Celcuity LLC (Form: S-1, Received: 08/23/2017 16:29:24)

As filed with the U.S. Securities and Exchange Commission on August 23, 2017.

Registration No. 333-

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

FORM S-1
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933

Celcuity LLC
(to be converted into CELCUITY INC.)
(Exact name of registrant as specified in its charter)

	Delaware			8071			45-3811132
	(State or other jurisdiction of incorporation or organization)			(Primary Standard Industrial Classification Code Number)			(I.R.S. Employer Identification Number)

16305 36th Avenue N., Suite 450
Minneapolis, MN 55446
(763) 392-0123
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Brian F. Sullivan
Chief Executive Officer
16305 36th Avenue N., Suite 450
Minneapolis, MN 55446
(763) 392-0767
(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Ryan C. Brauer
Eric O. Madson
Fredrikson & Byron, P.A.
200 South Sixth Street, Suite 4000
Minneapolis, Minnesota 55402
(612) 492-7000

W. Morgan Burns
Jonathan R. Zimmerman
Faegre Baker Daniels LLP
2200 Wells Fargo Center
90 South Seventh Street
Minneapolis, Minnesota 55402
(612) 766-7000

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

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, 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, 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 earlier 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 number of the earlier 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.

	Large accelerated filer ☐			Accelerated filer ☐
	Non-accelerated filer ☐			Smaller reporting company ☒
	(Do not check if a smaller reporting company)			Emerging growth company ☒

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 pursuant to Section 7(a)(2)(B) of the Securities Act. ☒

CALCULATION OF REGISTRATION FEE
Title of Each Class of Securities to be Registered	Proposed Maximum Aggregate Offering Price (1)			Amount of Registration Fee (2)
Common stock, $0.001 par value per share		$	15,000,000		$	1,739

(1)

Estimated solely for purposes of calculating the amount of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933. Includes the offering price of shares that the underwriter has the option to purchase to cover over-allotments, if any.

(2)

Calculated pursuant to Rule 457(o) based on an estimate of the proposed maximum aggregate offering price.

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, as amended (the “Securities Act”) or until the registration statement shall become effective on such date as the Commission acting pursuant to said Section 8(a), may determine.

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EXPLANATORY NOTE

Celcuity LLC, the registrant whose name appears on the cover page of this registration statement, is a Minnesota limited liability company. Celcuity LLC will convert into a Delaware corporation immediately prior to the effective time of the registration statement of which this prospectus is a part, and change its name from Celcuity LLC to Celcuity Inc. Shares of common stock of Celcuity Inc. are being offered by the prospectus that forms a part of this registration statement.

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

SUBJECT TO COMPLETION, DATED AUGUST 23, 2017

PRELIMINARY PROSPECTUS

Common Stock

This is the initial public offering of our common stock. We are offering shares of common stock. Prior to this offering, there has been no public market for our common stock. We expect the initial public offering price will be between $ and $ per share. We have applied to list our shares of common stock on The Nasdaq Capital Market under the symbol “CELC.”

We are an “emerging growth company” under applicable Securities and Exchange Commission rules and will be eligible for, and have decided to comply with, reduced public company disclosure requirements. See “Prospectus Summary — Implications of Being an Emerging Growth Company.”

Investing in our common stock involves a high degree of risk. See “Risk Factors” beginning on page 11 of this prospectus for a discussion of information that should be considered in connection with an investment in our securities.

Neither the Securities and Exchange Commission nor any state securities regulators have 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

Initial public offering price

Underwriting discounts and commissions (1)

Proceeds, before expenses, to us

(1)

In addition, we have agreed to reimburse the underwriter for certain expenses. See “Underwriting” for additional disclosure regarding underwriting discounts, commissions and estimated offering expenses.

We have granted the underwriter an option for a period of 30 days from the date of this prospectus to purchase up to an additional shares of common stock to cover over-allotments, if any.

Delivery of the shares of our common stock will be made on or about , 2017, subject to customary closing conditions.

Craig-Hallum Capital Group

Prospectus dated , 2017

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	Page
Prospectus Summary		1
Summary Financial Data		9
Risk Factors		11
Special Note Regarding Forward-Looking Statements		29
Use of Proceeds		31
Dividend Policy		32
Capitalization		33
Dilution		35
Selected Financial Data and Pro Forma Financial Data		38
Management’s Discussion and Analysis of Financial Condition and Results of Operations		40
Business		49
Management		78
Executive and Director Compensation		85
Certain Relationships and Related Party Transactions		91
Principal Stockholders		93
Description of Capital Stock		95
Shares Eligible for Future Sale		100
Material U.S. Federal Income Tax Consequences to Non-U.S. Holders		102
Underwriting		107
Legal Matters		112
Experts		112
Where You Can Find More Information		112
Index to Financial Statements		F-1

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ABOUT THIS PROSPECTUS

You should rely only on the information contained in this prospectus and any free writing prospectus prepared by or on behalf of us or to which we have referred you. Neither we nor the underwriter has authorized anyone to provide you with information that is different. We are offering to sell shares of our common stock, and seeking offers to buy shares of our common stock, only in jurisdictions where offers and sales are permitted. The information in this prospectus is complete and accurate only as of the date on the front cover of this prospectus, regardless of the time of delivery of this prospectus or any sale of shares of our common stock.

For investors outside the United States: neither we nor the underwriter have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. 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 shares of our common stock and the distribution of this prospectus outside the United States.

Except as otherwise indicated herein or as the context otherwise requires, references in this prospectus to “Celcuity,” “the company,” “we,” “us,” “our” and similar references refer to (1) prior to the completion of our conversion described under “Certain Relationships and Related Party Transactions—LLC Conversion,” Celcuity LLC, a Minnesota limited liability company, and (2) after giving effect to such conversion, Celcuity Inc., a Delaware corporation. We own various unregistered trademarks and servicemarks, including our corporate logo. Solely for convenience, the trademarks and trade names in this prospectus are referred to without the ® and ™ symbols, but such references should not be construed as any indicator that the owner of such trademarks and trade names will not assert, to the fullest extent under applicable law, their rights thereto. We do not intend the use or display of other companies’ trademarks and trade names to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

INDUSTRY AND MARKET DATA

In addition to the industry, market and competitive position data referenced in this prospectus from our own internal estimates and research, some market data and other statistical information included in this prospectus are based in part upon information obtained from third-party industry publications, research, surveys and studies, none of which we commissioned. Third-party industry publications, research, surveys and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information.

We are responsible for all of the disclosure in this prospectus and while we believe that each of the publications, research, surveys and studies included in this prospectus are prepared by reputable sources, neither we nor the underwriter have independently verified market and industry data from third-party sources. In addition, while we believe our internal company research and estimates are reliable, such research and estimates have not been verified by independent sources. Assumptions and estimates of our and our industry’s future performance are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in “Risk Factors.” These and other factors could cause our future performance to differ materially from our assumptions and estimates. See “Special Note Regarding Forward-Looking Statements.”

IMPLICATIONS OF BEING AN EMERGING GROWTH COMPANY

As a company with less than $1.0 billion in revenue during our last fiscal year, we qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act, or the JOBS Act, enacted in April 2012. An “emerging growth company” may take advantage of reduced reporting requirements that are otherwise applicable to public companies. These provisions include, but are not limited to:

•

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

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•

not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended, or the Sarbanes-Oxley Act;

•

reduced disclosure obligations regarding executive compensation in our periodic reports, proxy statements and registration statements; and

•

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

We may use these provisions until the last day of our fiscal year following the fifth anniversary of the closing of our initial public offering. However, if certain events occur prior to the end of such five-year period, including if we become a “large accelerated filer,” our annual gross revenue exceed $1.0 billion or we issue more than $1.0 billion of non-convertible debt in any three-year period, we will cease to be an emerging growth company prior to the end of such five-year period.

We have elected to take advantage of certain of the reduced disclosure obligations in the registration statement of which this prospectus is a part and may elect to take advantage of other reduced reporting requirements in future filings. As a result, the information that we provide to our stockholders may be different than you might receive from other public reporting companies in which you hold equity interests.

The JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. We have elected not to avail ourselves of this exemption and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.

iii

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Prospectus Summary

The following summary highlights information contained elsewhere in this prospectus and is qualified in its entirety by the more detailed information and financial statements included elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our common stock. Before you decide to invest in our common stock, you should read and carefully consider the following summary together with the entire prospectus, including our financial statements and the related notes thereto appearing elsewhere in this prospectus and the matters discussed in the sections in this prospectus entitled “Risk Factors,” “Selected Financial Data and Pro Forma Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Some of the statements in this prospectus constitute forward-looking statements that involve risks and uncertainties. See “Special Note Regarding Forward-Looking Statements.” Our actual results could differ materially from those anticipated in such forward-looking statements as a result of certain factors, including those discussed in the “Risk Factors” and other sections of this prospectus.

O ur B usiness

We believe our CELx platform provides two important improvements over the traditional molecular diagnostic tests used to guide a physician’s selection of targeted therapies for their cancer patients. First, molecular diagnostics can only provide a snapshot of the genetic mutations present in a patient’s tumor because they analyze dead cells. Using dead cells prevents molecular diagnostics from analyzing in real-time the dynamic cellular activities, known as cell signaling, that regulate cell proliferation or survival and can cause cancer when signaling activity becomes abnormal. Since genetic mutations are often only weakly correlated to the cell signaling activity driving a patient’s cancer, a molecular diagnostic is prone to providing an incomplete diagnosis. CELx tests overcome this limitation by measuring real-time cell signaling activity in a patient’s living tumor cells. When a CELx test detects abnormal signaling activity, a more accurate diagnosis of the patient’s cancer driver is obtained. Second, molecular diagnostics can only estimate the probability of a patient’s potential drug response based on a statistical analysis of the drug’s clinical trial results. Instead of this indirect estimate of drug response, CELx tests directly measure the effectiveness of a targeted therapy in a patient’s living tumor cells. This enables physicians to confirm that the therapeutic matching the patient’s cancer driver is functional in his or her tumor cells before prescribing it, which significantly increases the likelihood of a positive clinical outcome.

Our first analytically validated and commercially ready test using our CELx platform is our CELx HER2 Signaling Function Test, or CELx HSF Test. Our CELx HSF Test diagnoses two new breast cancer sub-types that traditional molecular diagnostics cannot detect. Abnormal activity in the HER2 signaling network, a key cellular process that regulates cell proliferation, plays a role in many breast cancers. To diagnose patients with HER2 breast cancer, molecular diagnostics analyze HER2 protein, one component of the complex HER2 signaling network. If these molecular diagnostics find excess HER2 protein levels in a patient’s tumor cells, patients are diagnosed with HER2 breast cancer (HER2+) and then are treated with anti-HER2 targeted therapies. However, several clinical trials found that a sub-group of patients with normal HER2 protein levels (HER2-negative) respond to anti-HER2 therapies, revealing that measuring HER2 protein levels alone misses patients who have HER2-driven breast cancer. To provide a more complete diagnosis for HER2-negative breast cancer patients, our CELx HSF Test determines whether the HER2 signaling network in a patient’s tumor cells is functioning abnormally. Our studies show that

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approximately 20% of HER2-negative breast cancer patients have abnormal HER2 signaling activity similar to levels found in HER2+ breast cancer cells. As a result, these HER2-negative patients have undiagnosed HER2-driven breast cancer and would likely respond to the same anti-HER2 targeted therapies only HER2+ patients receive today.

Our CELx HSF Test is targeting HER2-negative breast cancer patients receiving treatment, which includes, according to the National Cancer Institute’s SEER Cancer Statistic Review, or NCI SEER Review, approximately 278,000 patients annually in the U.S. Based on this patient population, we estimate the annual U.S. market opportunity for our CELx HSF Test alone is approximately $1.1 billion, assuming a price of $4,000 per test, which is in line with prices for complex molecular diagnostic tests. In addition, as a companion diagnostic, or CDx, we estimate this test could potentially drive approximately $4 billion of new U.S. annual revenue for HER2 therapies. This assumes HER2-negative breast cancer patients diagnosed with abnormal HER2 signaling by our CELx HSF Test, roughly 20% of all HER2-negative breast cancer patients, or 55,000 patients annually, are treated with HER2 therapies costing approximately $73,000 per patient. The per patient therapy cost assumed is in line with the cost of Herceptin ® and Perjeta ® , the current standard of care HER2 drug treatment regimen that, according to Genetech Inc., or Genetech, at the time of launching Perjeta ® in 2012, had a wholesale price of $10,900 per month. In late-2017, we will be fielding a prospective clinical trial in collaboration with the National Surgical Adjuvant Breast and Bowel Project Foundation, or NSABP, and Genentech to evaluate the efficacy of two of Genentech’s HER2 targeted therapies in patients with these newly identified cancer sub-types. According to the Roche 2016 Annual Report, these two HER2 drugs generated more than $8.9 billion of revenue in 2016. We expect interim results from this trial 10 to 12 months after the first patient is enrolled and final results in 18 to 21 months.

In addition to the two new breast cancer sub-types our CELx HSF Test diagnoses, we discovered 14 new potential cancer sub-types in breast, lung, colon, ovarian, kidney, bladder and hematological cancers. According to the NCI SEER Review, approximately 880,000 patients are treated annually in the U.S. for one of these cancer types. Approved or investigational drugs are currently available to treat each of these new potential cancer sub-types. We expect to develop and launch additional CELx tests to diagnose these new cancer sub-types on a staggered basis over the next few years while continuing our research to identify additional new cancer sub-types. The resulting total annual addressable test market, defined as the 880,000 cancer patients we are developing CELx tests for, is approximately $3.5 billion, assuming a price of $4,000 per test.

O ur P latform

The use of molecular diagnostic tests to select targeted therapies has largely fallen short of public expectations. Patient response rates to therapies targeting a genetic mutation are typically less than 50% and in some cases only 10% to 20%, creating a significant need for an alternative approach. In addition, many cancers lack a genetic biomarker to guide treatment. For those patients, the cellular dysfunction responsible for their cancer goes undiagnosed, which means they are less likely to receive a potentially beneficial targeted therapy. The table below provides objective response rates for representative targeted therapies that rely on a CDx to select eligible patients, as well as an example of the objective response rate for a targeted therapy that does not use a CDx to select eligible patients. The objective response rates listed below were obtained from the clinical trial data included with each of the targeted therapies respective FDA labels.

Targeted Therapy Objective Response Rates

Targeted Therapy
(FDA Label Date)

Type of Cancer

Biomarker

Objective
Response Rate (1)

Herceptin ® (04/17)

Breast

HER2

16 %

Perjeta ® (03/16)

Breast

HER2

11 %

Gilotrif ® (07/13)

Lung

EGFR mutations

31 %

Votrient ® (05/17)

Kidney

None

27 %

Erbitux ® (10/16)

Colon

EGFR/K-Ras WT

18 %

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(1)

Objective response rate (ORR) is the difference between the ORR of the targeted therapy and the ORR of the control drug during the targeted therapy’s pivotal clinical trial as reported in the targeted therapy’s FDA drug label.

Our CELx platform addresses the need for more accurate cancer diagnoses by incorporating our internally developed cell microenvironment and cell signaling quantification technologies. Unlike molecular tests that use fixed or lysed (dead) cells and can only measure the static composition of a cell, our CELx platform measures real-time signaling activity in a patient’s live tumor cells. This enables us to: (1) identify the cellular signaling abnormalities driving a patient’s cancer; and (2) confirm whether the matching targeted therapy is effective in the patient’s cells.

•

Dynamic cell signaling quantification. We analyze the signaling pathway activity of live patient tumor cells using a biosensor that converts the dynamic cellular response to pathway activators or pathway inhibitors to a measurable electrical signal in real-time. To determine the activity of a specific signaling pathway, an activating agent specific to a pathway receptor is used to turn on the pathway and a corresponding inhibitory agent specific to the pathway receptor is used to turn signaling off. Thus, our tests allow us to identify both the signaling pathway abnormalities driving a patient’s cancer and to confirm whether a matching targeted therapy may prove beneficial.

Our CELx tests are performed in our laboratory in Minneapolis, Minnesota that is certified under the Clinical Laboratory Improvement Amendments of 1988, or CLIA, and accredited by the College of American Pathologies, or CAP. We have one U.S. patent, four pending U.S. patent applications, one pending PCT patent application, as well as numerous corresponding non-U.S. patent applications covering our diagnostic approach using cell signaling analysis in living patient cells to guide treatment of patients with targeted therapies.

O ur S trategy and C ompetitive S trengths

We believe our CELx platform will fundamentally change the standard-of-care many cancer patients receive. Our platform enables us to discover new cancer sub-types and diagnose them in patients. Patients with these newly identified cancer sub-types have oncogenic pathways that are signaling abnormally, and, we believe, may respond positively to a matching targeted therapy. By identifying patients with a new cancer sub-type, each CELx test will create, in effect, a proprietary patient population that molecular diagnostics cannot identify.

Our CELx HSF test, analytically validated and conducted in our CLIA certified and CAP accredited laboratory, is currently ready for commercial use as a laboratory developed test. We intend to focus our commercial activity initially on partnering with pharmaceutical companies to provide companion diagnostics that diagnose the new cancer sub-types we discover. We will use our CELx companion diagnostics to match the newly identified patient populations to a pharmaceutical partners’ existing or investigational targeted therapies.

We believe our CELx CDx tests will expand the matching drug’s market size because they can facilitate approval of new drug indications that a pharmaceutical company would not otherwise be able to obtain.

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eligible patients, we will offer our tests directly to treating physicians and coordinate go-to-market strategies with our partner. This coordination of commercialization strategies will allow us to significantly leverage the sales, marketing and reimbursement resources of our pharmaceutical partner, unlike traditional molecular diagnostic companies.

We have a number of key strengths that enhance our ability to achieve our mission and build a successful company:

•

First mover. We are the first company we are aware of to launch diagnostic tests that measure the signaling pathway activity in a patient’s live tumor cells, which we believe gives us a significant first mover advantage.

•

High barriers to entry. Our issued and pending patents, as well as our proprietary information and trade secrets give, us a strong intellectual property position that we believe creates a significant barrier to entry for potential competitors.

•

Broad range of applications for our platform. We can develop tests for a wide range of signaling pathways and a wide range of cancer types. This allows us to build a deep new product pipeline that creates multiple paths to build a large and profitable business.

•

Multi-billion-dollar addressable market. The broad range of pathways and cancer tissues we can test with our CELx platform enables us to initially target up to approximately 880,000 cancer patients per year, creating a $3.5 billion addressable market for our CELx tests based on our expected selling price of at least $4,000 per test.

•

Diverse revenue streams including pharma partnerships. We anticipate generating significant revenue from CDx pharmaceutical partners, including revenue from the sale of tests to identify patients eligible for clinical trials, milestone payments, and potentially, royalties on the incremental drug revenues our tests enable. Our most significant revenue opportunity comes from ongoing sales of CELx tests to physicians during the commercialization stage of the CDx.

•

Strong senior leadership team. Our founders and senior leaders have a proven track record of success building, operating and selling several successful companies. We have deep and highly relevant and complementary diagnostic, scientific, product development, and commercialization experience that has enabled us to establish market leadership positions for the companies we previously led.

Our goal is to leverage our technology to build a durable competitive advantage that enables us to improve outcomes for a significant percentage of cancer patients. We believe our CELx platform offers a number of advantages over molecular profiling tests to accomplish this:

•

Powerful cancer sub-type discovery tool. We have already discovered 16 new potential cancer sub-types that cannot be diagnosed with molecular diagnostics.

•

Direct patient-specific assessment of disease status. Our platform provides the most complete assessment available today of the intracellular activity driving a patient’s cancer by analyzing a patient’s living tumor cells.

•

Direct measurement of matching drug effectiveness. The CELx platform evaluates whether there are inherent drug resistance mechanisms that would prevent the therapy from functioning in the patient’s tumor cells. Molecular tests cannot provide this evaluation.

•

Improved response rates. We believe a patient population will have a higher response rate to a matching targeted therapy when it is diagnosed with a CELx test than with a molecular biomarker.

•

Identify drug responsive proprietary patient cohorts. We believe our CELx tests will enable us to identify new proprietary patient populations not currently diagnosable with molecular tests and increase the number of patients likely to respond to a matching targeted therapy.

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•

Streamlined FDA approval of targeted therapeutics. CELx tests will enable our pharmaceutical partners to enroll patients in their clinical trials who exhibit the same cellular dysfunction their targeted therapy is designed to inhibit. We believe this will improve patient response rates, increasing the likelihood the trial meets its endpoint target and thus the likelihood the drug receives approval from the U.S. Food and Drug Administration, or FDA. Improved patient response rates would also help reduce the size, cost and length of our partner’s clinical trials.

R isks A ffecting U s

Our business is subject to a number of risks of which you should be aware before making an investment decision. These risks are discussed more fully in the “Risk Factors” section of this prospectus immediately following this prospectus summary. Some of these risks include:

•

we have a limited operating history upon which you can evaluate us, and we may never generate revenue or profit;

•

our initial success is heavily dependent on the success of our CELx HSF Test;

•

we may not be successful in finding pharmaceutical company partners for continuing development of additional CELx tests;

•

developing our CELx tests involves a lengthy and complex process that may not be successful;

•

clinical trials are expensive and complex with uncertain outcomes, which may prevent or delay commercialization of our CELx tests;

•

even if our CELx tests achieve positive clinical trial results, they may fail to achieve the degree of market acceptance by physicians, patients, third-party payors and others in the medical community necessary for commercial success;

•

our business, operational and financial goals may not be attainable if the market opportunities for our CELx tests or our pharmaceutical company partners are smaller than we expect;

•

the actual price we are able to charge for our CELx tests may be substantially lower than our expected price range;

•

the insurance coverage and reimbursement status of new diagnostic products is uncertain;

•

we face significant competition from other diagnostic companies; and

•

we may encounter difficulties in commercializing and marketing our products, or in managing growth.

I mplications of B eing an E merging G rowth C ompany

As a company with less than $1.0 billion of revenue during our last fiscal year, we qualify as an emerging growth company as defined in the JOBS Act, and we may remain an emerging growth company for up to five years from the date of the first sale in this offering. However, if certain events occur prior to the end of such five-year period, including if we become a large accelerated filer, our annual gross revenue exceeds $1.0 billion, or we issue more than $1.0 billion of non-convertible debt in any three-year period, we will cease to be an emerging growth company prior to the end of such five-year period. For so long as we remain an emerging growth company, we are permitted and intend to rely on exemptions from certain disclosure and other requirements that are applicable to other public companies that are not emerging growth companies. In particular, in this prospectus, we have provided only two years of audited financial statements and have not included all of the executive compensation related information that would be required if we were not an emerging growth company. Accordingly, the information contained herein may be different than the information you receive from other public companies in which you hold equity interests. However, we have irrevocably elected not to avail ourselves of the extended transition period for complying with new or revised accounting standards, and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.

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LLC C onversion

Immediately prior to the effective time of the registration statement of which this prospectus is a part, we intend to convert from a Minnesota limited liability company into a Delaware corporation and change our name from Celcuity LLC to Celcuity Inc., which we refer to herein as the “LLC Conversion.” In conjunction with the LLC Conversion:

•

all of the outstanding units of Celcuity LLC will automatically be converted into an aggregate of shares of our common stock, based on the relative ownership interests of the equity holders of Celcuity LLC prior to the closing of this offering, at a conversion ratio of one share of our common stock for every 40 units;

•

we will adopt and file a certificate of incorporation and certificate of conversion with the State of Delaware; and

•

we will adopt and file a plan of conversion and articles of conversion with the State of Minnesota.

For more information on the LLC Conversion, see the discussion under “Certain Relationships and Related Party Transactions—LLC Conversion.” See “Description of Capital Stock” for additional information regarding a description of our common stock following the LLC Conversion and the terms of our certificate of incorporation and bylaws that will be in effect upon the completion of this offering.

While operating as a limited liability company, our outstanding equity was referred to as “units.” In this prospectus for ease of comparison, we may refer to such units as our common stock for periods prior to the LLC Conversion, unless otherwise indicated in this prospectus. Similarly, unless otherwise indicated, we refer to members’ equity in this prospectus as stockholders’ equity.

O ur C orporate I nformation

We were originally formed as a Minnesota limited liability company. Immediately prior to the effective time of the registration statement of which this prospectus is a part, we intend to convert from a Minnesota limited liability company into a Delaware corporation and change our name from Celcuity LLC to Celcuity Inc. Our principal executive offices are located at 16305 36th Avenue N., Suite 450, Minneapolis, Minnesota 55446, and our telephone number is (763) 392-0123. Our website address is www.celcuity.com. We have included our website address in this prospectus as an inactive textual reference only. Information contained on, or that can be accessed through, our website is not part of this prospectus.

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The Offering

The following summary contains basic information about this offering. The summary is not intended to be complete. You should read the full text and more specific details contained elsewhere in this prospectus.

Issuer

Celcuity Inc.

Common stock offered by us

Over-allotment option

The underwriter has an option for a period of 30 days from the date of this prospectus to purchase up to additional shares of our common stock to cover over-allotments, if any.

Common stock to be outstanding after this offering (1)

shares (or shares if the underwriter exercises its option to purchase additional shares in full).

Use of proceeds

We estimate that the net proceeds from this offering, after deducting the underwriting discounts and commissions and estimated offering expenses payable by us, will be approximately $ million, or approximately $ million if the underwriter exercises its over-allotment option to purchase additional shares from us in full, assuming an initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus. We intend to use the net proceeds from this offering as follows:

•

approximately $ to fund additional research and development for discovery of new cancer sub-types and development and validation of new CELx tests;

•

approximately $ for clinical trials to support clinical claims;

•

approximately $ to fund development of operational processes and capital expenditures; and

•

approximately $ for working capital and other general corporate purposes.

See “Use of Proceeds” for a more complete description of the intended use of proceeds from this offering.

Dividend policy

We do not expect to pay any dividends or other distributions of our common stock in the foreseeable future. We currently intend to retain future earnings. See “Dividend Policy.”

Risk factors

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

Proposed listing

We have applied to have our common stock listed on The Nasdaq Capital Market in connection with this offering. No assurance can be given that such listing will be approved.

Proposed Nasdaq Capital Market symbol

“CELC”

(1)

The number of shares of our common stock to be outstanding after this offering is based on shares of our common stock outstanding as of June 30, 2017, after giving effect to: (1) the LLC Conversion; and (2) the conversion of our unsecured convertible promissory notes into shares of

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common stock as described in section entitled “Description of Capital Stock—Unsecured Convertible Promissory Notes,” using an assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and a closing date of , 2017. The number of shares of our common stock to be outstanding after this offering excludes:

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442,686 shares of common stock issuable upon the exercise of options granted as of June 30, 2017, with a weighted-average exercise price of $6.75 per share (after giving effect to the LLC Conversion);

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103,863 shares of common stock issuable upon the exercise of warrants outstanding as of June 30, 2017, with a weighted-average exercise price of $7.96 per share (after giving effect to the LLC Conversion);

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shares of common stock issuable upon the exercise of warrants that will be issued in connection with the automatic conversion of our unsecured convertible promissory notes, with an exercise price of $ per share, as described in section titled “Description of Capital Stock—Unsecured Convertible Promissory Notes;”

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shares of common stock issuable upon the exercise of the warrant that will be issued to the underwriter in connection with this offering, with an exercise price equal to 110% of the initial public offering price per share; and

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shares of our common stock reserved for future issuance under our new Celcuity Inc. 2017 Stock Incentive Plan.

Except as otherwise indicated, all information in this prospectus assumes the following:

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our conversion to a Delaware corporation prior to the closing of this offering;

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the filing of our Delaware certificate of incorporation and adoption of our bylaws prior to the closing of this offering; and

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no exercise by the underwriter of its option to purchase additional shares of our common stock to cover over-allotments.

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Summary Financial Data AND PRO FORMA FINANCIAL DATA

The following tables present, as of the dates and for the periods indicated, our selected historical financial data and certain pro forma financial data, as indicated therein. The statement of operations data for the years ended December 31, 2015 and 2016 and the balance sheet data as of December 31, 2015 and 2016 are derived from our audited financial statements that are included elsewhere in this prospectus. The summary statements of operations data for the six months ended June 30, 2016 and 2017 and the Balance Sheet data as of June 30, 2017 are derived from the unaudited condensed financial statements included in this prospectus. We have prepared the unaudited interim financial statements on the same basis as the audited financial statements and have included, in our opinion, all adjustments, consisting only of normal recurring adjustments, that we consider necessary for a fair statement of financial statements set forth in those statements. Our historical results are not indicative of the results to be expected in the future and our interim results are not necessarily indicative of results to be expected for the full year ending December 31, 2017, or any other period. The unaudited pro forma adjustments are based upon available information and certain assumptions we believe are reasonable under the circumstances.

The following summary financial data should be read in conjunction with, and are qualified in their entirety by reference to, “Use of Proceeds,” “Capitalization,” “Selected Financial Data and Pro Forma Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and the related notes included elsewhere in this prospectus.

	Years Ended December 31,						Six Months Ended June 30,
	2015			2016			2016			2017
							(unaudited)
Statements of Operations Data:
Operating expenses:
Research and development		$	2,011,719		$	3,064,762		$	1,412,056		$	2,212,629
General and administrative			250,091			263,664			131,417			386,963
Total operating expenses			2,261,810			3,328,426			1,543,473			2,599,592
Loss from operations			(2,261,810 )			(3,328,426 )			(1,543,473 )			(2,599,592 )
Other income (expense):
Interest expense			—			—			—			(186,686 )
Interest income			268			18,018			4,019			22,712
Total other income (expense)			268			18,018			4,019			(163,974 )
Net loss		$	(2,261,542 )		$	(3,310,408 )		$	(1,539,454 )		$	(2,763,566 )
Net loss per unit share attributable to common members—basic and diluted		$	(0.01 )		$	(0.01 )		$	(0.01 )		$	(0.01 )
Weighted-average (WA) common units outstanding used to compute net loss per unit attributable to common members—basic and diluted			233,732,667			252,523,542			247,266,395			257,604,208
Pro forma WA common shares outstanding used to compute net loss per share attributable to common stockholders—basic and diluted (1)			5,843,317			6,313,089			6,181,660
Pro forma net loss per share attributable to common stockholders—basic and diluted (1)		$	(0.39 )		$	(0.52 )		$	(0.25 )		$

(1)

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Convertible Promissory Notes,” with an assumed initial public offering price of $ per share, the midpoint of the price range set forth on the cover page of this prospectus. The weighted average common shares attributable to conversion of our convertible notes assumes the conversion of $8,337,500 principal amount, plus accrued interest of $16,305, into shares of common stock at the beginning of the period presented, or the original issuance date, if later.

				As of June 30, 2017
	As of December 31, 2016 Actual			Actual			Pro Forma (1)			Pro Forma As Adjusted (2)
				Unaudited			Unaudited			Unaudited
Balance Sheet Data:
Cash and cash equivalents		$	5,856,348		$	10,908,068		$	10,908,068		$
Total assets			6,056,977			11,686,950			11,686,950
Total current liabilities			445,359			776,954			776,954
Convertible notes			—			6,575,413			—
Total stockholders’ equity			5,611,618			4,334,583			10,909,996

(1)

Pro forma after giving effect to: (1) the LLC Conversion described in “Certain Relationships and Related Party Transactions—LLC Conversion”; and (2) the conversion of our unsecured convertible notes that were issued in 2017 and had a carrying value of $6,575,413 as of June 30, 2017, into common stock as described in the section entitled “Description of Capital Stock—Unsecured Convertible Promissory Notes,” with an assumed initial public offering price of $ per share, the midpoint of the price range set forth on the cover page of this prospectus.

(2)

Pro forma as adjusted after giving effect to the sale of shares of common stock in this offering at an assumed initial public offering price of $ per share, the midpoint of the price range set forth on the cover page of this prospectus, after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

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Risk Factors

An investment in our common stock involves a high degree of risk. You should carefully read and consider the risks described below before deciding to invest in our common stock. If any of the following risks actually occur, our business, financial condition, results of operation or cash flows could be materially harmed. In any such case, the trading price of our common stock could decline and you could lose all or part of your investment. When determining whether to buy our common stock, you should also refer to the other information in this prospectus, including our financial statements and the related notes.

R isks R elating to O ur B usiness

We have a limited operating history upon which you can evaluate us. We may never generate revenue or profit.

We are an early-stage biotechnology company that commenced activities in January 2012. We only have a limited operating history upon which you can evaluate us. Our business plan has not been tested. Since inception, we have had no revenue and have incurred significant operating losses. We have financed our operations primarily through private placements of our pre-LLC Conversion common units and the issuance of convertible notes. To become and remain profitable, we must continue to develop and commercialize the CELx platform, including the CELx HSF Test and CELx tests for other cancer sub-types. This will require us to be successful in a range of challenging activities, including completing nonclinical testing, initiating and completing clinical trials, building operational and financial infrastructure to support commercial operations, training and managing employees, and marketing and selling our CELx tests.

We may never succeed in these activities and, even if we do, we may never generate revenue that is sufficient to achieve profitability. We expect to continue to incur significant expenses and operating losses for the foreseeable future, and the net losses we incur may fluctuate significantly from quarter to quarter. Our failure to become and remain profitable would decrease the value of the company and could impair our ability to raise capital, maintain or expand our research and development efforts, expand our business, or continue our operations. A decline in the value of our company could also cause you to lose part or even all of your investment.

Our initial success is heavily dependent on the success of our CELx HSF Test.

Our business strategy includes generating revenue from the sale of our CELx tests and from CDx partnerships with pharmaceutical companies. Our ability to obtain such partnerships depends in part on the ability of our CELx HSF Test to demonstrate the incremental opportunity available for pharmaceutical companies. We will not begin fielding our first prospective clinical trial for the CELx HSF Test until late-2017 and expect final results of the trial will not be available for 18 to 21 months. Success of the HSF Test trial will depend on many factors, such as successful enrollment of patients, meeting trial endpoint goals, and completing the trial in a timely manner. If we are unable to demonstrate the efficacy of the HSF Test in identifying patients that respond to the targeted therapy, we will not be able to generate future revenue from our CELx HSF Test and may not be able to attract other pharmaceutical companies to partner with us for the development and commercialization of other CELx tests.

We may not be successful in finding pharmaceutical company partners for continuing development of additional CELx tests.

We intend to develop strategic partnerships with pharmaceutical companies for developing additional CELx tests. Many of the potential partners are global, multi-billion-dollar pharmaceutical companies with sophisticated research and development organizations and multiple priorities. We may not be successful in our efforts to establish such a strategic partnership or other alternative arrangements for additional CELx tests because our research and development pipeline may be insufficient, such tests may be deemed to be at too early of a stage of development for collaborative effort, or third parties may not view such tests as having the requisite potential to demonstrate efficacy. In addition, we may be restricted under collaboration agreements from entering into future agreements with other partners. If we are unable to reach agreements with suitable strategic partners on a timely basis, on acceptable terms or at all, we may have to curtail the

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development of additional CELx tests and our business, financial condition, results of operations and prospects may be materially and adversely affected.

Developing our CELx tests involves a lengthy and complex process that may not be successful.

Our CELx tests may take several years to develop from the time they are discovered to the time they are available for patient use, if ever. In order to develop CELx tests into commercially viable products, we need to successfully complete a variety of activities, including:

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conducting substantial research and development;

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conducting analytical and clinical studies; and

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obtaining and maintaining partnerships with pharmaceutical companies.

These activities will require us to expend significant resources. Based on comparable companies in this industry, few research and development projects result in commercial products, and success in early clinical studies often is not replicated in later studies. At any point, we may abandon development of a product candidate for several reasons, such as a clinical validation study failing to demonstrate the prospectively defined endpoints of the study. We may also be required to expend considerable resources repeating clinical studies, which would adversely affect the timing for generating potential revenue from a new product and our ability to invest in other products in our pipeline.

Clinical trials are expensive and complex with uncertain outcomes, which may prevent or delay commercialization of our CELx tests.

For our CELx tests to become a CDx for a matching targeted therapy, we must conduct extensive clinical trials to demonstrate that patients who have an abnormal signaling pathway, as identified by our CELx tests, respond to treatment with a matching targeted therapy. Clinical testing is expensive, difficult to design and implement, and can take many years to complete, and its outcome is inherently uncertain. As a company, we have no experience in conducting or participating in clinical trials. We cannot be certain that our existing clinical trial or future clinical trials, if any, will begin or be completed on time, if at all. We may experience numerous unforeseen events during, or as a result of, clinical trials that could delay or prevent our ability to commercialize our CELx tests, such as:

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delays in reaching, or failure to reach, agreement on acceptable clinical trial contracts or clinical trial protocols with planned trial sites and/or strategic partners;

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delay or failure in reaching agreement with the FDA or a comparable foreign regulatory authority on a trial design, in obtaining authorization from such authorities to commence the trial, and/or in complying with conditions or other requirements imposed by such regulatory authorities with respect to the trial;

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delay or failure in recruiting and enrolling suitable subjects to participate in one or more clinical trials, or with such participants completing a trial or returning for follow-up during or after the trial;

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clinical sites, investigators or other third-parties deviating from the trial protocol, failing to conduct the trial in accordance with regulatory and contractual requirements, and/or dropping out of a trial;

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regulatory imposition of a clinical hold for any of our clinical trials, where a clinical hold in a trial in one indication would result in a clinical hold for clinical trials in other indications; and

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changes in governmental regulations or administrative actions.

Significant nonclinical or clinical trial delays also could shorten any periods during which we may have the exclusive right to commercialize our CELx tests or allow our competitors to bring products to market before we do and impair our ability to successfully commercialize our CELx tests and may materially and adversely affect our business, financial condition, results of operations and prospects.

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Even if our CELx tests achieve positive clinical trial results, they may fail to achieve the degree of market acceptance by physicians, patients, third-party payors and others in the medical community necessary for commercial success.

If any of our potential CELx tests, including the CELx HSF Test, achieve positive clinical trial results, they may nonetheless fail to gain sufficient market acceptance by physicians, patients, third-party payors and others in the medical community necessary for commercial success. For example, conventional genomic- or proteomic-based analyses are commonly used today to diagnose cancer and prescribe cancer medications, and physicians may continue to rely on these diagnostic tests instead of adopting the use of a CELx test. The degree of market acceptance of our CELx tests, will depend on a number of factors, including:

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their efficacy and other potential advantages compared to alternative diagnostic tests;

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our ability to offer them for sale at competitive prices;

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their convenience and ease of administration compared to alternative diagnostics;

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the willingness of the target patient population to try new diagnostics and of physicians to initiate such diagnostics;

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the strength of marketing and distribution support;

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the availability of third-party coverage and adequate reimbursement for our diagnostic tests; and

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our ability partner with pharmaceutical companies to develop CDx programs for the new cancer sub-types we discover.

If our CELx tests do not achieve an adequate level of acceptance, we may never generate significant product revenues and we may not become profitable.

Our business, operational and financial goals may not be attainable if the market opportunities for our CELx tests or our pharmaceutical company partners are smaller than we expect. Our internal research and estimates on market opportunities have not been verified by independent sources, and neither we nor the underwriter have independently verified market and industry data from third-parties that we have relied on.

The total market opportunities that we believe exist are based on a variety of assumptions and estimates, including the number of potential CDx programs we will be able to successfully pursue, the amount of potential milestone payments that we could receive in CDx programs, the number of patients we will test in clinical trials, the price we will be able to charge for our tests and the total annual number of cancer patients with undiagnosed abnormal cell signaling. In addition, we have relied on third-party publications, research, surveys and studies for information related to determining market opportunities, including without limitation, information on the number of cancer patients and those receiving various forms of treatment, the cost of drug therapy, the amount of revenue generated from various types of drug therapy, the objective response rates of drug therapies, the number of deaths caused by cancer and the expected growth in cancer drug therapy and diagnostic markets. Our internal research and estimates on market opportunities have not been verified by independent sources, and neither we nor the underwriter have independently verified market and industry data from third-parties that we have relied on. Any or all of our assumptions and/or estimates may prove to be incorrect for several reasons, such as inaccurate reports or information that we have relied on, potential patients or providers not being amenable to using our CELx platform for diagnostic testing or such patients becoming difficult to identify and access, limited reimbursement for companion diagnostics, pricing pressure due to availability of alternative diagnostic tests, or an inability of the CELx tests’ companion drugs to obtain the necessary regulatory approvals for new indications. If any or all of our assumptions and estimates prove inaccurate, we and our CDx pharmaceutical partners may not attain our business, operational and financial goals.

The expected selling price range of our CELx test is an estimate. We have not yet sold any such tests and the actual price we are able to charge may be substantially lower than our expected price range.

We have estimated the selling price range of our CELx test based on the pricing of other diagnostic tests currently available and assumptions regarding the efficacy and market acceptance of our tests. We have not yet sold our CELx tests and cannot be certain of the actual price we may be able to charge. The

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availability and price of our competitors’ products could limit the demand and the price we are able to charge. We may not achieve our business plan if acceptance is inhibited by price competition, if pharmaceutical companies refuse to pay our expected prices for CELx tests in clinical trials, if physicians are reluctant to switch from other diagnostic tests to our CELx tests or if physicians switch to other new products or choose to reserve our CELx tests for use in limited circumstances. Furthermore, reductions in the reimbursement rate of third-party payors have occurred and may occur in the future. Each of these factors could cause our selling price to be substantially lower than expected, and we may fail to obtain revenue or become profitable.

The insurance coverage and reimbursement status of new diagnostic products is uncertain. Failure to obtain or maintain adequate coverage and reimbursement for CELx tests could limit our ability to market those CELx tests and decrease our ability to generate revenue.

The availability and extent of reimbursement by governmental and private payors is essential for most patients to be able to afford expensive diagnostic tests and treatments. Sales of any of our potential CELx tests will depend substantially, both in the United States and internationally, on the extent to which the costs of our CELx tests will be paid by health maintenance, managed care, and similar healthcare management organizations, or reimbursed by government health administration authorities, private health coverage insurers and other third-party payors. Reimbursement by a payor may depend on a number of factors, including a payor’s determination that the CELx tests are:

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neither experimental nor investigational;

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appropriate for the specific patient;

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cost-effective;

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supported by peer-reviewed publications; and

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included in clinical practice guidelines.

If reimbursement is not available, or is available only to a limited amount, we may not be able to successfully commercialize our CELx tests at expected levels, or potentially at all. Even if coverage is provided, the approved reimbursement amount may not be high enough to allow us to establish or maintain pricing sufficient to realize a sufficient return on our research and development investment.

There is significant uncertainty related to the insurance coverage and reimbursement of newly approved diagnostic products. In the United States, the principal decisions about reimbursement for new diagnostic products and services are typically made by the Centers for Medicare & Medicaid Services, or CMS, an agency within the U.S. Department of Health and Human Services. CMS decides whether and to what extent a new product or service will be covered and reimbursed under Medicare. Private payors tend to follow CMS to a substantial degree. As such, a significant portion of our potential revenue depends on CMS approving coverage and reimbursement of our CELx tests.

Outside the United States, international operations are generally subject to extensive governmental price controls and other market regulations, and we believe the increasing emphasis on cost-containment initiatives in Europe, Canada and other countries has and will continue to put pressure on the pricing and usage of diagnostic tests such as our potential CELx tests. In many countries, particularly the countries of the European Union, the prices of medical products are subject to varying price control mechanisms as part of national health systems. In these countries, pricing negotiations with governmental authorities can take considerable time. To obtain reimbursement or pricing approval in some countries, we may be required to demonstrate the cost-effectiveness of our CELx tests relative to other available diagnostic tests. The prices of products under such systems may be substantially lower than in the United States. Other countries allow companies to fix their own prices for products, but monitor and control company profits. Additional foreign price controls or other changes in pricing regulation could restrict the amount that we are able to charge for our CELx tests. Accordingly, in markets outside the United States, the reimbursement for our potential CELx tests may be reduced compared with the United States and may be insufficient to generate commercially reasonable revenue and profit.

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Moreover, increasing efforts by governmental and third-party payors, in the United States and internationally, to cap or reduce healthcare costs may cause such organizations to limit both coverage and level of reimbursement for new products approved and, as a result, they may not cover or provide adequate payment for our potential CELx tests. The downward pressure on healthcare costs in general, particularly prescription drugs and surgical procedures and other treatments, has become very intense. We expect to experience pricing pressures in connection with the sale of any CELx tests due to the trend toward managed healthcare, the increasing influence of health maintenance organizations and additional legislative changes.

We may encounter difficulties in commercializing and marketing our products.

In order to commercialize any CELx test, we must build marketing, sales, managerial and other non-technical capabilities or make arrangements with third parties to perform these services, and we may not be successful in doing so. For each CELx test we develop, we intend to pursue development agreements with the pharmaceutical companies that provide matching targeted therapies. Once we have completed the analytical validation of a CELx test, we plan to target key opinion leaders (KOLs) to build product awareness. Once we have clinical validation data available, we expect to expand our sales and marketing efforts to target the broader market, and coordinate our go-to-market activities with those of our partner pharmaceutical companies. These activities will be expensive and time consuming and will require significant attention of our executive officers to manage. Furthermore, there is no guarantee that any new drug indications will require our CELx tests as a CDx or that any pharmaceutical company will effectively coordinate sales and marketing activities with us. Any failure or delay in these activities would adversely impact the commercialization our CELx platform, and our business, financial condition, results of operations and prospects may be materially and adversely affected.

We may encounter difficulties in managing growth, which could disrupt our operations.

To manage our anticipated future growth, we must continue to implement and improve our managerial, operational and financial systems, expand our facilities and continue to recruit and train additional qualified personnel. Due to our limited financial resources, we may not be able to effectively manage the expansion of our operations or recruit and train additional qualified personnel. The expansion of our operations may lead to significant costs and may divert our management and business development resources. Any inability to manage growth could delay the execution of our business plans or disrupt our operations.

We face significant competition from other diagnostic companies and our operating results will suffer if we fail to compete effectively.

The diagnostic testing related industry is intensely competitive. We have competitors both in the United States and abroad, including universities and other research institutions and providers of diagnostics that focus on developing genomic or proteomic analyses of a patient’s diseased cells or theranostic tests to predict specific patient responses to a drug therapy. Many of our competitors have substantially greater financial, technical and other resources, such as larger research and development staff and well-established marketing and sales forces. Our competitors may succeed in developing, acquiring or licensing, on an exclusive basis, products or services that are more effective or less costly than the CELx tests that we are currently developing or that we may develop. In addition, established medical technology, biotechnology and/or pharmaceutical companies may invest heavily to accelerate discovery and development of diagnostic tests that could make our CELx tests less competitive.

Our ability to compete successfully will depend largely on our ability to:

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discover and develop CELx tests for cancer sub-types that are superior to other products in the market;

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demonstrate compelling advantages in the efficacy and convenience of our CELx tests on a cost competitive basis;

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attract qualified scientific, product development and commercial personnel;

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obtain and maintain patent and other proprietary protection as necessary for our CELx platform;

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obtain required U.S. and international regulatory approvals;

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successfully collaborate with research institutions and pharmaceutical companies in the discovery, development and commercialization of our current and future CELx tests; and

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successfully expand our operations and build a sales force to support commercialization.

We may not be able to compete effectively if we are unable accomplish one or more of the these objectives.

If our sole laboratory facility becomes inoperable, we will be unable to perform our tests and our business will be harmed.

We do not have redundant laboratory facilities. We perform all of our diagnostic services in our laboratory located in Minneapolis, Minnesota. Our facility and the equipment we use to perform our tests would be costly to replace and could require substantial lead time to repair or replace. The facility may be harmed or rendered inoperable by physical damage from fire, floods, tornadoes, power loss, telecommunications failures, break-ins and similar events, which may render it difficult or impossible for us to perform our tests for some period of time. The inability to perform our tests may result in the loss of customers or harm our reputation, and we may be unable to regain those customers in the future. Although we possess insurance for damage to our property and the disruption of our business, this insurance may not be sufficient to cover all of our potential losses and may not continue to be available to us on acceptable terms, or at all.

In order to rely on a third party to perform our tests, we could only use another facility with established state licensure and CLIA accreditation under the scope of which our potential CELx tests could be performed following validation and other required procedures. We cannot assure you that we would be able to find another CLIA-certified facility willing to adopt CELx tests and comply with the required procedures, or that this laboratory would be willing to perform the tests for us on commercially reasonable terms.

We must hire and retain a qualified sales force.

Our ability to grow revenue for our CELx tests is dependent upon our ability to build an effective sales team. We do not currently have a dedicated sales force, and building one will be an expensive and time-consuming process. We face intense competition for qualified sales personnel and our inability to hire or retain an adequate number of sales representatives could limit our ability to maintain or expand our business and increase sales. Even if we are able to increase our sales force, our new sales personnel may not provide sufficient high quality service and attention to effectively market and sell our CELx platform. If we are unable to develop our marketing and sales networks or if our sales personnel do not perform as expected, we may be unable to maintain or grow our existing business and our business, financial condition, results of operations and prospects may be materially and adversely affected.

We will be dependent on our ability to attract and retain key personnel.

Our operations will be materially dependent upon the services of our officers and key employees, including Brian F. Sullivan, our Chief Executive Officer, and Dr. Lance G. Laing, our Chief Science Officer. Successful implementation of our business plan will also require the services of other consultants and additional personnel. We cannot assure you that we will be able to attract and retain such persons as employees, independent contractors, consultants or otherwise. If we are not able to attract individuals with the skills required for our business, or if we lose the services of either Mr. Sullivan or Dr. Laing, we may be unable successfully to implement our business plan.

Our inability to raise additional capital on acceptable terms in the future may limit our ability to develop and commercialize our CELx platform.

We may require additional capital to finance capital expenditures and operating expenses over the next several years as we launch our CELx platform and expand our infrastructure, commercial operations and research and development activities. We may seek to raise additional capital through equity offerings, debt

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financings, collaborations or licensing arrangements. Additional funding may not be available to us on acceptable terms, or at all. If we raise funds by issuing equity securities, dilution to our stockholders could result. Any equity securities issued may also provide for rights, preferences or privileges senior to those of holders of our existing securities. The incurrence of additional indebtedness or the issuance of certain equity securities could result in increased fixed payment obligations and could also include restrictive covenants, such as limitations on our ability to incur additional debt or issue additional equity, limitations on our ability to acquire or license intellectual property rights, and other operating restrictions that could adversely affect our ability to conduct our business. In the event that we enter into collaborations or licensing arrangements to raise capital, we may be required to accept unfavorable terms. If we are not able to secure additional funding when needed, we may have to delay, reduce the scope of or eliminate one or more research and development programs or selling and marketing initiatives. In addition, we may have to work with a partner on one or more of our products or market development programs, which could lower the economic value of those programs to our company.

R isks R elated to O ur R eliance on T hird P arties

We will rely on collaboration with third parties to conduct our clinical trials, including the current trial involving the CELx HSF Test, and those third parties may not perform satisfactorily.

We will rely on third parties to conduct clinical trials for our CELx tests. For our CELx HSF Test, we are collaborating with the NSABP and Genentech to conduct a 55-patient single-arm interventional trial that is expected to begin enrolling patients in late-2017. We are funding the patient-related costs for this trial and Genentech is supplying the drugs. We will rely on NSABP to conduct our clinical trial of the CELx HSF Test, including setting up clinical sites, enrolling patients, and managing clinical data.

We expect to field additional clinical trials to evaluate new potential indications for drugs with patients identified by one of our new CELx tests. NSABP, other contract research organizations that we hire and/or pharmaceutical companies we partner with might not successfully carry out their contractual duties, meet expected deadlines, or conduct our planned clinical trials in accordance with regulatory requirements or our stated protocols. Any of them may also terminate their relationship with us for a variety of reasons. Furthermore, these third parties may also have relationships with other entities, some of which may be our competitors. If we need to enter into alternative arrangements, we may not be able to complete our clinical trials and may not be able to, or may be delayed in our efforts to, successfully commercialize our potential CELx tests.

The pharmaceutical companies that we partner with may not be successful in receiving regulatory approval for drug indications or may not commercialize their companion therapies for our expected CDx programs.

While we intend to provide our pharmaceutical company partners with new patient populations for such partners’ existing or investigational targeted therapies, there can be no assurances that such partners will be able to obtain regulatory approval for new indications to treat these patient populations or otherwise be successful in commercializing these new therapies. The pharmaceutical companies we partner with:

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may not meet clinical trial endpoint targets in evaluating efficacy of a targeted therapy in the patient population;

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may encounter regulatory or production difficulties that could constrain the supply of the companion therapies;

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may have difficulties gaining acceptance of the use of the companion therapies in the clinical community;

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may not pursue commercialization of any companion therapies;

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may elect not to continue or renew commercialization programs based on changes in their strategic focus or available funding, or external factors, such as an acquisition, that divert resources or create competing priorities;

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may not commit sufficient resources to the marketing and distribution of such companion therapies; or

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may terminate their relationship with us.

Any of these factors could adversely affect our commercialization strategy, business, results of operations and financial condition.

Our instrument or reagent suppliers may fail to meet our quality requirements for the items we purchase or fail to provide a continuous supply of the items we utilize to perform our CELx tests.

We utilize highly specialized reagents and instruments to perform our CELx tests. We may be unable to find suitable replacement reagents and instruments on a timely basis, if at all. Interruption in the supply of these items or degradation in their quality could delay analytical and clinical studies, and/or render us unable to deliver CELx tests. This would interrupt sales and adversely affect our business, results of operations and financial condition.

Performance issues or price increases by our shipping carriers could adversely affect our business, results of operations and financial condition, and harm our reputation and ability to provide our CELx tests on a timely basis.

Expedited, reliable shipping is essential to our operations. Should our shipping carrier encounter delivery performance issues such as loss, damage or destruction of a sample, such occurrences may damage our reputation and lead to decreased demand for our services and increased cost and expense to our business. In addition, any significant increase in shipping rates could adversely affect our operating margins and results of operations. Similarly, strikes, severe weather, natural disasters or other service interruptions by delivery services we use would adversely affect our ability to receive and process patient samples on a timely basis. There are only a few providers of overnight nationwide transport services, and there can be no assurance that we will be able to maintain arrangements with providers on acceptable terms, if at all.

R isks R elated to G overnment R egulation

Our CELx tests represent a novel approach to companion diagnostics, which could result in heightened regulatory scrutiny, delays in clinical development, or delays in our ability to commercialize any products.

Our unique and proprietary CELx technology is the first cancer diagnostic platform we are aware of that can detect the underlying signaling dysfunction driving a patient’s cancer. Because this is a novel approach to companion diagnostics, there can be no assurance as to the length of a clinical trial period, the number of patients the FDA or another applicable regulatory authority will require to be enrolled in the trials in order to establish the safety and efficacy of our CELx tests and the companion drugs, or that the data generated in these trials will be acceptable to the FDA or another applicable regulatory authority to support marketing approval of new indications for the companion drugs. This could delay or prohibit our clinical trials and/or commercialization of our CELx tests.

If the FDA were to begin regulating our tests, we could incur substantial costs and delays associated with trying to obtain premarket clearance or approval.

Most laboratory developed tests, or LDTs, are not currently subject to FDA regulation, although reagents, instruments, software or components provided by third parties and used to perform LDTs may be subject to regulation. We believe that the CELx tests are LDT’s, which is a term that describes tests that are designed and performed within a single laboratory. As a result, we believe the CELx tests are not currently subject to regulation by the FDA in accordance with the FDA’s current policy of exercising enforcement discretion regarding LDTs.

Historically, the FDA has not required laboratories that furnish only LDTs to comply with the agency’s requirements for medical devices (e.g., establishment registration, device listing, quality systems regulations, premarket clearance or premarket approval, and post-market controls). In mid-2014, the FDA published a Draft Guidance document describing a proposed approach for a regulatory framework for LDTs, but in late 2016, the FDA indicated it no longer intended to finalize the LDT Guidance Document at that time. It is not clear when or if the FDA will seek to alter the current LDT regulatory framework in the future. We cannot provide any assurance that FDA regulation, including premarket review, will not be required in the

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future for our tests, whether through additional guidance issued by the FDA, new enforcement policies adopted by the FDA or new legislation enacted by Congress. We cannot predict with certainty the timing or content of future legislation enacted or guidance issued regarding LDTs, or how it will affect our business.

If premarket review is required by the FDA at a future date or if we decide to voluntarily pursue FDA premarket review of our CELx tests, there can be no assurance that our CELx tests or any tests we may develop in the future will be cleared or approved by the FDA on a timely basis, if at all, nor can there be assurance that labeling claims will be consistent with our current claims or adequate to support continued adoption of and reimbursement for our CELx tests. If our CELx tests are allowed to remain on the market but there is uncertainty in the marketplace about our tests, if they are labeled investigational by the FDA, or if labeling claims the FDA allows us to make are more limited than we expect, reimbursement may be adversely affected and we may not be able to sell our CELx tests. Compliance with FDA regulations would increase the cost of conducting our business, and subject us to heightened regulation and scrutiny by the FDA and penalties for failure to comply with these requirements.

If we fail to obtain required federal and state laboratory licenses, we could lose the ability to perform our tests.

Clinical laboratory tests, including our CELx tests, are regulated under CLIA. CLIA is a federal law that regulates clinical laboratories that perform testing on specimens derived from humans for the purpose of providing information for the diagnosis, prevention or treatment of disease. CLIA regulations mandate specific standards for laboratories in the areas of personnel qualifications, administration, and participation in proficiency testing, patient test management and quality assurance. CLIA certification is also required in order for us to be eligible to bill state and federal healthcare programs, as well as many private third-party payers, for any tests we launch. We will also be required to maintain state licenses in certain states to conduct testing in our laboratories. While we currently have CLIA Certification for our Minnesota laboratory, failure to maintain this certifications would adversely affect our ability to launch our CELx tests.

We generate medical waste and could face substantial liability if we violate laws with respect to the handling of medical waste.

We generate regulated medical waste in the normal course of performing our CELx tests. This subjects us to a variety of federal, state and local environmental and safety laws and regulations. Some of the regulations under the current regulatory structure provide for strict liability, holding a party potentially liable without regard to fault or negligence. We could be held liable for damages and fines as a result of our, or others’, business operations should contamination of the environment or individual exposure to hazardous substances occur related to our business. We cannot predict how changes in laws or development of new regulations will affect our business operations or the cost of compliance.

Failure to comply with the HIPAA security and privacy regulations may increase our operational costs.

A portion of the data that we obtain and handle for or on behalf of our clients is considered protected health information, or PHI, subject to the Health Insurance Portability and Accountability Act of 1996, or HIPAA. Under HIPAA and our contractual agreements with our HIPAA-covered entity health plan customers, we are considered a “business associate” to those customers, and are required to maintain the privacy and security of PHI in accordance with HIPAA and the terms of our business associate agreements with our clients, including by implementing HIPAA-required administrative, technical and physical safeguards. We are also required to maintain similar business associate agreements with our subcontractors that have access to PHI of our customers in rendering services to us or on our behalf. We will incur significant costs to establish and maintain these safeguards and, if additional safeguards are required to comply with HIPAA regulations or our clients’ requirements, our costs could increase further, which would negatively affect our operating results. Furthermore, we cannot guarantee that such safeguards have been and will continue to be adequate under applicable laws. If we have failed, or fail in the future, to maintain adequate safeguards, or we or our agents or subcontractors use or disclose PHI in a manner prohibited or not permitted by HIPAA, our subcontractor business associate agreements, or our business associate agreements with our customers, or if the privacy or security of PHI that we obtain and handle is otherwise compromised, we could be subject to significant liabilities and consequences.

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We will also need to expend a considerable amount of resources complying with other federal, state and foreign laws and regulations. If we are unable to comply or have not complied with such laws, we could face substantial penalties or other adverse actions.

Our operations are subject, directly or indirectly, to other federal, state and foreign laws and regulations that are complex and their application to our specific products, services and relationships may not be clear and may be applied to our business in ways that we do not anticipate. Compliance with laws and regulations will require us to expend considerable resources implementing internal policies and procedures for compliance and ongoing monitoring, and will require significant attention of our management team. This will be challenging as an early-stage company with limited financial resources and human capital. These laws include, for example:

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Title XI of the Social Security Act, commonly referred to as the federal Anti-Kickback Statute, which prohibits the knowing and willful offer, payment, solicitation or receipt of remuneration, directly or indirectly, in cash or in kind, in return for or to reward the referral of patients or arranging for the referral of patients, or in return for the recommendation, arrangement, purchase, lease or order of items or services that are covered, in whole or in part, by a federal healthcare program such as Medicare or Medicaid;

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The civil False Claims Act, that forbids the knowing submission or “causing the submission” of false or fraudulent information or the failure to disclose information in connection with the submission and payment of claims for reimbursement to Medicare, Medicaid, federal healthcare programs or private health plans;

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The federal Physician Self-referral Law, commonly known as the Stark Law, which prohibits physicians from referring Medicare or Medicaid patients to providers of “designated health services” with whom the physician or a member of the physician’s immediate family has an ownership interest or compensation arrangement, unless a statutory or regulatory exception applies, and similar state equivalents that may apply regardless of payor; and

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The U.S. Foreign Corrupt Practices Act of 1977, as amended, or FCPA, the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the U.S. Travel Act, and the USA PATRIOT Act, which among other things, prohibit companies and their employees, agents, third-party intermediaries, joint venture partners and collaborators from authorizing, promising, offering, or providing, directly or indirectly, improper payments or benefits to recipients in the public or private sector.

Many states and foreign governments have adopted similar laws and regulations. Violations of law could subject us to civil or criminal penalties, monetary fines, disgorgement, individual imprisonment, contractual damages, reputational harm, diminished profits and future earnings and curtailment of our operations. We could also be required to change or terminate some portions of operations or business or could be disqualified from providing services to healthcare providers doing business with government programs.

New legislation and regulations could be passed that affect our operations and result in additional risks and/or costs to our business.

From time to time, legislation is drafted, introduced and passed in Congress that could significantly change the statutory provisions governing the testing, approval, manufacturing and marketing of products that are or will be regulated by the FDA or CMS. In addition to new legislation, CMS and FDA regulations and policies are often revised or interpreted by the agencies in ways that may significantly affect our business and our products. It is impossible to predict whether further legislative changes will be enacted or FDA or CMS regulations, guidance, policies or interpretations will be changed, or what the impact of such changes, if any, may be. The 2016 presidential election and change in administration make it even more difficult to predict if and how federal regulations may change and/or federal agencies might alter their positions. Changes in laws and the development of new regulations could affect our business operations and/or the cost of compliance.

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R isks R elated to I ntellectual P roperty

If we are unable to obtain and maintain intellectual property protection for our technology, or if the scope of the intellectual property protection obtained is not sufficiently broad, our competitors could develop and commercialize technology and diagnostic tests similar or identical to ours, and our ability to successfully commercialize our technology and diagnostic tests may be impaired.

Our ability to compete successfully will depend in part on our ability to obtain and enforce patent protection for our products, preserve our trade secrets and operate without infringing the proprietary rights of third parties. We have applied for patents that protect our technology. Our patent portfolio includes one U.S. patent, four pending U.S. patent applications, one pending international PCT patent application, and numerous corresponding non-U.S. patent applications. Each patent and patent application covers methods of use. However, we cannot assure you that our intellectual property position will not be challenged or that all patents for which we have applied will be granted. The validity and breadth of claims in patents involve complex legal and factual questions and, therefore, may be highly uncertain. Uncertainties and risks that we face include the following:

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our pending or future patent applications may not result in the issuance of patents;

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the scope of any existing or future patent protection may not exclude competitors or provide competitive advantages to us;

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our patents may not be held valid if subsequently challenged;

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other parties may claim that our products and designs infringe the proprietary rights of others—even if we are successful in defending our patents and proprietary rights, the cost of such litigation may adversely affect our business; and

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other parties may develop similar products, duplicate our products, or design around our patents.

The patent prosecution process is expensive and time-consuming, and we may not be able to file, prosecute, maintain, enforce or license all necessary or desirable patent applications at a reasonable cost or in a timely manner, or in all jurisdictions. We may choose not to seek patent protection for certain innovations and may choose not to pursue patent protection in certain jurisdictions, and under the laws of certain jurisdictions, patents or other intellectual property rights may be unavailable or limited in scope. It is also possible that we will fail to identify patentable aspects of our discovery and nonclinical development output before it is too late to obtain patent protection.

The patent position of companies like ours is highly uncertain, involves complex legal and factual questions and has in recent years been the subject of much litigation. The U.S. Patent and Trademark Office, or U.S. PTO, has not established a consistent policy regarding the breadth of claims that it will allow in medical technology patents. In addition, the laws of foreign jurisdictions may not protect our rights to the same extent as the laws of the United States. For example, India and China do not allow patents for methods of treating the human body. Publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the United States and other jurisdictions are typically not published until 18 months after filing, or in some cases not at all. Therefore, we cannot know with certainty whether we were the first to make the inventions claimed in our owned or licensed patents or pending patent applications, or that we were the first to file for patent protection of such inventions. As a result, the issuance, scope, validity, enforceability and commercial value of our patent rights are highly uncertain. Our pending and future patent applications may not result in patents being issued that protect our technology or CELx tests, in whole or in part, or which effectively prevent others from commercializing competitive technologies and diagnostic tests. Changes in either the patent laws or interpretation of the patent laws in the United States and other countries may diminish the value of our patents or narrow the scope of our patent protection.

Moreover, we may be subject to a third-party pre-issuance submission of prior art to the U.S. PTO or patent offices in foreign jurisdictions, or become involved in opposition, derivation, reexamination, inter partes review, post-grant review or interference proceedings challenging our patent rights or the patent rights of others. An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate, our patent rights, allow third parties to commercialize our technology and

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compete directly with us, without payment to us, or result in our inability to commercialize CELx platform without infringing third-party patent rights. In addition, if the breadth or strength of protection provided by our patents and patent applications is threatened, it could dissuade companies from collaborating with us to develop or commercialize current or future CELx tests.

Even if our owned patent applications issue as patents, they may not issue in a form that will provide us with any meaningful protection, prevent competitors from competing with us or otherwise provide us with any competitive advantage. Our competitors may be able to circumvent our owned patents by developing similar or alternative technologies or products in a non-infringing manner.

The issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, and our owned patents may be challenged in the courts or patent offices in the United States and abroad. Such challenges may result in loss of exclusivity or freedom to operate or in patent claims being narrowed, invalidated or held unenforceable, in whole or in part, which could limit our ability to stop others from using or commercializing similar or identical technology and product candidates, or limit the duration of the patent protection of our technology and potential diagnostic tests. Given the amount of time required for the development, testing and regulatory review of new diagnostic tests, patents protecting such tests might expire before or shortly after such candidates are commercialized. As a result, our owned patent portfolio may not provide us with sufficient rights to exclude others from commercializing diagnostic tests similar or identical to ours.

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

On September 16, 2011, the Leahy-Smith America Invents Act, or the Leahy-Smith Act, was signed into law. The Leahy-Smith Act includes a number of significant changes to U.S. patent law. These include provisions that affect the way patent applications are prosecuted and may also affect patent litigation. The U.S. PTO recently developed new regulations and procedures to govern administration of the Leahy-Smith Act, and many of the substantive changes to patent law associated with the Leahy-Smith Act, and in particular, the first to file provisions, only became effective on March 16, 2013. Accordingly, it is not clear what, if any, impact the Leahy-Smith Act will have on the operation of our business. However, the Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could have a material adverse effect on our business and financial condition. Depending on future actions by the U.S. Congress, the federal courts, and the U.S. PTO, the laws and regulations governing patents could change in unpredictable ways that would weaken our ability to obtain new patents or to enforce our existing patents and patents that we might obtain in the future. In addition, there may be patent law reforms in foreign jurisdictions that could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents in those foreign jurisdictions.

Third parties may initiate legal proceedings alleging that we are infringing their intellectual property rights, the outcome of which would be uncertain and could have a material adverse effect on the success of our business.

Our commercial success depends upon our ability, and the ability of our collaborators, to develop, manufacture, market and sell our CELx tests and use our proprietary technologies without infringing the proprietary rights of third parties. There is considerable intellectual property litigation in the medical technology, biotechnology and pharmaceutical industries. We may become party to, or threatened with, future adversarial proceedings or litigation regarding intellectual property rights with respect to our CELx platform, including interference or derivation proceedings before the U.S. PTO and similar bodies in other jurisdictions. Third parties may assert infringement claims against us based on existing patents or patents that may be granted in the future.

If we are found to infringe a third party’s intellectual property rights, we could be required to obtain a license from such third party to continue developing and marketing our CELx platform and CELx tests. However, we may not be able to obtain any required license on commercially reasonable terms or at all. Even if we were able to obtain a license, it could be non-exclusive, thereby giving our competitors access to the same technologies licensed to us. We could be forced, including by court order, to cease commercializing the infringing technology or product. In addition, we could be found liable for monetary damages,

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including treble damages and attorneys’ fees if we are found to have willfully infringed a patent. A finding of infringement could prevent us from commercializing our CELx platform or force us to cease some of our business operations, which could materially harm our business. Claims that we have misappropriated the confidential information or trade secrets of third parties could have a similar negative impact on our business.

We may be subject to claims by third parties asserting that our employees or we have misappropriated their intellectual property, or claiming ownership of what we regard as our own intellectual property.

Our current and future employees may have been previously employed at universities or other biotechnology, diagnostic technology or pharmaceutical companies, including our competitors or potential competitors and strategic partners. Although we try to ensure that our employees do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that these employees or we have used or disclosed intellectual property, including trade secrets or other proprietary information, of any such employee’s former employer. Litigation may be necessary to defend against these claims.

In addition, while it is our policy to require our employees and contractors who may be involved in the development of intellectual property to execute agreements assigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party who in fact develops intellectual property that we regard as our own. Our and their assignment agreements may not be self-executing or may be breached, and we may be forced to bring claims against third parties, or defend claims they may bring against us, to determine the ownership of what we regard as our intellectual property.

If we fail in prosecuting or defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. Even if we are successful in prosecuting or defending against such claims, litigation could result in substantial costs and be a distraction to management.

Any lawsuits relating to infringement of intellectual property rights necessary to defend ourselves or enforce our rights will be costly and time consuming, and could be unsuccessful.

Because competition in our industry is intense, competitors may infringe or otherwise violate our issued patents, patents of our licensors or other intellectual property. To counter infringement or unauthorized use, we may be required to file infringement claims, which can be expensive and time consuming, and could distract our technical and management personnel from their normal responsibilities. Any claims we assert against perceived infringers could provoke these parties to assert counterclaims against us alleging that we infringe their patents. In addition, in a patent infringement proceeding, a court may decide that a patent of ours is invalid or unenforceable, in whole or in part, construe the patent’s claims narrowly or refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question. An adverse result in any litigation proceeding could put one or more of our patents at risk of being invalidated or interpreted narrowly. We may also elect to enter into license agreements in order to settle patent infringement claims or to resolve disputes prior to litigation, and any such license agreements may require us to pay royalties and other fees that could be significant. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure.

If we are not able to prevent disclosure of our trade secrets and other proprietary information, the value of our CELx platform could be significantly diminished.

We rely on trade secret protection to protect our interests in proprietary know-how and in processes for which patents are difficult to obtain or enforce. We may not be able to protect our trade secrets adequately. We have a policy of requiring our consultants, advisors and strategic partners to enter into confidentiality agreements and our employees to enter into invention, non-disclosure and non-compete agreements. However, no assurance can be given that we have entered into appropriate agreements with all parties that have had access to our trade secrets, know-how or other proprietary information. There is also no assurance that such agreements will provide meaningful protection of our trade secrets, know-how or other proprietary information in the event of any unauthorized use or disclosure of information. Furthermore,

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we cannot provide assurance that any of our employees, consultants, contract personnel, or strategic partners, either accidentally or through willful misconduct, will not cause serious damage to our programs and/or our strategy, for example by disclosing important trade secrets, know-how or proprietary information to our competitors. It is also possible that our trade secrets, know-how or other proprietary information could be obtained by third parties as a result of breaches of our physical or electronic security systems. Any disclosure of confidential data into the public domain or to third parties could allow our competitors to learn our trade secrets and use the information in competition against us. In addition, others may independently discover our trade secrets and proprietary information. Any action to enforce our rights is likely to be time consuming and expensive, and may ultimately be unsuccessful, or may result in a remedy that is not commercially valuable. These risks are accentuated in foreign countries where laws or law enforcement practices may not protect proprietary rights as fully as in the United States. Any unauthorized disclosure of our trade secrets or proprietary information could harm our competitive position.

R isks R elating to O ur C ommon S tock and T his O ffering

You will suffer immediate and substantial dilution.

The initial public offering price of our common stock will be substantially higher than the net tangible book value per share of our common stock after giving effect to this offering. Therefore, if you purchase shares of our common stock in this offering, you will pay a price per share that substantially exceeds our net tangible book value per share after this offering. To the extent shares subsequently are issued under outstanding options or other equity awards or equity securities, you will incur further dilution. Based on an assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus, you will experience immediate dilution of $ per share, representing the difference between our pro forma net tangible book value per share, after giving effect to this offering, and the assumed initial public offering price. See “Dilution.”

After this offering, our executive officers, directors and principal stockholders, if they choose to act together, will continue to have the ability to control all matters submitted to stockholders for approval.

Upon the closing of this offering, our executive officers and directors, combined with our stockholders who each owned more than 5% of our outstanding common stock before this offering will, in the aggregate, beneficially own shares representing approximately % of our capital stock based on shares of common stock outstanding, on a post-LLC Conversion and pro forma basis, as of , 2017. As a result, if these stockholders were to choose to act together, they would be able to control all matters submitted to our stockholders for approval, as well as our management and affairs. For example, these persons, if they choose to act together, would control the election of directors and approval of any merger, consolidation or sale of all or substantially all of our assets. This concentration of ownership control may:

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delay, defer or prevent a change in control;

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make changes to our management and the board of directors challenging for other stockholders; or

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impede a merger, consolidation, takeover or other business combination involving us that other stockholders may desire or may result in you obtaining a premium for your shares.

Our internal control over financial reporting does not currently meet the standards required by Section 404 of the Sarbanes-Oxley Act, and failure to achieve and maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our business and stock price.

We previously have not been required to maintain internal control over financial reporting in a manner that meets the standards of publicly traded companies required by Sections 404(a) or 404(b) of the Sarbanes-Oxley Act. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP. We are not currently in compliance with, and we cannot be certain when we will be able to implement the requirements of Section 404(a). We may encounter problems or delays in

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implementing any changes necessary to make a favorable assessment of our internal control over financial reporting. If we cannot favorably assess the effectiveness of our internal control over financial reporting, investors could lose confidence in our financial information and the price of our common stock could decline.

Additionally, the existence of any material weakness or significant deficiency would require management to devote significant time and incur significant expense to remediate any such material weaknesses or significant deficiencies and management may not be able to remediate any such material weaknesses or significant deficiencies in a timely manner. The existence of any material weakness in our internal control over financial reporting could also result in errors in our financial statements that could require us to restate our financial statements causing us to fail to meet our reporting obligations and cause stockholders to lose confidence in our reported financial information, all of which could materially and adversely affect us.

Provisions in our corporate charter documents and under Delaware law could make an acquisition of our company, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management.

Provisions in our certificate of incorporation and our bylaws that will become effective upon the LLC Conversion may discourage, delay or prevent a merger, acquisition or other change in control of our company that stockholders may consider favorable, including transactions in which you might otherwise receive a premium for your shares. These provisions could also limit the price that investors might be willing to pay in the future for shares of our common stock, thereby depressing the market price of our common stock. In addition, because our board of directors will be responsible for appointing the members of our management team, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors. Among other things, these provisions:

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allow the authorized number of our directors to be changed only by resolution of our board of directors;

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limit the manner in which stockholders can remove directors from our board of directors;

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establish advance notice requirements for stockholder proposals that can be acted on at stockholder meetings and nominations to our board of directors;

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require that stockholder actions must be effected at a duly called stockholder meeting and prohibit actions by our stockholders by written consent;

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limit who may call stockholder meetings;

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authorize our board of directors to issue preferred stock without stockholder approval, which could be used to institute a “poison pill” that would work to dilute the stock ownership of a potential hostile acquirer, effectively preventing acquisitions that have not been approved by our board of directors; and

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require the approval of the holders of at least two-thirds of the votes that all our stockholders would be entitled to cast to amend or repeal specified provisions of our certificate of incorporation or bylaws that will become effective upon the closing of this offering.

Moreover, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which prohibits a person who owns in excess of 15% of our outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction in which the person acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner.

Any of these provisions of our charter documents or Delaware law could, under certain circumstances, depress the market price of our common stock. See “Description of Capital Stock.”

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An active trading market for our common stock may not develop.

Prior to this offering, there has been no public market for our common stock. The initial public offering price for our common stock will be determined through arms-length negotiations with the underwriter. Although we anticipate that our common stock will be approved for listing on The Nasdaq Capital Market, an active trading market for our shares may never develop or be sustained following this offering. If an active market for our common stock does not develop, it may be difficult for you to sell shares you purchase in this offering at a favorable price or at all.

The price of our common stock may be volatile and fluctuate substantially, which could result in substantial losses for purchasers of our common stock in this offering.

Our stock price is likely to be volatile. The stock market in general and the market for smaller medical technology companies in particular have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. As a result of this volatility, you may not be able to sell your common stock at or above the initial public offering price. The market price for our common stock may be influenced by many factors, including:

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the success of competitive products or technologies;

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results of planned clinical trials of our CELx HSF Test or other CELx tests may develop in the future;

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regulatory or legal developments in the United States and other countries;

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developments or disputes concerning patent applications, issued patents or other proprietary rights;

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the recruitment or departure of key personnel;

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the level of expenses related to any of our CELx tests or clinical development programs;

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actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts;

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operating results that fail to meet expectations of securities analysts that cover our company;

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variations in our financial results or those of companies that are perceived to be similar to us;

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changes in the structure of healthcare payment systems;

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market conditions in the pharmaceutical, biotechnology and medical technology sectors;

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general economic and market conditions; and

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the other factors described in this “Risk Factors” section.

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

Our stock price is likely to be volatile, and in the past companies that have experienced volatility in the market price of their stock have been subject to an increased incidence of securities class action litigation. We may be the target of this type of litigation in the future. Securities litigation against us could result in substantial costs and divert our management’s attention from other business concerns, which could seriously harm our business.

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

The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about us or our business. We do not have any control over these analysts. There can be no assurance that analysts will cover us or provide favorable coverage. If one or more

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of the analysts who cover us downgrade our stock or change their opinion of our stock, our stock price would likely decline. If one or more of these analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our stock price or trading volume to decline.

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

Our management will have broad discretion in the application of the net proceeds from this offering, including for any of the purposes described in the section entitled “Use of Proceeds,” and you will not have the opportunity as part of your investment decision to assess whether the net proceeds are being used appropriately. Our management could spend the net proceeds from this offering in ways that do not improve our results of operations or enhance the value of our common stock. The failure by our management to apply these funds effectively could result in financial losses that could have a material adverse effect on our business, cause the price of our common stock to decline and delay the development of our CELx platform. Pending their use, we may invest the net proceeds from this offering in a manner that does not produce income or that loses value.

We are an “emerging growth company,” and the reduced disclosure requirements applicable to emerging growth companies may make our common stock less attractive to investors.

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, and may remain an emerging growth company for up to five years. For so long as we remain an emerging growth company, we are permitted and intend to rely on exemptions from certain disclosure requirements that are applicable to other public companies that are not emerging growth companies. These exemptions include:

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being permitted to provide only two years of audited financial statements, in addition to any required unaudited interim financial statements, with correspondingly reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure;

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not being required to comply with the auditor attestation requirements in the assessment of our internal control over financial reporting of Section 404(b) of the Sarbanes-Oxley Act;

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

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reduced disclosure obligations regarding executive compensation; and

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

We have taken advantage of reduced reporting burdens in this prospectus. In particular, in this prospectus, we have not included all of the executive compensation related information that would be required if we were not an emerging growth company. We cannot predict whether investors will find our common stock less attractive if we rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.

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

As a public company, and particularly after we are no longer an emerging growth company, we will incur significant legal, accounting and other expenses that we did not incur as a private company. The Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of The Nasdaq Capital Market and other applicable securities rules and regulations impose various requirements on public companies, including establishment and maintenance of effective disclosure

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and financial controls and corporate governance practices. Our management and other personnel will need to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly.

We are evaluating these rules and regulations, and cannot predict or estimate the amount of additional costs we may incur or the timing of such costs. These rules and regulations are often subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices.

Pursuant to Section 404 of the Sarbanes-Oxley Act, or Section 404, we will first be required to furnish a report by our management on our internal control over financial reporting for the year ending December 31, 2018. As discussed above, if we cease to be an emerging growth company, we will be required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm as required by Section 404(b). To achieve compliance with Section 404 within the prescribed period, we will be engaged in a process to document and evaluate our internal control over financial reporting, which is both costly and challenging. In this regard, we will need to continue to dedicate internal resources, potentially engage outside consultants and adopt a detailed work plan to assess and document the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate, validate through testing that controls are functioning as documented and implement a continuous reporting and improvement process for internal control over financial reporting. Despite our efforts, there is a risk that we will not be able to conclude, within the prescribed timeframe or at all, that our internal control over financial reporting is effective as required by Section 404. If we identify one or more material weaknesses, it could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements.

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

We currently intend to retain all of our future earnings, if any, to finance the growth and development of our business. In addition, the terms of any future debt agreements may preclude us from paying dividends. As a result, appreciation, if any, in the market price of our common stock will be your sole source of gain for the foreseeable future.

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Special Note Regarding Forward-Looking Statements

This prospectus and other reports filed by the company from time to time with the Securities and Exchange Commission, or the SEC, contain or may contain forward-looking statements and information that are based upon beliefs of and information currently available to management as well as estimates and assumptions made by management. When used in the filings, the words “anticipate,” “believe,” “could,” “estimate,” “expect,” “future,” “intend,” “plan,” “predict,” “may,” “should,” “will,” “would” or the negative variation of these terms and similar expressions as they relate to the company or management identify forward-looking statements.

The forward-looking statements in this prospectus include, among other things, statements about:

•

our plans to develop and commercialize our CELx platform and CELx tests for patients with cancer and our expectations regarding the various cancer sub-types our CELx tests will identify;

•

any perceived advantage of our CELx platform and CELx tests as compared to traditional molecular or other diagnostic tests, including without limitation, the ability of our platform and tests to help physicians treat their patients’ cancers or to identify new patient populations not diagnosable with currently available diagnostic tests;

•

our expected first-mover advantage in providing products to culture living tumor cells on a commercial scale, or the sustainability of our competitive advantages;

•

the size and growth potential of the markets for our CELx platform, and our ability to serve those markets;

•

the rate and degree of market acceptance, both in the United States and internationally, and clinical utility of our diagnostic platform and tests;

•

our ability to partner with and generate revenue from pharmaceutical partners and physicians, and the market opportunity for HER2 therapies and other CELx programs for our pharmaceutical partners as a result of our CELx platform;

•

the success of competing tests that are or may become available;

•

the ability of our CELx platform and tests to impact clinical trials by our pharmaceutical partners, such as streamlining FDA approval of targeted therapeutics;

•

the success, cost and timing of our CELx platform development activities and planned clinical trials, as well as our reliance on collaboration with third parties to conduct our clinical trials;

•

our commercialization, marketing and manufacturing capabilities and strategy;

•

expectations regarding federal, state, and foreign regulatory requirements and developments, such as potential FDA regulation of our CELx platform and CELx tests, our operations, as well as our laboratory;

•

our plans with respect to pricing in the United States and internationally, and our ability to obtain reimbursement for CELx tests, including expectations as to our ability or the amount of time it will take to achieve successful reimbursement from third-party payors, such as commercial insurance companies and health maintenance organizations, and government insurance programs, such as Medicare and Medicaid;

•

our ability to obtain funding for our operations, including funding necessary to complete further development and commercialization of our CELx platform and CELx tests;

•

our expectations with respect to our facility needs;

•

our estimates regarding expenses, future revenue, capital requirements and needs for additional financing;

•

future agreements with third parties in connection with the commercialization of our CELx diagnostic platform and tests;

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•

our expectations regarding our ability to obtain and maintain intellectual property protection for CELx platform and approach;

•

our expectations regarding conversion from a Minnesota limited liability company to a Delaware corporation and the operation, independence, and composition of our board of directors;

•

our ability to attract and retain key scientific or management personnel;

•

our expectations regarding the period during which we qualify as an emerging growth company under the JOBS Act;

•

the requirements of being a public company;

•

our expectations regarding having our stock listed on The Nasdaq Capital Market; and

•

our anticipated use of the net proceeds from this offering.

Other risks, uncertainties and factors, including those discussed under “Risk Factors,” could cause our actual results to differ materially from those projected in any forward-looking statements we make. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended or planned.

Although management believes that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, the company does not intend to update any of the forward-looking statements to conform these statements to actual results.

