate with; or grant rights to; any person other than such potential Licensee with respect to a NICAM or any or all of the NICAM Program, provided that the potential Licensee later becomes a Licensee; and

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4.8.2

the date of a Liquidity Event is the earliest of:

(a)

the date the Liquidity Event becomes effective;

(b)

the date of the execution of an agreement for a Liquidity Event transaction;

(c)

the date of the grant of any option for a Liquidity Event transaction; and

(d)

the earliest date on which CPC or its Controlling Affiliate, as applicable, agrees with a potential party to a Liquidity Event transaction to restrict CPC’s or its Controlling Affiliate’s, as applicable, ability to: disclose information to; negotiate with; or grant rights to; any person other than such potential party with respect to: a License, a Liquidity Event transaction or any transaction respecting the Voting Stock of CPC or its Controlling Affiliate, as applicable, or any merger, reverse-merger, amalgamation, arrangement, consolidation or other form of business combination, share exchange, reorganization, recapitalization, transfer or other similar transaction of CPC or its Controlling Affiliate, as applicable, with another person, provided that the potential party later becomes a party to a Liquidity Event transaction.

Article 5 Reporting and Payment Terms

5.1

Royalty Term and Adjustments

The obligation of CPC to make royalty payments at the rate recited in Section 4.4 shall commence upon the First Commercial Sale of a Product in the Territory by CPC, its Affiliates or Licensees, and shall continue on a country-by-country and Product-by-Product for the longer of the date of either (i) the last expiration of any patent Covering such Product, including any formulation or reformulation patent, Controlled by CPC, its Affiliates or Licensees in each such country; or (ii) fifteen (15) years from First Commercial Sale in each such country.

5.2

Reports of Royalties on Net Sales; Payments

Within forty-five (45) days after the end of each calendar quarter for which royalties are payable by CPC to Aurinia with respect to Net Sales in the Territory pursuant to Section 4.4, CPC shall

5.2.1

submit to Aurinia a report, on a country-by-country basis, providing in reasonable detail an accounting of all Net Sales made during such calendar quarter and the calculation of the applicable royalties under Section 4.4; and

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5.2.2

pay to Aurinia all royalties payable by it under Section 4.4 as indicated in the report.

5.3

Reports of License Revenue or Liquidity Event Proceeds; Payments

Within forty-five (45) days after the end of each calendar quarter for which royalties or other payments are payable by CPC to Aurinia pursuant to Section 4.5 or 4.6, CPC shall:

5.3.1

submit to Aurinia a report providing in reasonable detail an accounting of all License Revenue or proceeds received during such calendar quarter and the calculation of the applicable royalties or payments under Section 4.5 or 4.6; and

5.3.2

pay to Aurinia all applicable royalties or payments under Section 4.5 or 4.6 as indicated in the report.

5.4

Reports of Milestone Events; Payments

Within thirty (30) days of the first achievement of each of the events referred to in Section 4.1 or 4.2, CPC shall report the occurrence of such event in reasonable detail and pay to Aurinia the applicable payment pursuant to Section 4.1 or 4.2.

5.5

Audits

5.5.1

CPC shall keep complete and accurate records of the items underlying royalties and License Revenue relating to the reports and payments required by this Article 5. Aurinia shall have the right annually at its own expense to have an independent, certified public accountant, selected by Aurinia and reasonably acceptable to CPC, review any such records of CPC in the location(s) where such records are maintained by CPC upon reasonable notice and during regular business hours and under obligations of confidence, for the sole purpose of verifying the basis and accuracy of payments made under this Article 5 in the previous three (3) years.

5.5.2

Aurinia shall bear the cost of any audit under this Section 5.5, except in the event that the results of the audit reveal an underpayment of the amounts described in this Article 5 by five percent (5%) or more over the period being audited, in which case CPC shall pay the reasonable costs of such examination. In the event that such examination concludes that additional amounts are owed to Aurinia, CPC shall pay any such additional amounts within thirty (30) days of the date that CPC receives the written report so concluding. In the event that such examination concludes that there has been an overpayment with respect to amounts paid to Aurinia, the excess (after deducting the cost of the examination) shall be refunded by Aurinia to CPC within thirty (30) days of the date that Aurinia receives the written report so concluding.

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5.6

Tax Matters

5.6.1

The Parties shall provide reasonable cooperation and information to each other in connection with (i) the preparation or filing of any Tax Return, Tax election, Tax consent or certification, or any claim for a Tax refund, (ii) any determination of liability for Taxes and (iii) any audit, examination or other proceeding in respect of Taxes related to the NICAM Program.

5.6.2

CPC shall make all payments to Aurinia under this Agreement without deduction or withholding except to the extent that any such deduction or withholding is required by Applicable Law to be made on account of Taxes.

5.6.3

Any Tax required to be withheld under Applicable Law on amounts payable under this Agreement shall promptly be paid by CPC on behalf of Aurinia to the appropriate Regulatory Authority, and CPC shall furnish Aurinia with proof of payment of such Tax. Any such Tax required to be withheld shall be an expense of and borne by Aurinia. CPC shall give notice of its intention to begin withholding any such Tax in advance and cooperate to use reasonable and legal efforts to reduce such Tax on payments made to Aurinia hereunder.

5.6.4

CPC and Aurinia shall cooperate with respect to all documentation required by any taxing authority or reasonably requested by CPC or Aurinia to secure a reduction in the rate of applicable withholding Taxes.

5.6.5

Notwithstanding the rest of this Section 5.6, CPC shall be responsible for:

(a)

all sales, use, transfer, value added and other similar Taxes, if any, arising out of the transfer by Aurinia of the Subject Assets to CPC pursuant to this Agreement; and

(b)

any Liability arising on or after the Effective Date for Taxes imposed with respect to the NICAM Program or the Subject Assets that are attributable to the ownership, sale, operation or use of the NICAM Program or the Subject Assets on or after following the Effective Date.

5.7

Currency Exchange

Unless otherwise agreed, all payments to be made by CPC to Aurinia shall be made in U.S. Dollars, to an Aurinia bank account able to receive U.S. Dollars. Notwithstanding the foregoing sentence, payments to be made by CPC to Aurinia under Sections 4.1 and 4.2 shall be made in Canadian dollars. If a payment is made by a Third Party to CPC in Canadian dollars and such payment gives rise to a royalty payment under this Agreement, then the royalty payment shall be made in Canadian dollars. In the case of License Revenue and Net Sales originating outside of Canada or the United States, royalty payments by CPC to Aurinia shall be converted to U.S. Dollars in accordance with the following: the rate of currency conversion shall be calculated using a simple average of mid-month and month-end spot rates as published by The Wall Street Journal, New York City Edition for such accounting period.