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Use of Proceeds

We estimate that our net proceeds from the sale of shares of our common stock in this offering will be approximately $ million, or approximately $ million if the underwriter exercises its option in full to purchase additional shares from us, based on an assumed initial public offering price of $ per share, the midpoint of the price range set forth on the cover page of this prospectus, after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

A $1.00 increase (decrease) in the assumed initial public offering price would increase (decrease) the net proceeds to us from this offering by approximately $ million, assuming the number of shares offered by us remains the same, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us. Similarly, each increase or decrease of in the number of shares of common stock offered by us would increase or decrease the net proceeds that we receive from this offering by approximately $ million, assuming that the assumed initial public offering price remains the same, and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us.

The principal purposes of this offering are to obtain additional capital to support our research and development activities, clinical studies, and commercial activities. We currently intend to use the net proceeds of this offering as follows:

•

approximately $ to fund additional research and development for discovery of new cancer sub-types and development and validation of new CELx tests;

•

approximately $ for clinical trials to support clinical claims;

•

approximately $ to fund development of operational processes and capital expenditures; and

•

approximately $ for working capital and other general corporate purposes.

The net proceeds are intended to support our research and development and efforts, the development of our operational processes, and the launch of our business development activities to pharmaceutical companies. The expected use of the net proceeds from the offering represents our intentions based upon our current plans and business conditions. As of the date of this prospectus, we cannot predict with any certainty all of the particular uses for the net proceeds or the amounts that we will actually spend on the uses set forth above. The amounts and timing of our actual expenditures and the extent of product development and commercialization may vary significantly depending on numerous factors, including the status, results and timing of the clinical trial for the CELx HSF Test that we intend to commence in late-2017 and our current nonclinical studies for additional diagnostic tests, as well as any unforeseen cash needs. As a result, our management will retain broad discretion over the allocation of the net proceeds from this offering.

Pending their use as described above, we plan to invest the net proceeds in short-term, interest-bearing obligations, investment-grade instruments, certificates of deposit or guaranteed obligations of the U.S. government. You will not have an opportunity to evaluate the economic, financial or other information on which we base our decisions regarding the use of these proceeds.

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Dividend Policy

We have never declared or paid any cash dividends on our capital stock. We currently intend to retain all available funds and any future earnings to support our operations and finance the growth and development of our business and do not intend to declare or pay any cash dividends in the foreseeable future. As a result, you will likely need to sell your shares of common stock to realize a return on your investment, and you may not be able to sell your shares at or above the price you paid for them. Payment of cash dividends, if any, in the future will be at the discretion of our board of directors and will depend on then-existing conditions, including our financial condition, operating results, contractual restrictions, capital requirements, business prospects and other factors our board of directors may deem relevant.

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Capitalization

The following table sets forth the cash and cash equivalents and our capitalization as of June 30, 2017, of:

•

our predecessor, Celcuity LLC, on an actual basis;

•

on a pro forma basis giving effect to: (1) the LLC Conversion described in “Certain Relationships and Related Party Transactions—LLC Conversion”; and (2) the conversion of our unsecured convertible promissory notes into common stock as described in “Description of Capital Stock—Unsecured Convertible Promissory Notes,” with an assumed initial public offering price of $ per share, the midpoint of the price range set forth on the cover page of this prospectus, and an assumed closing date of , 2017; and

•

on a pro forma as adjusted basis giving effect to the sale of shares of common stock in this offering at an assumed initial public offering price of $ per share, the midpoint of the price range set forth on the cover page of this prospectus, after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

The information in this table is illustrative only and our capitalization following the completion of this offering will be adjusted based on the actual initial public offering price and other terms of this offering determined at pricing. You should read this table in conjunction with the information contained in “Use of Proceeds,” “Selected Financial Data and Pro Forma Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” as well as the financial statements and the notes thereto included elsewhere in this prospectus.

	As of June 30, 2017
	Actual			Pro Forma (LLC Conversion & Note Conversion)			Pro Forma As Adjusted (1)
	(In thousands, except for share and per share data; unaudited)
Cash, cash equivalents and marketable securities (excluding restricted cash)		$	10,908		$	10,908		$
Convertible notes (2)			6,575			—			—
Stockholder’s Equity
Members’ equity contributions (3)			13,350			—
Common stock, $0.001 par value (4)			—			6
Additional paid-in capital (2)			2,080			21,999
Accumulated deficit			(11,095 )			(11,095 )
Total stockholders’ equity			4,335			10,910
Total Capitalization		$	10,910		$	10,910		$

(1)

Each $1.00 increase (decrease) in the assumed initial public offering price of $ per share, the midpoint of the price range set forth on the cover page of this prospectus, would increase (decrease) each of cash and cash equivalents, additional paid-in capital, total stockholders’ equity and total capitalization by approximately $ million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting underwriting discounts and commissions and estimated offering expenses payable by us. We may also increase or decrease the number of shares we are offering. Each increase (decrease) of shares in the number of shares offered by us would increase (decrease) each of cash and cash equivalents, additional paid-in capital, total stockholders’ equity and total capitalization by approximately $ million, assuming that the assumed initial public offering price, the midpoint of the price range set forth on the cover page of this prospectus, remains the same, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us. The pro forma as adjusted information discussed above is illustrative only and will adjust based on the actual initial public offering price and other terms of this offering determined at pricing.

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The number of shares of our common stock issued and outstanding as set forth in the table above excludes:

•

shares of our common stock reserved for future issuance under our new Celcuity Inc. 2017 Stock Incentive Plan.

(2)

In April and May 2017, we sold unsecured convertible promissory notes with an aggregate principal amount of $8,337,500, which upon the closing of this offering will convert into shares of common stock and warrants to purchase an additional shares of common stock, assuming an initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus. We incurred $885,130 of third party offering costs related to the sale of the unsecured convertible promissory notes. In addition, we issued a warrant to the placement agent with a fair market value of $286,999. The net proceeds of $7,452,370 were allocated $6,388,655 and $1,063,715 to the unsecured convertible promissory notes and warrants (additional paid-in capital), respectively. A total debt discount of $1,948,846 will be amortized as interest expense over the life of the convertible notes. Upon conversion of the unsecured convertible promissory notes at the closing of this offering, the net carrying value of the unsecured convertible promissory notes at that time will be converted to common stock (par value) and additional paid-in capital. For pro forma statements of operations data, see the section entitled “Selected Financial Data and Pro Forma Financial Data” of this prospectus.

(3)

Following the LLC Conversion, members’ equity contributions will be allocated among the line items for common stock, $0.001 par value per share, and additional paid-in capital.

(4)

No shares authorized, issued, or outstanding (actual); shares issued and outstanding (Pro Forma (LLC Conversion and Note Conversion)); shares issued and outstanding (Pro Forma As Adjusted).

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Dilution

If you invest in our common stock in this offering, your ownership interest will be immediately diluted to the extent of the difference between the assumed initial public offering price per share of our common stock and the pro forma as adjusted net tangible book value per share of our common stock immediately after this offering. Net tangible book value per share of our common stock is determined at any date by subtracting our total liabilities from the amount of our total tangible assets (total assets less intangible assets) and dividing the difference by the number of shares of our common stock deemed to be outstanding at that date.

Our historical net tangible book value as of June 30, 2017 was approximately $ million, or $ per share of common stock, based on 6,440,105 shares of common stock outstanding as of such date after giving effect to (1) the LLC Conversion; and (2) the sale of our unsecured convertible promissory notes with the original principal amount of $ described under “Description of Capital Stock—Unsecured Convertible Promissory Notes,” after deducting placement agent fees and other expenses incurred in connection with the offering of such notes. Investors participating in this offering will incur immediate and substantial dilution.

After giving effect to the conversion of our unsecured convertible promissory notes into common stock in connection with this offering as described in “Description of Capital Stock—Unsecured Convertible Promissory Notes,” with an assumed initial public offering price of $ per share, the midpoint of the price range set forth on the cover page of this prospectus, and an assumed closing date of , 2017, our pro forma as adjusted net tangible book value as of June 30, 2017 would have been approximately $ million, or $ per share.

After further giving effect to (1) the pro forma adjustment described above; and (2) our receipt of approximately $ million of estimated net proceeds, after deducting underwriting discounts and commissions and estimated offering expenses payable by us, from our sale of common stock in this offering at an assumed initial public offering price of $ per share, the midpoint of the price range set forth on the cover page of this prospectus, our pro forma as adjusted net tangible book value as of June 30, 2017, would have been approximately $ million, or $ per share. This amount represents an immediate increase in net tangible book value of $ per share of our common stock to existing equity holders and an immediate dilution in net tangible book value of $ per share of our common stock to new investors purchasing shares of common stock in this offering.

The following table illustrates this dilution on a per share basis to new investors:

Assumed initial public offering price per share

Historical net tangible book value per share as of June 30, 2017 after
giving effect to the LLC Conversion

Pro forma increase in net tangible book value per share attributable to
conversion of unsecured convertible promissory notes

Pro forma net tangible book value per share as of June 30, 2017

Pro forma increase in net tangible book value per share attributable to
new investors

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

Dilution per share to new investors purchasing common stock in this
offering

Each $1.00 increase (decrease) in the assumed initial public offering price of $ per share, the midpoint of the price range set forth on the cover page of this prospectus, would increase (decrease) our pro forma net tangible book value as of June 30, 2017 by $ million, or by $ per share, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

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Each $1.00 increase (decrease) in the assumed initial public offering price of $ per share, the midpoint of the price range set forth on the cover page of this prospectus, would increase (decrease) our pro forma as adjusted net tangible book value by $ million, or by $ per share, and the dilution to new investors in this offering by $ per share, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

We may also increase or decrease the number of shares we are offering. An increase of shares in the number of shares offered by us would increase our pro forma as adjusted net tangible book value after this offering by approximately $ million, or by $ per share, and the dilution per share to new investors purchasing common stock in this offering by $ per share, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting underwriting discounts and commissions and estimated offering expenses payable by us. Conversely, a decrease of shares in the number of shares offered by us would decrease our pro forma as adjusted net tangible book value after this offering by approximately $ million, or by $ per share, and the dilution per share to new investors purchasing common stock in this offering by $ per share, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

If the underwriter exercises its option to purchase additional shares in full in this offering, the pro forma as adjusted net tangible book value after this offering would be $ per share, the increase in pro forma net tangible book value to existing stockholders would be $ per share, and the dilution per share to new investors would be $ per share, in each case assuming an initial public offering price of $ per share, the midpoint of the price range set forth on the cover page of this prospectus.

The following table summarizes, as of June 30, 2017, after giving effect to the pro forma adjustments noted above, the differences between the number of shares purchased from us, the total consideration paid to us, and the average price per share paid to us by existing stockholders and by new investors purchasing shares in this offering, before deducting underwriting discounts and commissions and estimated offering expenses payable by us, at an assumed initial public offering price of $ per share, the midpoint of the price range set forth on the cover page of this prospectus.

	Shares Purchased			Total Consideration				Average Price Per Share
	Number	Percent		Amount		Percent		Average Price Per Share
Existing stockholders			%		$		%		$
New investors
Total			100 %		$		100 %		$

The number of shares of our common stock outstanding immediately following this offering is based on shares of our common stock outstanding as of June 30, 2017 and giving effect to the pro forma transactions described above. This number excludes:

•

shares of common stock issuable upon the exercise of the warrant that will be issued to the underwriter in connection with this offering, with an exercise price of $ per share; and

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•

shares of our common stock reserved for future issuance under our new Celcuity Inc. 2017 Stock Incentive Plan.

If the underwriter exercises its option to purchase additional shares in full, the percentage of shares of common stock held by existing stockholders will decrease to approximately % of the total number of shares of our common stock outstanding after this offering, and the number of shares held by new investors will increase to , or approximately % of the total number of shares of common stock outstanding after the offering.

To the extent that any of the outstanding options or warrants to purchase shares of our common stock are exercised, new investors may experience further dilution. In addition, we may issue additional shares of common stock, other equity securities or convertible debt securities in the future, which may cause further dilution to new investors in this offering.

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Selected Financial Data and Pro Forma Financial Data

The following tables present, as of the dates and for the periods indicated, our selected historical financial data and certain pro forma financial data, as indicated therein. The statements of operations data for the years ended December 31, 2015 and 2016 and the balance sheet data as of December 31, 2015 and 2016 are derived from our audited financial statements that are included elsewhere in this prospectus. The statements of operations data for the six months ended June 30, 2016 and 2017 and the balance sheet data as of June 30, 2017 are derived from our unaudited financial statements that are included elsewhere in this prospectus. Our historical results are not indicative of the results to be expected in the future and our interim results are not necessarily indicative of results to be expected for the full year ending December 31, 2017, or any other period. The unaudited pro forma adjustments are based upon available information and certain assumptions we believe are reasonable under the circumstances.

You should read this information together with our financial statements and the related notes, as well as the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus.

	Years Ended December 31,						Six Months Ended June 30,
	2015			2016			2016			2017
							(unaudited)
Statements of Operations Data:
Operating expenses:
Research and development		$	2,011,719		$	3,064,762		$	1,412,056		$	2,212,629
General and administrative			250,091			263,664			131,417			386,963
Total operating expenses			2,261,810			3,328,426			1,543,473			2,599,592
Loss from operations			(2,261,810 )			(3,328,426 )			(1,543,473 )			(2,599,592 )
Other income (expense):
Interest expense			—			—			—			(186,686 )
Interest income			268			18,018			4,019			22,712
Total other income (expense)			268			18,018			4,019			(163,974 )
Net loss		$	(2,261,542 )		$	(3,310,408 )		$	(1,539,454 )		$	(2,763,566 )
Net loss per unit share attributable to common members—basic and diluted		$	(0.01 )		$	(0.01 )		$	(0.01 )		$	(0.01 )
Weighted-average (WA) common units outstanding used to compute net loss per unit attributable to common members—basic and diluted			233,732,667			252,523,542			247,266,395			257,604,208
Pro Forma Adjustments: (1)
Pro forma adjustment for interest on convertible notes (2)			—			—			—			186,686
Pro forma net loss (3)		$	(2,261,542 )		$	(3,310,408 )		$	(1,539,454 )		$	(2,576,880 )
WA common shares outstanding pro forma (unaudited):
WA common shares after the LLC Conversion (4)			5,843,317			6,313,089			6,181,660			6,440,105
WA common shares attributed to conversion of convertible notes (5)			—			—			—
Pro forma WA common shares outstanding used to compute net loss per share attributable to common stockholders—basic and diluted (2)(5)			5,843,317			6,313,089			6,181,660
Pro forma net loss per share attributable to common stockholders—basic and diluted		$	(0.39 )		$	(0.52 )		$	(0.25 )		$

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(1)

(2)

As the convertible notes were considered converted at the original issuance dates in 2017, recognized interest expense of $186,686 for the six-month period ended June 30, 2017 was removed for pro forma purposes.

(3)

Celcuity LLC is a limited liability company and is therefore a disregarded legal entity for income tax purposes. Accordingly, no provision for income taxes was included in the financial statements for the periods presented. On a pro forma basis, after giving effect to the LLC Conversion, (i) no income tax expense would be recorded as Celcuity had net losses for the applicable periods, and (ii) no income tax benefit would be recorded as any potential tax benefit would be fully offset by a valuation allowance.

(4)

The weighted average common shares outstanding after the LLC Conversion assumes the units of Celcuity LLC are converted into shares of common stock at a conversion ratio of one share of common stock for every 40 units. The weighted average 252,523,542 and 257,604,208 units for the year ended December 31, 2016 and for the six months ended June 30, 2017, respectively, are assumed to convert into 6,313,089 and 6,440,105 shares of common stock at the beginning of the periods presented, respectively.

(5)

The weighted average common shares attributable to conversion of our convertible notes assumes the conversion of $8,337,500 principal amount, plus accrued interest of $16,305, into shares of common stock at the beginning of the period presented, or the original issuance date, if later. The conversion of such notes is based on an assumed initial public offering price of $ per share, the midpoint of the price range set forth on the cover page of this prospectus. The assumed pro forma conversion of the convertible notes at the original issue date during 2017 increased the weighted average common shares outstanding by for the six-month period ended June 30, 2017.

	As of December 31,						As of June 30, 2017
	2015			2016			As of June 30, 2017
	Actual			Actual			Actual			Pro Forma (1)
							(unaudited)
Balance Sheet Data:
Cash and cash equivalents		$	5,067,240		$	5,856,348		$	10,908,068		$	10,908,068
Total assets			5,300,025			6,056,977			11,686,950			11,686,950
Total current liabilities			283,604			445,359			776,954			776,954
Convertible notes			—			—			6,575,413			—
Total stockholders’ equity			5,016,421			5,611,618			4,334,583			10,909,996

(1)

Pro forma after giving effect to: (1) the LLC Conversion described in “Certain Relationships and Related Party Transactions—LLC Conversion”; and (2) the conversion of our unsecured convertible notes, which had a carrying value of $6,575,413 as of June 30, 2017, into common stock as described in the section entitled “Description of Capital Stock—Unsecured Convertible Promissory Notes,” with an assumed initial public offering price of $ per share, the midpoint of the price range set forth on the cover page of this prospectus.

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

The following discussion should be read in conjunction with the historical financial statements and the related notes thereto filed with this prospectus. This discussion and analysis and other parts of this prospectus contain forward-looking statements based upon our current beliefs, plans and expectations that involve risks, uncertainties and assumptions, such as statements regarding our objectives, intentions and projections. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of several factors, including those set forth under “Risk Factors” and elsewhere in this prospectus. You should carefully read the “Risk Factors” section of this prospectus to gain an understanding of the important factors that could cause actual results to differ materially from our forward-looking statements. Please also see the section entitled “Special Note Regarding Forward-Looking Statements.”

O verview

We are a cellular analysis company that is discovering new cancer sub-types and commercializing diagnostic tests designed to significantly improve the clinical outcomes of cancer patients treated with targeted therapies. Our proprietary CELx diagnostic platform is the only commercially ready technology we are aware of that uses a patient’s living tumor cells to identify the specific abnormal cellular process driving a patient’s cancer and the targeted therapy that best treats it. We believe our CELx platform provides two important improvements over traditional molecular diagnostics. First, molecular diagnostics can only provide a snapshot of the genetic mutations present in a patient’s tumor because they analyze dead cells. Using dead cells prevents molecular diagnostics from analyzing in real-time the dynamic cellular activities, known as cell signaling, that regulate cell proliferation or survival. Cancer can develop when certain cell signaling activity becomes abnormal. Since genetic mutations are often only weakly correlated to the cell signaling activity driving a patient’s cancer, a molecular diagnostic is prone to providing an incomplete diagnosis. CELx tests overcome this limitation by measuring real-time cell signaling activity in a patient’s living tumor cells. When a CELx test detects abnormal signaling activity, a more accurate diagnosis of the patient’s cancer driver is obtained. Second, molecular diagnostics can only estimate the probability of a patient’s potential drug response based on a statistical analysis of the drug’s clinical trial results. Instead of this indirect estimate of drug response, CELx tests directly measure the effectiveness of a targeted therapy in a patient’s living tumor cells. This enables physicians to confirm that the therapeutic matching the patient’s cancer driver is functional in the patient’s tumor cells before prescribing it, which significantly increases the likelihood of a positive clinical outcome.

In addition to our CELx tests for HER2-negative breast cancer, we are developing CELx tests to diagnose 14 new potential cancer sub-types we have discovered in breast, lung, colon, ovarian, kidney, bladder and hematological cancers. Approved or investigational drugs are currently available to treat these new potential cancer sub-types. We expect to launch these additional tests on a staggered basis over the next few years while continuing our research to identify additional new cancer sub-types.

We have not generated any revenue from sales to date, and we continue to incur significant research and development and other expenses related to our ongoing operations. As a result, we are not and have never been profitable and have incurred losses in each period since our inception in 2012. For the years

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ended December 31, 2016 and 2015, we reported a net loss of $3.3 million and $2.3 million, respectively. As of June 30, 2017, we had an accumulated deficit of $11.1 million, which includes $0.9 million of non-cash charges, consisting of approximately $0.7 million for equity-based compensation and approximately $0.2 million for non-cash interest expense. As of June 30, 2017, we had cash and cash equivalents of $10.9 million.

F inancial O verview

Components of Operating Results

Revenue

To date, we have not generated any revenue. Initially, our ability to generate revenue will depend primarily upon our ability to obtain partnership agreements with pharmaceutical companies to provide companion diagnostics for such pharmaceutical partners’ existing or investigational targeted therapies. We expect these partnerships to generate significant revenue from the sale of tests to identify patients eligible for clinical trials, from milestone payments, and, potentially, from royalties on the incremental drug revenues our tests enable. Once a new drug indication is received that requires use of our companion diagnostic to identify eligible patients, we expect to generate revenues from sales of tests to treating physicians.

Research and Development

Since our inception, we have primarily focused on research and development of our CELx platform, development and validation of our CELx HSF Test, and research related to the discovery of new cancer sub-types. Research and development expenses primarily include:

•

employee-related expenses related to our research and development activities, including salaries, benefits, travel and stock-based compensation expenses;

•

laboratory supplies;

•

consulting fees paid to third parties;

•

clinical trial costs;

•

facilities expenses; and

•

legal costs associated with patent applications.

Internal and external research and development costs are expensed as they are incurred. As we initiate clinical trials to evaluate efficacy of targeted therapies in cancer patients selected with one of our CELx tests, the proportion of research and development expenses allocated to external spending will grow at a faster rate than expenses allocated to internal expenses. For the years ended December 31, 2016 and 2015, we incurred research and development expenses of $3.1 million and $2.0 million, respectively. For the six months ended June 30, 2017, we incurred research and development expenses of $2.2 million.

Conducting a significant amount of research and development is central to our business model. We plan to increase our research and development expenses for the foreseeable future as we seek to discover new cancer sub-types and to develop and validate additional CELx tests to diagnose such sub-types. We also expect to incur increased expenses to support companion diagnostic business development activities with pharmaceutical companies as we develop additional CELx tests. Timelines and costs to develop and validate new CELx tests may differ materially from expectations.

General and Administrative

General and administrative expenses consist primarily of salaries and related benefits related to our executive, finance and support functions. Other general and administrative expenses include travel expenses for our general and administrative personnel and professional fees for auditing, tax, and legal services. We anticipate that our general and administrative expenses will increase in future periods, reflecting both increased costs in connection with the potential future commercialization of CELx tests, an expanding infrastructure, and increased professional fees associated with being a public reporting company.

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Sales and Marketing

Selling and marketing expenses consist primarily of professional and consulting fees related to these functions. Though we have incurred immaterial sales and marketing expenses to date as we continue to focus primarily on the development of our CELx platform and corresponding CELx tests, we expect to begin to incur increased selling and marketing expenses in anticipation of the commercialization of our CELx HSF Test. These increased expenses are expected to include payroll-related costs as we add employees in the commercial departments, costs related to the initiation and operation of our sales and distribution network and marketing related costs.

Interest Expense

Interest expense primarily consists of the amortization of debt discount and debt financing costs related to the issuance of our unsecured convertible promissory notes.

Interest Income

Interest income consists of interest income earned on our cash and cash equivalents balances.

R esults of O perations

Comparison of the Years Ended December 31, 2015 and 2016:

	Years Ended December 31,						Increase (Decrease)
	2015			2016			$			%
Operating expenses:
Research and development		$	2,011,719		$	3,064,762		$	1,053,043		52 %
General and administrative			250,091			263,664			13,573		5 %
Total operating expenses			2,261,810			3,328,426			1,066,616		47 %
Loss from operations			(2,261,810 )			(3,328,426 )			(1,066,616 )		47 %
Interest income			268			18,018			17,750		6623 %
Net loss		$	(2,261,542 )		$	(3,310,408 )		$	(1,048,866 )		46 %

Research and Development

For the year ended December 31, 2016, our total research and development expenses increased $1.05 million, or 52%, to $3.06 million from $2.01 million for the prior year. The increase primarily resulted from a $0.8 million increase in employee-related expenses, including equity-based compensation, to support development of our CELx platform, validation studies of our CELx HSF Test, business development activities, and a $0.2 million increase in laboratory supplies to support research and development projects.

General and Administrative

For the year ended December 31, 2016, our total general and administrative expenses increased $0.01 million, or 5%, to $0.26 million, from $0.25 million for the prior year. The increase in general and administrative expenses primarily resulted from increases in non-personnel related costs, including increases in property and casualty insurance, of $0.01 million for the year ended December 31, 2016.

Interest Income

For the year ended December 31, 2016, interest income increased by approximately $0.02 million over the prior year. The increase resulted from interest earned on our cash and cash equivalents from the $7.5 million of proceeds of a financing that closed in December 2015 and May 2016.

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Comparison of Six Months Ended June 30, 2016 and 2017:

	Six Months Ended June 30,						Increase (Decrease)
	2016			2017			$			%
	(unaudited)
Operating expenses:
Research and development		$	1,412,056		$	2,212,629		$	800,573		57 %
General and administrative			131,417			386,963			255,546		194 %
Total operating expenses			1,543,473			2,599,592			1,056,119		68 %
Loss from operations			(1,543,473 )			(2,599,592 )			(1,056,119 )		68 %
Other income (expense):
Interest expense			—			(186,686 )			(186,686 )		n/a
Interest income			4,019			22,712			18,693		465 %
Total other income (expense)			4,019			(163,974 )			(167,993 )
Net loss		$	(1,539,454 )		$	(2,763,566 )		$	(1,224,112 )		80 %

Research and Development

For the six months ended June 30, 2017, our total research and development expenses increased $0.8 million, or 57%, to $2.2 million from $1.4 million for the prior year period. The increase primarily resulted from an increase in employee-related expenses, including equity-based compensation, to support development of our CELx platform, validation studies of our CELx HSF Test, start-up clinical trial costs, and business development activities.

General and Administrative

For the six months ended June 30, 2017, our total general and administrative expenses increased $0.26 million, or 194%, to $0.39 million, from $0.13 million for the prior year period. The increase in general and administrative expenses primarily resulted from increases of $0.13 million in equity-based compensation and $0.06 million in professional accounting and audit fees for the six months ended June 30, 2017.

Interest Expense

For the six months ended June 30, 2017, interest expense increased $0.2 million over the same period in the prior year. The increase consisted of $0.2 million of non-cash amortization of debt discount and debt financing costs and accrued interest related to the issuance of our unsecured convertible promissory notes.

Interest Income

For the six months ended June 30, 2017, interest income increased $0.02 million over the same period in the prior year. The increase resulted from interest earned on our cash and cash equivalents.

L iquidity and C apital R esources

Since our inception, we have incurred losses and cumulative negative cash flows from operations. Through June 30, 2017, we have raised an aggregate of $13.7 million from the sale of membership units of Celcuity LLC and $7.5 million from the issuance of unsecured convertible promissory notes, which have been the primary source of funds for our operations since inception. As of June 30, 2017, our cash and cash equivalents were $10.9 million and we had an accumulated deficit of $11.1 million.

We expect that our research and development and general and administrative expenses will increase as we continue to develop our CELx platform and additional CELx tests, conduct research related to the discovery of new cancer sub-types, conduct clinical trials, pursue other business development activities, and become a public reporting company. We will also start to incur sales and marketing expenses as we commercialize our CELx HSF Test. We expect to use a portion of the net proceeds from this offering, in

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combination with our existing cash and cash equivalents, to fund our research and development expenses, capital expenditures, working capital, sales and marketing expenses, and general corporate expenses, as well as for the increased costs associated with being a public company. The amount by which we increase our research and development and other expenses will be dependent upon the net proceeds from this offering and cannot currently be estimated.

Based on our current business plan, we believe the net proceeds from this offering, together with our current cash and cash equivalents, will be sufficient to meet our anticipated cash requirements for at least 24 months following this offering.

If our available cash balances and net proceeds from this offering are insufficient to satisfy our currently anticipated liquidity requirements, including potential costs associated with delays in obtaining partnership agreements with pharmaceutical companies or other risks described in this prospectus, we may need to raise additional capital. We may also seek to raise additional capital beyond the currently anticipated amount to expand our business, pursue strategic investments, and take advantage of financing or other opportunities that we believe to be in the best interests of the company and our stockholders. Additional capital may be raised through the sale of common or preferred equity or convertible debt securities, entry into debt facilities or other third-party funding arrangements. The sale of equity and convertible debt securities may result in dilution to our stockholders and those securities may have rights senior to those of our common shares. Agreements entered into in connection with such capital raising activities could contain covenants that would restrict our operations or require us to relinquish certain rights. Additional capital may not be available on reasonable terms, or at all. These risks are discussed more fully in the section of this prospected entitled “Risk Factors.”

Cash Flows

The following table sets forth the primary sources and uses of cash for each of the periods set forth below.

	Years Ended December 31,						Six Months Ended June 30,
	2015			2016			2016			2017
							(unaudited)
Net cash provided by (used in):
Operating activities		$	(1,978,780 )		$	(2,888,288 )		$	(1,402,893 )		$	(2,209,733 )
Investing activities			(78,982 )			(40,903 )			(29,863 )			(165,851 )
Financing activities			4,802,394			3,718,299			3,718,300			7,427,304
Net increase in cash and cash equivalents		$	2,744,632		$	789,108		$	2,285,544		$	5,051,720

Operating Activities

Net cash used in operating activities in all periods resulted primarily from our net losses adjusted for non-cash charges.

The net cash used in operating activities was $2.0 million for the year ended December 31, 2015, and consisted primarily of a net loss of $2.3 million adjusted for non-cash items including depreciation of $0.06 million and stock-based compensation of $0.06 million and an increase in accounts payable of $0.16 million. The net cash used in operating activities was $2.9 million for the year ended December 31, 2016, and consisted primarily of a net loss of $3.3 million adjusted for non-cash items including depreciation of $0.07 million and stock-based compensation expense of $0.2 million.

The net cash used in operating activities was $1.4 million for the six months ended June 30, 2016, and consisted primarily of a net loss of $1.5 million adjusted for non-cash items including depreciation of $0.04 million and stock-based compensation expense of $0.04 million. The net cash used in operating activities was $2.2 million for the six months ended June 30, 2017 and consisted primarily of a net loss of $2.8 million and working capital changes of $0.1 million adjusted for $0.65 million of non-cash items, including depreciation of $0.05 million, stock-based compensation expense of $0.4 million and interest expense of $0.2 million.

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Investing Activities

Net cash used in investing activities for the years ended December 31, 2015 and 2016 was $0.08 million and $0.04 million, respectively, and consisted of purchases of property and equipment. Net cash used in investing activities for the six months ended June 30, 2016 and 2017 was $0.03 million and $0.17 million, respectively, and consisted of purchases of property and equipment.

Financing Activities

Net cash provided by financing activities for the year ended December 31, 2015 was $4.8 million and reflects the net proceeds from the sale of membership units of the Celcuity LLC to certain investors. Net cash provided by financing activities for the year ended December 31, 2016 was $3.7 million and reflects the net proceeds from the sale of membership units of Celcuity LLC to certain investors. Net cash provided by financing activities for the six months ended June 30, 2016 was $3.7 million and reflects the net proceeds from the sale of membership units of Celcuity LLC to certain investors. Net cash provided by financing activities for the six months ended June 30, 2017 was $7.4 million and reflects the net proceeds from the issuance of unsecured convertible promissory notes and member warrants to certain investors of $7.5 million, reduced by $0.03 million for deferred transaction costs related to this offering.

O ff -B alance S heet A rrangements

We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.

R ecent A ccounting P ronouncements

From time to time new accounting pronouncements are issued by the Financial Accounting Standards Board, or FASB, or other standard setting bodies and adopted by us as of the specified effective date. Unless otherwise discussed in Note 1 to our audited financial statements included elsewhere in this prospectus, we believe that the impact of recently issued standards that are not yet effective will not have a material impact on our financial position or results of operations upon adoption.

C ritical A ccounting P olicies and U se of E stimates

Our management’s discussion and analysis of financial condition and results of operations is based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States, or Generally Accepted Accounted Principles (GAAP). The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported expenses during the reporting periods. These items are monitored and analyzed by us for changes in facts and circumstances, and material changes in these estimates could occur in the future. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances; the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Changes in estimates are reflected in reported results for the period in which they become known. Actual results may differ materially from these estimates.

While our significant accounting policies are more fully described in Note 1 to our financial statements included elsewhere in this prospectus, we believe that the following accounting policies are critical to the process of making significant judgments and estimates in the preparation of our financial statements and understanding and evaluating our reported financial results.

Stock-Based Compensation

We issue stock-based awards to employees and non-employees, generally in the form of stock options. We account for our stock-based awards in accordance with FASB Accounting Standards Codification, or ASC, Topic 718, Compensation—Stock Compensation , or ASC 718. ASC 718 requires all stock-based payments to employees, including grants of employee stock options and modifications to existing stock options, to be recognized in the statements of operations based on their fair values. We account for

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stock-based awards to non-employees in accordance with FASB ASC Topic 505-50, Equity-Based Payments to Non-Employees , which requires the fair value of the award to be re-measured at fair value as the award vests. We recognize the compensation cost of stock-based awards on a straight-line basis over the vesting period of the award for employees and non-employees, which is generally four years. Compensation expense related to our stock-based awards is subject to a number of estimates, including the estimated volatility and underlying fair value of our common units as well as the estimated life of the awards. For a detailed description of how we estimate fair value for purposes of option grants and the methodology used in measuring stock-based compensation expense, see “Stock-Based Compensation and Common Unit Valuation” below. Following the completion of this offering, stock option values will partially be determined based on the market price of our common stock on The Nasdaq Capital Market.

S tock -B ased C ompensation and C ommon U nit V aluation

Stock-Based Compensation

We estimate the fair value of our stock-based awards to employees and non-employees using the Black-Scholes option pricing model, which requires the input of highly subjective assumptions, including, among others, (a) the expected volatility of our units, (b) the expected term of the award, (c) the risk-free interest rate, (d) expected dividends, and (e) the fair value of our common units on the date of grant. Due to the lack of a public market for the trading of our common stock and a lack of company-specific historical and implied volatility data, we have based our estimates of expected volatility on the historical volatility of a group of publicly traded companies in the life sciences and biotechnology industries generally in a similar stage of development as ourselves. For these analyses, we have selected companies that we consider broadly comparable to our Company and with historical share price information sufficient to meet the expected life of the stock-based awards. We compute the historical volatility data using the daily closing prices for the selected companies’ shares during the equivalent period of the calculated expected term of our stock-based awards. We will continue to apply this methodology until a sufficient amount of historical information regarding the volatility of our own stock price becomes available. For options granted to employees in 2015 and 2016, we determined the expected term based on the simplified method in accordance with Securities and Exchange (SEC) Staff Accounting Bulletins Nos. 107 and 110 as the Company’s units are not publicly traded. The risk-free interest rates for periods within the expected life of the option are based on the U.S. Treasury Yield Curve in effect during the period the options were granted.

We have computed the fair value of employee and non-employee stock options at date of grant using the following weighted-average assumptions:

	Years Ended December 31,				Six Months Ended June 30,
	2015		2016		2016		2017
Expected term (in years)		6.25 – 10.00		6.25 – 10.00		6.25 – 10.00		6.25 – 10.00
Volatility rate		72 %		75 %		72 %		75 %
Risk-free interest rate		1.98 %		2.00 %		2.00 %		2.00 %
Expected dividend yield		0 %		0 %		0 %		0 %

Stock-based compensation for employees and non-employees was allocated as outlined below:

	Years Ended December 31,						Six Months Ended June 30,
	2015			2016			2016			2017
Research and development		$	56,507		$	187,307		$	36,301		$	294,189
General and administrative			—			—			—			128,627
Total		$	56,507		$	187,307		$	36,301		$	422,816

As of June 30, 2017, total unrecognized compensation expense was $1.3 million and the weighted-average remaining requisite service period for such expense was 1.63 years. We expect the impact of our stock-based compensation expense for stock options granted to employees and non-employees to grow in future periods due to the potential increases in the value of our common units and in headcount.

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Membership Unit Valuations

As of the date of this prospectus, we are a private limited liability company with no public market for our membership units. Therefore, our board of governors determines the fair value of our membership units based on the most recent price of membership units sold to investors in arm’s length transactions.

For valuations after the completion of this offering, our board of directors will determine the fair value of each share of underlying common stock based on the closing price of our common stock on the date of grant, as reported on The Nasdaq Capital Market.

Unit Option Grants

The following table summarizes unit options granted from January 1, 2015 through June 30, 2017:

Period of Issuance	Number of Units Underlying Unit Options Granted		Exercise Price Per Unit			Fair Value Per Unit on Grant Date
Quarter 1, 2015		1,500,000		$	0.09		$	0.09
Quarter 2, 2015		181,000		$	0.09		$	0.09
Quarter 3, 2015		180,000		$	0.09		$	0.09
Quarter 4, 2015		210,000		$	0.09		$	0.09
Quarter 4, 2015		20,000		$	0.19		$	0.19
Quarter 2, 2016		6,790,000		$	0.19		$	0.19
Quarter 3, 2016		242,500		$	0.19		$	0.19
Quarter 4, 2016		570,000		$	0.19		$	0.19
Quarter 1, 2017		150,000		$	0.19		$	0.19
Quarter 2, 2017		5,776,000		$	0.21		$	0.19

The intrinsic value of all outstanding options as of June 30, 2017 was $0.5 million based on the estimated fair value of our membership units of $0.19 per unit, of which approximately $0.4 million related to vested options and approximately $0.1 million related to unvested options.

N et O perating L oss C arryforwards

We were originally organized as a Minnesota limited liability company and will convert to a Delaware corporation immediately prior to the effective time of the registration statement of which this prospectus is a part. As a result, none of the net operating losses incurred from inception through the date of the conversion will carry forward to the stockholders of Celcuity Inc.

JOBS A ct

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

Q uantitative and Q ualitative D isclosures about M arket R isk

As a smaller reporting company, we are not required to provide disclosure pursuant to this item.

P resentation of F inancial I nformation

We prepare our financial statements in accordance with GAAP. In the preparation of these financial statements, we are required to make estimates and assumptions that affect the reported amounts of assets, liabilities, costs and expenses and related disclosures. To the extent that there are material differences between these estimates and actual results, our financial condition or operating results would be affected.

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We base our estimates on past experience and other assumptions that we believe are reasonable under the circumstances, and we evaluate these estimates on an ongoing basis. We refer to accounting estimates of this type as critical accounting policies and estimates, which we discuss above under the heading “Critical Accounting Policies and Use of Estimates.”

L egal P roceedings

From time to time we may be involved in disputes or litigation relating to claims arising out of our operations. We are not currently a party to any legal proceedings that could reasonably be expected to have a material adverse effect on our business, financial condition and results of operations.

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Business

O verview

Our first analytically validated and commercially ready test using our CELx platform, the CELx HSF Test, diagnoses two new sub-types of HER2-negative breast cancer that traditional molecular diagnostics cannot detect. Our internal studies show that approximately 20% of HER2-negative breast cancer patients have abnormal HER2 signaling activity similar to levels found in HER2+ breast cancer cells. As a result, these HER2-negative patients have undiagnosed HER2-driven breast cancer and would be likely to respond to the same anti-HER2 targeted therapies only HER2+ patients receive today. Our CELx HSF Test is targeting HER2-negative breast cancer patients receiving treatment, which, according to the NCI SEER Review, includes approximately 278,000 patients annually in the U.S. We estimate the annual U.S. market opportunity for this first test alone is approximately $1.1 billion, assuming a test price of $4,000, which is in line with prices for complex molecular diagnostic tests and is the low end of our planned selling price range of $4,000 to $7,000 per test. In addition, as a CDx, we estimate this test could potentially drive approximately $4.0 billion of new annual U.S. revenue for HER2 therapies. This assumes HER2-negative breast cancer patients diagnosed with abnormal HER2 signaling by our CELx HSF test, roughly 20% of all HER2-negative breast cancer patients, or 55,000 patients annually, are treated with HER2 therapies costing approximately $73,000 per patient. The per patient therapy cost assumed is in line with the cost of Herceptin ® and Perjeta ® , the current standard of care HER2 drug treatment regimen that, according to Genetech at the time of launching Perjeta ® in 2012, had a wholesale price of $10,900 per month. We believe this creates significant motivation for pharmaceutical companies to partner with us. In late-2017, we will be fielding a prospective clinical trial in collaboration with the NSABP and Genentech to evaluate the efficacy of Genentech’s HER2 targeted therapies in patients with these newly identified cancer sub-types. We expect interim results 10 to 12 months from this trial after the first patient is enrolled and final results in 18 to 21 months.

In addition to our CELx tests for HER2-negative breast cancer, we are developing CELx tests to diagnose 14 new potential cancer sub-types we have discovered in breast, lung, colon, ovarian, kidney, bladder and hematological cancers. According to the NCI SEER Review, approximately 880,000 patients are treated annually in the U.S. for one of these cancer types. Approved or investigational drugs are currently available to treat these new potential cancer sub-types. We expect to develop and launch additional

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CELx tests to diagnose these new cancer sub-types on a staggered basis over the next few years while continuing our research to identify additional new cancer sub-types. The resulting total annual addressable U.S. test market, defined as the 880,000 cancer patients we are developing CELx tests for, is approximately $3.5 billion, assuming a price of $4,000 per test.

The need for more complete cancer diagnoses is significant. The complexity and dynamic nature of cancer makes it difficult to determine the underlying cellular activity driving the disease. Molecular tests are used to identify genetic mutations and select targeted therapies, but the overall impact of those tests on patient outcomes has fallen far short of expectations, primarily due to two factors. First, molecular tests provide a static and limited genetic profile of a patient’s tumor, and, therefore, cannot measure dynamic disease activity. These tests rely on statistical correlations to diagnose patients, and when a genetic mutation is only weakly correlated to oncogenic-related cellular dysfunction, a high number of false positive diagnoses will result. With patient response rates to therapies targeting a genetic mutation typically less than 50%, and in some cases, only 10% to 20%, there is significant need for an alternative approach. Second, many cancers lack a genetic biomarker to guide treatment. For those patients, the cellular dysfunction responsible for their cancer goes undiagnosed, which means they are less likely to receive a potentially beneficial targeted therapy. Thus, current molecular tests have demonstrated only a limited ability to diagnose the specific cellular dysfunction that is driving most patients’ cancer.

Our CELx platform addresses the need for better cancer diagnostic tests using two complementary technologies that represent a significant departure from molecular-based analyses. Unlike molecular tests that use fixed or lysed (dead) cells and can only measure the static composition of a cell, our CELx platform measures real-time signaling activity in a patient’s live tumor cells. This enables us to: (1) identify the cellular signaling dysfunction driving a patient’s cancer; and (2) confirm whether the matching targeted therapy is functional in the patient’s cells. We perform our CELx tests in our CLIA-certified and CAP-accredited laboratory in Minneapolis, Minnesota.

Our platform, comprised of our internally developed cell microenvironment and cell signaling quantification technologies, allows for more accurate diagnoses and the discovery of new cancer sub-types:

•

Cell microenvironment. Culturing living tumor cells poses three primary challenges. First, there is typically only a small amount of patient tumor tissue available. Second, the tumor cells often die once they are removed from the tumor tissue. Third, tumor cells that do survive are difficult to maintain. Moreover, when conventional cell culture approaches are used it can often take more than two months to prepare a test sample and the success rate is typically less than 50%. Due to these challenges, the pharmaceutical industry principally relies on widely available immortalized or genetically modified cancer cell lines, which are easily maintained and proliferate indefinitely at predictable rates. While these properties are useful for drug discovery purposes, that usefulness has minimized incentives to transfer patient tumor cell culturing technologies to the clinical setting. Our proprietary cell microenvironment technologies were designed to overcome these challenges and provide a testable cell sample from a patient tumor specimen as small as 20 milligrams in 10 to 14 days for more than 90% of the patient tumor specimens we receive.

•

We believe our CELx platform will fundamentally change the standard-of-care many cancer patients receive. Patients with the newly identified cancer sub-types we have discovered have oncogenic pathways that are signaling abnormally, and, we believe, may respond positively to a matching targeted therapy. By identifying patients with a new cancer sub-type, each CELx test will create, in effect, a proprietary patient population that molecular diagnostics cannot identify.

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commercial activity initially on partnering with pharmaceutical companies to provide companion diagnostics that diagnose the new cancer sub-types we discover. We will use our CELx companion diagnostics to match the newly identified patient populations to a pharmaceutical partners’ existing or investigational targeted therapies.

We expect these partnerships to generate significant revenue from the sale of tests to identify patients eligible for clinical trials, from milestone payments, and, potentially, from royalties on the incremental drug revenues our tests enable. Once a new drug indication is received that requires use of our CDx to identify eligible patients, we will offer our tests directly to treating physicians and coordinate go-to-market strategies with our partner. This coordination of commercialization strategies will allow us to significantly leverage the sales, marketing and reimbursement resources of our pharmaceutical partner, unlike traditional molecular diagnostic companies.

O ur V alue P roposition

We believe we offer a clear and compelling value proposition to the key healthcare stakeholders:

•

Patients & Providers—Improved patient outcomes. Our CELx tests provide a more accurate diagnosis of a patient’s cancer driver and an assessment of a matching targeted therapy’s effectiveness in blocking the cellular dysfunction. This will enable physicians to match more precisely the targeted therapy they use to treat their patients. We believe this will increase the percentage of patients responding to the drug, improving overall patient outcomes significantly.

•

Pharma—Increased revenue & optimized clinical trials. CELx tests can significantly increase the revenue potential for many existing targeted therapies by identifying entirely new pools of patients potentially responsive to their therapy. For some targeted therapies, we estimate a CELx test could double the number of patients approved to receive treatment, thus driving billions of dollars in incremental sales. Also, by providing more precise selection of patients, our CELx tests can increase the odds a clinical trial meets its trial endpoint, greatly enhancing the likelihood the drug will obtain FDA approval for a new indication. In addition, according to an ARK Invest publication dated August 2016, companion diagnostics that increase the response rates of a drug can reduce Phase 3 clinical trial size as much as ten-fold and costs as much as 60%.

•

Payors—Lower costs per responsive patient. By providing more precise cancer diagnoses and driving higher drug response rates, we will significantly reduce the money spent on drugs that do not benefit patients. Many targeted therapies cost more than $50,000 per treatment and only benefit a small fraction of patients receiving them. Calculating drug costs on a cost-per-responsive patient, and not just cost-per-treated patient, highlights the true cost of targeted therapies and the expense associated with low drug response rates. For instance, a $50,000 targeted therapy with a 30% response rate costs $167,000 per responsive patient; however, that same drug would only cost $83,000 per responsive patient if the response rate was 60%.

O ur C ompetitive S trengths

We have a number of key strengths that enhance our ability to achieve our mission and build a successful company:

•

First mover. We are the first company that we are aware of to launch diagnostic tests that measure the signaling pathway activity in a patient’s live tumor cells, which we believe gives us a significant first mover advantage.

•

High barriers to entry. Our issued and pending patents, as well as our proprietary information and trade secrets, give us a strong intellectual property position that we believe creates a significant barrier to entry for potential competitors.

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Multi-billion-dollar addressable market. The broad range of pathways and cancer tissues we can test with our CELx platform enables us to initially target up to approximately 880,000 cancer patients per year, creating a nearly $3.5 billion addressable market for our CELx tests based on our expected selling price of at least $4,000 per test.

•

Diverse revenue streams including pharma partnerships. We anticipate generating significant revenue from CDx pharmaceutical partners, including revenue from the sale of tests to identify patients eligible for clinical trials, milestone payments, and potentially, from royalties on the incremental drug revenues our tests enable. Our most significant revenue opportunity comes from ongoing sales of CELx tests to physicians during the commercialization stage of the CDx.

•

O ur P latform A dvantages

Our unique and proprietary CELx functional cellular analysis technology represents a major shift from the diagnostic industry’s reliance on molecular profiling to characterize a patient’s cancer sub-type. Our goal is to leverage our technology to build a durable competitive advantage that enables us to improve outcomes for a significant percentage of cancer patients.

Our CELx platform advantages include:

•

Powerful cancer sub-type discovery tool. We have already discovered 16 new potential cancer sub-types that are not currently diagnosed and treated with a matching targeted therapy. These sub-types are characterized by the dysfunctional signaling pathway activity our CELx tests identify. By identifying new cancer sub-types, we are creating new patient populations to which pharmaceutical companies can offer new and existing drug therapies.

•

Direct patient-specific assessment of disease status. Even though the response rates for many targeted therapeutics are low, for those patients who do respond, their outcomes can be improved significantly. The problem is matching the patient to the right drug. Our platform overcomes this problem by directly identifying whether an oncogenic signaling pathway is abnormally active in a patient’s cells. This provides the most complete assessment available today of the intracellular activity driving a patient’s cancer. Existing genomic tests typically can only provide a determination whether cancer is present and an assessment of molecular mutations that may or may not be associated with the patient’s cancer driver.

•

Direct measurement of matching drug effectiveness. An important advantage of the CELx platform is its ability to quantify the amount of signaling dysfunction that a matching targeted therapy can inhibit in an individual patient’s cancer cells. This allows us to evaluate whether there are inherent drug resistance mechanisms that would prevent the therapy from functioning in the patient’s tumor cells. Molecular tests cannot provide this evaluation.

•

Improved response rates. We believe a patient population will have a higher response rate to a matching targeted therapy when it is diagnosed with a CELx test than with a molecular biomarker. By first identifying whether dysfunctional signaling is present and then confirming that a matching targeted therapy can inhibit the dysfunction, a CELx test eliminates the two primary variables that confound patient response to targeted therapy signaling: the presence or absence of the disease and the drug not functioning as intended. A molecular test provides insight on neither of these variables in most cases.

•

Identify drug responsive proprietary patient cohorts. There are large numbers of cancer patients who lack a genetic biomarker to guide treatment. For these patients, the cellular dysfunction driving the cancer goes undiagnosed, thus excluding such patients from receiving a potentially beneficial targeted therapy. We believe our CELx tests will enable us to identify new proprietary patient populations not currently diagnosable with molecular tests and increase the number of

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patients likely to respond to a matching targeted therapy. Moreover, we will be the only partner a pharmaceutical company can work with to develop a CDx for a new indication of a targeted therapy addressing these new patient populations. By contrast, most molecular diagnostic tests are undifferentiated and have little proprietary value, which gives pharmaceutical companies a wide range of companies to select from when choosing a molecular-based CDx partner.

•

Streamlined FDA approval of targeted therapeutics. CELx tests will enable our pharmaceutical partners to enroll patients in their clinical trial with the same cellular dysfunction their targeted therapy is designed to inhibit. We believe this will improve patient response rates, increasing the likelihood the trial meets its endpoint target and thus the likelihood the drug receives FDA approval. Improved patient response rates would also help reduce the size, cost, and length of our partner’s clinical trials.

O ur I ndustry

According to the Centers for Disease Control and Prevention, or CDC, cancer was the second-leading cause of death in the United States in 2015, responsible for nearly one of every four deaths. Based on data collected from 2010 to 2012, the American Cancer Society indicates that approximately 42% of males and 38% of females in the United States will develop cancer at some point in their lives. CDC data shows that annual deaths from cancer nearly tripled between 1950 and 2014, and a 2016 report from the World Health Organization, or WHO, attributes 8.8 million worldwide deaths in 2015 to cancer. As life expectancies grow and cancer diagnoses increase, significant resources have been devoted to the search for effective cancer treatments. The 2016 report from the WHO shows that the total annual economic cost of cancer was greater than $1 trillion and growing.

There are many types of cancer treatment options, including surgery, radiation therapy, chemotherapy, immunotherapy, hormone therapy, stem cell transplant, and targeted therapy. Targeted therapies are drugs or other substances that block the growth and spread of cancer by interfering with specific molecular targets involved in the progression of cancer. Targeted therapies differ from standard chemotherapy drugs in that they are often cytostatic (block tumor cell proliferation) rather than cytotoxic (kill tumor cells). According to the National Cancer Institute, there are currently more than 80 approved targeted oncology therapies, some of which cost more than $100,000 per treatment course, and an IMS Institute article published in 2016 reports that annual global growth in the oncology drug market is expected to be 7.5 to 10.5% through 2020, reaching $150 billion, driven in part by the high costs associated with targeted therapies.

Diagnostic tests to detect single biomarkers are now widely used by pathologists to determine the molecular sub-type of a cancer. When a molecular biomarker test is used to support the choice of therapy to prescribe, it is often referred to as a “companion diagnostic.” Increasing numbers of targeted therapeutics are prescribed based on the results from a companion diagnostic test to detect the presence of a molecular biomarker. Only patients testing positive for the biomarker are eligible to receive the associated therapy.

Companion diagnostics are becoming increasingly important to the pharmaceutical industry. The use of companion diagnostics to better match patients to effective treatments positively impacts clinical outcomes and lowers expenditures on drugs that do not benefit patients. Stratifying the eligible patient population to include only likely responders is particularly important when the percentage of likely responders is only a fraction of the total cancer population. In these circumstances, narrowing the eligible patient population is often necessary to meet the clinical endpoint targets required to receive FDA drug approval. According to the October 2016 Global Companion Diagnostics Market report published by Market Data Forecast, the global companion diagnostics market totaled $3.3 billion in 2016, making it one of the fastest-growing segments of the in vitro diagnostic market, and is projected to continue strong growth into the future based on the number of drugs in clinical trials. The report notes that the global companion diagnostics market is expected to grow to $8.9 billion by 2021.

O ur M arket O pportunities

CDx Development Opportunities

We believe there at least 50 different potential opportunities for our company to collaborate on CDx programs with pharmaceutical companies. Our ability to develop partnering relationships with these

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pharmaceutical companies will be predicated on a number of factors, including the size of the patient population our CELx test identifies and the remaining patent life of the matching targeted therapy, and we are prepared to adjust our priorities accordingly.

We believe the total potential revenue opportunity for the various CDx development programs we will seek is approximately $1.6 billion. This assumes there are 50 potential CDx programs, milestone payments during the program average $20 million, and the number of patients we test to screen for enrollment in clinical trials averages 3,000. We estimate each program would generate $12 million in revenue from tests for the clinical trials, assuming a $4,000 price per test (the low end of our expected price range). The number of potential CDx programs is based on the number of new cancer sub-types we have discovered and the number of approved or investigational matching targeted therapies we have identified. The number of clinical trial tests we estimate each CDx program will require assumes our partner will enroll 300-450 CELx selected patients for their clinical trials. The estimated amount of milestone payments is consistent with several recently announced CDx programs. The table below summarizes the total potential available revenue from these CDx development programs.

CDx Program Total Revenue Potential

		Number of Potential CDx Programs			50
		Number of Clinical Trial Tests per CDx Program			3,000
		Price per test			$4,000
		Total Potential Clinical Trial Revenues (A)			$600,000,000
		Milestone Payments per program			$20,000,000
		Total Potential Milestone Payments (B)			$1,000,000,000
		Total Potential Revenue—All Programs (A+B)			$1,600,000,000
		Average CDx Program Revenue			$32,000,000

We believe the revenue opportunity per CDx program is consistent with other development programs pharmaceutical companies support. In addition, the revenue projection for an individual CDx program represents only a small fraction of the potential value the new drug indication our CDx could create for our pharmaceutical company partner. For some drugs, our tests could double the number of patients eligible for a targeted therapy. Our CELx HSF Test identified 20% of HER2-negative patients with abnormal HER2 signaling who may benefit from treatment with HER2 drugs. Fully deployed, this test could increase the annual number of eligible patients to receive HER2 targeted therapies by 55,000 in the U.S. alone, which more than doubles the current number of patients eligible to receive them. This assumes that our CELx HSF Test identifies abnormal HER2 signaling in approximately 20% of the 278,000 HER2-negative breast cancer patients that, according to the NCI SEER Review, are currently receiving treatment each year.

CELx Testing Opportunities

We expect to generate recurring CDx testing revenues once a CELx CDx-linked drug therapy is approved for patient use. On average, we believe that the lifetime value of providing the CDx test will significantly exceed the revenue generated from the CDx development program. We expect to offer each CELx test to patients at prices ranging from $4,000–$7,000, depending on the number of pathways evaluated. No tests directly comparable to the CELx tests are available today to offer reference points for pricing purposes. Pricing for several proprietary complex genomic tests, however, fall within this range and we believe this provides guidance on the amount insurance companies are willing to pay for highly informative tests that guide patient care.

We estimate an approximately $3.5 billion annual U.S. market opportunity for CELx CDx programs and physician ordered tests. For purposes of estimating the size of the market, as presented in the table below, we assume a CELx test price of $4,000. The number of test eligible patients listed in the table below was derived from the NCI SEER Review.

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Target Market Potential—U.S. Only

Disease Type	Test-Eligible Patients		Annual Revenue
Breast (HER2-)		278,230		$	1,112,918,400
NSCLC		263,612		$	1,054,446,000
Ovarian		29,051		$	116,204,800
Colon		146,000		$	580,983,800
Bladder		68,072		$	272,247,800
Kidney		57,084		$	225,280,800
Leukemia		40,294		$	161,175,200
		880,814		$	3,523,256,800

CEL x T echnology B ackground

The Role of Cellular Signaling Pathways in Cancer

Cancer is a class of exceedingly complex and diverse diseases characterized by the development of abnormal cells that divide uncontrollably and can infiltrate and destroy normal body tissue and disrupt normal organ function. In normal cells, a series of biochemical activities, known as signal transduction, transmit biochemical signals through an interconnected network of signaling pathways to control cell proliferation and survival. Cancer arises when alterations occur in one or more of these signaling pathways and normal cell processes are disrupted, resulting in uncontrolled cell proliferation. These alterations are driven by a variety of cellular aberrations, including genetic mutations and dysfunctional signaling pathway mechanisms. Identifying the alteration driving an individual’s cancer is complicated by the immense complexity of these signal transduction processes and the practically unquantifiable number of pathway variables.

As recently as 20 years ago, most cancers were classified and subsequently treated solely on the basis of the anatomical location of the tumor in the body. Chemotherapies that kill rapidly dividing cells were widely used, but they had only limited efficacy for many patients and caused a wide range of dangerous side effects due to lack of discrimination for tumor tissue. As tools to identify molecular mutations became available, scientists began to uncover correlations between certain molecular mutations, cancer tissue type, and a patient’s prognosis. This fostered the development of molecularly targeted therapeutics that were designed to disrupt the specific cellular function of the drug target, typically abnormal signaling pathway activity, associated the molecular mutation. These targeted therapies greatly improved outcomes for some cancer patients and are a testament to the efficacy of targeted therapies when effectively prescribed. According to information published by the Journal of Clinical Oncology in July 2015, targeted therapies are oftentimes 10 to 20 times more expensive than chemotherapies.

In conjunction with the advent of targeted therapies, new molecular diagnostics were developed to help physicians refine the classification of a patient’s cancer into sub-types based on the presence of a specific molecular anomalies, such as genetic mutations or over-expressed proteins. Such mutations or over-expressed proteins are commonly referred to as “biomarkers” when they are used to diagnose a disease and evaluate treatment options. For instance, breast cancer diagnostic tests are performed to determine whether two protein biomarkers, human epidermal growth factor receptor 2 (HER2) or estrogen receptors (ER), are overexpressed in the cancer cells. The results of these tests are used to classify the patient’s cancer molecular sub-type and to guide selection of a corresponding targeted drug therapy.

The launch and on-going development of many new targeted therapies and the increasing use of companion molecular diagnostics to guide selection of the most appropriate therapy for each patient ushered in the era of so-called “precision medicine” in oncology. Advances in genomic and proteomic techniques and drug discovery enabled researchers to identify new drug targets, new molecular diagnostics, and drugs that would specifically bind to the target.

While the increased usage of targeted therapies has improved patient outcomes, there is increasing recognition that the promise of molecularly guided diagnoses and targeted treatment has fallen far short of

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expectations. This is generally due to the heterogeneous nature of these diseases from patient to patient and the challenge of identifying the specific cellular dysfunction driving a cancer patient’s tumor growth. No matter how sophisticated or detailed, a point-in-time molecular profile can only provide a snapshot of a tumor. As a result, the genetic mutations many current tests identify are often only weakly correlated to the abnormal signaling driving a patient’s cancer. This is because protein and gene profiling provide an incomplete assessment of the biochemical activity promoting cancer tumor growth. In fact, when dysfunctional, the activity of signaling pathway networks are, we believe, not possible to assess using current genetic analyses, despite the impressive investments in mapping the human genome and advancements in techniques to identify molecular mutations.

The combination of the heterogeneous nature of cancer and the weak correlation of abnormal signaling to many genetic mutations helps explain why the response rates for patients treated with many targeted therapies are often less than 50%, and in some cases as low as 10% to 20%. The table below provides representative examples of response rates to targeted therapies that rely on a CDx to select eligible patients, as well as an example of the objective response rate for a targeted therapy that does not use a CDx to select eligible patients. The objective response rates listed below were obtained from the clinical trial data included with each of the targeted therapies’ respective FDA labels.

Targeted Therapy Objective Response Rates

Targeted Therapy

Type of
Cancer

Biomarker

Objective
Response Rate (1)

Herceptin ® (04/17)

Breast

HER2

16 %

Perjeta ® (03/16)

Breast

HER2

11 %

Gilotrif ® (07/13)

Lung

EGFR mutations

31 %

Votrient ® (05/17)

Kidney

None

27 %

Erbitux ® (10/16)

Colon

EGFR/K-Ras WT

18 %

(1)

Objective response rate (ORR) is the difference between the ORR of the targeted therapy and the ORR of the control drug during the targeted therapy’s pivotal clinical trial, as reported in the targeted therapy’s FDA drug label.

For a patient to respond to a targeted therapy designed to disrupt disease-related signaling activity, two factors must be present: (1) the patient’s diseased cells must have the same signaling pathway dysfunction the drug is designed to inhibit, and (2) the drug affects its targeted pathway as intended. Current state-of-the-art genomic tests use fixed (dead) cells, which limits them to evaluating the presence or concentration of a genetic mutation or protein. These tests cannot evaluate either dynamic signaling activity or whether a drug can affect that activity. When a patient’s genomic biomarker status does not represent underlying signaling pathway dysfunction, this can lead to selection of the wrong targeted therapy to treat the patient. Of particular interest to us are those patients with dysfunctional signaling who lack a corresponding biomarker; they are not currently eligible to receive any targeted therapy that treats their dysfunctional signaling.

To measure dynamic cellular activity, living patient tumor cells are required. Until our advancements, efforts to use living patient tumor cells have been limited by the lack of reliable methods to extract and culture cancer cells from patient tumors. These previously limited efforts reflect the emphasis amongst cancer researchers on creating stable cell lines for use to model cell function or to studies screen millions of test compounds in drug discovery programs. Pharmaceutical companies driving the commercial development of cell technologies work primarily with immortalized cells or cell lines genetically modified to express a target or mutation of interest. These cell lines consist of established cell cultures that proliferate indefinitely and very uniformly. They are used primarily because they provide a highly uniform response when tested with millions of small molecules in the search for potential new drugs, and because techniques to culture these cells are well known, their properties well understood, and other experimental results using them are available for comparison purposes. Conversely, live patient tumor cells are difficult to obtain, are only available in small quantities, and according to a 2014 article published by Science , the percentage of tumors that yield proliferative cells with conventional culturing methods has until now been well below

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50%, which required months of culturing to obtain sufficient testable quantities of cells. For these reasons, researchers prefer paraffin-fixed tissue or cell lines over living tumor cells when studying disease processes or screening drug candidates. This lack of compelling rationale for pharmaceutical companies and academic institutions to work with live tumor cells for research purposes left the field of live tumor cell research in a relatively immature state.

Our CELx Platform

We have made significant investments in research and development to build the first commercially-ready cancer diagnostic platform that we are aware of that measures the signaling pathway activity in a patient’s living tumor cells. To measure dynamic cellular activity, we internally developed two distinct but complementary technologies, which now comprise our CELx platform:

•

our proprietary cell microenvironment; and

•

our method to quantify dynamic patient cell signaling dysfunction.

We utilize our CELx platform to create CELx tests that measure specific signaling pathway activity in various tumor types.

Cell microenvironment. Previous research has shown that cancer cells extracted from a patient’s tumor share the molecular features of the primary cancers from which they were derived and could provide an ex vivo (outside the patient) model of a patient’s tumor. The technology around tumor cell extraction from individual patients and culturing techniques, however, has largely remained undeveloped. For instance, no competing diagnostic tests use live patient tumor cells to measure dynamic cell signaling activity and studies on the topic have historically highlighted the challenges of deriving a viable patient tumor cell sample from an individual patient tumor specimen.

We have developed a cell microenvironment to extract and expand viable tumor cells from fresh human tumor tissue, which meets the three critical clinical parameters a patient-derived tumor cell sample would need to satisfy in order to meet the regulatory and clinical requirements for a diagnostic test measuring signaling activity:

•

The patient cell sample tested must reflect the starting tumor’s composition. If samples do not reflect the original tumor’s composition, test results derived from that sample may not be representative of the patient’s tumor. Competing techniques largely rely upon use of irradiated non-tumor cells to foster cell proliferation, transformative “engineering” techniques or other un-natural manipulations of the cells to keep them alive. Because these competing approaches significantly increase the risk that the resulting patient cell test sample may not mirror the patient’s original tumor, we developed processes that only utilize tumor cells derived directly from the patient’s tumor specimen.

•

The sample must be available for testing in less than 21 days. Clinicians generally require test results in cases of complex diseases such as cancer within two to three weeks so they can begin treatment of their patient as soon as the initial symptoms are evaluated or a preliminary diagnosis is made. Competing techniques require two to six months to culture sufficient tumor cells for a test sample, making them unsuitable for use with a clinical diagnostic. To meet this time requirement we developed processes that allow tumor cell proliferation outside the patient.

•

At least 90% of the tumor specimens obtained from a patient must yield testable samples. Clinicians will only order tests that require a patient specimen when they are highly likely to receive a test result. The challenges of increasing the cell sample yield from tumor tissue are well known and competing techniques are only able to obtain testable quantities of cells from less than 50% of patient tumor specimens. To meet this requirement, we developed processes that enhance cell survival when tumor cells are removed from live tissue.

We believe our pioneering efforts have substantially advanced the technology of primary tumor cell culture technology. We have one issued U.S. patent, four pending U.S. patent applications, nine pending non-U.S. patent applications and one pending international PCT patent application, as well as significant proprietary know-how and trade secrets for the various cell sample preparation methods we have developed.

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The table below compares the critical advantages of our approach to the requirements for a clinical test with the prior state-of-the-art.

Critical Advantage of CELx Platform

Parameter

Clinical Test
Requirements

Prior State-of-Art

Celcuity

Celcuity’s
Advancement

Sample
Composition

Cell population
tested must reflect
starting tumor
composition

Multi-passage
culture process
requires use of
irradiated
non-tumor
cells

Only patient tumor
cells are used to
derive the sample

Cells tested mirror
heterogeneity of
patient tumor
tissue

Culturing
Period

<21 Days

2−6 months (1)

<14 days

Results available in
clinically relevant
window

Yield

>90%

<50% (1)

95%

Reliability exceeds
clinical test
requirements

(1)

Crystal, A.S, et. al., Patient-derived models of acquired resistance can identify effective drug combinations for cancer, Science , 13 November 2014.

Dynamic patient cell signaling quantification. The second component of our CELx platform involves methods to quantify specific dynamic signal transduction events in patient derived tumor cells. The complexity of signal transduction processes is immense and the permutations of the pathway variables are practically unquantifiable. Current analytical methods to assess these variables use dead (fixed or lysed) cells. Point-in-time measurements are limited to assessment of the compositional status (e.g. mutation), concentration level (e.g. protein amount), or activation status (e.g. phosphorylation) of a finite number of signaling pathway components. A key insight underlying our technology was our observation that, no matter how sophisticated or detailed, a point-in-time molecular profile would only provide a snapshot. These methods could not provide a complete, dynamic assessment of the signaling activity driving a patient’s cancer. These point-in-time molecular analyses would, in many cases, only provide a weak correlation to the presence of the signaling pathway dysfunction driving a patient’s cancer. Instead, we concluded that a complete diagnosis of cancer and an assessment of a patient’s response to treating their disease requires measurement of the underlying activity of signaling pathways in live patient tumor cells.

To measure live real-time dynamic cell signaling activity, we utilize an impedance biosensor instrument. An impedance biosensor is an analytical platform that converts changes in cellular activity to a measurable electrical signal. We use the instrument to monitor dynamic changes in cell adhesion and morphology initiated by signal pathway activation or inhibition in live patient tumor cells. The instrument is comprised of a 96-well microplate with thin gold electrodes covering the bottom of each well. Wells employed with a selective extracellular matrix attach viable cells in a specific manner to the electrodes. The presence of viable cells on top of the electrodes affects the local ionic environment at the electrode/cell interface, leading to an increase in electrode impedance. To obtain a measurement, a small alternating current is applied across the electrode. When cells are added to the microplate wells and attach to the electrodes, they act as insulators increasing the impedance in each well.

As cells cover the electrodes, the current is impeded in a manner related to the number of cells and their adhesion properties. In addition, since cell signaling changes modulate a cell’s adhesion properties, the impedance biosensor detects and quantifies these changes. When cells are stimulated and change their function, the accompanying changes in cell adhesion thus alter the impedance that is measured.

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The following schematic provides an example of impedance measurement in a single-well of the microplate:

[MISSING IMAGE: T1701672_SINGLEWELL.JPG]

To determine the activity of a specific signaling pathway, an activating agent specific to a pathway receptor is used to turn on the pathway and a corresponding inhibitory agent specific to the pathway receptor is used to turn signaling off. When signaling pathways are stimulated in this manner, adhesion molecules are effected and cause a change in the impedance measured in a well. By relying on the principle of detecting signaling pathway activity, we believe we can develop tests for a range of disease types and targeted therapies that affect various cellular pathways.

Data is recorded in real-time when a patient’s tumor cells are responding to activating or inhibitory agents and analyzed with the impedance biosensor. The output value is reported as the change in the electrical impedance measured. The change in impedance values is quantified over time and used to determine a Signaling Function Score. An example of the data output recorded during a CELx test using an impedance biosensor instrument is provided below.

In this example, a HER family signaling pathway (HER3) in a sample of breast cancer cells is stimulated with an activating agent (NRG1b) alone and in combination with various concentrations of a dual-HER family pathway inhibitor (lapatinib). The uppermost curve labeled “No Drug — Max Stimulation” represents the amount of HER3 signaling pathway activity that occurs over a 10-hour period when the breast cancer cells are stimulated with the NRG1b alone. The remaining curves represent the amount of pathway activity that occurs after the pathway inhibitor is added to cells at different doses. The curves with the pathway inhibitor added have decreasing peak and decreasing aggregate values and demonstrate that the test has an expected dose dependent response to the addition of the pathway inhibitor. The curve labeled “Max Stimulation—Max Drug” indicates that, in this example, nearly all the pathway activity stimulated with the activating agent is inhibited or blocked by the pathway inhibitor.

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Typical Impedance vs. Time Data Set (1)

[MISSING IMAGE: T1702136_CHRT-INHIBIT.JPG]

(1)

Data output recorded during a CELx test conducted by Celcuity.

N ew P roduct D evelopment

We are leveraging our CELx technology to discover new cancer sub-types that a genomic test cannot detect. These new sub-types are characterized by the hyperactive signaling pathway our test identifies. These sub-types cannot be detected by genomic tests because they lack a corresponding molecular biomarker to identify it. We will translate our discoveries into diagnostic tests that incorporate the following primary steps:

(1)

Extraction of proliferative tumor cells from patient biopsy. This step provides the patient tumor cells that we use to perform the test.

(2)

Activation of signaling pathway activity. This step determines whether the signaling pathway we are assessing is dysfunctional or not.

(3)

Inhibition of signaling pathway activity. This step determines whether the matching targeted therapy is functional in the patient’s tumor cells. If the drug can block a significant amount of the signaling dysfunction, this demonstrates lack of an inherent resistance mechanism in the patient’s tumor cells that would prevent the drug from functioning when prescribed to the patient.

We confirmed that we can discover new cancer sub-types in 2015 with the discovery of two new breast cancer sub-types—HER2-/ER+ and HER2-/ER- breast cancer with abnormal HER2 signaling. We are now leveraging the expertise we gained while validating the resulting CELx HSF Test for breast cancer to guide our discovery of additional cancer sub-types.

We are currently conducting research to identify additional cancer sub-types in five solid tumor types that, according to information from the NCI SEER Review and the American Cancer Association, account for nearly 560,000 new diagnoses annually. Our research studies to date have identified 14 potentially new breast, lung, ovarian, kidney, and bladder cancer sub-types that involve dysfunctional oncogenic signaling pathways. Multiple dysfunctional pathways were active in each of these tumor types. These studies confirm that the CELx platform can be a cancer sub-type discovery engine and that we can create a multi-pathway

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test to identify the specific driver in a patient’s tumor. We expect to eventually expand the tumor types we evaluate to include colon, head and neck, leukemia, esophageal, and gastric cancers that account for nearly 279,000 new diagnoses annually according to the NCI SEER Review.

We have now begun development of CELx tests for a number of these new potential cancer sub-types. Our goal is to characterize the prevalence of these new sub-types and to confirm that they can be inhibited with a matching therapy in mouse xenografts in 2017.

		Pathway				Cancer Site
		HER2				Current R&D Breast Lung Bladder Kidney Ovarian Future R&D Colorectal Bone Marrow Head and Neck Esophageal Gastric
		Pathway 1
		Pathway 2
		Pathway 3
		Pathway 4
		Pathway 5
		Pathway 6
		Pathway 7
		Pathway 8

We will seek to identify individual signaling pathways that may be driving at least 5% to 10% of the total cancers in each tissue area. Once we have characterized the prevalence of the different sub-types of signaling dysfunction in each tumor type and validated the tests for the different pathways, our plan will be to launch a corresponding CELx test. Eventually, each CELx test will analyze multiple pathways in a patient’s tumor to identify the specific pathway dysfunction driving a patient’s cancer. Testing multiple pathways will thus provide a systems view of the patient’s cancer using dynamic functional analysis. We believe this will result in more accurate diagnosis of a patient compared to molecular diagnostics that are using next generation sequencing to assess the status of multiple static biomarkers.

Clinical Trial Approach

A major component of our development and commercial activities is providing clinical data from interventional clinical trials using our CELx tests. Our clinical trial strategy is predicated on proving the correlation between our CELx Signaling Function Score and a patient’s clinical results. Once our first trial demonstrates that our CELx HER2 Test identifies patients responsive to HER2 targeted therapies, we expect pharmaceutical companies to partner with us to fund trials to evaluate new potential indications for their drugs with patients identified by one of our CELx tests. The trials will be designed to confirm that patients with abnormal pathway signaling obtain a superior clinical response to a therapy targeting that pathway than to the standard-of-care therapy they currently receive.

Each clinical trial would be structured as a prospective interventional study. The objective would be to confirm the relationship between the CELx Signaling Function Score generated by the CELx test and the study endpoint. Different primary endpoints will be used depending on the stage and type of cancer. For late-stage solid tumor trials, Time-to-Progression, or TTP, or Progression-Free Survival, or PFS, would likely be used, mirroring the endpoints used in the tested drug’s pivotal trial. For early stage solid tumor trials, pathological complete response, or pCR, would likely be used. The trials will either be single-arm or randomized two-arm.

We also expect to evaluate multiple CELx tests in the same trial when we have identified two or more cancer sub-types in the same tumor type (e.g., breast, ovarian, lung). Screened subjects would be assigned to a therapy arm that corresponds to the pathway found to be abnormal.

To obtain statistically significant results, a randomized two-arm trial is projected to require enrollment of approximately 120 to 150 patients for each drug evaluated, or between 60 to 75 patients in each arm.

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A single-arm trial would require 25 to 50 patients. We estimate each trial will require 18 to 27 months from the initiation of enrollment to completion of the follow-up period and that interim analysis will be performed in most trials with interim data available after 10 to 15 months.

For trials involving patients not currently eligible for a cancer drug that targets a certain pathway, we would first obtain a tissue specimen from each subject and perform the CELx test to identify subjects who have abnormal signaling. These patients would then be randomly assigned to either an arm that receives the current standard-of-care therapy or one that includes the current standard-of-care therapy plus the targeted therapy. All patients would be monitored until their disease progresses.

First Test—CELx HER2 Signaling Function Test

HER2+ breast cancer. Roughly 15% to 20% of breast cancer patients are diagnosed with HER2+ breast cancer when their tumor cells are found to have overexpressed or amplified levels of HER2. These patients are treated with anti-HER2 targeted therapies in combination with chemotherapies. Results from a number of clinical trial results for HER2 drugs reveal that only about 40% of HER2-positive patients respond to them. In addition, findings from several clinical trials have shown that a sub-set of HER2-negative patients benefit from therapies that target HER2. These results highlight the relatively weak correlation between HER2 receptor or gene amplification status and drug response.

Signaling activity status vs. HER2 receptor status. Based on this analysis, we concluded that measurement of HER2 signaling activity, rather than absolute HER2 levels, may more accurately diagnose HER2-driven breast cancer. This led to our successful studies in 2014 when we discovered abnormal HER2 signaling in HER2-negative breast cancer patient tissue. We concluded that this patient population provided an excellent opportunity to validate our hypothesis that signaling activity is more correlative to disease activity than receptor status.

HER2-negative breast cancer. Based on data published in the NCI SEER Review, approximately 342,000 women receive treatment for breast cancer in the United States each year. This includes 246,000 newly diagnosed patients and 150,000 women whose cancer has recurred. Approximately 84% of these women, 278,000, have HER2-negative breast cancer; these women represent the target patient population for this test.

HER2-Negative Breast Cancer Population

	Diagnosis								CELx HER2 Test
	Primary				Recurrent				Target Population
BC Type	%		#		%		#		%		#
HER2-, ER+		67 %		165,312		67 %		100,800		80 %		212,890
HER2-, ER-		17 %		40,590		17 %		24,750		100 %		65,340
		84 %		205,902		84 %		125,550		84 %		278,230

Measuring HER2-status not sufficient to diagnose all HER2 cancers. Despite the widely recognized role that a dysfunctional HER2-related signaling network plays in promoting breast cancer, only tests measuring a single reactant, HER2 protein, are performed in the clinic to diagnose it; we believe no diagnostic tests are available today that measure HER2 signaling activity within a patient’s breast tumor epithelial cells. This focus on measuring HER2 expression-levels reflects the widely-held view that measuring a patient’s HER2 status is sufficient to diagnose HER2-driven breast cancers. When only HER2 expression is measured, though, patients classified as HER2-negative but whose tumor cells have abnormal HER2 signaling are diagnosed as not having HER2-driven breast cancer, when, in fact, they do.

Diagnosing HER2 disease in HER2-negative patients with CELx HER2 Signaling Function Test. Since current genomic methods cannot identify the HER2-negative breast cancer patients who have the HER2-driven cancer, a new method was required. Such a method would need to analyze the HER2-signaling pathways (MAPK and PI3K) associated with HER2 cancers in a patient’s tumor cells. This is what our CELx HER2 Test is designed to do. Our test identifies patients whose HER2 status as determined by conventional techniques does not represent the correct diagnosis of their breast cancer at a functional level.

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The CELx HSF Test incorporates the following steps:

Measures signaling driven by HER2 hetero-dimerization of HER1 and HER3:

Activates PI3K & MAPK with HER3 ligand (NRG1) and HER1 ligand (EGF); and

Confirms signaling is HER2-driven using HER2 dimer blocker;

Quantifies amount of HER2 signaling anti-HER2 drugs inhibit; and

Reports HER2 signaling as either Normal or Abnormal in 14 days.

Improving outcomes, HER2 drug response rates, and lower cost per responding patient. Identifying these HER2-negative/HER2-signaling abnormal patients, and treating them with HER2 therapies, offers the potential to improve their clinical outcomes significantly. It is also likely that patients with abnormal HER2 signaling will respond at higher rates than HER2-positive patients. We believe that patients with abnormal HER signaling (e.g., those the CELx HSF Test diagnoses) are very likely to respond because they have the specific disease mechanism the HER2 therapies are designed to treat. This would result in a reduction in the cost of HER2 drugs per responsive patient for those the CELx HSF Test identifies compared to those identified with HER2 protein or gene status tests.

C linical S tudies

Prevalence Studies: 20% of HER2-Negative Patients Have Abnormal HER2-Signaling

To derive an initial estimate of the prevalence of abnormal HER2 signaling within the HER2-negative breast cancer population, we conducted a cell line survey, a training set study and a validation study using primary tumor cells. Live cell response to specific HER2 agonists (NRG1b and EGF) and antagonist (pertuzumab) was measured.

Key findings include:

•

Cell Line Survey Study (N=19)

•

4 of 9 HER2+ cell lines had HER2 signaling activity above 250 signaling units—these results helped establish an initial cut-off value;

•

Confirmed that normal HER2 signaling can occur in cells with overexpressed amounts of HER2; and

•

Confirmed that abnormal HER2 signaling can occur in cells with normal HER2 receptor levels.

•

Training Set Study (N=50).

•

7 of 34 HER2-negative breast cancer patients (20.5%; 95% CI = 10%–37%) had tumor cells with HER2 signaling activity that was characterized as abnormally high and consistent with the HER2 signaling found in the upper 50% of the HER2+ cell lines; and

•

The 16 healthy breast specimens had a significantly lower average and standard deviation HER2 Signaling Scores than the HER2- and HER2+ breast cancer specimens.

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•

Validation Study (N=114)

•

27 of 114 patients (23.7%; 95% CI = 17%–32%) had tumor cells with HER2 signaling activity that was characterized as abnormally high and consistent with the HER2 signaling found in the upper 50% of the HER2+ cell lines.

•

The graph below presents the data from the Cell Line, Training Set and Validation Prevalence Studies in a Box-Whiskers plot format.

•

The dotted line at 250 represents the cut-off value for the CELx HSF Test. The cut-off value of 250 is equivalent to the median CELx Signaling Score recorded from the sample of HER2+ cell lines.

•

HER2-negative breast cancer patients with CELx Signaling Scores at or above 250 have abnormal HER2 signaling.

•

The circled portions of the plots for the HER2- Training Set and HER2 Validation Set results represent the specimens with Abnormal HER2-driven signaling.

Xenograft Study: Abnormal HER2 Signaling Correlates to Drug Response Better than HER2 Status

We conducted a study in collaboration with the University of Minnesota using xenograft mouse models of human breast tumors to evaluate the relationship of HER2-driven signaling and response to lapatinib, a reversible dual-HER2 kinase inhibitor. Key findings:

•

The HER2 signal inhibitor shrank a HER2-negative tumor with abnormal HER2 signaling;

•

The HER2 signal inhibitor did not affect the HER2+ tumor with normal HER2 signaling; and

•

Findings contradict HER2 receptor-based conclusions:

•

Lapatinib inhibition more correlative to HER2 signaling than HER2 receptor expression; and

•

HER2 signaling status independent of HER2 receptor expression.

These findings support the hypothesis that HER2-negative breast cancer patients with abnormal HER2-driven signaling may benefit from treatment with anti-HER2 drugs.

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A summary of results:

Xenograft Study Results

	Cell Line
Parameter	HCC1954	BT483
HER2 Receptor Expression (IHC)	HER2+ (3+)	HER2- (0)
HER2 Signaling Status (CELx)	Normal	Abnormal
Lapatinib Inhibition (Xenograft)	13% (p = 0.34)	49% (p = 0.01)

Study of Two HER2 Antibody Therapies, Trastuzumab and Pertuzumab, in HER2- and HER2+ Cells

We conducted this study to compare the effectiveness of two anti-HER2 antibodies in blocking HER2-driven signaling in HER2+ and HER2- cells. Tumor cells from 5 HER2- primary tumors and 4 HER2+ cell lines were obtained. Real-time live cell response to NRG1, a specific HER2/HER3 agonist, with or without pertuzumab, trastuzumab, or the combination of the two, was measured and quantified. All cell samples tested had comparable, and abnormal, levels of NRG1 activated HER2-driven signaling. Key findings:

•

In each sample, the two mAb’s inhibited a higher percentage of signaling in combination than either mAb alone; no interference effects between the two mAb’s were detected;

•

Pertuzumab and trastuzumab alone were each more effective in the HER2- cell samples than in the HER2+ ones; and

•

Two HER2 mAb’s used to treat HER2+ breast cancer patients are as effective in blocking abnormal HER2-driven function ex vivo in HER2- primary cells as they are in HER2+ cell lines.

Average % NRG1 Inhibition

HER2 mAb	HER2+ Cell Lines	HER2-(HER2 S +) Primaries
Pertuzumab	62%	73%
Trastuzumab	19%	44%
T + P	87%	81%

Study of Four HER2 Signal Inhibitors in HER2- and HER2+ Cells with Abnormal HER2 Signaling

Tumor cells from seven HER2-negative tumor specimens with abnormal HER2-driven signaling (HER2 S +) and the nine HER2-positive cell lines were obtained. Real time live cell response to NRG1, a specific HER2/HER3 agonist, with or without a HER2 targeted drug (pertuzumab, lapatinib, neratinib, afatinib) was measured and quantified. From these responses, the percentage inhibition of the HER2-driven signaling initiated by NRG1 by the HER2 drugs was determined. Key findings:

•

Each of the HER2 drugs inhibited an average of at least 69% of the HER2-driven signaling activated by NRG1 stimulation in the HER2-negative primary cell samples;

•

The highest level of inhibition was found with the two irreversible covalent dual RTKi’s, afatinib and neratinib; and

•

All of the HER2 drugs inhibited a greater percentage of HER2-driven signaling in the HER2-negative primary tumor cells than in the HER2-positive cell lines.