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5.8

Blocked Payments

In the event that, by reason of applicable laws or regulations in any country, it becomes impossible or illegal for CPC or its Affiliate or a Licensee to transfer, or have transferred on its behalf, royalties or other payments to Aurinia, CPC shall promptly notify Aurinia of the conditions preventing such transfer and such distribution fees or other payments shall be deposited in local currency in the relevant country to the credit of Aurinia in a recognized banking institution designated by Aurinia or, if none is designated by Aurinia within a period of 30 days, in a recognized banking institution selected by Aurinia or its Affiliate or such Licensee, as the case may be, and identified in a notice given to Aurinia.

5.9

Late Payments

CPC shall pay interest to Aurinia on the aggregate amount of any payments that are not paid on or before the date such payments are due under this Agreement at a rate per annum equal to the lesser of one percent (1%) per month or the highest rate permitted by Applicable Law, calculated on the number of days such payments are paid after the date such payments are due and compounded monthly.

5.10

Security for Payments

CPC shall cooperate with Aurinia to secure Aurinia’s right to the payments referred to in Sections 4.1, 4.2, 4.5 and 4.6, including the granting of a security interest in the Subject Assets and any improvements thereto (including any data or intellectual property which may be exploited and thereby infringe any of the Patent Rights) and any payments to be made respecting same, including License Revenue and the proceeds of any Liquidity Event and assigning to Aurinia the right to receive the payments calculated on License Revenue or the proceeds of any Liquidity Event directly from the party making such payment. The amount of such security is not to exceed the cumulative total of expected payments to Aurinia of $7.9 million.

5.11

Ciclofilin Pharmaceuticals Inc.

With respect to CPC obligations to make the payments referred to in Article 4 and Article 5, any reference to “CPC” shall be deemed to include a reference to CPI. CPI shall cause CPC to perform its obligations in Article 4 and Article 5 and shall execute the guarantee attached as Exhibit 5.11.

Article 6 Allocation of Risk

6.1

Representations and Warranties of Each Party

Each of CPC and Aurinia hereby represents, warrants, and covenants to the other Party hereto as follows:

6.1.1

it is a corporation or entity duly organized and validly existing under the laws of the state, province or other jurisdiction of its incorporation or formation;

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6.1.2

the execution, delivery and performance of this Agreement by such Party has been duly authorized by all requisite corporate action and does not require any shareholder action or approval;

6.1.3

it has the power and authority to execute and deliver this Agreement and to perform its obligations hereunder;

6.1.4

the execution, delivery and performance by such Party of this Agreement and its compliance with the terms and provisions hereof and thereof does not and will not conflict with or result in a breach of any of the terms and provisions of or constitute a default under (i) a loan agreement, guaranty, financing agreement, agreement affecting a product or other agreement or instrument binding or affecting it or its property, (ii) the provisions of its charter or operative documents or bylaws, or (iii) any order, writ, injunction or decree of any court or governmental authority entered against it or by which any of its property is bound;

6.1.5

it shall at all times comply with all applicable laws and regulations relating to its activities under this Agreement;

6.1.6

there is no action, demand, suit, proceeding, arbitration, grievance, citation, summons, subpoena, inquiry or investigation of any nature, civil, criminal, regulatory or otherwise, in law or in equity, pending or, to such Party’s Knowledge, threatened against such Party with respect to this Agreement; and

6.2

Additional Representations and Warranties by Aurinia

In addition to the representations and warranties made by Aurinia in Section 6.1 above, Aurinia hereby represents, warrants, to CPC that, to Aurinia’ Knowledge and as of the Effective Date:

6.2.1

Aurinia has disclosed to CPC in good faith, all material information and documentation available to Aurinia concerning its condition, financial and otherwise, its management, its business, and its prospects relevant to the subject matter of this Agreement, including the prospects for the NICAMs;

6.2.2

except for the Subject Assets, there are no rights or assets owned or Controlled by Aurinia without any obligation to make any payment to any Third Party, including any agreements, bulk or finished drug product or regulatory documents or regulatory filings or regulatory approvals, owned or Controlled by Aurinia without any obligation to make any payment to any Third Party that would be breached, appropriated or infringed by the making, using or selling of Product in the Territory.

6.3

Sole Remedy

CPC’s sole remedy and Aurinia’s sole liability for any breach of the warranties made in Section 6.2 shall be that:

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6.3.1

in respect of the warranty made in Section 6.4.1, Aurinia shall promptly make commercially reasonable efforts to secure the release or discharge of such Encumbrance at Aurinia’s expense, provided that the warranty in Section 6.4.2 has not been breached; and

6.3.2

in respect of the warranty made in Section 6.2.2, Aurinia shall convey Aurinia’s interest in such right or asset to CPC.

6.4

Additional Representations and Warranties by CPC

In addition to the representations and warranties made by CPC in Section 6.1 above, CPC hereby represents, warrants, to Aurinia that as of the Effective Date:

6.4.1

to CPC’s Knowledge, Aurinia owns the Subject Assets free and clear of all Encumbrances, other than Permitted Encumbrances;

6.4.2

to CPC’s Knowledge, the only Liabilities respecting the Subject Assets and the NICAM Program as of the Effective Date are the Assumed Liabilities and the Excluded Liabilities;

6.4.3

Robert Foster is the sole legal and beneficial shareholder of CPI and owns all of the outstanding shares of CPI and CPI is the sole legal and beneficial shareholder of CPC and owns all of the outstanding shares of CPC; and

6.4.4

CPC has disclosed to Aurinia in good faith, all material information and documentation available to CPC concerning its condition, financial and otherwise, its management, its business, and its prospects relevant to the subject matter of this Agreement, including the prospects for the NICAMs.

6.5

CPC Acknowledgements

CPC expressly acknowledges that:

6.5.1

Third Parties may possess patent rights that may be infringed by the development and commercialization of Product by CPC and that Aurinia makes no representation or warranty that the assignments and licenses granted hereunder will be sufficient for the development and commercialization of Product by CPC.

6.5.2

Aurinia has made no representations to CPC regarding feasibility of development and/or commercialization of Product.

6.5.3

Aurinia has made no representations to CPC that Third Parties previously contracted for service with Aurinia will agree to contract for service with CPC.

6.5.4

CPC and Robert Foster has greater knowledge of the NICAMs Program than Aurinia without the knowledge of Robert Foster, and that the allocation of risk and limits of liability set out in this Agreement reflects the potential compensation to be paid by CPC to Aurinia under this Agreement and that Aurinia would not enter into this Agreement without the allocations of risk and limitations on its liability set out in this Agreement.

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6.6

Anti-Sandbagging

In no event shall Aurinia be liable for any Losses resulting from a breach of a representations, warranty or covenant if CPC (or any director, officer or employee of CPC, including for this purpose Robert Foster had knowledge at any time on or prior to the Effective Date of the facts, events or conditions constituting or resulting in such breach of representation, warranty or covenant.

6.7

NO OTHER WARRANTY

EXCEPT AS EXPRESSLY SET FORTH IN THIS Article 6, THE SUBJECT ASSETS ARE BEING ACQUIRED ON AN “AS IS, WHERE IS” BASIS AND AURINIA MAKES NO REPRESENTATION OR WARRANTY OF ANY KIND, EITHER EXPRESS OR IMPLIED, TO CPC, INCLUDING, WITHOUT LIMITATION, ANY EXPRESS OR IMPLIED WARRANTY WITH RESPECT TO THE PRODUCT OR THE SUBJECT ASSETS. IN ADDITION TO BUT NOT IN LIMITATION OF THE FOREGOING, AURINIA SPECIFICALLY DISCLAIMS (I) ANY EXPRESS OR IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO THE PRODUCT, (II) ANY EXPRESS OR IMPLIED WARRANTY REGARDING THE TITLE, VALIDITY OR ENFORCEABILITY OF ANY INTELLECTUAL PROPERTY RIGHT, AND (III) ANY EXPRESS OR IMPLIED WARRANTY THAT THE DEVELOPMENT, MANUFACTURE, USE, DISTRIBUTION, MARKETING, PROMOTION OR SALE OF THE PRODUCT BY OR ON BEHALF OF CPC WILL NOT INFRINGE ANY PATENT OR OTHER INTELLECTUAL PROPERTY RIGHT OF ANY THIRD PARTY.

6.8

LIMITATION ON AURINIA’S LIABILITY

AURINIA’S TOTAL LIABILITY, WHETHER UNDER THE EXPRESS OR IMPLIED TERMS OF THIS AGREEMENT, IN TORT (INCLUDING NEGLIGENCE) OR AT COMMON LAW, FOR ANY LOSS OR DAMAGE OF ANY KIND WHATSOEVER SUFFERED BY CPC OR ANY CPC INDEMNIFIED PARTY, INCLUDING WITHOUT LIMITATION ANY DAMAGE THAT MAY ARISE OR DOES ARISE FROM ANY BREACH OF THIS AGREEMENT OR ANY MISREPRESENTATION OR WARRANTY PROVIDED UNDER THIS AGREEMENT BY AURINIA IS LIMITED TO ONE HUNDRED PERCENT (100%) OF THE PAYMENTS PREVIOUSLY RECEIVED BY AURINIA UNDER THIS AGREEMENT. IN ADDITION, IN NO EVENT WILL AURINIA BE LIABLE TO CPC OR ANY CPC INDEMNIFIED PARTY FOR ANY INDIRECT, SPECIAL, EXEMPLARY, PUNITIVE, INCIDENTAL OR CONSEQUENTIAL DAMAGES, INCLUDING BUSINESS INTERRUPTION, LOST PROFITS, LOSS OF USE, DAMAGE TO GOODWILL, LOSS OF BUSINESS OR ENHANCED DAMAGES.

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Article 7 Confidentiality

7.1

Non-Disclosure and Use Restrictions

Except to the extent expressly authorized by this Agreement or otherwise agreed in writing, the Parties agree that, for the term of this Agreement and for five (5) years thereafter, each Party (the “Receiving Party”), receiving any Confidential Information of the other Party (the “Disclosing Party”) hereunder shall keep such Confidential Information confidential and shall not publish or otherwise disclose or use such Confidential Information for any purpose other than as provided for in this Agreement except for Confidential Information that the Receiving Party can establish:

7.1.1

was already known by the Receiving Party (other than under an obligation of confidentiality), at the time of disclosure by the Disclosing Party and such Receiving Party has documentary evidence to that effect;

7.1.2

was generally available to the public or otherwise part of the public domain at the time of its disclosure to the Receiving Party;

7.1.3

became generally available to the public or otherwise part of the public domain after its disclosure or development, as the case may be, and other than through any act or omission of a Party in breach of this confidentiality obligation;

7.1.4

was disclosed to that Party, other than under an obligation of confidentiality, by a Third Party who had no obligation to the Disclosing Party not to disclose such information to others; or

7.1.5

was independently discovered or developed by or on behalf of the Receiving Party without the use of the Confidential Information belonging to the other Party and the Receiving Party has documentary evidence to that effect.

7.2

Public Filings

Either Party may disclose the terms of this Agreement to the extent required, in the reasonable opinion of such Party’s legal counsel, to comply with applicable laws. Notwithstanding the foregoing, before disclosing this Agreement or any of the terms hereof pursuant to this Section 7.2, the Parties will consult with one another on the terms of this Agreement to be redacted in making any such disclosure. If a Party discloses this Agreement or any of the terms hereof in accordance with this Section 7.2, such Party agrees, at its own expense, to seek confidential treatment of portions of this Agreement or such terms, as may be reasonably requested by the other Party.

7.3

Public Statements

So long as this Agreement is in effect, neither of the Parties hereto shall issue or cause the dissemination of any press release or other announcement with respect to this Agreement or the transactions contemplated hereby without consulting with and obtaining the consent of the other Party which consent shall not be unreasonably withheld; provided, however, that such consent shall not be required where such release or announcement is required by Applicable Law or legal process.

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7.4

Consequence of Transfer of the Subject Assets

After completion of the transfer of the Subject Assets referred to in Section 2.4, the Subject Assets are deemed to be the Confidential Information of CPC.

Article 8 Indemnification, Release and Insurance

8.1

General Indemnification By Aurinia

Except as set out in this Agreement, Aurinia shall indemnify and hold harmless CPC and its Indemnified Parties (together, the “CPC Indemnified Parties”)from, against and in respect of any and all Losses incurred or suffered by the CPC Indemnified Parties or any of them as a result of, arising out of or directly or indirectly relating to:

8.1.1

any breach or violation of any covenant or agreement of Aurinia in or pursuant to this Agreement; or

8.1.2

the Excluded Liabilities;

except, in each case, to the extent such Loss is one for which CPC is indemnifying the Aurinia Indemnified Parties pursuant to Section 8.2.