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Average % NRG1 Inhibition

HER2 Drugs	Mechanism of Action	Cell Lines (HER2+)	Primaries (HER2-/ HER2 S +)
Pertuzumab	HER2 dimerization inhibitor	46%	78%
Lapatinib	Reversible Dual RTKi	15%	69%
Afatinib	Irreversible Covalent Dual RTKi	47%	93%
Neratinib	Irreversible Covalent Dual RTKi	95%	100%

Analytical Validation Study

We conducted analytical validation studies in accordance with applicable FDA guidance and Clinical and Laboratory Standards Institute, or CLSI, standards to characterize the performance of the CELx HSF Test. CLSI standards define the test protocols that the FDA and CLIA require laboratories to use to characterize the performance of their diagnostic tests. The study results confirm that the CELx HSF Test has high analytical sensitivity and specificity. A summary of the results is provided below:

CELx HSF Test Analytical Study Results

		Performance Characteristics			Results
		Analytical Precision (Qualitative)
		Analytical Sensitivity (95% CI)			95.8%–100% (88/88)
		Analytical Specificity (95% CI)			95.8%–100% (88/88)
		Detection Limits
		Limit of Blank			0.0020 cell attachment units
		Limit of Detection			0.0099 cell attachment units
		Cut-Off Characterization			250 signaling units
		Carry Over			0%

Clinical Trial (in process): CELx test FDA Approved for Use in Clinical Trials

On May 8, 2017, we entered into a non-exclusive Clinical Trial Agreement with NSABP to conduct a 55-patient single-arm interventional trial, which will commence in the second half of 2017. Pursuant to the agreement, NSABP serves as the Sponsor and Principle Investigator of the trial and is responsible for, among other things, setting up clinical sites, enrolling patients, and managing clinical data. NSABP has contracted separately with Genentech to provide drugs for the study at no cost. We are performing the CELx HSF Test to select patients for the trial and are providing the funding for the trial’s patient-related costs. Based on our estimates of patient enrollment rates, we expect to obtain interim results in 10 to 12 months after the first patient is enrolled and final results within 18 to 21 months.

NSABP is one of the country’s premier clinical research cooperatives. Its members include many of the country’s leading medical centers and their investigators are amongst the most-respected in the breast cancer field. Genentech is one of the largest biopharmaceutical companies in the world and was the first company to launch a HER2 targeted therapy; their anti-HER2 targeted therapies have roughly 95% market share.

We submitted an Investigational Device Exemption, or IDE, application to the FDA to obtain approval to use our CELx HSF Test in a clinical trial setting. The IDE submission included validation test protocols and study reports, manufacturing process summaries, and relevant publications. The FDA approved our IDE in early 2017.

The goal is to demonstrate that patients who have an abnormal signaling pathway, as identified by our CELx test, respond to treatment with a matching targeted therapy. A synopsis of the trial protocol is provided below.

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Clinical Trial Synopsis

		Objective				To evaluate the efficacy of neoadjuvant HER2 drug treatment in early stage HER2-/HER2 S + breast cancer patients
		Sites/Sponsor				Multi-center in collaboration with NSABP and Genentech
		Subjects				55 HER2- early stage breast cancer (26 ER+/29ER-)
		End Point				Pathological complete response (ypT0/Tis ypN0)
		Investigational (Single) Arm				N=55 (HER2 S +) AC-T + Trastuzumab + Pertuzumab

The results of our pre-clinical studies confirm that the CELx HSF Test can identify HER2-negative breast cancer patients whose tumor tissue has abnormal HER2-signaling activity. The proportion of the total HER2-negative breast cancer population that has abnormal HER2-signaling, an estimated 20%, is significant. There would be roughly 55,000 U.S. patients who would become eligible to receive HER2 therapies as a result of our test. For drug companies, we estimate our test could drive $4 billion of new annual revenue for HER2 therapies, creating significant motivation to partner with us to promote it. This assumes the 55,000 HER2-negative breast cancer patients diagnosed with abnormal HER2 signaling by our CELx HSF test are treated with HER2 therapies costing approximately $73,000 per patient. The per patient therapy cost assumed is in line with the cost of Herceptin ® and Perjeta ® , the current standard of care HER2 drug treatment regimen that, according to Genetech at the time of launching Perjeta ® in 2012, had a wholesale price of $10,900 per month.

Pursuant to our agreement with NSABP, the cost of the study is $2.65 million, subject to adjustment based on reimbursement for travel and similar expenses. Of this amount, we paid $300,000 upon entry into the agreement and we will pay: (i) an aggregate of approximately $1.8 million as certain patient milestones are met, (ii) six quarterly payments of $50,000 commencing in 2017 and ending in 2019, and (iii) a final payment of $250,000 upon completion of the study.

Our agreement with NSABP may be terminated by one or either party upon certain events, such as: (i) the FDA withdrawing its authorization and approval to perform the study, (ii) NSABP determining that the human and/or toxicology test results support termination of the study, (iii) either us or NSABP determining that an adverse reaction or side-effect of drugs administered in the study or a modification of the study’s protocol raises safety issues to support termination of the study, (iv) either party remaining in material breach of the agreement for a period of 30 days following notice of such breach, (v) us not performing the CELx HSF Tests or providing study kits, (vi) us failing to pay amounts owed to NSABP, and/or (vii) Genetech terminating its agreement with NSABP to supply drugs for the study or the drugs for the study no longer being manufactured or being available.

C ommercialization S trategy

Our commercial activities will target three complementary groups at various phases of the development of our CELx tests.

•

Pharmaceutical companies. For each CELx test we develop to diagnose a new cancer sub-type, we will identify the matching targeted therapies, either currently approved or in the investigational phase, and the manufacturer of those therapies. We will initiate discussions and seek to reach development agreements with each of these pharmaceutical companies when we have verified the prevalence of the cancer sub-type and completed successful animal studies.

•

Medical and surgical oncologists. We will initially target key opinion leaders, or KOLs, in each cancer type once we have completed the analytical validation of a CELx test. This will allow us to build awareness and credibility for the CELx test as we are generating clinical validation data. When a new drug indication is received that requires use of a CELx CDx to identify eligible patients, we will coordinate the pharmaceutical company’s go-to-market activities with our own. This coordination will allow us to significantly leverage the pharmaceutical company’s sales, marketing, and reimbursement, unlike traditional molecular diagnostic companies.

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Payors. We will initiate pilot activities with payors for late stage patients during the clinical validation phase of a CELx test’s development. We will expand our payor efforts to include health economics analysis once we have clinical trial data available. When a new drug indication is received that requires use of a CELx CDx to identify eligible patients, we expect to coordinate the pharmaceutical company’s reimbursement activities with our own.

Our CELx tests are laboratory developed tests and subject to regulation under the Clinical Laboratory Improvements Act (CLIA). We completed the analytical validation of our first CELx test and received CLIA certification in 2016, at which time our CELx HSF Test was ready to sell commercially on a stand-alone basis to treating physicians. We expect to generate revenues from CELx tests performed in conjunction with the clinical trials a pharmaceutical company will field during the clinical phase of our partners’ drug approval process. We also expect that the agreements we enter into with the pharmaceutical companies partnering with us on these trials will include milestone payments at initiation and completion of trials and perhaps at various other negotiated points during the trials. We expect to generate revenue from the sale of CELx tests ordered by physicians either as stand-alone diagnostics or, upon the approval of our pharmaceutical company’s matching drug, as a CDx.

We intend to position our unique and highly differentiated tests as practice changing advancements in patient care. To inform key stakeholders of the value of our solution in order to drive adoption and reimbursement, we expect to employ the following diverse commercialization strategies over time:

•

leverage our pharmaceutical partnership and their go-to-market initiatives for the drug our CDx is partnered with;

•

collaborate with oncology thought and KOLs and leading institutions on clinical research, publications, and product development;

•

build an experienced, oncology-focused sales force in the United States and international distribution channels that are supported by dedicated company personnel;

•

integrate into the everyday practice of clinicians through our medical affairs and client services efforts;

•

publish important medical and scientific data in peer-reviewed journals and present at major industry conferences, conduct clinical trials; and

•

work with patient advocacy groups, leading cancer philanthropic organizations, and medical societies to drive awareness of CELx tests and the importance of incorporating functional cellular analysis into cancer treatment.

Through these efforts, we will seek to promote our CELx test’s unique capabilities throughout the oncology community—from patients, to the physicians treating them, to the third-party payors for these treatments and to biopharmaceutical companies developing new treatments—all with the goal of facilitating better-informed treatment decisions for the greatest number of patients.

Once results from our current clinical trial are available, we expect to launch our first test, the CELx HSF Test in two phases. During the first phase, we intend to target KOLs in the oncology field to build awareness of our CELx platform. These KOLs are primarily comprised of oncologists and surgeons practicing at major academic health systems who participate in clinical research and cancer research scientists. They often are early adopters of new technologies, particularly those involving new insights into disease mechanisms.

We expect to gradually ramp up our efforts to the remainder of the medical oncologists once we have established our reputation within the KOL community. In addition, we will increase our investment in a direct sales force once our first clinical trial for our CELx HSF Test is completed, which we believe will occur in late 2018.

Once a CELx test is launched to the broader market, we expect physicians, typically a medical or surgical oncologist, will order our tests either as stand-alone diagnostics or, upon the approval of a pharmaceutical company’s matching drug, as a CDx. The physician will prescribe a CELx test and coordinate provision of a patient specimen from a biopsy or surgical procedure. The fresh tissue would then

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be shipped overnight directly to our laboratory where we would use our proprietary methods to extract diseased cell samples from the patient’s tissue and perform the CELx tests ordered. Test results would typically be available in 10 to 14 days after receipt of the patient specimen. For each patient sample analyzed, a Signaling Function Score would be calculated quantitatively and converted into a final qualitative result: abnormal or normal. For patients found to have an abnormal signaling function, clinicians would use the results of the CELx test as a guide to select a targeted drug that inhibits the abnormal signaling activity identified.

United States

For our first tests, we will target the estimated 4,300 medical oncologists working in hospitals and cancer centers in the United States. We expect to hire domestic sales professionals with typically over 10 years of experience in clinical oncology sales working at leading biopharmaceutical or specialty reference laboratory companies.

In general, we intend to focus our initial sales efforts on building relationships with KOLs and researchers at leading academic research institutions to demonstrate the scientific credibility of our CELx tests. We also plan to build relationships in community oncology practice settings through leading physician networks and community hospitals and community based cancer centers. We will also attend national and regional clinical meetings focused on cancer treatment for our anti-cancer tests.

We believe the unique and important nature of the results our CELx tests provide, and their positioning as a CDx, will drive many medical oncologists to independently seek out our tests once they become aware of them. We believe this may allow us to achieve our market penetration goals with a sales force and marketing expenses significantly less costly than has been experienced by molecular diagnostic companies.

International

We believe we can serve the international market from our laboratory in Minnesota. We expect to establish an international presence using local distributors that sell to physicians and coordinate shipment of specimens to the United States. To serve international markets, we would expect to add dedicated regional managers located outside the United States to oversee our relationships at the local level.

Pricing and Reimbursement

The principal groups that we expect to pay us in the future for our CELx tests include:

•

commercial third-party payors;

•

government payors, including Medicare and state Medicaid plans;

•

biopharmaceutical customers;

•

hospitals, cancer centers, and other institutions; and

•

patients.

Adequate reimbursement will be an important factor in achieving broad clinical adoption of our CELx tests. At the same time, we believe broad clinical adoption will help drive favorable reimbursement decisions. To achieve broad reimbursement coverage with commercial third-party payors and government payors, including Medicare and Medicaid, we plan to demonstrate the economic and clinical value of our CELx tests to payors by employing a multi-pronged strategy:

•

Set a high bar for analytical validation. We expect to present data on the reproducibility and precision of CELx tests at conferences and will seek to publish the results in peer-reviewed journals.

•

Meet the evidence standards necessary to be consistent with leading clinical guidelines. We believe inclusion in leading clinical practice guidelines plays a critical role in payers’ coverage decisions. We plan to conduct clinical validation and clinical utility studies that are consistent with the requirements of the widely recognized National Comprehensive Cancer Network clinical practice guidelines.

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Execute an internal managed care policy and claims adjudication function as part of our core business operations. We plan to make obtaining adequate and widespread reimbursement a critical component of our business operations. We expect to hire a team of in-house claims processing and reimbursement specialists who will work with patients and payers to navigate the claims process and obtain maximum reimbursement.

•

Cultivate a network of KOLs. KOLs are able to influence clinical practice by publishing research and determining whether new tests should be integrated into practice guidelines. We expect to collaborate with KOLs early in the development process to ensure our clinical studies are designed and executed in a way that clearly demonstrates the benefits of our tests to physicians and payers.

•

Compile a growing library of peer-reviewed studies that demonstrate the test is effective. We will seek to publish peer-reviewed articles and review papers to help support our efforts to obtain widespread adoption and reimbursement of our CELx tests. In each disease area we pursue, we intend to conduct studies in order to develop similar supporting literature.

•

Reduce expenditures. We intend to build economic models to measure the financial benefits of using our CELx test in guiding patient treatment and minimizing the use of drugs that will not likely have a positive impact. We plan to use the data we gather through the use of these models as we meet with commercial third-party payors and government payors.

•

Commercial third-party payors and government payors are increasingly making significant efforts to contain healthcare costs. A major cost reduction opportunity is to reduce expenditures for drug courses that provide no patient benefit. Our technology will enable physicians to prescribe therapies that have significantly higher response rates than has been the case with targeted therapies to date. Since this will lower the drug cost per responsive patient, we believe widespread use of our CELx tests is consistent with payors goals of delivering health care more cost effectively.

O ur C ompetition

At present, we are not aware of any other companies that offer diagnostic tests that use a patient’s live tumor cells to identify the signaling pathway driving a patient’s cancer. There are several companies focused on developing genomic or proteomic analyses of a patient’s diseased cells. Initial efforts identified protein targets or genetic mutations, oftentimes referred to as “biomarkers,” that are associated with a disease process to enable development of drugs more closely tailored to specific patient populations.

As tools for human genome analysis have become less expensive, a number of companies have also recently launched more complex genomic test panels and gene expression signatures tests. These tests rely on a static measurement of molecular properties and mathematical analysis to identify statistically significant correlations between the selected molecular properties and a clinical condition or outcome of populations of patients with the “same” disease.

These genetic tests often have limited predictive success because they only identify some, but not all of, the molecular and cellular conditions required for a drug therapy to function in a patient. They may identify the presence of the genes associated with a disease but they cannot determine how the gene products function in the context of a particular individual.

Providers of genomic or proteomic tests includes diagnostic kit manufacturers, hospitals and independent laboratories. We do not plan to develop tests where a molecular biomarker can identify drug responsive patients, so our current tests will not compete directly against the tests provided by these other companies. The table below provides a summary of the points of differentiation between our signaling function analysis approach and the molecular approaches used by our potential competitors.

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Current Molecular Methods vs. Celcuity’s Functional Cellular Analysis Platform

Type of Cell Sample Used:

Dead tumor cells
(fixed, lysed)

Live tumor cells

Type of Analysis Performed

Single point-in-time mutation(s)
status or protein amount, or
activation status

Quantify signaling pathway
activity over 24-hour period

Relationship to disease driver

Correlative

Direct Cause

Disease driver evaluated

No. Only a single or small set of
components of the cell are
evaluated

Yes. The activity of the entire
signaling pathway is assessed

Drug function evaluated

No. Cannot assess drug function
with dead cells

Yes. Drug’s effect on signaling
pathway activity in patient’s cells
quantified

Companies

Foundation Medicine, Caris Life
Sciences, NeoGenomics,
LabCorp, Quest, Nanostring,
Paradigm, Biocept, Exosome
Diagnostics, Guardant Health,
Roche Diagnostics, Qiagen,
Myriad, Genomic Health

Celcuity

We are not aware of any available tests directly comparable to the CELx tests. However, list prices for several proprietary complex genomic tests are listed below and provide guidance as to the pricing of highly informative tests that guide cancer patient care. We expect to offer each CELx test to patients at list prices ranging from $4,000 to $7,000, depending on the number of pathways evaluated.

Company	Product	List Price
Genomic Health	Oncotype breast cancer recurrence test	$4,620 (1)
Foundation Medicine	FoundationOne solid tumor genetic profile test	$5,800 (2)
Veracyte	Afirma thyroid cancer diagnostic test	$3,200 (3)

(1)

Reported in Genomic Health, Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016.

(2)

Reported in Foundation Medicine, Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016.

(3)

Reported in Veracyte, Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016.

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I ntellectual P roperty

We believe one of our core competitive advantages is the strength of our intellectual property portfolio. We developed our CELx technology internally. We are seeking both U.S. and non-U.S. patents to protect our inventions. Our patent portfolio currently includes the following:

Subject Matter

Patent/Application #

Status

Priority
Date

Expiration

Methods of treating a cancer patient using cell signaling analysis

US 9,404,915

U.S. granted; Europe and Japan pending

6/12/2012

2033

Methods of treating a cancer patient using cell signaling analysis

US 15/192,280

U.S. pending

6/12/2012

2033

Methods of determining the functional status of a cellular pathway

US 15/179,119

U.S. pending

12/12/2013

2034

Methods of diagnosing a cancer patient using cell signaling analysis

US 15/533,897

U.S., Australia, Canada, China, Europe, Japan, South Korea and New Zealand pending

12/12/2014

2035

Methods of creating a patient cell microenvironment

PCT/US2016/057923

PCT pending

10/20/2015

2036

Methods of treating a cancer patient using cell signaling analysis

US 62/473,936

U.S. pending

3/20/2017

2038

We understand we must develop and maintain protection on the proprietary aspects of our technologies in order to remain competitive. We rely on a combination of patents, copyrights, trademarks, trade secret and other intellectual property laws and confidentiality, material transfer agreements, invention assignment agreements and other contracts to protect our intellectual property rights.

We plan to develop names for new products and apply for trademarks and as appropriate secure trademark protection for them, including domain name registration, in relevant jurisdictions. We also have developed a number of proprietary methods, materials, processes, and techniques related to the preparation of patient samples and performance of the CELx test that we believe are most effectively protected as trade secrets rather than as patented subject matter.

R esearch and D evelopment

We have made significant investments in research and development for our CELx platform. Our annual research and development expenses were approximately $3.1 million and $2.0 million for the years ended December 31, 2015 and 2016, respectively.

P rincipal S uppliers

We purchase commercially available reagents and instruments from a variety of suppliers. Our principal reagent suppliers include Bio-Techne Corporation, Selleck Chemicals, Sigma-Aldrich, and VWR International. Our principal instrument suppliers include Acea Biosciences, Integra Biosciences, Invitrogen, and Thermo Fisher Scientific. These items are purchased on a purchase order basis pursuant to the applicable supplier’s standard terms and conditions. The items purchased from these suppliers are standard products sold widely to the biotechnology industry. All items purchased are typically available within several days after an order is placed.

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G overnment R egulation

CLIA and CMS

The CMS regulates all clinical laboratory testing (except research) performed on humans in the U.S. through CLIA. All clinical laboratories that perform clinical lab services on human specimens for the purpose of providing information on the diagnosis, prevention or treatment of disease must receive CLIA certification. This covers approximately 175,000 laboratories as of 2017. Laboratories must obtain CLIA certification and demonstrate compliance with CLIA requirements as confirmed by an inspection by CMS. We received our CLIA certification in 2016. We also had our laboratory certified by the College of American Pathologies, or CAP, in 2016, an organization recognized by CMS as a third party reviewer of clinical laboratories. Several states, including, among others, New York and California, require licensure of out-of-state labs that receive specimens from the state and compliance with the state’s individual laboratory regulations.

If our laboratory is out of compliance with CLIA requirements, we may be subject to sanctions such as suspension, limitation or revocation of our CLIA certificate, as well as directed plan of correction, state on-site monitoring, civil money penalties, civil injunctive suit or criminal penalties. We must maintain CLIA compliance and certification to be eligible to bill for services provided to Medicare and Medicaid beneficiaries. If we were to be found out of compliance with CLIA program requirements and subjected to sanction, our business could be harmed. Failure to comply with state licensure laws, if applicable, could subject us to additional sanctions imposed by state licensing authorities.

FDA

FDA approval or clearance is not currently required for CELx tests offered as a stand-alone laboratory developed test. If we are partnered with a drug company to launch a CELx test as a CDx for a new drug indication, we would be required to obtain a Pre-Market Approval, or PMA, in conjunction with the pharmaceutical company seeking a New Drug Approval for the matching therapy. Historically, the FDA has exercised enforcement discretion with respect to tests performed solely in a central laboratory, like the CELx tests, often referred to as Laboratory Developed Tests, or LDTs. The FDA has not required laboratories that furnish only LDTs to comply with the agency’s requirements for medical devices ( e.g. , establishment registration, device listing, quality systems regulations, pre-market clearance or pre-market approval, and post-market controls).

Although the FDA proposed regulations that would apply to LDTs, FDA recently decided that, at present, those regulations are not moving forward towards approval and implementation. In mid-2014, the FDA published a Draft Guidance Document describing a proposed approach for a regulatory framework for LDTs that would have resulted in most of the high-value LDT tests marketed today eventually being required to obtain 510(k) clearance or a Pre-Market Approval. If implemented, this regulatory framework would require most hospital clinical labs to abandon a number of tests it performs or to pursue regulatory clearances or approvals to perform them. These proposals met significant resistance from Congress, the hospital industry, and independent clinical laboratories. The FDA indicated in late 2016 that it does not intend to finalize the 2014 Draft Guidance Document at this time. However, FDA continues to discuss potential regulatory approaches to LDTs.

HIPAA and HITECH

Under the administrative simplification provisions of HIPAA, as amended by the HITECH Act, the U.S. Department of Health and Human Services, or HHS, issued regulations that establish uniform standards governing the conduct of certain electronic healthcare transactions and protecting the privacy and security of protected health information used or disclosed by healthcare providers and other covered entities. HIPAA includes the following primary sets of regulations: privacy regulations, security regulations, and standards for electronic transactions, which establish standards for certain healthcare transactions. The privacy and security regulations were extensively amended in 2013 to incorporate new requirements from the HITECH Act.

The privacy regulations cover the use and disclosure of protected health information by healthcare providers and other covered entities. They also set forth certain rights that an individual has with respect to

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his or her protected health information, including, but not limited to, the right to access or amend certain records containing protected health information, or to request restrictions on the use or disclosure of protected health information. The security regulations establish requirements for safeguarding the confidentiality, integrity, and availability of protected health information that is electronically transmitted or electronically stored. The HITECH Act, among other things, makes many of HIPAA’s privacy and security standards applicable to business associates of covered entities, and established certain protected health information security breach notification requirements. A covered entity must notify affected individual(s) and the HHS when there is a breach of unsecured protected health information. HIPAA also governs patient access to laboratory test reports. Effective October 6, 2014, individuals (or their personal representatives, as applicable), have the right to access test reports directly from clinical laboratories and to direct that copies of those test reports be transmitted to persons or entities designated by the individual.

These laws impose significant fines and other penalties for improper use or disclosure of protected health information. Additionally, to the extent that we submit electronic healthcare claims and payment transactions that do not comply with the electronic data transmission standards established under HIPAA and the HITECH Act, payments to us may be delayed or denied.

In addition to the federal privacy regulations, there are a number of state laws regarding the privacy and security of health information and personal data that are applicable to our operations. The HIPAA privacy and security regulations establish a uniform federal “floor” that covered entities and business associates must meet and do not supersede state laws that are more stringent or provide individuals with greater rights with respect to the privacy or security of, and access to, their records containing protected health information. The compliance requirements of these various state laws, including additional breach reporting requirements, and the penalties for violation vary widely and new privacy and security laws in this area are evolving. We believe that we have taken the steps required for us to comply with health information privacy and security statutes and regulations in all jurisdictions, both state and federal. However, we may not be able to maintain compliance in all jurisdictions where we do business. Failure to maintain compliance, or changes in state or federal laws regarding privacy or security, could result in civil and/or criminal penalties and could have a material adverse effect on our business.

Federal, State and Foreign Fraud and Abuse Laws

In the United States, there are various fraud and abuse laws with which we must comply and we are potentially subject to regulation by various federal, state and local authorities, including CMS, other divisions of the HHS (e.g., the Office of Inspector General), the U.S. Department of Justice, and individual U.S. Attorney offices within the Department of Justice, and state and local governments. We also may be subject to foreign fraud and abuse laws in connection with our international business activities.

In the United States, the federal Anti-Kickback Statute prohibits, among other things, knowingly and willfully offering, paying, soliciting or receiving remuneration to induce, or in return for patient referrals for, or purchasing, leasing, ordering, recommending or arranging for the purchase, lease or order of, any healthcare item or service reimbursable under a governmental payor program. Courts have stated that a financial arrangement may violate the Anti-Kickback Statute if any one purpose of the arrangement is to encourage patient referrals or other federal healthcare program business, regardless of whether there are other legitimate purposes for the arrangement. The definition of “remuneration” has been broadly interpreted to include anything of value, including gifts, discounts, credit arrangements, payments of cash, consulting fees, waivers of co-payments, ownership interests, and providing anything at less than its fair market value. Recognizing that the Anti-Kickback Statute is broad and may technically prohibit many innocuous or beneficial arrangements within the healthcare industry, the HHS issued a series of regulatory “safe harbors.” These safe harbor regulations set forth certain provisions, which, if met, will assure healthcare providers and other parties that they will not be prosecuted under the federal Anti-Kickback Statute. Although full compliance with these provisions protects against prosecution under the federal Anti-Kickback Statute, the failure of a transaction or arrangement to fit within a specific safe harbor does not necessarily mean that the transaction or arrangement is illegal or that prosecution under the federal Anti-Kickback Statute will be pursued. Many states also have anti-kickback statutes, some of which may apply to items or services reimbursed by any third-party payor, including commercial insurers.

In addition, federal false claims laws, including the federal civil False Claims Act, prohibit, among other things, any person or entity from knowingly presenting, or causing to be presented, a false claim for

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payment to, or approval by, the federal government or knowingly making, using, or causing to be made or used a false record or statement material to a false or fraudulent claim to the federal government. As a result of a modification made by the Fraud Enforcement and Recovery Act of 2009, a claim includes “any request or demand” for money or property presented to the U.S. government. Recently, several pharmaceutical and other healthcare companies have been prosecuted under these laws for allegedly providing free product to customers with the expectation that the customers would bill federal programs for the product. Other companies have been prosecuted for causing false claims to be submitted because of the companies’ marketing of the product for unapproved, and thus generally non-reimbursable, uses. The civil monetary penalties statute imposes penalties against any person or entity who, among other things, is determined to have presented or caused to be presented a claim to a federal health program that the person knows or should know is for an item or service that was not provided as claimed or is false or fraudulent.

HIPAA created additional federal criminal statutes that prohibit knowingly and willfully executing, or attempting to execute, a scheme to defraud or to obtain, by means of false or fraudulent pretenses, representations or promises, any money or property owned by, or under the control or custody of, any healthcare benefit program, including private third-party payors and knowingly and willfully falsifying, concealing or covering up by trick, scheme or device, a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services.

In addition, various states have enacted false claim laws analogous to the federal False Claims Act, although many of these state laws apply where a claim is submitted to any third-party payor and not merely a governmental payor program. If our operations are found to be in violation of any of the federal or state healthcare laws described above or any other governmental regulations that apply to us, we may be subject to significant penalties, including without limitation, civil, criminal and/or administrative penalties, damages, fines, disgorgement, exclusion from participation in government programs, such as Medicare and Medicaid, injunctions, private “qui tam” actions brought by individual whistleblowers in the name of the government, or refusal to allow us to enter into government contracts, contractual damages, reputational harm, administrative burdens, diminished profits and future earnings, and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations.

In Europe, various countries have adopted anti-bribery laws providing for severe consequences, in the form of criminal penalties and/or significant fines, for individuals and/or companies committing a bribery offence. Violations of these anti-bribery laws, or allegations of such violations, could have a negative impact on our business, results of operations and reputation. For instance, in the United Kingdom, under the Bribery Act 2010, which went into effect in July 2011, a bribery occurs when a person offers, gives or promises to give a financial or other advantage to induce or reward another individual to improperly perform certain functions or activities, including any function of a public nature. Bribery of foreign public officials also falls within the scope of the Bribery Act 2010. Under the new regime, an individual found in violation of the Bribery Act 2010 faces imprisonment of up to 10 years. In addition, the individual can be subject to an unlimited fine, as can commercial organizations for failure to prevent bribery.

Federal and State Physician Self-Referral Prohibitions

Under a federal law directed at “self-referral,” commonly known as the “Stark Law,” there are prohibitions, with certain exceptions, on referrals for certain designated health services, including laboratory services, that are covered by the Medicare and Medicaid programs by physicians who personally, or through a family member, have an investment or ownership interest in, or a compensation arrangement with, an entity performing the tests. The prohibition also extends to payment for any testing referred in violation of the Stark Law. A person who engages in a scheme to circumvent the Stark Law’s referral prohibition may be fined up to $100,000 for each such arrangement or scheme. In addition, any person who presents or causes to be presented a claim to the Medicare or Medicaid programs in violation of the Stark Law is subject to civil monetary penalties of up to $15,000 per bill submission, an assessment of up to three times the amount claimed and possible exclusion from participation in federal governmental payor programs. Bills submitted in violation of the Stark Law may not be paid by Medicare or Medicaid, and any person collecting any amounts with respect to any such prohibited bill is obligated to refund such amounts. Many states have comparable laws that are not limited to Medicare and Medicaid referrals.

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Other Regulatory Requirements

Our operations do not currently use hazardous materials, but we do generate regulated medical waste in the normal course of performing our CELx tests. This subjects us to a variety of federal, state and local environmental and safety laws and regulations. Some of the regulations under the current regulatory structure provide for strict liability, holding a party potentially liable without regard to fault or negligence. We could be held liable for damages and fines as a result of our, or others’, business operations should contamination of the environment or individual exposure to hazardous substances occur. We cannot predict how changes in laws or development of new regulations will affect our business operations or the cost of compliance.

New Legislation and Regulations

Pharmaceutical Coverage, Pricing and Reimbursement

Significant uncertainty exists as to the coverage and reimbursement status of any products for which we sell. Sales of any of our products will depend, in part, on the extent to which the costs of the products will be covered by third-party payors, including government health programs such as Medicare and Medicaid, commercial health insurers, managed care organizations or pharmaceutical companies. The process for determining whether a third-party payor will provide coverage for a test sometimes is separate from the process for setting the price of a drug product or for establishing the reimbursement rate that a payor will pay for the drug product. Third-party payors may limit coverage to specific testing products on an approved list, which might not include all of the tests available for a particular indication.

In order to obtain coverage and reimbursement for any product, we may need to conduct expensive pharmacoeconomic studies in order to demonstrate the medical necessity and cost-effectiveness of the test. Whether or not we conduct such studies, our products may not be considered medically necessary or cost-effective. A third-party payor’s decision to provide coverage for a test does not imply that an adequate reimbursement rate will be approved. Further, one payor’s determination to provide coverage for a product does not assure that other payors will also provide coverage, and adequate reimbursement, for the product. Third-party reimbursement may not be sufficient to enable us to maintain price levels high enough to realize an appropriate return on our investment in product development.

The containment of healthcare costs has become a priority of federal, state and foreign governments, and the prices of tests and drugs have been a focus in this effort. Third-party payors are increasingly challenging the prices charged for medical products and services, examining the medical necessity and reviewing the cost-effectiveness of testing products, drug products and medical services and questioning safety and efficacy. If these third-party payors do not consider our products to be cost-effective compared to other available tests, they may not cover our products or, if they do, the level of payment may not be sufficient to allow us to sell our products at a profit. The U.S. government, state legislatures and foreign governments have shown significant interest in implementing cost-containment programs to limit the growth of government-paid healthcare costs, including price controls and restrictions on reimbursement. Adoption of such controls and measures, and tightening of restrictive policies in jurisdictions with existing controls and measures, could limit payments for testing products or drugs that require use of our testing products and could adversely affect our net revenue and results.

Pricing and reimbursement schemes vary widely from country to country. Some countries may require the completion of additional studies that compare the cost-effectiveness of a particular test to currently available tests. The downward pressure on healthcare costs in general, particularly prescription drugs and

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testing products, has become intense. As a result, increasingly high barriers are being erected to the entry of new products. In addition, in some countries, cross-border imports from low-priced markets exert competitive pressure that may reduce pricing within a country. Any country that has price controls or reimbursement limitations for testing products may not allow favorable reimbursement and pricing arrangements for any of our products.

Coverage policies, third-party reimbursement rates and test pricing regulation may change at any time. In particular, in the United States, the Affordable Care Act contains provisions that have the potential to substantially change healthcare delivery and financing, including impacting the profitability of testing and drugs. For example, the Affordable Care Act revised the methodology by which rebates owed by manufacturers for covered outpatient drugs are calculated under the Medicaid Drug Rebate Program, extended the Medicaid Drug Rebate Program to utilization of covered drugs dispensed to individuals enrolled in Medicaid managed care organizations and subjected manufacturers to new annual fees for certain branded prescription drugs. As the price of our test may be included in the reimbursement rates for certain drugs, this could significantly impact our pricing. Even if favorable coverage and reimbursement status is attained for one or more products, less favorable coverage policies and reimbursement rates may be implemented in the future. However, the proposed repeal of the Affordable Care Act and the uncertainty surrounding a potential replacement law make it even more difficult to predict the future for reimbursement and pricing of drugs and tests in the United States.

C orporate H istory

We were organized as a Minnesota limited liability company in 2011. Immediately prior to the effective time of the registration statement of which this prospectus is a part, we intend to convert from a Minnesota limited liability company into a Delaware corporation and change our name from Celcuity LLC to Celcuity Inc.

F acilities

We currently lease and occupy approximately 5,000 square feet in Minneapolis, Minnesota, which includes our clinical laboratory and offices. This lease expires in May 2018 and is renewable annually. We anticipate requiring additional laboratory and office space in the upcoming years, which may require us to re-locate to another leased facility in the Minneapolis area.

E mployees and L abor R elations

As of June 30, 2017, we had 15 employees, each of which were full-time employees. None of our employees are currently covered by collective bargaining agreements and we believe that our relations with our employees are good.

L egal P roceedings

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Management

E xecutive O fficers and D irectors

The following individuals are currently serving as our executive officers and directors:

Name	Age	Title
Brian F. Sullivan	55	Chairman of the Board and Chief Executive Officer
Vicky Hahne	51	Chief Financial Officer
Lance G. Laing	55	Chief Science Officer, Vice President, Secretary and Director
Maureen Cronin	64	Director (1)
David F. Dalvey	58	Director (1)
Richard J. Nigon	69	Director (1)

(1)

Ms. Cronin, Mr. Dalvey, and Mr. Nigon will each serve as a member of the audit, compensation, and nominating and corporate governance committees. For more information regarding the independence of the directors and committee members, see “Independence of our Board and Board Committees” below. For more information regarding our committees, see “Board Committees” below.

E xecutive O fficers

Brian F. Sullivan, Chairman and Chief Executive Officer

Mr. Sullivan is our co-Founder and has served as Chairman of the Board and Chief Executive Officer since we commenced operations in 2012. Mr. Sullivan has over 25 years of experience founding and building successful, high growth technology companies. He was Chairman and CEO of SterilMed, a medical device reprocessing company, from 2003, when he led an investment group to acquire a majority interest, until its sale to Ethicon Endo-Surgery Inc., a Johnson & Johnson company, for $330 million in 2011. Previously, he was co-founder and Chief Executive Officer of Recovery Engineering, a filtration company, which he took public and subsequently sold to Procter & Gamble for $265 million in 1999. Since 2003, Mr. Sullivan has served on the board of directors of Entegris, Inc., a publicly-held company. Mr. Sullivan has received four U.S. patents and has several pending. He graduated magna cum laude with distinction from Harvard College with an A.B. in economics. Among other attributes, skills, and qualifications, the board of directors believes Mr. Sullivan is uniquely qualified to serve as a director based on his extensive operational and business development experience, and his knowledge in building stockholder value, growing a company from inception and navigating significant corporate transactions and the public company process.

Lance G. Laing, Ph.D., Chief Science Officer

Dr. Laing is our co-Founder and has served as Chief Science Officer, Vice President, Secretary and Director since we commenced operations in 2012. Dr. Laing’s career spans more than 15 years in drug discovery research and technology development. He received his doctorate in biophysics and biochemistry from The Johns Hopkins University and completed a National Institutes of Health post-doctoral fellowship at Washington University Medical School. He has received 17 U.S. patents and has an additional 24 U.S. patents pending. His drug discovery research career began at Scriptgen/Anadys Pharmaceuticals (purchased by Novartis), where he worked under Professor Peter Kim, who became President of Merck Research. He also was Director of Chemistry and Bioapplications and Director of Detection Product Development for two companies that each developed instruments similar to those Celcuity uses to perform the CELx tests. His work at these two instrument companies gave him unique expertise and experience in developing a variety of patented applications for these instruments. Most recently, he served as an executive director for an international drug discovery and development company. Among other attributes, skills, and qualifications, the board of directors believes Dr. Laing is uniquely qualified to serve as a director based on his significant research, medical and scientific expertise.

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Vicky Hahne, Chief Financial Officer

Ms. Hahne joined as our Chief Financial Officer in July 2017. She has more than 20 years of financial leadership experience, including the most recent 10 years in the healthcare industry. Prior to joining Celcuity, Ms. Hahne served as Controller of Respiratory Technologies Inc., a medical device manufacturer, from 2015 to 2017. While at Respiratory Technologies, she played a key role in the due diligence process to sell the company to Koninklijke Philips. In 2014, she served as Controller for Ability Network Inc., a healthcare information technology company. From 2007 to 2012, Ms. Hahne served as Controller of Sterilmed Inc., a medical device reprocessing company, where she was significantly involved in the sale of the company to Johnson & Johnson. Prior to these roles, Ms. Hahne held several senior financial positions at SimonDelivers Inc., including Chief Financial Officer. Ms. Hahne has extensive experience in early stage, high growth companies with responsibilities including financial controls and stewardship, financial analysis, mergers and acquisitions, building infrastructure and systems. She received a B.S. degree in Finance and Accounting from Northern State University and received her CPA certificate in 1990.

N on -E mployee D irectors

Maureen Cronin, Ph.D., Director

Dr. Cronin is currently Executive Director of Research Informatics at Celgene Corporation, where she has served since 2012. Dr. Cronin’s career spans more than 25 years in biotechnology research and development and drug discovery research. She has served at seven biotechnology or molecular diagnostics startups, including service as a senior research executive at two leading oncology precision medicine diagnostics companies. From 2001 to 2010, she was Vice President of Research at Genomic Health, Inc. and from 2010 to 2012, she was Vice President of Research and Development at Foundation Medicine, Inc. Her technology research and development career began at Affymetrix (purchased by Thermo Fisher). She currently serves as a director of a privately-held company. She received her doctorate in physiology and pharmacology from University of California, San Diego as a Regents’ Fellow and completed a UCSD post-doctoral fellowship at the San Diego VA Hospital. She has been named an inventor on 17 U.S. and 11 European patents and has authored or coauthored more than 40 peer reviewed publications. Her work at diagnostics and drug development companies gives her unique expertise and experience in developing and delivering precision medicine tests. Among other attributes, skills, and qualifications, the board of directors believes Ms. Cronin is uniquely qualified to serve as a director based on her significant diagnostics research and applied scientific expertise.

David F. Dalvey, Director

Mr. Dalvey has served as a member of Celcuity’s board of directors since February 2014. He was designated to serve as a board member by certain institutional investors of Celcuity pursuant to an agreement entered into in connection with such investors’ purchase of equity units of the company. Mr. Dalvey has more than 30 years of experience in the fields of corporate finance and venture capital, working primarily with growth-oriented technology and life-science businesses. He has over 10 years of corporate finance advisory experience with two national investment banks, completing over 150 individual transactions. He has been the General Partner of Brightstone Venture Capital, a venture capital management company, since September 2000. Brightstone is a 25 year old venture capital management company that has raised and managed ten venture partnerships. Previously, he held management positions with R.J. Steichen and Company, an investment bank, from 1995 to 2000, The Food Fund LP, a venture capital firm, from 1992 to 1995 and Wessels, Arnold & Henderson, an investment bank, from 1987 to 1992. Mr. Dalvey served on the board of directors for Navarre Corporation (now Speed Commerce, Inc.) from 2009 until November 2012, on the board of managers for Blue Rock Market Neutral Fund, a mutual fund registered under the Investment Company Act of 1940 from 2000 to 2014 and on the board of directors for Digitiliti, Inc. from July 2011 until October 2012. Mr. Dalvey has significant operational exposure as a board director or advisor to many other public and privately held growth businesses and has served on these companies’ audit, strategic or governance committees, including companies such as HomeSpotter, Definity Health, AppTec Laboratories, CHF Solutions, BiteSquad, Agiliti, and Nature Vision. Mr. Dalvey received a B.S. in Business/Management Economics from University of Minnesota. Among other

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attributes, skills, and qualifications, the board of directors believes Mr. Dalvey is uniquely qualified to serve as a director based on his leadership experience in operating both public and private companies and his experience working in the investment community and with investment firms enable him to bring valuable insight and knowledge to our board of directors.

Richard J. Nigon, Director

Mr. Nigon is currently Senior Vice President of Cedar Point Capital, LLC., a private company that raises capital for early stage companies, where he has served since 2007. Mr. Nigon has also been a board member for Tactile Systems Technology since September 2012 and Northern Technologies International Corp. since February 2010, including its non-executive Chairman of the board of directors since November 2012. Mr. Nigon also serves as a director of several private companies. Mr. Nigon previously served as a board member for Vascular Solutions, Inc. from November 2000 to February 2017, when it was acquired by Teleflex, Incorporated and as a board member for Virtual Radiologic Corporation from May 2007 until it was acquired in July 2010. From February 2001 until December 2006, Mr. Nigon was a Director of Equity Corporate Finance for Miller Johnson Steichen Kinnard, a privately held investment firm, which was acquired in December 2006 by Stifel Nicolaus, a brokerage and investment banking firm. After that acquisition, Mr. Nigon became a Managing Director of Private Placements of Stifel Nicolaus until May 2007. From February 2000 to February 2001, Mr. Nigon served as the Chief Financial Officer of Dantis, Inc., a web hosting company. Prior to joining Dantis, Mr. Nigon was employed by Ernst & Young LLP from 1970 to 2000, where he served a partner from 1981 to 2000. While at Ernst & Young, Mr. Nigon served as the Director of Ernst & Young’s Twin Cities Entrepreneurial Services Group and was the coordinating partner on several publicly-traded companies in the consumer retailing and manufacturing sectors. We believe Mr. Nigon is qualified to serve on our board of directors because of his extensive public accounting and auditing experience, including particular experience with emerging growth companies. We also feel that he will bring to the board of directors a strong background in financial controls and reporting, financial management, financial analysis, SEC reporting requirements and mergers and acquisitions. His strategic planning expertise gained through his management and leadership roles at private investment firms also makes him well-suited to serve as a member of our board of directors.

O ther S enior M anagement

Laura Beggrow, RN, Chief Commercial Officer

Ms. Beggrow, 54, joined as our Chief Commercial Officer in June 2016. She has more than 20 years of sales and marketing leadership experience in the pharmaceutical and molecular diagnostic industry, including service as a Chief Commercial Officer, VP Sales and Marketing and President. Between 2004 and 2013, Ms. Beggrow served in various sales and marketing leadership positions at one of the leading molecular diagnostic companies in the U.S., Genomic Health, Inc. During her tenure, her roles included V.P. U.S. Sales and Marketing and V.P. U.S. Sales, and she led successful launches of several key products. From 2013 to 2014, she served as President of Strand Diagnostics, Inc., where she provided commercial and operational leadership. From 2014 to 2015, she was Chief Commercial Officer of NantHealth, an early stage company developing a suite of molecular diagnostic products. Ms. Beggrow has a proven track record of successfully launching products, developing strategic product portfolio plans, and building market leading sales organizations. Prior to these roles, Ms. Beggrow served in various sales and sales management positions at Rhone-Poulenc Rorer, Genentech, Cell Therapeutics and Abbott Laboratories. She received a B.S. in Nursing from The Ohio State University.

Larry Fitzgerald, VP Strategic Partnerships and Managed Markets

Mr. Fitzgerald, 46, joined as our VP Strategic Partnerships and Managed Markets in June 2016. Mr. Fitzgerald has over 20 years of experience in the pharmaceutical and molecular diagnostics industry, serving in various sales, sales management, reimbursement, and business development roles. Between 2004 and 2013, Mr. Fitzgerald served as a Senior Regional Manager and National Accounts Manager at one of the leading molecular diagnostic companies in the U.S., Genomic Health, Inc. During his tenure, he was responsible for developing and executing reimbursement strategies with regional and national health insurance payor groups and leading sales activities directed towards large group practices. From 2013 and

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2014, Mr. Fitzgerald served as Head of Strategic Partnerships and Payors at Invitae Corporation, an early-stage genetic testing company. From 2014 and 2015, he served as VP Sales Strategy and Managed Markets at NantHealth, an early stage company developing a suite of molecular diagnostic products. He began his career in pharmaceutical sales at Johnson and Johnson, Amgen and Novartis. Mr. Fitzgerald has a proven track record of driving product adoption and executing reimbursement strategies for newly launched pharmaceuticals and diagnostic tests. Mr. Fitzgerald received his B.S. in Finance from the University of Florida.

F amily R elationships

Dr. Laing, our Chief Science Officer and Director, is a brother-in-law of Mr. Sullivan, our Chairman and Chief Executive Officer.

I nvolvement in C ertain L egal P roceedings

To the best of our knowledge, none of our directors or executive officers have, during the past ten years, been involved in any legal proceedings described in subparagraph (f) of Item 401 of Regulation S-K.

B oard C omposition

Upon consummation of this offering, our bylaws will provide that the size of our board of directors will be determined from time to time by resolution of our board of directors. Following the completion of this offering, we anticipate that our board of directors will consist of five directors, three of whom we expect to qualify as independent directors under the rules and regulations of the SEC and The Nasdaq Capital Market.

E lection of D irectors

Our bylaws will provide that members of our board or directors will be elected by a majority vote of our stockholders; provided however, if the number of nominees exceeds the number of directors to be elected at a stockholders meeting, the election of directors will be by a plurality of the votes.

I ndependence of our B oard and B oard C ommittees

Rule 5605 of the Nasdaq Marketplace Rules, or the Nasdaq Listing Rules, requires a majority of a listed company’s board of directors be “independent” as defined in Nasdaq Listing Rule 5605(a)(2) within one year of listing. In addition, the Nasdaq Listing Rules require that, subject to specified exceptions, each member of a listed company’s audit, compensation, and nominating and corporate governance committees be independent and that audit committee members also satisfy independence criteria set forth in Rule 10A-3 under the Exchange Act.

Prior to the completion of this offering, we will complete our review of the composition of our board of directors and its committees and the independence of each director. Based upon information requested from and provided by each director concerning his or her background, employment and affiliations, including family and other relationships, including those relationships described under “Certain Relationships and Related Party Transactions,” we believe that none of our non-employee directors, representing three of our five directors, will have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that each of these directors will be deemed “independent” as that term is defined under Rule 5605(a)(2) of the Nasdaq Listing Rules. Mr. Sullivan and Dr. Laing will not be considered independent because of their service as our Chief Executive Officer and Chief Science Officer, respectively.

We also believe that each director who will serve as a member of the audit, compensation, and nominating and corporate governance committees will satisfy the independence standards for such committees established by the SEC and the Nasdaq Listing Rules, as applicable. In making these determinations on the independence of our directors, our board of directors will consider the relationships that each such non-employee director has with the company and all other facts and circumstances our board of directors deemed relevant in determining independence, including the beneficial ownership of our capital stock by each non-employee director.

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L eadership S tructure of the B oard

Our bylaws and corporate governance guidelines, which will become effective upon the consummation of this offering, will provide our board of directors with flexibility to combine or separate the positions of Chairman of our board of directors and Chief Executive Officer and/or the implementation of a presiding or lead director in accordance with its determination that utilizing one or the other structure would be in the best interests of the company. We expect that Mr. Sullivan will initially serve as the Chairman of our board of directors. We believe that this leadership structure is appropriate at this time because:

•

it promotes unified leadership and direction for the company;

•

it allows for a single, clear focus for management to execute the company’s strategic initiatives and business plans;

•

our Chief Executive Officer is in the best position to chair board meetings and to ensure that the key business issues and risks facing the company are brought to the board’s attention; and

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we can more effectively execute our strategy and business plans to maximize stockholder value if the Chairman of the board of directors is also a member of the management team.

We anticipate that our board of directors will periodically review our leadership structure and may make such changes in the future as it deems appropriate.

R ole of B oard in R isk O versight P rocess

Our board of directors will have oversight responsibility for the company’s risk management process. The board of directors will administer its oversight function through its committees, but will retain responsibility for general oversight of risks. The committee chairs will be responsible for reporting findings regarding material risk exposure to the board of directors as quickly as possible. The board of directors will delegate to the audit committee oversight responsibility to review our code of ethics, including whether the code of ethics is successful in preventing illegal or improper conduct, and our management’s risk assessments and management’s financial risk management policies, including the policies and guidelines used by management to identify, assess and manage our exposure to financial risk. Our compensation committee will assess and monitor any major compensation-related risk exposures and the steps management should take to monitor or mitigate such exposures.

B oard C ommittees

Upon the consummation of this offering, our board of directors will have three standing committees: an audit committee, a compensation committee and a nominating and corporate governance committee. Under the Nasdaq Listing Rules, the membership of the audit committee is required to consist entirely of independent directors, subject to applicable phase-in periods. The following is a brief description of our committees:

Audit Committee

Upon consummation of this offering, we will establish an audit committee in accordance with Section 3(a)(58)(A) of the Exchange Act. The primary duties and responsibilities of our audit committee will be to oversee (1) the integrity of our accounting and financial reporting processes and the audits of our financial statements; (2) our systems of internal controls; (3) our code of ethics and business conduct; and (4) our compliance with legal and regulatory requirements. In addition, our audit committee will appoint and monitor the independence, qualifications and performance of our independent auditors, provide an avenue of communication between our independent auditors, management and the board of directors and review and approve related party transactions as required by the NASDAQ Listing Rules.

Ms. Cronin, Mr. Dalvey and Mr. Nigon will be members of our audit committee. We believe the members of the audit committee will be “independent directors” as that term is defined in Rules 5605(a)(2), 5605(c)(2)(A), and Rule 10A-3 of the Nasdaq Listing Rules as promulgated under the Exchange Act. The

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audit committee will have at least one member that is an “audit committee financial expert” as defined by Item 407(d)(5)(ii) of Regulation S-K. Upon the listing of our common stock on The Nasdaq Capital Market, the audit committee will operate under a written charter that satisfies the applicable standards of the SEC and The Nasdaq Capital Market.

Compensation Committee

Upon the consummation of this offering, we will establish a compensation committee. In general, our compensation committee will review and make recommendations regarding the compensation of our board of directors, executive officers and certain other key employees.

We anticipate that our compensation committee will approve the compensation arrangements currently in place for our named executive officers. The compensation committee will evaluate the performance of our Chairman and Chief Executive Officer and determine his compensation based on this evaluation without our Chairman and Chief Executive Officer present during voting or deliberations on his compensation. With respect to the other named executive officers, the compensation committee will consider the recommendations of our Chairman and Chief Executive Officer as to performance evaluations and recommended compensation arrangements. The compensation of all named executive officers is subject to the final approval of the committee. We also anticipate that the compensation committee will review and advise our board of directors on bonus and equity awards, and performance objectives for future compensation.

Ms. Cronin, Mr. Dalvey and Mr. Nigon will be members of our compensation committee. The compensation committee charter will require that members of the compensation committee be “independent directors” as that term is defined in Rule 5605(a)(2) of the Nasdaq Listing Rules, qualify as “non-employee directors” under Rule 16b-3 of the Exchange Act and “outside directors” under Section 162(m) of the Code, and be free from any other relationship that would interfere with the exercise of independent judgment as a member of the committee.

Nominating and Corporate Governance Committee

Upon the consummation of this offering, we will establish a nominating and corporate governance committee. Ms. Cronin, Mr. Dalvey and Mr. Nigon will be members of our nominating and corporate governance committee. The nominating and corporate governance committee charter will require that members of the committee be “independent directors” as that term is defined in Rule 5605(a)(2) of the Nasdaq Listing Rules. The principal functions of the nominating and corporate governance committee will be to:

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develop and recommend to the board of directors minimum qualifications for director nominees;

•

identify and evaluate potential candidates for the board of directors and committee positions;

•

recommend to the board of directors a slate of nominees for election as directors at our annual meetings of stockholders;

•

recommend to the board of directors individuals to be appointed to the board of directors in connection with vacancies or newly created director positions and the termination of directors for cause or other appropriate reasons;

•

review the size and composition of the board of directors and committees;

•

oversee our corporate governance practices;

•

evaluate and make recommendations regarding stockholder proposals submitted to the board of directors for inclusion in the company’s proxy statement; and

•

develop, recommend and oversee an annual self-evaluation process for the board of directors and its committees of the board of directors.

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B oard D iversity

Upon consummation of this offering, our nominating and corporate governance committee will be responsible for reviewing with our board of directors, on an annual basis, the appropriate characteristics, skills and experience required for our board of directors as a whole and its individual members. In evaluating the suitability of individual candidates (both new candidates and current members), we expect that the nominating and corporate governance committee, in recommending candidates for election, and our board of directors, in approving (and, in the case of vacancies, appointing) such candidates, will take into account many factors, including the following:

•

personal and professional integrity;

•

ethics and values;

•

experience in corporate management, such as serving as an officer or former officer of a publicly held company;

•

experience in the industries in which we compete;

•

experience as a board member or executive officer of another publicly held company;

•

diversity of expertise and experience in substantive matters pertaining to our business relative to other board members;

•

conflicts of interest; and

•

practical and mature business judgment.

C ode of E thics

We plan to adopt a code of ethics applicable to our principal executive officer and principal financial and accounting officer, in accordance with Section 406 of the Sarbanes-Oxley Act, the rules of the SEC promulgated thereunder, and the Nasdaq Listing Rules. In the event that any changes are made or any waivers from the provisions of the code of ethics are made, these events would be disclosed on our website or in a report on Form 8-K within four business days of such event. The code of ethics will be posted on our website at www.celcuity.com. Copies of the code of ethics will be provided free of charge upon written request directed to Investor Relations, Celcuity Inc., 16305 36 th Avenue N., Suite 450, Minneapolis, Minnesota 55446.

C ompensation C ommittee I nterlocks

The compensation committee is composed entirely of directors who are not our current or former employees, each of who meets the applicable definition of “independent” in the current rules of the under the listing standards of Nasdaq and SEC rules and regulations. None of the members of the compensation committee during the fiscal year ended December 31, 2016 was an executive officer of a company of which one of our executive officers is a director. The compensation committee is responsible for establishing and administering our executive compensation policies. Our compensation committee does not have any interlocks with other companies. Prior to establishing the compensation committee, our full board of directors made decisions relating to the compensation of our officers. For a description of any transactions between us and members of our compensation committee and affiliates of such members, please see “Certain Relationships and Related Party Transactions.”

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Executive and Director Compensation

O verview

The compensation of our executive officers is structured with the goal of providing a competitive compensation program that will enable us to attract and retain highly-qualified executives, which is necessary to achieve our financial and strategic objectives and create long-term value for our stockholders. Our Chief Executive Officer, Chief Financial Officer, and Chief Science Officer (collectively, our “named executive officers”) are currently compensated with a base salary and milestone-based incentive pay. In addition, we have an equity incentive plan, under which we have had the ability to grant options and other equity awards to our named executive officers, employees, directors, consultants and independent contractors. Following the LLC Conversion, we will cease making grants under this equity incentive plan and will adopt a new equity incentive plan to replace the existing plan. See the “Employee Benefits and Stock Plan” subsection below for additional information on these plans.

S ummary C ompensation T able

The following table presents information regarding compensation awarded to, earned by, or paid to our named executive officers for the fiscal years ended December 31, 2016 and 2015:

Name and Position	Year		Salary ($)			Total ($)
Brian F. Sullivan Chief Executive Officer and Chief Financial Officer		2016		$	214,077 (1)		$	214,077
		2015		$	205,077 (1)		$	205,077
Lance G. Laing Chief Science Officer		2016			214,077		$	214,077
Lance G. Laing Chief Science Officer		2015			205,077		$	205,077
Vicky Hahne Chief Financial Officer		2016			— (2)			— (2)
Vicky Hahne Chief Financial Officer		2015			— (2)			— (2)

(1)

$100,000 of the salary amount reported for Mr. Sullivan for each of the fiscal years ended December 31, 2016 and 2015, respectively, was accrued but not paid to Mr. Sullivan. Mr. Sullivan will continue to receive $100,000 of his annual salary on an accrued, but not paid basis, until such compensation arrangement is changed by our board of directors. As of June 30, 2017, the amount of accrued compensation owed to Mr. Sullivan was $226,154.

(2)

Ms. Hahne was appointed our Chief Financial Officer on July 5, 2017. The position was previously held by Mr. Sullivan. She was not previously employed by the Company and had no salary or other compensation for the fiscal years ended December 31, 2016 and 2015.

M ilestone I ncentive P ay

We provide our named executive officers and other senior managers the opportunity to earn incentive payments under a milestone-based incentive pay program. Payments under the incentive program are based on our achievement of milestones that advance our core business strategy. Milestones currently in effect are the establishment of CDx development programs with pharmaceutical companies. Future milestones will be established by our compensation committee. Each participant is granted the opportunity to earn incentive pay up to a maximum percentage of his or her base salary. The maximum milestone based incentive pay for each of our named executive officers is 40% of base salary. Incentive payments under the incentive program are made partly in cash and partly in the form of equity awards. Incentive payments to our named executive officers will be paid 25% in cash and 75% in the form of equity awards. No incentive payments were made under the program for the fiscal years ended December 31, 2016 or 2015.

E mployment A greements , S everance and C hange in C ontrol A greements

We have not entered into employment agreements, severance agreements or change-of-control agreements with our named executive officers. Mr. Sullivan, Ms. Hahne, and Dr. Laing have each entered into a confidentiality, assignment of inventions and non-competition agreement with us, which provides,

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among other things, that the named executive officer will not engage in a competitive business or solicit our employees or consultants for a period of 24 months after termination of employment.

O utstanding E quity A wards at F iscal 2016 Y ear -E nd

Our named executive officers did not hold any outstanding equity awards as of December 31, 2016.

E mployee B enefit and S tock P lans

2012 Equity Incentive Plan

Our 2012 Equity Incentive Plan, or 2012 Plan, was adopted by the board of governors and approved by the members of Celcuity LLC on August 10, 2012, and was subsequently amended on November 12, 2012. The 2012 Plan provides for unit options, restricted unit awards, performance unit awards or unit bonuses. The exercise price of each unit option granted under our 2012 Plan is not less than one hundred percent (100%) of the fair market value of one unit on the date of grant. The maximum permitted term of options granted under our 2012 Plan is ten years. Our board of governors has administered the plan and determined the provisions of incentive awards, including eligible recipients, number of units subject to an incentive award, exercise price, vesting schedule, duration of an incentive award and other restrictions an incentive award may be subject to. In the event of our merger, consolidation, sale of substantially all assets, liquidation or dissolution or other change of control, the 2012 Plan provides that the board of governors may accelerate the exercisability of awards, terminate the 2012 Plan and unexercised awards, continue the 2012 Plan with respect to outstanding awards, replace or exchange incentive awards for similar securities of the successor, substitute the awards with similar awards of the successor or provide for cash payment for outstanding awards (net of exercise price).

As of June 30, 2017, on a post-LLC Conversion basis, we had reserved 625,000 shares of common stock for issuance under our 2012 Plan. As of June 30, 2017, on a post-LLC Conversion basis, options to purchase 442,686 of these shares were issued and remained outstanding and 192,527 of these shares remained available for future grant. The options outstanding as of June 30, 2017 had a weighted-average exercise price of $6.75 per share. Effective on the date of LLC Conversion, the outstanding awards under the 2012 Plan will be adjusted to reflect the LLC Conversion (including number of shares and exercise prices). Immediately thereafter we will cease granting any additional awards under the 2012 Plan. However, any outstanding options granted under the 2012 Plan, as adjusted to reflect the LLC Conversion, will remain outstanding subject to the terms of our 2012 Plan and the related option agreements until such outstanding options are exercised or until they terminate or expire by their terms. As of June 30, 2017, no restricted unit awards, performance unit awards or unit bonuses have been granted under the 2012 Plan. Such awards would have had terms similar to the terms described below for the counterpart awards (post-LLC Conversion) that may granted under our 2017 Equity Incentive Plan.

2017 Stock Incentive Plan

Our 2017 Stock Incentive Plan, or 2017 Plan, was adopted by our board of directors on , 2017 and it will become effective immediately following the LLC Conversion. We have reserved shares of our common stock to be issued under our 2017 Plan. The number of shares reserved for issuance under our 2017 Plan will increase automatically on January 1 of each of 2018 through 2024 by the number of shares equal to % of the aggregate number of outstanding shares of our common stock as of the immediately preceding December 31. However, our board of directors may reduce the amount of the increase in any particular year. In addition, the following shares will again be available for grant and issuance under our 2017 Plan:

•

shares subject to options or stock appreciation rights granted under our 2017 Plan that cease to be subject to the option or stock appreciation right for any reason other than exercise of the option or stock appreciation right;

•

shares subject to awards granted under our 2017 Plan that are subsequently forfeited or repurchased by us at the original issue price;

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•

shares subject to awards granted under our 2017 Plan that otherwise terminate without shares being issued; and

•

shares surrendered, cancelled or exchanged for cash or a different award (or combination thereof).

Awards Available

Our 2017 Plan will authorize the award of stock options, restricted stock awards, or RSAs, stock appreciation rights, or SARs, restricted stock units, or RSUs, performance awards and stock bonuses. No person will be eligible to receive more than shares in any calendar year under our 2017 Plan other than a new employee of ours, who will be eligible to receive no more than shares under the 2017 Plan in the calendar year in which the employee commences employment. No more than shares will be issued pursuant to the exercise of incentive stock options.

Our 2017 Plan will provide for the grant of awards to our employees, directors, consultants, independent contractors and advisors, provided the consultants, independent contractors, directors and advisors are natural persons that render services not in connection with the offer and sale of securities in a capital-raising transaction. The awards granted may vest based on time and/or achievement of performance conditions.

Our compensation committee may provide for options to be exercised only as they vest or to be immediately exercisable with any shares issued on exercise being subject to our right of repurchase that lapses as the shares vest. The exercise price of stock options must be at least equal to the fair market value of our common stock on the date of grant. The maximum term of options granted under our 2017 Plan is ten years.

A RSA is a grant by us of shares of our common stock subject to restrictions. The price (if any) of an RSA will be determined by the compensation committee. Unless otherwise determined by the compensation committee at the time of award, vesting will cease on the date the participant no longer provides services to us and unvested shares will be forfeited to or repurchased by us.

SARs provide for a payment, or payments, in cash or shares of our common stock, to the holder based upon the difference between the fair market value of our common stock on the date of exercise and the stated exercise price up to a maximum amount of cash or number of shares.

RSUs represent the right to receive shares of our common stock at a specified date in the future, subject to forfeiture of that right because of termination of employment or failure to achieve certain performance conditions. If an RSU has not been forfeited, then on the date specified in the RSU agreement, we will deliver to the holder of the restricted stock unit whole shares of our common stock (which may be subject to additional restrictions), cash or a combination of our common stock and cash.

Performance shares are performance awards that cover a number of shares of our common stock that may be settled cash or by issuance of the underlying shares. These awards are subject to forfeiture prior to settlement because of termination of employment or failure to achieve the performance conditions. No participant will be eligible to receive more than $ in performance awards in any calendar year.

Stock bonuses may be granted as additional compensation for service or performance and, therefore, will not be issued in exchange for cash.

Transferability

Awards granted under our 2017 Plan may not be transferred in any manner other than by will or by the laws of descent and distribution or as determined by our compensation committee. Unless otherwise permitted by our compensation committee, stock options may be exercised during the lifetime of the optionee only by the optionee or the optionee’s guardian or legal representative. Options granted under our 2017 Plan generally may be exercised for a period of three months after the termination of the optionee’s service to us, for a period of 12 months in the case of death or disability, or such longer period as our compensation committee may provide. Options generally terminate immediately upon termination of employment for cause.

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Certain Adjustments

In the event there is a specified type of change in our capital structure without our receipt of consideration, such as a stock split, appropriate adjustments will be made to the number of shares reserved under our 2017 Plan, the maximum number of shares that can be granted in a calendar year and the number of shares and exercise price, if applicable, of all outstanding awards under our 2017 Plan.

Change of Control and Other Corporate Events

Our 2017 Plan provides that, in the event of specified types of mergers or consolidations, a sale, lease, or other disposition of all or substantially all of our assets or other corporate transactions, outstanding awards under our 2017 Plan may be assumed or replaced by any surviving or acquiring corporation; the surviving or acquiring corporation may substitute similar awards for those outstanding under our 2017 Plan; outstanding awards may be settled for the full value of such outstanding award (whether or not then vested or exercisable) in cash, cash equivalents, or securities (or a combination thereof) of the successor entity with payment deferred until the date or dates the award would have become exercisable or vested; or outstanding awards may be terminated for no consideration. Our board of directors or its compensation committee has the discretion to provide that a stock award under our 2017 Plan will immediately vest as to all or any portion of the shares subject to the stock award at the time of a corporate transaction or in the event a participant’s service with us or a successor entity is terminated actually or constructively within a designated period following the occurrence of the transaction. Stock awards held by participants under our 2017 Plan will not vest automatically on such an accelerated basis unless specifically provided in the participant’s applicable award agreement. In the event of a corporate transaction, the vesting of all awards granted to non-employee directors shall accelerate and such awards shall become exercisable (as applicable) in full upon the consummation of the corporate transaction.

Termination / Amendment

Our 2017 Plan will terminate ten years from the date our board of directors adopted the plan, unless it is terminated earlier by our board of directors. Our board of directors may amend or terminate our 2017 Plan at any time. Our board of directors generally may amend our 2017 Plan, without stockholder approval unless required by applicable law.

Plan Administration

Our 2017 Plan will be administered by our compensation committee, all of the members of which are outside directors as defined under applicable federal tax laws, or by our board of directors acting in place of our compensation committee. The compensation committee will have the authority to construe and interpret our 2017 Plan, grant awards and make all other determinations necessary or advisable for the administration of the plan.

2017 Employee Stock Purchase Plan

Purpose

The purpose of our employee stock purchase plan, or ESPP, is to provide our employees with an opportunity to purchase shares of our common stock through periodic payroll deductions. The ESPP was adopted by our board of directors on , 2017, subject to stockholder approval at our next meeting of stockholders. If our stockholders do not approve the ESPP, it will be terminated and all contributions returned to the participants without the purchase of any shares.

Shares Available

We have reserved a total of shares for issuance under the ESPP, none of which have been issued as of the date of this prospectus. The number of shares authorized and reserved for issuance under the ESPP will be automatically increased on the first day of each of our fiscal years beginning in 2018 by the lesser of (i) shares; and (ii) % of the total outstanding number of shares of common stock. Unless terminated earlier by our board of directors, our ESPP will terminate in , 2027.

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Eligibility

All employees are eligible to participate in the ESPP unless they are employed for less than 20 hours per week or own 5% or more of the total combined voting power or value of our common stock.

Purchasing Shares

The ESPP is administered using overlapping 24 month offering periods, (each referred to as an Offering Period). A new Offering Period begins every six months on May 1 and November 1 of each year. Eligible employees must complete a subscription agreement prior to the first day of an Offering Period, or the Offering Date, to participate in an Offering Period. The subscription agreement must include the percentage of the employee’s regular cash compensation that he or she would like to deduct from their payroll check during each pay period. Employees may deduct 1% to 10% of their regular cash compensation from each payroll check to apply to the ESPP.

Each Offering Period has four (4) six-month Purchase Periods (each referred to as a Purchase Period), which begin on May 1 and November 1 of each year. Employee payroll deductions for participating employees are accumulated until the last day of each Purchase Period, currently April 30 and October 31, or the Purchase Date. On the Purchase Date, the employee’s payroll deductions are used to purchase shares of common stock at 85% of the fair market value of a share of common stock on either the Offering Date or the Purchase Date, whichever is lower. If the Purchase Date has a lower price, the employee will automatically be placed in the Offering Period beginning immediately after the Purchase Date.

The ESPP places a limit on the value and number of shares of common stock each employee may purchase. Each employee may purchase a maximum of shares per Purchase Period and a maximum of shares per Offering Period. The fair market value of shares of common stock purchased by each employee cannot exceed $ in any calendar year.

Withdrawal and Termination

By giving written notice, each employee may withdraw the entire amount accumulated under the ESPP during a Purchase Period prior to the Purchase Date. Upon an employee’s termination of employment for any reason, including retirement or death, the employee’s participation in the ESPP is automatically terminated.

If the company is dissolved or liquidated, any Purchase Period or Offering Period will terminate immediately prior to the dissolution or liquidation. If we sell substantially all of our assets to another company or engage in a merger or consolidation where our stockholders will own less than 50% of shares of stock in the resulting company, the ESPP will either be assumed by the successor entity or a new Purchase Date will be set before the transaction is completed, after which the ESPP will terminate.

Plan Administration

The board of directors, or a committee appointed by them, interprets, supervises and administers the ESPP and has the authority to adopt, amend and rescind any rules governing the ESPP so long as they are consistent with the terms of the ESPP. For example, the board of directors has the ability to change the duration and frequency of Offering Periods and Purchase Periods as well as the maximum and minimum percentages of regular cash contribution employees may contribute to purchase stock. Additionally, in the event of reorganization, recapitalization, consolidation, merger or other increase or reduction in the number of shares of common stock outstanding, the board of directors has the discretion to adjust the number of shares reserved under the ESPP as well as the price paid per share for common stock purchased under the ESPP.

N on -E mployee D irector C ompensation

Following the completion of this offering, we intend to adopt a policy for compensating our non-employee directors with a combination of cash and equity. We expect that shortly after the consummation of this offering the compensation committee will recommend equity awards in the form of restricted stock units and/or stock options for our board of directors under the 2017 Plan.

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Our non-employee directors received no compensation for the years ended December 31, 2015 and 2016.

L imitations on L iability and I ndemnification M atters

Our certificate of incorporation that will become effective in connection with the LLC Conversion contains provisions that limit the liability of our directors for monetary damages to the fullest extent permitted by the Delaware General Corporation Law. Consequently, our directors will not be personally liable to us or our stockholders for monetary damages for any breach of fiduciary duties as directors, except liability for:

•

any breach of the director’s duty of loyalty to us or our stockholders;

•

any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;

•

unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the Delaware General Corporation Law; or

•

any transaction from which the director derived an improper personal benefit.

Our certificate of incorporation and our bylaws that will become effective in connection with the LLC Conversion require us to indemnify our directors and officers to the maximum extent not prohibited by the Delaware General Corporation Law and allow us to indemnify other employees and agents as set forth in the Delaware General Corporation Law. Subject to certain limitations, our bylaws also require us to advance expenses incurred by our directors and officers for the defense of any action for which indemnification is required or permitted.

We intend to enter into separate indemnification agreements with our directors, officers and certain of our key employees, in addition to the indemnification provided for in our certificate of incorporation and bylaws. These agreements, among other things, will require us to indemnify our directors, officers and key employees for certain expenses, including attorneys’ fees, judgments, penalties, fines and settlement amounts actually incurred by these individuals in any action or proceeding arising out of their service to us or any of our subsidiaries or any other company or enterprise to which these individuals provide services at our request. Subject to certain limitations, our indemnification agreements also require us to advance expenses incurred by our directors, officers and key employees for the defense of any action for which indemnification is required or permitted.

We believe that these indemnification provisions and agreements are necessary to attract and retain qualified directors, officers and key employees. We also maintain directors’ and officers’ liability insurance. The limitation of liability and indemnification provisions in our certificate of incorporation and bylaws may discourage stockholders from bringing a lawsuit against our directors and officers for breach of their fiduciary duty. They may also reduce the likelihood of derivative litigation against our directors and officers, even though an action, if successful, might benefit us and other stockholders. Further, a stockholder’s investment may be adversely affected to the extent that we pay the costs of settlement and damage awards against directors and officers as required by these indemnification provisions.

At present, there is no pending litigation or proceeding involving any of our directors or executive officers as to which indemnification is required or permitted, and we are not aware of any threatened litigation or proceeding that may result in a claim for indemnification.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, executive officers or persons controlling us, we have been informed that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

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Certain Relationships and Related Party Transactions

T ransactions with C edar P oint C apital

Mr. Nigon, a member of our board of directors, is a broker with Cedar Point Capital, LLC, or Cedar Point. Since January 1, 2016, we have (1) paid Cedar Point $1,653,666 in cash as placement agent commissions in connection with the private placements of an aggregate $8,431,664 of our common units representing membership interests and an aggregate $8,337,500 of our unsecured convertible promissory notes, and (2) in connection with such private placements, issued to Cedar Point warrants to purchase an aggregate 4,154,530 of our common units representing membership interests with a weighted average exercise price of $0.199110 per unit, which would be approximately 103,863 shares at a weighted-average exercise price of $7.96 per share on a post-LLC Conversion basis. Mr. Nigon is a Senior Vice President of Cedar Point, but is not a director, executive officer or equity owner of Cedar Point.

S ale of U nsecured C onvertible P romissory N otes

Since January 1, 2016, Mr. Nigon, a member of our board of directors, and his immediate family members purchased our unsecured convertible promissory notes in the aggregate principal amount of $360,478. As further described in the section entitled “Description of Capital Stock—Unsecured Convertible Promissory Notes,” these notes will convert into shares of common stock in connection with this offering,” and Mr. Nigon and his immediately family members will receive warrants to purchase an aggregate of shares of our common stock in connection with conversion of such notes.

I ndemnification A greements

We intend to enter into indemnification agreements with each of our directors and executive officers. The indemnification agreements and our certificate of incorporation and our bylaws to be in effect upon completion of this offering will require us to indemnify our directors to the fullest extent not prohibited by Delaware law. Subject to certain limitations, our bylaws also require us to advance expenses incurred by our directors and officers. For more information regarding these agreements, see “Executive and Director Compensation—Limitations on Liability and Indemnification Matters.”

I nvestors ’ R ights A greements and M ember C ontrol A greement

We have entered into investors’ rights agreements and a member control agreement with holders of our common units (pre-LLC Conversion), including Mr. Sullivan, Chairman of the Board, Chief Executive Officer, and member of our board of directors; Dr. Laing, our Chief Science Officer, Vice President, Secretary and member of our board of directors; Richard J. Nigon, a member of our board of directors; and Brightstone Venture Capital Fund, LP, an entity whose general partner is Mr. David F. Dalvey, a member of our board of directors.

Under the investors’ rights agreements, these stockholders are entitled to preemptive rights that allow them certain rights to participate when we issue new securities, such as the common stock issued pursuant to this offering. Such rights will be waived in connection with this offering and the investors’ rights agreements will automatically terminate in connection with this offering.

Under the member control agreement, these stockholders are entitled to rights with respect to the registration of their shares following our initial public offering under the Securities Act. These rights to be waived by all stockholders. For a description of these registration rights, see “Description of Capital Stock—Registration Rights.”

LLC C onversion

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•

all of our outstanding units will automatically be converted into an aggregate of 6,440,105 shares of our common stock, based on the relative ownership interests of our pre-IPO equityholders as set forth in the Celcuity LLC limited liability company agreement;

•

we will adopt and file a certificate of incorporation and certificate of conversion with the State of Delaware; and

•

we will adopt and file a plan of conversion and articles of conversion with the State of Minnesota.

As a result of the LLC Conversion, we will record income tax expense or benefit in our statements of operations, and a liability or asset for any income tax payable or receivable on our balance sheet.

See “Description of Capital Stock” for additional information regarding a description of our common stock following the LLC Conversion and the terms of our certificate of incorporation and bylaws that will be in effect upon the completion of this offering.

P olicies and P rocedures for R elated P arty T ransactions

In connection with this offering, we intend to adopt a written related person transactions policy that our executive officers, directors, nominees for election as a director, beneficial owners of more than 5% of our common stock, and any members of the immediate family of and any entity affiliated with any of the foregoing persons, are not permitted to enter into a material related person transaction with us without the review and approval of our audit committee, or a committee composed solely of independent directors in the event it is inappropriate for our audit committee to review such transaction due to a conflict of interest. The policy will provide that any request for us to enter into a transaction with an executive officer, director, nominee for election as a director, beneficial owner of more than 5% of our common stock or with any of their immediate family members or affiliates in which the amount involved exceeds $120,000 will be presented to our audit committee for review, consideration and approval. In approving or rejecting any such proposal, our audit committee will consider the relevant facts and circumstances available and deemed relevant to the audit committee, including, but not limited to, whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances and the extent of the related person’s interest in the transaction.

Although we have previously not had a written policy for the review and approval of transactions with related persons, our board of directors has historically reviewed and approved any transaction where a director or officer had a financial interest, including the transactions described above. Prior to approving such a transaction, the material facts as to a director’s or officer’s relationship or interest in the agreement or transaction were disclosed to our board of directors. Our board of directors took this information into account when evaluating the transaction and in determining whether such transaction was fair to the company and in the best interest of all of our stockholders.

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Principal Stockholders

The following table sets forth certain information with respect to the beneficial ownership of our common stock at , 2017, and as adjusted to reflect the sale of common stock in this offering, for:

•

each of our directors;

•

each of our named executive officers;

•

all of our current directors and executive officers as a group; and

•

each person, or group of affiliated persons, who beneficially owned more than 5% of our common stock.

Ownership information provided below assumes no exercise of the underwriter’s over-allotment option.

The columns entitled “Shares Beneficially Owned” and “Percentage of Common Stock Beneficially Owned Prior to Offering” are based on shares of our common stock outstanding as of , 2017, after giving effect to (1) the LLC Conversion and (2) the issuance of shares of common stock upon conversion of our unsecured convertible promissory notes as described in the section entitled “Description of Capital Stock—Unsecured Convertible Promissory Notes,” based on an assumed initial public offering price of $ per share, the midpoint of the price range set forth on the cover page of this prospectus, and an assumed closing date of , 2017. The column entitled “Percentage of Common Stock Beneficially Owned After Offering” is based on shares of our common stock to be outstanding after this offering, after giving effect to (1) the LLC Conversion, (2) the issuance of shares of common stock upon conversion of our unsecured convertible promissory notes as described above, and (3) the sale of shares of common stock in this offering. The table below does not reflect any shares of common stock that those listed in the table may purchase in this offering.

Beneficial ownership is determined according to the rules of the SEC and generally means that a person has beneficial ownership of a security if he or she possesses sole or shared voting or investment power of that security, including the right to acquire beneficial ownership of that security within 60 days, including through outstanding options and warrants that are exercisable within 60 days of , 2017. Options and warrants to purchase shares of our common stock that are exercisable within 60 days of , 2017 are deemed to be beneficially owned by the persons possessing those rights and are treated as outstanding for the purpose of computing percentage ownership of that person, but are not treated as outstanding for the purpose of computing any other person’s ownership percentage. Except as indicated in the footnotes below, each of the beneficial owners named in the table below has, and upon completion of this offering will have, to our knowledge, sole voting and investment power with respect to all shares of common stock listed as beneficially owned by him or her, except for shares owned jointly with that person’s spouse. Unless otherwise indicated, the address for each of the stockholders in the table below is Celcuity Inc., 16305 36th Avenue N., Suite 450, Minneapolis, MN 55446.

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Shares
Beneficially Owned

Percentage of Common Stock
Beneficially Owned

Name of Beneficial Owner

Prior to Offering (1)

After Offering (2)

5% Stockholders

The Globe Resources Group, LLC (3)

680,566

Directors and Named Executive Officers

Brian F. Sullivan (4)

2,777,274

Vicky Hahne

—

Lance G. Laing (4)

1,266,125

Maureen Cronin

—

David F. Dalvey (5)

250,000

Richard J. Nigon (4)

All Directors and Executive Officers as a Group (6 persons) (4)

(1)

Applicable percentage ownership prior to this offering is based on shares of common stock plus, for each individual, any securities that individual has the right to acquire within 60 days of , 2017.

(2)

Applicable percentage ownership after this offering is based on shares of common stock plus, for each individual, any securities that individual has the right to acquire within 60 days of , 2017.

(3)

The address of The Globe Resources Group, LLC is 8301 E. 21st Street North, Suite 420, Wichita, KS 67206.

(4)

The beneficial ownership reported in the table includes shares of common stock the beneficial owners have the right to acquire within 60 days of , 2017 upon the exercise of stock options or warrants as follows: Mr. Sullivan, 21,500 shares; Mr. Laing, 16,125 shares; Mr. Nigon, shares; and all Directors and Executive Officers as a Group, shares.

(5)

Mr. Dalvey’s beneficial ownership includes 250,000 shares of common stock owned by Brightstone Venture Capital Fund, LP, of which Mr. Dalvey is the General Partner.

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Description of Capital Stock

Upon the completion of the LLC Conversion and this offering, our certificate of incorporation will authorize us to issue up to 45,000,000 shares of common stock, par value $0.001 per share, and 5,000,000 shares of undesignated preferred stock, par value $0.001 per share. The following description summarizes the most important terms of our capital stock. Because it is only a summary, it does not contain all the information that may be important to you. For a complete description, you should refer to our certificate of incorporation and bylaws to be in effect upon the closing of this offering, which are included as exhibits to the registration statement of which this prospectus forms a part, and to the applicable provisions of Delaware law.

Our outstanding unsecured convertible promissory notes (discussed below), will automatically convert into common stock in connection with the completion of this offering, with a conversion price equal to the price per share in this offering. On a pro forma basis as of June 30, 2017, assuming the effectiveness of the LLC Conversion and the conversion of outstanding unsecured convertible promissory notes with a conversion price of $ per share (the midpoint of the price range set forth on the cover page of this prospectus), there were shares of our common stock issued, held by approximately 112 stockholders of record, and no shares of our preferred stock outstanding. Our board of directors is authorized, without stockholder approval, to issue additional shares of our capital stock.

C ommon S tock

Voting Rights

Each holder of common stock is entitled to one vote for each share on all matters submitted to a vote of the stockholders.

Dividend Rights

Holders of our common stock are entitled to receive ratably any dividends that our board of directors may declare out of funds legally available for that purpose.

Rights and Preferences

Holders of our common stock will have no preemptive, conversion, subscription or other rights, and there are no redemption or sinking fund provisions applicable to our common stock.

Right to Liquidation Distributions

Upon our liquidation, dissolution or winding-up, the assets legally available for distribution to our stockholders would be distributable ratably among the holders of our common stock and any participating preferred stock outstanding at that time, subject to prior satisfaction of all outstanding debt and liabilities and the preferential rights of and the payment of liquidation preferences, if any, on any outstanding shares of preferred stock.

U nsecured C onvertible P romissory N otes

In connection with two private placements, we have issued to investors unsecured convertible promissory notes, or Notes, in the aggregate principal amount of $8,337,500. The Notes carry interest at a rate of 1.25% per annum and the principal and accrued interest will be automatically converted into equity securities upon the closing of a qualified financing, which is an offering of our equity securities from which we receive gross proceeds of at least $5,000,000 (not including the amount of Notes that are converted upon the closing of such qualified financing). The conversion price of the Notes will be equal to the price at which the equity securities are sold in the qualified financing.

In addition, upon conversion of the Notes, each Note holder will be entitled to receive, in addition to the equity securities issuable upon conversion of the Note, a seven-year warrant to purchase additional equity securities of the same class and series issued upon conversion of the Note. The aggregate warrant exercise price will be equal to 15% of the principal amount of the Note purchased by the Note holder. The

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exercise price per warrant share will be equal to the conversion price of the Note (i.e., the price at which the equity securities are sold in the qualified financing). The number of warrant shares will be equal to aggregate warrant exercise price divided by the exercise price per warrant share.

This offering will be considered a qualified financing. As such, based on an assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and a closing date of , 2017, the Notes will convert into an aggregate of shares of our common stock and our Note holders will receive seven-year warrants to purchase an aggregate of shares of our common stock. A $1.00 decrease in the assumed initial public offering price of $ per share would increase the number of shares of common stock issuable upon conversion of our Notes by shares and increase the number of shares of common stock issuable upon exercise of the warrants to be issued in connection with the Note conversion by shares. A $1.00 increase in the assumed initial public offering price of $ per share would decrease the number of shares of common stock issuable upon conversion of our Notes by shares and decrease the number of shares of common stock issuable upon exercise of the warrants to be issued in connection with the Note conversion by shares.

P referred S tock

Upon the completion of this offering, our board or directors will be authorized, without action by the stockholders, to designate and issue up to an aggregate of 5,000,000 shares of preferred stock in one or more series. Our board of directors will be authorized to designate the rights, preferences and privileges of the shares of each series and any of its qualifications, limitations or restrictions. Our board or directors will be able to authorize the issuance of preferred stock with voting or conversion rights that could adversely affect the voting power or other rights of the holders of common stock. The issuance of preferred stock, while providing flexibility in connection with possible future financings and acquisitions and other corporate purposes could, under certain circumstances, have the effect of restricting dividends on our common stock, diluting the voting power of our common stock, impairing the liquidation rights of our common stock, or delaying, deferring or preventing a change in control of the company, which might harm the market price of our common stock. See also “Anti-Takeover and Other Protective Provisions” below.

Our board of directors will make any determination to issue such shares based on its judgment as to the company’s best interests and the best interests of our stockholders. Upon the completion of this offering, we will have no shares of preferred stock outstanding and we have no current plans to issue any shares of preferred stock following completion of this offering.

O ptions and W arrants

Options

As of June 30, 2017, on a post-LLC Conversion basis, we had outstanding options to purchase an aggregate of 442,686 shares of our common stock, with a weighted-average exercise price of $6.75 per share.

Warrants

As of June 30, 2017, on a post-LLC Conversion basis, we had outstanding warrants to purchase an aggregate of 103,863 shares of our common stock, with a weighted-average exercise price of $7.96 per share. All outstanding warrants have 10-year terms and expire between January 14, 2026 and May 17, 2027.

In addition, in connection with the closing of this offering and the automatic conversion of our Notes, holders of our Notes will be issued seven-year warrants to purchase an aggregate shares with a per-share exercise price of $ . See the subsection entitled “Unsecured Convertible Promissory Notes” above. We will also issue a warrant to purchase shares of our common stock to the underwriter in connection with the closing of this offering. The number of shares of common stock issuable upon exercise of the warrant will be increased by up to shares if the overallotment option is exercised by the underwriter. The underwriter’s warrant will have a five-year term and an exercise price that is 110.0% of the public offering price per share in this offering.

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R egistration R ights

Piggyback Registration Rights

We have entered into a member control agreement with holders of our common units (pre-LLC Conversion) that provides our equity holders with the right to have their post-LLC Conversion stock registered in connection with the company registering any of its securities under the Securities Act, for its own account or the account of any of its securities holders. The registration rights apply to (1) affiliates, and (2) non-affiliates that hold common units that are not eligible for resale under Rule 144 of the Securities Act. Because all of our non-affiliate equity members hold common units that are eligible for resale under Rule 144, only our affiliates have such registration rights in connection with this offering. On a post-LLC Conversion basis, our affiliates hold shares of common stock with these piggyback registration rights and we expect all such affiliates will waive such rights for this offering.

If we register any of our securities for public sale in another offering, holders of registrable securities will have the right to include their shares in the registration statement. This may include non-affiliates if their stock is not then eligible for resale under Rule 144. The registration rights do not apply to any registration on Form S-8 or similar limited-purpose form of registration statement effected solely to implement an employee benefit plan or any registration on Form S-4 or similar limited purpose form of registration statement effected solely to implement an acquisition approved by our equity holders.

The underwriter of any underwritten offering will have the right to limit the number of shares registered by holders if the underwriter determines that marketing factors require limitation, in which case the number of shares to be registered will be apportioned pro rata among the holders of registration rights, according to the total amount of securities entitled to be included by each holder.

Expenses of Registration Rights

We generally will pay all expenses related to the registrations, other than expenses solely attributed to the registration of the holders’ registrable securities, such as underwriting discounts and commissions.

A nti -T akeover and O ther P rotective P rovisions

The provisions of Delaware law and our certificate of incorporation and our bylaws to be in effect following the completion of this offering may have the effect of delaying, deferring or discouraging another person from acquiring control of the company. These provisions, which are summarized below, may have the effect of discouraging takeover bids. They are also designed, in part, to encourage persons seeking to acquire control of us to negotiate first with our board of directors. We believe that the benefits of increased protection of our potential ability to negotiate with an unfriendly or unsolicited acquirer outweigh the disadvantages of discouraging a proposal to acquire us because negotiation of these proposals could result in an improvement of their terms.

Delaware Law

We are subject to the provisions of Section 203 of the Delaware General Corporation Law regulating corporate takeovers. In general, Section 203 prohibits a publicly-held Delaware corporation from engaging in a business combination with an interested stockholder for a period of three years following the date on which the person became an interested stockholder unless:

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prior to the date of the transaction, the board of directors of the corporation approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder;

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the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the voting stock outstanding, but not the outstanding voting stock owned by the interested stockholder, (i) shares owned by persons who are directors and also officers and (ii) shares owned by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or

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at or subsequent to the date of the transaction, the business combination is approved by the board of directors of the corporation and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66.67% of the outstanding voting stock that is not owned by the interested stockholder.

Generally, a business combination includes a merger, asset or stock sale, or other transaction or series of transactions together resulting in a financial benefit to the interested stockholder. An interested stockholder is a person who, together with affiliates and associates, owns or, within three years prior to the determination of interested stockholder status, did own 15% or more of a corporation’s outstanding voting stock. We expect the existence of this provision to have an anti-takeover effect with respect to transactions our board of directors does not approve in advance. We also anticipate that Section 203 may discourage attempts that might result in a premium over the market price for the shares of common stock held by stockholders.

Certificate of Incorporation and Bylaw Provisions

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Board of directors vacancies . Our bylaws will authorize only our board of directors to fill vacant directorships, including newly created seats. In addition, the number of directors constituting our board of directors will be permitted to be set only by a resolution adopted by our board of directors. These provisions would prevent a stockholder from increasing the size of our board of directors and then gaining control of our board of directors by filling the resulting vacancies with its own nominees. This makes it more difficult to change the composition of our board of directors but promotes continuity of management.

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Advance notice requirements for stockholder proposals and director nominations . Our bylaws will provide advance notice procedures for stockholders seeking to bring business before our annual meeting of stockholders or to nominate candidates for election as directors at our annual meeting of stockholders. Our bylaws will also specify certain requirements regarding the form and content of a stockholder’s notice. These provisions might preclude our stockholders from bringing matters before our annual meeting of stockholders or from making nominations for directors at our annual meeting of stockholders if the proper procedures are not followed. We expect that these provisions may also discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of the company.

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No cumulative voting . The Delaware General Corporation Law provides that stockholders are not entitled to the right to cumulate votes in the election of directors unless a corporation’s certificate of incorporation provides otherwise. Our certificate of incorporation will not provide for cumulative voting.

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Stockholder action; special meetings of stockholders . Our certificate of incorporation will provide that our stockholders may not take action by written consent, but may only take action at annual or special meetings of our stockholders. As a result, a holder controlling a majority of our capital stock would not be able to amend our bylaws or remove directors without holding a meeting of our stockholders called in accordance with our bylaws. Further, our bylaws will provide that special meetings of our stockholders may be called only by a majority of our board of directors, the chairperson of our board of directors, or our Chief Executive Officer, thus prohibiting a stockholder from calling a special meeting. These provisions might delay the ability of our stockholders to force consideration of a proposal or for stockholders controlling a majority of our capital stock to take any action, including the removal of directors.

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Issuance of undesignated preferred stock . Upon completion of the LLC Conversion, we will have 5,000,000 shares of undesignated preferred stock. Our board of directors will have the authority, without further action by the stockholders, to issue this preferred stock with rights and preferences, including voting rights, designated from time to time by our board of directors. The existence of authorized but unissued shares of preferred stock would enable our board of directors to render more difficult or to discourage an attempt to obtain control of us by means of a merger, tender offer, proxy contest or other means.

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Amendment of charter and bylaw provisions . The affirmative vote of stockholders representing at least two-thirds of the voting power of all then-outstanding capital stock will be required to amend, alter or repeal certain provisions of our certificate of incorporation, including the provision noted above regarding stockholders not being able to act by written consent. A majority of our board of directors will have authority to adopt, amend or repeal provisions of our bylaws. Stockholders will also have the authority to adopt, amend or repeal provisions of our bylaws, but only with the affirmative vote of stockholders representing at least two-thirds of the voting power of all then-outstanding capital stock.

Exclusive Forum

Unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if such court has no jurisdiction, the federal district court for the District of Delaware) shall be the sole and exclusive forum for (1) any derivative action or proceeding brought on our behalf, (2) any action asserting a claim of breach of a fiduciary duty owed by any of our current or former directors, officers or other employees to us or our stockholders, (3) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law, our certificate of incorporation or our bylaws, (4) any action asserting a claim against us governed by the internal affairs doctrine, or (5) any other action asserting an internal corporate claim, as defined in Section 115 of the Delaware General Corporation Law; in all cases subject to the court having personal jurisdiction over the indispensable parties named as defendants. This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and other employees.

T ransfer A gent and R egistrar

The transfer agent and registrar for our common stock is Continental Stock Transfer & Trust Company. The transfer agent and registrar’s address is 17 Battery Place, 8 th Floor, New York, NY 10004.

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Shares Eligible for Future Sale

Prior to this offering, no public market for our common stock existed, and a liquid trading market for our common stock may not develop or be sustained after this offering. Future sales of substantial amounts of our common stock in the public market, or the anticipation of such sales, could adversely affect prevailing market prices of our common stock from time to time and could impair our future ability to raise equity capital in the future. Furthermore, because only a limited number of shares of our common stock will be available for sale shortly after this offering due to certain contractual and legal restrictions on resale described below, sales of substantial amounts of our common stock in the public market after such restrictions lapse, or the anticipation of such sales, could adversely affect the prevailing market price of our common stock and our ability to raise equity capital in the future.

Upon completion of this offering, we will have outstanding a total of shares of our common stock (or shares if the underwriters’ option to purchase additional shares is exercised in full), based on our outstanding shares as of , 2017, after giving effect to the LLC Conversion and assuming (1) the issuance of shares of common stock in this offering; and (2) all principal and accrued interest on our outstanding Notes is converted into shares of common stock as described in section entitled “Description of Capital Stock—Unsecured Convertible Promissory Notes.” All of the shares sold in this offering (plus any shares sold as a result of the underwriters’ exercise of their option) will be freely tradable without restriction or further registration under the Securities Act, unless those shares are purchased by our affiliates as that term is defined in Rule 144 under the Securities Act.

The remaining shares of common stock to be outstanding after this offering will be “restricted securities” under Rule 144. Of these restricted securities, shares will be subject to transfer restrictions for 180 days from the date of this prospectus pursuant to lock-up agreements. Restricted securities may be sold in the public market only if they have been registered or if they qualify for an exemption from registration under Rules 144 or 701 or otherwise under the Securities Act.

We may issue shares of common stock from time to time as consideration for future acquisitions, investments or other corporate purposes. In the event that any such acquisition, investment or other transaction is significant, the number of shares of common stock that we may issue may in turn be significant. We may also grant registration rights covering those shares of common stock issued in connection with any such acquisition and investment.

R ule 144

In general, under Rule 144 of the Securities Act, as in effect on the date of this prospectus, beginning 90 days after the date of this prospectus any person who is not our affiliate at any time during the preceding three months, and who has beneficially owned their shares for at least six months, including the holding period of any prior owner other than one of our affiliates, would be entitled to sell an unlimited number of shares of our common stock provided current public information about us is available, and, after owning such shares for at least one year, including the holding period of any prior owner other than one of our affiliates, would be entitled to sell an unlimited number of shares of our common stock without restriction.

Beginning 90 days after the date of this prospectus, a person who is our affiliate or who was our affiliate at any time during the preceding three months, and who has beneficially owned restricted securities for at least six months, including the holding period of any prior owner other than one of our affiliates, is entitled to sell within any three-month period a number of shares that does not exceed the greater of:

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1% of the number of shares of our common stock then outstanding, which will equal approximately shares, based on the number of shares of our common stock outstanding upon completion of this offering (or shares if the underwriter exercises its over-allotment option in full); or

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the average weekly trading volume of our common stock on The Nasdaq Capital Market during the four calendar weeks preceding the filing of a Notice of Proposed Sale of Securities pursuant to Rule 144 with respect to the sale.

Sales under Rule 144 by our affiliates are also subject to manner of sale provisions and notice requirements and to the availability of current public information about us.

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Upon expiration of the 180-day lock-up period described below, shares of our common stock will be eligible for sale under Rule 144. We cannot estimate the number of shares of our common stock that our existing stockholders will elect to sell under Rule 144.

R ule 701

Rule 701 generally allows a stockholder who purchased shares of our common stock pursuant to a written compensatory plan or contract and who is not deemed to have been an affiliate of our company during the immediately preceding 90 days to sell these shares in reliance upon Rule 144, but without being required to comply with the public information, holding period, volume limitation or notice provisions of Rule 144. Rule 701 also permits affiliates of our company to sell their Rule 701 shares under Rule 144 without complying with the holding period requirements of Rule 144. All holders of Rule 701 shares, however, are required by that rule to wait until 90 days after the date of this prospectus before selling those shares pursuant to Rule 701.

L ock - up A greements

We expect that our officers, directors, and stockholders will enter into an agreement that, without the prior written consent of the underwriter, they will not, subject to limited exceptions, directly or indirectly sell or dispose of any shares of common stock or any securities convertible into or exchangeable or exercisable for shares of our common stock for a period of 180 days after the date of this prospectus. The lock-up restrictions and specified exceptions are described in more detail under “Underwriting.”

F orm S-8 R egistration S tatement

As soon as practicable after the closing of this offering, we intend to file one or more registration statements on Form S-8 under the Securities Act covering all of the shares of our common stock subject to outstanding options and the shares of our common stock reserved for issuance under our current equity incentive plan. We expect to file these registration statements, as applicable, as soon as permitted under the Securities Act. However, the shares registered on Form S-8 may be subject to the volume limitations and the manner of sale, notice and public information requirements of Rule 144 and will not be eligible for resale until expiration of the lock-up and market standoff agreements to which they are subject. Of the shares of our common stock that were subject to stock options outstanding as of June 30, 2017, options to purchase shares of common stock were vested as of June 30, 2017. Shares of our common stock underlying outstanding options will not be eligible for sale until expiration of the 180 day lock-up and market standoff agreements to which they are subject.

R egistration R ights

We have granted piggyback registration rights to certain of our stockholders to sell our common stock. Registration of the sale of these shares under the Securities Act would result in these shares becoming freely tradable without restriction under the Securities Act immediately upon the effectiveness of the registration, except for shares purchased by affiliates. For a further description of these rights, see “Description of Capital Stock—Registration Rights.”

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Material U.S. Federal Income Tax Consequences to Non-U.S. Holders

This section summarizes the material U.S. federal income tax considerations relating to the acquisition, ownership and disposition of our common stock acquired by “non-U.S. holders” (as defined below) pursuant to this offering. This summary does not provide a complete analysis of all potential U.S. federal income tax considerations relating thereto. The information provided below is based upon provisions of the U.S. Internal Revenue Code of 1986, as amended, or the Code, Treasury regulations promulgated thereunder, administrative rulings and judicial decisions currently in effect. These authorities may change at any time, possibly retroactively, or the Internal Revenue Service, or IRS, might interpret the existing authorities differently. In either case, the tax considerations of owning or disposing of our common stock could differ from those described below. As a result, we cannot assure you that the tax consequences described in this discussion will not be challenged by the IRS or will be sustained by a court if challenged by the IRS.

This summary does not address the tax considerations arising under the laws of any non-U.S., state or local jurisdiction, or under U.S. federal gift and estate tax laws, except to the limited extent provided below. In addition, this discussion does not address tax considerations applicable to an investor’s particular circumstances or to investors that may be subject to special tax rules, including, without limitation:

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banks, insurance companies or other financial institutions;

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partnerships or entities or arrangements treated as partnerships or other pass-through entities for U.S. federal tax purposes (or investors in such entities);

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corporations that accumulate earnings to avoid U.S. federal income tax;

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persons subject to the alternative minimum tax or Medicare contribution tax on net investment income;

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tax-exempt organizations or tax-qualified retirement plans;

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controlled foreign corporations or passive foreign investment companies;

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dealers in securities or currencies;

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traders in securities that elect to use a mark-to-market method of accounting for their securities holdings;

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persons that own, or are deemed to own, more than 5% of our capital stock (except to the extent specifically set forth below);

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certain former citizens or former long-term residents of the United States;

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persons who hold our common stock as a position in a hedging transaction, “straddle,” “conversion transaction” or other risk reduction transaction;

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persons who do not hold our common stock as a capital asset within the meaning of Section 1221 of the Code (generally, for investment purposes); or

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persons deemed to sell our common stock under the constructive sale provisions of the Code.

In addition, if a partnership or entity classified as a partnership for U.S. federal income tax purposes is a beneficial owner of our common stock, the tax treatment of a partner in the partnership or an owner of the entity will depend upon the status of the partner or other owner and the activities of the partnership or other entity. Accordingly, this summary does not address tax considerations applicable to partnerships that hold our common stock, and partners in such partnerships should consult their tax advisors.

INVESTORS CONSIDERING THE PURCHASE OF OUR COMMON STOCK SHOULD CONSULT THEIR OWN TAX ADVISORS REGARDING THE APPLICATION OF THE U.S. FEDERAL INCOME AND ESTATE TAX LAWS TO THEIR PARTICULAR SITUATIONS AND THE CONSEQUENCES OF FOREIGN, STATE OR LOCAL LAWS, AND TAX TREATIES.

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N on -U.S. H older D efined

For purposes of this summary, a “non-U.S. holder” is any beneficial owner of our common stock, other than a partnership, that is not:

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an individual who is a citizen or resident of the United States;

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a corporation, or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized under the laws of the United States;

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any state therein or the District of Columbia;

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a trust if it (i) is subject to the primary supervision of a U.S. court and one of more U.S. persons have authority to control all substantial decisions of the trust or (ii) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person; or

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an estate whose income is subject to U.S. income tax regardless of source.

If you are a non-U.S. citizen that is an individual, you may, in many cases, be treated as a resident alien, as opposed to a nonresident alien, by virtue of being present in the United States for at least 31 days in the calendar year and for an aggregate of at least 183 days during a three-year period ending in the current calendar year. For these purposes, all the days present in the current year, one-third of the days present in the immediately preceding year, and one-sixth of the days present in the second preceding year are counted. Resident aliens are subject to U.S. federal income tax as if they were U.S. citizens. Such an individual is urged to consult his or her own tax advisor regarding the U.S. federal income tax consequences of the ownership or disposition of our common stock.

D ividends

We do not expect to declare or make any distributions on our common stock in the foreseeable future. If we do make distributions on shares of our common stock, however, such distributions will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Distributions in excess of our current and accumulated earnings and profits will constitute a return of capital that is applied against and reduces, but not below zero, a non-U.S. holder’s adjusted tax basis in shares of our common stock. Any remaining excess will be treated as gain realized on the sale or other disposition of our common stock. See “Sale of Common Stock” below.

Any dividend paid to a non-U.S. holder of our common stock that is not effectively connected with the non-U.S. holder’s conduct of a trade or business in the United States will generally be subject to U.S. withholding tax at a 30% rate. The withholding tax might apply at a reduced rate, however, under the terms of an applicable income tax treaty between the United States and the non-U.S. holder’s country of residence. You should consult your tax advisors regarding your entitlement to benefits under a relevant income tax treaty. Generally, in order for us or our paying agent to withhold tax at a lower treaty rate, a non-U.S. holder must certify its entitlement to treaty benefits. A non-U.S. holder generally can meet this certification requirement by providing an IRS Form W-8BEN or Form W-8BEN-E (or any successor of such forms) or appropriate substitute form to us or our paying agent. If the non-U.S. holder holds the stock through a financial institution or other agent acting on the holder’s behalf, the holder will be required to provide appropriate documentation to the agent. The holder’s agent will then be required to provide certification to us or our paying agent, either directly or through other intermediaries. If you are eligible for a reduced rate of U.S. federal withholding tax under an income tax treaty, you may obtain a refund or credit of any excess amounts withheld by filing an appropriate claim for a refund with the IRS in a timely manner.

Dividends received by a non-U.S. holder that are effectively connected with a U.S. trade or business conducted by the non-U.S. holder, and if required by an applicable income tax treaty between the United States and the non-U.S. holder’s country of residence, are attributable to a permanent establishment maintained by the non-U.S. holder in the United States, are not subject to U.S. withholding tax. To obtain this exemption, a non-U.S. holder must provide us or our paying agent with an IRS Form W-8ECI properly certifying such exemption. Such effectively connected dividends, although not subject to withholding tax,

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are taxed at the same graduated income tax rates applicable to U.S. persons, net of certain deductions and credits. In addition to being taxed at graduated tax rates, dividends received by corporate non-U.S. holders that are effectively connected with a U.S. trade or business of the corporate non-U.S. holder may also be subject to a branch profits tax at a rate of 30% or such lower rate as may be specified by an applicable tax treaty.

S ale of C ommon S tock

Subject to the discussions below regarding backup withholding and the Foreign Account Tax Compliance Act, non-U.S. holders will generally not be subject to U.S. federal income tax on any gains realized on the sale, exchange or other disposition of our common stock unless:

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the gain (i) is effectively connected with the conduct by the non-U.S. holder of a U.S. trade or business and (ii) if required by an applicable income tax treaty between the United States and the non-U.S. holder’s country of residence, is attributable to a permanent establishment maintained by the non-U.S. holder in the United States (in which case the special rules described below apply);

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the non-U.S. holder is an individual who is present in the United States for 183 days or more in the taxable year of the sale, exchange or other disposition of our common stock, and certain other requirements are met (in which case the gain would be subject to a flat 30% tax, or such reduced rate as may be specified by an applicable income tax treaty, which may be offset by certain U.S. source capital losses, even though the individual is not considered a resident of the United States); or

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the rules of the Foreign Investment in Real Property Tax Act, or FIRPTA, treat the stock as a “U.S. real property interest” as defined in Section 897 of the Code.

The FIRPTA rules may apply to a sale, exchange or other disposition of our common stock if we are, or were within the shorter of the five-year period preceding the disposition and the non-U.S. holder’s holding period, a “U.S. real property holding corporation” (as defined in Section 897 of the Code), or USRPHC. In general, we would be a USRPHC if interests in U.S. real estate comprised at least half of the value of our business assets. We do not believe that we are a USRPHC and we do not anticipate becoming one in the future. Even if we become a USRPHC, as long as our common stock is regularly traded on an established securities market, such common stock will be treated as U.S. real property interests only if beneficially owned by a non-U.S. holder that actually or constructively owned more than 5% of our outstanding common stock at sometime within the five-year period preceding the disposition.

If any gain from the sale, exchange or other disposition of our common stock, (1) is effectively connected with a U.S. trade or business conducted by a non-U.S. holder and (2) if required by an applicable income tax treaty between the United States and the non-U.S. holder’s country of residence, is attributable to a permanent establishment maintained by such non-U.S. holder in the United States, then the gain generally will be subject to U.S. federal income tax at the same graduated rates applicable to U.S. persons, net of certain deductions and credits. If the non-U.S. holder is a corporation, under certain circumstances, that portion of its earnings and profits that is effectively connected with its U.S. trade or business, subject to certain adjustments, generally would be subject also to a “branch profits tax.” The branch profits tax rate is 30% unless reduced by applicable income tax treaty.

U.S. F ederal E state T ax

The estates of nonresident alien individuals generally are subject to U.S. federal estate tax on property with a U.S. situs. Because we are a U.S. corporation, our common stock will be U.S. situs property and therefore will be included in the taxable estate of a nonresident alien decedent, unless an applicable estate tax treaty between the United States and the decedent’s country of residence provides otherwise.

B ackup W ithholding and I nformation R eporting

The Code and the Treasury regulations require those who make specified payments to report the payments to the IRS. Among the specified payments are dividends and proceeds paid by brokers to their customers. The required information returns enable the IRS to determine whether the recipient properly

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included the payments in income. This reporting regime is reinforced by “backup withholding” rules. These rules require the payors to withhold tax from payments subject to information reporting if the recipient fails to cooperate with the reporting regime by failing to provide his taxpayer identification number to the payor, furnishing an incorrect identification number, or failing to report interest or dividends on his returns. The backup withholding tax rate is currently 28%. The backup withholding rules do not apply to payments to corporations, whether domestic or foreign, provided they establish such exemption.

Payments to non-U.S. holders of dividends on common stock generally will not be subject to backup withholding, and payments of proceeds made to non-U.S. holders by a broker upon a sale of common stock will not be subject to information reporting or backup withholding, in each case so long as the non-U.S. holder certifies its status as a non-U.S. holder (and we or our paying agent do not have actual knowledge or reason to know the holder is a U.S. person or that the conditions of any other exemption are not, in fact, satisfied) or otherwise establishes an exemption. The certification procedures to claim treaty benefits described under “Dividends” will generally satisfy the certification requirements necessary to avoid the backup withholding tax. We must report annually to the IRS any dividends paid to each non-U.S. holder and the tax withheld, if any, with respect to these dividends. Copies of these reports may be made available to tax authorities in the country where the non-U.S. holder resides.

Under the Treasury regulations, the payment of proceeds from the disposition of shares of our common stock by a non-U.S. holder made to or through a U.S. office of a broker generally will be subject to information reporting and backup withholding unless the beneficial owner certifies, under penalties of perjury, among other things, its status as a non-U.S. holder (and the broker does not have actual knowledge or reason to know the holder is a U.S. person) or otherwise establishes an exemption. The payment of proceeds from the disposition of shares of our common stock by a non-U.S. holder made to or through a non-U.S. office of a broker generally will not be subject to backup withholding and information reporting, except as noted below. Information reporting, but not backup withholding, will apply to a payment of proceeds, even if that payment is made outside of the United States, if you sell our common stock through a non-U.S. office of a broker that is:

•

a U.S. person (including a foreign branch or office of such person);

•

a “controlled foreign corporation” for U.S. federal income tax purposes;

•

a foreign person 50% or more of whose gross income from certain periods is effectively connected with a U.S. trade or business; or

•

a foreign partnership if at any time during its tax year (a) one or more of its partners are U.S. persons who, in the aggregate, hold more than 50% of the income or capital interests of the partnership or (b) the foreign partnership is engaged in a U.S. trade or business, unless the broker has documentary evidence that the beneficial owner is a non-U.S. holder and certain other conditions are satisfied, or the beneficial owner otherwise establishes an exemption (and the broker has no actual knowledge or reason to know to the contrary).

Backup withholding is not an additional tax. Any amounts withheld from a payment to a holder of common stock under the backup withholding rules can be credited against any U.S. federal income tax liability of the holder and may entitle the holder to a refund, provided that the required information is furnished to the IRS in a timely manner.

F oreign A ccount T ax C ompliance A ct

A U.S. federal withholding tax of 30% may apply to dividends and the gross proceeds of a disposition of our common stock paid to a foreign financial institution (as specifically defined by the applicable rules) unless such institution enters into an agreement with the U.S. government to withhold on certain payments and to collect and provide to the U.S. tax authorities substantial information regarding U.S. account holders of such institution (which includes certain equity holders of such institution, as well as certain account holders that are foreign entities with U.S. owners). This U.S. federal withholding tax of 30% will also apply to dividends and the gross proceeds of a disposition of our common stock paid to a non-financial foreign entity unless such entity provides the withholding agent with either a certification that it does not have any substantial direct or indirect U.S. owners or provides information regarding direct and

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indirect U.S. owners of the entity. The 30% federal withholding tax described in this paragraph cannot be reduced under an income tax treaty with the United States or by providing an IRS Form W-8BEN or similar documentation. The withholding tax described above will not apply if the foreign financial institution or non-financial foreign entity otherwise qualifies for an exemption from the rules and certifies as such on a Form W-8BEN-E (or any successor of such form). Under certain circumstances, a non-U.S. holder might be eligible for refunds or credits of such taxes. Holders should consult with their own tax advisors regarding the possible implications of the withholding described herein.

The withholding provisions described above generally apply to proceeds from a sale or other disposition of common stock if such sale or other disposition occurs on or after January 1, 2019 and to payments of dividends on our common stock.

THE PRECEDING DISCUSSION OF U.S. FEDERAL TAX CONSIDERATIONS IS FOR GENERAL INFORMATION ONLY. IT IS NOT TAX ADVICE. EACH PROSPECTIVE INVESTOR SHOULD CONSULT ITS OWN TAX ADVISOR REGARDING THE PARTICULAR U.S. FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF PURCHASING, HOLDING AND DISPOSING OF OUR COMMON STOCK, INCLUDING THE CONSEQUENCES OF ANY PROPOSED CHANGE IN APPLICABLE LAWS.

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Underwriting

The underwriter named below has agreed to buy, subject to the terms of the underwriting agreement, the number of shares of common stock listed opposite its name below. The underwriter is committed to purchase and pay for all of the shares if any are purchased, other than those shares covered by the over-allotment option described below. Craig-Hallum Capital Group LLC is the sole book-running manager for the offering.

Underwriter			Number of Shares
Craig-Hallum Capital Group LLC
Total

The underwriter has advised us that it proposes to offer the shares of common stock to the public at a price of $ per share. The underwriter proposes to offer the shares of common stock to certain dealers at the same price less a concession of not more than $ per share. After the offering, these figures may be changed by the underwriter.

The shares sold in this offering are expected to be ready for delivery against payment in immediately available funds on or about , 2017, subject to customary closing conditions. The underwriter may reject all or part of any order.

We have granted to the underwriter an option to purchase up to an additional shares of common stock from us at the same price to the public, and with the same underwriting discount, as set forth in the table below. The underwriter may exercise this option any time during the 30-day period after the date of this prospectus, but only to cover over-allotments, if any. To the extent the underwriter exercises the option, the underwriter will become obligated, subject to certain conditions, to purchase the shares for which it exercises the option.

C ommissions and D iscounts

The table below summarizes the underwriting discounts that we will pay to the underwriter. These amounts are shown assuming both no exercise and full exercise of the over-allotment option. In addition to the underwriting discount, we have agreed to pay up to $275,000 of the fees and expenses of the underwriter, which may include the fees and expenses of counsel to the underwriter. In connection with the successful completion of this offering, for the price of $50, the underwriter may purchase a warrant to purchase shares of our common stock equal to 5.0% of the shares sold in this offering at an exercise price that is 110.0% of the public offering price per share in this offering; provided that the underwriter will only receive such warrants relating to the over-allotment option upon the closing (if any) of the over-allotment option. The warrants are exercisable during the period commencing on the date of the prospectus and ending five years from the date of this prospectus. The warrants may not be sold during this offering, or 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 warrants, or the shares acquirable upon exercise thereof, by any person for a period of 180 days immediately following the effective date of this registration statement, except as provided in paragraph (g)(2) of Rule 5110 of FINRA.

Except as disclosed in this prospectus, the underwriter has not received and will not receive from us any other item of compensation or expense in connection with this offering considered by FINRA to be underwriting compensation under FINRA Rule 5110. The underwriting discount was determined through an arms’ length negotiation between us and the underwriter.

Per Share

Total with No
Over-
Allotment

Total with
Over-
Allotment

Underwriting discount to be paid by us

We estimate that the total expenses of this offering, excluding underwriting discounts, will be $ . This includes $275,000 of fees and expenses of the underwriter. These expenses are payable by us.

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I ndemnification

We also have agreed to indemnify the underwriter against certain liabilities, including civil liabilities under the Securities Act of 1933, as amended, or to contribute to payments that the underwriter may be required to make in respect of those liabilities.

N o S ales of C ommon S tock

We, each of our directors and officers and certain of our significant stockholders have agreed not to offer, sell, agree to sell, directly or indirectly, or otherwise dispose of any shares of common stock or any securities convertible into or exchangeable for shares of common stock without the prior written consent of the underwriter for a period of 180 days after the date of this prospectus. These lock-up agreements provide limited exceptions and their restrictions may be waived at any time by the underwriter.

D etermination of O ffering P rice

The underwriter has advised us that it proposes to offer the shares directly to the public at the estimated initial public offering price range set forth on the cover page of this preliminary prospectus. That price range and the initial public offering price are subject to change as a result of market conditions and other factors. Prior to this offering, no public market exists for our common stock. The initial public offering price of the shares was determined by negotiation between us and the underwriter. The principal factors considered in determining the initial public offering price of the shares included:

•

the information in this prospectus and otherwise available to the underwriter, including our financial information;

•

the history and the prospects for the industry in which we compete;

•

the ability and experience of our management;

•

the prospects for our future earnings;

•

the present state of our development and our current financial condition;

•

the general condition of the economy and the securities markets in the United States at the time of this initial public offering;

•

the recent market prices of, and the demand for, publicly-traded securities of generally comparable companies; and

•

other factors as were deemed relevant.

We cannot be sure that the initial public offering price will correspond to the price at which the shares of common stock will trade in the public market following this offering or that an active trading market for the shares of common stock will develop or continue after this offering.

P rice S tabilization , S hort P ositions and P enalty B ids

To facilitate this offering, the underwriter may engage in transactions that stabilize, maintain or otherwise affect the price of our common stock during and after the offering. Specifically, the underwriter may create a short position in our common stock for its own accounts by selling more shares of common stock than we have sold to the underwriter. The underwriter may close out any short position by purchasing shares in the open market.

In addition, the underwriter may stabilize or maintain the price of our common stock by bidding for or purchasing shares in the open market and may impose penalty bids. If penalty bids are imposed, selling concessions allowed to broker-dealers participating in this offering are reclaimed if shares previously distributed in this offering are repurchased, whether in connection with stabilization transactions or otherwise. The effect of these transactions may be to stabilize or maintain the market price of our common stock at a level above that which might otherwise prevail in the open market. The imposition of a penalty

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bid may also affect the price of our common stock to the extent that it discourages resales of our common stock. The magnitude or effect of any stabilization or other transactions is uncertain. These transactions may be effected on The Nasdaq Capital Market or otherwise and, if commenced, may be discontinued at any time.

In connection with this offering, the underwriter and selling group members may also engage in passive market making transactions in our common stock on The Nasdaq Capital Market. Passive market making consists of displaying bids on The Nasdaq Capital Market limited by the prices of independent market makers and effecting purchases limited by those prices in response to order flow. Rule 103 of Regulation M promulgated by the Securities and Exchange Commission limits the amount of net purchases that each passive market maker may make and the displayed size of each bid. Passive market making may stabilize the market price of our common stock at a level above that which might otherwise prevail in the open market and, if commenced, may be discontinued at any time.

Neither we nor the underwriter make any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of our common stock. In addition, neither we nor the underwriter make any representation that the underwriter will engage in these transactions or that any transaction, if commenced, will not be discontinued without notice.

E lectronic O ffer , S ale and D istribution of S hares

The underwriter or syndicate members may facilitate the marketing of this offering online directly or through one of their respective affiliates. In those cases, prospective investors may view offering terms and a prospectus online and place orders online or through their financial advisors. Such websites and the information contained on such websites, or connected to such sites, are not incorporated into and are not a part of this prospectus.

O ther R elationships

The underwriter and its affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing and brokerage activities. The underwriter has in the past, and may in the future, engage in investment banking and other commercial dealings in the ordinary course of business with us or our affiliates. The underwriter has in the past, and may in the future, receive customary fees and commissions for these transactions.

In the ordinary course of their various business activities, the underwriter and its affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers, and such investment and securities activities may involve securities and/or instruments of the issuer. The underwriter and its affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or instruments and may at any time hold, or recommend to clients that it acquires, long and/or short positions in such securities and instruments.

L isting

In connection with this offering, we have applied to have our common stock listed on The Nasdaq Capital Market under the symbol “CELC.” There is no assurance, however, that our common stock will ever be listed on The Nasdaq Capital Market or any other national securities exchange.

T ransfer A gent and R egistrar

The transfer agent and registrar for our common stock is Continental Stock Transfer & Trust Company.

S elling R estrictions

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

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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 supplement (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 underwriter is not required to comply with the disclosure requirements of NI 33 105 regarding underwriter conflicts of interest in connection with this offering.

European Economic Area

In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive, each, a Relevant Member State, an offer to the public of any shares of our common stock may not be made in that Relevant Member State, except that an offer to the public in that Relevant Member State of any shares of our common stock may be made at any time under the following exemptions under the Prospectus Directive, if they have been implemented in that Relevant Member State:

•

to any legal entity which is a qualified investor as defined in the Prospectus Directive;

•

to fewer than 100 or, if the Relevant Member State has implemented the relevant provision of the 2010 PD Amending Directive, 150, natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive, subject to obtaining the prior consent of the representatives for any such offer; or

•

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

For the purposes of this provision, the expression an “offer to the public” in relation to any shares of our common stock in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and any shares of our common stock to be offered so as to enable an investor to decide to purchase any shares of our common stock, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State, the expression “Prospectus Directive” means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State), and includes any relevant implementing measure in the Relevant Member State, and the expression “2010 PD Amending Directive” means Directive 2010/73/EU.

United Kingdom

The underwriter has represented and agreed that:

•

it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000, or FSMA) received by it in connection with the issue or sale of the shares of our common stock in circumstances in which Section 21(1) of the FSMA does not apply to us; and

•

it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the shares of our common stock in, from or otherwise involving the United Kingdom.

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Switzerland

The shares may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange, or the 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 or marketing material relating to the shares or the offering may be publicly distributed or otherwise made publicly available in Switzerland.

Neither this document nor any other offering or marketing material relating to the offering, or the shares 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 shares will not be supervised by, the Swiss Financial Market Supervisory Authority FINMA, and the offer of shares has not been and will not be authorized under the Swiss Federal Act on Collective Investment Schemes, or CISA. Accordingly, no public distribution, offering or advertising, as defined in CISA, its implementing ordinances and notices, and no distribution to any non-qualified investor, as defined in CISA, its implementing ordinances and notices, shall be undertaken in or from Switzerland, and the investor protection afforded to acquirers of interests in collective investment schemes under CISA does not extend to acquirers of shares.

Australia

No placement document, prospectus, product disclosure statement or other disclosure document has been lodged with the Australian Securities and Investments Commission, or the ASIC, in relation to the offering.

This prospectus does not constitute a prospectus, product disclosure statement or other disclosure document under the Corporations Act 2001, or the Corporations Act, and does not purport to include the information required for a prospectus, product disclosure statement or other disclosure document under the Corporations Act.

Any offer in Australia of the shares may only be made to persons, the Exempt Investors, who are “sophisticated investors” (within the meaning of section 708(8) of the Corporations Act), “professional investors” (within the meaning of section 708(11) of the Corporations Act) or otherwise pursuant to one or more exemptions contained in section 708 of the Corporations Act so that it is lawful to offer the shares without disclosure to investors under Chapter 6D of the Corporations Act.

The shares applied for by Exempt Investors in Australia must not be offered for sale in Australia in the period of 12 months after the date of allotment under the offering, except in circumstances where disclosure to investors under Chapter 6D of the Corporations Act would not be required pursuant to an exemption under section 708 of the Corporations Act or otherwise or where the offer is pursuant to a disclosure document which complies with Chapter 6D of the Corporations Act. Any person acquiring shares must observe such Australian on-sale restrictions.

This prospectus contains general information only and does not take account of the investment objectives, financial situation or particular needs of any particular person. It does not contain any securities recommendations or financial product advice. Before making an investment decision, investors need to consider whether the information in this prospectus is appropriate to their needs, objectives and circumstances, and, if necessary, seek expert advice on those matters.

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Legal Matters

The validity of the shares of our common stock to be issued in this offering will be passed upon for us by our counsel, Fredrikson & Byron P.A., Minneapolis, MN. Certain legal matters relating to this offering will be passed upon for the underwriter by Faegre Baker Daniels LLP, Minneapolis, MN.

Experts

The financial statements as of and for the twelve months ended December 31, 2015 and December 31, 2016 included in this prospectus have been audited by Boulay PLLP, our independent registered public accounting firm, and have been included herein in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.

Where You Can Find More Information

We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the shares of our common stock offered by this prospectus. This prospectus, which constitutes part of that registration statement, does not contain all of the information set forth in the registration statement or the accompanying exhibits and schedules. Some items included in the registration statement are omitted from this prospectus in accordance with the rules and regulations of the SEC. For further information with respect to us and the common stock offered in this prospectus, we refer you to the registration statement and the accompanying exhibits and schedules. Statements contained in this prospectus regarding the contents of any contract, agreement or any other document are summaries of the material terms of these contracts, agreements or other documents. With respect to each of these contracts, agreements or other documents filed as an exhibit to the registration statement, reference is made to such exhibit for a more complete description of the matter involved.

A copy of the registration statement and the accompanying exhibits and schedules and any other document we file may be inspected without charge and copied at the SEC’s public reference room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information on the operation of the public reference room by calling the SEC at 1-800-SEC-0330. The SEC maintains a website that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC. The address of the SEC’s website is http://www.sec.gov.

In connection with this offering and before this registration statement becomes effective, we will register our common stock with the SEC under Section 12 of the Exchange Act and, upon such registration, we will become subject to the information and periodic reporting requirements of the Exchange Act, and we will file periodic reports, proxy statements and other information with the SEC. These periodic reports, proxy statements and other information will be available for inspection and copying at the public reference room and website of the SEC referred to above. We maintain a website at http://www.celcuity.com. You may access our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports, proxy statements and other information filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act with the SEC free of charge at our website as soon as reasonably practicable after such material is 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.

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Celcuity LLC

Index to Financial Statements

The following financial statements are included in this prospectus.

For the years ended December 31, 2016 and December 31, 2015:

Item	Page
Report of the Independent Registered Public Accounting Firm		F-2
Balance Sheets as of December 31, 2016 and December 31, 2015		F-3
Statements of Operations for the years ended December 31, 2016 and December 31, 2015		F-4
Statements of Changes in Members’ Equity for the years ended December 31, 2016 and December 31, 2015		F-5
Statements of Cash Flows for the years ended December 31, 2016 and December 31, 2015		F-6
Notes to the Financial Statements	F-7 – F- 13
For the three and six months ended June 30, 2017 and June 30, 2016:
Item	Page
Balance Sheets as of June 30, 2017 (unaudited) and December 31, 2016		F-14
Statements of Operations for the three and six months ended June 30, 2017 and June 30, 2016 (unaudited)		F-15
Statements of Cash Flows for the six months ended June 30, 2017 and June 30, 2016 (unaudited)		F-16
Notes to the Financial Statements	F-17 – F- 24

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Governors and
Members of Celcuity LLC:

We have audited the accompanying balance sheets of Celcuity LLC as of December 31, 2016 and 2015, and the related statements of operations, changes in members’ equity, and cash flows for each of the years in the two-year period ended December 31, 2016. Celcuity LLC’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Celcuity LLC as of December 31, 2016 and 2015, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2016, in conformity with accounting principles generally accepted in the United States of America.

/s/ Boulay PLLP

Minneapolis, Minnesota
June 9, 2017

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Celcuity LLC

Balance Sheets
December 31, 2016 and 2015

	2016			2015
Assets
Current Assets:
Cash and cash equivalents		$	5,856,348		$	5,067,240
Restricted cash			50,000			50,000
Deposits			5,717			5,717
Total current assets			5,912,065			5,122,957
Property and equipment, net			144,912			177,068
Total Assets		$	6,056,977		$	5,300,025
Liabilities and Members’ Equity
Current Liabilities:
Accounts payable		$	331,534		$	261,755
Accrued expenses			113,825			21,849
Total current liabilities			445,359			283,604
Total Liabilities			445,359			283,604
Commitments and contingencies
Members’ Equity:
Members’ equity contributions - 257,604,208 and 235,645,866 units issued and outstanding, respectively			13,349,654			9,961,962
Additional paid-in capital			593,365			75,452
Accumulated deficit			(8,331,401 )			(5,020,993 )
Total Members’ Equity			5,611,618			5,016,421
Total Liabilities and Members’ Equity		$	6,056,977		$	5,300,025

See accompanying notes to the financial statements

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Celcuity LLC

Statements of Operations
For the years ended December 31, 2016 and 2015

	2016			2015
Operating expenses:
Research and development		$	3,064,762		$	2,011,719
General and administrative			263,664			250,091
Total operating expenses			3,328,426			2,261,810
Loss from operations			(3,328,426 )			(2,261,810 )
Interest income			18,018			268
Net Loss		$	(3,310,408 )		$	(2,261,542 )
Net loss per unit, basic and diluted		$	(0.01 )		$	(0.01 )
Weighted average member units outstanding, basic and diluted			252,523,542			233,732,667

See accompanying notes to the financial statements

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Celcuity LLC

Statements of Changes in Members’ Equity for the years ended December 31, 2016 and 2015

	Member Contributions					Additional Paid-In Capital			Member Note Receivable			Accumulated Deficit			Total Members’ Equity
	Units		Amount			Additional Paid-In Capital			Member Note Receivable			Accumulated Deficit			Total Members’ Equity
Balance at December 31, 2014		213,008,732		$	6,159,568		$	18,945		$	(1,000,000 )		$	(2,759,451 )		$	2,419,062
Member units issued, net		22,637,134			3,802,394			—			—			—			3,802,394
Stock-based compensation		—			—			56,507			—			—			56,507
Proceeds from payment of Member note for units purchased		—			—			—			1,000,000			—			1,000,000
Net loss		—			—			—			—			(2,261,542 )			(2,261,542 )
Balance at December 31, 2015		235,645,866			9,961,962			75,452			—			(5,020,993 )			5,016,421
Member units issued, net		21,958,342			3,387,692			330,607			—			—			3,718,299
Stock-based compensation		—			—			187,306			—			—			187,306
Net loss		—			—			—			—			(3,310,408 )			(3,310,408 )
Balance at December 31, 2016		257,604,208		$	13,349,654		$	593,365		$	—		$	(8,331,401 )		$	5,611,618

See accompanying notes to the financial statements

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Celcuity LLC

Statements of Cash Flows
For the years ended December 31, 2016 and 2015

	2016			2015
Cash flows from operating activities:
Net loss		$	(3,310,408 )		$	(2,261,542 )
Adjustments to reconcile net loss to net cash used by operations:
Depreciation			73,059			58,376
Stock-based compensation			187,306			56,507
Changes in operating assets and liabilities:
Accounts payable			69,779			157,469
Accrued expenses			91,976			10,410
Net cash used by operating activities			(2,888,288 )			(1,978,780 )
Cash flows from investing activities:
Purchases of property and equipment			(40,903 )			(78,982 )
Net cash used by investing activities:			(40,903 )			(78,982 )
Proceeds from sale of member units, net of issuance costs			3,718,299			3,802,394
Proceeds from member note receivable for member units sold in 2014			—			1,000,000
Net cash provided by financing activities			3,718,299			4,802,394
Net increase in cash			789,108			2,744,632
Cash and cash equivalents at beginning of year			5,067,240			2,322,608
Cash and cash equivalents at end of year		$	5,856,348		$	5,067,240

See accompanying notes to the financial statements

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TABLE OF CONTENTS

Celcuity LLC
Notes to Financial Statements
December 31, 2016 and December 31, 2015

1. Summary of Significant Accounting Policies

Nature of Business

Celcuity LLC (the Company), a Minnesota company, is a cellular analysis company that is discovering new cancer sub-types and commercializing diagnostic tests designed to significantly improve the response rates of cancer patients treated with targeted therapies. The Company’s proprietary CELx diagnostic platform is currently the only commercially available technology to use a patient’s living tumor cells to evaluate the functional status of the cell signaling pathways associated with cancer. The CELx platform identifies the abnormal signaling activity driving a patient’s cancer and quantifies how effectively a targeted therapy can treat it. This enables physicians to select the therapeutic that precisely matches and inhibits a patient’s cellular dysfunction, which significantly increases the likelihood of a positive clinical outcome. The Company’s first analytically validated and commercially ready CELx test diagnoses two new sub-types of HER2-negative breast cancer. In late-2017, the Company will be fielding a prospective clinical trial to evaluate the efficacy of HER2 targeted therapies in patients with these newly identified cancer sub-types. In addition to the CELx tests for HER2-negative breast cancer, the Company is developing CELx tests to diagnose 14 new potential cancer sub-types in breast, lung, colon, ovarian, kidney, bladder and hematological cancers. The Company expects to launch these additional tests on a staggered basis over the next few years. Celcuity was cofounded in 2012 by Brian Sullivan and Lance Laing and is currently based in Minnesota. The Company has not generated any revenues to date.

Accounting Estimates

Management uses estimates and assumptions in preparing these financial statements in accordance with accounting principles generally accepted in the United States of America. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include the useful lives of fixed assets; and valuation of stock-based compensation.

Cash and Cash Equivalents

The Company maintains its accounts primarily at one financial institution. At times throughout the year, the Company’s cash balances may exceed amounts insured by the Federal Deposit Insurance Corporation. At December 31, 2016 and 2015, the Company had $5,842,193 and $0 respectively, in money market funds that are considered cash equivalents.

Property and Equipment

Property and equipment are stated at cost. Depreciation is provided over estimated useful lives by the use of the straight-line method. Maintenance and repairs are expensed as incurred; major improvements and betterments are capitalized.

Estimated useful lives of property and equipment are as follows for the major classes of assets:

Asset Description	Estimated Lives
Furniture and Equipment		4
Leasehold Improvements		2-3

Long-Lived Assets

Long-lived assets, such as property and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying

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TABLE OF CONTENTS

Celcuity LLC
Notes to Financial Statements
December 31, 2016 and December 31, 2015

1. Summary of Significant Accounting Policies (Continued)

value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values, and third party independent appraisals, as considered necessary.

Deferred Transaction Costs

Deferred transaction costs, primarily consist of direct incremental legal, accounting, and other fees relating to the Company’s contemplated initial public offering (“IPO”), and are capitalized as incurred. The deferred transaction costs will be offset against IPO proceeds upon the consummation of the offering. In the event the IPO is terminated, which would include a postponement of 90 days or greater, any deferred transaction costs will be expensed.

Comprehensive Loss

Comprehensive loss includes net loss as well as other changes in stockholders’ equity that result from transactions and economic events other than those with stockholders. For all periods presented, there was no difference between net loss and comprehensive loss.

Risks and Uncertainties

The Company is subject to risks common to companies in the development stage including, but not limited to, dependency on the clinical and commercial success of its diagnostic tests, ability to obtain regulatory approval of its disgnostic tests, the need for substantial additional financing to achieve its goals, uncertainty of broad adoption of its approved products, if any, by physicians and consumers, and significant competition.

Fair Value of Financial Instruments

The Company’s accounting for fair value measurements of assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring or nonrecurring basis adheres to the Financial Accounting Standards Board (FASB) fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:

•

Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the Company at the measurement date.

•

Level 2 Inputs: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.

•

Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date.

The level in the fair value hierarchy within which a fair measurement in its entirety falls is based on the lowest level input that is significant to the fair value measurement in its entirety.

The carrying values of restricted cash, accounts payable, accrued expenses and other financial working capital items approximate fair value at December 31, 2016 and 2015, due to the short maturity nature of these items.

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TABLE OF CONTENTS

Celcuity LLC
Notes to Financial Statements
December 31, 2016 and December 31, 2015

1. Summary of Significant Accounting Policies (Continued)

Income Taxes

Celcuity is a LLC and as such it is a disregarded legal entity for income tax purposes. Accordingly, no provision or benefit for income taxes was included in the financial statements for the years ended December 31, 2016 and 2015.

Primarily due to the Company’s tax status, the Company does not have any significant tax uncertainties that would require recognition or disclosure. For years before 2013, the Company is no longer subject to U.S. federal or state income tax examination. The Company’s policy is to recognize interest and penalties related to uncertain tax positions as a component of general and administrative expenses. As of December 31, 2016 and December 31, 2015, the Company did not have any significant uncertain tax positions.

Stock-Based Compensation

The Company’s stock-based compensation consists of member unit options issued to certain employees and nonemployees of the Company. The Company recognizes compensation expense for employees based on estimated grant date fair value using the Black-Scholes option-pricing method.

The fair value of options granted to nonemployees is determined using the fair value of the service provided or the fair value of the option granted, whichever is more reliable. The fair value is measured at the value of the Company’s common units at the earlier of the date that the commitment for performance by the counterparty has been reached or the counterparty’s performance is complete. Awards granted to nonemployees are remeasured to fair value at each period end date until vested and expensed on a straight-line basis over the vesting period.

Research and Development

Research and development costs are expensed as incurred. Research and development costs amounted to $3,064,762 in 2016 and $2,011,719 in 2015, respectively.

Segment Data

The Company manages its operations as a single segment for the purposes of assessing performance and making operating decisions.

Application of New or Revised Accounting Standards

Pursuant to the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), a company constituting an “emerging growth company” is, among other things, entitled to rely upon certain reduced reporting requirements.

The Company is an emerging growth company, but has irrevocably elected not to take advantage of the extended transition period afforded by the JOBS Act for the implementation of new or revised accounting standards. As a result, the Company will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for public companies that are not emerging growth companies.

Recently Adopted Accounting Pronouncements

In August 2014, FASB issued Accounting Standards Update No 2014-15, “Presentation of Financial Statements—Going Concern: Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.” The standard defines management’s going concern assessment and disclosure responsibilities.

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TABLE OF CONTENTS

Celcuity LLC
Notes to Financial Statements
December 31, 2016 and December 31, 2015

1. Summary of Significant Accounting Policies (Continued)

The Company has adopted this standard as of January 1, 2016 and determined that it has the necessary capital, based on current cash on hand and the convertible note offering closed in May 2017, to meet all its obligations for at least one year from the issuance of these financial statements.

Recently Issued Accounting Pronouncements

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which provides guidance for accounting for leases. The new guidance requires companies to recognize the assets and liabilities for the rights and obligations created by leased assets, initially measured at the present value of the lease payments. The accounting guidance for lessors is largely unchanged. The ASU is effective for annual and interim periods beginning after December 15, 2018 for public entities and December 15, 2019 for all other entities, with early adoption permitted . It is to be adopted using a modified retrospective approach. The Company is currently evaluating the impact that the adoption of this guidance will have on the Company’s financial statements.

In May 2014 and amended in August 2015, the FASB issued ASU No. 2014-09 which amended the Revenue from Contracts with Customers (Topic 606) of the Accounting Standards Codification. The core principle of the new guidance is that an entity should recognize revenue to reflect the transfer of goods and services to customers in an amount equal to the consideration the entity receives or expects to receive. The ASU is effective for annual and interim periods beginning after December 15, 2017 for public entities and December 15, 2018 for all other entities, with early adoption permitted . The Company is currently evaluating the impact that the adoption of this guidance will have on the Company’s financial statements.

2. Net Loss per Common Unit

Basic and diluted net loss per common unit is determined by dividing net loss attributable to common unitholders by the weighted-average common units outstanding during the period. For all periods presented, the common units underlying the options have been excluded from the calculation because their effect would be anti-dilutive. Therefore, the weighted-average shares outstanding used to calculate both basic and diluted loss per common units are the same.

For the years ended December 31, 2016 and 2015, 2,211,304 and 1,285,676 option and warrant unit equivalents, respectively have been excluded from the computations of diluted weighted-average units outstanding as they would be anti-dilutive.

3. Property and Equipment

Property and equipment consists of the following at December 31:

	2016			2015
Leasehold improvements		$	22,307		$	22,307
Furniture and equipment			278,020			237,117
			300,327			259,424
Less: Accumulated depreciation			(155,415 )			(82,356 )
Totals		$	144,912		$	177,068

Depreciation expense was $73,059 and $58,376 for the periods ending December 31, 2016 and December 31, 2015, respectively.

4. Lease Obligations

The Company leases its corporate space in Minneapolis, Minnesota. At December 31, 2016, the Company had the following minimum commitments for payment of rentals which at inception had a non-cancellable term of more than one year:

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Celcuity LLC
Notes to Financial Statements
December 31, 2016 and December 31, 2015

4. Lease Obligations (Continued)

	Operating Lease
2017		$	51,445
2018		$	21,982

Rent expense for operating leases was approximately $49,600 and $49,600 for 2016 and 2015, respectively. In connection with the corporate lease, the Company is required to maintain a $50,000 standby letter of credit. The standby letter of credit expires on July 31, 2018.

5. Members’ Equity

Member Units

The Company has one class of member units. The Company had 257,604,208 and 235,645,866 member units issued and outstanding at December 31, 2016 and 2015, respectively. There is no limitation on the number of Units that may be issued by the Company. Units have no par value. Each member has one vote for each unit owned.

During 2015, the Company raised $3,802,394, net of offering costs of $477,606, through the sale of 22,637,134 member units. During 2016, the Company raised $3,718,294, net of offering costs of $764,254, through the sale of 21,958,342 member units. Included with the offering costs amount is $330,607 related to the fair value of member unit warrants issued to the broker dealer. All of the 2015 and 2016 offerings were through two separate private placements. The per unit offering price for both private placements was $0.18907.

Member Unit Warrants

In connection with the 2016 private placement unit offering, the Company issued ten-year warrants to the broker dealer of the private placement. The warrants allow the brokers to purchase up to 2,209,940 member units at $0.18907 per unit. The warrants are immediately exercisable and expire on January 14, 2026. These warrants are equity classified and the fair value of $330,607 was recorded as additional paid-in capital.

6. Stock-Based Compensation

The 2012 Equity Incentive Plan was adopted by the board of governors and approved by the members of Celcuity LLC on August 10, 2012, and was subsequently amended on November 12, 2012. The Company reserved a maximum of 25,000,000 common equity units available for issuance under the 2012 Equity Incentive Plan, of which 12,083,500 common equity units were outstanding as of December 31, 2016. The 2012 Equity Incentive Plan provides for unit options, restricted unit awards, performance unit awards or unit bonuses. The exercise price of each unit option granted under our 2012 Equity Incentive Plan is not less than one hundred percent (100%) of the fair market value of one unit on the date of grant. The maximum permitted term of options granted under our 2012 Equity Incentive Plan is ten years. The board of governors has administered the plan and determined the provisions of incentive awards, including eligible recipients, number of units subject to an incentive award, exercise price, vesting schedule, duration of an incentive award and other restrictions an incentive award may be subject to.

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TABLE OF CONTENTS

Celcuity LLC
Notes to Financial Statements
December 31, 2016 and December 31, 2015

6. Stock-Based Compensation (Continued)

The Black-Scholes option-pricing model was used to estimate the fair value of equity-based awards with the following weighted-average assumptions at December 31:

	2016	2015
Risk-free interest rate	2.00%	1.98%
Expected volatility	75.0%	72.0%
Expected life (years)	6.25 to 10.00	6.25 to 10.00
Expected dividend yield	0%	0%

The inputs for the Black-Scholes valuation model require management’s significant assumptions. The common unit price was determined by the Board of Governors based on recent prices of membership units sold in private offerings. The risk-free interest rates were based on the rate for U.S. Treasury securities at the date of grant with maturity dates approximately equal to the expected life at the grant date. The expected life was based on the simplified method in accordance with the Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin Nos. 107 and 110 as the Company’s units are not publicly traded. The expected volatility was estimated based on historical volatility information of peer companies that are publicly available.

All assumptions used to calculate the grant date fair value of nonemployee options are generally consistent with the assumptions used for options granted to employees, except the expected life is equal to the contractual term. In the event the Company terminates any of its consulting agreements, the unvested options underlying the agreements would also be cancelled. Unvested nonemployee options are marked-to-market at each reporting period.

The following table summarizes the activity for all stock options outstanding at December 31 under the Plan:

	2016					2015
	Shares		Weighted Average Exercise Price			Shares		Weighted Average Exercise Price
Options outstanding at beginning of year		4,581,000		$	0.08		2,500,000		$	0.06
Granted		7,602,500		$	0.19		2,081,000		$	0.09
Exercised		—		$	—		—		$	—
Expired		—		$	—		—		$	—
Forfeited		(100,000 )		$	0.09		—		$	—
Balance at end of year		12,083,500		$	0.15		4,581,000		$	0.08
Options exercisable at December 31:		2,858,500		$	0.07		1,252,667		$	0.06
Weighted Average Grant Date Fair Value for Options Granted During:				$	0.13				$	0.06

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TABLE OF CONTENTS

Celcuity LLC
Notes to Financial Statements
December 31, 2016 and December 31, 2015

6. Stock-Based Compensation (Continued)

The following table summarizes additional information about stock options outstanding and exercisable at December 31, 2016 under the Plan:

Options Outstanding									Options Exercisable
Options Outstanding	Weighted Average Remaining Contractual Life		Weighted Average Exercise Price			Aggregate Intrinsic Value			Options Exercisable		Weighted Average Exercise Price			Aggregate Intrinsic Value
12,083,500		8.80		$	0.15		$	497,862		2,858,500		$	0.07		$	332,692

The Company recognized stock-based compensation expense of $187,307 and $56,507 for 2016 and 2015, respectively. Total unrecognized compensation cost related to stock options is estimated to be recognized as follows:

2017	$	364,753
2018		253,316
2019		225,875
2020		110,833
Total estimated compensation cost to be recognized	$	954,777

7. Retirement Savings Plan

Substantially all of the Company’s employees are eligible to participate in a qualified defined contribution 401(k) plan. Participants may elect to have a specified portion of their salary contributed to the plan, and the Company may make discretionary contributions to the plan. The Company did not make any contributions to the plan for 2016 or 2015.

8. Subsequent Events

In May 2017, the Company issued to investors unsecured convertible promissory notes, or Notes, in the aggregate principal amount of $8,337,500. The Notes carry interest at a rate of 1.25% per annum. The Notes will convert into equity securities at the earlier of (i) the closing of an equity financing in which we receive gross proceeds of at least $5,000,000, or (ii) December 31, 2018, if no qualified equity financing has then occurred. Upon conversion of the Notes, holders of the Notes will also receive a warrant to purchase additional equity securities of the same class and series issued upon conversion of the Notes. The conversion price of the Notes will be equal to the price at which the equity securities are sold in the qualified financing.

In May 2017, the Company entered into an agreement with a clinical research organization to conduct a clinical research study. The Company is obligated to make a payment of $300,000 in June 2017 and to make additional payments of $50,000, $200,000, $50,000 in 2017, 2018, and 2019 respectively. Additional payments will be due as patients are enrolled in the study. The maximum amount of these additional payments is estimated to be approximately $2,100,000 over the course of the Agreement.

The Company has evaluated subsequent events through June 9, 2017, the date which the financial statements were available to be issued.

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TABLE OF CONTENTS

Celcuity LLC

Condensed Balance Sheets
June 30, 2017 and December 31, 2016

	June 30, 2017			December 31, 2016
	(unaudited)
Assets
Current Assets:
Cash and cash equivalents		$	10,908,068		$	5,856,348
Restricted cash			50,000			50,000
Deposits			5,717			5,717
Deferred transaction costs			301,730			—
Prepaid assets			156,120			—
Total current assets			11,421,635			5,912,065
Property and equipment, net			265,315			144,912
Total Assets		$	11,686,950		$	6,056,977
Liabilities and Members’ Equity:
Current Liabilities:
Accounts payable		$	519,867		$	331,534
Accrued expenses			257,087			113,825
Total current liabilities			776,954			445,359
Long term liabilities			6,575,413			—
Commitments and contingencies
Members’ Equity:
Members’ equity contributions - 257,604,208 units issued and outstanding			13,349,654			13,349,654
Additional paid-in capital			2,079,896			593,365
Accumulated deficit			(11,094,967 )			(8,331,401 )
Total Members’ Equity			4,334,583			5,611,618
Total Liabilities and Members’ Equity		$	11,686,950		$	6,056,977

See accompanying notes to the financial statements

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TABLE OF CONTENTS

Celcuity LLC

Condensed Statements of Operations
(unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Operating expenses:
Research and development		$	1,303,886		$	751,505		$	2,212,629		$	1,412,056
General and administrative			301,820			72,339			386,963			131,417
Total operating expenses			1,605,706			823,844			2,599,592			1,543,473
Loss from operations			(1,605,706 )			(823,844 )			(2,599,592 )			(1,543,473 )
Other income (expense)
Interest expense			(186,659 )			—			(186,686 )			—
Interest income			16,150			3,859			22,712			4,019
Other income (expense), net			(170,509 )			3,859			(163,974 )			4,019
Net Loss		$	(1,776,215 )		$	(819,985 )		$	(2,763,566 )		$	(1,539,454 )
Net loss per unit, basic and diluted		$	(0.01 )		$	(0.00 )		$	(0.01 )		$	(0.01 )
Weighted average member units outstanding, basic and diluted			257,604,208			253,770,053			257,604,208			247,266,395

See accompanying notes to the financial statements

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TABLE OF CONTENTS

Celcuity LLC

Condensed Statements of Cash Flows
For the six months ended June 30, 2017 and 2016
(unaudited)

	2017			2016
Cash flows from operating activities:
Net loss		$	(2,763,566 )		$	(1,539,454 )
Adjustments to reconcile net loss to net cash used by operations:
Depreciation			45,449			35,484
Stock-based compensation			422,816			36,301
Non-cash interest expense			186,759			—
Changes in operating assets and liabilities:
Prepaid assets			(156,120 )			—
Accounts payable			(34,771 )			46,038
Accrued expenses			89,700			18,738
Net cash used by operating activities			(2,209,733 )			(1,402,893 )
Cash flows from investing activities:
Purchases of property and equipment			(165,851 )			(29,863 )
Net cash used by investing activities:			(165,851 )			(29,863 )
Cash flows from financing activities:
Proceeds from sale of member units, net of issuance costs			—			3,718,300
Proceeds from sale of convertible promissory notes			7,493,330			—
Payments for debt issuance costs			(40,961 )			—
Deferred transaction costs			(25,065 )			—
Net cash provided by financing activities			7,427,304			3,718,300
Net increase in cash			5,051,720			2,285,544
Cash and cash equivalents at beginning of period			5,856,348			5,067,240
Cash and cash equivalents at end of period		$	10,908,068		$	7,352,783
Non-cash financing activities:
Debt issuance costs related to sale of convertible promissory notes		$	844,170		$	—
Debt discount related to investor and agent warrants (Note 7)			1,063,715			—
Deferred transaction costs included in accounts payable and accrued expenses			276,666			—

See accompanying notes to the financial statements

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TABLE OF CONTENTS

Celcuity LLC
Notes to Financial Statements
June 30, 2017 and 2016
(Unaudited)

1. Summary of Significant Accounting Policies

Nature of Business

Celcuity, LLC (the Company), a Minnesota company, is a cellular analysis company that is discovering new cancer sub-types and commercializing diagnostic tests designed to significantly improve the response rates of cancer patients treated with targeted therapies. The Company’s proprietary CELx diagnostic platform is currently the only commercially available technology to use a patient’s living tumor cells to evaluate the functional status of the cell signaling pathways associated with cancer. The CELx platform identifies the abnormal signaling activity driving a patient’s cancer and quantifies how effectively a targeted therapy can treat it. This enables physicians to select the therapeutic that precisely matches and inhibits a patient’s cellular dysfunction, which significantly increases the likelihood of a positive clinical outcome. The Company’s first analytically validated and commercially ready CELx test diagnoses two new sub-types of HER2-negative breast cancer. In late-2017, the Company will be fielding a prospective clinical trial to evaluate the efficacy of HER2 targeted therapies in patients with these newly identified cancer sub-types. In addition to the CELx tests for HER2-negative breast cancer, the Company is developing CELx tests to diagnose 14 new potential cancer sub-types in breast, lung, colon, ovarian, kidney, bladder and hematological cancers. The Company expects to launch these additional tests on a staggered basis over the next few years. Celcuity was cofounded in 2012 by Brian Sullivan and Lance Laing and is currently based in Minnesota. The Company has not generated any revenues to date.

Basis of Presentation

The accompanying unaudited financial statements include the accounts of the Company, and have been prepared in accordance with Article 10 of the Securities and Exchange Commission’s or the SEC, Regulation S-X. Accordingly, as permitted by Article 10, the unaudited financial statements do not include all of the information required by accounting principles generally accepted in the United States (U.S. GAAP). The Balance Sheet at December 31, 2016 was derived from the audited financial statements at that date and does not include all the disclosures required by U.S. GAAP. In the opinion of management, all adjustments which are of a normal recurring nature and necessary for a fair presentation have been reflected in the financial statements. These unaudited financial statements should be read in conjunction with the audited financial statements as of and for the year ended December 31, 2016 and the related footnotes thereto. Operating results for the three and six months ended June 30, 2017 are not necessarily indicative of the results to be expected during the remainder of the current year or for any future period.

Accounting Estimates

Cash and Cash Equivalents

The Company maintains its accounts primarily at one financial institution. At times throughout the year the Company’s cash balances may exceed amounts insured by the Federal Deposit Insurance Corporation. At June 30, 2017 and December 31, 2016, the Company had $10,809,411 and $5,842,193, respectively, in money market funds and US Treasury Bills that are considered cash equivalents.

Property and Equipment

Property and equipment are stated at cost. Depreciation is provided over estimated useful lives using the straight-line method. Maintenance and repairs are expensed as incurred; major improvements and betterments are capitalized.

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Celcuity LLC
Notes to Financial Statements
June 30, 2017 and 2016
(Unaudited)

1. Summary of Significant Accounting Policies (Continued)

Estimated useful lives of property and equipment are as follows for the major classes of assets:

Asset Description	Estimated Lives
Furniture and Equipment		4
Leasehold Improvements		2-3

Long-Lived Assets

Long-lived assets, such as property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values, and third party independent appraisals, as considered necessary.

Deferred Transaction Costs

Deferred transaction costs primarily consist of direct incremental legal and other fees relating to the Company’s contemplated initial public offering (“IPO”), and are capitalized as incurred. The deferred transaction costs will be offset against IPO proceeds upon the consummation of the offering. In the event the IPO is terminated, which would include a postponement of 90 days or greater, any deferred transaction costs will be expensed. Total costs incurred were $301,730 for the three and six months ending June 30, 2017.

Fair Value of Financial Instruments

•

Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the Company at the measurement date.

•

The level in the fair value hierarchy within which a fair measurement in its entirety falls is based on the lowest level input that is significant to the fair value measurement in its entirety.

The carrying values of cash equivalents, restricted cash, accounts payable, accrued expenses and other financial working capital items approximate fair value at June 30, 2017 and December 31, 2016, due to the short maturity nature of these items.

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TABLE OF CONTENTS

Celcuity LLC
Notes to Financial Statements
June 30, 2017 and 2016
(Unaudited)

1. Summary of Significant Accounting Policies (Continued)

Income Taxes

Celcuity is an LLC and is therefore a disregarded legal entity for income tax purposes. Accordingly, no provision for income taxes was included in the financial statements for all periods presented.

Primarily due to the Company’s tax status, the Company does not have any significant tax uncertainties that would require recognition or disclosure. For years before 2013, the Company is no longer subject to U.S. federal or state income tax examination. The Company’s policy is to recognize interest and penalties related to uncertain tax positions as a component of general and administrative expenses. As of June 30, 2017 and December 31, 2016, the Company did not have any significant uncertain tax positions.

Stock-Based Compensation

The Company’s stock-based compensation consists of member unit options issued to certain employees and nonemployees of the Company. The Company recognizes compensation expense for employees based on an estimated grant date fair value using the Black-Scholes option-pricing method. The Company has elected to account for forfeitures as they occur.

Research and Development

Research and development costs are expensed as incurred. Research and development costs amounted to $2,212,629 and $1,412,056 for the six months ending June 30, 2017 and 2016, respectively, and $1,303,886 and $751,505 for the three months ending June 30, 2017 and 2016, respectively.

Clinical Trial Costs

The Company records prepaid assets or accrued expenses for prepaid or estimated clinical trial costs conducted by third-party service providers, which include the conduct of preclinical studies and clinical trials. These costs are a significant component of the Company’s research and development expenses. The Company accrues for these costs based on factors such as estimates of the work completed and in accordance with agreements established with its third-party service providers under the service agreements. The Company makes significant judgments and estimates in determining the accrued liabilities balance in each reporting period. As actual costs become known, the Company adjusts its prepaid assets or accrued expenses. The Company has not experienced any material differences between accrued costs and actual costs incurred. However, the status and timing of actual services performed, number of patients enrolled and the rate of patient enrollments may vary from the Company’s estimates, resulting in adjustment to expense in future periods. Changes in these estimates that result in material changes to the Company’s prepaid assets or accrued expenses could materially affect the Company’s results of operations.

Recently Adopted Accounting Pronouncements

In August 2014, FASB issued Accounting Standards Update (ASU) No 2014-15, “Presentation of Financial Statements—Going Concern: Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”. The standard defines management’s going concern assessment and disclosure

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Celcuity LLC
Notes to Financial Statements
June 30, 2017 and 2016
(Unaudited)

1. Summary of Significant Accounting Policies (Continued)

responsibilities. The Company has adopted this standard as of January 1, 2016 and determined that it has the necessary capital, based on current cash on hand and the convertible note offering closed in May 2017, to meet all its obligations for at least one year from the issuance of these financial statements.

In July 2017, FASB issued ASU No. 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815). The amendments in Part I of this Update change the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features. When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. The amendments also clarify existing disclosure requirements for equity-classified instruments. As a result, a freestanding equity-linked financial instrument (or embedded conversion option) no longer would be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. For freestanding equity classified financial instruments, the amendments require entities that present earnings per share (EPS) in accordance with Topic 260 to recognize the effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders in basic EPS. Convertible instruments with embedded conversion options that have down round features are now subject to the specialized guidance for contingent beneficial conversion features (in Subtopic 470-20, Debt—Debt with Conversion and Other Options), including related EPS guidance (in Topic 260). The amendments in Part II of this Update recharacterize the indefinite deferral of certain provisions of Topic 480 that now are presented as pending content in the Codification, to a scope exception. Those amendments do not have an accounting effect. For public business entities, the amendments in Part I of this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. For all other entities, the amendments in Part I of this Update are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. The Company has adopted this standard as of January 1, 2017 and it did not have an effect on its financial statements as none of their equity or convertible debt instruments contain a down-round feature.

Recently Issued Accounting Pronouncements

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which provides guidance for accounting for leases. The new guidance requires companies to recognize the assets and liabilities for the rights and obligations created by leased assets, initially measured at the present value of the lease payments. The accounting guidance for lessors is largely unchanged. The ASU is effective for annual and interim periods beginning after December 15, 2018 for public entities and December 15, 2019 for all other entities, with early adoption permitted. It is to be adopted using a modified retrospective approach. The Company is currently evaluating the impact that the adoption of this guidance will have on the Company’s financial statements.

In May 2014 and amended in August 2015, the FASB issued ASU No. 2014-09 which amended the Revenue from Contracts with Customers (Topic 606) of the Accounting Standards Codification. The core principle of the new guidance is that an entity should recognize revenue to reflect the transfer of goods and services to customers in an amount equal to the consideration the entity receives or expects to receive. The ASU is effective for annual and interim periods beginning after December 15, 2017 for public entities and December 15, 2018 for all other entities, with early adoption permitted. The Company is currently evaluating the impact that the adoption of this guidance will have on the Company’s financial statements.

2. Net Loss per Common Unit

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Celcuity LLC
Notes to Financial Statements
June 30, 2017 and 2016
(Unaudited)

2. Net Loss per Common Unit (Continued)

because their effect would be anti-dilutive. Therefore, the weighted-average shares outstanding used to calculate both basic and diluted loss per common units are the same.

For the six months ending June 30, 2017 and 2016, 2,370,516 and 2,393,116 option and warrant unit equivalents, respectively, have been excluded from the computations of diluted weighted-average units outstanding.

3. Property and Equipment

Property and equipment consists of the following at June 30, 2017 and December 31, 2016:

	June 30, 2017			December 31, 2016
	(unaudited)
Leasehold improvements		$	22,307		$	22,307
Furniture and equipment			443,871			278,020
			466,178			300,327
Less: Accumulated depreciation			(200,863 )			(155,415 )
Totals		$	265,315		$	144,912

Depreciation expense was $45,449 and $35,484 for the six months ending June 30, 2017 and 2016, respectively, and $25,722 and $18,466 for the three months ending June 30, 2017 and 2016.

4. Commitments

Lease Obligation

The Company leases its corporate space in Minneapolis, Minnesota. At June 30, 2017, the Company had the following minimum commitments for payment of rentals which at inception had a non-cancellable term of more than one year:

	Operating Lease
Remainder of 2017		$	26,379
2018		$	21,982

Annual rent expense for operating leases was $25,076 and $24,816 for the six months ending June 30, 2017 and 2016, respectively, and $12,668 and $12,408 for the three months ending June 30, 2017 and 2016, respectively. In connection with the corporate lease, the Company is required to maintain a $50,000 standby letter of credit. The standby letter of credit expires on July 31, 2018.

Clinical Research Study

In May 2017, the Company entered into an agreement with a clinical research organization to conduct a clinical research study. The Company made a payment of $300,000 in June 2017 and is obligated to make payments of $50,000, $200,000, and $50,000 in 2017, 2018, and 2019, respectively. Additional payments will be due as patients are enrolled in the study. The maximum amount of these additional payments is estimated to be approximately $2,040,000 over the course of the agreement.

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Celcuity LLC
Notes to Financial Statements
June 30, 2017 and 2016
(Unaudited)

5. Members’ Equity

Member Units

The Company has one class of member units. The Company had 257,604,208 units issued and outstanding at June 30, 2017 and December 31, 2016. There is no limitation on the number of Units that may be issued by the Company. Units have no par value. Each member has one vote for each unit owned.

Member Unit Warrants

In connection with the 2016 private placement unit offering, the Company issued ten-year warrants to the placement agent of the private placement. The warrants allow the agent to purchase up to 2,209,940 member units at $0.18907 per unit. The warrants are immediately exercisable and expire on January 14, 2026. These warrants are equity classified and the fair value of $330,607 was recorded as additional paid-in capital. In connection with the unsecured convertible promissory note offering (Note 7), the Company issued 5,940,640 seven-year warrants to those investors. In addition, the Company issued 1,944,590 ten-year warrants to the placement agent. At June 30, 2017 and December 31, 2016, the Company had 10,095,170 and 2,209,940 member unit warrants outstanding, respectively.

6. Stock-Based Compensation

The 2012 Equity Incentive Plan was adopted by the board of governors and approved by the members of the Company on August 10, 2012, and was subsequently amended on November 12, 2012. The Company reserved a maximum of 25,000,000 common equity units available for issuance under the 2012 Equity Incentive Plan, of which 17,707,417 common equity units were outstanding as of June 30, 2017. The 2012 Equity Incentive Plan provides for unit options, restricted unit awards, performance unit awards or unit bonuses. The exercise price of each unit option granted under our 2012 Equity Incentive Plan is not less than one hundred percent (100%) of the fair market value of one unit on the date of grant. The maximum permitted term of options granted under our 2012 Equity Incentive Plan is ten years. The board of governors has administered the plan and determined the provisions of incentive awards, including eligible recipients, number of units subject to an incentive award, exercise price, vesting schedule, duration of an incentive award and other restrictions an incentive award may be subject to.

The Black-Scholes option-pricing model was used to estimate the fair value of equity-based awards with the following weighted-average assumptions for the six months ending June 30:

	2017	2016
Risk-free interest rate	2.00%	2.00%
Expected volatility	75.0%	72.0%
Expected life (years)	6.25 to 10.00	6.25 to 10.00
Expected dividend yield	0%	0%

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Celcuity LLC
Notes to Financial Statements
June 30, 2017 and 2016
(Unaudited)

6. Stock-Based Compensation (Continued)

options underlying the agreements would also be cancelled. Unvested nonemployee options are marked-to-market at each reporting period.

The following table summarizes the activity for all stock options outstanding for the six months ending June 30 under the Plan:

	2017					2016
	Shares		Weighted Average Exercise Price			Shares		Weighted Average Exercise Price
Options outstanding at beginning of year		12,083,500		$	0.15		4,581,000		$	0.08
Granted		5,926,000		$	0.21		6,790,000		$	0.19
Forfeited		(302,083 )		$	0.09		—		$	—
Balance at June 30		17,707,417		$	0.17		11,371,000		$	0.14
Options exercisable at June 30:		6,644,750		$	0.14		2,087,667		$	0.07
Weighted Average Grant Date Fair Value for Options Granted During the period:				$	0.13				$	0.13

The following table summarizes additional information about stock options outstanding and exercisable at June 30, 2017 under the Plan:

Options Outstanding									Options Exercisable
Options Outstanding	Weighted Average Remaining Contractual Life		Weighted Average Exercise Price			Aggregate Intrinsic Value			Options Exercisable		Weighted Average Exercise Price			Aggregate Intrinsic Value
17,707,417		8.86		$	0.17		$	475,005		6,644,750		$	0.14		$	382,906

The Company recognized stock-based compensation expense of $422,816 and $36,301 for the six months ending June 30, 2017 and 2016, respectively and $326,548 and $18,971 for the three months ending June 30, 2017 and 2016, respectively. Total unrecognized compensation cost related to stock options is estimated to be recognized as follows:

Remainder of 2017	$	259,655
2018		395,865
2019		354,499
2020		239,456
2021		61,081
Total estimated compensation cost to be recognized	$	1,309,556

7. Unsecured Convertible Promissory Notes

In April and May of 2017, the Company issued to certain accredited investors unsecured convertible promissory notes (the “Convertible Notes”) in the original principal amount of $5,750,000 and $2,587,500, respectively, for total principal of $8,337,500, pursuant to the terms of a Confidential Private Placement Memorandum.

The Convertible Notes accrued interest at a rate of 1.25% per annum from date of issuance until December 31, 2018 on a non-compounding basis. All principal and interest is due on December 31, 2018.

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Celcuity LLC
Notes to Financial Statements
June 30, 2017 and 2016
(Unaudited)

7. Unsecured Convertible Promissory Notes (Continued)

The Convertible Notes and all accrued interest thereon will automatically convert upon occurrence of a qualified financing, which is a closing of an equity offering of at least $5,000,000. The conversion price of the Convertible Notes will be equal to the price at which the equity securities are sold in the qualified financing. If a qualified financing does not occur on or before December 31, 2018, the Convertible Notes and accrued interest will automatically convert into units of membership interest of the Company on December 31, 2018, at a conversion price of $0.21052 per unit. The Convertible Notes do not have any optional conversion rights.

In connection with the issuance of the Convertible Notes, the Company granted those investors a seven-year warrant to purchase 5,940,640 units of member interest at an exercise price that is equal to the conversion price of the Convertible Notes. The gross proceeds of $8,337,500 was allocated $7,560,783 and $776,717 to the Convertible Notes and warrants, respectively, based on their relative fair value. The relative fair value of the warrants of $776,717 was recorded as debt discount and credited to additional paid-in capital. The resulting debt discount is amortized to interest expense using the effective interest method over the term of the Convertible Notes.

Cedar Point Capital, LLC (“Cedar”) served as the Company’s placement agent in connection with the placement of the Convertible Notes and earned a commission of approximately 10% of the original principal balance of such notes. Debt financing costs in the aggregate of $885,131 (not including agent warrant discussed below), comprised primarily of the commission earned by Cedar, are amortized to interest expense using the effective interest method over the term of the Convertible Notes. In addition to the commission earned by Cedar, the Company issued an agent’s ten-year warrant to purchase 1,944,590 units of membership units. The exercise price is the same as the seven-year warrant issued to the Convertible Notes’ investors. The fair value of the agent’s warrant was $286,999 and is considered additional debt discount and was credited to additional paid-in capital. During the quarter ended June 30, 2017, the Company amortized $170,454 of debt discount and financing costs to interest expense for these Convertible Notes.

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Common Stock

PROSPECTUS

Craig-Hallum Capital Group

, 2017

Until , 2017 (25 days after the date of this prospectus), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This requirement is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriter and with respect to their unsold allotments or subscriptions.

TABLE OF CONTENTS

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution.

The following table sets forth all costs and expenses, other than underwriting discounts and commissions, payable by us in connection with the sale of the common stock being registered. All amounts shown are estimates except for the SEC registration fee, the FINRA filing fee and the Nasdaq listing fee.

Expense	Amount to be Paid
SEC registration fee		$	1,739
FINRA filing fee			2,750
Nasdaq listing fee			*
Accountants’ fees and expenses			*
Legal fees and expenses			*
Blue Sky fees and expenses			*
Transfer Agent fees and expenses			*
Printing expenses			*
Miscellaneous			*
TOTAL		$	*

To be provided by amendment.

Item 14. Indemnification of Directors and Officers.

We plan to convert to a Delaware corporation prior to the effectiveness of this registration statement. Section 102(b)(7) of the Delaware General Corporation Law, or DGCL, provides that a Delaware corporation, in its certificate of incorporation, may limit the personal liability of a director to the corporation or its stockholders for monetary damages for breach of fiduciary duties as a director, except for liability for any:

•

transaction from which the director derived an improper personal benefit;

•

act or omission not in good faith or that involved intentional misconduct or a knowing violation of law;

•

unlawful payment of dividends or redemption of shares; or

•

breach of the director’s duty of loyalty to the corporation or its stockholders.

Section 145(a) of the DGCL provides, in general, that a Delaware corporation may indemnify any person who was or is a party, or is threatened to be made a party, to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) because that person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or other enterprise. The indemnity may include expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with such action, so long as the person acted in good faith and in a manner he or she reasonably believed was in or not opposed to the corporation’s best interests, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful.