8.2

General Indemnification By CPC

CPC shall indemnify and hold harmless Aurinia and its Indemnified Parties (together, the “Aurinia Indemnified Parties”), from, against and in respect of any and all Losses incurred or suffered by the Aurinia Indemnified Parties or any of them as a result of, arising out of or directly or indirectly relating to:

8.2.1

any breach of, or inaccuracy in, any representation or warranty made by CPC in this Agreement, or any breach or violation of any covenant or agreement of CPC in or pursuant to this Agreement;

8.2.2

the gross negligence, intentional misconduct or violation of Applicable Law by or of the CPC Indemnified Parties or any of them;

8.2.3

the Assumed Liabilities, including products liability claims or actions incurred or suffered by the Aurinia Indemnified Parties or any of them directly or indirectly relating to the development, manufacture or commercialization of the Product in the Territory, whether before or after the Effective Date;

8.2.4

any violation of Applicable Law by the CPC Indemnified Parties in the performance of CPC’s obligations under this Agreement, including, with regard to CPC’s obligations pertaining to adverse event reporting and recalls of the Product; or

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8.2.5

any actual or alleged infringement of any trademarks, patent rights or other intellectual property rights, or misappropriation of confidential information or trade secrets, of any Third Party existing or having a priority date prior to the Effective Date in connection with the development, manufacture or commercialization of the Product in the Territory;

except, in each case, to the extent such Loss is one for which Aurinia is indemnifying the CPC Indemnified Parties pursuant to Section 8.1.

8.3

Procedure for Indemnification

8.3.1

Each Indemnified Party shall give prompt written notification to the person from whom indemnification is sought (the “Indemnifying Party”) of the commencement of any action, suit or proceeding relating to a Third Party claim for which indemnification may be sought or, if earlier, upon the assertion of any such claim by a Third Party (it being understood and agreed, however, that the failure by an Indemnified Party to give notice of a Third Party claim as provided in this Section 8.3 shall not relieve the Indemnifying Party of its indemnification obligation under this Agreement except and only to the extent that such Indemnifying Party is actually prejudiced as a result of such failure to give notice).

8.3.2

Within 30 days after delivery of such notification, the Indemnifying Party may, upon written notice thereof to the Indemnified Party, assume control of the defense of such action, suit, proceeding or claim with counsel reasonably satisfactory to the Indemnified Party. If the Indemnifying Party does not assume control of such defense, the Indemnified Party shall control such defense.

8.3.3

The Party not controlling such defense may participate therein.

8.3.4

The Party controlling such defense shall keep the other Party advised of the status of such action, suit, proceeding or claim and the defense thereof and shall consider in good faith recommendations made by the other Party with respect thereto.

8.3.5

The Indemnified Party shall not agree to any settlement of such action, suit, proceeding or claim without the prior written consent of the Indemnifying Party, which shall not be unreasonably withheld. The Indemnifying Party shall not agree to any settlement of such action, suit, proceeding or claim or consent to any judgment in respect thereof that does not include a complete and unconditional release of the Indemnified Party from all liability with respect thereto or that imposes any liability or obligation on the Indemnified Party without the prior written consent of the Indemnified Party.

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8.4

Release

For valuable consideration, the receipt and adequacy of which are hereby acknowledged, CPC, on behalf of itself and on behalf of each of the CPC Indemnified Parties, does hereby release and forever discharge Aurinia and the Aurinia Indemnified Parties from any and all Losses which the CPC Indemnified Parties now or may hereafter have against the Aurinia Indemnified Parties, or any of them, by reason of any matter, cause or thing whatsoever that is based upon, arises out of, or relates to the use by Aurinia and the Aurinia Indemnified Parties of the Subject Assets except any Losses under or in respect of this Agreement.

8.5

Insurance

From the Effective Date and until at least five years after the Effective Date:

8.5.1

CPC shall procure and maintain insurance, including product liability insurance, adequate to cover its obligations hereunder and which are consistent with normal business practices of prudent corporations similarly situated at all times during which the Product is being clinically tested with human subjects or commercially distributed or sold.

8.5.2

CPC shall provide Aurinia with written evidence of such insurance upon request. CPC shall provide Aurinia with written notice at least thirty (30) days prior to the cancellation, non-renewal or material change in such insurance.

The Parties acknowledge and agree that such insurance shall not be construed to create a limit of CPC’s liability with respect to its indemnification obligations under this Article 8.

Article 9 Miscellaneous

9.1

Amendment

No amendment, modification or supplement of any provision of this Agreement shall be valid or effective unless made in writing and signed by a duly authorized officer of each Party.

9.2

Assignment

CPC may assign this Agreement and the Subject Assets only with the prior written approval of Aurinia, except that CPC may assign same without the approval of Aurinia as part of a Liquidity Event upon receipt by Aurinia of the milestone payment payable upon the occurrence of such Liquidity Event. After CPC has paid to Aurinia the milestone payment payable upon the occurrence of a Liquidity Event, CPC may assign this Agreement to an Affiliate or to a successor in interest or transferee of all or substantially all of CPC’s business with the prior written approval of Aurinia (which consent shall not be unreasonably withheld). This Agreement shall be binding upon the successors and permitted assigns of the Parties and the name of a Party appearing herein shall be deemed to include the names of such Party’s successors and permitted assigns to the extent necessary to carry out the intent of this Agreement. CPC shall not assign any of the Patent Rights, Assumed Contracts or any material part of the Product Related Assets or the Regulatory Assets unless the assignee has first agreed with Aurinia to be bound by the terms of this Agreement as if such assignee were CPC hereunder.

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9.3

Counterparts

This Agreement may be executed in any number of counterparts, each of which need not contain the signature of more than one Party but all such counterparts taken together shall constitute one and the same agreement.

9.4

Descriptive Headings

The descriptive headings of this Agreement are for convenience only, and shall be of no force or effect in construing or interpreting any of the provisions of this Agreement.

9.5

Entire Agreement of the Parties

This Agreement constitutes and contains the complete, final and exclusive understanding and agreement of the Parties as to the subject matter hereof and cancels and supersedes any and all prior negotiations, correspondence, understandings and agreements, whether oral or written, among the Parties respecting the subject matter hereof.

9.6

Expenses

Except as expressly set out in this Agreement, each Party will be responsible paying for its own expenses incurred in connection with this Agreement and its negotiation.

9.7

Further Actions

Each Party agrees to execute, acknowledge and deliver such further instruments, and to do all such other acts, as may be necessary or appropriate in order to carry out the purposes and intent of this Agreement.