Section 145(b) of the DGCL provides, in general, that a Delaware corporation may indemnify any person who was or is a party, or is threatened to be made a party, to any threatened, pending or completed action or suit by or in the right of the corporation to obtain a judgment in its favor because the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or other enterprise. The indemnity may include expenses (including attorneys’ fees) actually and reasonably incurred by the person

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in connection with the defense or settlement of such action, so long as the person acted in good faith and in a manner the person reasonably believed was in or not opposed to the corporation’s best interests, except that no indemnification shall be permitted without judicial approval if a court has determined that the person is to be liable to the corporation with respect to such claim. Section 145(c) of the DGCL provides that, if a present or former director or officer has been successful in defense of any action referred to in Sections 145(a) and (b) of the DGCL, the corporation must indemnify such officer or director against the expenses (including attorneys’ fees) he or she actually and reasonably incurred in connection with such action.

Section 145(g) of the DGCL provides, in general, that a corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or other enterprise against any liability asserted against and incurred by such person, in any such capacity, or arising out of his or her status as such, whether or not the corporation could indemnify the person against such liability under Section 145 of the DGCL.

Our certificate of incorporation and our bylaws will provide for the limitation of liability and indemnification of our directors and officers to the fullest extent permitted under the DGCL.

We also expect to enter into separate indemnification agreements with our directors and officers in addition to the indemnification provided for in our certificate of incorporation and bylaws. These indemnification agreements will provide, among other things, that we will indemnify our directors and officers for certain expenses, including damages, judgments, fines, penalties, settlements and costs and attorneys’ fees and disbursements, incurred by a director or officer in any claim, action or proceeding arising in his or her capacity as a director or officer of the company or in connection with service at our request for another corporation or entity. The indemnification agreements also provide for procedures that will apply in the event that a director or officer makes a claim for indemnification.

We also expect to maintain a directors’ and officers’ insurance policy pursuant to which our directors and officers are insured against liability for actions taken in their capacities as directors and officers.

We have entered into an underwriting agreement in connection with this offering, which provides for indemnification by the underwriter of us, our officers and directors, for certain liabilities, including liabilities arising under the Securities Act.

Item 15. Recent Sales of Unregistered Securities.

The following includes certain information regarding all securities sold by Celcuity within the past three years which were not registered under the Securities Act.

S ales of M embership U nits and W arrants in P rivate P lacements

In February 2014, we sold an aggregate of 44,444,444 common units representing membership interests in Celcuity LLC to Brightstone Venture Capital Fund, LP, or Brightstone, and The Globe Resources Group LLC, or Globe, at a price of $0.09 per unit, which would be approximately 1,111,111 shares at a price of $3.60 per share on a post-LLC Conversion basis.

During March 2014, we sold an aggregate of 8,333,340 common units representing membership interests in Celcuity LLC at a price of $0.1034482 per unit, which would be approximately 208,334 shares at a price of $4.14 per share on a post-LLC Conversion basis. Cedar Point Capital, LLC, or Cedar Point, served as a placement agent for a portion of the units sold in the offering. The aggregate commission paid to Cedar Point was $112,069.

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In February 2015, we sold 1,666,667 common units representing membership interests in Celcuity LLC to Brightstone at a price of $0.09 per unit, which would be approximately 41,667 shares at a price of $3.60 per share on a post-LLC Conversion basis.

From December 2015 through January 2016, we sold an aggregate of 27,370,836 common units representing membership interests in Celcuity LLC at a price of $0.18907 per unit, which would be approximately 684,271 shares at a price of $7.56 per share on a post-LLC Conversion basis. Cedar Point served as a placement agent in the offering. The aggregate cash commission paid to Cedar Point was $510,000. Cedar Point also received a 10-year warrant to purchase 1,348,708 common units representing membership interests with an exercise price of $0.18907 per unit, which would be approximately 33,718 shares at a price of $7.56 per share on a post-LLC Conversion basis.

From March 2016 through May 2016, we sold an aggregate of 17,224,640 common units representing membership interests in Celcuity LLC at a price of $ 0.18907 per unit, which would be approximately 430,616 shares at a price of $7.56 per share on a post-LLC Conversion basis. Cedar Point served as a placement agent in the offering. The aggregate cash commission paid to Cedar Point was $325,666. Cedar Point also received a 10-year warrant to purchase 861,232 common units representing membership interests with an exercise price of $0.18907 per unit, which would be approximately 21,531 shares at a price of $7.56 per share on a post-LLC Conversion basis.

The February 2014 sales of membership units to Brightstone and Globe, and the February 2015 sale of membership units to Brightstone, were made in reliance upon exemption from the registration requirements pursuant to Section 4(a)(2) under the Securities Act. The offer and sale of all other securities listed in this subsection entitled “Sales of Membership Units and Warrants in Private Placements” was made to a limited number of accredited investors in reliance upon exemptions from the registration requirements pursuant to Section 4(a)(2) under the Securities Act and Regulation D promulgated under the Securities Act. There was no general solicitation or advertising with respect to the private placements and each of the purchasers provided written representations of an intent to acquire the securities for investment only and not with a view to or for sale in connection with any distribution of the securities. Restrictive legends were affixed to each of the certificates representing the units issued in the private placements.

S ales of U nsecured C onvertible P romissory N otes in P rivate P lacements

During April 2017, we sold 1.25% Unsecured Convertible Promissory Notes with an aggregate principal amount of $5,750,000 that mature on December 31, 2018, or the April 2017 Notes. Cedar Point served as a placement agent in the offering. The aggregate cash commission paid to Cedar Point was $560,000. Cedar Point also received a 10-year warrant to purchase 1,330,040 common units representing membership interests with an exercise price of $0.21052 per unit, which would be approximately 33,251 shares at a price of $8.42 per share on a post-LLC Conversion basis.

During May 2017, we sold 1.25% Unsecured Convertible Promissory Notes with an aggregate principal amount of $2,587,500 that mature on December 31, 2018, or the May 2017 Notes. Cedar Point served as a placement agent in the offering. The aggregate cash commission paid to Cedar Point was $258,000. Cedar Point also received a 10-year warrant to purchase 614,550 common units representing membership interests with an exercise price of $0.21052 per unit, which would be approximately 15,364 shares at a price of $8.42 per share on a post-LLC Conversion basis.

The offer and sale of all securities listed in this section entitled “Sales of Unsecured Convertible Promissory Notes in Private Placements” was made to a limited number accredited investors in reliance upon exemptions from the registration requirements pursuant to Section 4(a)(2) under the Securities Act and Regulation D promulgated under the Securities Act. There was no general solicitation or advertising with respect to the private placements and each of the purchasers provided written representations of an intent to acquire the securities for investment only and not with a view to or for sale in connection with any distribution of the securities. Restrictive legends were affixed to the April 2017 Notes and May 2017 Notes issued in the private placements.

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Item 16. Exhibits and Financial Statement Schedules.

(a)

Exhibits.

See the Exhibit Index immediately following the signature page to this prospectus, which is incorporated herein by reference.

(b)

Financial Statement Schedules.

All schedules have been omitted because the information required to be presented in them is not applicable or is shown in the financial statements or related notes included in this prospectus.

Item 17. Undertakings.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission 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 registrant of expenses incurred or paid by a director, officer or controlling person of the registrant 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 registrant will, unless in the opinion of its 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 Securities Act and will be governed by the final adjudication of such issue.

The undersigned registrant hereby undertakes that:

(1)

The registrant will provide to the underwriter at the closing as specified in the underwriting agreement, certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser.

(2)

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.

(3)

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.

(4)

For the purpose of determining liability under the Securities Act, each prospectus filed pursuant to Rule 424(b) as part of this registration statement other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in this registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in this registration statement or prospectus that is part of this registration statement or made in a document incorporated or deemed incorporated by reference into this registration statement or prospectus that is part of this registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in this registration statement or prospectus that was part of this registration statement or made in any such document immediately prior to such date of first use.

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:

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(1)

Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424 under the Securities Act;

(2)

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;

(3)

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

(4)

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

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SIGNATURES

Pursuant to the requirements of the Securities Act, the Registrant has duly caused this registration statement on Form S-1 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Minneapolis, State of Minnesota, on the 23 rd day of August, 2017.

	CELCUITY LLC
	By:			/s/ Brian F. Sullivan Brian F. Sullivan Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Brian F. Sullivan as his or her true and lawful agent, proxy and attorney-in-fact, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to (i) act on, sign and file with the SEC any and all amendments (including post-effective amendments) to this registration statement together with all schedules and exhibits thereto and any subsequent registration statement filed pursuant to Rule 462(b) under the Securities Act, together with all schedules and exhibits thereto, (ii) act on, sign and file such certificates, instruments, agreements and other documents as may be necessary or appropriate in connection therewith, (iii) act on and file any supplement to any prospectus included in this registration statement or any such amendment or any subsequent registration statement filed pursuant to Rule 462(b) under the Securities Act, and (iv) take any and all actions which may be necessary or appropriate to be done, as fully for all intents and purposes as he might or could do in person, hereby approving, ratifying and confirming all that such agent, proxy and attorney-in-fact or any of his substitutes may lawfully do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Act, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Brian F. Sullivan Brian F. Sullivan	Chief Executive Officer (Principal Executive Officer), Director (Governor) and Chairman	August 23, 2017
/s/ Vicky Hahne Vicky Hahne	Chief Financial Officer (Principal Financial and Accounting Officer)	August 23, 2017
/s/ Lance G. Laing Lance G. Laing	Chief Science Officer, Vice President and Secretary, and Director (Governor)	August 23, 2017
/s/ Maureen Cronin Maureen Cronin	Director (Governor)	August 23, 2017
/s/ David F. Dalvey David F. Dalvey	Director (Governor)	August 23, 2017
/s/ Richard J. Nigon Richard J. Nigon	Director (Governor)	August 23, 2017

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EXHIBIT INDEX

	Exhibit Number			Description
	1.1			Form of Underwriting Agreement*
	2.1			Form of Plan of Conversion*
	3.1			Certificate of Incorporation, to be in effect immediately prior to the completion of this offering*
	3.2			Bylaws, to be in effect immediately prior to the completion of this offering*
	4.1			Specimen Certificate representing shares of common stock of Celcuity Inc.*
	4.2			Form of Underwriter’s Warrant*
	5.1			Opinion of Fredrikson & Byron, P.A.*
	10.1			Celcuity Inc. 2017 Employee Stock Purchase Plan*+
	10.2			Celcuity Inc. 2017 Stock Incentive Plan*+
	10.3			Form of Stock Option Agreement pursuant to Celcuity Inc. 2017 Stock Incentive Plan*+
	10.4			Form of Restricted Stock Award Agreement pursuant to Celcuity Inc. 2017 Stock Incentive Plan*+
	10.5			Form of Restricted Stock Unit Award Agreement pursuant to Celcuity Inc. 2017 Stock Incentive Plan*+
	10.6			Form of Stock Appreciation Right Agreement pursuant to Celcuity Inc. 2017 Stock Incentive Plan*+
	10.7			Celcuity LLC 2012 Equity Incentive Plan, adopted August 10, 2012, as amended by First Amendment to the Celcuity LLC 2012 Equity Incentive Plan, adopted November 12, 2015+
	10.8			Form of Incentive Plan Unit Option Agreement pursuant to the Celcuity LLC 2012 Equity Incentive Plan+
	10.9			Form of Warrant to Purchase Units of Membership Interest issued by Celcuity LLC to Cedar Point Capital, LLC, as placement agent of membership units and unsecured convertible promissory notes of Celcuity LLC
	10.10			Form of 1.25% Unsecured Convertible Promissory Note issued by Celcuity LLC
	10.11			Form of Warrant to Purchase Shares of Common Stock to be issued by Celcuity Inc. in connection with the conversion of 1.25% Unsecured Convertible Promissory Notes
	10.12			Commercial Lease, dated March 11, 2014, as amended by First Amendment to Commercial Lease, dated March 20, 2014, as amended by Second Amendment to Commercial Lease, dated August 31, 2016, by and between West Glen Development, LLC and Celcuity LLC
	10.13			Clinical Trial Agreement, dated May 8, 2017, between NSABP Foundation, Inc. and Celcuity LLC
	10.14			Confidentiality, Assignment of Inventions and Non-Competition Agreement, dated November 15, 2011, between Celcuity LLC and Brian F. Sullivan+
	10.15			Confidentiality, Assignment of Inventions and Non-Competition Agreement, dated November 15, 2011, between Celcuity LLC and Lance G. Laing+
	10.16			Confidentiality, Non-Compete and Proprietary Rights Agreement, dated May 17, 2017, between Celcuity LLC and Vicky Hahne+
	23.1			Consent of Boulay PLLP
	23.2			Consent of Fredrikson & Byron, P.A. (included in Exhibit 5.1)*
	24.1			Power of Attorney (included on signature page)

To be filed by amendment.

Management contract or compensatory plan.

Exhibit 10.7

CELCUITY LLC

2012 Equity Incentive Plan

Adopted August 10, 2012

TABLE OF CONTENTS

			Page

1.	Purpose of Plan		1

2.	Definitions		1

3.	Plan Administration		3
	3.1	The Committee	3
	3.2	Authority of the Committee	3

4.	Units Available for Issuance		4
	4.1	Maximum Number of Units Available	4
	4.2	Accounting for Incentive Awards	4
	4.3	Adjustments to Units and Incentive Awards	4

5.	Participation		5

6.	Options		5
	6.1	Grant	5
	6.2	Exercise Price	5
	6.3	Exercisability and Duration	5
	6.4	Payment of Exercise Price	5
	6.5	Manner of Exercise	5

7.	Restricted Unit Awards		5
	7.1	Grant	5
	7.2	Rights as a Member; Transferability	6
	7.3	Dividends and Distributions	6
	7.4	Enforcement of Restrictions	6

8.	Performance Unit Awards		6

9.	Unit Bonuses		7

10.	Effect of Termination of Employment or Other Service		7
	10.1	Termination Due to Death, Disability or Retirement	7
	10.2	Termination for Reasons Other than Death, Disability or Retirement	8
	10.3	Modification of Rights Upon Termination	9
	10.4	Date of Termination of Employment or Other Service	9

11.	Payment of Withholding Taxes		9
	11.1	General Rules	9
	11.2	Special Rules	9

12.	Change in Control		9
	12.1	Change in Control	9
	12.2	Action upon Change in Control	10

			Page

13.	Rights of Eligible Recipients and Participants; Transferability		11
	13.1	Employment or Service	11
	13.2	Rights as a Member	11
	13.3	Restrictions on Transfer	11
	13.4	Breach of Confidentiality, Assignment of Inventions or Non-Compete Agreements	11
	13.5	Non-Exclusivity of the Plan	11

14.	Member Control Agreement, Securities Law and Other Restrictions		11
	14.1	Member Control Agreement	11
	14.2	Securities Law and Other Restrictions	12

15.	Plan Amendment, Modification and Termination		12

16.	Effective Date and Duration of the Plan		12

17.	Miscellaneous		12
	17.1	Governing Law	12
	17.2	Successors and Assigns	12

CELCUITY LLC

2012 Equity Incentive Plan

1. Purpose of Plan.

The purpose of the Celcuity LLC 2012 Equity Incentive Plan (the “ Plan ”) is to advance the interests of Celcuity LLC (the “ Company ”) and its members by enabling the Company and its Subsidiaries to attract and retain persons of skill and ability to perform services for the Company and its Subsidiaries by providing an incentive to such individuals through equity participation in the Company and by rewarding such individuals who contribute to the achievement by the Company of its economic objectives.

2. Definitions.

The following terms will have the meanings set forth below, unless the context clearly otherwise requires:

2.1. “ Board ” means the Board of Governors of the Company.

2.2. “ Cause ” has the meaning set forth in Section 10.2 of the Plan.

2.3. “ Change in Control ” means an event described in Section 12.1 of the Plan.

2.4. “ Code ” means the Internal Revenue Code of 1986, as amended.

2.5. “ Committee ” means the group of individuals administering the Plan, as provided in Section 3 of the Plan.

2.6. “ Company ” means Celcuity LLC, a limited liability company organized under and pursuant to Minnesota Statutes, Chapter 322B.

2.7. “ Disability ” means the disability of the Participant such as would entitle the Participant to receive disability income benefits pursuant to the long-term disability plan of the Company or Subsidiary then covering the Participant or, if no such plan exists or is applicable to the Participant, the permanent and total disability of the Participant within the meaning of Section 22(e)(3) of the Code.

2.8. “ Eligible Recipient ” means any employee of the Company or any Subsidiary and any non-employee governor, consultant or independent contractor of the Company or any Subsidiary.

2.9. “ Exchange Act ” means the Securities Exchange Act of 1934, as amended.

2.10. “ Fair Market Value ” means, with respect to the Units, as of any date, such price as the Committee determines in good faith in the exercise of its reasonable discretion, taking into account all available information material to the value of the Units, and consistent with the definition of “fair market value” under Section 409A of the Code.

2.11. “ Incentive Award ” means an Option, Restricted Unit Award, Performance Unit Award or Unit Bonus granted to an Eligible Recipient pursuant to the Plan.

2.12. “ Member Control Agreement ” means the Member Control Agreement dated November 15, 2011, by and between the Company and the members of the Company, as amended from time to time.

2.13. “ Option ” means a right to purchase Units granted to an Eligible Recipient pursuant to Section 6 of the Plan.

2.14. “ Participant ” means an Eligible Recipient who receives one or more Incentive Awards under the Plan.

2.15. “ Performance Unit Award ” means a right granted to an Eligible Recipient pursuant to Section 8 of the Plan to receive a payment from the Company, in the form of Units, cash or a combination of both, upon the achievement of established employment, service, performance or other goals.

2.16. “ Previously Acquired Units ” means Units that are already owned by the Participant or, with respect to any Incentive Award, that are to be issued upon the grant, exercise or vesting of such Incentive Award.

2.17. “ Restricted Unit Award ” means an award of Units granted to an Eligible Recipient pursuant to Section 7 of the Plan that is subject to the restrictions on transferability and the risk of forfeiture imposed in accordance with the provisions of such Section 7.

2.18. “ Retirement ” means termination of employment or service pursuant to and in accordance with the regular (or, if approved by the Board for purposes of the Plan, early) retirement/pension plan or practice of the Company or Subsidiary then covering the Participant, provided that if the Participant is not covered by any such plan or practice, the Participant will be deemed to be covered by the Company’s plan or practice for purposes of this determination.

2.19. “ Securities Act ” means the Securities Act of 1933, as amended.

2.20. “ Subsidiary ” means any entity that is directly or indirectly controlled by the Company or any entity in which the Company has a significant equity interest, as determined by the Committee.

2.21. “ Unit Bonus ” means an award of Units granted to an Eligible Recipient pursuant to Section 9 of the Plan.

2.22. “ Units ” means the units into which a member’s ownership interest in the Company is divided, each Unit consisting of the member’s Financial Rights and Governance Rights as provided in the Member Control Agreement. “ Units ” also means the number and kind of units or other securities into which such Units may be changed in accordance with Section 4.3 of the Plan.

3. Plan Administration.

3.1. The Committee . The Plan will be administered by the Board or by a committee of the Board. Such a committee, if established, will act by majority approval of its members (but may also take action with the written consent of a majority of the members of such committee), and a majority of the members of such a committee will constitute a quorum. As used in the Plan, “ Committee ” will refer to the Board or to such a committee, if established. To the extent consistent with limited liability company law, the Committee may delegate to any officers of the Company the duties, power and authority of the Committee under the Plan pursuant to such conditions or limitations as the Committee may establish; provided , however , that only the Committee may exercise such duties, power and authority with respect to Eligible Recipients who officers or governors of the Company. The Committee may exercise its duties, power and authority under the Plan in its sole and absolute discretion without the consent of any Participant or other party, unless the Plan specifically provides otherwise. Each determination, interpretation or other action made or taken by the Committee pursuant to the provisions of the Plan will be final, conclusive and binding for all purposes and on all persons, including, without limitation, the Company, the members of the Company, the Participants and their respective successors-in-interest. No member of the Committee will be liable for any action or determination made in good faith with respect to the Plan or any Incentive Award granted under the Plan.

3.2. Authority of the Committee .

(a) In accordance with and subject to the provisions of the Plan, the Committee will have the authority to determine all provisions of Incentive Awards as the Committee may deem necessary or desirable and as consistent with the terms of the Plan, including, without limitation, the following: (i) the Eligible Recipients to be selected as Participants; (ii) the nature and extent of the Incentive Awards to be made to each Participant (including the number of Units to be subject to each Incentive Award, any exercise price, the manner in which Incentive Awards will vest or become exercisable and whether Incentive Awards will be granted in tandem with other Incentive Awards) and the form of written agreement, if any, evidencing such Incentive Award; (iii) the time or times when Incentive Awards will be granted; (iv) the duration of each Incentive Award; and (v) the restrictions and other conditions to which the payment or vesting of Incentive Awards may be subject. In addition, the Committee will have the authority under the Plan in its sole discretion to pay the economic value of any Incentive Award in the form of cash, Units or any combination of both.

(b) The Committee will have the authority under the Plan to amend or modify the terms of any outstanding Incentive Award in any manner, including, without limitation, the authority to modify the number of Units or other terms and conditions of an Incentive Award, extend the term of an Incentive Award, accelerate the exercisability or vesting or otherwise terminate any restrictions relating to an Incentive Award, accept the surrender of any outstanding Incentive Award or, to the extent not previously exercised or vested, authorize the grant of new Incentive Awards in substitution for surrendered Incentive Awards; provided , however , that the amended or modified terms are permitted by the Plan as then in effect, that such amendment or modification does not cause the Incentive Award to become subject to Section 409A of the Code, and that any Participant adversely affected by such amended or modified terms has consented to

such amendment or modification. No amendment or modification to an Incentive Award, however, whether pursuant to this Section 3.2 or any other provisions of the Plan, will be deemed to be a re-grant of such Incentive Award for purposes of the Plan.

(c) In the event of (i) any reorganization, merger, consolidation, recapitalization, liquidation, reclassification, dividend in Units, division or combination of Units, rights offering, extraordinary dividend or divestiture (including a spin-off) or any other similar change in the capital structure or Units, (ii) any purchase, acquisition, sale or disposition of a significant amount of assets or a significant business, (iii) any change in accounting principles or practices, or (iv) any other similar change, in each case with respect to the Company or any other entity whose performance is relevant to the grant or vesting of an Incentive Award, the Committee (or, if the Company is not the surviving entity in any such transaction, the board of governors or board of directors of the surviving entity) may, without the consent of any affected Participant, amend or modify the vesting criteria of any outstanding Incentive Award that is based in whole or in part on the financial performance of the Company (or any Subsidiary or division thereof) or such other entity so as equitably to reflect such event, with the desired result that the criteria for evaluating such financial performance of the Company or such other entity will be substantially the same (in the sole discretion of the Committee or the board of governors or board of directors of the surviving entity) following such event as prior to such event; provided , however , that the amended or modified terms are permitted by the Plan as then in effect.

4. Units Available for Issuance.

4.1. Maximum Number of Units Available . Subject to adjustment as provided in Section 4.3 of the Plan or by amendment, the maximum number of Units that will be available for issuance under the Plan will be Five Million (5,000,000).

4.2. Accounting for Incentive Awards . Units that are issued under the Plan or that are subject to outstanding Incentive Awards will be applied to reduce the maximum number of Units remaining available for issuance under the Plan. Any Units that are subject to an Incentive Award that lapse, expire, are forfeited or for any reason are terminated unexercised or unvested and any Units that are subject to an Incentive Award that is settled or paid in cash or any form other than Units will automatically again become available for issuance under the Plan. Any Units that constitute the forfeited portion of a Restricted Unit Award, however, will not become available for re-issuance under the Plan after they have been so forfeited.

4.3. Adjustments to Units and Incentive Awards . In the event of any reorganization, merger, consolidation, recapitalization, liquidation, reclassification, dividend in Units, division or combination of Units, rights offering, extraordinary dividend or divestiture (including a spin-off) or any other similar change in the capital structure or Units of the Company, the Committee (or, if the Company is not the surviving entity in any such transaction, the board of governors or board of directors of the surviving entity) will make appropriate adjustment (which determination will be conclusive) as to the number and kind of securities or other property (including cash) available for issuance or payment under the Plan and, in order to prevent dilution or enlargement of the rights of Participants, (a) the number and kind of securities

or other property (including cash) subject to outstanding Incentive Awards, and (b) the exercise price of outstanding Incentive Awards.

5. Participation.

Participants in the Plan will be those Eligible Recipients who, in the judgment of the Committee, have contributed, are contributing or are expected to contribute to the achievement of economic objectives of the Company or its Subsidiaries. Eligible Recipients may be granted from time to time one or more Incentive Awards, singly or in combination or in tandem with other Incentive Awards, as may be determined by the Committee in its sole discretion. Incentive Awards will be deemed to be granted as of the date specified in the grant resolution of the Committee, which date will be the date of any related agreement with the Participant.

6. Options.

6.1. Grant . An Eligible Recipient may be granted one or more Options under the Plan, and such Options will be subject to such terms and conditions, consistent with the other provisions of the Plan, as may be determined by the Committee in its sole discretion.

6.2. Exercise Price . The per Unit price to be paid by a Participant upon exercise of an Option will be determined by the Committee in its discretion at the time of the Option grant; provided , however , that such price will not be less than one hundred percent (100%) of the Fair Market Value of one Unit on the date of grant.

6.3. Exercisability and Duration . An Option will become exercisable at such times and in such installments as may be determined by the Committee in its sole discretion at the time of grant; provided , however , that no Option may be exercisable after ten (10) years from its date of grant.

6.4. Payment of Exercise Price . The total purchase price of the Units to be purchased upon exercise of an Option will be paid entirely in cash (including check, bank draft or money order); provided , however , that the Committee, in its sole discretion and upon terms and conditions established by the Committee, may allow such payments to be made, in whole or in part, by tender of Previously Acquired Units, a promissory note (on terms acceptable to the Committee in its sole discretion) or a combination of such methods, or by any other form of payment the Committee may authorize.

6.5. Manner of Exercise . An Option may be exercised by a Participant in whole or in part from time to time, subject to the conditions contained in the Plan and in the agreement evidencing such Option, by delivery in person, by facsimile or electronic transmission or through the mail of written notice of exercise to the Company (Attention: Chief Executive Officer) at its principal executive office, and by paying in full the total exercise price for the Units to be purchased in accordance with Section 6.4 of the Plan.

7. Restricted Unit Awards.

7.1. Grant . An Eligible Recipient may be granted one or more Restricted Unit Awards under the Plan, and such Restricted Unit Awards will be subject to such terms and

conditions, consistent with the other provisions of the Plan, as may be determined by the Committee in its sole discretion. The Committee may impose such restrictions or conditions, such as forfeiture or a repurchase option, not inconsistent with the provisions of the Plan, to the vesting of or the lapse of restrictions or conditions for any such Restricted Unit Awards as it deems appropriate, including, without limitation, that the Participant remain in the continuous employ or service of the Company or a Subsidiary for a certain period or that the Participant or the Company (or any Subsidiary or division thereof) satisfy certain performance goals or criteria.

7.2. Rights as a Member; Transferability . Except as provided in Sections 7.1, 7.3 and 13.3 of the Plan, a Participant will have all voting, distribution, liquidation and other rights with respect to Units issued to the Participant as a Restricted Unit Award under this Section 7 upon the Participant becoming the holder of record of such Units as if such Participant were a holder of record of unrestricted Units.

7.3. Dividends and Distributions . Unless the Committee determines otherwise in its sole discretion (either in the agreement evidencing the Restricted Unit Award at the time of grant or at any time after the grant of the Restricted Unit Award), any dividends or distributions paid with respect to Units subject to the unvested portion of a Restricted Unit Award will be subject to the same restrictions as the Units to which such dividends or distributions relate. In the event the Committee determines not to pay dividends or distributions currently, the Committee will determine in its sole discretion whether any interest will be paid on such dividends or distributions. In addition, the Committee in its sole discretion may require such dividends and distributions to be reinvested (and in such case the Participant consents to such reinvestment) in Units that will be subject to the same restrictions as the Units to which such dividends or distributions relate.

7.4. Enforcement of Restrictions . To enforce the restrictions referred to in this Section 7, the Committee may place a legend on the certificates representing the Units referring to such restrictions and may require the Participant, until the restrictions have lapsed, to keep the Unit certificates, together with duly endorsed Assignments Separate from Certificate, in the custody of the Company or its transfer agent or to maintain evidence of Unit ownership, together with duly endorsed Assignments Separate from Certificate, in an uncertificated book-entry account with the Company or its transfer agent.

8. Performance Unit Awards.

An Eligible Recipient may be granted one or more Performance Unit Awards under the Plan, and such Performance Unit Awards will be subject to such terms and conditions, consistent with the other provisions of the Plan, as may be determined by the Committee in its sole discretion. The Committee may impose such restrictions or conditions, not inconsistent with the provisions of the Plan, to the vesting of such Performance Unit Awards as it deems appropriate, including, without limitation, that the Participant remain in the continuous employ or service of the Company or any Subsidiary for a certain period or that the Participant or the Company (or any Subsidiary or division thereof) satisfy certain performance goals or criteria. The Committee will have the sole discretion to determine the form in which payment of the economic value of Performance Unit Awards will be made to a Participant (i.e., cash, Units or any combination thereof) or to consent to or disapprove the election by a Participant of the form of such payment.

9. Unit Bonuses.

An Eligible Recipient may be granted one or more Unit Bonuses under the Plan, and such Unit Bonuses will be subject to such terms and conditions, consistent with the other provisions of the Plan, as may be determined by the Committee. The Participant will have all voting, distribution, liquidation and other rights with respect to the Units issued to a Participant as a Unit Bonus under this Section 9 upon the Participant becoming the holder of record of such Units; provided , however , that the Committee may impose such restrictions on the assignment or transfer of a Unit Bonus as it deems appropriate.

10. Effect of Termination of Employment or Other Service.

10.1. Termination Due to Death, Disability or Retirement . Unless otherwise provided by the Committee in its sole discretion in the agreement evidencing an Incentive Award:

(a) Death or Disability . In the event a Participant’s employment or other service with the Company and all Subsidiaries is terminated by reason of death or Disability:

(i) all outstanding Options then held by the Participant will become immediately exercisable in full and remain exercisable for a period of six (6) months after such termination (but in no event after the expiration date of any such Option);

(ii) all Restricted Unit Awards then held by the Participant will become fully vested; and

(iii) all Performance Unit Awards and Unit Bonuses then held by the Participant will vest and/or continue to vest in the manner determined by the Committee and set forth in the agreement evidencing such Performance Unit Awards or Unit Bonuses.

(b) Retirement . In the event a Participant’s employment or other service with the Company and all Subsidiaries is terminated by reason of Retirement:

(i) all outstanding Options then held by the Participant will remain exercisable, to the extent exercisable as of the date of such termination, for a period of six (6) months after such termination (but in no event after the expiration date of any such Option);

(ii) all Restricted Unit Awards then held by the Participant that have not vested as of such termination will be terminated and forfeited; and

10.2. Termination for Reasons Other than Death, Disability or Retirement . Unless otherwise provided by the Committee in its sole discretion in the agreement evidencing an Incentive Award:

(a) Voluntary Termination or Termination for Cause . In the event a Participant’s employment or other service with the Company and all Subsidiaries is voluntarily terminated by the Participant or is terminated by the Company or any Subsidiary for “ Cause ,” all rights of the Participant under the Plan and any agreements evidencing an Incentive Award will immediately terminate without notice of any kind, and:

(i) no Options then held by the Participant will thereafter be exercisable,

(ii) all Restricted Unit Awards then held by the Participant that have not vested as of such termination will be terminated and forfeited; and

(iii) all Performance Unit Awards and Unit Bonuses then held by the Participant that have not vested as of such termination will be terminated and forfeited.

(b) Other Reasons . In the event a Participant’s employment or other service with the Company and all Subsidiaries is terminated for any reason other than death, Disability, Retirement, voluntary termination by the Participant or termination by the Company or any Subsidiary for “ Cause ,” or if a Participant is in the employ or service of a Subsidiary and the Subsidiary ceases to be a Subsidiary of the Company (unless the Participant continues in the employ or service of the Company or another Subsidiary),

(i) all outstanding Options then held by such Participant will remain exercisable, to the extent exercisable as of such termination, for a period of ninety (90) days after such termination (but in no event after the expiration date of any such Option);

(ii) all Restricted Unit Awards then held by the Participant that have not vested as of such termination will be terminated and forfeited; and

(c) Definition of “Cause” . For purposes of this Section 10.2, “ Cause ” (as determined by the Committee) will be as defined in any employment or other agreement or policy applicable to the Participant or, if no such agreement or policy exists, will mean (i) dishonesty, fraud, misrepresentation, embezzlement or deliberate injury or attempted injury, in each case related to the Company or any Subsidiary, (ii) substantial failure on the part of the Participant to perform his or her duties to the Company or any Subsidiary or gross negligence on the part of the Participant in the performance of such duties, (iii) any unlawful or criminal activity of a serious nature, or (iv) any material breach of any employment, service, confidentiality or non-compete agreement entered into with the Company or any Subsidiary.

10.3. Modification of Rights Upon Termination . Notwithstanding the other provisions of this Section 10, upon a Participant’s termination of employment or other service with the Company and all Subsidiaries, the Committee may, in its sole discretion (which may be exercised at any time on or after the date of grant, including following such termination), (a) cause Options (or any part thereof) then held by such Participant to become or continue to become exercisable and/or remain exercisable following such termination of employment or service and (b) cause Restricted Unit Awards, Performance Unit Awards and Unit Bonuses then held by such Participant to vest and/or continue to vest or become free of transfer restrictions, as the case may be, following such termination of employment or service, in each case in the manner determined by the Committee; provided , however , that no Incentive Award may remain exercisable or continue to vest beyond its expiration date. Notwithstanding the foregoing, no extension to exercise will be permitted if such extension would cause the Award to become subject to Section 409A of the Code.

10.4. Date of Termination of Employment or Other Service . Unless the Committee otherwise determines in its sole discretion, a Participant’s employment or other service will, for purposes of the Plan, be deemed to have terminated on the date recorded on the personnel or other records of the Company or the Subsidiary for which the Participant provides employment or other service, as determined by the Committee in its sole discretion based upon such records.

11. Payment of Withholding Taxes.

11.1. General Rules . The Company is entitled to (a) withhold and deduct from future wages of the Participant (or from other amounts that may be due and owing to the Participant from the Company or a Subsidiary), or make other arrangements for the collection of, all legally required amounts necessary to satisfy any and all foreign, federal, state and local withholding and employment-related tax requirements attributable to an Incentive Award, including, without limitation, the grant, exercise or vesting of, or payment of dividends with respect to, an Incentive Award, or (b) require the Participant promptly to remit the amount of such withholding to the Company before taking any action, including issuing any Units, with respect to an Incentive Award.

11.2. Special Rules . The Committee may, in its sole discretion and upon terms and conditions established by the Committee, permit or require a Participant to satisfy, in whole or in part, any withholding or employment-related tax obligation described in Section 11.1 of the Plan by electing to tender Previously Acquired Units or a promissory note (on terms acceptable to the Committee in its sole discretion), or by a combination of such methods.

12. Change in Control.

12.1. Change in Control . For purposes of this Section 12, a “ Change in Control ” of the Company means the occurrence of any of the following events:

(a) the sale, lease, exchange or other transfer of all or substantially all of the assets of the Company (in one transaction or in a series of related transactions) except where such sale, lease, exchange or other transfer is to an entity controlled by the Company;

(b) the approval by the members of the Company of any plan or proposal for the liquidation or dissolution of the Company; or

(c) any person becomes after the effective date of the Plan the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of fifty percent (50%) or more of the combined voting power of the Company’s outstanding securities ordinarily having the right to vote at elections of governors; or

(d) a merger or consolidation to which the Company is a party if the persons who are the members of the Company immediately prior to effective date of such merger or consolidation have “beneficial ownership” (as defined in Rule l3d-3 under the Exchange Act), immediately following the effective date of such merger or consolidation, of securities of the surviving entity representing 50% or less of the combined voting power of the surviving entity’s then outstanding securities ordinarily having the right to vote at elections of governors or directors.

12.2. Action upon Change in Control . If a Change in Control of the Company occurs or is about to occur, the Committee, in its sole discretion, may provide for one or more of the following:

(a) the partial or full acceleration of the exercisability of outstanding Incentive Awards held by some or all Participants, provided that the Committee, in its sole discretion, may condition such acceleration (or the Participant’s receipt of any securities or payments with respect to such acceleration) upon the Participant’s continued service to the Company or to the successor entity in the Change in Control; or

(b) the complete termination of the Plan and cancellation of outstanding Incentive Awards not exercised prior to a date specified by the Committee; or

(d) replacement or exchange of the Incentive Awards for awards of or options to purchase units, stock or similar securities of the successor entity in the Change in Control; or

(e) the substitution for outstanding Incentive Awards of units, stock or similar securities of the person acquiring control of the Company or a related corporation; or

(f) the receipt by some or all Participants holding outstanding Incentive Awards with respect to some or all of the Units subject to such Incentive Awards, as of the effective date of any such Change in Control of the Company, of cash in an amount equal to the excess of the per Unit price paid in connection with the Change in Control of the Company over the exercise price (if any) per Unit of such Incentive Awards, multiplied by the number of Units subject to such Incentive Awards.

13. Rights of Eligible Recipients and Participants; Transferability.

13.1. Employment or Service . Nothing in the Plan will interfere with or limit in any way the right of the Company or any Subsidiary to terminate the employment or service of any Eligible Recipient or Participant at any time, nor confer upon any Eligible Recipient or Participant any right to continue in the employ or service of the Company or any Subsidiary.

13.2. Rights as a Member . As a holder of Incentive Awards (other than Restricted Unit Awards and Unit Bonuses), a Participant will have no rights as a member of the Company unless and until such Incentive Awards are exercised for, or paid in the form of, Units and the Participant becomes the holder of record of such Units. Except as otherwise provided in the Plan, no adjustment will be made for dividends or distributions with respect to such Incentive Awards as to which there is a record date preceding the date the Participant becomes the holder of record of such Units, except as the Committee may determine in its discretion.

13.3. Restrictions on Transfer . Except pursuant to testamentary will or the laws of descent and distribution or as otherwise expressly permitted by the Plan, unless approved by the Committee in its sole discretion, no right or interest of any Participant in an Incentive Award prior to the exercise or vesting of such Incentive Award will be assignable or transferable, or subjected to any lien, during the lifetime of the Participant, either voluntarily or involuntarily, directly or indirectly, by operation of law or otherwise. A Participant will, however, be entitled to designate a beneficiary to receive an Incentive Award upon such Participant’s death, and in the event of a Participant’s death, payment of any amounts due under the Plan will be made to, and exercise of any Options (to the extent permitted pursuant to Section 10 of the Plan) may be made by, the Participant’s legal representatives, heirs and legatees.

13.4. Breach of Confidentiality, Assignment of Inventions or Non-Compete Agreements . Notwithstanding anything in the Plan to the contrary, in the event that a Participant materially breaches the terms of any confidentiality, assignment of inventions or non-compete agreement entered into with the Company or any Subsidiary, whether such breach occurs before or after termination of such Participant’s employment or other service with the Company or any Subsidiary, the Committee in its sole discretion may immediately terminate all rights of the Participant under the Plan and any agreements evidencing an Incentive Award then held by the Participant without notice of any kind.

13.5. Non-Exclusivity of the Plan . Nothing contained in the Plan is intended to modify or rescind any previously or subsequently approved compensation plans or programs of the Company or create any limitations on the power or authority of the Board to adopt such additional or other compensation arrangements as the Board may deem necessary or desirable.

14. Member Control Agreement, Securities Law and Other Restrictions.

14.1. Member Control Agreement. Notwithstanding any other provision of the Plan or any agreements entered into pursuant to the Plan, the Company will not be required to issue any Units to a Participant under an Incentive Award unless the Participant executes and delivers to the Company a Consent and Assumption Agreement, in the form attached to the Member Control Agreement as Appendix A , consenting to be bound by the terms and provisions of the

Member Control Agreement, including but not limited to the terms and provisions restricting the transfer of Units by members of the Company.

14.2. Securities Law and Other Restrictions. Notwithstanding any other provision of the Plan or any agreements entered into pursuant to the Plan, the Company will not be required to issue any Units under the Plan, and a Participant may not sell, assign, transfer or otherwise dispose of Units issued pursuant to Incentive Awards granted under the Plan, unless (a) there is in effect with respect to such Units a registration statement under the Securities Act and any applicable state or foreign securities laws or an exemption from such registration under the Securities Act and applicable state or foreign securities laws, and (b) there has been obtained any other consent, approval or permit from any other regulatory body which the Committee, in its sole discretion, deems necessary or advisable. The Company may condition such issuance, sale or transfer upon the receipt of any representations or agreements from the parties involved, and the placement of any legends on certificates representing Units, as may be deemed necessary or advisable by the Company in order to comply with such securities law or other restrictions.

15. Plan Amendment, Modification and Termination.

The Board may suspend or terminate the Plan or any portion thereof at any time, and may amend the Plan from time to time in such respects as the Board may deem advisable in order that Incentive Awards under the Plan will conform to any change in applicable laws or regulations or in any other respect the Board may deem to be in the best interests of the Company. No termination, suspension or amendment of the Plan may adversely affect any outstanding Incentive Award without the consent of the affected Participant; provided , however , that this sentence will not impair the right of the Committee to take whatever action it deems appropriate under Sections 3.2, 4.3 and 12 of the Plan.

16. Effective Date and Duration of the Plan.

The Plan is effective as of August 10, 2012, the date it was adopted by the Board. The Plan will terminate at midnight on August 9, 2022 and may be terminated prior to such time by Board action. No Incentive Award may be granted under the Plan after such termination. Incentive Awards outstanding upon termination of the Plan may continue to be exercised, or become free of restrictions, in accordance with their terms.

17. Miscellaneous.

17.1. Governing Law . The validity, construction, interpretation, administration and effect of the Plan and any rules, regulations and actions relating to the Plan will be governed by and construed exclusively in accordance with the laws of the State of Minnesota, notwithstanding the conflicts of laws principles of any jurisdictions.

17.2. Successors and Assigns . The Plan will be binding upon and inure to the benefit of the successors and permitted assigns of the Company and the Participants.

* * *

FIRST AMENDMENT TO THE

CELCUITY LLC 2012 EQUITY INCENTIVE PLAN

November 12, 2015

RECITALS:

A. The Celcuity LLC 2012 Equity Incentive Plan (the “ Plan ”) was adopted by the Board of Governors and approved by the Members of Celcuity LLC (the “ Company ”) on August 10, 2012.

B. The Company desires to amend the Plan to increase the number of Units of membership interest in the Company available for issuance under the Plan.

AMENDMENT:

1. Amendment. Section 4.1 of the Plan is hereby amended in its entirety to read as follows:

“4.1. Maximum Number of Units Available . Subject to adjustment as provided in Section 4.3 of the Plan or by amendment, the maximum number of Units that will be available for issuance under the Plan will be Twenty-Five Million (25,000,000).”

2. Effective Date. The foregoing amendment shall be effective as of November 12, 2015, and shall be subject to approval by the Members of the Company at the next Annual or Special Meeting of Members or by written consent.

Exhibit 10.8

CELCUITY LLC

2012 EQUITY INCENTIVE PLAN

UNIT OPTION AGREEMENT

THIS UNIT OPTION AGREEMENT (“ Option Agreement ”) is entered into as of the “ Grant Date ” set forth below, by and between Celcuity LLC, a Minnesota limited liability company (the “ Company ”) and the person named below (the “ Optionee ”). The Option granted hereby is granted under the Celcuity LLC 2012 Equity Incentive Plan (the “ Plan ”). Unless otherwise defined herein, terms used in this Option Agreement that are defined in the Plan will have the meanings given to them in the Plan.

1. Grant of Option . The Company hereby grants to the Optionee an option (the “ Option ”) to purchase the number of units of Membership Interest of the Company (the “ Units ”) set forth below, at the exercise price per Unit set forth below (the “ Exercise Price ”), subject to the terms and conditions of the Plan, which is incorporated herein by reference. In the event of a conflict between the terms and conditions of the Plan and the terms and conditions of this Option Agreement, the terms and conditions of the Plan will prevail.

Grant Number:	______________

Optionee:	______________________________________

Grant Date:	_______________, 20__

Vesting Commencement Date:	_______________, 20__

Total Number of Units Subject to the Option:	______________ Units

Exercise Price per Unit:	$_____ per Unit

Total Exercise Price:	$______________

Term/Expiration Date:	_______________, 20__

Earlier Expiration:	See Section 5.

2. Vesting Schedule . This Option may be exercised, in whole or in part, in accordance with the following schedule:

(a) Time-Based Vesting . This Option will vest and become exercisable:

[insert vesting schedule]

provided , however , that if the Optionee ceases to provide services to the Company before this Option has become exercisable with respect to all of the Units, no additional Units will vest after the termination of such services. A change in the capacity in which the Optionee renders service to the Company (for example, if the Optionee ceases to serve as an employee or governor but

continues to provide services as a consultant or independent contractor) will not be deemed to be a cessation of service, and will not disrupt the vesting or exercisability of this Option.

(b) Treatment Upon a Change in Control. In the event of a Change in Control of the Company, this Option will be subject to the following terms:

(i) This Option will become exercisable in its entirety if a Change in Control of the Company occurs on or before the date the Optionee ceases to provide services to the Company.

(ii) In the event of a Change in Control, the Committee administering the Plan may take any of the actions described in Section 12.2 of the Plan with respect to this Option.

3. Exercise of Option .

(a) Right to Exercise . This Option will be exercisable during its term in accordance with the vesting schedule set forth in Section 2 of this Option Agreement and with the applicable provisions of the Plan and this Option Agreement. This Option may not be exercised for a fraction of a unit. No portion of the Option which has not become vested and exercisable at the date of the Optionee’s termination of service to the Company will thereafter become vested and exercisable, except as may be set forth in a written agreement between the Company and the Optionee.

(b) Duration of Exercisability . The installments provided in the vesting schedule set forth in Section 2 of this Option Agreement are cumulative. Each such installment which becomes vested and exercisable pursuant to the vesting schedule set forth in Section 2 of this Option Agreement will remain vested and exercisable until this Option expires pursuant Section 5 of this Option Agreement.

(c) Method of Exercise . This Option will be exercisable by delivery of an exercise notice in the form attached hereto as Exhibit A (the “ Exercise Notice ”), stating the election to exercise the Option and the number of Units with respect to which the Option is being exercised (the “ Exercised Units ”), and containing such other representations and agreements as may be required by the Company pursuant to the provisions of the Plan. The Exercise Notice must be accompanied by payment of the aggregate Exercise Price as to all Exercised Units. The Optionee will also be required to make adequate provision for all withholding taxes relating to the exercise as a condition to the exercise of the Option. This Option will be deemed to be exercised upon receipt by the Company of such fully executed Exercise Notice accompanied by the aggregate Exercise Price and arrangement for the adequate provision for the withholding taxes relating to the exercise.

(d) Issuance of Units . No Units will be issued pursuant to the exercise of the Option unless such issuance and exercise complies with applicable laws. Assuming such compliance, for income tax purposes the Units will be considered transferred to the Optionee on the date on which the Option is exercised with respect to such Exercised Units.

(e) Restrictions on Exercise . This Option may not be exercised if the issuance of Units upon such exercise or the method of payment of consideration for such Units would constitute a violation of any applicable law.

(f) Investment Representations . Unless the Units have been registered under the Securities Act at the time this Option is exercised, the Exercise Notice delivered to the Company by the Optionee will, if required by the Company, contain the investment representations included in the form of Exercise Notice attached hereto as Exhibit A .

4. Method of Payment . The aggregate Exercise Price shall be payable in cash (including a personal check or certified or bank cashier’s check, payable to the order of the Company) or in such other manner as may be approved by the Board or Committee.

5. Expiration of Option . This Option will expire and may not be exercised to any extent by anyone after the first to occur of the following events:

(a) Expiration of Term of Option . The Term/Expiration Date set forth in Section 1 of this Option Agreement;

(b) [ Termination of Service without Cause . The expiration of three months from the date of the Optionee’s voluntary or involuntary termination of service to the Company, unless the Optionee’s service is terminated for Cause or such termination occurs by reasons of the Optionee’s death or Disability;]

(c) Termination of Service for Cause . Except as the Board or Committee may otherwise approve, the date of the Optionee’s termination of service if the Optionee’s service is terminated for Cause;

(d) Death or Disability . The expiration of one year from the date of the Optionee’s termination of service by reason of the Optionee’s death or Disability; or

(e) Cancellation upon Change in Control . The cancellation of this Option by action of the Committee pursuant to Section 12.2 of the Plan, in connection with a Change in Control of the Company.

6. Non-Transferability of Option . This Option may not be transferred in any manner otherwise than by will or by the laws of descent or distribution and may be exercised during the lifetime of the Optionee only by the Optionee. The terms of the Plan and this Option Agreement will be binding upon the executors, administrators, heirs, successors and assigns of the Optionee.

7. Membership Control Agreement . The Units issuable pursuant to the exercise of the Option will be subject to the terms and conditions of the Member Control Agreement between the Company and its members. Upon exercise of the Option, the Optionee agrees to become a party to the Member Control Agreement and be bound by the terms and conditions of the Member Control Agreement. The transfer of the Units issued upon exercise of this Option

(including transfer by gift or operation of law) is subject to certain restrictions set forth in Article 14 of the Member Control Agreement.

8. Withholding Taxes . The Optionee agrees to make appropriate arrangements with the Company (or the Parent or Subsidiary employing or retaining the Optionee) for the satisfaction of all Federal, state, local and foreign income and employment tax withholding requirements applicable to the Option exercise. The Optionee acknowledges and agrees that the Company may refuse to honor the exercise and refuse to deliver Units if such withholding amounts are not delivered at the time of exercise.

9. NO GUARANTEE OF CONTINUED SERVICE . THE OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF UNITS PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS AN EMPLOYEE, GOVERNOR, OR CONSULTANT AT THE WILL OF THE COMPANY (AND NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED AN OPTION OR PURCHASING UNITS HEREUNDER). THE OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS AN EMPLOYEE, GOVERNOR, OR CONSULTANT FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND WILL NOT INTERFERE WITH THE OPTIONEE’S RIGHT OR THE COMPANY’S RIGHT TO TERMINATE THE OPTIONEE’S RELATIONSHIP (A) AS AN EMPLOYEE AT ANY TIME, WITH OR WITHOUT CAUSE; (B) AS A CONSULTANT PURSUANT TO THE TERMS OF THE OPTIONEE’S AGREEMENT WITH THE COMPANY OR AN AFFILIATE; OR (C) AS A GOVERNOR PURSUANT TO THE BYLAWS OF THE COMPANY AND ANY APPLICABLE PROVISIONS OF THE LIMITED LIABILITY COMPANY LAW OF THE STATE OR OTHER JURISDICTION IN WHICH THE COMPANY IS DOMICILED, AS THE CASE MAY BE.

10. Entire Agreement; Governing Law . The Plan is incorporated herein by reference. The Plan and this Option Agreement constitute the entire agreement of the parties regarding the acquisition of Units in the Company and supersede in their entirety all prior oral and written undertakings and agreements of the Company and the Optionee on that subject, with the exception of any other options previously granted and delivered to the Optionee under the Plan or any similar plan maintained by the Company or its Affiliates. This Option Agreement may not be modified adversely to the Optionee’s interest except by means of a writing signed by the Company and the Optionee. This Option Agreement is governed by the internal substantive laws but not the choice of law rules of the State of Minnesota.

Signature page to Unit Option Agreement

By the Optionee’s signature and the signature of the Company’s representative below, the Optionee and the Company agree that this Option is granted under and governed by the terms and conditions of the Plan and this Option Agreement. The Optionee has reviewed the Plan and this Option Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Option Agreement and fully understands all provisions of the Plan and Option Agreement. The Optionee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Board of Governors (or any Committee to whom the Board has delegated administration of the Plan) upon any questions relating to the Plan and this Option Agreement.

The Optionee further agrees to notify the Company of any change in the Optionee’s residence address indicated below.

OPTIONEE:		CELCUITY LLC

		By:
(Signature)		Title:


(Print Name)		(Print Name)

Address:		Address:
		Celcuity LLC

Exhibit A

CELCUITY LLC

2012 EQUITY INCENTIVE PLAN

EXERCISE NOTICE

[ To be completed and signed upon the exercise of the Option ]

Celcuity LLC

_______________________

1. Exercise of Option . Effective as of the Exercise Date set forth below, the undersigned (the “ Purchaser ”) hereby elects to exercise the Purchaser’s Option to purchase units of Membership Interest (the “ Units ”) of Celcuity LLC (the “ Company ”) under and pursuant to the Celcuity LLC 2012 Equity Incentive Plan (the “ Plan ”) and the Unit Option Agreement bearing the Grant Number and Grant Date set forth below (the “ Option Agreement ”). The Option is being exercised with respect to the number of Units stated below (the “ Exercised Units ”).

Exercise Date:	_______________, 20__

Purchaser:	______________________________________

Grant Number:	______________

Grant Date:	_______________, 20__

Number of Exercised Units:	______________ Units

Exercise Price per Unit:	$_____ per Unit

Total Exercise Price:	$______________

2. Delivery of Payment . The Purchaser herewith delivers to the Company the total Exercise Price for the Units, and any and all withholding taxes due in connection with the exercise of the Option, in cash (including a personal check or certified or bank cashier’s check, payable to the order of the Company).

3. Representations of Purchaser . In connection with the purchase of the Units, the Purchaser represents to the Company as follows:

(a) The Purchaser (i) acknowledges that the Purchaser has received, read and understood the Plan and the Option Agreement, (ii) agrees that the Units are being acquired in accordance with and subject to the terms, provisions and conditions of the Plan and the Option Agreement, and (iii) agrees to abide by and be bound by their terms and conditions.

A- 1

(b) The Purchaser agrees (i) to provide such additional documents as the Company may require pursuant to the terms of the Plan, and (ii) to provide for the payment by the Purchaser to the Company (in the manner designated by the Company) of the Company’s withholding obligation, if any, relating to the exercise of the Option.

(c) The Purchaser is aware of the Company’s business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Units.

(d) The Purchaser is acquiring these Units for investment for the Purchaser’s own account only and not with a view to, or for resale in connection with, any “distribution” thereof within the meaning of the Securities Act of 1933, as amended (the “ Securities Act ”).

(e) The Purchaser acknowledges and understands that the Units constitute “restricted securities” under the Securities Act and have not been registered under the Securities Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of the Purchaser’s investment intent as expressed herein. The Purchaser further understands that the Units must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available. The Purchaser further acknowledges and understands that the Company is under no obligation to register the Units.

(f) The Purchaser understands that the certificate evidencing the Units will be imprinted with a legend that prohibits the transfer of the Units unless they are registered or such registration is not required in the opinion of counsel satisfactory to the Company and any other legend required under applicable state securities laws.

4. Rights as Member . Until the issuance of the Units (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or other distributions or any other rights as a member of the Company will exist with respect to the units of Membership Interest subject to the Option, notwithstanding the exercise of the Option. The Units will be issued to the Purchaser as soon as practicable after the Option is exercised in accordance with the Option Agreement. No adjustment will be made for a dividend or other distribution or other right for which the record date is prior to the date of issuance of the Units.

5. Company’s Right of First Refusal . Before any Units held by the Purchaser or any transferee (either being sometimes referred to herein as the “ Holder ”) may be sold or otherwise transferred (including transfer by gift or operation of law), the Company or its assignee(s) will have a right of first refusal to purchase the Units on the terms and conditions set forth in Article 14 of the Company’s Member Control Agreement.

6. Tax Consultation . The Purchaser understands that the Purchaser’s purchase or disposition of the Units will have certain tax consequences, some of which may be adverse tax consequences. The Purchaser represents that the Purchaser has consulted with any tax consultants the Purchaser deems advisable in connection with the purchase or disposition of the Units and that the Purchaser is not relying on the Company for any tax advice.

A- 2

7. Restrictive Legends and Stop-Transfer Orders .

(a) Legends . The Purchaser understands and agrees that the Company will cause the legends set forth below or legends substantially equivalent thereto, to be placed upon any certificate(s) evidencing ownership of the Units together with any other legends that may be required by the Company or by state or federal securities laws:

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “ACT”) AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR, IN THE OPINION OF COMPANY COUNSEL SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.

THE UNITS REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND A RIGHT OF FIRST REFUSAL HELD BY THE ISSUER OR ITS ASSIGNEE(S) AS SET FORTH IN THE MEMBER CONTROL AGREEMENT BETWEEN THE ISSUER AND ITS MEMBERS, INCLUDING THE ORIGINAL HOLDER OF THESE UNITS, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER RESTRICTIONS AND RIGHT OF FIRST REFUSAL ARE BINDING ON TRANSFEREES OF THESE UNITS.

(b) Stop-Transfer Notices . The Purchaser agrees that, in order to ensure compliance with the restrictions referred to herein, the Company may issue appropriate “stop transfer” instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records.

(c) Refusal to Transfer . The Company will not be required (i) to transfer on its books any Units that have been sold or otherwise transferred in violation of any of the provisions of this Exercise Notice or (ii) to treat as owner of such Units or to accord the right to vote or pay dividends to any purchaser or other transferee to whom such Units are transferred in violation of any of the provisions of this Exercise Notice.

8 Binding Effect . Subject to the restrictions on transfer herein set forth, this Exercise Notice will inure to the benefit of and be binding upon the Purchaser and his or her heirs, executors, administrators, successors and assigns.

9. Entire Agreement; Governing Law . The Plan and Option Agreement are incorporated herein by reference. This Exercise Notice, the Plan and the Option Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and the Purchaser with respect to the subject matter hereof, and may not be modified adversely to the Purchaser’s interest except by means of a writing signed by the Company and the Purchaser. This Option Agreement is governed by the internal substantive laws but not the choice of law rules, of the State of Minnesota.

A- 3

Signatures to Exercise Notice

[ To be signed upon the exercise of the Option ]

Submitted by:		Accepted by:

PURCHASER:		CELCUITY LLC

		By:
(Signature)		Title:


(Print Name)		(Print Name)

Address:		Address:
		Celcuity LLC




		(Date Received)

A- 4

Exhibit 10.9

EXHIBIT A

THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER EITHER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, OFFERED, PLEDGED OR OTHERWISE DISTRIBUTED FOR VALUE UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND SUCH LAWS COVERING SUCH SECURITIES, OR THE COMPANY RECEIVES AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT, OFFER, PLEDGE OR OTHER DISTRIBUTION FOR VALUE IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT AND SUCH LAWS.

CELCUITY LLC

a Minnesota limited liability company

WARRANT TO PURCHASE

UNITS OF MEMBERSHIP INTEREST

Warrant No.:	AW-___
Name of Holder:	Cedar Point Capital, LLC
Warrant Issue Date:	________, 2017
No. of Warrant Units:	___________ Units
Warrant Exercise Price:	$0.21052 per Unit ¹
Expiration Date:	________, 2027

THIS WARRANT CERTIFIES THAT, for good and valuable consideration, the Holder named above, or its registered assigns, is entitled to subscribe for and purchase from Celcuity LLC, a Minnesota limited liability company, at any time after the date hereof up to and including 5:00 p.m. Minneapolis, Minnesota time on the Expiration Date set forth above, the number of fully paid and non-assessable Warrant Units in the Company at the Warrant Exercise Price set forth above, all subject to the terms and conditions set forth in this Warrant. The Warrant Exercise Price and the number of Warrant Units are subject to adjustment in accordance with the anti-dilution provisions of this Warrant.

1. Definitions . Capitalized terms not defined elsewhere in this Warrant shall have the meanings set forth below.

(a) “ Agent ” means Cedar Point Capital, LLC.

¹ NTD: This is based on the $60 million valuation and 285,000,000 Units outstanding (exact number is 284,814,148 Units fully diluted as of 3.31.17).

(b) “ Common Units ” shall mean Units of Membership Interest of the class and series authorized by the Company at the date of this Warrant. At the date hereof, the Company has authorized only one class and series of Units, and all Units outstanding at the date hereof are “ Common Units ” as defined herein.

(d) “ Holder ” means the Holder named above, any party who acquires all or a part of this Warrant as a registered transferee of the Holder, or any record holder or holders of Warrant Units issued upon exercise, whether in whole or in part, of this Warrant.

(e) “ Member Control Agreement ” means the Amended and Restated Member Control Agreement, dated February 27, 2014, among the Company and its Members, as amended from time to time.

(f) “ Units ” of “ Membership Interest ” are used to designate a person’s interest in the Company consisting of such person’s Financial Rights and/or Governance Rights as set forth in the Member Control Agreement.

(g) “ Warrant Units ” mean the Common Units that may be acquired upon exercise of this Warrant.

2. Exercise: Transferability .

(a) Exercise . Subject to the provisions of Section 2(a)(ii) hereof, the rights represented by this Warrant may be exercised by the Holder hereof, in whole or in part (but not as to a fractional Warrant Unit), by written notice of exercise (in the form attached hereto) delivered to the Company at its principal office prior to the Expiration Date and accompanied or preceded by the surrender of this Warrant and a check in payment of the aggregate Warrant Exercise Price for the Warrant Units purchased upon such exercise.

(i) The Company agrees that the Warrant Units purchased upon exercise of this Warrant shall be and are deemed to be issued to the Holder as of the close of business on the date on which this Warrant shall have been surrendered and the payment made for such Warrant Units as aforesaid. Subject to the provisions of Section 2(a)(ii), certificates for the Warrant Units so purchased shall be delivered to the Holder within a reasonable time, not exceeding fifteen (15) days after the rights represented by this Warrant shall have been so exercised, and, unless this Warrant has expired, a new Warrant representing the right to purchase the number of Warrant Units, if any, with respect to which this Warrant shall not then have been exercised shall also be delivered to the Holder within such time.

(ii) Notwithstanding the foregoing, the Company shall not be required to deliver any certificate for Warrant Units upon exercise of this Warrant except in accordance with exemptions from the applicable securities registration requirements or effective registrations under applicable securities laws. The Holder exercising this Warrant shall execute such documents and make such representations, warranties and

agreements as may be required to comply with the exemptions relied upon by the Company for the issuance of the Warrant Units.

(b) Transfer . Subject to the provisions of Section 7 hereof, this Warrant is transferable by the Holder to associated persons of the Agent, provided such persons are accredited investors or are sophisticated, experienced securities industry professionals. Each successive Holder of this Warrant, or of any portion of the rights represented thereby, shall be bound by the terms and conditions set forth herein.

3. Exchange and Replacement . Subject to Sections 2 and 7 hereof, this Warrant is exchangeable upon the surrender hereof by the Holder to the Company at its principal office for new Warrants of like tenor and date representing in the aggregate the right to purchase the number of Warrant Units purchasable hereunder, each of such new Warrants to represent the right to purchase such number of Warrant Units (not to exceed the aggregate total number purchasable hereunder) as shall be designated by the Holder at the time of such surrender. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction, or mutilation of this Warrant, and, in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it, and upon surrender and cancellation of this Warrant, if mutilated, the Company will make and deliver a new Warrant of like tenor, in lieu of this Warrant; provided, however, that if the Agent shall be such Holder, an agreement of indemnity by such Holder shall be sufficient for all purposes of this Section 3. This Warrant shall be promptly canceled by the Company upon the surrender hereof in connection with any exchange or replacement.

4. Covenants of the Company . The Company covenants and agrees that all Warrant Units will, upon issuance, be duly authorized and issued, fully paid, non-assessable, and free from all taxes, liens, and charges with respect to the issue thereof except for all taxes, liens and charges imposed by the Holder. The Company further covenants and agrees that during the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized and reserved for the purpose of issue upon exercise of the subscription rights evidenced by this Warrant a sufficient number of Common Units to provide for the exercise of the rights represented by this Warrant.

5. Anti-dilution Adjustments . The provisions of this Warrant are subject to adjustment as follows:

(a) Subdivision or Combination of Warrant Units . If the Company at any time subdivides or combines the outstanding Common Units, the Warrant Exercise Price shall be decreased, in the case of a subdivision, or increased, in the case of a combination, in the same proportion as the Common Units are subdivided or combined, effective automatically as of the date the Company shall take a record of the holders of its Common Units for the purpose of the subdivision or combination (or if no such record is taken, as of the effectiveness of the subdivision or combination).

(b) Distributions in Common Units . If the Company at any time makes a distribution to holders of Common Units payable in Common Units, or fixes a record date for the determination of holders of Common Units entitled to receive a distribution payable in Common

Units, the Warrant Exercise Price shall be decreased by multiplying it by a fraction, (A) the numerator of which shall be the total number of Common Units outstanding immediately prior to such distribution, and (B) the denominator of which shall be the total number of Common Units outstanding immediately after such distribution (plus, if the Company paid cash instead of fractional Units of Membership Interest otherwise issuable in such distribution, the number of additional Common Units which would have been outstanding had the Company issued fractional Units instead of cash), effective automatically as of the date the Company shall take a record of the holders of its Common Units for the purpose of receiving such distribution (or if no such record is taken, as of the effectiveness of such distribution).

(c) Reclassification, Consolidation or Merger . If (1) at any time, as a result of (A) a capital reorganization or reclassification (other than a subdivision, combination or distribution which gives rise to adjustment of the Warrant Exercise Price pursuant to Section 5(a) or Section 5(b) above); or (B) a merger or consolidation of the Company with another corporation, partnership, limited liability company or other entity (whether or not the Company is the surviving entity), the class or series of Membership Interests issuable upon the exercise of this Warrant shall be changed into or exchanged for the same or a different number of Units of any class or classes of Membership Interest in the Company or any class or classes of stock or other equity interest in any other corporation, partnership, limited liability company or other entity, or other securities convertible into such stock or equity interests, then (2) as a part of such reorganization, reclassification, merger or consolidation, appropriate adjustments shall be made in the terms of this Warrant so that (y) the Holder shall thereafter be entitled to receive, upon exercise of this Warrant, the kind and amount of Membership Interests, shares of stock, other equity interests, other securities, money and property which the Holder would have received at the time of such capital reorganization, reclassification, merger or consolidation, if the Holder had exercised its right under this Warrant to purchase Warrant Units immediately prior to such capital reorganization, reclassification, merger or consolidation, and (z) this Warrant shall thereafter be adjusted on terms as nearly equivalent as may be practicable to the adjustments heretofore provided in this Section 5. The provision of this Section 5(c) shall similarly apply to successive capital reorganizations, reclassifications, mergers, and consolidations.

(d) Liquidating Distributions, etc. If the Company, at any time while this Warrant is outstanding, shall make a distribution of its assets to the holders of its Common Units as a distribution in liquidation or partial liquidation or by way of return of capital, the Holder shall, upon exercise of the Holder’s rights hereunder and payment of the Warrant Exercise Price, both in accordance with Section 2(a) hereof, be entitled to receive, in addition to the number of Warrant Units receivable upon such exercise, the assets that would have been payable to the Holder as owner of that number of Warrant Units had the Holder been a holder of record of such Warrant Units on the record date for such distribution; and an appropriate provision therefor shall be made a part of any such distribution in accordance with the plan for such distribution.

(e) Other Action Affecting Units . If at any time the Company takes any action affecting its Units of Membership Interest, other than an action described in any of Sections 5(a) through 5(d) above which, in the opinion of the Company’s Board of Governors, would have an adverse effect upon the rights of the Holder to purchase Warrant Units, then the Warrant Exercise Price or the kind or amount of securities issuable upon the exercise of this

Warrant, or both, shall be adjusted in such manner and at such time as the Board may in good faith determine to be equitable in the circumstances.

(f) Adjustment of Number of Warrant Units . Upon each adjustment to the Warrant Exercise Price pursuant to Section 5(a) or Section 5(b) above, the number of Warrant Units purchasable hereunder shall be adjusted (including any fractions of such Warrant Units) by multiplying such number by a fraction, the numerator of which shall be the Warrant Exercise Price immediately prior to such adjustment and the denominator of which shall be the Warrant Exercise Price immediately thereafter.

(g) Notice of Adjustment Events . Whenever the Company contemplates the occurrence of an event which would give rise to adjustments under this Section 5, the Company shall mail to the Warrant Holder, at least fifteen (15) days prior to the record date with respect to such event or, if no record date shall be established, at least fifteen (15) days prior to such event, a notice specifying (i) the nature of the contemplated event, (ii) the date on which any such record is to be taken for the purpose of such event, (iii) the date on which such event is expected to become effective, and (iv) the time, if any is to be fixed, when the holders of record of Units of Membership Interest (or other securities) shall be entitled to exchange their Units of Membership Interest (or other securities) for securities or other property deliverable in connection with such event.

(h) Notice of Adjustments . Whenever the Warrant Exercise Price or the kind or amount of securities issuable upon the exercise of this Warrant, or both, shall be adjusted pursuant to this Section 5, the Company shall prepare a written notice of such adjustments, setting forth in reasonable detail the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated, and the Warrant Exercise Price and the kind and amount of securities issuable upon the exercise of this Warrant after giving effect to such adjustment, and shall mail such notice (by first class mail postage prepaid) to the Holder promptly after each adjustment.

6. Rights and Obligations as a Member of the Company .

(a) Member Control Agreement . The Warrant Units issuable upon exercise of this Warrant will be subject to the terms and conditions of the Member Control Agreement. Upon exercise of this Warrant, the Holder agrees to become a party to the Member Control Agreement and be bound by the terms and conditions of the Member Control Agreement. The transfer of the Warrant Units issued upon exercise of this Warrant is subject to certain restrictions set forth in Article 14 of the Member Control Agreement.

(b) No Rights or Obligations as Member . Nothing contained in this Warrant shall be construed as imposing any obligation on the Holder to purchase any securities of the Company, or as conferring upon the Holder any voting rights or other rights as a Member of the Company or as imposing on the Holder any obligations as a Member of the Company, until this Warrant is actually exercised.

7. Notice of Transfer of Warrant or Resale of the Warrant Units .

(a) Subject to the restrictions on sale, assignment, hypothecation, or other transfer set forth in Section 2(a)(ii) hereof or Article 14 of the Member Control Agreement, the Holder, by acceptance of this Warrant, agrees to give written notice to the Company, before transferring this Warrant or any Warrant Units, of such Holder’s intention to do so, describing briefly the manner of any proposed transfer. Promptly upon receiving such written notice, the Company shall present copies thereof to the Company’s counsel. If in the opinion of such counsel the proposed transfer may be effected without registration or qualification (under any federal or state securities laws), the Company, as promptly as practicable, shall notify the Holder of such opinion, whereupon the Holder shall be entitled to transfer this Warrant or to dispose of Warrant Units received upon the previous exercise of this Warrant, all in accordance with the terms of the notice delivered by the Holder to the Company; provided that an appropriate legend may be endorsed on this Warrant or the certificates for such Warrant Units respecting restrictions upon transfer thereof necessary or advisable in the opinion of counsel to the Company and satisfactory to the Company to prevent further transfers which would be in violation of Section 5 of the Securities Act of 1933, as amended, and applicable state securities laws; and provided further that the Holder and prospective transferee or purchaser shall execute such documents and make such representations, warranties, and agreements as may be required to comply with the exemptions relied upon by the Company for the transfer or disposition of the Warrant or Warrant Units.

(b) If in the opinion of Company’s counsel the proposed transfer or disposition of this Warrant or any Warrant Units described in the written notice given pursuant to this Section 7 may not be effected without registration or qualification of such transfer or disposition under applicable securities laws, the Company shall promptly give written notice thereof to the Holder, and the Holder will limit its activities in respect to such transfer or disposition to such activities as, in the opinion of such counsel, are permitted by law.

8. Legends . The certificates representing any Warrant Units issued upon exercise of this Warrant shall bear legends containing substantially the following language:

“The Membership Units represented by this Certificate have been issued without registration under the Securities Act of 1933, and no transfer of them will be made by the Company unless done pursuant to an effective registration statement under the Securities Act of 1933, as amended, and under appropriate state laws, or there is presented to the Company an opinion of counsel satisfactory to it to the effect that such registration is not required.

“The sale, pledge, hypothecation or transfer of the Membership Units represented by this Certificate is subject to restrictions set forth in an Amended and Restated Member Control Agreement among the Company and its Members dated February 27, 2014, as amended from time to time.”

9. Miscellaneous .

(a) The representations, warranties and agreements herein contained shall survive the exercise of this Warrant. This Warrant shall be interpreted under the laws of the State of Minnesota.

(b) All Common Units or other securities issued upon the exercise of the Warrant shall be validly issued, fully paid and non-assessable, and the Company will pay all taxes due and payable by the issuer in respect of the issuance thereof.

(c) Neither this Warrant nor any term hereof may be changed, waived, discharged or terminated orally but only by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought.

IN WITNESS WHEREOF, Celcuity LLC has caused this Warrant to be signed by its duly authorized officer as of the Warrant Issue Date set forth above.

	CELCUITY LLC

	By:
		Brian F. Sullivan
	Its:	Chief Executive Officer

NOTICE OF EXERCISE OF WARRANT

To be signed by the registered Holder in order to exercise the Warrant

TO:

CELCUITY LLC

The undersigned Holder hereby irrevocably elects to exercise the attached Warrant to purchase for cash __________________ of the Warrant Units issuable upon the exercise of such Warrant, and requests that certificates for such Warrant Units (together with a new Warrant to purchase the number of Warrant Units, if any, with respect to which this Warrant is not exercised) be issued in the name of the following person:


	Name in which Units shall be registered
	(please print)


	Social security or tax identification number

	Address:





Dated: ______________________
	Signature of Holder*


	Name of Holder (please print)


	Title of signatory (if signing for an entity)

The signature on this Notice of Exercise of Warrant must correspond to the name as written upon the face of the Warrant in every particular without alteration or enlargement or any change whatsoever. When signing on behalf of a corporation, partnership, trust or other entity, please indicate your position(s) and title(s) with such entity.

ASSIGNMENT FORM

To be signed only upon authorized transfer of Warrants.

TO:

CELCUITY LLC

FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers unto ________________________________________________________________ the right to purchase the securities of Celcuity LLC to which the within Warrant relates and appoints ____________________________________________ as attorney-in-fact, with full power of substitution in the premises, to transfer said right on the books of Celcuity LLC.

Dated: ______________________
	Signature of Holder*


	Name of Holder (please print)


	Title of signatory (if signing for an entity)

	Address of transferee:

The signature on this Assignment Form must correspond to the name as written upon the face of the Warrant in every particular without alteration or enlargement or any change whatsoever. When signing on behalf of a corporation, partnership, trust or other entity, please indicate your position(s) and title(s) with such entity.

Exhibit 10.10

this Note and the SECURITIES issuable upon conversion of this Note have not been registered under the Securities Act of 1933, as amended, or any state securities laws. They may not be sold, offered for sale, or transferred in the absence of either an effective registration under the Securities Act of 1933, as amended, and applicable state securities laws, or an opinion of counsel for the Company that such transaction is exempt from registration under the Securities Act of 1933, as amended, and applicable state securities laws.

THE SECURITIES ISSUABLE UPON CONVERSION OF THIS NOTE WILL BE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND RIGHTS OF REPURCHASE AND MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF INVESTOR AGREEMENTS BETWEEN THE COMPANY AND HOLDERS OF ITS SECURITIES.

CELCUITY LLC

a Minnesota limited liability company

1.25% UNSECURED CONVERTIBLE PROMISSORY NOTE
Due December 31, 2018

Note No.:	CN-__

Name of Holder:	_________________________

Issue Date:	____________, 2017

Principal Amount:	$_____________

Maturity Date:	December 31, 2018

FOR VALUE RECEIVED, Celcuity LLC, a Minnesota limited liability company (the “ Company ”), promises to pay to the order of the Holder named above (the “ Holder ”), at the Holder’s address appearing on the records of the Company or at such other place as the Holder may designate in writing from time to time, the Principal Amount set forth above, with interest accruing on the unpaid principal balance hereof at the rate set forth below, which payment shall be made in the manner and form specified in this Note.

This Note is one of several 1.25% Unsecured Convertible Promissory Notes due December 31, 2018 that the Company has issued or may issue to the Holder and other investors (the “ Notes ,” as defined below). The unpaid principal balance of the Notes and accrued interest thereon shall be converted into “ Securities ” (as defined below) on the terms and conditions set forth below.

1. SATISFACTION OF THE NOTE

1.1. Conversion . The unpaid principal balance of this Note and all accrued interest thereon shall be automatically converted into Securities as provided in Section 2 of this Note, and shall not be paid in cash.

1.2. Interest . Interest shall accrue on the unpaid principal balance of this Note from the Issue Date set forth above at the fixed rate of 1.25% per annum. Interest shall be calculated on the basis of the actual number of days elapsed in a 365-day year. Upon the automatic conversion of this Note into Securities as provided below, all accrued interest on the principal balance shall be converted into Securities and shall not be paid in cash.

1.3. Insolvency Event . Notwithstanding the provisions of Section 1.1, this Note shall automatically become due and payable without notice or demand if the Company shall (a) admit in writing its inability to pay its debts as they mature, (b) make a general assignment for the benefit of creditors, (c) file a voluntary petition for bankruptcy or for a reorganization or to effect a plan or other arrangement of creditors, (d) have filed against it a creditor’s petition or other petition for an adjudication in bankruptcy or for a reorganization, and the Company files an answer to such petition admitting the material allegations thereof, or (e) apply for or permit the appointment of a receiver, trustee, or custodian for any of its property or assets. If this Note becomes payable pursuant to this Section 1.3, the principal balance of this Note and all accrued interest thereon shall be due and payable in cash. All payments on this Note shall be applied first to the payment of costs of collection, then to payment of accrued interest, and then to reduction of principal. All payments of interest and principal shall be made in lawful money of the United States of America.

2. CONVERSION INTO SECURITIES

2.1. Automatic Conversion . The entire principal balance of this Note and all accrued interest thereon shall be automatically converted into Securities upon the earlier of (i) the closing of a “ Qualified Financing ” (as defined below), or (ii) December 31, 2018.

2.2. Number of Securities Issuable Upon Conversion . The number of Securities into which this Note shall be converted shall be determined by dividing the sum of the outstanding principal balance of this Note plus accrued interest thereon by the “ Conversion Price ” (as defined below).

2.3. Warrants . In addition to the Securities issuable upon conversion of this Note, the Company shall issue to the Holder, upon conversion of this Note, a warrant, substantially in the form attached hereto as Exhibit A (“ Warrant ”), having an aggregate purchase price equal to 15% of the principal amount of this Note, to purchase additional Securities of the same class and series issued upon Conversion of this Note. The exercise price of the Warrant shall be equal to the Conversion Price of this Note.

2.4. Holder’s Rights Upon Conversion . Upon conversion of the Notes as provided in this Section 2, the Holder shall have all the rights and benefits accorded to purchasers of Securities in the Qualified Financing or holders of other Securities issuable upon conversion of the Notes, except any such rights and benefits as are conditioned upon the holding of a minimum percentage ownership in the Company or a minimum investment in the Securities, and the Holder shall execute all agreements and instruments evidencing such rights in the same form as are signed by purchasers of Securities in the Qualified Financing or holders of other Securities issuable upon conversion of the Notes.

2.5. Securities Subject to Investor Agreements . The Securities issuable upon conversion of this Note shall be subject to the terms and conditions of the “ Investor Agreements ” (as defined below). Upon conversion of this Note, and as a condition to the issuance of Securities upon such conversion, the Holder must agree to be bound by the terms of and become a party to the Investor Agreements by signing and delivering to the Company a joinder agreement to each of the Investor Agreements.

2.6. Definitions .

(a) Company . The “ Company ” means Celcuity LLC, a Minnesota limited liability company, or any successor entity resulting from a merger or consolidation of the Company with another limited liability company, corporation or other entity or a reorganization or conversion of the Company into another entity.

(b) Conversion Price . The “ Conversion Price ” of this Note shall be equal to (i) the price paid for one unit (or comparable denomination) of the Securities sold in a Qualified Financing, or (ii) if no Qualified Financing has occurred and the Notes are converted at December 31, 2018, $0.21052 per Unit of common membership interest in the Company, subject to adjustment as provided in Section 2.7(a).

(c) Investor Agreements . “ Investor Agreements ” means (i) the Amended and Restated Member Control Agreement, dated February 27, 2014, among the Company and its members, as amended from time to time, governing the rights and obligations of the Company’s members, including but not limited to restrictions on transfer of the membership interests, and (ii) any investor rights agreement, voting agreement, or similar agreement entered into between the Company and purchasers of Securities in connection with a Qualified Financing, relating to the rights and obligations of purchasers of the Securities.

(d) Notes . The term “ Notes ” includes this Note and all other 1.25% Unsecured Convertible Promissory Notes due December 31, 2018, issued by the Company.

(e) Qualified Financing . A “ Qualified Financing ” means an offering of Securities of the Company from which the Company receives gross proceeds of at least $5,000,000 (not including the amount of Notes that are convertible into Securities upon the closing of the Qualified Financing).

(f) Securities . The “ Securities ” issuable upon conversion of this Note shall be (i) equity securities of the same class and series sold by the Company in the Qualified Financing, or (ii) if no Qualified Financing occurs before December 31, 2018, Units of common membership interest in the Company, the only class and series of membership interest outstanding at the Issue Date of this Note, subject to adjustment as provided in Section 2.7(b).

2.7. Certain Adjustments .

(a) Subdivision or Combination of Units . If the Company at any time after the Issue Date and before the conversion of this Note into Securities subdivides or combines the outstanding Units of common membership interest in the Company, the Conversion Price specified in Section 2.6(b)(ii) of this Note shall be decreased, in the case of a subdivision, or

increased, in the case of a combination, in the same proportion as the common units are subdivided or combined, effective automatically as of the date the Company shall take a record of the holders of its common units for the purpose of the subdivision or combination (or if no such record is taken, as of the effectiveness of the subdivision or combination).

(b) Reclassification, Consolidation or Merger . If (i) at any time, as a result of (A) a capital reorganization or reclassification (other than a subdivision, combination or distribution which gives rise to adjustment of the Conversion Price pursuant to Section 2.7(a) above); or (B) a merger or consolidation of the Company with, or conversion of the Company into, another corporation, partnership, limited liability company or other entity (whether or not the Company is the surviving entity), the class or series of membership interests issuable upon the conversion of this Note shall be changed into or exchanged for the same or a different number of units of any class or classes of membership interest in the Company or any class or classes of stock or other equity interest in any other corporation, partnership, limited liability company or other entity, or other securities convertible into such stock or equity interests, then (ii) upon conversion of this Note pursuant to Section 2.6(b)(ii) above the Holder shall receive the kind and amount of membership interests, shares of stock, or other equity interests that the Holder would have received at the time of such capital reorganization, reclassification, merger, consolidation or conversion, if this Note had been converted into Securities immediately prior to such capital reorganization, reclassification, merger, consolidation or conversion.

3. GENERAL

3.1. No Security . This Note is an unsecured obligation of the Company and is not guaranteed by any third party.

3.2. No Rights as a Member . This Note does not entitle the Holder to any voting rights, financial rights or other rights as a member of the Company. Such rights shall arise only when Securities have been issued to the Holder upon conversion of this Note and the Holder has agreed to be bound by the terms of and has become a party to the Investor Agreements.

3.3. Termination of Rights . Except for the rights to obtain certificates or other instruments representing Securities, all rights of the Holder with respect to this Note shall terminate upon the effective conversion of the Note, whether or not this Note has been surrendered to the Company for cancellation.

3.4. Waivers . No act or omission of the Holder, including specifically any failure to exercise any right, remedy or recourse, shall be deemed a waiver or release thereof. Any such waiver or release shall be effective only as set forth in a written document executed by the Holder and then only to the extent specifically recited therein.

3.5. Remedies . If this Note is not converted or paid when due, or is enforced, collected or attempted to be enforced or collected by the initiation or prosecution of any suit before any court or by any other judicial proceeding, or is placed in the hands of an attorney for enforcement or collection, then the Holder shall be entitled to collect, in addition to all of the amounts owing hereunder, all court costs and reasonable attorneys’ fees incurred by the Holder.

The Company hereby waives demand, presentment for payment, notice of non-payment, protest, and all other notice, filing of suit and diligence in collecting this Note.

3.6. Governing Law . This Note shall be governed by and construed in all respects according to the laws of the State of Minnesota, without regard to principles of conflicts of law.

IN WITNESS WHEREOF, the Company has caused this Note to be executed by its duly authorized representative as of the Issue Date set forth above.

	CELCUITY LLC

	By:
		Brian F. Sullivan
	Its:	Chief Executive Officer

EXHIBIT A

[Form of warrant to be issued upon conversion of convertible Promissory Note]

CELCUITY LLC

a Minnesota limited liability company

WARRANT TO PURCHASE EQUITY SECURITIES ¹

Warrant No.:	W-__

Name of Holder:	___________________________________

Warrant Issue Date:	_______________

Aggregate Warrant Exercise Price:	$___________

Warrant Exercise Price:	$___________ per Warrant Security

No. of Warrant Securities:	_______________

Expiration Date:	_______________

THIS WARRANT CERTIFIES THAT, for good and valuable consideration, the Holder named above, or its registered assigns, is entitled to subscribe for and purchase from Celcuity LLC, a Minnesota limited liability company, at any time after the date hereof up to and including 5:00 p.m. Minneapolis, Minnesota time on the Expiration Date set forth above, the number of fully paid and non-assessable Warrant Securities of the Company at the Warrant Exercise Price set forth above, all subject to the terms and conditions set forth in this Warrant. The Warrant Exercise Price and the number of Warrant Securities are subject to adjustment in accordance with the anti-dilution provisions of this Warrant.

¹ Explanatory Note : This Warrant will be issued upon conversion of a 1.25% Unsecured Convertible Promissory Note due December 31, 2018 (the “ Note ”) held by the Holder. The Warrant Securities issuable upon exercise of this Warrant will be Securities of the same class and series issued upon conversion of the Note. The Aggregate Warrant Exercise Price of this Warrant will be equal to 15% of the principal amount of the Note. The Warrant Exercise Price per Warrant Security will be equal to the Conversion Price of the Note. The number of Warrant Securities will be equal to Aggregate Warrant Exercise Price divided by the Warrant Exercise Price per Warrant Security. The Expiration Date of this Warrant will be seven years after the Warrant Issue Date.

EXHIBIT A

1. Definitions . Capitalized terms not defined elsewhere in this Warrant shall have the meanings set forth below.

(a) “ Company ” means Celcuity LLC, a Minnesota limited liability company, or any successor entity resulting from a merger or consolidation of the Company with another limited liability company, corporation or other entity or a reorganization or conversion of the Company into another entity.

(b) “ Holder ” means the Holder named above, any party who acquires all or a part of this Warrant as a registered transferee of the Holder, or any record holder or holders of Warrant Securities issued upon exercise, whether in whole or in part, of this Warrant.

(c) “ Investor Agreements ” means (i) the Amended and Restated Member Control Agreement, dated February 27, 2014, among the Company and its members, as amended from time to time, governing the rights and obligations of the Company’s members, including but not limited to restrictions on transfer of the membership interests, and (ii) any investor rights agreement, voting agreement, or similar agreement entered into between the Company and purchasers of Securities in connection with a Qualified Financing, relating to the rights and obligations of purchasers of the Securities.

(d) “ Notes ” means the 1.25% Unsecured Convertible Promissory Notes due December 31, 2018, issued by the Company.

(e) “ Qualified Financing ” means an offering of Securities of the Company from which the Company receives gross proceeds of at least $5,000,000 (not including the amount of Notes that are convertible into Securities upon the closing of the Qualified Financing).

(f) “ Securities ” means ____________ ² of the Company, subject to adjustment as provided in Section 5.

(g) “ Warrant Securities ” means the Securities that may be acquired upon exercise of this Warrant.

2. Exercise . Subject to the provisions of Section 2(b) hereof, the rights represented by this Warrant may be exercised by the Holder hereof, in whole or in part (but not as to a fractional Warrant Security), by written notice of exercise (in the form attached hereto) delivered to the Company at its principal office prior to the Expiration Date and accompanied or preceded by the surrender of this Warrant and a check in payment of the aggregate Warrant Exercise Price for the Warrant Securities purchased upon such exercise.

(a) The Company agrees that the Warrant Securities purchased upon exercise of this Warrant shall be and are deemed to be issued to the Holder as of the close of business on the date on which this Warrant shall have been surrendered and the payment made for such

² The Securities issuable upon exercise of this Warrant will be (i) equity securities of the same class and series sold by the Company in the Qualified Financing (as defined in the Note), or (ii) if no Qualified Financing occurs before December 31, 2018, Units of common membership interest in the Company.

Warrant Securities as aforesaid. Subject to the provisions of Section 2(b), certificates for the Warrant Securities so purchased shall be delivered to the Holder within a reasonable time, not exceeding fifteen (15) days after the rights represented by this Warrant shall have been so exercised, and, unless this Warrant has expired, a new Warrant representing the right to purchase the number of Warrant Securities, if any, with respect to which this Warrant shall not then have been exercised shall also be delivered to the Holder within such time.

(b) Notwithstanding the foregoing, the Company shall not be required to deliver any certificate for Warrant Securities upon exercise of this Warrant except in accordance with exemptions from the applicable securities registration requirements or effective registrations under applicable securities laws. The Holder exercising this Warrant shall execute such documents and make such representations, warranties and agreements as may be required to comply with the exemptions relied upon by the Company for the issuance of the Warrant Securities.

3. Exchange and Replacement . Subject to Sections 2 and 7 hereof, this Warrant is exchangeable upon the surrender hereof by the Holder to the Company at its principal office for new Warrants of like tenor and date representing in the aggregate the right to purchase the number of Warrant Securities purchasable hereunder, each of such new Warrants to represent the right to purchase such number of Warrant Securities (not to exceed the aggregate total number purchasable hereunder) as shall be designated by the Holder at the time of such surrender. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction, or mutilation of this Warrant, and, in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it, and upon surrender and cancellation of this Warrant, if mutilated, the Company will make and deliver a new Warrant of like tenor, in lieu of this Warrant; provided, however, that if the Agent shall be such Holder, an agreement of indemnity by such Holder shall be sufficient for all purposes of this Section 3. This Warrant shall be promptly canceled by the Company upon the surrender hereof in connection with any exchange or replacement.

4. Covenants of the Company . The Company covenants and agrees that all Warrant Securities will, upon issuance, be duly authorized and issued, fully paid, non-assessable, and free from all taxes, liens, and charges with respect to the issue thereof except for all taxes, liens and charges imposed by the Holder. The Company further covenants and agrees that during the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized and reserved for the purpose of issue upon exercise of the subscription rights evidenced by this Warrant a sufficient number of Securities to provide for the exercise of the rights represented by this Warrant.

5. Anti-dilution Adjustments . The provisions of this Warrant are subject to adjustment as follows:

(a) Subdivision or Combination of Warrant Securities . If the Company at any time after the Warrant Issue Date subdivides or combines the outstanding Securities, the Warrant Exercise Price shall be decreased, in the case of a subdivision, or increased, in the case of a combination, in the same proportion as the Securities are subdivided or combined, effective automatically as of the date the Company shall take a record of the holders of its Securities for

the purpose of the subdivision or combination (or if no such record is taken, as of the effectiveness of the subdivision or combination).

(b) Distributions in Securities . If the Company at any time makes a distribution to holders of Securities payable in the same Securities, or fixes a record date for the determination of holders of Securities entitled to receive a distribution payable in the same Securities, the Warrant Exercise Price shall be decreased by multiplying it by a fraction, (A) the numerator of which shall be the total number of Securities outstanding immediately prior to such distribution, and (B) the denominator of which shall be the total number of Securities outstanding immediately after such distribution (plus, if the Company paid cash instead of fractional Securities otherwise issuable in such distribution, the number of additional Securities which would have been outstanding had the Company issued fractional Securities instead of cash), effective automatically as of the date the Company shall take a record of the holders of its Securities for the purpose of receiving such distribution (or if no such record is taken, as of the effectiveness of such distribution).

(c) Reclassification, Consolidation or Merger . If (1) at any time, as a result of (A) a capital reorganization or reclassification (other than a subdivision, combination or distribution which gives rise to adjustment of the Warrant Exercise Price pursuant to Section 5(a) or Section 5(b) above); or (B) a merger or consolidation of the Company with another corporation, partnership, limited liability company or other entity (whether or not the Company is the surviving entity), the class or series of equity interests in the Company issuable upon the exercise of this Warrant shall be changed into or exchanged for the same or a different number of units of any class or classes of equity interests in the Company or any class or classes of stock or other equity interest in any other corporation, partnership, limited liability company or other entity, or other securities convertible into such stock or equity interests, then (2) as a part of such reorganization, reclassification, merger or consolidation, appropriate adjustments shall be made in the terms of this Warrant so that (y) the Holder shall thereafter be entitled to receive, upon exercise of this Warrant, the kind and amount of equity interests in the Company, shares of stock, other equity interests, other securities, money and property which the Holder would have received at the time of such capital reorganization, reclassification, merger or consolidation, if the Holder had exercised its right under this Warrant to purchase Warrant Securities immediately prior to such capital reorganization, reclassification, merger or consolidation, and (z) this Warrant shall thereafter be adjusted on terms as nearly equivalent as may be practicable to the adjustments heretofore provided in this Section 5. The provision of this Section 5(c) shall similarly apply to successive capital reorganizations, reclassifications, mergers, and consolidations.

(d) Liquidating Distributions, etc. If the Company, at any time while this Warrant is outstanding, shall make a distribution of its assets to the holders of its Securities as a distribution in liquidation or partial liquidation or by way of return of capital, the Holder shall, upon exercise of the Holder’s rights hereunder and payment of the Warrant Exercise Price, both in accordance with Section 2 hereof, be entitled to receive, in addition to the number of Warrant Securities receivable upon such exercise, the assets that would have been payable to the Holder as owner of that number of Warrant Securities had the Holder been a holder of record of such Warrant Securities on the record date for such distribution; and an appropriate provision therefor shall be made a part of any such distribution in accordance with the plan for such distribution.

(e) Other Action Affecting Units . If at any time the Company takes any action affecting its Securities, other than an action described in any of Sections 5(a) through 5(d) above which, in the opinion of the Company’s Board of Governors, would have an adverse effect upon the rights of the Holder to purchase Warrant Securities, then the Warrant Exercise Price or the kind or amount of securities issuable upon the exercise of this Warrant, or both, shall be adjusted in such manner and at such time as the Board may in good faith determine to be equitable in the circumstances.

(f) Adjustment of Number of Warrant Securities . Upon each adjustment to the Warrant Exercise Price pursuant to Section 5(a) or Section 5(b) above, the number of Warrant Securities purchasable hereunder shall be adjusted (including any fractions of such Warrant Securities) by multiplying such number by a fraction, the numerator of which shall be the Warrant Exercise Price immediately prior to such adjustment and the denominator of which shall be the Warrant Exercise Price immediately thereafter.

(g) Notice of Adjustment Events . Whenever the Company contemplates the occurrence of an event which would give rise to adjustments under this Section 5, the Company shall mail to the Warrant Holder, at least fifteen (15) days prior to the record date with respect to such event or, if no record date shall be established, at least fifteen (15) days prior to such event, a notice specifying (i) the nature of the contemplated event, (ii) the date on which any such record is to be taken for the purpose of such event, (iii) the date on which such event is expected to become effective, and (iv) the time, if any is to be fixed, when the holders of record of Securities interest (or other securities) shall be entitled to exchange their Securities (or other securities) for securities or other property deliverable in connection with such event.

6. Rights and Obligations as a Member of the Company .

(a) Investor Agreements . The Warrant Securities issuable upon exercise of this Warrant will be subject to the terms and conditions of the Investor Agreements. Upon exercise of this Warrant, the Holder agrees to become a party to the Investor Agreements and be bound by the terms and conditions of the Investor Agreements. The transfer of the Warrant Securities issued upon exercise of this Warrant is subject to certain restrictions set forth in Article 14 of the Member Control Agreement.

Company or as imposing on the Holder any obligations as a member of the Company, until this Warrant is actually exercised.

7. Notice of Transfer of Warrant or Resale of the Warrant Securities .

(a) Subject to the restrictions on sale, assignment, hypothecation, or other transfer set forth in Section 2(b) hereof or Article 14 of the Member Control Agreement, the Holder, by acceptance of this Warrant, agrees to give written notice to the Company, before transferring this Warrant or any Warrant Securities, of such Holder’s intention to do so, describing briefly the manner of any proposed transfer. Promptly upon receiving such written notice, the Company shall present copies thereof to the Company’s counsel. If in the opinion of such counsel the proposed transfer may be effected without registration or qualification (under any federal or state securities laws), the Company, as promptly as practicable, shall notify the Holder of such opinion, whereupon the Holder shall be entitled to transfer this Warrant or to dispose of Warrant Securities received upon the previous exercise of this Warrant, all in accordance with the terms of the notice delivered by the Holder to the Company; provided that an appropriate legend may be endorsed on this Warrant or the certificates for such Warrant Securities respecting restrictions upon transfer thereof necessary or advisable in the opinion of counsel to the Company and satisfactory to the Company to prevent further transfers which would be in violation of Section 5 of the Securities Act of 1933, as amended, and applicable state securities laws; and provided further that the Holder and prospective transferee or purchaser shall execute such documents and make such representations, warranties, and agreements as may be required to comply with the exemptions relied upon by the Company for the transfer or disposition of the Warrant or Warrant Securities.

(b) If in the opinion of Company’s counsel the proposed transfer or disposition of this Warrant or any Warrant Securities described in the written notice given pursuant to this Section 7 may not be effected without registration or qualification of such transfer or disposition under applicable securities laws, the Company shall promptly give written notice thereof to the Holder, and the Holder will limit its activities in respect to such transfer or disposition to such activities as, in the opinion of such counsel, are permitted by law.

8. Legends . The certificates representing any Warrant Securities issued upon exercise of this Warrant shall bear legends containing substantially the following language:

“The Securities represented by this Certificate have been issued without registration under the Securities Act of 1933, and no transfer of them will be made by the Company unless done pursuant to an effective registration statement under the Securities Act of 1933, as amended, and under appropriate state laws, or there is presented to the Company an opinion of counsel satisfactory to it to the effect that such registration is not required.

“The sale, pledge, hypothecation or transfer of the Securities represented by this Certificate is subject to restrictions set forth in an Amended and Restated Member Control Agreement among the Company and its Members dated February 27, 2014, as amended from time to time.”

9. Miscellaneous .

(a) The representations, warranties and agreements herein contained shall survive the exercise of this Warrant. This Warrant shall be interpreted under the laws of the State of Minnesota.

(b) All Securities or other securities issued upon the exercise of the Warrant shall be validly issued, fully paid and non-assessable, and the Company will pay all taxes due and payable by the issuer in respect of the issuance thereof.

IN WITNESS WHEREOF, Celcuity LLC has caused this Warrant to be signed by its duly authorized officer as of the Warrant Issue Date set forth above.

	CELCUITY LLC

	By:
		Brian F. Sullivan
	Its:	Chief Executive Officer

NOTICE OF EXERCISE OF WARRANT

To be signed by the registered Holder in order to exercise the Warrant

TO:

CELCUITY LLC

The undersigned Holder hereby irrevocably elects to exercise the attached Warrant to purchase for cash __________________ of the Warrant Securities issuable upon the exercise of such Warrant, and requests that certificates for such Warrant Securities (together with a new Warrant to purchase the number of Warrant Securities, if any, with respect to which this Warrant is not exercised) be issued in the name of the following person:


	Name in which Units shall be registered
	(please print)


	Social security or tax identification number

	Address:





Dated: ______________________
	Signature of Holder*


	Name of Holder (please print)


	Title of signatory (if signing for an entity)

ASSIGNMENT FORM

To be signed only upon authorized transfer of Warrants.

TO:

CELCUITY LLC

Dated: ______________________
	Signature of Holder*


	Name of Holder (please print)


	Title of signatory (if signing for an entity)

	Address of transferee:

Exhibit 10.11

CELCUITY INC.

a Delaware corporation

WARRANT TO PURCHASE SHARES OF COMMON STOCK

Warrant No.:	W-__
Name of Holder:	___________________________________
Warrant Issue Date:	_______________, 2017
Aggregate Warrant Exercise Price:	$___________
Warrant Exercise Price:	$___________ per Share
No. of Warrant Shares:	_______________
Expiration Date:	_______________, 2024

THIS WARRANT CERTIFIES THAT, for good and valuable consideration, the Holder named above, or its registered assigns, is entitled to subscribe for and purchase from Celcuity Inc., a Delaware corporation, at any time after the date hereof up to and including 5:00 p.m. Minneapolis, Minnesota time on the Expiration Date set forth above, the number of fully paid and non-assessable Warrant Shares of the Company at the Warrant Exercise Price set forth above, all subject to the terms and conditions set forth in this Warrant. The Warrant Exercise Price and the number of Warrant Shares are subject to adjustment in accordance with the anti-dilution provisions of this Warrant.

1. Definitions . Capitalized terms not defined elsewhere in this Warrant shall have the meanings set forth below.

(a) “ Company ” means Celcuity Inc., a Delaware corporation, its predecessor, Celcuity LLC, a Minnesota limited liability company, or any successor entity resulting from a merger or consolidation of the Company with another limited liability company, corporation or other entity or a reorganization or conversion of the Company into another entity.

(b) “ Holder ” means the Holder named above, any party who acquires all or a part of this Warrant as a registered transferee of the Holder, or any record holder or holders of Warrant Shares issued upon exercise, whether in whole or in part, of this Warrant.

(c) “ Investor Agreements ” means (i) the Amended and Restated Member Control Agreement of Celcuity LLC, dated February 27, 2014, as amended from time to time, or a successor agreement, if applicable, governing the rights and obligations of the Company’s equity owners, including but not limited to restrictions on transfer of the equity interests, and (ii) any investor rights agreement, voting agreement, or similar agreement entered into between the Company and purchasers of Shares in connection with a Qualified Financing, relating to the rights and obligations of purchasers of the Shares.

(d) “ Notes ” means the 1.25% Unsecured Convertible Promissory Notes due December 31, 2018, issued by the Company.

(e) “ Qualified Financing ” means an offering of Shares of the Company from which the Company receives gross proceeds of at least $5,000,000 (not including the amount of Notes that are convertible into Shares upon the closing of the Qualified Financing).

(f) “ Shares ” means shares of Common Stock, par value $0.001 per share, of the Company, subject to adjustment as provided in Section 5.

(g) “ Warrant Shares ” means the Shares that may be acquired upon exercise of this Warrant.

2. Exercise . Subject to the provisions of Section 2(b) hereof, the rights represented by this Warrant may be exercised by the Holder hereof, in whole or in part (but not as to a fractional Share), by written notice of exercise (in the form attached hereto) delivered to the Company at its principal office prior to the Expiration Date and accompanied or preceded by the surrender of this Warrant and a check in payment of the aggregate Warrant Exercise Price for the Warrant Shares purchased upon such exercise.

(a) The Company agrees that the Warrant Shares purchased upon exercise of this Warrant shall be and are deemed to be issued to the Holder as of the close of business on the date on which this Warrant shall have been surrendered and the payment made for such Warrant Shares as aforesaid. Subject to the provisions of Section 2(b), certificates for the Warrant Shares so purchased shall be delivered to the Holder within a reasonable time, not exceeding fifteen (15) days after the rights represented by this Warrant shall have been so exercised, and, unless this Warrant has expired, a new Warrant representing the right to purchase the number of Warrant Shares, if any, with respect to which this Warrant shall not then have been exercised shall also be delivered to the Holder within such time.

(b) Notwithstanding the foregoing, the Company shall not be required to deliver any certificate for Warrant Shares upon exercise of this Warrant except in accordance with exemptions from the applicable securities registration requirements or effective registrations under applicable securities laws. The Holder exercising this Warrant shall execute such documents and make such representations, warranties and agreements as may be required to comply with the exemptions relied upon by the Company for the issuance of the Warrant Shares.

3. Exchange and Replacement . Subject to Sections 2 and 7 hereof, this Warrant is exchangeable upon the surrender hereof by the Holder to the Company at its principal office for new Warrants of like tenor and date representing in the aggregate the right to purchase the number of Warrant Shares purchasable hereunder, each of such new Warrants to represent the right to purchase such number of Warrant Shares (not to exceed the aggregate total number purchasable hereunder) as shall be designated by the Holder at the time of such surrender. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction, or mutilation of this Warrant, and, in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it, and upon surrender and cancellation of this Warrant, if mutilated, the Company will make and deliver a new Warrant of like tenor, in lieu of this Warrant. This Warrant shall be promptly canceled by the Company upon the surrender hereof in connection with any exchange or replacement.

4. Covenants of the Company . The Company covenants and agrees that all Warrant Shares will, upon issuance, be duly authorized and issued, fully paid, non-assessable, and free from all taxes, liens, and charges with respect to the issue thereof except for all taxes, liens and charges imposed by the Holder. The Company further covenants and agrees that during the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized and reserved for the purpose of issue upon exercise of the subscription rights evidenced by this Warrant a sufficient number of Shares to provide for the exercise of the rights represented by this Warrant.

5. Anti-dilution Adjustments . The provisions of this Warrant are subject to adjustment as follows:

(a) Subdivision or Combination of Shares . If the Company at any time after the Warrant Issue Date subdivides or combines the outstanding Shares, the Warrant Exercise Price shall be decreased, in the case of a subdivision, or increased, in the case of a combination, in the same proportion as the Shares are subdivided or combined, effective automatically as of the date the Company shall take a record of the holders of its Shares for the purpose of the subdivision or combination (or if no such record is taken, as of the effectiveness of the subdivision or combination).

(b) Distributions in Shares . If the Company at any time makes a distribution to holders of Shares payable in Shares, or fixes a record date for the determination of holders of Shares entitled to receive a distribution payable in Shares, the Warrant Exercise Price shall be decreased by multiplying it by a fraction, (A) the numerator of which shall be the total number of Shares outstanding immediately prior to such distribution, and (B) the denominator of which shall be the total number of Shares outstanding immediately after such distribution (plus, if the Company paid cash instead of fractional Shares otherwise issuable in such distribution, the number of additional Shares which would have been outstanding had the Company issued fractional Shares instead of cash), effective automatically as of the date the Company shall take a record of the holders of its Shares for the purpose of receiving such distribution (or if no such record is taken, as of the effectiveness of such distribution).

(c) Reclassification, Consolidation or Merger . If (1) at any time, as a result of (A) a capital reorganization or reclassification (other than a subdivision, combination or

distribution which gives rise to adjustment of the Warrant Exercise Price pursuant to Section 5(a) or Section 5(b) above); or (B) a merger or consolidation of the Company with another corporation, partnership, limited liability company or other entity (whether or not the Company is the surviving entity), the class or series of equity interests in the Company issuable upon the exercise of this Warrant shall be changed into or exchanged for the same or a different number of units of any class or classes of equity interests in the Company or any class or classes of stock or other equity interest in any other corporation, partnership, limited liability company or other entity, or other securities convertible into such stock or equity interests, then (2) as a part of such reorganization, reclassification, merger or consolidation, appropriate adjustments shall be made in the terms of this Warrant so that (y) the Holder shall thereafter be entitled to receive, upon exercise of this Warrant, the kind and amount of equity interests in the Company, shares of stock, other equity interests, other securities, money and property which the Holder would have received at the time of such capital reorganization, reclassification, merger or consolidation, if the Holder had exercised its right under this Warrant to purchase Warrant Shares immediately prior to such capital reorganization, reclassification, merger or consolidation, and (z) this Warrant shall thereafter be adjusted on terms as nearly equivalent as may be practicable to the adjustments heretofore provided in this Section 5. The provision of this Section 5(c) shall similarly apply to successive capital reorganizations, reclassifications, mergers, and consolidations.

(d) Liquidating Distributions, etc. If the Company, at any time while this Warrant is outstanding, shall make a distribution of its assets to the holders of its Shares as a distribution in liquidation or partial liquidation or by way of return of capital, the Holder shall, upon exercise of the Holder’s rights hereunder and payment of the Warrant Exercise Price, both in accordance with Section 2 hereof, be entitled to receive, in addition to the number of Warrant Shares receivable upon such exercise, the assets that would have been payable to the Holder as owner of that number of Warrant Shares had the Holder been a holder of record of such Warrant Shares on the record date for such distribution; and an appropriate provision therefor shall be made a part of any such distribution in accordance with the plan for such distribution.

(e) Other Action Affecting Units . If at any time the Company takes any action affecting its Shares, other than an action described in any of Sections 5(a) through 5(d) above which, in the opinion of the Company’s Board of Directors, would have an adverse effect upon the rights of the Holder to purchase Warrant Shares, then the Warrant Exercise Price or the kind or amount of securities issuable upon the exercise of this Warrant, or both, shall be adjusted in such manner and at such time as the Board may in good faith determine to be equitable in the circumstances.

(f) Adjustment of Number of Warrant Shares . Upon each adjustment to the Warrant Exercise Price pursuant to Section 5(a) or Section 5(b) above, the number of Warrant Shares purchasable hereunder shall be adjusted (including any fractions of such Warrant Shares) by multiplying such number by a fraction, the numerator of which shall be the Warrant Exercise Price immediately prior to such adjustment and the denominator of which shall be the Warrant Exercise Price immediately thereafter.

(g) Notice of Adjustment Events . Whenever the Company contemplates the occurrence of an event which would give rise to adjustments under this Section 5, the Company

shall mail to the Warrant Holder, at least fifteen (15) days prior to the record date with respect to such event or, if no record date shall be established, at least fifteen (15) days prior to such event, a notice specifying (i) the nature of the contemplated event, (ii) the date on which any such record is to be taken for the purpose of such event, (iii) the date on which such event is expected to become effective, and (iv) the time, if any is to be fixed, when the holders of record of Shares (or other securities) shall be entitled to exchange their Shares (or other securities) for securities or other property deliverable in connection with such event.

6. Rights and Obligations as a Member of the Company .

(a) Investor Agreements . The Warrant Shares issuable upon exercise of this Warrant will be subject to the terms and conditions of the Investor Agreements. Upon exercise of this Warrant, the Holder agrees to become a party to the Investor Agreements and be bound by the terms and conditions of the Investor Agreements.

(b) No Rights or Obligations as Member . Nothing contained in this Warrant shall be construed as imposing any obligation on the Holder to purchase any securities of the Company, or as conferring upon the Holder any voting rights or other rights as a stockholder of the Company or as imposing on the Holder any obligations as a stockholder of the Company, until this Warrant is actually exercised.

7. Notice of Transfer of Warrant or Resale of the Warrant Shares .

(a) Subject to the restrictions on sale, assignment, hypothecation, or other transfer set forth in Section 2(b) hereof or Article 14 of the Member Control Agreement, the Holder, by acceptance of this Warrant, agrees to give written notice to the Company, before transferring this Warrant or any Warrant Shares, of such Holder’s intention to do so, describing briefly the manner of any proposed transfer. Promptly upon receiving such written notice, the Company shall present copies thereof to the Company’s counsel. If in the opinion of such counsel the proposed transfer may be effected without registration or qualification (under any federal or state securities laws), the Company, as promptly as practicable, shall notify the Holder of such opinion, whereupon the Holder shall be entitled to transfer this Warrant or to dispose of Warrant Shares received upon the previous exercise of this Warrant, all in accordance with the terms of the notice delivered by the Holder to the Company; provided that an appropriate legend may be endorsed on this Warrant or the certificates for such Warrant Shares respecting restrictions upon transfer thereof necessary or advisable in the opinion of counsel to the Company and satisfactory to the Company to prevent further transfers which would be in violation of Section 5 of the Securities Act of 1933, as amended, and applicable state securities

laws; and provided further that the Holder and prospective transferee or purchaser shall execute such documents and make such representations, warranties, and agreements as may be required to comply with the exemptions relied upon by the Company for the transfer or disposition of the Warrant or Warrant Shares.

(b) If in the opinion of Company’s counsel the proposed transfer or disposition of this Warrant or any Warrant Shares described in the written notice given pursuant to this Section 7 may not be effected without registration or qualification of such transfer or disposition under applicable securities laws, the Company shall promptly give written notice thereof to the Holder, and the Holder will limit its activities in respect to such transfer or disposition to such activities as, in the opinion of such counsel, are permitted by law.

8. Legends . The certificates representing any Warrant Shares issued upon exercise of this Warrant shall bear a legend containing substantially the following language:

9. Miscellaneous .

(a) The representations, warranties and agreements herein contained shall survive the exercise of this Warrant. This Warrant shall be interpreted under the laws of the State of Minnesota.

(b) All Shares or other securities issued upon the exercise of the Warrant shall be validly issued, fully paid and non-assessable, and the Company will pay all taxes due and payable by the issuer in respect of the issuance thereof.

IN WITNESS WHEREOF, Celcuity Inc. has caused this Warrant to be signed by its duly authorized officer as of the Warrant Issue Date set forth above.

	CELCUITY INC.

	By:
		Brian F. Sullivan
	Its:	Chief Executive Officer

NOTICE OF EXERCISE OF WARRANT

To be signed by the registered Holder in order to exercise the Warrant

TO: CELCUITY INC.

The undersigned Holder hereby irrevocably elects to exercise the attached Warrant to purchase for cash __________________ of the Warrant Shares issuable upon the exercise of such Warrant, and requests that certificates for such Warrant Shares (together with a new Warrant to purchase the number of Warrant Shares, if any, with respect to which this Warrant is not exercised) be issued in the name of the following person:


			Name in which Units shall be registered
			(please print)


			Social security or tax identification number

			Address:





Dated:
			Signature of Holder*


			Name of Holder (please print)


			Title of signatory (if signing for an entity)

ASSIGNMENT FORM

To be signed only upon authorized transfer of Warrants.

TO:

CELCUITY INC.

FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers unto ___________________________________________________________________ the right to purchase the Shares of Common Stock of Celcuity Inc. to which the within Warrant relates and appoints ____________________________________________ as attorney-in-fact, with full power of substitution in the premises, to transfer said right on the books of Celcuity Inc.

Dated:
			Signature of Holder*


			Name of Holder (please print)


			Title of signatory (if signing for an entity)

			Address of transferee:

Exhibit 10.12

COMMERCIAL LEASE

This Lease, dated this 11 day of March, 2014 by and between West Glen Development, LLC, a Minnesota limited liability company (“Landlord”), and Celcuity, LLC, a Minnesota limited liability company (hereinafter referred to as “Tenant”).

DEFINITIONS:

“Property”–– That certain real property located in the City of Plymouth (the “City”), County of Hennepin and State of Minnesota and legally described on Exhibit A attached hereto and made a part hereof, including all buildings and site improvements located thereon.

“Building”–– That certain office/warehouse building containing approximately 83,121 square feet located upon the Property and commonly described as West Glen Development I, located at 16305 - 36 ^th Avenue North, Plymouth, Minnesota 55446.

“Premises”–– That certain portion of the Building designated as Suite 450, totaling approximately 4,818 square feet, consisting of 3,994 square feet of office space and approximately 812 square feet of warehouse, storage or service space shown on Exhibit B, and 12 square feet of shared mechanical space as measured from the outside walls of the Premises to the center of the partition wall. The Premises include a non-exclusive license for access to, and use of, Common Areas, as hereinafter defined, and all licenses and easements appurtenant to the Premises.

“Common Areas”–– The areas to be used for the non-exclusive use by Tenant and other tenants in the Building, including, but not limited to, corridors, lavatories, driveways, truck docks, parking lots and landscaped areas. Subject to reasonable rules and regulations promulgated by Landlord attached hereto and made a part hereof as Exhibit C , the Common Areas are hereby made available to Tenant and its employees, agents, customers, and invitees for reasonable use in common with other tenants, their employees, agents, customers and invitees.

WITNESSETH:

1. TERM:

For and in consideration of the rents, additional rents, terms, provisions and covenants herein contained, Landlord hereby lets, leases and demises to Tenant, the Premises for the term of thirty-seven (37) months commencing on the 1 ^st day of May, 2014 (sometimes called “the Commencement Date”) and expiring the 31 ^st day of May, 2017 (sometimes called “Expiration Date”), unless sooner terminated as hereinafter provided (the “Term”).

2. BASE RENT:

Landlord reserves and Tenant shall pay to Landlord, the rent designated in Article 42 of the attached Addendum, payable in advance without notice, offset, deduction or demand, in equal monthly installments as set forth in the Addendum, commencing on the Commencement Date and continuing on the first day of each and every month thereafter for the next succeeding months during the balance of the Term (the “Base Rent”) or any extension or renewal thereof. In the event the Commencement Date falls on a date other than the first of a month, or the Expiration Date falls on a date other than the last of a month, the Base Rent for that month shall be prorated and adjusted accordingly.

3. ADDITIONAL RENT:

Tenant shall pay to Landlord throughout the Term of this Lease Agreement the following:

a. Tenant shall pay a sum equal to 5.8% of the Real Estate Taxes. The term “Real Estate Taxes” shall mean all taxes, fees, charges and assessments, general and special, and any taxes in lieu thereof, become due or payable against or upon the Building or the Property of which the Premises are a part. All attorneys’ fees and other costs and expenses incurred by Landlord during negotiation for or contests of the amount of Real Estate Taxes shall be included in the term “Real Estate Taxes.” Tenant, in addition to all other payments to Landlord by Tenant required hereunder, shall pay to Landlord, in each year during the Term of this Lease Agreement and any extension or renewal thereof, Tenant’s proportionate share of Real Estate Taxes. Any tax year commencing during any lease year shall be deemed to correspond to such lease year. In the event the taxing authorities include in such real estate taxes and assessments the value of any improvements made by Tenant, or of machinery, equipment, fixtures, inventory or other personal property or assets of Tenant, then Tenant shall pay all the taxes attributable to such items in addition to its proportionate share of said aforementioned Real Estate Taxes. A copy of the tax statement submitted by Landlord to Tenant shall be sufficient evidence of the amount of Real Estate Taxes assessed or levied against the Property of which the Premises are a part.

b. Tenant shall pay a sum equal to 5.8% of the annual aggregate Operating Expenses incurred by Landlord in the operation, maintenance and repair of the Building and Property during the term of this Lease Agreement and any renewals or extensions thereof. The term “Operating Expenses” shall include but not be limited to all payments by Landlord for maintenance, repair, operation, replacement and care of all Common Areas (including common area utilities and lighting), mechanical rooms, common area plumbing, roofs, parking and landscaped areas, signs, snow removal, non-structural repair and maintenance of the exterior of the Building, insurance premiums, management fee (not to exceed 5% of gross building revenue), wages and fringe benefits of personnel employed for such work, costs of equipment purchased and used for such purposes, and the cost or portion thereof properly allocable to the Property (amortized in accordance with GAAP standards together with the interest at the rate of ten percent (1 0%) per annum on the unamortized balance) of any capital improvements made to the Building by Landlord after the Base Year which result in a reduction of Operating Expenses or made to the Building by Landlord after the date of this Lease Agreement that are required under any governmental law or regulation that was not applicable to the Building at the time it was constructed, or that are required by the insurer under any insurance policy carried on the Property and Building by Landlord. Operating Expenses shall also include a yearly capital reserve to be held in a segregated account until and for the use of replacement of black topped surfaced driveway and parking areas and Building mechanical equipment when needed. The amount of such reserve shall be determined by reasonable accounting and building management purposes.

c. For purposes of this Article, Tenant’s “pro rata share” or “proportionate share” shall be determined on the same ratio as the total square feet in the Premises bears to the total square feet in the Building. Landlord may at any time designate a fiscal year in lieu of a calendar year or vice versa and in such event, at the time of such change, there may be a billing for the year which is less that twelve (12) calendar months. Landlord reserves, and Tenant hereby assigns to Landlord, the sole and exclusive right to contest, protest, petition for review, or otherwise seek a reduction in Real Estate Taxes.

The payment of the sums set forth in this Article 3 shall be in addition to the Base Rent payable pursuant to Article 2 of this Lease Agreement. All sums due hereunder shall be due and payable within thirty (30) days of delivery of written certification by Landlord setting forth the computation of the amount due from Tenant. In the event the Term shall begin or expire at any time during the calendar year, Tenant shall be responsible for his pro-rata share of Real Estate Taxes and Operating Expenses during the Term of this Lease Agreement and/or occupancy time.

Prior to commencement of the Term of this Lease Agreement, and prior to the commencement of each calendar year thereafter commencing during the Term of this Lease Agreement or any renewal or extension thereof, Landlord may estimate for each calendar year (i) the total amount of Real Estate Taxes; (ii) the total amount of Operating Expenses; (iii) Tenant’s share of Real Estate Taxes for such calendar year; (iv) Tenant’s share of Operating Expenses for such calendar year; and (v) the computation of the annual and monthly rental payable during such calendar year as a result of increases or decreases in Tenant’s share of Real Estate Taxes and Operating Expenses. Said estimates will be in writing and will be delivered or mailed to Tenant.

The amount of Tenant’s share of Real Estate Taxes and Operating Expenses for each calendar year, so estimated, shall be payable as Additional Rent by Tenant, without offset, deduction or demand, in equal monthly installments, in advance, on the first day of each month during such calendar year. In the event that such estimate is delivered to Tenant before the first day of January of such calendar year, said amount, so estimated, shall be payable as “Additional Rent” in equal monthly installments, in advance, on the first day of each month during such calendar year. In the event that such estimate is delivered to Tenant after the first day of January of such calendar year, said amount, so estimated, shall be payable as Additional Rent in equal monthly installments, in advance, on the first day of each month over the balance of such calendar year, with the number of installments being equal to the number of full calendar months remaining in such calendar year.

Upon completion of each calendar year during the Term of this Lease Agreement or any renewal or extension thereof, Landlord shall cause its accountants to determine the actual amount of the Real Estate Taxes and Operating Expenses payable in such calendar year and Tenant’s share thereof and deliver a written certification of the amounts thereof to Tenant. If Tenant has underpaid its share of Real Estate Taxes or Operating Expenses for such calendar year, Tenant shall pay the balance of its share of same within ten (1 0) business days after the receipt of such statement. If Tenant has overpaid its share of Real Estate Taxes or Operating Expenses for such calendar year, Landlord shall either (i) refund such excess, or (ii) credit such excess against the most current monthly installment or installments due Landlord for its estimate of Tenant’s share of Real Estate Taxes and Operating Expenses for the next following calendar year. A pro rata adjustment shall be made for a fractional calendar year occurring during the Term of the Lease Agreement or any renewal or extension thereof based upon the number of days of the Term of the Lease Agreement during said calendar year as compared to three hundred sixty-five (365) days and all additional sums payable by Tenant or credits due Tenant as a result of the provision of this Article 3 shall be adjusted accordingly.

d. Landlord shall keep reasonably detailed records of all Operating Expenses and Real Estate Taxes for a period of at least three (3) years. Not more frequently than once in every 12-month period and after at least twenty (20) days’ prior written notice to Landlord, Tenant shall be permitted to review or audit the records of the Operating Expenses and Real Estate Taxes either directly or through agents. If Tenant exercises its review or audit rights as provided above, Tenant shall conduct any inspection at a reasonable time and in a manner so as not to unduly disrupt the conduct of Landlord’s business. Any such inspection by Tenant shall be for the sole purpose of verifying the Operating Expenses and/or Real Estate Taxes. Any shortfall or excess revealed and verified by Tenant’s audit shall be paid to the applicable party within thirty (30) days after that party is notified of the shortfall or excess to the extent such overage or shortfall has not previously been adjusted pursuant to this Lease. If Tenant’s inspection of the records for any given calendar year or partial calendar year reveals that Tenant was overcharged for Operating Expenses or Real Estate Taxes by an amount of greater than four percent (4%), or if any overcharge was due to intentional fraudulent or negligent conduct by Landlord, then, Landlord shall reimburse Tenant for the reasonable costs of the review or audit.

4. COVENANT TO PAY RENT:

The covenants of Tenant to pay the Base Rent and the Additional Rent are each independent of any other covenant, condition, provision or agreement contained in this Lease Agreement. All rents are payable to Landlord

at 3600 Holly Lane North, Suite 100, Plymouth, MN 55447. No receipt or acceptance by Landlord from Tenant of less than the monthly rent herein stipulated shall be deemed to be other than a partial payment on account for any due and unpaid stipulated rent; no endorsement or statement of any check or any letter or other writing accompanying any check or payment of rent to Landlord shall be deemed an accord and satisfaction, and Landlord may accept and negotiate such check or payment without prejudice to Landlord’s rights to (i) recover the remaining balance of such unpaid rent or (ii) pursue any other remedy provided in this Lease Agreement.

5. UTILITIES:

Landlord shall provide mains and conduits to supply water, gas, electricity and sanitary sewage to the Property. Tenant shall pay, when due, directly to the appropriate provider, all charges for sewer usage or rental, garbage disposal, trash or refuse removal, water, electricity, gas, fuel oil, L.P. gas, telephone and/or other utility services or energy source separately metered and furnished to the Premises during the Term of this Lease Agreement, or any renewal or extension thereof, together with any related installation or connection charges or deposits (“Utility Costs”). If additional costs are required to separately meter the Premises it will be at Landlord’s sole cost and expense. If any services or utilities furnished to the Premises are jointly metered with other premises, Landlord will make a commercially reasonable determination of Tenant’s proportionate share of such Utility Costs and Tenant, within ten (10) business days following Tenant’s receipt of an invoice therefore, shall pay such share to Landlord as Additional Rent. If Landlord elects to furnish any of the foregoing utility services or other services furnished or caused to be furnished to Tenant, then the rate charged by Landlord shall not exceed the rate Tenant would be required to pay to a utility company or service company furnishing any of the foregoing utilities or services. The charges thereof shall be deemed Additional Rent in accordance with Article 3. Landlord shall not be liable for, and Tenant shall not be entitled to any abatement or reduction of Base Rent or Additional Rent by reason of Landlord’s failure to furnish any of the foregoing utilities, when such failure is caused by accident, breakage, repairs (including replacements), strikes, lockouts or other labor disturbances or labor disputes of any character, or for any other causes not attributable to Landlord.

6. CARE AND REPAIR OF PREMISES:

Tenant shall, at all times throughout the Term of this Lease Agreement, including renewals and extensions, and at its sole expense, keep and maintain the Premises in a clean, safe, sanitary and first class condition and in compliance with all applicable laws, codes, ordinances, rules and regulations. Tenant’s obligations hereunder shall include but not be limited to the maintenance, repair and replacement, if necessary, of mechanical, heating and air conditioning fixtures, equipment, and systems; all lighting and electrical systems; all plumbing fixtures and equipment; any and all other fixtures, motors and machinery; all interior walls, partitions, doors and windows, including the regular painting thereof; all exterior entrances, windows, doors, garage doors, docks and dock levelers, bumpers and seals, and docks and the replacement of all broken glass; and all interior walls, columns, floors and doors of the trash enclosures. When used in this provision, the term “repairs” shall include replacements or renewals when necessary, and all such repairs made by Tenant shall be equal in quality and class to the original work. The Tenant shall keep and maintain all portions of the Premises, trash enclosures and the sidewalk and areas adjoining the same in a safe, clean and orderly condition, free of accumulation of dirt and rubbish. Tenant shall be responsible for the prompt removal of snow, ice and other hazardous conditions accumulating or occurring on the sidewalks and walkways between the Premises and parking areas. Maintenance of the HVAC shall specifically include the reasonable cost of semi-annual inspections performed by Landlord’s own engineers or by an independent mechanical contractor who shall be contracted for by Landlord. In either event, said cost shall be included by Landlord in Operating Expenses under Article 3 of this Lease Agreement and Landlord warrants that any such cost will be reasonable and competitive.

If Tenant fails, refuses or neglects to maintain or repair the Premises as required in this Lease Agreement after written notice shall have been given to Tenant, in accordance with Article 33 of this Lease Agreement, Landlord

may at its option make such repairs without liability to Tenant for any loss or damage that may accrue to Tenant’s merchandise, fixtures or other property or to Tenant’s business by reason thereof, and upon completion thereof, Tenant shall pay to Landlord all costs plus 10% of overhead incurred by Landlord in making such repairs upon presentation to Tenant of a bill therefore.

Landlord shall repair, at its expense, the structural portions of the Building, provided however where structural repairs are required to be made by reason of the acts of Tenant, the costs thereof shall be borne by Tenant and payable by Tenant to Landlord upon demand.

Landlord shall be responsible for all outside maintenance of the Premises, including grounds, parking areas and outside areas around trash enclosures. All such maintenance which is the responsibility of Landlord shall be provided as reasonably necessary to the comfortable use and occupancy of Premises during business hours, except Saturdays, Sundays and holidays, upon the condition that Landlord shall not be liable for damages for failure to do so due to causes beyond its control. Landlord shall ensure access to the Premises, including timely snow removal all days.

7. SIGNS:

Any sign, lettering, picture, notice or advertisement installed on or in any part of the Property and visible from the exterior of the Building, or visible from the exterior of the Premises, must be approved in advance by Landlord and the City and installed at Tenant’s expense. In the event of a violation of the foregoing by Tenant, Landlord may remove the same without notice and without any liability and may charge the expense incurred for such removal to Tenant. Tenant agrees to comply with the sign criteria of the City and the criteria attached here to as Exhibit E . Tenant agrees to maintain its signage in good repair, and to hold Landlord harmless from any loss, cost or damages resulting from the erection, existence, maintenance or removal of the signage.

8. ALTERATIONS, INSTALLATIONS, FIXTURES:

Tenant will not make any alterations, repairs, additions or improvements in or to the Premises (for purposes of this Article 8, any of the foregoing being referred to as the “Work” ) or add, disturb or in any way change any plumbing, wiring, life/safety or mechanical systems, locks, or structural portions of the Building without the prior written consent of the Landlord as to the character of the Work, the manner of doing the Work, and the contractor(s) doing the Work. Such consent shall not be unreasonably withheld or delayed, if such Work is required of Tenant or is the obligation of Tenant pursuant to this Lease Agreement. As a condition to Landlord’s consent to Work proposed by Tenant, Landlord may impose reasonable conditions with respect thereto as Landlord deems appropriate, including, without limitation, requiring Tenant to furnish surety performance and/or payment bonds or other security for the payment of all costs incurred in connection with such Work, insurance against liabilities that may arise out of such Work, plans and specifications approved by Landlord and permits necessary for such Work. If such Work is performed by contractor(s) not retained by Landlord, Tenant shall upon completion of such Work, (i) deliver to Landlord evidence that payment for all such Work has been made by Tenant, contractors’ affidavits and full and final mechanic’s lien waivers and (ii) pay to Landlord a construction supervision fee of five percent (5%) of the total cost of such Work, but in no event less than $500.00 to reimburse Landlord for the costs incurred by its construction manager in inspecting and supervising such Work (provided, however, that the construction supervision fee for minor Work approved by Landlord with a total cost less than $1,000.00 shall be charged at $80.00 per hour). All such Work shall be done in a good and workmanlike manner using quality materials and shall comply with all applicable governmental laws, ordinances, rules and regulations. Tenant agrees to indemnify and hold Landlord free and harmless from any liability, loss, cost, damage or expense (including attorney’s fees) by reason of any of such Work. The provisions of Article 18 of this Lease Agreement shall apply to all Work performed under this Article 8. All leasehold alterations, installations, physical additions or improvements to the Premises made by Tenant shall at the option of Landlord become the property of Landlord

and shall be either removed by Tenant at Tenant’s sole cost or surrendered to Landlord upon the termination of this Lease Agreement; provided, however, this clause shall not apply, and Tenant shall retain title and rights to all, to movable equipment, whiteboard, artwork, audio visual equipment and industrial and other property or machinery mounted or secured to the Premises, or furniture owned by Tenant which may be removed by Tenant at the end of the Term of this Lease Agreement if Tenant is not then in default. Landlord shall provide Tenant with notice of Tenant’s obligation to remove any such alteration or improvement at the end of the Lease Term at the time that Landlord grants consent to such alteration or improvement. If Landlord does not notify Tenant that Tenant is obligated to remove such alteration or improvement, such improvement or alteration may be removed at Tenant’s option.

9. POSSESSION:

Except as otherwise provided, Landlord shall deliver possession of the Premises with any tenant improvements thereto substantially completed on or before the Commencement Date of the Term, but delivery of possession prior to such Commencement Date shall not affect the Expiration Date of this Lease Agreement. Time is of the essence. Failure of Landlord to deliver possession of the Premises by the Commencement Date of the Term due to any cause beyond the reasonable control of Landlord, including, without limitation, a holding over by a prior tenant, labor or material shortages, strikes, casualty loss, acts of God or failure by the City to timely approve any plans or issue a building permit (any of the foregoing being hereafter referred to as an “Excused Delay” ), shall automatically postpone the Commencement Date of the Term and shall extend the Expiration Date of this Lease Agreement accordingly. The rentals herein reserved shall commence on the first day of the Term, provided, however, in the event of any occupancy by Tenant prior to the beginning of the Term, such occupancy shall in all respects be the same as that of a tenant under this Lease Agreement, and the rentals shall commence as of the date that Tenant enters into such occupancy of the Premises. Provided further, that if Landlord shall be delayed in delivery of the Premises to Tenant due to Tenant’s failure to timely deliver any plans to Landlord or make any required deposit, changes in or additions to plans or tenant improvements made at the request of Tenant or any other delay caused by Tenant or any of its contractors, agents or employees, or by Tenant’s failure to pay for the costs of the tenant improvements in excess of any tenant improvement allowance and any deposit (any of the foregoing being hereafter referred to as a “Tenant Delay” ), then in such case the commencement of Tenant’s obligation to pay rentals shall be accelerated by the number of days of such Tenant Delay. Prior to the commencement of the Term, Landlord shall have no responsibility or liability for loss or damage to trade fixtures or equipment installed or left on the Premises. By occupying the Premises as a tenant, or to install trade fixtures or equipment, or to perform finishing work, Tenant shall be conclusively deemed to have accepted the same and to have acknowledged that the Premises are in the condition required by this Lease Agreement, except for any items for which Tenant has given Landlord a written list within thirty (30) days of Tenant’s first occupancy of the Premises. Should the commencement date of the Term of this Lease Agreement occur for any reason on a day other than the first day of the calendar month, then in that event solely for the purposes of determining the Expiration Date of the Term of this Lease Agreement, the Term shall be deemed to have commenced on the first (1 ^st ) day of the calendar month immediately following. Following Tenant’s occupancy of the Premises and within ten (10) days of Landlord’s request, Landlord and Tenant shall execute a ratification agreement which shall set forth the final commencement and expiration dates of the Term, shall acknowledge the Base Rent, the square footage of the Premises (office space and warehouse, shared mechanical space), delivery of the Premises in the condition required by this Lease Agreement and shall include such other matters as Landlord may reasonably request (hereafter the “Ratification Agreement” ).

10. SECURITY AND DAMAGE DEPOSIT:

Tenant, contemporaneously with the execution of this Lease Agreement, has deposited with Landlord the sum of Five Thousand Seven Hundred Seventeen and /36100 Dollars ($5,717.36), receipt of which is acknowledged hereby by Landlord, which deposit is to be held by Landlord, without liability for interest, as a security and

damage deposit for the faithful performance by Tenant during the Term hereof or any extension hereof. Prior to the time when Tenant shall be entitled to the return of this security deposit, Landlord may commingle such deposit with Landlord’s own funds and use such security deposit for such purpose as Landlord may determine. In the event of the failure of Tenant to keep and perform any of the terms, covenants and conditions of this Lease Agreement to be kept and performed by Tenant during the Term hereof or any extension hereof, then Landlord, either with or without terminating this Lease Agreement may (but shall not be required to) apply such portion of said deposit as may be necessary to compensate or repay Landlord for all losses or damages sustained or to be sustained by Landlord due to such breach on the part of Tenant, including, but not limited to overdue and unpaid rent, any other sum payable by Tenant to Landlord pursuant to the provisions of this Lease Agreement, damages or deficiencies in the reletting of Premises, and reasonable attorney’s fees incurred by Landlord. Should the entire deposit or any portion thereof, be appropriated and applied by Landlord, in accordance with the provisions of this paragraph, Tenant upon written demand by Landlord, shall remit forthwith to Landlord a sufficient amount of cash to restore said security deposit to the original sum deposited, and Tenant’s failure to do so within five (5) business days after receipt of such demand shall constitute a breach of this Lease Agreement. Said security deposit shall be returned to Tenant, less any depletion thereof as the result of the provisions of this paragraph, at the end of the Term of this Lease Agreement or any renewal thereof, or upon the earlier termination of this Lease Agreement. Tenant shall have no right to anticipate return of said deposit by withholding any amount required to be paid pursuant to the provisions of this Lease Agreement or otherwise. Tenant understands that its potential liability under this Lease Agreement is not limited to the amount of the security deposit. Use of such security deposit by Landlord shall not constitute a waiver, but is in addition to any other remedies available to Landlord under this Lease Agreement and under law.

In the event Landlord shall sell the Property, or shall otherwise convey or dispose of its interest in this Lease Agreement, Landlord may assign the security deposit or any balance thereof to Landlord’s assignee, whereupon Landlord shall be released from all liability for the return or repayment of such security deposit and Tenant shall look solely to the said assignee for the return and repayment of said security deposit. Said security deposit shall not be assigned or encumbered by Tenant without such consent of Landlord, and any assignment or encumbrance without such consent shall not bind Landlord. In the event of any rightful and permitted assignment of this Lease Agreement by Tenant, said security deposit shall be deemed to be held by Landlord as a deposit made by the assignee, and Landlord shall have no further liability with respect to the return of said security deposit to Tenant.

11. USE:

The Premises shall be used and occupied by Tenant solely for the purposes of general office, lab, warehouse and other related ancillary uses and such use by Tenant shall at all times be in full compliance with all applicable laws, ordinances and governmental regulations affecting the Building and Property and subject to the reasonable rules and regulations of Landlord set forth on Exhibit C . Tenant agrees not to commit or permit any act to be performed on the Premises or any omission to occur which will be in violation of any statute, regulation, or ordinance of any governmental body or which will increase the insurance rates on the Building or which will be in violation of any insurance policy carried on the Building by Landlord. Tenant, at its expense, shall comply with all governmental laws, ordinances, rules and regulations applicable to the use of the Premises and its occupancy and shall promptly comply with all governmental orders, rulings and directives for the correction, prevention and abatement of any violation upon, or in connection with the Premises or Tenant’s use or occupancy of the Premises, including the making of any alterations or improvements to the Premises, all at Tenant’s sole cost and expense. Without limiting the scope of the foregoing provisions of this Article 11, Tenant’s use of the Premises shall comply with all applicable requirements of the 1998 Minnesota Uniform Fire Code, as amended and as may hereafter be amended from time to time and of any replacement and/or successor law, ordinance, code or rule or regulation, including, without limitation, the 2003 Minnesota State Fire Code, expressly including requirements relating to the types of materials that may be stored in the Premises, the storage containers that may be used, the heights such storage containers may be stacked and the separation that must exist between materials and stacks.

Tenant shall not disturb other occupants of the Building by making any undue or unseemly noise or otherwise and shall not do or permit to be done in or about the Premises or Building anything which will be dangerous to life or limb. The employees of Tenant shall not be permitted, during their breaks or otherwise, to congregate or loiter in any of the common areas of the Building, including the Common Areas, in such a manner that would be disruptive of the use of such Common Areas by the other tenants and occupants of the Building or that would obstruct access to, from or within the Building. Tenant shall not, without the prior consent of Landlord, use any apparatus, machinery, device or equipment in or about the Premises that will cause any substantial noise or vibration or any increase in the normal consumption level of electric power. If any of Tenant’s apparatus, machinery, devices or equipment should disturb the enjoyment of any other tenant in the Building, then Tenant shall provide, at its sole cost and expense, adequate insulation or take such other action, including removing such apparatus, machinery, devices or equipment, as may be necessary to eliminate the disturbance. No food or beverage dispensing machines (except those solely servicing Tenant’s on-Premises employees) shall be installed by Tenant in the Premises without the prior written consent of Landlord. In no event shall Tenant (i) permit the storage of any materials, equipment or other personal property outside of the Building or (ii) permit any motor vehicle to be parked outside of the Building overnight.

12. ACCESS TO PREMISES:

Tenant agrees to permit Landlord and the authorized representatives of Landlord to enter the Premises at all reasonable times during usual business hours for the purpose of inspecting, making any necessary repairs, conducting environmental testing, and performing any work therein that may be necessary to comply with any laws, ordinances, rules, regulations or requirements of any public authority or of the Board of Fire Underwriters or any similar body or that Landlord may deem necessary to prevent waste or deterioration in connection with the Premises.

Nothing herein shall imply any duty upon the part of Landlord to do any such work that, under any provision of this Lease Agreement, Tenant may be required to perform and the performance thereof by Landlord shall not constitute a waiver of Tenant’s default in failing to perform the same. The Landlord may, during the progress of any work in the Premises, keep and store upon the Premises all necessary materials, tools and equipment. The Landlord shall not in any event be liable for inconvenience, annoyance, disturbance, loss of business, or other damage of Tenant by reason of making repairs or the performance of any work in the Premises, or on account of bringing materials, supplies and equipment into or through the Premises during the course thereof and the obligations of Tenant under this Lease Agreement shall not thereby be affected in any manner whatsoever. Tenant agrees that no additional locks will be placed on any of the doors to the Premises without the written consent of Landlord. Tenant shall have the right to install an access reader to the building and access to its premises 24 hours per day, 7 days a week, 52 weeks per year of the lease. Tenant shall also have the right to install additional security to the Premises if Tenant determines necessary.

Landlord reserves the right to enter upon the Premises at any time in the event of an emergency and at reasonable hours to exhibit the Premises to prospective purchasers or others; and to exhibit the Premises to prospective tenants and to display “For Lease” or similar signs on windows or doors in the Premises during the last nine months of the Term of this Lease Agreement, all without hindrance or molestation by Tenant

Landlord acknowledges that Tenant is performing research with secret and proprietary information, and hereby agrees that any inspection or entering of the Premises, except in an emergency, shall be subject to the following: (a) Landlord will give notice of at least thirty six (36) hours prior to any such inspection including the identities of who will be performing the inspection and in what areas of the Premises and (b) all persons entering the Premises shall execute a nondisclosure agreement provided by Tenant protecting any confidential or trade secret information that they may learn during the inspection.

13. EMINENT DOMAIN:

In the event of any eminent domain or condemnation proceeding, or private sale in lieu thereof, in respect to the Property during the Term thereof, the following provisions shall apply:

a. If the whole of the Property shall be acquired or condemned by eminent domain for any public or quasi-public use or purpose, then the Term of this Lease Agreement shall cease and terminate as of the date possession shall be taken in such proceeding and all rentals shall be paid up to that date.

b. If any part constituting less than the whole of the Property shall be acquired or condemned as aforesaid, and in the event that such partial taking or condemnation shall materially affect the Premises so as to render the Premises unsuitable for the business of Tenant, in the reasonable opinion of Landlord, then the Term of this Lease Agreement shall cease and terminate as of the date possession shall be taken by the condemning authority and rent shall be paid to the date of such termination.

In the event of a partial taking or condemnation of the Property which shall not materially affect the Premises so as to render the Premises unsuitable for the business of Tenant, in the reasonable opinion of Landlord, this Lease Agreement shall continue in full force and effect but with a proportionate abatement of the Base Rent and Additional Rent based on the portion, if any, of the Premises taken. Landlord reserves the right, at its option, to restore the Building and the Premises to substantially the same condition as they were prior to such condemnation. In such event, Landlord shall give written notice to Tenant, within thirty (30) days following the date possession shall be taken by the condemning authority, of Landlord’s intention to restore. Upon Landlord’s notice of election to restore, Landlord shall commence restoration and shall restore the Building and the Premises with reasonable promptness, subject to delays beyond Landlord’s control and delays in the making of condemnation or sale proceeds adjustment by Landlord; and Tenant shall have no right to terminate this Lease Agreement except as herein provided. Upon completion of such restoration, the rent shall be adjusted based upon the portion, if any, of the Premises restored.

c. In the event of any condemnation or taking as aforesaid, whether whole or partial, Tenant shall not be entitled to any part of the award paid for such condemnation and Landlord is to receive the full amount of such award, Tenant hereby expressly waiving any right to claim to any part thereof; provided, however, that nothing contained herein shall be deemed to give Landlord any interest in or require Tenant to assign to Landlord any separate award made to Tenant for its relocation expenses, the taking of personal property and fixtures belonging to Tenant, the unamortized value of improvements made or paid for by Tenant, or the interruption of or damage to Tenant’s business. Tenant agrees that any claims made by Tenant for condemnation awards shall not in any way diminish the award due to Landlord for its interest in the Premises.

d. Although all damages in the event of any condemnation shall belong to Landlord whether such damages are awarded as compensation for diminution in value of the leasehold or to the fee of the Premises, Tenant shall have the right to claim and recover from the condemning authority, but not from Landlord, such compensation as may be separately awarded or recoverable by Tenant in Tenant’s own right on account of any and all damage to Tenant’s business by reason of the condemnation and for or on account of any cost or loss to which Tenant might be put in removing Tenant’s merchandise, furniture, fixtures, leasehold improvements and equipment. However, Tenant shall have no claim against Landlord or make any claim with the condemning authority for the loss of its leasehold estate, any unexpired term or loss of any possible renewal or extension of said Lease Agreement, or loss of any possible value of said lease, any unexpired term, renewal or extension of said Lease Agreement.

14. DAMAGE OR DESTRUCTION:

In the event of any damage or destruction to the Property by fire or any other cause during the Term hereof, the following provisions shall apply:

a. If the Building is damaged by fire or any other cause to such extent that the cost of restoration, as reasonably estimated by Landlord, will equal or exceed thirty percent (30%) of the replacement value of the Building (exclusive of foundations) just prior to the occurrence of the damage, then Landlord may, no later than the sixtieth (60th) day following the damage, give Tenant written notice of Landlord’s election to terminate this Lease Agreement.

b. If the cost of restoration as estimated by Landlord shall amount to less than thirty percent (30%) of said replacement value of the Building, or if, despite the cost, Landlord does not elect to terminate this Lease Agreement, Landlord shall restore the Building and the Premises with reasonable promptness, subject to delays beyond Landlord’s control and delays in the making of insurance adjustments by Landlord; and Tenant shall have no right to terminate this Lease Agreement except as herein provided. Landlord shall not be responsible for restoring or repairing leasehold improvements of Tenant.

c. In the event of either of the elections to terminate, this Lease Agreement shall be deemed to terminate on the date of the receipt of the notice of election and all rentals shall be paid up to that date. Tenant shall have no claim against Landlord for the value of any unexpired Term of this Lease Agreement.

d. In any case where damage to the Building shall materially affect the Premises so as to render them unsuitable in whole or in part for the purposes for which they are demised hereunder, then, unless such destruction was wholly or partially caused by the negligence or breach of the terms of this Lease Agreement by Tenant, its employees, contractors or licensees, a portion of the rent based upon the amount of the extent to which the Premises are rendered unsuitable shall be abated until repaired or restored. If the destruction or damage was wholly or partially caused by negligence or breach of the terms of this Lease Agreement by Tenant as aforesaid and if Landlord shall elect to rebuild, the rent shall not abate and Tenant shall remain liable for the same.

Notwithstanding anything contained in this Article 14 to the contrary, Landlord shall only be obligated to restore the Premises to the extent of the insurance proceeds actually received, but if the insurance proceeds actually received do not permit Landlord to restore the Premises, Landlord shall so notify Tenant and either Landlord or Tenant may terminate this Lease Agreement by written notice given within sixty (60) days after Landlord’s notice. If Landlord restores the Premises or the Building in accordance with the provisions of this Article, then Tenant shall not have any right to terminate this Lease Agreement because of such damage.

15. INSURANCE:

a. Tenant will keep in force at its own expense for so long as this Lease Agreement remains in effect commercial general liability insurance insuring Tenant, on an “occurrence” rather than a “claims made” basis, against liability for bodily injury, property damage (including loss of use of property) and personal injury, which insurance shall (i) name Landlord, its property manager and such other parties as Landlord may designate, as additional insureds, (ii) be with companies and in form acceptable to Landlord, and (iii) with limits of liability not less than: $1,000,000 for injury/death to any one person; $2,000,000 for injury/death to more than one person, and $1,000,000 with respect to damage to property, and have a minimum combined limit of liability of no less than Three Million and 00/100ths Dollars ($3,000,000.00), subject to any changes reasonably required by Landlord’s insurance company. Said insurance shall also provide for contractual liability coverage. The amount and coverage of such commercial general liability insurance shall not limit Tenant’s liability nor relieve Tenant of any of its obligations under this Lease Agreement. Tenant shall further provide for business interruption insurance to

cover a period of not less than six (6) months. Tenant will deposit with Landlord certificate(s) of the policy or policies of such insurance, which shall provide that Landlord shall be notified in writing thirty (30) days prior to cancellation, material change, or failure to renew the insurance. Tenant further covenants and agrees to indemnify and hold Landlord and Landlord’s property manager harmless from and defend them against all claims, liabilities, judgments, demands, causes of action, losses, damages and costs and expenses, including reasonable attorneys’ fees, for damage to any property or injury to or death of any person arising from: (i) any act or omission by Tenant, its contractors, agents, employees or invitees in, at, or around the Premises or the Building; (ii) the negligence or willful misconduct of Tenant; (iii) Tenant’s failure to comply with any and all governmental laws, rules, ordinances or regulations applicable to the use of the Premises and its occupancy; and/or (iv) any breach or default by Tenant under this Lease Agreement. Tenant’s indemnity obligations under this Article shall survive the expiration or earlier termination of this Lease Agreement. If Tenant shall not comply with its covenants made in this Article, Landlord may, at its option, cause insurance as aforesaid to be issued and in such event Tenant agrees to pay the premium for such insurance promptly upon Landlord’s demand.

b. Landlord shall carry and cause to be in full force and effect a fire and extended coverage insurance policy on the Building, but not contents owned, leased to or otherwise in possession of Tenant. The cost of such insurance and any other insurance maintained by Landlord for the Building shall be an Operating Expense.

c. Tenant shall not carry any stock of goods or do anything in or about the Premises that will in any way impair or invalidate the obligation of the insurer under any policy of insurance required by this Lease Agreement.

d. In the event that the use of the Premises by Tenant increases the premium rate for insurance carried by Landlord on the improvements of which the Premises are a part, Tenant shall pay Landlord, upon demand, the amount of such premium increase. If Tenant installs any electrical equipment that overloads the power lines to the building or its wiring, Tenant shall, at its own expense, make whatever changes are necessary to comply with the requirements of the insurance underwriter, insurance rating bureau and governmental authorities having jurisdiction.

16. WAIVER OF SUBROGATION:

Landlord and Tenant hereby release the other from any and all liability or responsibility to the other or anyone claiming through or under them by way of subrogation or otherwise for any loss or damage to property caused by fire or any of the extended coverage or supplementary contract casualties, even if such fire or other casualty shall have been caused by the fault or negligence of the other party, or anyone for whom such party may be responsible.

17. DEFAULT OF TENANT:

a. In the event of any failure of Tenant to pay any rental due hereunder on the date the same shall be due, or any failure to perform any other of the terms, conditions or covenants of this Lease Agreement to be observed or performed by Tenant for more than twenty (20) days after written notice of such failure shall have been given to Tenant, or if Tenant or an agent of Tenant shall falsify any report required to be furnished to Landlord pursuant to the terms of this Lease Agreement, or if Tenant or any guarantor of this Lease Agreement shall become bankrupt or insolvent, or file any debtor proceedings or any person shall take or have against Tenant or any guarantor of this Lease Agreement in any court pursuant to any statute either of the United States or of any state a petition of bankruptcy or insolvency or for reorganization or for the appointment of a receiver or trustee of all or a portion of Tenant’s or any such guarantor’s property, or if Tenant or any such guarantor makes an assignment for the benefit or creditors, or petitions for or enters into an arrangement, or suffer this Lease

Agreement to be taken under any writ of execution, then in any such event Tenant shall be in default hereunder, and Landlord, in addition to other rights or remedies it may have, shall have the immediate right of re-entry and may remove all persons and property from the Premises and such property may be removed and stored in a public warehouse or elsewhere at the cost of, and for the account of Tenant, all without service of notice or resort to legal process and without being guilty of trespass, or becoming liable for any loss or damage which may be occasioned thereby.

b. Should Landlord elect to re-enter the Premises, as herein provided, or should it take possession of the Premises pursuant to legal proceedings or pursuant to any notice provided for by law, it may either terminate this Lease Agreement or it may from time to time, without terminating this Lease Agreement, make such alterations and repairs as may be necessary in order to relet the Premises, and relet the Premises or any part thereof upon such term or terms (which may be for a term extending beyond the Term of this Lease Agreement) and at such rental or rentals and upon such other terms and conditions as Landlord in its sole discretion may deem advisable. Upon each such subletting all rentals received by Landlord from such reletting shall be applied first to the payment of any indebtedness other than rent due hereunder from Tenant to Landlord; second, to the payment of any costs and expenses of such reletting, including brokerage fees and reasonable attorney’s fees and costs of such alterations and repairs; third, to the payment of the rent due and unpaid payment of future rent as the same may become due and payable hereunder. If such rentals received from such reletting during any month be less than that to be paid during that month by Tenant hereunder, Tenant, upon demand, shall pay any such deficiency to Landlord. No such re-entry or taking possession of the Premises by Landlord shall be construed as an election on its part to terminate this Lease Agreement unless a written notice of such intention is given to Tenant or unless the termination thereof is decreed by a court of competent jurisdiction. Notwithstanding any such reletting without termination, Landlord may at any time after such re-entry and reletting elect to terminate this Lease Agreement for any such breach, in addition to any other remedies it may have, it may recover from Tenant all damages it may incur by reason of such breach, including the cost of recovering the Premises, reasonable attorney’s fees, and including the worth at the time of such termination of the excess, if any, of the amount of rent and charges equivalent to rent reserved in this Lease Agreement for the remainder of the stated term, minus the amount of rental loss which Tenant proves could have been reasonably avoided, all of which amounts shall be immediately due and payable from Tenant to Landlord. Landlord shall also be entitled to any other amounts necessary to compensate Landlord for all detriment proximately caused by Tenant’s failure to comply with the requirements of this Lease Agreement.

c. Landlord may, at its option, instead of exercising any other rights or remedies available to it in this Lease Agreement or otherwise by law, statute or equity, spend such money as is reasonably necessary to cure any default of Tenant herein and the amount so spent, and costs incurred, including reasonable attorney’s fees in curing such default, shall be paid by Tenant, as Additional Rent, upon demand.

d. In the event suit shall be brought for recovery of possession of the Premises, for the recovery of rent of any other amount due under the provisions of this Lease Agreement, or because of the breach of any other covenant herein contained on the part of Tenant to be kept or performed, and a breach shall be established, Tenant shall pay to Landlord all expenses incurred therefore, including a reasonable attorney’s fee, together with interest on all such expenses at the rate of ten percent (10%) per annum from the date of such breach of the covenants of this Lease Agreement.

e. Tenant hereby expressly waives any and all rights of redemption granted by or under any present or future laws in the event of Tenant being evicted or dispossessed for any cause, or in the event of Landlord obtaining possession of the Premises, by reason of the violation by Tenant of any of the covenants or conditions of this Lease Agreement, or otherwise. Tenant also waives any demand for possession of the Premises, and any demand for payment of rent and any notice of intent to re-enter the Premises, or of intent to terminate this Lease

Agreement, other than the notices above provided in this Article, and waives any and every other notice or demand prescribed by any applicable statues or laws.

f . No remedy herein or elsewhere in this Lease Agreement or otherwise by law, statute or equity, conferred upon or reserved to Landlord or Tenant shall be exclusive of any other remedy, but shall be cumulative, and may be exercised from time to time and as often as the occasion may arise.

18. DEFAULT OF LANDLORD:

The failure by Landlord to observe or perform any of the covenants, conditions, or provisions of this Lease to be observed or performed by Landlord, where such failure shall continue for a period of thirty (30) days after written notice thereof by Tenant to Landlord, shall be deemed to be a default by Landlord under this Lease; provided, however, that if the nature of Landlord’s default is such that more than thirty (30) days are reasonably required for its cure, then Landlord shall not be deemed to be in default if Landlord commences such cure within said thirty (30) day period and thereafter diligently prosecutes such cure to completion, provided that the default shall actually be cured within ninety (90) days after notice. In the event of a default by Landlord beyond applicable cure periods, Tenant shall have the right, at its election, to: (a) sue for all actual (but not consequential, speculative or punitive) damages sustained by reason of the default; or (b) perform the obligations described in the notice in which case Landlord shall reimburse Tenant for the reasonable cost of the performance of such obligations within ten (10) business days after Tenant’s submission of an invoice therefor. If Tenant elects to proceed under clause (b) above, then the Landlord’s default shall be deemed to have been cured when Tenant’s expense has been reimbursed in full. In the event Tenant commences a suit for damages sustained by reason of a Landlord Default and prevails in such suit and obtains a final, non-appealable judgment with respect to such suit, Landlord shall reimburse Tenant for all reasonable costs including attorney’s fees.

19. INDEMNITY & HOLD HARMLESS:

Both Tenant and Landlord shall indemnify, protect, defend (at Landlord’s request and with counsel approved by Landlord) and hold each other and both parties’ affiliates and each of their respective partners, directors, officers, shareholders and employees, harmless from and against every demand, claim, cause of action, judgment, costs and expense, including, but not limited to, reasonable attorneys’ fees and disbursements of counsel, whether suit is initiated or not, and all loss and damage arising from any injury, loss or damage to the person or property of Tenant, any other tenant in the Property or to any other person rightfully in the Property, (i) occurring in or about the Premises, or (ii) caused by the negligence or misconduct of Tenant or Landlord, their affiliates or any of their respective employees, representatives, agents or contractors, or (iii) resulting from the violation of any legal requirements or the provisions of this Lease Agreement by Tenant or Landlord, their affiliates or any of their respective employees, representatives, agents or contractors. Tenant’s and Landlord’s indemnity obligations under this Article shall survive the expiration or earlier termination of this Lease Agreement.

If any mechanic’s lien is filed against any part of the Property for work, labor or services claimed to have been done for, or materials claimed to have been furnished to, Tenant, such mechanic’s lien shall be discharged by Tenant within ten (10) days thereafter, at Tenant’s sole cost and expense, by the payment thereof or by making any deposit required by law or by posting a bond with such surety, in such amount and in such form as Landlord deems proper. Tenant shall immediately notify Landlord of any mechanic’s lien or other lien filed against the Property or any part thereof by a contractor or subcontractor of Tenant or otherwise by reason of work claimed to have been done for or materials claimed to have been furnished to Tenant. If Tenant fails to remove such lien or post such bond within the ten (10) day period following the filing thereof, Landlord may, at its sole discretion and without waiving its rights and remedies based on such breach by Tenant and without releasing Tenant from any of its obligations, cause such lien to be released by any means it shall deem proper, including payment in satisfaction of the claim giving rise to such lien. Tenant shall, in such event, pay to Landlord at once, upon notice by

Landlord, any sum paid by Landlord to remove such lien including reasonable attorneys’ fees, together with interest at the rate of 12% from the date of such payment by Landlord. Landlord shall have the right at all times to post and keep posted on the Premises any notices permitted or required by applicable law, or that Landlord shall deem proper for the protection of Landlord, the Premises, the Property and any other party having an interest therein, from liens. All material suppliers, contractors, artisans, mechanics, laborers and other parties contracting with Tenant for the furnishing of any labor, services, materials, supplies or equipment with respect to any portion of the Premises are hereby charged with notice that they must look solely to Tenant for payment of the same and Tenant’s purchase orders, contracts and subcontracts in connection therewith must clearly state this requirement.

20. NON-LIABILITY OF LANDLORD; RIGHTS RESERVED:

Landlord will not be liable for any damage or injury to the person, business (or any loss of income therefrom), inventory, furnishings, equipment or other property of Tenant, Tenant’s employees, invitees, customers or any other person in or about the Premises or Building, whether such damage or injury to the person or property is caused by or results from: (i) fire, steam, electricity, water, gas, explosions, falling plaster, snow or rain; (ii) the breakage, leakage, obstruction or other defects of pipes, sprinklers, wires, appliances, plumbing, air conditioning or lighting fixtures or any other cause; (iii) conditions arising in or about the Premises or Building, or from other sources or places; (iv) any curtailment or interruption in utility services; or (v) any act or omission of any other tenant of the Building or persons in the Property, occupants of adjacent property, of the buildings, or the public or caused by operations in construction of any private, public or quasi-public work. The provisions of this Article will not exempt Landlord from liability for its gross negligence or willful misconduct; provided, however, in no event shall Landlord be liable for any consequential damages. Landlord shall not be liable to Tenant for any damages as the result of any latent defect in the Premises. All property of Tenant kept or stored on the Premises shall be so kept or stored at the risk of Tenant only and Tenant shall hold Landlord harmless from any claims arising out of damage to the same, including subrogation claims by Tenant’s insurance carrier.

Landlord shall have the following rights, exercisable without liability by Landlord to Tenant: (a) to change the Building’s name and/or street address; (b) to install, affix and maintain any and all signs on the exterior and in the interior of the Building; (c) to change the leasable areas and common areas of the Building and/or construct additional buildings on the land on which the Building is located. Landlord also reserves all airspace rights above, below and to all sides of the Premises; and (d) to grant anyone the exclusive right to conduct any business or render any service in or to the Building, so long as it does not exclude Tenant’s permitted use of the Premises.

21. SUBORDINATION, ESTOPPEL AND FINANCIAL STATEMENTS:

This Lease Agreement shall be subordinated to any mortgages, deeds of trust, security agreements, ground leases, master leases or other encumbrances (collectively, “Encumbrances”) that may now exist or that may hereafter be placed upon the Property, or any part thereof, and to any and all advances made thereunder, and to the interest upon the indebtedness evidenced by such Encumbrances, and to all renewals, modifications, consolidations, replacements and extensions of any of the Encumbrances. In the event of execution by Landlord after the date of this Lease Agreement of any such Encumbrance, renewal, modifications, consolidations, replacement or extension, Tenant agrees, within ten (10) business days of its receipt, to execute and return any commercially reasonable subordination agreement required by the holder of such Encumbrance, which agreement shall provide that:

a. Such holder shall not disturb the possession and other rights of Tenant under this Lease Agreement so long as Tenant is not in default hereunder;

b. In the event of acquisition of title to the Premises by such holder, such holder shall accept Tenant as tenant of the Premises under the terms and conditions of this Lease Agreement and shall perform all the obligations of Landlord hereunder; and

c. In such event Tenant shall recognize such holder as landlord hereunder.

Tenant shall, upon receipt of a request from Landlord therefore, within ten (1 0) business days after receipt of such request, execute and deliver to Landlord or to any proposed holder of an Encumbrance, an estoppel certificate in recordable form, certifying that this Lease Agreement is in full force and effect, that there are no offsets against rent nor defenses to Tenant’s performance under this Lease Agreement, or setting forth any such offsets or defenses claimed by Tenant, as the case may be, and such other terms as reasonably requested by Landlord. In the event that Tenant fails to execute and return the estoppel certificate within such ten (10) business day period, the holder of such Encumbrance shall be entitled to rely, as against the Tenant, that (i) this Lease Agreement is in full force and effect, without amendment except as specified by the Landlord, (ii) Tenant has no offsets against rent nor any defenses to Tenant’s performance under this Lease Agreement, (iii) Tenant has no right to any offset or defenses to the payment of rent, and (iv) Tenant has not paid any rental under this Lease Agreement more than one month in advance.

Tenant agrees to give prompt written notice to the holder of each Encumbrance who has given Tenant written notice of its address of any default by Landlord under this Lease Agreement which would entitle Tenant to terminate or cancel this Lease Agreement or abate the rental payable hereunder, and agrees that, notwithstanding any provision of this Lease Agreement to the contrary, no rental abatement or notice of termination of this Lease Agreement by Tenant shall be effective unless all such notified holders of Encumbrances have received said notice and have failed for thirty (30) days after receipt thereof to cure Landlord’s default, or if the default cannot be cured within thirty (30) days, have failed to commence and to diligently pursue the cure of Landlord’s default which gave rise to such right of termination or abatement.

22. ASSIGNMENT OR SUBLETTING:

a. Tenant Assignment. Tenant agrees not to assign, sublet, license, mortgage or encumber this Lease Agreement, the Premises, or any part thereof, whether by voluntary act, operation of law, or otherwise, without the specific prior written consent of Landlord in each instance and such consent shall not be unreasonably withheld. If Tenant is a corporation, partnership or other legal entity, transfer of a controlling interest of Tenant shall be considered an assignment of this Lease Agreement for purposes of this Article. Consent by Landlord in one such instance shall not be a waiver of Landlord’s rights under this Article as to requiring consent for any subsequent instance. Any purported assignment, subletting, licensing, mortgaging or other transfer of this Lease Agreement or the Premises hereunder by Tenant that does not comply with the provisions of this Article 21 shall be void. Notwithstanding anything herein to the contrary, Tenant may, without the consent of Landlord, assign this Lease Agreement or sublet all or any part of the Premises to an Affiliate of Tenant. As used herein, an “Affiliate” of Tenant shall be deemed to be any entity which either controls, is controlled by or is under common control with Tenant, with “control” meaning the power to direct the management and policies, directly or indirectly, through the ownership of voting capital stock or other ownership interest. In connection with any assignment of this Lease Agreement or subletting of the Premises made or requested by Tenant, Tenant shall pay Landlord (i) a processing fee of $500.00 and (ii) all out-of-pocket costs incurred by Landlord, including reasonable attorneys’ fees. In the event Tenant desires to sublet a part or all of the Premises, or assign this Lease Agreement, including to an Affiliate of Tenant, Tenant shall give written notice to Landlord at least twenty-one (21) days prior to the proposed subletting or assignment, which notice shall state the name of the proposed subtenant or assignee and the terms of any sublease or assignment documents and shall include copies of financial statements or other relevant financial information of the proposed subtenant or assignee. Any rents and other consideration received by Tenant from an assignment of this Lease Agreement or subletting of the Premises

which exceed the rents then payable by Tenant under this Lease Agreement shall be immediately paid by Tenant to Landlord as Additional Rent hereunder. At Landlord’s option following a default by Tenant under this Lease Agreement, any and all payments by the subtenant with respect to the sublease shall be paid directly to Landlord. In any event no assignment or subletting, including to an Affiliate of Tenant, shall release Tenant of its obligation to pay the rent and to perform all other obligations to be performed by Tenant hereunder for the Term of this Lease Agreement. The acceptance of rent by Landlord from any other person shall not be deemed to be a waiver by Landlord of any provision hereof. At Landlord’s option and with the exception of an assignment or subletting to an Affiliate of Tenant, Landlord may terminate this Lease Agreement in lieu of giving its consent to any proposed assignment of this Lease Agreement or subletting of all of the Premises (which termination may be contingent upon the execution of a new lease with the proposed assignee or subtenant).

b. Landlord Assignment. Landlord’s right to assign this Lease Agreement is and shall remain unqualified upon any sale or transfer of the Building and, provided the purchaser succeeds to the interests of Landlord under this Lease Agreement, Landlord shall thereupon be entirely freed of all obligations of the Landlord’s hereunder and shall not be subject to any liability resulting from any act or omission or event occurring after such conveyance.

23. ATTORNMENT:

In the event of any sale, transfer or assignment of Landlord’s interest in the Property, or the Building in which the Premises are located, or this Lease Agreement, or if the Property comes into custody or possession of a mortgagee or any other party whether because of a mortgage foreclosure, or otherwise, Tenant shall attorn to such assignee or other party and recognize such party as Landlord hereunder; provided, however Tenant’s peaceable possession will not be disturbed so long as Tenant faithfully performs its obligations under this Lease Agreement. Tenant shall execute, on demand, any attornment agreement required by any such party to be executed, containing such provisions as such party may require.

24. NOVATION IN THE EVENT OF SALE:

In the event of the sale of the Premises, Landlord shall be and hereby is relieved of all of the covenants and obligations created hereby accruing from and after the date of sale, and such sale shall result automatically in the purchaser assuming and agreeing to carry out all the covenants and obligations of Landlord herein. Notwithstanding the foregoing provisions of this Article, Landlord, in the event of a sale of the Premises, shall cause to be included in the agreement of sale and purchase a covenant whereby the purchaser of the Premises assumes and agree to carry out all of the covenants and obligations of Landlord herein.

The Tenant agrees at any time and from time to time upon not less than ten (10) business days prior written request by Landlord to execute, acknowledge and deliver to Landlord a statement in writing certifying that this Lease Agreement is unmodified and in full force and effect, or as modified and stating the modifications, and the dates to which Base Rent, Additional Rent and other charges have been paid in advance, if any, and such other terms as Landlord shall reasonably require, it being intended that any such statement delivered pursuant to this paragraph may be relied upon by any prospective purchaser of the fee or mortgagee, or assignee of any mortgage of the Premises. In the event that Tenant fails to execute and return such statement within such ten (10) business day period, the requesting party shall be entitled to rely, as against the Tenant, that: (i) this Lease Agreement is in full force and effect, without amendment except as specified by the Landlord, (ii) Tenant has no offsets against rent nor any defenses to Tenant’s performance under this Lease Agreement, (iii) Tenant has no right to any offset or defenses to the payment of rent, and (iv) Tenant has not paid any rental under this Lease Agreement more than one month in advance.

25. SUCCESSORS AND ASSIGNS:

The terms, covenants and conditions hereof shall be binding upon and inure to the successors and assigns of the parties hereto.

26. REMOVAL OF FIXTURES:

Notwithstanding anything contained in Article 8, Article 29, or elsewhere in this Lease Agreement, at the termination of the Lease, if Landlord requests, Tenant will promptly remove at the sole cost and expense of Tenant, all fixtures, equipment and alterations made by Tenant simultaneously with vacating the Premises and Tenant will promptly repair all damage and restore said Premises to the condition that existed immediately prior to said fixtures, equipment and alterations having been made, all at the sole cost and expense of Tenant, including the removal of any or all data and voice cabling or other wiring, all at Tenant’s sole cost.

27. QUIET ENJOYMENT:

Landlord warrants that it has full right to execute and to perform this Lease Agreement and to grant the estate demised, and that Tenant, upon payment of the rents and other amounts due and the performance of all the terms, conditions, covenants and agreements on Tenant’s part to be observed and performed under this Lease Agreement, may peaceably and quietly enjoy the Premises for the business uses permitted hereunder, subject, nevertheless, to the terms and conditions of this Lease Agreement.