9.8

Governing Law; Dispute Resolution

This Agreement shall be governed by and interpreted in accordance with the substantive laws of the Province of British Columbia, without regard to conflict of law principles thereof. The Parties recognize that a bona fide dispute as to certain matters may from time to time arise during the term of this Agreement. In the event of the occurrence of such a dispute either Party may, by written notice to the other Party, have such dispute referred to their respective officers (designated below) or their successors or designees for attempted resolution by good faith negotiations within ten (10) calendar days after such notice is received. Said designated officers are as follows:

For Aurinia:	President & CEO

For CPC:	President & CEO

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In the event the designated officers are not able to resolve such dispute through good faith negotiations within such ten (10) calendar day period, either Party may refer the matter to and finally resolved by arbitration under the Rules of the International Chamber of Commerce (ICC). The Arbitration shall be in English, using three (3) independent arbitrators. Each Party shall select one independent arbitrator within forty-five (45) days of the arbitration request, and the two (2) arbitrators selected by the Parties shall select the third independent arbitrator within ninety (90) days after the arbitration request. The place of arbitration shall be Vancouver, British Columbia, Canada. Notwithstanding the foregoing, each Party may bring an action for injunctive relief arising out of any claim or disputes arising out of or in connection with all actions and proceedings relating to infringement of patents and non-disclosure, non-use and maintenance of Confidential Information in any court of competent jurisdiction.

9.9

Independent Contractors

Both Parties are independent contractors under this Agreement. Nothing herein contained shall be deemed to create an employment, agency, joint venture or partnership relationship between the Parties hereto or any of their agents or employees, or any other legal arrangement that would impose liability upon one Party for the act or failure to act of the other Party. Neither Party shall have any express or implied power to enter into any contracts or commitments or to incur any liabilities in the name of, or on behalf of, the other Party, or to bind the other Party in any respect whatsoever.

9.10

No Trademark Rights

No right express or implied is granted by this Agreement for CPC to use in any manner the name “Aurinia”“ or any other tradename or trademark of Aurinia in connection with the performance of this Agreement. No right express or implied is granted by this Agreement for Aurinia to use in any manner the name “CPC” or any other tradename or trademark of CPC in connection with the performance of this Agreement.

9.11

Notices

All notices and other communications hereunder (including, without limitation, any notice of breach, termination, change of address, etc.) shall be in writing and shall be deemed given if delivered personally or by facsimile transmission (receipt verified), mailed by registered or certified mail (return receipt requested), postage prepaid, or sent by nationally recognized express courier service, to the Parties at the following addresses (or at such other address for a Party as shall be specified by like notice, provided, however, that notices of a change of address shall be effective only upon receipt thereof):

All correspondence to Aurinia shall be addressed as follows:

Aurinia Pharmaceuticals Inc.

#1203 - 4464 Markham Street

Victoria, BC V8Z 7X8 Canada

Attention: President

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With a copy to:

Farris, Vaughan, Wills & Murphy LLP

25^th Floor, 700 West Georgia St

Vancouver, B.C. V7Y 1B3

F: (604) 661-9349

Attention: James P. Hatton, Q.C.

All correspondence to CPC shall be addressed as follows:

Ciclofilin Pharmaceuticals Corp.

34 Westbrook Drive

Edmonton, Alberta T6J 2C9 Canada

Attn: President

All correspondence to CPI shall be addressed as follows:

Ciclofilin Pharmaceuticals Inc.

3525 Del Mar Heights Road Suite 427

San Diego, CA, USA 92130

Attention: President

9.12

Representation by Legal Counsel

Each Party hereto represents that it has been represented by legal counsel in connection with this Agreement and acknowledges that it has participated in the drafting hereof. In interpreting and applying the terms and provisions of this Agreement, the Parties agree that no presumption shall exist or be implied against the Party which drafted such terms and provisions.

9.13

Severability

If any clause or portion thereof in this Agreement is for any reason held to be invalid, illegal or unenforceable, the same shall not affect any other portion of this Agreement, as it is the intent of the Parties that this Agreement shall be construed in such fashion as to maintain its existence, validity and enforceability to the greatest extent possible. In any such event, this Agreement shall be construed as if such clause of portion thereof had never been contained in this Agreement, and there shall be deemed substituted therefor such provision as will most nearly carry out the intent of the Parties as expressed in this Agreement to the fullest extent permitted by Applicable Law.

9.14

Waiver

No provision of the Agreement shall be waived by any act, omission or knowledge of a Party or its agents or employees except by an instrument in writing expressly waiving such provision and signed by a duly authorized officer of the waiving Party. The waiver by either of the Parties of any breach of any provision hereof by the other Party shall not be construed to be a waiver of any succeeding breach of such provision or a waiver of the provision itself.

- 29 -

IN WITNESS WHEREOF, duly authorized representatives of the Parties have duly executed this Agreement to be effective as of the Effective Date.

CICLOFILIN PHARMACEUTICALS CORP.		AURINIA PHARMACEUTICALS INC.

By:	/s/ Robert T. Foster	By:	/s/ Michael R. Martin
Name:	Robert T. Foster	Name:	Michael R. Martin
Title:	CEO	Title:	Chief Operating Officer

CICLOFILIN PHARMACEUTICALS INC.

By:	/s/ Robert T. Foster
Name:	Robert T. Foster
Title:	CEO

- 30 -

Exhibit 1.1.5: Assumed Contracts

agreements for the storage of NICAMS research materials

NRC-IRAP Isotechnika Pharma Inc. Contribution Agreement (Project 814534) of September 16, 2013

NIAID Non-Clinical Evaluation Agreement between National Institute of Allergy and Infectious Diseases, an institute of the National Institutes of Health, and Isotechnika Pharma Inc. of August 1, 2012

Exhibit 1.1.40(a): Know How

IRAP PROJECT # 725948 - Evaluation of Non-immunosuppressive Cyclosporin Analogues for Treatment of Chronic Neurological Disorders

IRAP PROJECT # 809613 - Preclinical Development of NICAM 440-02 as an Anti-viral Agent for the Treatment of Hepatitis C Virus

IRAP PROJECT # 796811 - The Identification and Evaluation of Proprietary NICAMs as Inhibitors of Viral Replication in Infectious Disease

IRAP PROJECT # 788856 - NICAM Cyclosporine Analogues for Treatment of Ischemia Reperfusion Disorders

Exhibit 1.1.38: Patents and Patents Pending

Docket
Number

Country

Status

Client\Division

Application Number

Application
Date

Patent
Number

Grant
Date

Title

- 2 -

Docket
Number

Country

Status

Client\Division

Application Number

Application
Date

Patent
Number

Grant
Date

Title

Exhibit 3.2: Excluded Liabilities

(i) Fees due and owing as of the Effective Date under the Assumed Contracts; and (ii) accounts for legal or patent agent fees associated with the Patent Rights portfolio for work performed on or before the Effective Date; the cumulative total of which shall not exceed $140,000

Exhibit 5.11: Guarantee

Guarantee

THIS GUARANTEE (the “Guarantee”) is made and entered into effective as of February 14, 2014 (the “Execution Date”), effective as of the Effective Date, by and between Aurinia Pharmaceuticals Inc., a Canadian corporation with an office at #1203 - 4464 Markham Street, Victoria, BC V8Z 7X8 Canada (“Aurinia”) and Ciclofilin Pharmaceuticals Inc., a California corporation with an address at 3525 Del Mar Heights Road, Suite 427, San Diego, CA, USA 92130 (“CPI”). Each of CPI and Aurinia is sometimes referred to individually herein as a “Party” and collectively as the “Parties”.

Recitals

WHEREAS, CPI, Ciclofilin Pharmaceuticals Corp., an Alberta corporation with an address at 34 Westbrook Drive, Edmonton, Alberta T6J 2C9 Canada (“CPC”) and Aurinia have entered into as of the Execution Date a separate NICAMs Purchase and Sale Agreement (the “Assignment Agreement”); and

WHEREAS, CPI is the sole legal and beneficial shareholder of CPC and owns all of the outstanding shares of CPC;

WHEREAS, under the terms of the Assignment Agreement, CPI has agreed to cause CPC to perform certain payment obligations thereunder and to execute and deliver a guarantee in favor of Aurinia;

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Parties agree as follows:

Article 1 Definitions

The terms in this Guarantee with initial letters capitalized, whether used in the singular or plural, shall have the meanings set forth in this Article 1 or elsewhere in this Guarantee, or if not otherwise defined in this Guarantee, shall have the meanings set forth in the Assignment Agreement.

1.1 “Guaranteed Obligations”

For the purposes of this Guarantee, the term Guaranteed Obligations shall mean any and all payment obligations due by CPC to Aurinia under Article 4 and Article 5 of the Assignment Agreement as amended or replaced from time to time, whether direct or indirect, present or future, absolute or contingent, express or implied, and whether performance of such payment obligations of CPC under the Assignment Agreement may be or hereafter become barred by any statute of limitations or law of prescription or may be or hereafter become otherwise irrevocable or unenforceable.

Article 2 Guarantee

2.1 Guarantee

CPI hereby unconditionally, absolutely and irrevocably guarantees, and covenants to Aurinia the full and punctual performance, observance, satisfaction, and payment when due, of any and all of the Guaranteed Obligations. If any default shall be made in the due performance, observance, satisfaction and payment of any of the Guaranteed Obligations, CPI covenants and agrees with Aurinia to perform, observe, satisfy and pay to Aurinia forthwith any and all of the Guaranteed Obligations in respect of which such default will have occurred and all damages that may arise in consequence thereof and the reasonable costs and expenses of collection or of otherwise enforcing any of the rights of Aurinia under this Guarantee (including reasonable legal fees and disbursements).

2.2 Nature of Guarantee

CPI covenants and agrees with Aurinia that:

(a)

the obligations and liabilities of CPI hereunder shall be absolute, unconditional and irrevocable, shall not be subject to any counterclaim, set off, deduction or defense based upon any claim CPI may have against CPC, Aurinia or any other person, whether in connection with this Guarantee or any other transaction, and until there has been full and punctual performance, observance, satisfaction and payment of all of the Guaranteed Obligations, the rights of Aurinia and the obligations of CPI under this Guarantee shall remain in full force and effect without regard to, and shall not be released, discharged or in any way affected or impaired by, any occurrence, matter, circumstance or condition whatsoever (whether or not CPI has any knowledge or notice thereof or has consented thereto), and without limiting the generality of the foregoing, shall remain in full force and effect without regard to, and shall not be released, discharged or in any way affected or impaired, terminated or prejudiced by:

(i)

the dissolution, winding-up or other cessation of existence of CPC or CPI or the institution of any proceeding relating thereto, any continuance or reorganization or any change in the business, capital structure, directorate, management, members, name, objects, organization, partners, powers or shareholders of CPC or CPI, the amalgamation of CPC or CPI with another corporation, the sale or disposal of or appointment of a custodian, liquidator, receiver or trustee in respect of the assets or undertaking, in whole or in part, of CPC or CPI, any distribution of the assets, in whole or in part, of CPC or CPI upon any arrangement, bankruptcy, composition, insolvency, liquidation, readjustment, receivership, reorganization or other similar proceeding or occurrence relating to CPC or CPI, any assignment by CPC or CPI for the benefit of creditors, any other marshalling of any of the assets of CPC or CPI or any other act or event which would constitute a novation of any obligation or liability of CPC in respect of any of the Guaranteed Obligations whether by substitution of the obligations or liabilities of any other person in place of those of CPC or otherwise;

(ii)

any obligation or liability of CPC, whether in respect of any of the Guaranteed Obligations or otherwise, of CPI, whether under this Guarantee or otherwise, or of any other person who is or may become liable in respect of any of the Guaranteed Obligations, or any agreement or instrument evidencing any such obligation or liability, heretofore, now or hereafter being invalid, illegal or unenforceable;

(iii)

any issue or levy by any administrative, governmental, judicial or other authority or arbitrator of any award, execution, injunction, judgment, order, warrant of attachment, writ or similar process against CPC, whether in respect of any of the Guaranteed Obligations or otherwise, or against CPI, whether in respect of any of its obligations or liabilities under this Guarantee or otherwise, or against any other person who is or may become liable in respect of any of the Guaranteed Obligations;

(iv)

any activity, conduct, matter or thing authorized by CPI under Section 2.3 below;

(v)

any extension of time for compliance with or payment of any of the Guaranteed Obligations;

(vi)

any waiver, consent, extension, granting of time, forbearance, indulgence, renewal or other action or inaction under or in respect of the Assignment Agreement or any of the Guaranteed Obligations, or any exercise or non-exercise of any right, remedy or power in respect thereof;

(vii)

any informality or irregularity in, omission from, invalidity of, unenforceability of or other defect in the Assignment Agreement or any of the Guaranteed Obligations or any other agreement or instrument, or any misrepresentation by CPC under the Assignment Agreement or any other agreement or instrument;

(viii)

any lack or limitation of capacity, status, power or authority, or any incapacity or disability, of CPC or CPI or Aurinia or any of their respective directors, officers, employees, trustees, partners or agents acting or purporting to act on their behalf, and any defect or any failure to comply with a formal legal requirement in the execution or delivery of the Assignment Agreement or any document;

(ix)

any action or other proceeding brought by any beneficiaries or creditors of, or by, CPC or any other person for any reason whatsoever, including without limitation any action or proceeding in any way attacking or involving any issue in respect of the Assignment Agreement, any of the Guaranteed Obligations, or any other agreement or instrument; or

(x)

any occurrence or non-occurrence of any other act or event which, by operation of law or equity or otherwise, would directly or indirectly now or hereafter result in the determination, discharge, extinction, limitation, merger, novation, reduction or release, pro tanto or otherwise, of CPI or of any of its obligations or liabilities hereunder or which would otherwise prejudice or impair any right of Aurinia hereunder;

(b)

the obligations and liabilities of CPI hereunder shall constitute obligations and liabilities of payment and not of collection and shall be absolute and independent of and not in consideration of or conditional or contingent upon any other obligation or liability of CPI, any obligation or liability of CPC, whether in respect of any of the Guaranteed Obligations or otherwise, or any obligation or liability of any other person who is or may become liable in respect of any of the Guaranteed Obligations, or any prior notice or protest to, demand upon or action, suit or other proceeding against CPC or any such other person, and Aurinia may bring or prosecute a separate action, suit or other proceeding against CPI whether such action, suit or other proceeding is brought or prosecuted against CPC or any such other person or whether CPC or any such other person (including Aurinia) is joined in such action, suit or other proceeding; and

(c)

any part performance or part payment by CPC of any of the Guaranteed Obligations or other circumstance which operates to toll any statute of limitations or law of prescription as to CPC shall operate to toll such statute of limitations or law of prescription as to CPI.