28. RECORDING:

Tenant shall not record this Lease Agreement without the written consent of Landlord. However, upon the request of either party hereto, the other party shall join in the execution of a Memorandum Lease Agreement for the purposes of recordation. Said Memorandum Lease Agreement shall describe the parties, the Premises and the Term of the Lease Agreement and shall incorporate this Lease Agreement by reference.

29. OVERDUE PAYMENTS:

All monies due under this Lease Agreement from Tenant to Landlord shall be due on demand, unless otherwise specified and if not paid when due, shall result in the imposition of a service charge for such late payment in the amount of five percent (5%) of the amount due, provided, however, Landlord will waive one late payment month service charge per year provided such payment is received by the fifteenth (15 ^th ) day of said month. All unpaid or delinquent rents and Tenant obligations of any kind shall accrue interest at the rate of one and one-half (1-1/2%) percentage per month from and after the due date.

30. SURRENDER:

On the Expiration Date or upon the termination hereof upon a day other than the Expiration Date, Tenant shall peaceably surrender the Premises broom-clean in good order, condition and repair, reasonable wear and tear only excepted. On or before the last day of the Term or the sooner termination thereof, Tenant shall at its expense remove all of its furnishings, equipment and other personal property from the Premises, repairing any damage caused thereby, and any property not so removed shall be deemed abandoned. At the election of Landlord, all alterations, additions and fixtures, other than Tenant’s trade fixtures, which have been made or installed by either Landlord or Tenant upon the Premises shall remain as Landlord’s property and shall be surrendered with the Premises as a part thereof, or Landlord may require removal of the same at the end of the Term or upon the sooner termination thereof, in which event Tenant shall repair any damage caused thereby. If the Premises are not vacated and surrendered at the end of the Term or sooner termination thereof, Tenant shall indemnify Landlord against any and all loss, cost, damage,

liability and expense resulting from delay by Tenant in so vacating and surrendering the Premises, including, without limitation, claims made by any succeeding tenant founded on such delay, which indemnity obligation shall survive the expiration or earlier termination of this Lease Agreement. Tenant shall promptly surrender all keys for the Premises to Landlord and shall inform Landlord of any combinations to any locks and/or safes on the Premises.

31. END OF TERM AND HOLDING OVER:

Tenant will, at the expiration of this Lease Agreement, whether by lapse of time or termination, vacate and surrender immediate possession of the Premises to Landlord. If Tenant fails to vacate and surrender possession of the Premises, the Landlord may, at its option, serve written notice upon Tenant that such holdover constitutes the creation of a month-to-month tenancy. If Landlord does not give said notice, Tenant’s holdover shall create a tenancy at sufferance. In any event, the tenancy shall be upon the terms and conditions of this Lease Agreement, except that the Base Rent and Additional Rent shall be 150% the Base Rent and Additional Rent Tenant was obligated to pay Landlord under this Lease Agreement immediately prior to expiration (in the case of tenancy at sufferance such Base Rent and Additional Rent shall be prorated on the basis of a 365 day year for each day Tenant remains in possession); excepting further that in the case of a tenancy at sufferance, no notices shall be required prior to commencement of any legal action to regain possession of the Premises. The provisions of this Article shall not constitute a waiver by Landlord of any right of re-entry as otherwise available to Landlord; nor shall receipt of any rent or any other act in apparent affirmance of the tenancy operate as a waiver of the right to terminate this Lease Agreement for a breach by Tenant hereof. If Tenant determines to extend or renew the Term of this Lease, whether by new lease agreement or amendment to this Lease Agreement, Landlord shall have no obligation to pay commissions or fees of any kind to any brokers that Tenant may engage regarding such new lease term. Tenant hereby acknowledges that any claims for brokerage commissions or fees in connection with a new term of this Lease Agreement shall be paid in full by Tenant.

32. CONSENTS BY LANDLORD:

Whenever provision is made under this Lease Agreement for Tenant securing the consent or approval by Landlord, such consent or approval shall only be in writing.

33. NOTICES:

Any notice required or permitted under this Lease Agreement shall be in writing and deemed sufficiently given or secured if sent by registered or certified return receipt mail or registered overnight courier service to Tenant at the address of the Premises provided in Definitions on Page 1 of this Lease Agreement and to Landlord at the address as provided in Article 4 of this Lease Agreement, and either party may by like written notice at any time designate a different address to which notices shall subsequently be sent or rent to be paid.

34. RULES AND REGULATIONS:

Tenant shall observe and comply with the rules and regulations set forth on Exhibit C or as Landlord may reasonably promulgate from time to time, for the safety, care and cleanliness of the Premises, Building, Common Areas and Property.

35. INTENT OF PARTIES:

Except as otherwise provided herein, Tenant covenants and agrees that if it shall at any time fail to pay any costs or expenses, or fail to take out, pay for, maintain or deliver any of the insurance policies, or fail to make any other payment or perform any other act on its part to be made or performed as required in this Lease Agreement, then Landlord may, but shall not be obligated to, and without notice to or demand upon Tenant and without waiving or

releasing Tenant from any obligations of Tenant contained in this Lease Agreement, pay any such cost or expense, effect any such insurance coverage and pay premiums therefore, and may make any other payment or perform any other act on the part of Tenant to be made and performed as provided in this Lease Agreement, in such manner and to such extent as Landlord may deem desirable, and in exercising any such right, to also pay all necessary and incidental costs and expenses, employ counsel and incur and pay reasonable attorneys’ fees. All sums so paid by Landlord and all necessary and incidental costs and expenses in connection with the performance of any such act by Landlord, together with interest thereon at the rate of twelve percent (12%) per annum from the date of making of such expenditure by Landlord, shall be deemed Additional Rent hereunder, and shall be payable to Landlord on demand. Tenant covenants to pay any such sum or sums with interest as aforesaid and Landlord shall have the same rights and remedies in the event of the non-payment thereof by Tenant as in the case of default by Tenant in the payment of the Base Rent or Additional rent due under this Lease Agreement.

36. GENERAL:

a. The Lease Agreement does not create the relationship of principal and agent or of partnership or of joint venture or of any association between Landlord and Tenant, the sole relationship between the parties hereto being that of landlord and tenant.

b. No waiver of any default of Tenant hereunder shall be implied from any omission by Landlord to take any action on account of such default if such default persists or is repeated, and no express waiver shall affect any default other than the default specified in the express waiver and that only for the time and to the extent therein stated. One or more waivers by Landlord shall not then be construed as a waiver of a subsequent breach of the same covenant, term or condition. The consent to or approval by Landlord of any act by Tenant requiring Landlord’s consent or approval shall not waive or render unnecessary Landlord’s consent to or approval of any subsequent similar act by Tenant. No action required or permitted to be taken by or on behalf of Landlord under the terms or provisions of this Lease Agreement shall be deemed to constitute an eviction or disturbance of Tenant’s possession of the Premises. All preliminary negotiations are merged into and incorporated in this Lease Agreement. The laws of the State of Minnesota shall govern the validity, performance and enforcement of this Lease Agreement.

c. This Lease Agreement and the exhibits, attached hereto and forming a part hereof, constitute the entire agreement between Landlord and Tenant affecting the Premises and there are no other agreements, either oral or written, between them other than as herein set forth. No subsequent alteration, amendment, change or addition to this Lease Agreement shall be binding upon Landlord or Tenant unless reduced to writing and executed in the same form and manner in which this Lease Agreement is executed. If Tenant is a legal entity, each individual executing this Lease Agreement on behalf of said entity represents and warrants that s/he is duly authorized to execute and deliver this Lease Agreement on behalf of said entity in accordance with a duly adopted resolution of the governing body of said entity or in accordance with the organizational documents of said entity, and that this Lease Agreement is binding upon said entity in accordance with its terms.

d. If any agreement, covenant or condition of this Lease Agreement or the application thereof to any person or circumstances shall, to any extent, be invalid or unenforceable, the remainder of this Lease Agreement, or the application of such agreement, covenant or condition to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby and each agreement, covenant or condition of this Lease Agreement shall be valid and be enforced to the fullest extent permitted by law.

e. The obligations of Landlord under this Lease Agreement do not constitute the personal obligations of the individual partners, members, trustees, shareholders, directors or officers of Landlord or its constituent members or partners. If Landlord shall fail to perform any covenant, term or condition of this Lease Agreement required of Landlord, Tenant shall be required to deliver to Landlord written notice of the same. If, as

a consequence of such default, Tenant shall recover a money judgment against Landlord, such judgment shall be satisfied only out of the proceeds of sale received upon execution of such judgment and levied thereon against the right, title and interest of Landlord in the Property and out of rent or other income from the Property receivable by Landlord, or out of consideration received by Landlord from the sale or other disposition of all or any part of Landlord’s right, title or interest in the Property, and no action for any deficiency may be sought or obtained by Tenant.

f. Tenant represents to Landlord, and Landlord represents to Tenant, that the representing party is not (and such party is not engaged in this transaction on behalf of) a person or entity with which either party is prohibited from doing business pursuant to any law, regulation or executive order pertaining to national security ( “Anti-Terrorism Laws” ) and; such party has not violated and, to the best of such party’s knowledge it is not under investigation for, the violation of any Anti-Terrorism Laws pertaining to money laundering. “Anti-Terrorism Laws”, as referenced above, shall specifically include, but shall not be limited to, the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L. No. 107-56 (aka, the USA Patriot Act); Executive Order 13224; the Bank Secrecy Act, 31 U.S.C. Section 5311 et. Seq.; the Trading with the Enemy Act, 50 U.S.C. App. Section 1 et. Seq.; the International Emergency Economic Powers Act, 50 U.S.C. Section 1701 et. Seq.; sanctions and regulations promulgated pursuant thereto by the Office of Foreign Assets Control (“OFAC”), as well as laws related to the prevention and detection of money laundering in 18 U.S. C. Sections 1956 and 1957.

37. ENVIRONMENTAL:

a. Tenant will not cause or permit any Hazardous Materials (as defined below) to be brought upon, kept or used on the Property (as defined below) in a manner or for a purpose prohibited by or which could result in liability under any Hazardous Materials Law (as defined below). Tenant, at its sole cost and expense, will comply with all Hazardous Materials Laws and prudent industry practice relating to the presence, treatment, storage, transportation, disposal, release or management of Hazardous Materials in, on, under or about the Property required for Tenant’s use of the Property and its operations therein and will notify Landlord in writing in advance of any and all Hazardous Materials Tenant brings upon, keeps or uses on the Property (other than small quantities of office cleaning or other office supplies as are customarily used in the ordinary course of a general office use). On or before the expiration or earlier termination of this Lease Agreement, Tenant will, at its sole cost and expense, cause all Hazardous Materials in, on, under or about the Property as a result of or in any way related to Tenant’s use of the Property or its operations therein, whether prior to or following the commencement date of this Lease Agreement, to be removed from the Property in accordance and in compliance with all Hazardous Materials Laws. Tenant will not take any remedial action in response to the presence of any Hazardous Materials in, on, under or about the Property, nor enter into any settlement agreement, consent decree or other compromise with respect to any Claims (as defined below) relating to or in any way connected with the Property, without first notifying Landlord of Tenant’s intention to do so and affording Landlord reasonable opportunity to investigate, appear, intervene or otherwise appropriately assert and protect Landlord’s interest in the Property.

b. Tenant will notify Landlord of any of the following actions affecting Landlord, Tenant or the Property and resulting from or in any way relating to Tenant’s use of the Property or its operations therein immediately after receiving notice of the same: (a) any enforcement, clean-up, removal or other governmental or regulatory action instituted, completed or threatened under any Hazardous Materials Law; (b) any Claim made or threatened by any person relating to damage, contribution, cost recovery, compensation, loss or injury resulting from or claimed to result from any Hazardous Material; and (c) any reports made by any person, including Tenant, to any environmental agency relating to any Hazardous Material, including any complaints, notices, warnings or asserted violations. Tenant will also provide Landlord, as promptly as possible and in any event within ten (10) business days after Tenant first receives or sends the same, with copies of all Claims, reports,

complaints, notices, warnings or asserted violations relating in any way to the Property. Upon Landlord’s written request, Tenant will promptly deliver to Landlord notices of manifests reflecting the legal and proper disposal of all Hazardous Materials removed or to be removed from the Property. All such manifests will list Tenant or its agent as a responsible party and will not attribute responsibility for any such Hazardous Materials to Landlord.

c. Subject to the provisions of Article 12 above, including but not limited to the notice and confidentiality provisions, Landlord shall have the right, from time to time, by itself or by its agent, to enter upon the Property for purposes of inspecting the compliance thereof, and the operations conducted thereon, with Hazardous Materials Laws, and to take such samples or perform such intrusive testing, or “Phase II” investigation, as Landlord may, in its discretion, determine; provided that any such entry, or such intrusive testing, shall not unreasonably interfere with the business operations of Tenant on the Property. Tenant shall afford Landlord, or its agent, reasonable access to inspect Tenant’s books and records evidencing compliance with Hazardous Materials Laws, including, but not limited to, access to appropriate licenses and permits, as well as manifests or other records relative to the handling, treatment, storage, shipment, or disposal of Hazardous Materials, as required under applicable Hazardous Materials Laws. The costs incurred in exercising Landlord’s rights under this Article 37 C shall be paid by Landlord unless such entry and/or testing by Landlord reveals either a violation of Hazardous Materials Laws or the presence of Hazardous Materials requiring remediation, in either which case and in addition to being responsible for all of the costs of remedying such violation and/or remediating such Hazardous Materials, Tenant shall reimburse Landlord for the costs incurred by Landlord under this Article 37 C within thirty (30) days following Tenant’s receipt of an invoice therefore.

d. Tenant acknowledges and agrees that all reporting and warning obligations required under Hazardous Materials Laws resulting from or in any way relating to Tenant’s use of the Property or its operations therein are Tenant’s sole responsibility, regardless whether such Hazardous Materials Laws permit or require Landlord to report or warn.

e. With respect to all Hazardous Materials generated, used or otherwise located on the Property, whether prior to or following the commencement date of this Lease Agreement, as a result of or in any way related to Tenant’s use of the Property or its operations therein, the following specific rules shall govern:

(i) Tenant shall at all times be in full compliance with all Hazardous Materials Laws. Tenant shall advise Landlord prior to the generation or handling of Hazardous Materials (other than small quantities of office cleaning or other office supplies as are customarily used in the ordinary course of a general office use). Upon request by Landlord, Tenant shall deliver to Landlord copies of all contracts, programs, management plans or certifications regarding the generation, storage, removal or disposal of Hazardous Materials which are required in order for Tenant to be in compliance with the Hazardous Materials Laws.

(ii) All Hazardous Materials located upon the Property shall be transported therefrom, and appropriately disposed of directly by Tenant pursuant to Hazardous Materials removal contracts executed by Tenant and in compliance with all Hazardous Materials Laws.

(iii) Tenant shall, immediately upon receipt provide Landlord with copies of, and shall comply with, all Environmental Requirements.

(iv) In no event shall any Hazardous Materials be stored, handled or disposed of on the Property other than in strict compliance herewith.

f. Tenant will indemnity, defend (with counsel reasonably acceptable to Landlord), protect and hold

harmless the Landlord Parties (as defined below) from and against any and all Claims whatsoever arising or resulting, in whole or in part, directly or indirectly, from the presence, treatment, storage, transportation, disposal, release or management of Hazardous Materials in, on, under, upon or from the Property (including water tables and atmosphere) resulting from or in any way related to Tenant’s use of the Property or its operations therein, whether prior to or following the commencement date of this Lease Agreement. Tenant’s obligations under this Article 37 F include, without limitation and whether foreseeable or unforeseeable, the costs of (a) any required or necessary repair, clean-up, detoxification or decontamination of the Property, and (b) implementing any closure, remediation or other required action in connection therewith as stated above.

g. Landlord warrants and covenants that to the best of its knowledge there is no contamination of the Premises, the Building or the Property caused by Hazardous Substances. Landlord hereby agrees to defend, indemnify and hold harmless Tenant and its officers, directors, shareholders, partners and principals from and against any claims arising as of the result of any past or present existence, use, handling, storage, transportation, manufacture, release or disposal of any Hazardous Substances in, on or under the Premises, the Building or the Property, and any release of Hazardous Substances at or from the Building or the Property. Landlord’s obligations under this Section shall survive the expiration or earlier termination of the Term of this Lease and the Sale of the Premises, the Building or the Property by the Landlord. The foregoing indemnifications shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

The terms of this section relating to Tenant shall not apply to conditions pre-existing, caused by another tenant of Property, or otherwise not related to or caused by Tenant.

h. As used herein, the following terms shall have the following meanings:

(i) “Hazardous Materials” means any of the following, in any amount: (a) any petroleum or petroleum product, asbestos in any form, urea formaldehyde and polychlorinated biphenyls; (b) any radioactive substance; (c) any toxic, infectious, reactive, corrosive, ignitable or flammable chemical or chemical compound; and (d) any chemicals, materials or substances, whether solid, liquid or gas, defined as or included in the definitions of “hazardous substances,” “hazardous wastes,” “pollutants,” ’‘contaminants,” “hazardous materials,” “extremely hazardous wastes,” “restricted hazardous wastes,” “toxic substances,” “toxic pollutants,” “solid waste,” or words of similar import in any federal, state or local statute, law, ordinance or regulation now existing or existing on or after the Effective Date, including, without limiting the generality of the foregoing, the Comprehensive Environmental Response Compensation and Liability Act, 42 U.S.C. § 9601, et seq., and the Minnesota Environmental Response and Liability Act, Minn. Stat. Chapter 115B, as any of the same may be interpreted by government offices and agencies.

(ii) “Property” means the Premises and the Building (expressly including the all Common Areas) together.

(iii) “Hazardous Materials Laws” means any federal, state or local statutes, laws, ordinances or regulations now or hereafter existing that control, classify, regulate, list or define Hazardous Materials, or the generation, storage, transportation, treatment or disposal of Hazardous Materials.

(iv) “Landlord Parties” means Landlord and its property manager and their respective officers, governors, members, managers and employees.

(v) “Claims” means all claims, actions, liabilities, damages, costs, penalties, forfeitures, losses or expenses, including, without limitation, reasonable attorneys’ fees.

(vi) “Environmental Requirements” means all permits, inspection reports, monitoring reports, licenses, orders, demands, compliance requests, edicts or other documentation filed, served, delivered or transmitted either with, to or from the Minnesota Pollution Control Agency, Minnesota Department of Health or the Environmental Protection Agency or any other governmental body, including Hazardous Materials Laws.

i. The obligations of Tenant under this Article 37 shall survive the expiration or earlier termination of this Lease Agreement.

38. CAPTIONS:

The captions are inserted only as a matter of convenience and for reference, and in no way define, limit or describe the scope of this Lease Agreement nor the intent or any provision thereof.

39. ATTACHMENTS:

Attached hereto and made a part hereof is an Addendum containing Article 42 through Article 53 inclusive and Exhibits A through Exhibit G, inclusive, which Exhibits are as follows:

Exhibit		Description
Exhibit A		Legal Description
Exhibit B		Premises
Exhibit C		Building Rules and Regulations
Exhibit D		Building Standard Tenant Lease Finish and Tenant Improvements
Exhibit E		Sign Criteria
Exhibit F		Ratification Agreement
Exhibit G		Letter of Credit

40. SUBMISSION:

Submission of this Lease Agreement by Landlord to Tenant for examination and/or execution shall not in any manner bind Landlord and no obligations on Landlord shall arise under this Lease Agreement unless and until this Lease Agreement is fully signed and delivered by Landlord and Tenant; provided, however, the execution and delivery by Tenant of this Lease Agreement to Landlord shall constitute an offer by Tenant of the terms, covenants and conditions contained in this Lease Agreement, which offer may not be revoked for a period of thirty (30) days after such delivery.

41. REPRESENTATION:

Each of the parties represents and warrants that except only as may be provided in Article 44 of the Addendum, there are no claims for brokerage commissions or finder’s fees (collectively “Leasing Commissions” ) in connection with this Lease Agreement, and agrees to indemnify the other party against, and hold it harmless from all liabilities arising from any claim for Leasing Commissions asserted by a broker, agent or other person or entity claiming through the indemnifying party, including without limitation, reasonable attorneys’ fees incurred in connection therewith.

IN WITNESS WHEREOF, Landlord and Tenant have caused these presents to be executed in form and manner sufficient to bind them at law, as of the day and year first above written.

Landlord:		West Glen Development, LLC
		A Minnesota limited liability company

Date:	3/25/14	By:	/s/ Bradley L. Moen
			Bradley L. Moen, Governor

Date:	3/11/14	By:	/s/ Michael J. Leuer
			Michael J. Leuer, Governor

Tenant:		Celcuity, LLC
		A Minnesota limited liability company

Date:	3/11/14	By:	/s/ Brian F. Sullivan
		Name:	Brian Sullivan
		Its:	CEO

LEASE ADDENDUM

This Lease Addendum, dated this 11 day of March, 2014 by and West Glen Development, LLC , a Minnesota limited liability company (“Landlord”), and Celcuity , LLC, a Minnesota limited liability company(“Tenant”), is attached to and made a part of that certain Commercial Lease of even date hereof (the “Lease Agreement”). The Lease Agreement as modified by this Lease Addendum is hereinafter referred to as the Lease. Except to the extent otherwise defined below, all capitalized terms used in this Lease Addendum shall be as defined in the Lease Agreement.

Any provision of the Lease Agreement to the contrary notwithstanding, Landlord and Tenant mutually agree as follows:

42. Base Rental:

Months	Price Per Square Foot		Monthly
May 1, 2014 to May 31, 2014	$	0	$	0
June 1, 2014 to April 30, 2015	$	10.03	$	4,027.05
May 1, 2015 to April 30, 2016	$	10.28	$	4,127.42
May 1, 2016 to April 30, 2017	$	10.53	$	4,227.80
May 1, 2017 to May 31,2017	$	10.80	$	4,336.20

43. Amounts Due Upon Lease Execution: In addition to the Security and Damage Deposit described in Article 10 of the Lease Agreement in the amount of $5,717.36, upon execution of the Lease Agreement, Tenant shall submit to Landlord a check in amount representing the second month’s Base Rent of $4,027.05 for a total of $9,744.41.

44. Brokerage: Jon Yanta and Brent Masica, agents or brokers with Cushman & Wakefield/Northmarq, are representing Landlord, and that Jeff Wenngatz, agent or broker with CRESA, is representing Tenant in this transaction. Landlord shall be responsible for all commissions associated with this transaction.

45. Construction: Preliminary plans prepared by Landlord for permanent improvements to the Premises are attached hereto as Exhibit D and by this reference incorporated herein. Exhibit D has been approved by each of Landlord and Tenant. The parties acknowledge that Exhibit D will modify the Premises to accommodate Tenant’s intended use. Upon any required approval of Exhibit D by the City and the issuance of a building permit by the City, Landlord shall be responsible for constructing the improvements as shown on Exhibit D (hereafter called “Tenant Improvements” ) for and on behalf of Tenant. Landlord and Tenant have agreed that the costs of such Tenant Improvements shall be paid by Landlord. Any improvements to the Premises, other than as shown on Exhibit D, and the furnishing of the Premises, shall be made by Tenant at the sole cost and expense of Tenant, subject to all other provisions of this Lease Agreement. If the Tenant Improvements cannot be substantially completed prior to the Commencement Date, then the provisions of Article 9 shall apply. As used in this Lease Agreement, “substantial completion” of the Tenant Improvements or their being “substantially completed” means (i) Landlord has completed construction of the Tenant Improvements in accordance with Exhibit D to such an extent that Tenant may occupy the Premises for the purpose of conducting its business operations therein, subject to completion by Landlord of normal punch list items (hereafter called the “Punch List Items” ) and (ii) any required certificate of occupancy/completion or its local equivalent has been issued by the City for the Premises so as to permit the use and occupancy of the Premises by Tenant.

46. Additional Tenant Improvements. In addition to the Tenant Improvements defined in Article 45, Landlord agrees to provide, at Landlord’s cost and expense, the following, under the same terms and conditions as provided in Article 45:

Two (2) electrical receptacles per office/conference room

Twenty (20) electrical receptacles in the lab area and five (5) electrical receptacles in the office area for work stations

Tenant will supply two (2) lab sinks and Landlord shall install and providing plumbing to said sinks

Epoxy floor coating with a urethane top coat and 4” vinyl base in lab area

Clean and paint restrooms

VCT flooring in break room

Carpet and paint in the office area

Parabolic T-8 lights in office

i .

9 lineal feet of base cabinets with PLAM top in break room, including sink

Further, Tenant agrees that all costs associated with a clean room, venting, zoned HVAC in lab and HEPA filters (together referred to as the “Additional Work”) will be at Tenant’s sole cost and expense and pursuant to all of the terms and conditions of this Lease. Prior to commencing construction of Additional Work, Landlord shall submit to Tenant a written estimate of the total costs thereof, which include a construction management fee payable to Landlord’s construction manager for profit and overhead in the total amount of ten percent (10%) (hereafter called the “Estimate”). Tenant shall deposit the amount of the Estimate with Landlord within ten (10) business days of Tenant’s receipt of the Estimate (hereafter called the “Deposit”). Landlord will not commence construction of the Additional Work until any required Deposit is made by Tenant. No interest shall accrue on the Deposit and Landlord shall use such Deposit to pay for the costs of the Additional Work as and when payable. Following substantial completion of the Additional Work, if the actual costs of the Additional Work exceed the total of the Deposit, Tenant shall pay Landlord the excess amount within fifteen (15) days following Tenant’s receipt from Landlord of a written statement of such actual costs. Conversely, in the event a Deposit has been made by Tenant and the total of the Deposit exceeds the actual costs, Landlord shall reimburse the excess amount to Tenant (not to exceed, however, the amount of the Deposit) within fifteen (15) days following Tenant’s receipt from Landlord of a written statement of such actual costs.

47. Early Move-In. Except as otherwise provided, Landlord shall deliver possession of the Premises with the tenant improvements thereto substantially completed on or before the Commencement Date, but delivery of possession prior to the Commencement Date shall not affect the Expiration Date of this Lease Agreement. Failure of Landlord to deliver possession of the Premises by the Commencement Date due to any cause beyond the reasonable control of Landlord, including, without limitation, a holding over by a prior tenant, labor or material shortages, strikes, casualty loss, acts of God or failure by the City to timely approve the an plans or issue a building permit (any of the foregoing being hereafter referred to as an “Excused Delay” ), shall automatically postpone the Commencement Date and shall extend the Expiration Date of this Lease Agreement accordingly. The rentals herein reserved shall commence on the first day of the Term, provided, however, in the event of any occupancy by Tenant prior to the beginning of the Term, such occupancy shall in all respects be the same as that of a tenant under this Lease Agreement, and the rentals shall commence as of the date that Tenant enters into such occupancy of the Premises; provided, however, the Tenant may enter the Premises rent-free during the Move-in Period (as defined below) only for the purposes described below. Provided further, that if Landlord shall be delayed in delivery of the Premises to Tenant due to Tenant’s failure to timely deliver any plans to Landlord or make any required deposit, changes in or additions to plans or tenant improvements made at the request of Tenant, Tenant’s failure to timely deliver any required Security Deposit or any other delay caused by Tenant or any of its contractors, agents or employees, or by Tenant’s failure to pay for the costs of tenant improvements in excess of any tenant improvement allowance and any deposit (any of the foregoing being hereafter referred to as a “Tenant Delay” ), then in such case the commencement of Tenant’s obligation to pay rentals shall be accelerated by the number of days of such Tenant Delay. Notwithstanding anything herein to the contrary, so long as Tenant does not interfere with the completion of any tenant improvements and Tenant coordinates its entry into the

Premises with the scheduled adopted by Landlord’s construction manager for the completion of tenant improvements, Tenant may enter the Premises, rent-free but otherwise subject to all of the terms and conditions of this Lease Agreement, up to two (2) week(s) prior to the Commencement Date of this Lease Agreement (herein the “Move-in Period” ) for the limited purpose of installing its wiring and moving its workstations, furnishings, equipment and other personal property into the Premises. During the Move-in Period and at any other time prior to the Commencement Date, Landlord shall have no responsibility or liability for loss or damage to trade fixtures or equipment installed or left on the Premises. By occupying the Premises as a tenant, or to install trade fixtures or equipment, or to perform finishing work, Tenant shall be conclusively deemed to have accepted the same and to have acknowledged that the Premises are in the condition required by this Lease Agreement, except for any punch list items for which Tenant has given Landlord a written list within thirty (30) days of Tenant’s first occupancy of the Premises. Should the Commencement Date of this Lease Agreement occur for any reason on a day other than the first day of the calendar month, then in that event solely for the purposes of determining the Expiration Date of the Term of this Lease Agreement, the Term shall be deemed to have commenced on the first (1 ^st ) day of the calendar month immediately following. Promptly following Tenant’s occupancy of the Premises, Landlord and Tenant shall execute a Ratification Agreement in the form attached hereto as Exhibit F which shall set forth the final commencement and expiration dates of the Term, shall acknowledge the Base Rent, the rentable square footage of the Premises, delivery of the Premises in the condition required by this Lease Agreement and shall include such other matters as Landlord may reasonably request.

48. Option to Extend Term.

A. Subject to the provisions of Article 48B below and provided this Lease Agreement or Tenant’s right of possession hereunder has not been earlier terminated, Tenant shall have the right to extend the Term of the Lease Agreement as to all, but not less than all, of the Premises then being leased hereunder, for one period of three (3) years beginning immediately following the end of the initial Term (the “Extended Term” ) subject to the following terms and conditions:

(i) Tenant shall give written notice to Landlord of the exercise of Tenant’s right to extend the Term of this Lease Agreement no later than nine (9) months prior to the commencement of the Extended Term, time being of the essence (the “Renewal Notice” ). If no such Renewal Notice is timely given, this Lease Agreement shall terminate as of the end of the initial Term;

(ii) Tenant shall not be in default under this Lease Agreement beyond the passage of any applicable period of cure, grace or notice at the time of giving the Renewal Notice or at any time thereafter to and including the commencement of the Extended Term; and

(iii) The extension of the Term hereunder for the Extended Term shall be on the same terms and conditions as are applicable to the initial Term;

provided, however, (i) Tenant shall have no further right to extend the Term of this Lease Agreement, (ii) Articles 46 and 47 shall not apply to the Extended Term and (iii) the Base Rent payable by Tenant to Landlord in monthly installments during the Extended Term shall be the Market Rent (as defined in Article 49 below) as reasonably determined by Landlord. Within ten (10) days following receipt of Tenant’s Renewal Notice, but no earlier than nine (9) months prior to the commencement of the Extended Term, Landlord shall notify Tenant of Landlord’s determination of the Market Rent for the Extended Term (“Landlord’s Market Rent Determination” ). If Tenant disagrees with Landlord’s Market Rent Determination for the Extended Term, the parties shall negotiate in good faith for a period of thirty (30) days following receipt by Tenant of Landlord’s Market Rent Determination as to the Base Rent payable during the Extended Term. If the parties are unable to agree in writing on the Base Rent payable during the Extended Term within said thirty (30) day period, Tenant shall have the right to rescind the giving of

the Renewal Notice by giving written notice of rescission to Landlord no later than five (5) days following the end of said twenty (20) day period, time being of the essence (the “Rescission Notice” ), in which event the giving of the Renewal Notice shall be deemed rescinded and this Lease Agreement shall expire as of the end of the initial Term. In the event such Rescission Notice is not timely given, the Renewal Notice shall remain in full force and effect and the Base Rent payable during the Extended Term shall be as set forth in Landlord’s Market Rent Determination.

B. It is acknowledged and agreed by the parties that the right of Tenant (hereafter the “Original Tenant” ) to extend the Term of this Lease Agreement under Article 48 A above is personal to Original Tenant. and should said Original Tenant either assign this Lease Agreement or sublet all or any part of the Premises to any person or entity other than to an Affiliate of said Original Tenant, Article 48 A above shall automatically become null and void and of no further force or effect.

49. Market Rent. For purposes of Article 48 above, “Market Rent” shall be the annual net rental rate per square foot of rentable area which a tenant renewing its lease would agree to pay, and a landlord would agree to accept, as of the date in question, for the term in question, for the space in question in its then existing condition, assuming reasonably prudent persons, each being fully knowledgeable in all the facts, and each being willing to deal but neither being under any compulsion to deal, and assuming a lease containing all of the terms, covenants and conditions of this Lease Agreement. Such Market Rent shall be based on prevailing rental rates being charged to tenants in comparable buildings in the Minneapolis/St. Paul area, including the Building. Market Rent shall be determined giving due consideration to whether or not improvement allowances, Leasing Commissions or other lease concessions (collectively, the “Lease Concessions” ) are then customarily being offered in connection with the renewal of existing leases, it being the intention of the parties that Landlord shall provide Lease Concessions that are consistent with and determined contemporaneously with the determination of Market Rent.

50. Right of First Offer. In the event any contiguous space adjacent to the Premises (the “Adjacent Space” ) becomes available to Landlord to lease, Landlord agrees to give written notice thereof to Tenant (“Landlord’s Offer Notice” ):

(i) Tenant shall give written notice to Landlord of its agreement to lease the Adjacent Bay within five (5) business days after receipt of Landlord’s Offer Notice (the “Acceptance Notice”). If no such Renewal Notice is timely given, this Right of First Offer shall terminate; and

(ii) Tenant shall not be in default under this Lease Agreement beyond the passage of any applicable period of cure, grace or notice at the time of giving the Acceptance Notice; and

provided, however, (i) Tenant shall have no further right of first offer on any adjacent space in the Building, (ii) Base Rent shall be at Market Rent (as defined in Article 49 above) and (iii) the Additional Rent payable by Tenant to Landlord shall be adjusted to reflect the increased proportionate share of Tenant’s Premises in the Building.

It is acknowledged and agreed by the parties that the right of Tenant (hereafter the “Original Tenant”) to lease the Adjacent Space under this Article 50 is personal to Original Tenant. and should said Original Tenant either assign this Lease or sublet all or any part of the Premises to any person or entity other than to an affiliate of said Original Tenant, this Article 50 shall automatically become null and void and of no further force or effect.

51. Letter of Credit.

Simultaneously with Tenant’s execution and delivery of this Lease Agreement, Tenant at its sole cost and expense shall deliver to Landlord, from a commercially recognized financial institution (the “Financial Institution” ) in the Twin Cities metropolitan area approved by Landlord, an irrevocable, unconditional standby letter of credit in the amount of Fifty Thousand and no/100 Dollars ($50,000.00), in substantially the form as set forth in Exhibit G attached hereto and incorporated herein by reference, with any revisions thereof to be approved, in advance, by Landlord (such letter of credit, together with any other renewal or replacement letters of credit delivered or to be delivered by Tenant hereunder shall be referred to herein collectively as the “Letter of Credit” ). Subject to the provisions hereinafter provided with respect to periodic reductions in the amount of the Letter of Credit under specified terms and conditions, the Letter of Credit shall be maintained until sixty (60) days following the expiration of the Term of this Lease Agreement. Tenant may periodically renew the Letter of Credit to assure that it is maintained throughout the entirety of said period; provided, any expiring Letter of Credit must be extended, renewed and/or replaced with a substitute Letter of Credit at least thirty (30) days prior to the stated expiration date of such Letter of Credit.

Anything herein to the contrary notwithstanding, in the event at any time during the Term of this Lease Agreement the issuing Financial Institution for a Letter of Credit delivered by Tenant under this Article either (i) has its rating downgraded by Bankrate’s Safe & Sound Rating System or comparable private rating system for financial institutions or (ii) is liquidated, dissolved or has a receiver appointed for it by the federal or state regulatory authorities, then in such case Landlord may at any time thereafter require that the Tenant replace the Letter of Credit issued by such Financial Institution with a Letter of Credit issued by a replacement Financial Institution approved by Landlord. In the event such a replacement Letter of Credit is not delivered to Landlord within twenty (20) days following Landlord’s written demand, then in such case and notwithstanding anything in Article 17 of this Lease Agreement to the contrary, an incurable default by Tenant shall have occurred under this Lease Agreement not requiring further written notice by Landlord and Landlord may, at its option, draw upon the Letter of Credit for the full amount of the Letter of Credit.

Landlord may draw on the Letter of Credit as follows:

A. Notwithstanding any provision to the contrary contained within this Lease Agreement, in the event of a default by Tenant beyond the passage of any applicable period of cure, grace or notice, in the payment of rent (whether denominated Base, Additional or otherwise) or any other default by Tenant beyond the passage of any applicable period of cure, grace or notice, under the terms of this Lease Agreement, then in such case Landlord may, at its option, draw upon the Letter of Credit for the amount necessary to cure such default and apply the proceeds to such cure. Tenant shall, within five (5) days following the date of such draw on the Letter of Credit by Landlord, deliver to Landlord a replacement Letter of Credit for the full amount of the Letter of Credit Landlord was holding prior to such draw. If Tenant shall fail to deliver such replacement Letter of Credit to Landlord within said five (5) day period, then in such case and notwithstanding anything in Article 17 of this Lease Agreement to the contrary, an incurable default by Tenant shall have occurred under this Lease Agreement not requiring written notice by Landlord and Landlord may, at its option, draw upon the Letter of Credit for the full remaining amount of the Letter of Credit.

B. In the event of the failure by Tenant to extend, renew and/or replace an expiring Letter of Credit with a substitute Letter of Credit at least thirty (30) days prior to the stated expiration date of such Letter of Credit, then in such case and notwithstanding anything in Article 17 of this Lease Agreement to the contrary, an incurable default by Tenant shall have occurred under this Lease Agreement not requiring written notice

by Landlord and Landlord may, at its option, draw upon the Letter of Credit for the full amount of the Letter of Credit.

In the event Landlord shall draw upon the full amount (or in the case of subpart A above, the full remaining amount) of the Letter of Credit pursuant to the foregoing provisions of this Article, Landlord may, in addition to applying such proceeds to such other amounts as are payable to Landlord under Article 17 of this Lease Agreement following a default by Tenant, apply the proceeds of such Letter of Credit to Landlord’s Unamortized Transaction Costs, which Unamortized Transaction Costs shall, without further act or notice by Landlord, automatically become due and payable in full. For purposes of this Article, the “Unamortized Transaction Costs” shall mean the then unamortized amount of the Transaction Costs assuming that the total amount of such Transaction Costs together with interest thereon at the rate of twelve percent (12%) per annum is being amortized in equal monthly installments over the initial Term of this Lease Agreement. As used in this Article, the “Transaction Costs” shall mean any and all of the following: (i) any Tenant Improvement Allowance furnished by Landlord pursuant to Exhibit D of this Lease Agreement, (ii) any Leasing Commissions paid by Landlord to Landlord’s broker and/or Tenant’s broker pursuant to Article 41 of this Lease Agreement, and (iii) any free or abated Base Rental under Article 42 of this Lease Agreement and/or free or abated Additional Rental under Article 3 of this Lease Agreement for Real Estate Taxes and Operating Expenses.

Tenant understands that its potential liability under this Lease Agreement is not limited to the amount of the Letter of Credit. Application of the proceeds of the Letter of Credit from time to time by Landlord shall not constitute a waiver, but is in addition to all other remedies available to Landlord under this Lease Agreement and under law.

52. HVAC Repair and Replacement. Tenant’s obligations as set forth in Article 6 of the Lease with respect to the maintenance, repair and replacement, if necessary, of heating and air conditioning fixtures, equipment, and systems, are modified as follows: If the HVAC equipment requires replacement during the Term of the Lease, Landlord shall pay for the cost of such replacement. Tenant shall reimburse Landlord for said replacement costs based on the following formula in equal monthly payments:

Number of months remaining in Lease Term	x	Replacement Cost
One Hundred Forty-Four Months

53. Tenant Visitor Log Requirement. Landlord agrees that upon any entry to the Premises, by Landlord, its representatives, and any visitors provided access to the Premises by the Landlord, all individuals must provide the following information: printed full name, time and date of entry and departure, place of employment, purpose of entry, and signature. Tenant shall make a visitor log book available in the reception area of the Premises for the purpose of recording such information.

Landlord:		West Glen Development, LLC
		A Minnesota limited liability company

Date:	3/25/14	By:	/s/ Bradley L. Moen
			Bradley L. Moen, Vice President

Date:	3/11/14	By:	/s/ Michael J. Leuer
			Michael J. Leuer, Governor

Tenant:		Celcuity, LLC
		A Minnesota limited liability company

Date:	3/11/14	By:	/s/ Brian F. Sullivan
		Name:	Brian Sullivan
		Its:	CEO

EXHIBIT A

LEGAL DESCRIPTION OF PROPERTY

Lot 1, Block 1, West Glen Corporate Center, Hennepin County, Minnesota

EXHIBIT B
PREMISES

EXHIBIT C

BUILDING RULES AND REGULATIONS

1. Any sign, lettering, picture, notice or advertisement installed on or in any part of the Property and visible from any exterior or interior common area of the “Complex” or from the exterior of the Property, shall be installed at Tenant’s sole cost and expense, and in such manner, character and style as Landlord may approve in writing. Anything herein to the contrary notwithstanding, approval as to signs shall be subject to Landlord’s approval that may be withheld in Landlord’s sole discretion. In the event of a violation of the foregoing by Tenant, Landlord may remove the same without any liability and may charge the expense incurred by such removal to Tenant. The term “Complex” shall be defined to mean all real property on which the eight buildings, driveways, parking areas, landscaped areas and related common areas, commonly referred to as “West Glen Development I,” is located in the City of Plymouth, Minnesota.

2. Tenant, its employees, customers, invitees and guests shall not obstruct sidewalks, entrances, passages, corridors, vestibules, halls, or stairways in and about the Complex which are used in common with other tenants and their employees, customers, guests and invitees, and which are not a part of the property of Tenant. Tenant shall not place objects against glass partitions or doors or windows that would be unsightly from the Complex corridors or from the exterior of the Complex and will promptly remove any such objects upon notice from Landlord.

3. Tenant shall not make excessive noises, cause disturbances or vibrations, use or operate any electrical or mechanical devices that emit excessive sound or other waves, disturbances or create obnoxious odors, nor operate any device/equipment for radio/television broadcasting or reception from or within the Complex or elsewhere and shall not place or install any projections, antennas, aerials or similar devices inside or outside the Property or on the Complex.

4. Tenant shall not waste electricity, water or vestibule heat furnished by Landlord, if any, and shall cooperate fully with Landlord to ensure the most effective operation of the Complex’s heating and air conditioning systems.

5. Tenant assumes full responsibility for protecting its space from theft, robbery and pilferage, which includes keeping doors locked and other means of entry to the Property closed and secured at all times.

6. In no event shall Tenant bring into the Complex flammables, such as gasoline, kerosene, naphtha, benzene, explosives or any other article of intrinsically dangerous nature. If, by reason of the failure of Tenant to comply with the provisions of this subparagraph, any insurance premium for all or any part of the Complex shall at any time be increased, Tenant shall make immediate payment of the whole of the increased insurance premium, without waiver of any of Landlord’s other rights at law or in equity for Tenant’s breach of this Lease. Any permitted items must be stored in a fireproof cabinet.

7. Tenant shall comply with all applicable federal, state and municipal laws, ordinances and regulations, and building rules and shall not directly or indirectly make any use of the Property which may be prohibited by any of the foregoing or which may be dangerous to persons or property or may increase the cost of insurance or require additional insurance coverage.

8. Landlord shall have the right to prohibit any advertising by Tenant which in Landlord’s reasonable opinion tends to impair the reputation of the Complex or its desirability as a building complex for office/warehouse use, and upon written notice from Landlord, Tenant shall refrain from or discontinue such advertising.

9. The Property shall not be used for cooking (as opposed to heating of food), lodging, sleeping or for any immoral or illegal purpose.

10. Unless expressly permitted by Landlord, no additional locks or similar devices shall be attached to any door or window and no keys other than those provided by Landlord shall be made for any door. If more than two keys for one lock are desired by Tenant, Landlord may provide the same upon payment by Tenant. Upon termination of this Lease or of Tenant’s possession, Tenant shall surrender all keys of the Property and shall explain to Landlord all combination locks on safes, cabinets and vaults.

11. Any carpeting cemented down shall be installed with a releasable adhesive. In the event of a violation of the foregoing by Tenant, Landlord may charge the expense incurred by removal to Tenant.

12. The restrooms, drinking fountains and other plumbing fixtures shall not be used for any purpose other than those for which they are constructed, and no sweepings, rubbish, rags, coffee grounds or other substances shall be disposed of therein. All damages resulting from any misuse of the fixtures shall be borne by Tenant who, or whose employees, agents, visitors or licensees have caused same. No person shall waste water by interfering or tampering with the faucets or otherwise.

13. Tenant shall not overload any utilities serving the Property.

14. No dog or other animal shall be allowed in the Building or within/on the Business Park’s grounds.

15. All loading/unloading, receiving/delivery of goods/supplies or disposal of garbage/refuse shall be made only through entryways provided for such purposes. Tenant shall be responsible for any damage to the Complex or the property of its employees or others and injuries sustained by any person whomsoever resulting from the use or moving of such articles in or out of the Property, and shall make all repairs and improvements required by Landlord or governmental authorities in connection with the use or moving of such articles.

16. All safes, equipment or other heavy articles shall only be used by Tenant in a manner which will not interfere with or cause damage to the Property or the Complex in which they are located, or to the other tenants or occupants of said Complex. Tenant shall be responsible for any damage to the Building or the property of its employees or others and injuries sustained by any person whomsoever resulting from the use or moving of such articles in or out of the Property, and shall make all repairs and improvements required by Landlord or governmental authorities in connection with the use or moving of such articles.

17. Canvassing, soliciting, and peddling in or about the Complex is prohibited and each Tenant shall cooperate to prevent the same.

18. Wherever in these Building Rules and Regulations the word “Tenant” occurs, it is understood and agreed that it shall mean Tenant’s associates, employees, agents, clerks, invitees, and visitors. Wherever the word “Landlord” occurs, it is understood and agreed that it shall mean Landlord’s assigns, agents, employees, and visitors.

19. Landlord shall have the right to enter upon the Property at all reasonable hours for the purpose of inspecting the same.

20. Landlord shall have the right to enter the Property at hours convenient to Tenant for the purpose of exhibiting the same to prospective tenants.

21. Tenant, its employees, customers, invitees and guests shall, when using the parking facilities in and around the Complex, observe and obey all signs regarding fire lanes and no parking zones, and when parking always park between the designated lines. Landlord reserves the right to tow away, at the expense of the owner, any vehicle that is improperly parked or parked in a no parking zone. All vehicles shall be parked at the sole risk of the owner, and Landlord assumes no responsibility for any damage to or loss of vehicles. No vehicles shall be parked overnight, except for vehicles owned by persons working overnight.

22. In case of invasion, mob, riot, public excitement, or other commotion, Landlord reserves the right to prevent access to the Complex during the continuance of the same by closing the doors or otherwise, for the safety of the tenants or the protection of the Complex and the property therein. Landlord shall in no case be liable for damages resulting from any error or action taken with regard to the admission to or exclusion from the Complex of any person.

23. All entrance doors to the Property shall be locked when the Property is not in use. All common corridor doors, if any, shall also be closed during times when the heating and air conditioning equipment in the Complex is operating so as not to dissipate the effectiveness of the system or place an overload thereon.

24. No awning or other projection shall be attached to the outside walls of the Complex. No curtains, blinds, shades or screens visible from the exterior or interior common area of the Complex or visible from the exterior of the Property, shall be attached to, hung in, or used in connection with any window or door of the Property without the prior written consent of Landlord. Such curtains, blinds, shades, screens or other fixtures must be of a quality, type, design and color, and attached in manner approved by Landlord.

25. Landlord reserves the reasonable right at any time to rescind, alter or waive, in whole or in part, any of these Rules and Regulations when deemed necessary, desirable, or proper, in Landlord’s judgment, for its best interest or for the best interest of the tenants of the Complex.

26. Any trash dumpsters must be kept inside the Premises.

27. No outside storage of materials is allowed. (This includes trailer storage parked longer than 96 hours.)

28. To the extent these rules are in conflict with the terms of the Lease, the terms of the Lease shall rule and govern.

29. Tenant and Tenant’s employees, agents, visitors and licensees shall observe faithfully and comply strictly with the foregoing rules and regulations and such other and further appropriate rules and regulations as Landlord or Landlord’s agent may from time to time adopt. Reasonable notice of any additional rules and regulations shall be given in such manner as Landlord may reasonably elect.

EXHIBIT D

BUILDING STANDARD FINISHES

BUILDING STANDARD TENANT LEASE FINISH

DEMISING PARTITION OFFICE WALLS, Shall be 5/8” fire rated gypsum wallboard on 6” metal studs to underside of deck with sound attenuation blanket in stud cavity. WAREHOUSE SEPARATION WALL, Shall be 5/8” fire rated gypsum wallboard on 6” metal studs to underside of deck on warehouse and 5/8 gypsum to 12’ A.F.F. on office side of wall, unless required by code to go to deck, with sound attenuation blanket in stud cavity to 12’ A.F.F. TOILET WALL PARTITION: Shall be 5/8” fire rated gypsum wallboard on metal studs to 12’ A.F.F. with sound attenuation blanket in stud cavity. Gypsum wallboard interior face to office and toilet rooms shall be taped, bedded and sanded to accept scheduled wall finish. Gypsum wallboard interior to warehouse shall be fire taped only when required by code.

INTERIOR PARTITIONS: Shall be 5/8” fire rated gypsum wallboard on 3-5/8” metal studs to the underside of suspended ceiling grid at 10’ 0” above finished floor. Gypsum wallboard is taped, bedded and sanded to accept scheduled wall finish. Gypsum wallboard applications to the inside face of the exterior wall, in office areas only, shall extend to 10’ 0” above finish floor, applied to metal furring strips and be taped, bedded and sanded to accept scheduled wall finish.

FLOOR COVERING: Shall be selected from either 30-32 oz. cut pile nylon or 22-26 oz. level loop nylon in building standard colors in office areas. Carpet shall be directly glued down on concrete floor slab. Carpet base shall be 4” carpet base in building standard color. Warehouse area concrete floor slabs have been Spray-cured.

CEILING HEIGHTS/CEILING SUSPENSION SYSTEM AND ACOUSTICAL CEILING TILE: Shall be 24” X 48” lay-in panel in 15/16” exposed white suspended steel grid at 10’ 0” clear height in office area. The warehouse ceiling is exposed structure, Grey decking, and grey- primed bar joist, at 24’ 0” average clear height to bottom of bar joists.

WALL FINISHES: Two coats of scrubbable flat latex wall paint on office walls in building standard paint manufacturers’ colors, including up to 20% deep tone accent colors.

INTERIOR DOORS: Shall be 3’ 0” x 7’ x 1-3/4” solid core red oak veneer doors with light oak stain and painted hollow metal frames with Brushed Chrome finish hardware. Wood frame optional at additional cost. Sidelights are optional at additional cost. One door, door frame and associated hardware will be provided per 300 square feet of office space including the main entrance.

RESTROOMS: Shall consist of two toilet room facilities including all plumbing fixtures to code, exhaust fan and hot water heater. Walls will be painted gypsum board with ceramic tile to 4’ 0“above finish floor on fixture wall only and ceramic base throughout. Ceramic tile floor and base shall be provided in toilet rooms. Toilet room ceiling will be 2’ x 4’ acoustical ceiling tile. Toilet accessories will include a toilet paper holder and metal toilet partitions (when necessary). All toilet rooms will be handicap accessible.

MECHANICAL: Gas-fired roof top heating/air conditioning units for office area, metered to each tenant with controls in tenant space. Sized for 1 ton air conditioning load for 450 square feet of office area. Warehouse space heating shall be sized for the average of 40 BTU per square foot, (assuming the presence of 1 rolling overhead exterior door in warehouse space).

PLUMBING: Toilet room fixtures shall consist of a white porcelain handicap accessible floor mount toilet, a white porcelain lavatory and electric hot water heater sized to service restroom requirements. A handicap

accessible drinking fountain will be provided. A commodity wall hung janitor sink will be provided, recessed behind doors when necessary.

FIRE PROTECTION: Wet pipe Class 4 sprinkler system and fire protection controls are installed in building shall as per regulatory codes. One semi-recessed head per 225 square feet in the office area and one head per 130 square feet in the warehouse area will be provided. Head relocation, if required by tenant plan, is done under tenant lease finish cost.

ELECTRICAL SERVICE: Shall consist of 120/208 volt, 3-phase service, amp service complete with distribution panel and circuit breakers for only equipment provided.

ELECTRICAL RECEPTACLES: Shall be duplex receptacles providing two receptacles per office space and one duplex receptacle in warehouse located at panel. One light switch will be provided per 200 square feet of office. Two switches allowed per warehouse space. All receptacle and switch plate covers shall be ivory color.

TELEPHONE: One 4’ x 4’ plywood telephone board for mounting (equipment by others) will be provided. NO phone cable or equipment will be provided or installed by Landlord. Any communication or computer cable must be fire rated for installation in the air plenum ceiling.

LIGHT FIXTURES: Shall be 2’ x 4’ recessed fluorescent light fixtures with acrylic prismatic Fluorescent Fixtures lens, four cool white T-8 lamps, one fixture provided per 80 square feet of office. Twenty-five (25) 30-foot candles of light provided in warehouse. The standard warehouse lighting will be 2 – Metal Halide High bay fixtures per 40’ x 40’ bay ..

DOCK EQUIPMENT: 2 – Dock bumpers will be provided at each dock door. Dock levelers and dock seals are available for an additional cost. If levelers are included in the Tenants lease, the standard dock leveler size provided will be 6’ wide X 8’ long with a 30,000 lb rating. Tenants can upgrade leveler capacity for an additional cost.

IMPROVEMENTS PROVIDED AT LESSEE’S EXPENSE

All improvements constructed to the Premises that are in addition to the tenant improvements listed in the Lease Addendum of this Exhibit shall be approved by Lessor and the cost thereof shall be paid by Lessee.

DESIGN OF TENANT IMPROVEMENTS

Lessee shall retain the services of Lessor’s architect for the purposes of office and warehouse layouts to prepare the necessary drawings including without limitation, Basic Plans and Final Plans (Lessee’s Plans) for construction of Lessee improvements. All Lessee’s Plans shall be subject to approval of Lessor.

EXHIBIT E

SIGN CRITERIA

GENERAL:

1. Tenant shall be required to identify the premises with a sign. All such signs shall be subject to the requirements and limitations as outlined hereafter or as Landlord shall determine to be necessary, in its sole judgment.

2. Tenant’s signs shall be store identity sign ONLY and shall be placed on the exterior wall in sign area designated by Landlord.

3. Light sources may be concealed by translucent material. Sign letters or components may be illuminated with lamps contained fully within the depth of the letter. In any event, light sources shall not exceed 100-foot lamberts.

PROHIBITION :

The following types of signs or sign components shall be PROHIBITED:

(a)

Signs employing moving or flashing lights.

(b)

Signs employing exposed ballast boxes or transformers.

(c)

Sign manufacturers’ names, stamps or decals.

(d)

Signs employing painted non-illuminated letters.

(e)

Signs of box or cabinet type on metal fascia.

(f)

Signs employing letters with no returns or exposed fastenings.

(g)

Paper or cardboard signs, stickers or decals hung around, on or behind storefront (including glass doors and/or windows).

(h)

Signs placed at right angles to any front.

(i)

Signs purporting to identify leased departments or concessionaires or contained within the premises.

PROCEDURE : Tenant shall submit two (2) drawings of its proposed signage to the Landlord for approval prior to installation of any signage. Tenant must receive Landlord’s written approval prior to installation of its signage. Signs must meet approval of the City of Plymouth, Minnesota, regarding West Glen Development. Sign contractor must obtain a building permit.

FASCIA SIGNS:

(a) Signs shall be composed of individual lit letters and shall be no more than 30 inches in height.

(b) Signs shall be internally illuminated. Lighting fixtures attached to the building to illuminate an unlit sign are prohibited.

(c) Signs may have one line of copy above another line but the total height shall not exceed the designated sign area.

(d) The color of the interior shell and/or the lens of individually lit letters and the color of the light source or the returns for the individually lit letters shall be subject to Landlord’s written approval.

(e) A sign shall not cover more than eighty percent (80%) of the linear distances of the storefront to which it is attached. However, all signs shall be set in at least eighteen inches (18”) from the borders of the Tenant’s lease area. Signs shall be placed to optimally identify the Tenant’s entry. Proposed placement shall be subject to Landlord’s written approval.

(f) Logos may be used in the allocated sign but are subject to the size limitation. There shall be no more than one (1) logo per tenant frontage.

(g) Upon termination of the lease agreement, by lapse of time or otherwise, Tenant shall remove and dispose of its signage at its sole cost and expense.

INTERIOR SIGNS: Neon window signs shall be acceptable on the inside of display windows ONLY. Interior signs shall be subject to Landlord’s written approval as to size, style and color. Interior signs must also be approved by the City of Plymouth.

EXHIBIT F

RATIFICATION AGREEMENT
(Office/Service Lease)

WHEREAS, West Glen Development, LLC, a Minnesota limited liability company (“Landlord”), and Celcuity, LLC , a Minnesota limited liability company (“Tenant”), entered into a lease agreement dated the _____ day of______________, 2014 (the “Lease Agreement”) with respect to Suite 450 of the Building at 16305-36 ^th Avenue, North, Plymouth, Minnesota. Unless otherwise indicated, the terms defined in the Lease Agreement shall have the same meanings when used herein; and

WHEREAS, pursuant to Article 9 of the Lease Agreement, the parties agreed to ratify in writing the following terms of the Lease Agreement.

NOW, THEREFORE, in consideration of the foregoing, the parties hereby agree that:

1. The Term of the Lease Agreement commenced on___________ ____, 20__ and will terminate on _____________ ____, 20___unless sooner terminated in accordance with the provisions of the Lease Agreement.

2. The monthly installments of Base Rent payable for the Premises during the Term are as follows:

Period of Term

Rate Per SF

Monthly Base Rent

Annual Base Rent

3. The Premises contain___________square feet, consisting of___________square feet of office space, ____square feet of warehouse, service or storage space, and __ square feet of shared mechanical space.

4. Tenant acknowledges and agrees that the Premises have been delivered to Tenant by Landlord in the condition required by the Lease Agreement and Tenant has accepted possession of the Premises.

Except as otherwise stated herein, all of the remaining terms and conditions of the Lease Agreement shall continue to be in full force and effect.

Landlord:	West Glen Development, LLC
	A Minnesota limited liability company

Date:	By:
		Bradley L. Moen, Vice President

Date:	By:
		Michael J. Leuer, Governor

Tenant:	Celcuity, LLC
	A Minnesota limited liability company

Date:			By:
			Name:
			Its:

EXHIBIT G

LETTER OF CREDIT

____ __, 2014

________________

c/o West Glen Development, LLC

3600 Holly Lane North, Suite 100

Plymouth, MN 55447

RE:

Irrevocable Letter of Credit

Dear Sir/Madam:

By order of our client, __________________, a _________________, we hereby establish our irrevocable Letter of Credit No.___ in your favor for a sum or sums not to exceed _____________________ and 00/100 Dollars ($___________.00) in the aggregate (the “Maximum Amount”), effective immediately.

This Letter of Credit shall be payable in immediately available funds in U.S. Dollars. Funds under this Letter of Credit are payable to you upon your presentation to us of the original of this Letter of Credit and a statement signed by a person purporting to be an officer or authorized agent of you or a transferee of you, marked “Drawn under Letter of Credit No. _____ of [Name of Issuing Bank]” and stating as follows:

“The undersigned is entitled to make a draw hereunder in the amount of $___________in accordance with that certain Lease Agreement dated___________, 20 _, as may be amended from time to time, between the undersigned or the undersigned’s predecessor in interest, as Landlord and___________or its successor in interest, as Tenant, concerning the leasing of space in the building known as the___________located at _________, ________________, Minnesota.”

Multiple drawings are allowed. If a drawing is presented and paid, the original Letter of Credit will be endorsed and returned to you. If your drawing exhausts the Maximum Amount, we will retain it.

This Letter of Credit shall expire twelve (12) months from the date hereof; but is automatically extendable, so that this Letter of Credit shall be deemed automatically extended, from time to time, without amendment, for one (1) year from the expiration date hereof and from each and every future expiration date, unless at least sixty (60) days prior to any expiration date we shall notify you by certified or overnight mail at the address set forth above that we elect not to consider this Letter of Credit extended for any such additional period.

This Letter of Credit is transferable and may be transferred one or more times. However, no transfer shall be effective unless written notification of such transfer is given to us.

We hereby agree to honor each draft drawn under and in compliance with this Letter of Credit, if duly presented at our offices at ____________________.

This Letter of Credit is subject to the International Standby Practices 1998, International Chamber of Commerce Publication No. 590.

	[ Name of Bank ]

	By:
	Its:

FIRST AMENDMENT TO
COMMERCIAL LEASE

This Amendment, dated this 20 day of March, 2014 by and between West Glen Development, LLC, a Minnesota limited liability company (“Landlord”), and Celcuity, LLC, a Minnesota limited liability company (hereinafter referred to as “Tenant”).

RECITALS

Landlord and Tenant entered into a Commercial Lease dated March 10, 2014, (the “Original Lease”), relating to the real property and building in Plymouth, Hennepin County, Minnesota legally described as Lot 1, Block 1, West Glen Corporate Center (the “Property”) and that certain portion of the Building thereon designated as Suite 450 totaling 4,818 square feet (the “Premises”). Capitalized terms shall have the same definitions as provided in the Original Lease.

Landlord and Tenant wish to amend the Original Lease to permit a change in the Tenant Improvements (as defined in Article 45 of the Addendum to the Original Lease and as shown on page 37 of Exhibit D) and to allow for the amortization of the costs of the change in the Tenant Improvements by adjusting the amount of Base Rent due during the Term of the Lease, all pursuant to the terms and conditions of this Amendment.

LEASE AMENDMENT

Base Rental. Article 42 of the Addendum to the Original Lease shall be revised as follows:

Months	Price Per Square Foot		Monthly
May 1, 2014 to May 31, 2014	$	0	$	0
June 1, 2014 to April 30, 2015	$	10.17	$	4,083.26
May 1, 2015 to April 30, 2016	$	10.42	$	4,183.63
May 1, 2016 to April 30, 2017	$	10.68	$	4,288.02
May 1, 2017 to May 31, 2017	$	10.95	$	4,396.43

Exhibit D. Page 37 only of Exhibit D to the Original Lease shall be replaced by the attached “Exhibit D (Final Version),” which shows the change to the Tenant Improvements by the addition of another door in the Premises. Exhibit D (Final Version) has been approved by each of Landlord and Tenant.

Letter of Credit. The Letter of Credit required pursuant to Article 51 of the Original Lease is attached hereto. The Letter of Credit has been approved by each of Landlord and Tenant.

Confirmation. Except to the extent otherwise defined herein, all terms, conditions and provisions contained within the Original Lease shall remain unchanged and in full force and effect.

Landlord:		West Glen Development, LLC
		A Minnesota limited liability company

Date:	3/25/14	By:	/s/ Bradley L. Moen
			Bradley L. Moen, Vice President

Date:	3/21/14	By:	/s/ Michael J. Leuer
			Michael J. Leuer, Governor

Tenant:		Celcuity, LLC
		A Minnesota limited liability company

Date:	3/20/14	By:	/s/ Brian Sullivan
		Name:	Brian Sullivan
		Its:	CEO

Exhibit D (Final Version)

Replacement page 37 to Original Lease

SECOND AMENDMENT TO

COMMERCIAL LEASE

This Amendment, dated this 31 ^st day of August, 2016 by and between West Glen Development, LLC, a Minnesota limited liability company (“Landlord”), and Celcuity, LLC, a Minnesota limited liability company (hereinafter referred to as “Tenant”).

RECITALS

Landlord and Tenant entered into a Commercial Lease dated March 11, 2014, (the “Original Lease”), relating to the real property and building in Plymouth, Hennepin County, Minnesota legally described as Lot 1, Block 1, West Glen Corporate Center (the “Property”) and that certain portion of the Building thereon designated as Suite 450 totaling 4,818 square feet (the “Premises”). Capitalized terms shall have the same definitions as provided in the Original Lease.

Landlord and Tenant amended the Original Lease pursuant to that certain First Amendment to Commercial Lease, dated March 20, 2014. The Original Lease and the First Amendment shall hereinafter be referred to together as the “Lease.”

Landlord and Tenant wish to further amend the Lease to extend the Term as provided herein.

LEASE AMENDMENT

Term. The term of the lease shall be extended by 12 months. Article 1 of the Lease shall be revised to provided that the Expiration Date shall be the 31 ^st day of May, 2018.

Base Rental. Article 42 of the Addendum to the Original Lease shall be revised as follows:

Months		Price Per Square Foot				Monthly
June 1, 2017 to May 31, 2018		$	10.95			$	4,396.43

Confirmation. Except to the extent otherwise defined herein, all terms, conditions and provisions contained within the Lease shall remain unchanged and in full force and effect

Landlord:		West Glen Development, LLC A Minnesota limited liability company

Date:	8/31/16	By:	/s/ Bradley L. Moen
			Bradley L. Moen, Vice President

Date:	9/1/16	By:	/s/ Michael J. Leuer
			Michael J. Leuer, Governor

Tenant:		Celcuity, LLC
		A Minnesota limited liability company

Date:	8 /31/16	By:	/s/ Brian Sullivan
		Name:	Brian Sullivan
		Its:	CEO

Exhibit 10.13

Clinical Trial Agreement

FB-12 Phase II Study

Between

NSABP Foundation, Inc.

and

Celcuity, LLC

Table of Contents

RECITALS		1

ARTICLE I	DEFINITIONS	1

ARTICLE II	SCOPE OF SERVICE	3

ARTICLE III	PROTOCOL	4

ARTICLE IV	FINANCIAL SUPPORT	6

ARTICLE V	STUDY KITS AND STUDY DRUGS	7

ARTICLE VI	BIOSPECIMEN COLLECTION; TRANSFER AND USE	7

ARTICLE VII	WARRANTIES AND DISCLAIMERS	9

ARTICLE VIII	AUDITS, MONITORING, SITE QUALIFICATION, AND ACCESS TO RESEARCH RECORDS	9

ARTICLE IX	RECORDS AND REPORTS	11

ARTICLE X	FINANCIAL DISCLOSURE AND CONFLICT OF INTEREST	12

ARTICLE XI	CONFIDENTIAL INFORMATION	13

ARTICLE XII	PUBLICATIONS / PRESENTATIONS AND GENERAL PUBLICITY	15

ARTICLE XIII	DATA OWNERSHIP AND INVENTIONS	17

ARTICLE XIV	NOTICE	18

ARTICLE XV	INDEMNIFICATION; INSURANCE	19

ARTICLE XVI	HUMAN SUBJECTS	21

ARTICLE XVII	INDEPENDENT CONTRACTOR	22

ARTICLE XVIII	TERM AND TERMINATION	22

ARTICLE XIX	SEVERABILITY	23

ARTICLE XX	WAIVER	24

ARTICLE XXI	DEBARMENT	24

ARTICLE XXII	FORCE MAJEURE	24

ARTICLE XXIII	GOVERNING LAW	24

ARTICLE XXIV	CERTAIN DISCLOSURES AND TRANSPARENCY	25

ARTICLE XXV	NO TRANSFER OF PROPRIETARY RIGHTS NOT SPECIFIED	25

ARTICLE XXVI	CONFORMANCE WITH LAW AND ACCEPTED PRACTICE	25

ARTICLE XXVII	INTEGRATION	25

ARTICLE XXVIII	AMENDMENTS	25

ARTICLE XXIX	ASSIGNMENT	26

ARTICLE XXX	ENTIRE AGREEMENT	26

ARTICLE XXXI	COUNTERPARTS	26

BINDING EXECUTION		27

Appendices

Appendix A	NSABP Protocol entitled, “An Open-Label Phase II Trial to Evaluate the Efficacy and Safety of Neoadjuvant ACT + Trastuzumab and Pertuzumab in Early Stage HER2-Negative Breast Cancer Patients Selected with a Test Measuring Live Cell HER2 Signaling Transduction (Fact 1), (FB-12),” including the sample Informed Consent Form

Appendix B	Budget, Payment Schedule and Task List

Appendix C	NSABP Ownership of Data/Materials Policy

Appendix D	NSABP Publication Policy

Appendix E	Selected Terms of Agreement for Disclosure to Sites

Clinical Trial Agreement

This Clinical Trial Agreement (together with Appendices as incorporated hereunder, the “Agreement”) is entered into and effective as of May 8, 2017 (the “Effective Date”), by and between NSABP Foundation, Inc., a 501(c)(3) non-profit Pennsylvania membership corporation with its principal office and place of business located at Nova Tower 2, Two Allegheny Center, Suite 1200; Pittsburgh, PA 15212-5234 (“NSABP”), and Celcuity, LLC, with its principal office and place of business located at 16305 – 36 ^th Avenue North, Suite 450; Minneapolis, MN 55446 (“Celcuity”) (each, a “Party” and, collectively, the “Parties”).

RECITALS

Whereas, NSABP conducts research and educational activities designed to improve the outcome for cancer patients via improved therapeutic and prevention modalities. The activities contemplated by this Agreement are of interest and benefit to both Parties, and such activities will further NSABP’s medical research objectives in a manner consistent with its non-profit, scientific and charitable status; and

Whereas, Celcuity, is an early-stage venture capital-backed biotechnology company developing novel diagnostic tests that functionally analyze diseased live cells; and

Whereas, the Parties desire to conduct in the United States a clinical research study entitled, “An Open-Label Phase II Trial to Evaluate the Efficacy and Safety of Neoadjuvant Act + Trastuzumab + Pertuzumab in Early State HER2-Negative Breast Cancer Patients Selected with a Test Measuring Live Cell HER2 Signaling Transduction (Fact 1), (FB-12)” which may be amended from time to time; and

NOW, THEREFORE, for and in consideration of the mutual covenants herein contained, the Parties hereby enter into this Agreement under the terms and conditions herein set forth.

ARTICLE I
Definitions

1.1

The following terms, whether used in the singular or plural, have the respective meaning set forth below.

1.2

“AE” or “Adverse Event” shall have the meaning set forth in Section 9.3(b).

1.3

“Applicable Law” shall have the meaning given in Section 3.2 of this Agreement.

1.4

“Celcuity Results” shall have the meaning given in Section 6.3.2 of this Agreement.

1.5

“CELx HER2” shall mean the Celcuity CELx HER2 Signaling Function® Test, as described in more detail hereunder.

1.6

“Claims” shall have the meaning given in Section 15.1 of this Agreement.

1.7

“Confidential Information” shall have the meaning given in Section 11.1 of this Agreement.

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1.8

“CRFs” shall mean the case report forms for the Study, and shall include electronic CRFs (“eCRFs”) and the data contained therein.

1.9

“Data” shall mean all data generated in the course of conducting the Study; provided, however, that Data will not include Materials Data. For purposes of clarity, Data does not include patient medical records or other Participating Site source documentation, which shall remain the property of the Participating Site.

1.10

“Disclosing Party” shall have the meaning given in Section 11.2 of this Agreement.

1.11

“FDA” shall mean the United States Food and Drug Administration, including any successor agency.

1.12

“Funding” shall have the meaning given in Section 4.1 of this Agreement.

1.13

“Genentech” shall mean Genentech, Inc.

1.14

“Good Clinical Practices” or “GCP” shall have the meaning defined in the most recent version of any FDA rules, regulations and guidelines on good clinical practice.

1.15

“IB” shall mean the investigator brochure for the Study Drugs hereunder, as it may be updated and amended from time to time by NSABP.

1.16

“IND” shall mean an Investigational New Drug Application under 21 CFR Part 312.

1.17

“Informed Consent Form” or “ICF” shall mean the informed consent form that is to be signed by all Subjects enrolled in the Study, together with any amendments thereto.

1.18

“Inventions” shall have the meaning given in Section 13.3 of this Agreement.

1.19

“Investigator” shall mean a licensed health care professional who is a qualified clinical investigator, and who is employed or otherwise engaged by NSABP or Participating Sites, in accordance with this Agreement, to conduct the Study under the Protocol pursuant to 21 CFR § 312.

1.20

“IRB” shall mean the duly appointed and relevant ethics institutional review board established pursuant to 21 CFR Part 56 for the purpose of reviewing clinical investigations, including investigations to be conducted at a Participating Site.

1.21

“Joint Confidential Information” shall have the meaning given in Section 6.3.3 of this Agreement.

1.22

“Materials” shall have the meaning set forth in Section 6.2.

1.23

“Materials Data” shall have the meaning set forth in Section 6.2.

1.24

“NSABP Indemnitees” shall have the meaning given in Section 15.1 of this Agreement.

1.25

“Other Inventions” shall have the meaning set forth in Section 13.5.

1.26

“Participating Sites” shall mean Research Collaborator and its Research Sites.

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1.27

“Protocol” or “FB-12” shall mean the NSABP protocol entitled “An Open-Label Phase II Trial to Evaluate the Efficacy and Safety of Neoadjuvant ACT + Trastuzumab and Pertuzumab in Early Stage HER2-Negative Breast Cancer Patients Selected with a Test Measuring Live Cell HER2 Signaling Transduction (Fact 1),” which will include the sample Informed Consent Form and which the Parties agree will be deemed attached hereto as Appendix A and incorporated into this Agreement once finalized, together with any modifications and amendments to the Protocol made in accordance with this Agreement and other Protocol related documents necessary for the effective communications of the Protocol.

1.28

“Receiving Party” shall have the meaning given in Section 11.2 of this Agreement.

1.29

“Research Collaborator” shall mean an institution that has been qualified by NSABP to participate in the Study.

1.30

“Research Site” shall mean a site that is cooperating with Research Collaborator and, through that cooperation, is participating in the Study. A Research Site may be a legal affiliate/subsidiary of Research Collaborator or it may be a separate legal entity.

1.31

“SOP” shall mean Standard Operating Procedure.

1.32

“Sponsor” shall mean NSABP as the holder of the IND for the Study.

1.33

“Study” shall mean all work to be carried out pursuant to the Protocol and this Agreement.

1.34

“Study Drugs” shall mean Trastuzumab and Pertuzumab supplied for the Study by Genentech.

1.35

“Study Kit” shall mean the Celcuity CELx Specimen Collection Kit.

1.36

“Study Personnel” shall mean the personnel conducting the Study at Participating Sites, including Investigators.

1.37

“Subjects” shall mean those individuals who enroll in the Study.

All other capitalized terms used herein shall have the meaning expressly ascribed to them herein.

ARTICLE II
Scope of Service

2.1

Norman Wolmark, M.D., shall be the NSABP Principal Investigator for the Study in accordance with applicable NSABP policies.

2.2

The Parties will each appoint a liaison to review and coordinate Study progress.

2.3

NSABP, through its Research Collaborators and headquarters components, shall exercise commercially reasonable efforts consistent with good clinical practice and Applicable Law to carry out the Study.

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2.4

Celcuity shall use commercially reasonable efforts to timely perform its obligations hereunder (a) in a good and scientific manner; (b) in accordance with all standard laboratory, and clinical practices; and (c) in compliance with all Applicable Law.

2.5

This Agreement sets forth the terms and conditions pursuant to which Celcuity will fund the conduct and performance of the Study and the terms and conditions pursuant to which (a) NSABP will conduct the Study; and (b) Celcuity will provide CELx HER2 testing and results. This Agreement is not intended to result in an exclusive relationship for the conduct of clinical studies by NSABP. Celcuity and NSABP both retain the right to collaborate with other entities to conduct the types of clinical trials contemplated by this Agreement.

2.6

The Parties acknowledge and agree that Study Drugs are to be provided free of charge by Genentech, Inc. (“Genentech”). NSABP will enter into an agreement with Genentech for the supply of the Study Drugs to be shipped to NSABP’s designated drug distributor. NSABP will use reasonable efforts to have such agreement provide that it may not be terminated by either party other than for reasons comparable to those provided in Section 18.2, clauses (a) through (d), of this Agreement. The Parties agree that, if for any reason, the Study Drugs are not available for the Study, such as if NSABP and Genentech are unable to agree to contractual terms, the Study Drugs are not available, or due to other circumstances, the Study will not be conducted and either Party may terminate this Agreement in accordance with Article XVIII.

2.7

NSABP will, enter into signed, written contracts with its Research Collaborators who wish to participate in the Study to (a) require that all Study Personnel are qualified to conduct the Study; (b) require that the Study is conducted under the direction of the applicable Investigator at a Participating Site and under the direction of the NSABP Principal Investigator and with the prior approval and on-going review of all appropriate and necessary review authorities; (c) obligate Research Collaborators, who shall obligate their respective Research Sites, to terms and conditions with respect to the Study that are required pursuant to this Agreement, and (d) comply with Applicable Laws. For clarification purposes, references herein to contractual obligations of Participating Sites shall include the requirement that each Research Collaborator impose such obligations on its Research Sites.

ARTICLE III
Protocol

3.1

The Study is of mutual interest to NSABP and Celcuity. Celcuity’s willingness to provide the Study funding and perform the CELx HER2 testing pursuant to this Agreement is predicated upon its review of the Protocol and NSABP’s agreement to conduct the Study in accordance with the Protocol and the terms and conditions of this Agreement.

3.2

The Study will be performed in accordance with the terms and conditions contained herein, the Protocol, and Applicable Laws. “Applicable Laws” shall mean, as applicable, (a) all applicable requirements of the U.S. investigational new drug (“IND”) regulations (Title 21, Part 312.1 et seq .); (b) GCP, as may be amended from time to time; (c) the Code of Federal Regulations governing informed consent and IRBs (Title 21, Parts 50 and 56) and privacy of patient health information (Title 45, Parts 160 and 164 promulgated pursuant to the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”)); and (d) other applicable federal, state, provincial, and local laws, legally binding

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regulations, and guidelines having the force and effect of law. Celcuity acknowledges that NSABP does not consider itself a HIPAA-covered entity; however, NSABP shall collect, use, store, access, and disclose Personal Health Information collected from Study Subjects only as permitted by the IRB approved informed consent form or HIPAA authorization form obtained from a Study Subject. Celcuity agrees that, to the extent Celcuity and any Celcuity designee has access to Protected Health Information, Celcuity and such Celcuity designee shall collect, use, store, access, and disclose Personal Health Information collected from Study Subjects only as permitted by the IRB approved informed consent form or HIPAA authorization form obtained from a Study Subject.

3.3

NSABP has filed and will maintain an IND with the FDA for the Study and may cross-reference an appropriate IND held by Genentech.

3.4

Celcuity has filed and will maintain an IDE in good standing with the FDA for the duration of the Study. Without limitation, Article XI shall apply to any Confidential Information NSABP supplies directly to Celcuity in support of Celcuity’s IDE for the Study.

3.5

Initiation of the Study at a Participating Site shall not begin until the relevant IRB approval for such Participating Site is obtained by such Participating Site.

3.6

NSABP or Celcuity may at any time suggest amendments to the Protocol as may appear desirable; such amendments shall be discussed between NSABP and Celcuity and (except as set forth below) such amendments may be made binding only upon mutual, signed written agreement by the Parties.

(a)

If such amendments are requested by NSABP, NSABP will promptly notify Celcuity of the same and submit to Celcuity a written estimate of the difference in costs arising from the amendments requested by NSABP. Celcuity, at its sole discretion, shall decide whether it will pay any increased costs or provide any additional CELx HER2 testing, if required in the Protocol amendment. If such amendment requires additional Study Drugs, implementation of the amendment will be contingent on Genentech’s agreement to supply the additional Study Drugs free of charge.

(b)

If such amendments are requested by Celcuity and have been agreed to by NSABP, and such amendments will increase or decrease the costs of the Study or require additional CELx HER2 testing, NSABP will promptly notify Celcuity of the same and submit to Celcuity a written estimate of the difference in costs and/or requirements for the additional CELx HER2 testing arising from the amendments requested. Celcuity, in its reasonable discretion, shall decide whether NSABP shall implement such amendments. If such amendment requires additional Study Drugs, implementation of the amendment will be contingent on Genentech’s agreement to supply the additional Study Drugs free of charge.

(c)

Notwithstanding anything to the contrary herein, if NSABP reasonably believes that generally accepted standards of clinical research and/or medical practice, or other appropriate concerns, justify an amendment to the Protocol such amendment shall become effective thirty (30) days after Celcuity’s receipt of notice thereof from NSABP. However, any such amendment shall not impose on

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Celcuity any obligation to provide additional financial support unless Celcuity has agreed to the same in a signed writing or amendment to this Agreement.

(d)

NSABP will make all required submissions to the IND in connection with any amendment to the Protocol made pursuant to this Section 3.6.

ARTICLE IV
Financial Support

4.1

In consideration for NSABP’s activities pursuant to this Agreement, including those obligations specifically undertaken by NSABP as shown in the Task List attached hereto as Appendix B (“Budget, Payment Schedule, and Task List”), Celcuity agrees to pay NSABP a total sum as set forth in Appendix B in accordance with the terms and conditions set forth in Appendix B (the “Funding”). NSABP agrees to use the funding provided by Celcuity solely to conduct the Study.

(a)

The total amount payable, as set forth in Appendix B assumes completed enrollment in the Study of the number of Subjects set forth in A ppendix B , or the number ultimately determined appropriate to reach the Study endpoints using an intent to treat analysis at a level of statistical significance.

(b)

Celcuity shall not be obligated to make any payments to NSABP in excess of the amount set forth in Appendix B unless Celcuity and NSABP agree to such excess amount in a signed, written amendment to this Agreement.

(c)

NSABP will submit invoices for all amounts due to it by Celcuity under this Agreement as specified in Appendix B . NSABP’s Tax Identification Number is 25-1781357.

4.2

If the attendance of NSABP personnel and/or the Participating Site(s)’ Investigator(s) is requested at any meeting necessary to provide information regarding the Study, Celcuity shall reimburse NSABP for reasonable and necessary travel and lodging expenses incurred by the travelers , to attend such meeting(s). Celcuity shall make such reimbursements within thirty (30) days of receiving an invoice from NSABP for reimbursement of the expenses and acceptable detailed documentation of such expenses.

4.3

NSABP agrees that the amounts payable or otherwise provided by Celcuity under this Agreement represent amounts actually and reasonably required to enable the work to be performed by NSABP and the Participating Sites in connection with the Study. The Parties agree that the amounts have not been determined in a manner that takes into account the volume or value of any referrals or business, nor are such amounts made in exchange for any explicit or implicit agreement to purchase, prescribe, recommend, or provide a favorable formulary status for any Celcuity product or service.

4.4

NSABP agrees that for all items required under the Protocol for which Celcuity has agreed to provide compensation as set forth in this Agreement, Celcuity will be the sole source of monetary compensation. Accordingly, NSABP agrees, and shall obligate all Research Collaborators to, and to obligate their respective Research Sites to, agree not to charge any Subject, nor submit claims to, or otherwise seek reimbursement from, third party payors or any federal healthcare program for the CELx HER2 testing provided hereunder; for any examinations, tests or procedures paid by Celcuity hereunder; and all

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claims that NSABP or the Participating Sites submit for reimbursement to any third party payor or any federal healthcare program for any procedure that was paid for through the funding provided by Celcuity provided pursuant to this Agreement by or on behalf of Celcuity at no cost to NSABP will comply with Applicable Law.

ARTICLE V
Study Kits and Study Drugs

5.1

Study Kits . Without charge to NSABP, Celcuity shall supply the Study Kits for use in the Study and in accordance with the Protocol, in the quantities that have been determined sufficient to meet the requirements of the Study.

(a)

Study Kits Supply . Celcuity, at its expense, shall be responsible for the supply, handling and delivery of the Study Kit up to the point of delivery to NSABP’s Participating Sites, in accordance with the terms of this Agreement, the Protocol, and any Applicable Law relating thereto. Celcuity will pay and be responsible for all costs associated with use and management of the Study Kits in the Study (including (without limitation) for delivery of Study Kits to Participating Sites).

(i)

Title; Ownership . The Parties acknowledge and agree that title to, ownership of all Study Kits provided for the Study hereunder shall remain with Celcuity.

(ii)

Receipt, Storage, AND RETURN of Study Kit . NSABP shall obligate its Research Collaborators to provide NSABP with (A) confirmation of receipt; (B) prompt written notice of any damaged Study Kit, and/or of any inadequacy of the supplied Study Kit, and (C) confirmation that the Study Kit has been used and handled in accordance with Protocol requirements, Celcuity’s written instructions, and in accordance with Applicable Law.

(b)

Study Drugs Supply .

(i)

Supply of Study Drugs . The Study Drugs are intended to be supplied by Genentech through a contract between NSABP and Genentech.

(ii)

Use of Study Drugs . NSABP shall obligate its Research Collaborators, who shall obligate their Research Sites, to store, use, and dispose of Study Drugs in accordance with the Protocol, Genentech’s and/or NSABP’s written instructions, and Applicable Law.