2.3 Authorizations

CPI authorizes Aurinia, at the sole discretion of Aurinia, without notice to or demand upon CPI, and without in any manner, releasing, discharging, or in any way affecting any obligation or liability of CPI hereunder or prejudicing or impairing any right of Aurinia hereunder, from time to time to:

(a)

accelerate, adjust, compromise, extend, modify, renew or otherwise change the time, form or manner for performance of or any term in respect of any of the Guaranteed Obligations;

(b)

compromise, release or settle with or substitute or delay or waive the exercise of any right or remedy against CPC, CPI or any other person who is or may become liable in respect of any of the Guaranteed Obligations;

(c)

grant any other indulgence to CPC, CPI or any other person who is or may become liable in respect of any of the Guaranteed Obligations and compound with all or any of such persons as Aurinia shall see fit; and

(d)

otherwise deal with CPC, CPI or any other person who is or may become liable in respect of any of the Guaranteed Obligations, as Aurinia may deem appropriate or desirable.

2.4 Waivers

CPI unconditionally waives:

(a)

any right to receive from Aurinia any communication whatsoever with respect to any of the Guaranteed Obligations or any obligation or liability of CPI, whether under this Guarantee or otherwise, or of any other person who is or may become liable in respect of any of the Guaranteed Obligations, including, without limitation:

(i)

any notice of the creation, existence or incurring, now or hereafter, of any Guaranteed Obligations, the acceptance by Aurinia of or the intention of Aurinia to act on or in reliance on any obligation or liability of CPI, whether under this Guarantee or otherwise, or of any other person who is or may become liable in respect of any of the Guaranteed Obligations, or any default by or non-performance or non-observance of any obligation of CPC, CPI or any such other person; or

(ii)

any communication of any information known by Aurinia relating to the financial condition of CPC or to any other circumstance bearing upon the risk of non-performance of any of the Guaranteed Obligations.

(b)

any right to require Aurinia to:

(i)

proceed against CPC, CPI or any other person who is or may become liable in respect of any of the Guaranteed Obligations;

(ii)

first apply any property or assets of CPC or any other person who is or may become liable in respect of any of the Guaranteed Obligations to the discharge of the Guaranteed Obligations or marshal in favor of CPI; or

(iii)

pursue or exercise or exhaust any other right or remedy of Aurinia whatsoever before proceeding against and enforcing its rights and remedies against CPI under this Guarantee;

(c)

so long as any of the Guaranteed Obligations shall remain unperformed, unsatisfied or unpaid, including such part thereof, if any, as shall exceed the liability of CPI hereunder, any right to claim repayment against CPC or to exercise any right of subrogation to or any right to enforce any right or remedy which Aurinia now has or hereafter may have against or in respect of CPC, any other person who is or may become liable in respect of any of the Guaranteed Obligations;

(d)

any defense arising out of or in connection with:

(i)

any absence, impairment or loss of any right of contribution, reimbursement or subrogation or any other right or remedy of CPI against or in respect of CPC, any other person who is or may become liable in respect of any of the Guaranteed Obligations;

(ii)

any disability, incapacity, or defense available to CPC (other than a defense available to CPC under the terms of the Assignment Agreement) or any other person who is or may become liable in respect of any of the Guaranteed Obligations or any cessation from any cause whatsoever of any obligation or liability of CPC or any such other person in respect of any of the Guaranteed Obligations; or

(iii)

any other circumstance which might otherwise constitute a defense to any action, suit or other proceeding against CPI, whether on this Guarantee or otherwise; and

(e)

any benefit of any statute of limitations or law of prescription affecting any obligation or liability of CPI, whether under this Guarantee or otherwise, or the enforcement thereof to the fullest extent permitted by law.

2.5 Bankruptcy, etc.

In the event of any distribution of the assets, in whole or in part, of CPC, CPI or any other person who is or may become liable in respect of any of the Guaranteed Obligations, upon any arrangement, bankruptcy, composition, execution sale, insolvency, liquidation, readjustment, receivership, reorganization or other similar proceeding or occurrence relating to any such person, any proceeding for the dissolution, liquidation, winding-up or other cessation of existence of any such person, voluntary or involuntary, whether or not involving bankruptcy or insolvency proceedings, any assignment by any such person for the benefit of creditors or any other marshalling of any of the assets of any such person:

(a)

no obligation or liability of CPI hereunder shall be determined or in any manner affected and no right of Aurinia hereunder shall in any manner be prejudiced or impaired by any omission by Aurinia to prove its claim or to prove its full claim and Aurinia may prove such claim as it sees fit and may refrain from proving any claim and may value as it sees fit or refrain from valuing any security held by Aurinia; and

(b)

so long as any of the Guaranteed Obligations shall remain unperformed or unpaid, including such part thereof, if any, as shall exceed the liability of CPI hereunder, Aurinia shall have the right to include in any claim made by them the amount of all sums paid by CPI, whether under this Guarantee or otherwise, and to prove and rank for and receive dividends in respect to such claim, any and all right to prove and rank for such sums paid by CPI and to receive the full amount of all dividends in respect thereof being hereby assigned and transferred by CPC.

2.6 Continuing Guarantee

The obligations of CPI under this Guarantee constitute a continuing guarantee and shall remain in full force and effect until all the Guaranteed Obligations have been Mly performed, observed, satisfied and paid. No recovery under this Guarantee, and no action or proceeding brought or instituted under this Guarantee, and no recovery in pursuance of such action or proceeding, shall be a bar or defense to any further action or proceeding under this Guarantee or to any ftirther recovery.

2.7 Security for Payments

CPI shall cooperate with Aurinia to secure Aurinia’s right to the payments referred to in Sections 4.1, 4.2, 4.5 and 4.6 of the Assignment Agreement, including the granting of a pledge and hypothecation of CPI’s interest in CPC, the granting of a security interest in any dividends, distributions or other payments to be paid or made to CPI from CPC, the granting of a security interest in the proceeds of any Liquidity Event and assigning to Aurinia the right to receive the payments calculated on the proceeds of any Liquidity Event directly from the party making such payment. The amount of such security is not to exceed the cumulative total of expected payments to Aurinia of $7.9 million.

Article 3 General Provisions

3.1 Time of the EssenceTime is of the essence of this Guarantee.

3.2 Incorporation of TermsThe terms of Article 9, Miscellaneous, of the Assignment Agreement are hereby incorporated into this Guarantee and constitute a part hereof.

IN WITNESS WHEREOF, CPI, intending to be bound hereby, has executed this Guarantee by its duly authorized representatives as of the Execution Date.

Ciclofilin Pharmaceuticals Inc.

By:

/s/ ROBERT T. FOSTER

Name:

ROBERT T. FOSTER

Title:

CEO

Exhibit 10.9

[*] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.

AMENDMENT NO. 1 TO NICAMS PURCHASE AND SALE AGREEMENT

May 26, 2016

THIS AMENDMENT NO. 1 (this “Amendment”) to the NCIAMs Purchase and Sale Agreement, is made and entered into as of May 26, 2016, by and between Aurinia Pharmaceuticals Inc., a Canadian corporation (“Aurinia”), Ciclofilin Pharmaceuticals Corp., an Alberta corporation (“CPC”), and Ciclofilin Pharmaceuticals, Inc., a Delaware corporation as successor in interest to Ciclofilin Pharmaceuticals Inc., a California corporation (“CPI”). Aurinia, CPI and CPC may each be referred to herein individually as a “Party” and collectively as the “Parties”.

WHEREAS , CPI is contemplating entering into an Agreement and Plan of Merger (the “Merger Agreement”) with ContraVir Pharmaceuticals, Inc., a Delaware corporation (“ContraVir”), Ciclofilin Acquisition Corp., a Delaware corporation (“Merger Sub”) and a wholly-owned subsidiary of ContraVir, and Robert Foster, Pharm.D., Ph.D., solely in his capacity as the representative of CPI’s stockholders;

WHEREAS, pursuant to the Merger Agreement, Merger Sub will be merged with and into CPI with CPI surviving as the surviving corporation (the “Merger”) on the terms of the Merger Agreement as provided to Aurinia on or before the date of this Agreement;

WHEREAS, in connection with the Merger and the transactions contemplated thereby, the Parties desire to amend that certain NCIAMs Purchase and Sale Agreement, dated February 14, 2014 (the “Purchase Agreement”) as set forth below;

WHEREAS , as of the date hereof, Aurinia, CPI and ContraVir are entering into a Consent and Acknowledgement Agreement, whereby, among other things, ContraVir agrees to make payments under the Purchase Agreement directly to Aurinia;

WHEREAS, capitalized terms not defined herein shall have the meanings ascribed to them in the Purchase Agreement; and

WHEREAS, the Purchase Agreement may be amended with the written consent of Aurinia, CPC and CPI.

NOW, THEREFORE, in consideration of the mutual execution hereof and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

1. AMENDMENTS TO PURCHASE AGREEMENT. The Purchase Agreement shall be amended as follows:

(a)

Section 4.1 is hereby amended and restated in its entirety to read as follows:

4.1

Near-Term Milestone Payments

4.1.1

CPC will pay the milestone payments set forth in the table below within thirty (30) days of the first achievement of each of the following events:

Event	Milestone Payment
Upon receipt of Phase I Positive Data from a Phase I trial, where “Phase I Positive Data” shall mean that the trial shall have demonstrated sufficient safety and tolerability in healthy subjects to support a Phase II clinical trial.	$	450,000
Upon dosing of first patient in a Phase III clinical trial, regardless of Indication	$		*
Total Milestones	$		*

2. CONSENT TO MERGER. Pursuant to Section 9.2 of the Purchase Agreement, Aurinia hereby consents to the Merger.

3. EFFECTIVENESS OF AMENDMENT. Notwithstanding anything to the contrary, this Amendment shall automatically be canceled and shall have no effect if the Merger is not completed prior to September 1, 2016.

4. OTHER AGREEMENTS.

(a) Delivery of Merger Agreement. CPI agrees to deliver an unredacted copy of the executed Merger Agreement within 10 days of the closing of the Merger.

(b) Liquidity Event. The Parties agree that the Merger qualifies as a Liquidity Event under the Purchase Agreement. No upfront payments or proceeds shall be due to Aurinia under Sections 4.6 or 9.2 of the Purchase Agreement arising from the payments from ContraVir to CPI under Section 1.4(b) of the Merger Agreement. The Liquidity Event milestones shall be paid if and when any CPI stockholders are paid pursuant to the Merger Agreement.

5. NO OTHER AMENDMENT. Except for the matters set forth in this Amendment, all other terms of the Purchase Agreement shall remain unchanged and in full force and effect.

6. GOVERNING LAW. This Amendment shall be governed by and interpreted in accordance with the substantive laws of the Province of British Columbia, without regard to conflict of law principles thereof.

7. COUNTERPARTS. This Amendment may be executed in one or more counterparts, each of which will be deemed an original but all of which together shall constitute one and the same instrument. Counterparts executed via facsimile or in electronic format (.pdf) shall be deemed to be original signatures hereunder.

[Remainder of page intentionally left blank.]

IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the date first written above.

	CICLOFILIN PHARMACEUTICALS CORP.

	By:	/s/ ROBERT T. FOSTER

	Name:	ROBERT T. FOSTER
	Title:	CEO

	CICLOFILIN PHARMACEUTICALS, INC.

	By:	/s/ ROBERT T. FOSTER

	Name:	ROBERT T. FOSTER
	Title:	CEO

	AURINIA PHARMACEUTICALS INC.

	By:	/s/ Charles A. Rowland

	Name:	Charles A. Rowland
	Title:	CEO

[Signature Page]

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

Hepion Pharmaceuticals, Inc.

Edison, New Jersey

We hereby consent to the incorporation by reference in the Prospectus constituting a part of this Registration Statement on Form S-1 (Amendment No. 1) of our report dated May 14, 2020, relating to the consolidated financial statements of Hepion Pharmaceuticals, Inc., which is incorporated by reference in that Prospectus. Our report on the consolidated financial statements contains an explanatory paragraph regarding the Company’s ability to continue as a going concern.

We also consent to the reference to us under the caption “Experts” in the Prospectus.

/s/ BDO USA, LLP

Woodbridge, New Jersey

November 12, 2020