ARTICLE VI
Biospecimen Collection; Transfer and Use

6.1

NSABP will arrange with its Research Collaborators participating in the Study for the collection of Materials as set forth in the Protocol. The Parties acknowledge and agree that there will not be any residual Materials remaining after the CELx HER2 testing is completed.

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6.2

Transfer . NSABP’s Research Collaborators participating in the Study shall be directed to send the biospecimens collected by them according to the Protocol and related Study instructions (the “Materials”). For purposes of this Agreement, “Materials” of NSABP shall mean the tissue samples and all the molecular constituents of the samples (including all constituents extracted from such samples), any progeny and unmodified derivatives thereof. NSABP shall provide, and direct such Participating Sites to provide, to Celcuity certain limited information relating to the Materials, to the extent specifically described in the Protocol and related Study instructions (the “Materials Data”); provided, however, that in no event will any Participating Site be directed to provide Celcuity with any clinical data or any information from which the identity of any Subject could be ascertained, such as personal health information (the “PHI”) or other clinical data not yet de-identified. The Materials, including all constituent portions thereof and all property therefrom (including any residual thereto), the Materials Data, and all proprietary rights to the foregoing, shall remain the sole and exclusive property of NSABP. Celcuity agrees that the NSABP’s Ownership of Data and Materials Ownership Policy (attached hereto as Appendix C ) shall apply and is incorporated by reference herein. Celcuity agrees that its use of the Materials and Materials Data shall be governed by the IRBs of record regarding the Study. Celcuity shall promptly comply with all conditions regarding use of the Materials and Data imposed by the IRBs of record. The Materials Data and Materials shall be deemed Confidential Information of NSABP.

6.3

Use . Subject to the terms and conditions of this Agreement, NSABP hereby grants Celcuity a non-exclusive, fully paid-up, non-transferable license to use the Materials and the Materials Data during the term hereof solely to perform its obligations hereunder, to perform the Study, and in accordance with the Protocol and related study instructions. None of the Materials or Materials Data may be transferred to any third party. No license is granted hereby for use of the Materials or Materials Data for any purposes other than those expressly set forth in this Section, including (without limitation) in any research involving human subjects or for the purpose of directly producing any product or directly providing any service, which product or service is sold or otherwise made commercially available.

6.3.1

Upon (a) conclusion of the work to be performed as part of the Study; or (b) termination of this Agreement in accordance with Article XVIII; or (c) upon request by NSABP, Celcuity agrees to discontinue use of the Materials and/or Materials Data and will, to the extent permitted by Applicable Law or regulation, arrange for the prompt return to NSABP of the Materials and Materials Data and items which contain any of the Materials and/or Materials Data, or for the lawful disposal of all unused Materials and Materials Data, as elected by NSABP.

6.3.2

Subject to NSABP’s rights in and to the Materials and Materials Data, and all proprietary rights thereto, any data and results generated solely by or on behalf of Celcuity from analysis of the Materials and Materials Data pursuant to the Protocol (“Celcuity Results”), and all proprietary rights thereto, shall be solely owned by Celcuity. The Celcuity Results shall be deemed Confidential Information of Celcuity.

6.3.3

Subject to NSABP’s rights in and to the Materials Data and Materials, and all proprietary rights thereto, and subject to Celcuity’s rights in and to the Celcuity Results, and all proprietary rights thereto, any data and results jointly developed by Celcuity and NSABP pursuant to research activities performed jointly by the

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Parties hereunder shall be deemed the Confidential Information of both Celcuity and NSABP (“Joint Confidential Information”). For the avoidance of doubt, Joint Confidential Information does not include any Materials Data, Materials, or Celcuity Results.

6.4

Data Access . Celcuity understands and agrees that NSABP will not deliver to Celcuity any clinical data (including PHI) related to the Materials.

6.5

Celcuity Obligations as to Materials . Celcuity shall use only trained personnel to handle the Materials, which shall be done carefully under laboratory conditions which afford adequate biohazard containment and that meet or exceed appropriate minimum safety guidelines. Celcuity shall comply with all applicable federal, state and local laws and regulations concerning the storage, labeling, handling, testing, transportation, use and disposal of the Materials, including (without limitation) the Study Kit.

ARTICLE VII
Warranties and Disclaimers

7.1

EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER OF THE PARTIES MAKES ANY, AND EACH HEREBY DISCLAIMS AND NEGATES ANY AND ALL, REPRESENTATIONS AND WARRANTIES (EXPRESS, IMPLIED, STATUTORY, OR OTHERWISE), WHETHER WRITTEN OR ORAL, EXPRESSED OR IMPLIED, WITH RESPECT TO THE SUBJECT MATTER OF THIS AGREEMENT, INCLUDING ANY AND ALL IMPLIED WARRANTIES OF QUALITY, PERFORMANCE, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR USE, THE PATENTABILITY, SCOPE, OR ENFORCEABILITY OF THE RIGHTS GRANTED HEREIN, AND/OR THE NONINFRINGEMENT OF THIRD PARTY INTELLECTUAL PROPERTY RIGHTS.

ARTICLE VIII
Audits, Monitoring, Site Qualification, and Access to Research Records

8.1

Audits .

(a)

Celcuity (or its authorized representative(s)) may arrange in advance with the NSABP Principal Investigator and NSABP to conduct co-audits of Participating Sites during normal business hours, with such arrangements made for mutually agreeable times in advance with the Participating Sites. Celcuity and NSABP agree to use reasonable efforts to provide at least forty-eight (48) hours’ notice to the Participating Sites and to limit such audits to one (1) day in length. However, upon mutual agreement between Celcuity and NSABP, such audits may be longer than one (1) day in length. It is further agreed that (i) regulatory authorities in the United States and other applicable countries and/or regions, at any time during regular business hours; and (ii) Celcuity, or its authorized representative(s) during regular business hours and by arrangement reasonably in advance with the NSABP Principal Investigator and NSABP, may examine and inspect the facilities and procedures of the NSABP Operations Center, or any designated agent of NSABP, or any Participating Site. In the case of Celcuity, such examinations and inspections shall be limited to verify the performance of the Study in accordance with this Agreement, for the purpose of determining compliance with the Study, Protocol, Study source document verification; and

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with applicable FDA regulations. Celcuity shall be permitted to inspect Data and any other work product relating to the Study at NSABP subject to the provisions of this Agreement. The Parties agree to treat any information obtained in any audit or visit as Confidential Information subject to Article XI.

(b)

NSABP shall, upon Celcuity’s reasonable request, provide Celcuity with summary reports of audit findings for any audited Participating Site with respect to the Study. NSABP shall remove all identifying Subject information from any such reports. Subject to Applicable Laws, on a periodic basis upon Celcuity’s request and at a time mutually convenient to the Parties, Celcuity may visit NSABP or its designated agent to review the content of audit reports of the Participating Sites.

(c)

The Parties recognize that certain regulatory agencies have authority to audit Study-related activity. If any applicable governmental or regulatory authority (i) contacts or otherwise has any communication with respect to the Study with NSABP or the NSABP Principal Investigator or any Research Collaborator or other Participating Site; (ii) conducts, or gives notice to NSABP, any Research Collaborators or any other Participating Sites of its intent to conduct an inspection of the Study at any facility including any Participating Site; or (iii) takes or gives notice of its intent to take any other regulatory action with respect to the Study, if allowed by law, NSABP shall, promptly upon learning of same, notify Celcuity of such contact, communication or notice. NSABP will permit, if allowed by Applicable Laws or permitted by the applicable governmental or regulatory authority and permissible in accordance with Research Collaborator’s policy, to be present at any such inspection or regulatory action with respect to the Study with approval from the inspector performing such inspection. NSABP shall promptly provide Celcuity with copies of pertinent information and documentation issued by any applicable governmental or regulatory authority, any proposed response and a copy of any written final response related to such inspection. When permitted by Applicable Laws, Celcuity may provide its own response to the applicable government or regulatory authority.

(d)

It is recognized that either Party may conduct any audit of a Participating Site it reasonably deems necessary in accordance with Section 8.1(a), to fulfill regulatory obligations or communicate to any regulatory authority as it deems necessary and appropriate, in each case, with respect to the Study. Each Party shall notify the other Party in advance prior to performing such audits, which audits shall be held at a mutually convenient time. Celcuity agrees to inform NSABP of communications with any regulatory authority with respect to the Study. Notwithstanding the above, NSABP or Celcuity may conduct for cause audits where the immediate need to assure Subject safety, data integrity, or regulatory compliance exists or as required to address FDA or other government requests with as little as twenty-four (24) hours’ notice.

(e)

Celcuity and NSABP acknowledge that Celcuity may use the Data for confidential FDA submissions. However, Celcuity shall pay any reasonable increased Study costs of NSABP and its Participating Sites relating thereto provided such costs are expressly set forth in a signed amendment to this Agreement.

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(f)

Notwithstanding anything to the contrary, the Parties agree and acknowledge that any visit to a Participating Site may be subject to that Participating Site’s policies and procedures, such as those for patient confidentiality and privacy, security, safety, and the like. The Parties agree to comply with any such policies and procedures of any such Participating Site while at such Participating Site’s facilities of which a Party is informed.

8.2

Monitoring and Site Qualification .

(a)

Participating Site Qualification Assessment Visits . NSABP will follow its SOPs for Participating Site qualification assessment visits, which consists of on-going Qualification Teleconference Calls (“QTC”) that are pre-scheduled detailed interviews conducted with Study Personnel that have first-hand knowledge of such Participating Site’s facilities and processes. QTCs are supplemented by periodic, on-site, scheduled “Assessment Visits.” If an Assessment Visit has not been conducted by the time a Subject is enrolled in the Study then an Assessment Visit will be promptly performed in accordance with NSABP’s SOPs.

(b)

Participating Site Monitoring . NSABP will perform central monitoring in accordance with Applicable Law and NSABP’s SOP and at least one (1) on-site monitoring visit to each Participating Site that enrolls a Subject.

ARTICLE IX
Records and Reports

9.1

NSABP, or its designated representative shall perform the following recordkeeping and reporting obligations in a timely and accurate fashion in accordance with NSABP’s SOPs:

(a)

preparation and maintenance of complete and accurate written records, accounts, notes, reports, and data of the Study; and

(b)

preparation and submission to Celcuity of CRFs for each Subject if required by a regulatory authority with jurisdiction, upon receipt of written proof of such regulatory authority’s demand for said CRFs.

9.2

Each Party will provide to the other Party copies of all communications exchanged by the Party and the FDA, the Office for Human Research Protection (“OHRP”), or other regulatory agency that characterize any analyses or conclusions of Data or which otherwise cite an opinion about the Study rendered by NSABP.

9.3

Adverse Reactions and SAEs .

(a)

NSABP shall report all AEs (as that term is defined in the Protocol) to the FDA and other applicable regulatory authorities, and the appropriate IRB as required by Applicable Law within the requisite applicable timeframes, and will concurrently forward all such reports to Celcuity and Genentech. NSABP will provide seriousness, criteria, causality and expectedness assessment, and conduct follow-up on AEs as required by the Protocol and Applicable Law. NSABP will report SAEs (as that term is defined in the Protocol) requiring expedited reporting to the FDA and other applicable regulatory authorities via a FDA Form

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3500A MEDWATCH report and concurrently provide a copy of such MEDWATCH report to Celcuity and Genentech. For expedited reports, NSABP will send the MEDWATCH report to Celcuity and Genentech no later than seven (7) days for initial life-threatening and death reports, and fifteen (15) days for all other initial or follow-up SUSARs, from the time of receipt of the report by NSABP. For non-expedited reports ( i.e., unrelated to Study Drugs or listed/expected event), NSABP will send the MEDWATCH report to Celcuity and Genentech no later than thirty (30) days from the time of receipt of the report by NSABP.

(b)

NSABP, in accordance with NSABP’s SOPs, will provide to Research Collaborators, and thereby to the Investigators and all Participating Sites, relevant safety information regarding the Study Drugs through the distribution of reports of SUSARs received from Genentech, safety updates, IB updates, SUSARs that emerge during the Study, and other safety related communications. NSABP will obligate Research Collaborators participating in the Study to, in accordance with their institutional policies, submit such documents to their IRB and/or communicate the safety information findings to the Subjects as directed by their IRB and/or NSABP.

9.4

NSABP agrees to provide Celcuity with copies of the annual reports to the IND filed for the Study. NSABP will provide Celcuity copies of reports or forms filed with the FDA related to this Agreement. All information provided under this Section 9.4 shall be subject to the provisions of Article XI and such written communications shall be marked “ Confidential ” in accordance with Article XI. NSABP agrees that it will not disclose to any third party any communications it receives from Celcuity pursuant to this Section 9.4, absent the prior consent of Celcuity, except as otherwise allowed in accordance with Article XI.

9.5

NSABP agrees to maintain complete and accurate records as required under 21 CFR Part 312.62 relating to the disposition of the Study Drugs and the treatment of Subjects in the Study, if applicable. Prior to discarding such records, NSABP will notify Celcuity of pending destruction and provide an opportunity for Celcuity, to elect, at its own expense, to further maintain and store the records for an additional period of time. NSABP shall provide Celcuity with interim written Study status reports ( e.g. , toxicity reports, monthly accrual reports, site status information) on a frequency reasonably requested by Celcuity.

9.6

NSABP shall register the Study with www.ClinicalTrials.gov, at or before the onset of Subject enrollment.

ARTICLE X
Financial Disclosure and Conflict of Interest

10.1

So that Celcuity may fulfill its certification and other financial disclosure obligations under 21 CFR Part 54 to the FDA as may be required under Applicable Law, upon reasonable request, NSABP will provide to Celcuity copies of such financial disclosures related to this Agreement, including disclosures by Investigators that NSABP receives from the Participating Sites on such forms as are customarily used in the industry. At the beginning of the Study, during the time the Study is being conducted, and for one (1) year following completion of the Study, NSABP shall provide updates of such disclosure forms upon Celcuity‘s reasonable request, or promptly after NSABP receives notice of a

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material change in a prior disclosure. NSABP shall use commercially reasonable efforts to require that any investigator in a leadership position responsible for the design, conduct, or reporting of the Study, and any Investigator, to disclose any significant private financial interests related to the Study Drugs. NSABP shall use commercially reasonable efforts to require that Investigators at Participating Sites not undertake the Study if it would prevent him/her from carrying out his/her obligations in compliance with the foregoing policy.

ARTICLE XI
Confidential Information

11.1

“Confidential Information” shall mean all information and materials related to the Study (whether owned by a Disclosing Party or by a third party to whom such Disclosing Party owes an obligation of confidence) disclosed by a Disclosing Party to a Receiving Party, including without limitation the Study Protocol, case report forms, the Investigator’s Brochure, proprietary technology, procedures, formulations, protocols, patient information or identifiers, know-how, clinical data, Data, Materials, Materials Data, Celcuity Results, specifications, documents and related Study materials, techniques, processes, biospecimens, products samples, apparatus, research plans, business plans, or identity of potential collaborators.

11.2

The Parties may disclose to each (including their respective agents and representatives and to NSABP Research Collaborators and their respective agents and representatives) Confidential Information to aid in effecting or completing performance of the Study under this Agreement. Confidential Information, whether written, electronic, or verbal, disclosed by either Party hereunder (the ”Disclosing Party”) to the other (the “Receiving Party”) shall be treated as confidential by the Receiving Party and subject to the terms of this Article XI for a period of ten (10) years following completion or closure of the Study at all Participating Sites. All such disclosures of Confidential Information shall be prominently marked with the legend “ Confidential ” or “ Confidential Information ” or the like. If disclosed orally or in other than documentary or electronic form, Confidential Information shall be reduced to a tangible form within thirty (30) days thereafter and a copy of such tangible form, bearing the foregoing confidentiality legend, shall be provided to the designated representative of the Receiving Party. The Receiving Party further agrees not to disclose to others or use for any purpose other than as reasonably necessary for performance of the Study (or enforcement or exercise of its rights under this Agreement), Confidential Information disclosed by the Disclosing Party pursuant to this Agreement. These obligations of non-disclosure and non-use shall not apply to information to the extent:

(a)

that it is or becomes publicly available through no fault of the Receiving Party;

(b)

that is already independently known to the Receiving Party hereunder prior to receipt from the Disclosing Party hereunder, as shown by its prior written records or is independently developed by the Receiving Party without use of, or reference to, any Confidential Information received from the Disclosing Party; or

(c)

that subsequent to its disclosure to the Receiving Party hereunder, is disclosed to the Receiving Party on a non-confidential basis by a third party with the legal right to do so.

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11.3

In the event Celcuity shall come into contact with a Subject’s Study records, Celcuity shall hold in confidence the identity of the Subject and shall comply with Applicable Law regarding the confidentiality of such records as if these records were patient medical records.

11.4

Receiving Party may provide Disclosing Party’s Confidential Information to its directors, employees, consultants, contractors, agents, and IRBs, and, in the case of NSABP, to Research Collaborators and their Research Sites, IRBs, Study Personnel, and applicable accreditation organizations, in each case, on a need-to-know basis and provided such directors, employees, consultants, contractors, agents, Research Sites and Study Personnel are subject to written obligations, or bound by institutional policies, of confidentiality and non-use with regard to such Confidential Information that are the same or substantially the same as those of this Agreement. Research Collaborator and its Research Sites may provide Confidential Information as required to be disclosed in order to obtain informed consent from patients or subjects who may wish to enroll in the Study, provided, however, that the information will be disclosed only to the extent necessary and will not be provided in answer to unsolicited inquiries by telephone or to individuals who are not eligible Study candidates.

11.5

Confidential Information shall not be disclosed by the Receiving Party without prior written approval of the Disclosing Party to any third party except as set forth above, or, if required by the FDA or any other applicable regulatory or governmental agency having the authority to make such a demand, or pursuant to a subpoena, or a judicial order, or as required by Applicable Law. The Receiving Party agrees to contact the Disclosing Party prior to the release of any Confidential Information pursuant to this Section 11.5 and allow the Disclosing Party to exhaust any legal action it may take to prevent or limit the disclosure, and the Parties shall endeavor to agree upon a mutually satisfactory way to disclose such Confidential Information as is necessary for this limited purpose and required by Applicable Law. Nothing herein shall prevent a Receiving Party from complying with a legal obligation to disclose Confidential Information of the Disclosing Party so long as the Receiving Party:

(a)

provides the Disclosing Party prompt notice of the Receiving Party’s perceived obligation of disclosure and intent to disclose (or to resist disclosure);

(b)

cooperates with the Disclosing Party’s lawful attempts to prevent the disclosure or obtain protection for such Confidential Information; and

(c)

only discloses that portion of Confidential Information that it is legally required to disclose.

11.6

Receiving Party must within thirty (30) days, upon written request of a Disclosing Party (a) return all Confidential Information in its possession or control to the Disclosing Party, or (b) destroy or delete all Confidential Information in its possession or control. Notwithstanding the foregoing, one (1) copy may be kept in secure confidential files for archival and legal purposes only and any electronic back-up or archival storage copies made in accordance with Receiving Party’s standard procedures solely for purposes of disaster recovery and compliance with records retention policies. When Receiving Party has complied with its obligations described above, upon request by Disclosing Party, it shall confirm to Disclosing Party, in writing that it has returned, destroyed or deleted all Confidential Information.

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11.7

The terms and conditions of this Agreement shall be deemed the Confidential Information of NSABP and Celcuity and subject to this Article XI. Notwithstanding the foregoing, NSABP’s disclosure of the terms of this Agreement to Research Collaborators to the extent necessary to contract with such Research Collaborators for the Study shall not be deemed a breach of this Article XI and a Research Collaborator may disclose such provisions to the extent required by a Research Collaborator’s institutional policies or by Applicable Law.

ARTICLE XII
Publications / Presentations and General Publicity

12.1

The Study is subject to the current NSABP Publication Policy (the current form of which is attached hereto as Appendix D ) with the exception that in all instances a biostatistical services contractor will perform the functions and assume the responsibilities of the NSABP Biostatistical Center. Another exception to the Policy is that invited presentations requiring submission of a manuscript involving previously unpublished Data relating to the Study conducted under this Agreement shall be submitted to Celcuity to review for Confidential Information at least thirty (30) calendar days prior to submission for publication. Celcuity shall have thirty (30) calendar days to respond with any requested revisions, including without limitation, the deletion of Celcuity’s Confidential Information, other than the results of the Study, and to protect any existing or future patents. NSABP shall act in good faith upon such requested revisions, except NSABP shall delete any Celcuity Confidential Information, other than the results of the Study, from such proposed publication. NSABP agrees not to amend its Publication Policy, as related to this Agreement, during the conduct of Study without prior written notice to Celcuity. The Parties agree that publication of a summary of the results of the Study in accordance with the Publication Policy of NSABP shall not be deemed a violation of Article XII. Notwithstanding anything to the contrary in this Agreement, in the event that neither Celcuity nor NSABP publishes a manuscript on the primary endpoint of the Study within eighteen (18) months after the occurrence of the Study primary endpoint events or after the early termination of the Study, whichever occurs first, Participating Sites, or multiple Participating Sites, will have the right to publish or present with respect to the applicable Participating Sites’ own Study-related data.

12.2

Publication of the results of the Study will be made as promptly after completion of the Study, or early termination of the Study, as the case may be, as is reasonably possible. Manuscripts will be submitted to Celcuity at least fifteen (15) days prior to submission for publication. If an Invention is described in a proposed publication, which in the reasonable opinion of Celcuity should be the subject of a patent application, then, upon the request of Celcuity, NSABP will withhold publication to allow Celcuity to pursue the diligent filing of a patent application. Publication will not be withheld by NSABP beyond the time reasonably necessary to complete such diligent filing, and in no instance shall publication (or submission for publication) be withheld for more than a total of sixty (60) days after Celcuity’s receipt of any such manuscript. If Celcuity believes that any proposed publication contains any Confidential Information, other than Study results, then Celcuity shall so notify NSABP and NSABP shall remove all references to such Confidential Information.

12.3

Abstracts, posters, and similar presentations will be sent to Celcuity promptly after they are available to NSABP.

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12.4

NSABP and Celcuity agree to provide to the other for review prior to release or dissemination a copy of each press release or public announcement that references the Study. It is understood that this provision does not apply to NSABP’s communication with its Research Collaborators or Subjects. NSABP shall inform its Research Collaborators that press releases and public announcements that relate to Study results must be provided to NSABP prior to release or dissemination. NSABP agrees to provide copies of such press releases and public announcements to Celcuity. Such prior notice under this Section shall not give Celcuity the right to restrict or prevent a proposed press release or public announcement by one of the Research Collaborators, such notice being solely informational.

12.5

Neither Party shall mention or otherwise use (nor authorize others to use) the name, trademark, trade name, logo or names of the employees of the other Party in any publication, press release or promotional material without the prior written approval of the other Party; provided, however, that Celcuity shall have the right to identify NSABP as the group responsible for conducting the Study. Celcuity agrees that its use of the name, symbols, and/or marks of NSABP, or names of NSABP’s employees, shall be limited to identification of NSABP and its Research Collaborators and subcontractors’ staff as collaborators with NSABP. Celcuity will not use, nor authorize others to use, the name, symbols, or marks of NSABP or any Participating Site in any advertising or publicity material or make any form of representation or statement, which would constitute an express or implied endorsement by NSABP or any Participating Site of the CELx HER2 test without prior written approval from NSABP. Likewise, NSABP shall not use the name of Celcuity or the marks of Celcuity in such a manner without the written permission of Celcuity. Notwithstanding the foregoing, Celcuity agrees that NSABP, Research Collaborators, and Participating Sites may use Celcuity’s name in connection with identifying the describing the Study, including on websites and in materials provided to potential Subjects. Notwithstanding the foregoing, the Parties agree that they may issue a joint press release regarding the primary endpoint results, and shall use reasonable efforts and cooperate in good faith to do so, prior to the publication or presentation of such Study results, provided that all such releases or disclosures shall be (i) limited to non-numeric characterizations of the primary end point, and (ii) consistent with pre-release embargo restrictions of Study results by journals and/or conference organizers.

12.6

The Parties recognize that Celcuity shall have the right to use the Data for regulatory and commercial purposes in the United States and elsewhere throughout the world. Nothing contained within this Agreement (including any exhibits or appendices hereto) shall prohibit Celcuity from publishing regarding the results of the Study, including but not limited to, publishing regarding any subsets of Data, provided that, such publications occur after NSABP has published on the primary endpoints of the Study, and such Celcuity manuscripts are provided to NSABP for review and comment at least thirty (30) days prior to submission for publication unless otherwise agreed to by the Parties in writing. Nothing contained within this Agreement (including any exhibits or appendices hereto) shall prohibit Celcuity from discussing the results of the Study with investors or regulatory agencies under an agreement with confidentiality terms substantially the same as Article XI of this Agreement.

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ARTICLE XIII
Data Ownership and Inventions

13.1

NSABP shall not acquire, as a result of the Study, any proprietary rights in the CELx HER2 test or the Study Kit other than the rights to use the same to conduct the Study. Neither NSABP nor Celcuity shall acquire, as a result of the Study, any proprietary rights in the Study Drugs, other than the right to use the Study Drugs for research and educational purposes for the Study conducted under this Agreement.

13.2

Subject to Article XI, Celcuity hereby grants to NSABP and each Participating Site a non-exclusive, royalty-free, perpetual right and license to use the Celcuity Results for academic and patient treatment purposes, and for non-commercial research purposes. Celcuity shall provide NSABP with the Celcuity Results once available to Celcuity.

13.3

Any inventions or discoveries (whether patentable or not) solely relating to the CELx HER2 and made during the course of performing the Study (collectively, hereinafter “Invention(s)”), whether solely made by employees, contractors or other agents of NSABP, Research Collaborators and/or Participating Sites, solely by employees, contractors or other agents of Celcuity, or jointly by employees, contractors or other agents of NSABP, Research Collaborators and/or Participating Sites and employees, contractors or other agents of Celcuity, shall be solely owned by Celcuity.

13.4

NSABP shall, and will obligate Research Collaborators, Participating Sites and Investigators to, promptly notify Celcuity of any such Invention. NSABP shall assign or obligate Research Collaborators, Participating Sites, Investigators and their employees, contractors or other agents to assign any and all of their rights, title and interest in Inventions to Celcuity. Upon Celcuity’s request and at Celcuity’s expense, NSABP shall take such actions as Celcuity deems necessary or appropriate to obtain patent or other proprietary protection in Celcuity’s name with respect to any of the foregoing.

13.5

Any inventions or discoveries that are conceived or reduced to practice in the course of performing the Study, but which are not Inventions (“Other Inventions”), will be owned in accordance with U.S. patent law. Subject to the option granted below and the license grant in the following sentence, each of Research Collaborator, NSABP, and/or Celcuity, as the case may be, will have the right to use, exploit, license, transfer and/or sell its rights in jointly-made Other Inventions without the consent of and without obligation to account to the other. NSABP will obligate each Research Collaborator to grant to NSABP and Celcuity a non-exclusive, royalty-free license to use Other Inventions of Research Collaborator for non-commercial purposes only.

13.6

The Parties agree that the Research Collaborator will have the primary right to prepare, file and prosecute any patent applications on Other Inventions made solely by Research Collaborator at Research Collaborator’s expense. If Research Collaborator and NSABP both elect not to prepare, file, prosecute or maintain an application or patent arising from any Other Invention made solely by Research Collaborator, NSABP will promptly notify Celcuity, and Celcuity will have the right, but not the obligation to prepare, file, prosecute and maintain such applications or patents at Celcuity’s expense. The Parties will work together in good faith to determine a filing and prosecution strategy (including the Party that will have primary responsibility for prosecution activities) of all Other Inventions made jointly by Research Collaborator and/or NSABP and Celcuity.

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13.7

NSABP shall grant, and will require Research Collaborators to grant, to Celcuity a first option to negotiate an exclusive or non-exclusive (subject to availability of such rights), royalty-bearing and sublicensable license to NSABP’s and/or Research Collaborator’s interests, if any, in any Other Inventions, to make, use and sell (or otherwise research, develop or commercialize) those inventions or any products that are covered by patent rights that claim or that include those inventions. The option will extend for a period of one hundred eighty (180) days following the date of NSABP’s or Research Collaborator’s (as applicable) full written disclosure to Celcuity of the Other Invention. In the event that NSABP or Research Collaborator cannot reach agreement with Celcuity on the terms of a license, NSABP or Research Collaborator may license its respective rights in that Other Invention to any third party.

13.8

All Data and as stated in the above Article VI, all Materials and Materials Data, and all proprietary rights to the foregoing, shall be the sole property of NSABP, and otherwise subject to the NSABP Ownership of Data/Materials Policy attached as Appendix C . Celcuity agrees to treat such as Confidential Information of NSABP pursuant to Article XI prior to NSABP’s public release thereof, subject to Celcuity’s right to make limited disclosures as provided in Section 12.6. Subject to Article XI, Celcuity shall have the right to use the Data for regulatory purposes. NSABP agrees not to authorize use of such Data for an IDE or any other regulatory submission relating to a regulatory approval for CELx HER2 by others.

13.9

Any inventions or discoveries by NSABP or its employees that are not conceived in the course of NSABP’s performance of the Study shall be (as between NSABP and Celcuity) the sole property of NSABP, even if they arise from research using Data and/or Materials, or data and/or materials derived therefrom, obtained in connection with the Study. The Parties agree that, for purposes of this Article XIII, performance of sub-studies conducted by NSABP and/or Celcuity with such Data and/or Materials shall not be deemed performance of the Study, unless any such sub-study is expressly and specifically defined in the Protocol as a sub-study within the Study.

13.10

Notwithstanding anything to the contrary, NSABP and Research Collaborators shall retain a non-exclusive, royalty-free, perpetual right and license to their respective Inventions and Other Inventions to use the same for patient treatment, scientific and medical research, and academic purposes.

ARTICLE XIV
Notice

14.1

Any notice required or permitted hereunder related to this Agreement shall be in writing and shall be deemed given as of the date it is: (a) delivered to the recipient by hand; (b) delivered to the recipient by overnight courier; or (c) received by the Party to receive such notice by registered or certified mail, postage prepaid, return receipt requested, and addressed as set forth below, or to such other address as is subsequently specified in writing.

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If to NSABP :	With a copy to :
Joan Beyer Goldberg, MPH	Norman Wolmark, M.D.
Chief Executive Officer	Chairman
NSABP Foundation, Inc.	NSABP Foundation, Inc.
Nova Tower 2	Nova Tower 2
Two Allegheny Center, Suite 1200	Two Allegheny Center, Suite 1200
Pittsburgh, PA 15212	Pittsburgh, PA 15212

If to Celcuity :

Brian Sullivan

Chief Executive Officer

Celcuity, LLC

16305 – 36 ^th Avenue North, Suite 450

Minneapolis, MN 55446

14.2

Any change(s) to the list in this Article XIV will be communicated in writing to the other Party, pursuant to the terms of this Article XIV.

ARTICLE XV
Indemnification; Insurance

15.1

Celcuity shall defend, indemnify, and hold harmless NSABP and Participating Sites, and their respective officers, employees, contractors, and agents, and Investigators and the NSABP Principal Investigator (collectively the “NSABP Indemnitees”), from and against any and all liabilities and expenses, including attorneys’ fees, resulting from third party claims, actions, or suits, including (without limitation) those for personal injury or death (“Claims”) to the extent resulting from:

(a)

the use of the Study Kit used in accordance with the Study and written instructions/information provided by Celcuity to NSABP or through NSABP to any third party including participants in connection with the Study;

(b)

the use of the Study Kit in accordance with the Protocol and/or written instructions/information supplied or distributed to third parties (including the general public) by Celcuity in connection with the Study Kit;

(c)

any claimed design defect, manufacturing defect, contamination or adulteration, or failure to warn relating to the Study Kit;

(d)

medical procedures performed pursuant to the Protocol that are not part of routine medical care and would not have been done but for the conduct of the Study; and/or

(e)

Celcuity’s failure to follow the Protocol, breach of this Agreement, or failure to comply with Applicable Law.

REGARDLESS OF WHETHER THE SAME ARE CAUSED, IN WHOLE OR IN PART, BY THE CONCURRENT NEGLIGENCE OF THE NSABP INDEMNITEES; PROVIDED, HOWEVER, that:

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(i)

the NSABP Indemnitee conducts the Study in accordance with Protocol requirements and written instructions delivered by Celcuity concerning administration of the Study Drug, use of the Study Kit, and applicable guidelines; and

(ii)

such loss does not arise out of the gross negligence or willful malfeasance of any NSABP Indemnitees; and

(iii)

the NSABP Indemnitee promptly notifies Celcuity in writing of any written complaint or claim, or any serious injury relating to any loss subject to this indemnification; and

(iv)

Celcuity shall have the right to select defense counsel and to direct the defense or settlement of any such claim or suit. Notwithstanding the foregoing, this Section 15.1(iv) shall apply to state universities or institutions only to the extent permissible under applicable state law.

Celcuity shall have no obligation to defend, indemnify, or hold harmless NSABP or the NSABP Indemnitees from and against any liability for Claims to the extent such Claims result from:

(A)

any negligence in the use or administration of the Study Drugs by NSABP or any NSABP Indemnitee in connection with the Study; and/or

(B)

any claimed design defect, manufacturing defect, or contamination or adulteration, relating to the Study Drugs.

Nothing contained within this Agreement (including any exhibits or appendices hereto) shall constitute a waiver by Celcuity of any rights of subrogation, contribution or similar rights that it may have against parties other than the NSABP Indemnitees.

15.2

Celcuity shall provide diligent defense against or settlement of any Claims, whether such Claims are rightfully or wrongfully brought or filed.

15.3

Any Claim, to the extent found by a court of competent jurisdiction to have resulted from the negligence or willful malfeasance of an NSABP Indemnitee, is excluded from Celcuity’s indemnity obligations under this Agreement to such extent. Deviations, defined as single event variations from the terms of Protocol which would not have a significant deleterious effect on the research or on the participant that may arise out of necessity, do not constitute negligence or willful malfeasance or a violation of the requirements of Section 15.1(a) and/or 15.1 (b).

15.4

The NSABP Indemnitee(s) shall reasonably cooperate with Celcuity and its legal representatives in the investigation and defense of any Claim covered under this Agreement. In the event a Claim is or may be asserted, NSABP, or Participating Sites, shall have the right to select and to obtain representation by separate legal counsel. Legal counsel selected by NSABP or Participating Sites may participate in any settlement negotiations or legal proceedings subject to Article XV, but Celcuity shall retain the right to direct the settlement or defense of any Claim, subject to NSABP Indemnitee’s consent and to the extent allowed under state law for Participating Sites that are state universities and institutions, which consent shall not be unreasonably withheld or delayed. If NSABP

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or Participating Sites that are state universities and institutions, exercises such right, all costs and expenses incurred by NSABP, or such Participating Sites, for such separate counsel shall be borne by NSABP, or such Participating Site.

15.5

Celcuity shall maintain a policy or program of insurance or self-insurance at levels sufficient to support its liabilities and contractual obligations, including any indemnification obligation assumed herein. Upon request, Celcuity will provide evidence of its insurance.

15.6

NSABP shall maintain a policy or program of insurance it deems appropriate to protect its liabilities and contractual obligations assumed herein.

15.7

NSABP will obligate each Participating Site to obtain and maintain, at its own expense and throughout the term of this Agreement, such insurance as it deems appropriate to protect its liabilities and contractual obligations. However, failure of any Participating Site to have insurance coverage, ability to obtain insurance coverage, or any inadequacy of insurance coverage shall not relieve or decrease liabilities, if any, of NSABP or the Participating Site under this Agreement. It is understood that NSABP, including its agents, Participating Sites, and subcontractors, is not responsible for the acts or omissions of Celcuity. A program of self-insurance by a Participating Site will suffice for compliance by such Participating Site with this provision.

15.8

NEITHER PARTY SHALL BE LIABLE TO THE OTHER UNDER THIS AGREEMENT FOR ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL, INDIRECT, INCIDENTAL OR PUNITIVE DAMAGES RELATED TO THIS AGREEMENT OR ANY BREACH THEREOF, EXCEPT FOR DAMAGES RESULTING FROM A PARTY’S BREACH OF ITS CONFIDENTIALITY OBLIGATIONS IN ARTICLE XI. NOTHING IN THIS AGREEMENT IS INTENDED TO RESTRICT OR LIMIT A PARTY’S INDEMNIFICATION RIGHTS OR OBLIGATIONS SET FORTH IN THIS ARTICLE XV.

15.9

Attached hereto as Appendix E to this Agreement is a listing of Selected Terms of Agreement for Disclosure to Sites. NSABP may provide a copy of Appendix E potential Participating Sites as reasonably deemed necessary or helpful by NSABP in connection with negotiating the terms of agreements with potential Participating Sites for performance of the Study.

ARTICLE XVI
Human Subjects

16.1

Informed consent of the Subjects shall be obtained in accordance with 45 CFR Part 46 and all Applicable Law. Related IRB review and approval of the Protocol, including the ICF, shall be obtained in accordance with 21 CFR Part 56 and Applicable Law. The ICF and/or HIPAA authorization form(s) as approved by the IRB shall disclose that documentation may be provided to representatives of Celcuity, Genentech, the FDA or other regulatory agencies and that Subjects’ identifying information will be removed prior to submission thereto. Subject to Applicable Law, during audits of the Study at NSABP, Participating Sites, or their designated agents, Celcuity shall have the right to review ICFs to assure that they conform to Applicable Law.

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16.2

In the event of physical injury resulting from research procedures in which the Subject will participate, no form of compensation is available from Celcuity. Medical treatment may be provided at the Subject’s own expense, or at the expense of the health care insurer ( i.e. , Medicare, Medicaid, BC/BS, or VA, if eligible, etc.), which may or may not provide coverage. NSABP acknowledges and agrees that it does not have the authority to bind Celcuity to reimburse participants for medical expenses arising from or relating to the Study.

ARTICLE XVII
Independent Contractor

17.1

The relationship of the Parties to this Agreement is that of independent contractors. Neither Party is authorized or empowered to act as an agent for the other for any purpose, and shall not on behalf of the other enter into any contract, warranty, or representation as to any matter. Neither Party shall be bound by the acts or conduct of the other except as provided by the terms of this Agreement. All NSABP activities hereunder are rendered by NSABP as an independent contractor for federal, state and local income tax purposes and for all other purposes.

ARTICLE XVIII
Term and Termination

18.1

This Agreement shall be effective upon the Effective Date and shall continue until the completion of the obligations of this Agreement unless terminated earlier in accordance with this Article XVIII.

18.2

This Agreement may be terminated by either Party, immediately upon written notice to the other Party, if any of the following conditions occur:

(a)

If the authorization and approval to perform the Study in the United States is withdrawn by the FDA;

(b)

If human and/or toxicology test results, in the reasonable opinion of NSABP or Celcuity are of such magnitude and/or frequency of incidence as to support termination of the Study;

(c)

If the emergency of any adverse reaction or side-effect of any drug administered in the Study or a modification to the Protocol raises safety issues of such magnitude and/or incidence in the reasonable opinion of either NSABP or Celcuity to support termination of the Study;

(d)

In the event a Party remains in material breach of any Section of this Agreement thirty (30) days after its receipt of notice in writing from the other Party of a material breach; or

(e)

If Celcuity does not perform the CELx HER2 test or is unable to provide the Study Kit.

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18.3

Termination of Agreement by NSABP . NSABP shall have the right to immediately terminate this Agreement by notice to Celcuity in the event of any of the following:

(a)

if Celcuity fails to pay an undisputed amount due to NSABP hereunder within thirty (30) days after being notified by NSABP that it is in arrears of payments due hereunder; or

(b)

if Celcuity remains in material breach of any other Section of this Agreement thirty (30) days after its receipt of notice in writing from NSABP of such material breach; or

(c)

if Genentech terminates the agreement to supply the Study Drugs, the manufacture of the Study Drugs ceases, and/or the Study Drug is no longer available.

18.4

Termination by Agreement . The Parties may, by mutual agreement, terminate this Agreement. NSABP and Celcuity shall use reasonable efforts and act in good faith to resolve any and all issues which may arise in connection with the Study, including problems with recruitment of subjects, timing, costs, supply of the Study Drug, third party participants in the Study, and the like. NSABP shall use reasonable efforts to notify Celcuity of any significant issues regarding the NSABP’s agreement with Genentech for the supply and distribution of the Study Drug.

18.5

Obligations Upon Termination . If this Agreement is terminated for any reason, NSABP will obligate Participating Sites to immediately stop enrolling Subjects into the Study and the Study shall be discontinued in accordance with the Protocol, this Agreement, and in a manner designed to preserve Subject safety and data integrity. NSABP shall wind-down the Study in an efficient, safe, and cost-effective manner. The need for any continued Subject safety monitoring and the appropriate manner to cease conducting Study procedures will be reasonably determined by NSABP in accordance with Applicable Law. In addition, payments will be made to NSABP by Celcuity for reasonable costs incurred for all NSABP services performed up to the time of termination in accordance with this Agreement and for any reasonable, non-cancelable expenses related to the Study. Such amounts shall take into account any payments previously made by Celcuity to NSABP under this Agreement. In the event the payments made by Celcuity exceed the final fees, NSABP shall return the excess balance to Celcuity. NSABP will promptly destroy or return to Celcuity all Confidential Information of Celcuity.

18.6

Survival . No expiration or termination of this Agreement will release the Parties from their rights or obligations accrued prior to expiration or effective date of termination. The rights and duties under Sections 2.6, 4.1, 4.2, 4.3, 4.4, 5.1 (d) and (e), 5.2 through 5.4, 8.1, 9.3, 9.4, 9.5, and 17.5 and 17.6, and Articles VI, VII, IX through XVI, XVIII, XXIII through XXX, and Appendix B will survive the expiration or termination of this Agreement.

ARTICLE XIX
Severability

19.1

If any provision(s) of this Agreement is or becomes invalid, is ruled illegal, or is held unenforceable, in each case as determined by a court of competent jurisdiction, the

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invalidity, illegality or unenforceability thereof shall not affect the remainder of this Agreement and it shall remain in full force and effect and enforceable in accordance with its terms. Further, in lieu of each such provision which is invalid, illegal, or unenforceable, a new valid, legal, and enforceable provision as similar as possible in economic and business objective intended by the Parties shall be substituted for such invalid, illegal, or unenforceable provision.

ARTICLE XX
Waiver

20.1

The waiver by either Party of a breach or violation of any term, provision or condition of this Agreement, whether by conduct or otherwise, shall not operate as, or be construed to be, a waiver of any subsequent breach of the same or other term, provision or condition hereof.

ARTICLE XXI
Debarment

21.1

NSABP certifies that to the best of its knowledge as of the Effective Date neither NSABP nor any person employed thereby directly in the performance of the Study is (a) currently debarred under Section 306(a) or (b) of the Federal Food, Drug and Cosmetic Act; or (b) is listed by any federal or state agency as debarred or disqualified. NSABP shall obligate its Research Collaborators to certify that none of its Investigators or Participating Sites, nor any of their respective personnel conducting or engaged to conduct the Study, (i) is currently debarred; or (ii) is listed by any federal or state agency as debarred or disqualified; and (iii) to notify NSABP immediately of any such occurrence. If at any time after execution of this Agreement, NSABP becomes aware that NSABP or any person employed thereby and providing services for the Study hereunder is, or is in the process of being debarred, or any of the foregoing related to NSABP, a Research Collaborator, Investigators, Participating Site or any of their respective personnel, NSABP hereby certifies that NSABP will promptly notify Celcuity.

ARTICLE XXII
Force Majeure

22.1

Neither Party shall be liable for any delay or failure to perform as required by this Agreement, to the extent such delay or failure to perform is due to circumstances beyond that Party’s reasonable control, such as labor disturbances or labor disputes of any kind, accidents, failure of utilities, mechanical breakdowns, material shortages, hurricanes, tornadoes, blizzards, electrical outages, disease, or other such unavoidable occurrences.

ARTICLE XXIII
Governing Law

23.1

The construction, validity and performance of this Agreement, including any non-contractual obligations relating to this Agreement, shall be governed by the laws of the Commonwealth of Pennsylvania without reference to its principles of conflicts of law. Each Party hereby submits to the exclusive jurisdiction of the state and federal courts situated in Pittsburgh (Allegheny County), Pennsylvania. Notwithstanding the foregoing, this Article XXIII need not apply to those Research Collaborators which are state

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universities or institutions, and NSABP’s agreements with such Research Collaborators may be silent as to applicable governing law.

ARTICLE XXIV
Certain Disclosures and Transparency

24.1

NSABP acknowledges that Celcuity may be required to abide by federal and state disclosure laws and certain transparency policies governing its activities including, without limitation, providing reports to the government and to the public concerning financial or other relationships with healthcare providers. NSABP agrees that Celcuity may disclose information about the Agreement and about the Study, including relating to any transfers of value pursuant to this Agreement in accordance with Applicable Law. NSABP agrees to discuss with Celcuity the perceived obligations and supply mutually agreed upon required information reasonably requested by Celcuity for disclosure purposes. To the extent that NSABP, any Investigator or Participating Site is independently obligated to disclose specific information concerning the Study, including relating to transfers of value from Celcuity pursuant to this Agreement, NSABP will, and will cause Investigators and Participating Sites to make timely and accurate required disclosures.

ARTICLE XXV
No Transfer of Proprietary Rights Not Specified

25.1

It is agreed that neither NSABP nor Celcuity transfers to the other by operation of this Agreement any patent right, copyright, or other proprietary right of either Party, except to the extent expressly set forth herein.

ARTICLE XXVI
Conformance with Law and Accepted Practice

26.1

In performing their respective obligations hereunder, the Parties shall comply, as applicable, with generally accepted standards of good standard practices, with the Protocol, and with all Applicable Law governing the performance of clinical investigations as applicable to the Study. NSABP agrees to retain records resulting from the conduct of the Study for the time required by applicable federal regulations subject to Article IX herein.

ARTICLE XXVII
Integration

27.1

Appendices identified within this Agreement are incorporated in this Agreement by reference.

ARTICLE XXVIII
Amendments

28.1

This Agreement may be extended, renewed, or otherwise amended at any time only by a writing signed by the Parties hereto.

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ARTICLE XXIX
Assignment

29.1

Neither Party hereto may assign or otherwise transfer any of its rights or obligations under this Agreement without the prior written consent of the other Party; provided, however, that without such consent NSABP may freely assign this Agreement in connection with the transfer or sale of all, or substantially all, of its assets or business to which this Agreement relates, or to a successor entity or acquirer in the event of its merger or consolidation, or change of control.

29.2

This Agreement shall inure to the benefit of, and be binding upon, each Party signatory hereto, its successors, and permitted assigns. No assignment shall relieve either Party of the performance of any accrued obligation, which such Party may then have under this Agreement. Any permitted assignee will assume the rights and obligations of its assignor under this Agreement.

ARTICLE XXX
Entire Agreement

30.1

This Agreement, including any Appendices hereto, represents the entire agreement between the Parties with respect to the subject matter hereof, and supersedes all prior discussions, agreements, and understanding entered into orally or otherwise between the Parties in connection with the subject matter herein. Each Party confirms that it is not relying on any representations or warranties of any other Party except as specifically set forth in this Agreement. To the extent of any conflict or inconsistency between the terms of this Agreement, Appendices or the Protocol, the terms of this Agreement will control, except that the terms of the Protocol will nonetheless control with respect to scientific and medical issues in connection with any such conflict or inconsistency. This Agreement may only be modified by a writing duly executed by both Parties.

ARTICLE XXXI
Counterparts

31.1

This Agreement and any amendments may be executed in any number of counterparts, each of which shall be an original and all of which together shall constitute one and the same document, binding on all Parties notwithstanding that each of the Parties may have signed different counterparts. Facsimiles or scanned copies of signatures or electronic images of signatures shall be considered original signatures unless prohibited by Applicable Law.

[The remainder of this page intentionally left blank]

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Binding Execution

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement in duplicate by the proper persons thereunto duly authorized.

NSABP Foundation, Inc.		Celcuity, LLC

By:	/s/ Joan Beyer Goldberg, MPH	By:	/s/ Brian F. Sullivan
	Authorized Signature		Authorized Signature

Joan Beyer Goldberg, MPH		Brian F. Sullivan
Authorized Representative		Authorized Representative

Chief Executive Officer		Chief Executive Officer
Title		Title

May 9, 2017		May 10, 2017
Date		Date

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Appendix A

NSABP Protocol:

NSABP protocol entitled “An Open-Label Phase II Trial to Evaluate the Efficacy and Safety of Neoadjuvant ACT + Trastuzumab and Pertuzumab in Early Stage HER2-Negative Breast Cancer Patients Selected with a Test Measuring Live Cell HER2 Signaling Transduction (Fact 1) (FB-12),” including the sample Informed Consent Form

Appendix A is set out on the following pages.

NSABP PROTOCOL FB-12

An Open-Label Phase II Trial to Evaluate the Efficacy and Safety of Neoadjuvant Doxorubicin Plus Cyclophosphamide Followed by Weekly Paclitaxel Plus Trastuzumab and Pertuzumab in Early Stage HER2-Negative Breast Cancer Patients Selected with a Test Measuring Live Cell HER2 Signaling Transduction (FACT 1)

NSABP Foundation, Inc.

Nova Tower 2

Two Allegheny Center – Suite 1200

Pittsburgh, PA 15212

TELEPHONE:		1-800-270-3165
E-MAIL:		industry.trials@nsabp.org
CLINICAL QUESTIONS:		1-800-270-3165

KEY STUDY PERSONNEL

NSABP Chair:		Norman Wolmark, MD
NSABP Foundation Breast Committee Chair:		Charles E. Geyer, MD
Protocol Chair:		Eleftherios Mamounas, MD, MPH
Medical Oncology Co-Chair:		Lee Schwartzberg, MD
Protocol Officer:		Priya Rastogi, MD
Protocol Statistician:		Marc Buyse, ScD

Protocol FB-12 IND #XXXX (trastuzumab and pertuzumab),

sponsored by the NSABP Foundation, Inc.

Celcuity, LLC – Protocol FB-12

CONFIDENTIAL

TABLE OF CONTENTS

INFORMATION RESOURCES			10
GLOSSARY OF ABBREVIATIONS AND ACRONYMS			11

1.0	OVERVIEW OF STUDY DESIGN		13
	1.1	Summary	13

2.0	background		15
	2.1	CELx Signaling Function Ò Technology	15
	2.2	CELx HER2 Signaling Function Ò (HSF) test	16
	2.3	Intended use of investigational device	17
	2.4	Justification for the design of the clinical trial	17

3.0	study aims and endpoints		22
	3.1	Primary aim and endpoint	22
	3.2	Secondary aims and endpoints	22

4.0	patient eligibility and ineligibility		23
	4.1	Patient selection guidelines	23
	4.2	Conditions for patient eligibility (Screening)	23
	4.3	Conditions for patient eligibility (Study Enrollment)	25
	4.4	Conditions for patient ineligibility (Screening)	25

5.0	requirements for study entry, during treatment, and follow-up		27

6.0	PATHOLOGY AND CORRELATIVE SCIENCE STUDIES		31
	6.1	Overview of requirement	31
	6.2	CELx HSF testing	31
	6.3	Residual cancer burden	31

7.0	study treatment		32
	7.1	Treatment regimen	32
	7.2	Dose determinations	33
	7.3	Supportive therapy	33
	7.4	Surgery	34
	7.5	Prohibited therapies	35
	7.6	Participation in other clinical trials	35

8.0	treatment management		36
	8.1	General instructions	36
	8.2	Management of anemia	36
	8.3	Treatment management for AC	36
	8.4	Treatment decisions when components of paclitaxel, trastuzumab, or pertuzumab must be held or discontinued	36
	8.5	Treatment management for paclitaxel	36
	8.6	Treatment management for trastuzumab and pertuzumab	38
	8.7	Heart failure and left ventricular systolic dysfunction	38
	8.8	Other trastuzumab- and pertuzumab-specific instructions	40
	8.9	CTCAE grade 2 cardiac disorder adverse events that prohibit trastuzumab and pertuzumab therapy	41

9.0	drug information		42
	9.1	Doxorubicin, cyclophosphamide, and paclitaxel	42

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	9.2	Trastuzumab	42
	9.3	Pertuzumab	44
	9.4	Transfer of trastuzumab and pertuzumab	45
	9.5	Destruction of trastuzumab and pertuzumab	45
	9.6	Drug accountability	45

10.0	adverse event reporting		46
	10.1	Definition of an AE	46
	10.2	Definition of an SAE	46
	10.3	Events requiring expedited reporting	47
	10.4	Pregnancy	48
	10.5	Grading the severity of the AE	48
	10.6	Expedited reporting instructions	48
	10.7	Routine reporting of AEs	49
	10.8	Documentation requested following death	49

11.0	assessment of effect		50
	11.1	Timing of clinical response assessments	50

12.0	patient entry procedures		51
	12.1	Patient consent forms	51
	12.2	Study entry	51
	12.3	Patient study number and treatment assignment	51
	12.4	Investigator-initiated discontinuation of study therapy	51
	12.5	Patient-initiated discontinuation of study therapy	52
	12.6	Patient-initiated withdrawal from the study	52

13.0	data handling and recordkeeping		53

14.0	statistical considerations		54
	14.1	Study design	54
	14.2	Study endpoints	54
	14.3	Study objectives	55
	14.4	Sample size	56
	14.5	Accrual time and study duration	56
	14.6	Monitoring	56

15.0	Device Accountability		57

16.0	publication information		58

17.0	references		59

Appendix A	Assessment of performance status and activities of daily living	60
Appendix B	Suggested procedure for evaluation of surgical specimens	61

Figure 1.	NSABP FB-12 Schema	14

Table 1.	Tests, exams, and other requirements for screening and prior to study entry	27
Table 2.	Tests, exams, and other requirements during therapy and follow-up	29
Table 3.	Treatment regimen	32
Table 4.	Dose levels for paclitaxel	37
Table 5.	Trastuzumab and pertuzumab management based on LVEF assessments	39
Table 6.	Dose modifications and instructions for trastuzumab and pertuzumab	40

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INFORMATION RESOURCES

NSABP Department of Site and Study Management NSABP Operations Center Nova Tower 2 Two Allegheny Center – Suite 1200 Pittsburgh, PA 15212 Phone: 1-800-270-3165 E-mail: industry.trials@nsabp.org
For questions regarding: · IRB review & informed consent · Submission of IRB approval · Study entry information · Eligibility · Treatment regimen · Dose modifications/delays · Other clinical aspects of the trial · Adverse event reporting including SAE reporting · eCRF completion · Trastuzumab and pertuzumab shipments	NSABP Department of Site and Study Management (DSSM)	Phone: 1-800-270-3165 E-mail: industry.trials@nsabp.org
For questions regarding data management	DSSM	Phone: 1-800-270-3165 E-mail: industry.trials@nsabp.org
Requests for study drug (trastuzumab and pertuzumab)	DSSM	E-mail: FB12.drugorders@nsabp.org
Requests for CELx Specimen Collection Kits and questions regarding submission of tumor samples	Celcuity	E-mail: http://celcuity.com/contact/ Phone: 1-844-310-3900 Refer to FB-12 Pathology Instructions.

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GLOSSARY OF ABBREVIATIONS AND ACRONYMS

AC	doxorubicin (Adriamycin Ò ) and cyclophosphamide
AE	adverse event
AJCC	American Joint Committee on Cancer
ALT	alanine aminotransferase
ANC	absolute neutrophil count
ARDS	acute respiratory distress syndrome
ASCO	American Society of Clinical Oncology
AST	aspartate aminotransferase
BP	blood pressure
BSA	body surface area
BUN	blood urea nitrogen
CAP	College of American Pathologists
CBC	complete blood count
cCR	clinical complete response
CHF	congestive heart failure
CI	confidence interval
CLIA	Clinical Laboratory Improvement Amendments
CRF	case report form
CT	computed tomography
CTCAE v4.0	Common Terminology Criteria for Adverse Events Version 4.0
CTEP	Cancer Therapy Evaluation Program
DCIS	ductal carcinoma in situ
DSSM	NSABP Department of Site and Study Management
ECHO	echocardiogram
ECOG	Eastern Cooperative Oncology Group
EGF	Epidermal growth factor
ER	estrogen receptor
FDA	Food and Drug Administration
FISH	fluorescence in situ hybridization
FNA	fine needle aspiration
GCP	Good Clinical Practice
G-CSF	granulocyte colony stimulating factor
GM-CSF	granulocyte macrophage-colony stimulating factor
H&P	history and physical
HER	human epidermal growth factor receptor
HIV	human immunodeficiency virus
HR	hazard ratio
IB	Investigator's Brochure
ICH	International Conference on Harmonization
IDE	Investigational Device Exemption
IHC	immunohistochemistry
IND	investigational new drug
IRB	institutional review board
ISO	International Organization for Standardization
IV	intravenous
LCIS	lobular carcinoma in situ

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GLOSSARY OF ABBREVIATIONS AND ACRONYMS (continued)

LLN	lower limit of normal
LV	left ventricular
LVEF	left ventricular ejection fraction
mAB	monoclonal antibody
MAPK	mitogen-activated protein kinase
MRI	magnetic resonance imaging
MUGA	multi-gated acquisition (scan)
NCCN	National Comprehensive Cancer Network
NCI	National Cancer Institute
NRG1b	Neuregulin 1 beta
NSABP	NSABP Foundation, Inc.
p	probability
pCR	pathologic complete response
PET	positron emission tomography
PgR	progesterone receptor
PI3K	phosphoinositide 3-kinase
q	every
RCB	residual cancer burden
RT	radiation therapy
SAE	serious adverse event
SN	sentinel node
ULN	upper limit of normal
WOCBP	women of childbearing potential
WP	weekly paclitaxel

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1.0

overview of study design

1.1

Summary

This is a prospective, single arm, open label, multicenter interventional study designed to evaluate the efficacy of neoadjuvant chemotherapy with anti-HER2 antibodies in patients with HER2-negative invasive breast cancer who have abnormal HER2 signaling activity determined by the Celcuity HSF testing.

Patients will be required to have a prescreening research core needle biopsy to procure a fresh tumor specimen that will be sent to Celcuity for CELx HSF testing, in order to assess the status of their HER2 signaling activity (abnormally or normally active). Patients who have abnormal HER2 signaling activity will receive weekly paclitaxel plus the anti-HER2 therapy regimen of trastuzumab and pertuzumab following completion of initial doxorubicin/cyclophosphamide.

The primary endpoint of the study is to evaluate whether patients with HER2-negative breast cancers based on standard ASCO/CAP testing criteria, but with abnormal HER2-driven signaling pathways determined by the Celcuity HSF assay, and receive HER2-targeted therapy with neoadjuvant chemotherapy will have a higher rate of pathological complete response in the breast and lymph nodes (pCR breast and lymph nodes) than has been found historically in patients with HER2-negative breast cancer who have received neoadjuvant chemotherapy. Secondary endpoints include pathologic complete response (breast), clinical complete response (cCR), residual cancer burden (RCB) 0-1 index, and relationship between quantitative CELx score and pCR rate.

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Figure 1.
NSABP FB-12 Schema

Doxorubicin (A) 60 mg/m ² IV + cyclophosphamide (C) 600 mg/m ² IV Day 1 every 2 weeks or every 3 weeks at investigator's discretion.

Weekly Paclitaxel (WP): 80 mg/m ² IV weekly for 12 doses.

†

Trastuzumab + Pertuzumab: Trastuzumab (administer a loading dose of 8 mg/kg IV; then 6 mg/kg IV every 3 weeks for 4 cycles) with pertuzumab (administer a loading dose of 840 mg IV; then 420 mg IV every 3 weeks for 4 cycles).

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2.0

background

2.1

CELx Signaling Function Ò Technology

Scientists and clinicians have long sought a method to more precisely diagnose and treat patients with heterogeneous diseases. In response to this need, Celcuity, LLC (Celcuity) developed CELx Signaling Function Ò technology, a proprietary cellular functionality analysis platform that measures signaling pathway activity using live patient cells. The hypothesis of the CELx Signaling Function Ò test is that measurement of cell signaling dysfunction in a patient’s live disease cells is the most accurate method of diagnosing the presence of signaling activity of the HER2 pathway. This information can be used to determine whether a signaling pathway associated with breast cancer is abnormal in a patient’s breast cancer tissue.

Dynamic patient cell signaling quantification

The CELx platform quantifies specific dynamic signal transduction activities in a patient’s tumor cells. The complexity of signal transduction processes is immense and the permutations of the pathway variables are practically unquantifiable. Current analytical methods to assess these variables use dead (fixed or lysed) cells, measuring only a snapshot. Point-in-time measurements are limited to assessment of the compositional status (e.g., mutation), concentration level (e.g., protein amount) or activation status (e.g., phosphorylation) of a finite number of signaling pathway components. A complete diagnosis of a patient’s cancer and an assessment of the potential response to a targeted therapy requires measurement of the underlying activity of signaling pathways in live patient tumor cells.

To measure live real-time dynamic cell signaling activity, an impedance biosensor instrument is used. An impedance biosensor is an analytical platform that converts changes in cellular activity to a measurable electrical signal. This instrument measures dynamic changes in cell adhesion and morphology initiated by signal pathway activation or inhibition in live patient tumor cells.

The following schematic provides an example of impedance measurement in a single-well of the microplate. Activation or inhibition of signaling activity causes changes in cell adhesion. To measure cell adhesion changes in real-time , live patient cells are attached to a microelectrode.

As cells cover the electrodes, the current is impeded in a manner related to the number of cells. In addition, since cell signaling changes modulate a cell’s adhesion properties, the impedance biosensor also detects and quantifies these changes. When cells are stimulated and change their function, the accompanying changes in cell adhesion thus alter the impedance that is measured.

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To determine the activity of a specific signaling pathway, an activating agent specific to a pathway receptor is used to turn on the pathway and a corresponding inhibitory agent specific to the pathway receptor is used to turn signaling off. When signaling pathways are stimulated in this manner, adhesion molecules are affected and cause a change in the impedance measured in a well. By relying on the principle of detecting signaling pathway activity, we believe we can develop tests for a range of disease types and targeted therapies that affect various cellular pathways.

The output value is reported as the change in the electrical impedance measured. The change in impedance values is quantified over time and used to determine a Signaling Function Score.

An example of the data recorded is provided in the graph below. In this example, a HER family signaling pathway (HER3) in a sample of breast cancer cells is stimulated with an activating agent (NRG1b) alone and in combination with various concentrations of a dual-HER family inhibitor (lapatinib). The uppermost curve labeled “No Drug – Max Stimulation” represents the amount of HER3 signaling pathway activity that occurs over a 10-hour period when the breast cancer cells are stimulated with the NRG1b alone. The remaining curves represent the amount of pathway activity that occurs after the pathway inhibitor is added to cells. The curves with the pathway inhibitor added have lower peak and aggregate values and demonstrate that the test has an expected dose dependent response to the addition of the pathway inhibitor. The curve labeled “Max Stimulation – Max Drug” indicates that, in this example, nearly all the pathway activity stimulated with the activating agent is inhibited or blocked by the pathway inhibitor.

Typical Impedance vs. Time Data Set

2.2

CELx HER2 Signaling Function Ò (HSF) test

The CELx HER2 Signaling Function Test is a qualitative Laboratory Developed Test (LDT) to measure HER2-driven signaling network activity that uses viable primary cells isolated from HER2-negative breast tumor tissue specimens obtained from a patient. Specimens are collected in a Celcuity provided specimen collection kit at the clinical site and then delivered directly to Celcuity’s CLIA-certified and CAP-accredited laboratory where the test is performed and the test report is issued.

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The CELx HSF Test incorporates the following steps:

1.	Measures signaling driven by HER2 hetero-dimerization of HER1 and HER3:
	a. Activates PI3K & MAPK with HER3 ligand (NRG1) and HER1 ligand (EGF)
	b. Confirms signaling is HER2-driven using HER2 dimer blocker
2.	Quantifies amount of HER2 signaling anti-HER2 drugs inhibit
3.	Transforms quantitative result into a final qualitative result that characterizes the activity level of the HER2 signaling pathway network in the tested patient tumor cells as either normal or abnormal.

Celcuity has completed analytical validation studies in accordance with applicable FDA guidance and Clinical and Laboratory Standards Institute (CLSI) standards in its CLIA/CAP certified laboratory to characterize the performance of the CELx HSF test. A summary of the results is below ( Celcuity 2017 ):

Results of analytical validation studies for CELx HSF test ( Laing ^a 2017 )

Performance Characteristics		Results
Analytical Precision (Qualitative) Analytical Sensitivity (95% CI) Analytical Specificity (95% CI)		95.8% - 100% (88/88) 95.8% - 100% (88/88)
Detection Limits Limit of Blank Limit of Detection Limit of Quantification		0.0020 cell attachment units 0.0099 cell attachment units 0.1000 cell attachment units
Cut-Off Characterization		250 signaling units

2.3

Intended use of investigational device

The CELx HER2 Signaling Function Test for specimen characterization is a qualitative laboratory developed test intended to measure HER2-driven signaling activity in tumor cells obtained from patients previously diagnosed with HER2-negative breast cancer to evaluate whether the patients have normal or abnormal HER2-driven signaling activity. The intended use of this test is to identify HER2-negative breast cancer patients with abnormal HER2-driven signaling so they may be enrolled in the proposed clinical trial.

2.4

Justification for the design of the clinical trial

HER2 breast cancer disease is defined at a biological level as hyperactivity of the HER2-related signaling pathways. It is currently diagnosed by measuring the amount of HER2 receptor present in the patient’s tumor cells using IHC and/or by demonstrating gene amplification by FISH testing. This approach does not identify whether the actual disease mechanism, abnormal HER2

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signaling, is present. Instead, it assumes that the HER2 receptor, one component of a complex biochemical reaction, can characterize the signaling activity of the entire HER2 pathway network. The clinical sensitivity of this approach has been called into question recently when several analyses of HER2 drug trials found that a portion of inadvertently enrolled HER2-negative patients received benefit from the HER2-directed therapy ( Paik 2008 ). From a biological and biochemical standpoint, this is not surprising. It is also consistent with the fact that many HER2-positive patients do not respond to HER2-targeted therapy. This suggests that the correlation between HER2 receptor levels and HER2 signaling activity is well below 100%. As a result, measuring only HER2 receptor levels and/or gene amplification can lead to a substantial number of false negative HER2 disease diagnoses. This would be the case with HER2-negative breast cancer patients who have abnormal HER2 signaling activity. IHC or FISH will diagnose these patients as not having HER2-driven breast cancer, when, in fact, they do.

To overcome the limitation of measuring only receptor levels to diagnose HER2 breast cancer, Celcuity described in a recently published study ( Huang 2017 ) the development of its CELx HER2 Signaling Function Test to measure functional HER2 signaling in live patient tumor cells. This test identifies patients who have abnormal HER2-driven signaling activity despite having normal HER2 receptor levels. This is currently an undiagnosable sub-type of HER2-related breast cancer.

In a recently published study ( Huang 2016 ), Celcuity found that 20% of HER2-negative breast cancer patients have the same level of abnormal HER2 signaling activity as the abnormal HER2 signaling activity found in HER2-positive breast cancer cell lines. These patients may thus benefit from treatment with a HER2-directed therapy.

To assess the potential clinical benefit HER2 therapies may offer these patients, a prospective, single arm, open label neoadjuvant interventional study is proposed. Data from previous clinical trials have consistently found a significant difference in the pathological response rates (pCR) between HER2-negative and HER2-positive breast cancer patients when they receive their respective standard of care therapies. For ER-positive/HER2-negative breast cancer patients receiving neoadjuvant chemotherapy or hormonal therapy, the average pCR rate is 8%, and for ER-negative/HER2-negative patients, the average pCR rate is 31% ( Cortazar 2014 ). This contrasts sharply to pCR rates of 30%-50% for ER-positive/HER2-positive breast cancer patients and 55%-80% for ER-negative/HER2-positive breast cancer patients receiving neoadjuvant treatment with anti-HER2 antibodies in combination with chemotherapy ( Schneeweiss 2013 ).

This suggests that HER2-negative patients with abnormal HER2 signaling receiving neoadjuvant chemotherapy with anti-HER2 therapy may experience pCR rates significantly higher than HER2-negative patients with normally active HER2 signaling activity and possibly comparable to the pCR rates experienced by HER2-positive patients.

Summary of CELx Studies:

Excerpts of key results from Celcuity’s published studies are provided below.

Prevalence Studies: 20% of HER2-Negative Patients Have Abnormal HER2-Signaling

To derive an initial estimate of the prevalence of abnormal HER2 signaling within the HER2-negative breast cancer population, Celcuity conducted a cell line survey, and training set and validation studies using patient tumor cells. Live cell response to specific HER2 agonists (NRG1b and EGF) and antagonist (pertuzumab) was measured.

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Key findings include:

Cell Line Survey Study (N=9) ( Huang 2017 )

4 of 9 HER2+ cell lines had HER2 signaling activity above 250 signaling units. These results helped establish an initial cut-off value.

Confirmed that normal HER2 signaling can occur in cells with overexpressed amounts of HER2.

Training Set Study (N=50) ( Huang 2017 )

The 16 healthy breast specimens had a significantly lower average and standard deviation HER2 Signaling Scores than the HER2- and HER2+ breast cancer specimens.

Validation Study (N=114) ( Laing ^b 2017 )

The patients providing specimens in the Training Set and Validation Set studies had the following characteristics:

	Training Set					Validation Set
Characteristic	No.		%			No.		%
No. of breast cancer patients		34		100	%		114		100	%
Age, years
Mean		57.5					58.6
Clinical Stage
I		5		15	%		23		20	%
II		22		65	%		62		54	%
III		5		15	%		24		22	%
N/A ¹		2		6	%		4		4	%
Histology
DCIS only		1		3	%		0		0	%
Invasive only		13		38	%		24		21	%
Invasive Ductal/DCIS mixed		10		29	%		55		48	%
Lobular/other		8		24	%		35		31	%
N/A ¹		2		6	%		0		0	%
Lymph Status
Positive		12		35	%		56		49	%
Negative		20		59	%		46		40	%
pNx or N/A ¹		2		6	%		12		11	%
Estrogen Receptor Status
ER+		26		76	%		96		84	%
ER-		1		3	%		18		16	%
N/A ¹		7		21	%		0		0
HER2 IHC score/FACS
IHC 0, 1+ or FISH not amp ²		34		100	%		101		89	%
IHC 2+ and FISH not amp		0		0			13		11	%
3+		0		0			0		0

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The graph below presents the data from the Cell Line, Training Set, and Validation Prevalence Studies in a Box-Whiskers plot format.

The dotted line at 250 represents the cut-off value for the CELx HSF Test. The cut-off value of 250 is equivalent to the median CELx Signaling Score recorded from the sample of HER2+ cell lines.

HER2-negative breast cancer patients with CELx Signaling Scores at or above 250 have abnormal HER2 signaling and meet the enrollment criteria for this study.

The circled portions of the plots for the HER2- Training Set and HER2 Validation Set results represent the specimens with Abnormal HER2-driven signaling.

Xenograft Study: Abnormal HER2 Signaling Correlates to Drug Response Better than HER2 Status ( Laing ^c 2017 )

Xenograft mouse models of human breast tumors to evaluate the relationship of HER2-driven signaling and response to lapatinib, a reversible dual-HER2 kinase inhibitor. Key findings:

The HER2 signal inhibitor shrank a HER2-negative tumor with abnormal HER2 signaling

The HER2 signal inhibitor did not affect the HER2+ tumor with normal HER2 signaling

Findings contradict HER2 receptor-based conclusions:

Lapatinib inhibition more correlative to HER2 signaling than HER2 receptor expression

HER2 signaling status independent of HER2 receptor expression

These findings support the hypothesis that HER2-negative breast cancer patients with abnormal HER2-driven signaling may benefit from treatment with anti-HER2 drugs.

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Xenograft Study Results

	Cell Line
Parameter	HCC1954	BT483
HER2 Receptor Expression (IHC)	HER2+ (3+)	HER2- (0)
HER2 Signaling Status (CELx)	Normal	Abnormal
Lapatinib Inhibition (Xenograft)	13% (p = 0.34)	49% (p = 0.01)

Study of Two HER2 Antibody Therapies, Trastuzumab and Pertuzumab, in HER2- and HER2+ Cells

Celcuity conducted this study to compare the effectiveness of two anti-HER2 antibodies in blocking HER2-driven signaling in HER2+ and HER2- cells. Tumor cells from 5 HER2- primary tumors and 4 HER2+ cell lines were obtained. Real-time live cell response to NRG1, a specific HER2/HER3 agonist, with or without pertuzumab, trastuzumab, or the combination of the two, was measured and quantified. All cell samples tested had comparable, and abnormal, levels of NRG1 activated HER2-driven signaling.

Key findings are:

In each sample, the two monoclonal antibodies (mAbs) inhibited a higher percentage of signaling in combination than either mAb alone; no interference effects between the two mAbs were detected.

Pertuzumab and trastuzumab alone were each more effective in the HER2- cell samples than in the HER2+ ones.

Two HER2 mAbs used to treat HER2+ breast cancer patients are as effective in blocking abnormal HER2-driven function ex vivo in HER2- primary cells as they are in HER2+ cell lines.

	Average % NRG1 Inhibition
HER2 mAb	HER2+ Cell Lines	HER2-(HER2 _S +) Primaries
Pertuzumab	62%	73%
Trastuzumab	19%	44%
Tz + Pz	87%	81%

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3.0

study aims and endpoints

3.1

Primary aim and endpoint

Aim: Pathologic complete response (breast and lymph nodes)

Endpoint: Percentage of patients with pathologic complete response (pCR) defined as the absence of residual invasive cancer on hematoxylin and eosin evaluation of the complete resected breast specimen and all sampled regional lymph nodes following completion of neoadjuvant systemic therapy (ypT0/Tis ypN0).

3.2

Secondary aims and endpoints

3.2.1

Pathologic complete response (breast)

Aim: To determine pathologic complete response

Endpoint: Percentage of patients with pathologic complete response in the breast (ypT0/Tis).

3.2.2

Clinical complete response (cCR)

Aim: To determine clinical complete response (cCR)

Endpoint: Percentage of patients with clinical complete response rate based on physical examination of the breast and axilla.

3.2.3

Residual cancer burden (RCB)

Aim: To determine residual cancer burden (RCB)

Endpoint: Residual cancer burden 0-1 index.

3.2.4

CELx score and pCR rate

Aim: To determine the relationship between the qualitative score and pCR rate

Endpoint: Relationship between quantitative CELx score and pCR rate

3.2.5

Safety and Toxicity

Aim: To assess the safety and tolerability based on reported adverse events that were deemed to be related to the neoadjuvant therapy.

Endpoint: Frequency and severity of adverse events categorized using the NCI Common Terminology Criteria for Adverse Events version 4.0 (CTCAE v4.0).

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4.0

patient eligibility and ineligibility

4.1

Patient selection guidelines

Although the guidelines in Section 4.1 are not inclusion/exclusion criteria, investigators should consider each of these factors when selecting patients for the FB-12 trial. Investigators should also consider all other relevant factors (medical and non-medical), as well as the risks and benefits of the study therapy, when deciding if a patient is an appropriate candidate for the FB-12 trial.

Medical oncologist has indicated the intention to administer doxorubicin/cyclophosphamide followed by paclitaxel.

Co-morbid conditions should be taken into consideration, but not the diagnosis of breast cancer.

All patients will be required to have a research core biopsy procedure to procure fresh tumor tissue for pre-entry central HER2 signaling testing by Celcuity (see Table 1 and Section 6.2 ).

4.2

Conditions for patient eligibility (Screening)

A patient cannot be considered eligible for this study unless all of the following conditions are met:

4.2.1

The patient must have consented to participate and must have signed and dated an appropriate IRB-approved consent form that conforms to federal and institutional guidelines for the pre-entry research core biopsy for CELx HSF testing and for initiating chemotherapy (see Section 6.2 ).

4.2.2

Patients must be female.

4.2.3

Patients must be ³ 18 years old.

4.2.4

Patient must have an ECOG performance status of 0 or 1 (see Appendix A ).

4.2.5

The diagnosis of invasive adenocarcinoma of the breast must have been made by core needle biopsy .

4.2.6

The primary breast tumor must be palpable and measure ³ 2.0 cm on physical exam.

4.2.7

The regional lymph nodes can be cN0, cN1, or cN2a.

4.2.8

Histological grade II or III tumor.

4.2.9

Ipsilateral axillary lymph nodes must be evaluated by imaging (mammogram, ultrasound, and/or MRI) within 6 weeks prior to initiating chemotherapy. If suspicious or abnormal, FNA or core biopsy is recommended, also within 6 weeks prior to initiating chemotherapy. Findings of these evaluations will be used to determine the nodal status prior to initiating chemotherapy.

Nodal status – negative

Imaging of the axilla is negative;

Imaging is suspicious or abnormal but the FNA or core biopsy of the questionable node(s) on imaging is negative;

Nodal status – positive

FNA or core biopsy of the node(s) is cytologically or histologically suspicious or positive.

Imaging is suspicious or abnormal but FNA or core biopsy was not performed.

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4.2.10

Tumor specimen obtained at the time of diagnosis must have ER and PgR analysis assessed by current ASCO/CAP Guidelines (www.asco.org). Patients are eligible with either hormone receptor-positive or hormone receptor-negative tumors.

4.2.11

Tumor specimen obtained at the time of diagnosis must have been determined to be HER2-negative as follows:

Immunohistochemistry (IHC) 0-1+; or

IHC 2+ and ISH non-amplified with a ratio of HER2 to CEP17 < 2.0, and if reported, average HER2 gene copy number < 4 signals/cells; or

ISH non-amplified with a ratio of HER2 to CEP17 < 2.0, and if reported, average HER2 gene copy number < 4 signals/cells.

4.2.12

Blood counts performed within 6 weeks prior to initiating chemotherapy must meet the following criteria:

ANC must be ³ 1200/mm ³ ;

platelet count must be ³ 100,000/mm ³ ; and

hemoglobin must be ³ 10 g/dL.

4.2.13

The following criteria for evidence of adequate hepatic function performed within 6 weeks prior to initiating chemotherapy must be met:

total bilirubin must be £ ULN for the lab unless the patient has a bilirubin elevation
> ULN to 1.5 x ULN due to Gilbert’s disease or similar syndrome involving slow conjugation of bilirubin; and

alkaline phosphatase must be £ 2.5 x ULN for the lab; and

AST must be £ 1.5 x ULN for the lab.

Alkaline phosphatase and AST may not both be > the ULN . For example, if the alkaline phosphatase is > the ULN but £ 2.5 x ULN, the AST must be £ the ULN. If the AST is > the ULN but £ 1.5 x ULN, the alkaline phosphatase must be £ ULN.

Note: If ALT is performed instead of AST (per institution's standard practice), the ALT value must be £ 1.5 x ULN; if both were performed, the AST must be £ 1.5 x ULN.

4.2.14

Patients with AST or alkaline phosphatase > ULN are eligible for inclusion in the study if liver imaging (CT, MRI, PET-CT, or PET scan) performed within 6 weeks prior to initiating chemotherapy does not demonstrate metastatic disease and the requirements in criterion 4.2.13 are met.

4.2.15

Patients with alkaline phosphatase that is > ULN but £ 2.5 x ULN or unexplained bone pain are eligible for inclusion in the study if a bone scan, PET-CT scan, or PET scan performed within 6 weeks prior to initiating chemotherapy does not demonstrate metastatic disease.

4.2.16

Serum creatinine performed within 6 weeks prior to initiating chemotherapy must be £ 1.5 x ULN for the lab.

4.2.17

The LVEF assessment by echocardiogram or MUGA scan performed within 90 days prior to initiating chemotherapy must be ³ 55% regardless of the facility's LLN .

4.2.18

Patients with reproductive potential must agree to use an effective non-hormonal method of contraception during therapy, and for at least 7 months after the last dose of study therapy.

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4.3

Conditions for patient eligibility (Study Enrollment)

A patient cannot be considered eligible for this study unless all of the following conditions are met:

4.3.1

The patient must have consented to participate and must have signed and dated an appropriate IRB-approved consent form that conforms to federal and institutional guidelines for the FB-12 study treatment.

4.3.2

Tumor determined to have abnormal HER2-driven signaling activity based on the CELx HSF test.

4.4

Conditions for patient ineligibility (Screening)

Any patient with one or more of the following conditions will be ineligible for this study:

4.4.1

T4 tumors including inflammatory breast cancer.

4.4.2

FNA alone to diagnose the breast cancer.

4.4.3

Excisional biopsy or lumpectomy performed prior to initiating chemotherapy.

4.4.4

Surgical axillary staging procedure prior to initiating chemotherapy. Pre-neoadjuvant therapy sentinel node biopsy is not permitted. (FNA or core biopsy is acceptable.)

4.4.5

Definitive clinical or radiologic evidence of metastatic disease. Required imaging studies must have been performed within 6 weeks prior to initiating chemotherapy.

4.4.6

Synchronous bilateral invasive breast cancer. (Patients with synchronous and/or previous contralateral DCIS or LCIS are eligible.)

4.4.7

Any previous history of ipsilateral invasive breast cancer or ipsilateral DCIS. (Patients with synchronous or previous ipsilateral LCIS are eligible.)

4.4.8

Previous therapy with anthracycline, taxanes, trastuzumab, or other HER2 targeted therapies for any malignancy.

4.4.9

Any sex hormonal therapy, e.g., birth control pills, ovarian hormone replacement therapy, etc. (These patients are eligible if this therapy is discontinued prior to initiating chemotherapy.)

4.4.10

History of non-breast malignancies (except for in situ cancers treated only by local excision and basal cell and squamous cell carcinomas of the skin) within 2 years prior to initiating chemotherapy.

4.4.11

Cardiac disease (history of and/or active disease) that would preclude the use of the drugs included in the treatment regimens. This includes but is not confined to:

Active cardiac disease:

angina pectoris that requires the use of anti-anginal medication;

ventricular arrhythmias except for benign premature ventricular contractions;

supraventricular and nodal arrhythmias requiring a pacemaker or not controlled with medication;

conduction abnormality requiring a pacemaker;

valvular disease with documented compromise in cardiac function; and

symptomatic pericarditis.

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History of cardiac disease:

myocardial infarction documented by elevated cardiac enzymes or persistent regional wall abnormalities on assessment of LV function;

history of documented CHF; and

documented cardiomyopathy.

4.4.12

Uncontrolled hypertension defined as sustained systolic BP > 150 mmHg or diastolic BP > 90 mmHg. (Patients with initial BP elevations are eligible prior to initiating chemotherapy if initiation or adjustment of BP medication lowers pressure.)

4.4.13

Active hepatitis B or hepatitis C with abnormal liver function tests.

4.4.14

Intrinsic lung disease resulting in dyspnea.

4.4.15

Poorly controlled diabetes mellitus.

4.4.16

Active infection or chronic infection requiring chronic suppressive antibiotics.

4.4.17

Patients known to be HIV positive.

4.4.18

Nervous system disorder (paresthesia, peripheral motor neuropathy, or peripheral sensory neuropathy) ³ grade 2, per the CTCAE v4.0.

4.4.19

Malabsorption syndrome, ulcerative colitis, resection of the stomach or small bowel, or other disease significantly affecting gastrointestinal function.

4.4.20

Other non-malignant systemic disease that would preclude treatment with any of the treatment regimens or would prevent required follow-up.

4.4.21

Conditions that would prohibit administration of corticosteroids.

4.4.22

Chronic daily treatment with corticosteroids with a dose of ³ 10 mg/day methylprednisolone equivalent (excluding inhaled steroids).

4.4.23

Known hypersensitivity to any of the study drugs or any of the ingredients or excipients of these drugs (e.g., Cremophor ® EL), including sensitivity to benzyl alcohol.

4.4.24

Pregnancy or lactation at the initiation of chemotherapy. (Note: Pregnancy testing must be performed within 2 weeks prior to initiating chemotherapy according to institutional standards for women of childbearing potential.)

4.4.25

Psychiatric or addictive disorders or other conditions that, in the opinion of the investigator, would preclude the patient from meeting the study requirements.

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5.0

requirements for study entry, during treatment, and follow-up

Tests, exams, and other assessments required prior to study entry are listed on Table 1 . Requirements following study entry are outlined on Table 2 .

Table 1. Tests, exams, and other requirements for screening and prior to study entry

Required Assessments ^a	Screening (prior to initiating chemotherapy)		Prior to Study Entry
CELx HSF test results confirmed (see Section 6.2 ) ^b			X
Consent form signed by the patient	X		X
Determination of HER2 status on diagnostic biopsy specimen (Section 4.2.11)	X
Determination of hormone receptor status on diagnostic biopsy specimen ( Section 4.2.10 )	X
History & physical exam ^c	X	Within 6 weeks
Performance status ( Appendix A )	X
Menopausal status	X
Height & weight	X
Assessment of concomitant therapies	X
Assessment of BP and BP medications	X
Determination of nodal status ( Sections 4.2.9 and 4.4.4 )	X
Tumor assessment ( Section 11.0 ) ^d	X
CBC/differential/platelet count	X
Total bilirubin/AST/Alkaline phosphatase ^e	X
Serum chemistries: BUN, creatinine, sodium, potassium, calcium, glucose, total protein, albumin	X
Pregnancy test ^f	X	Within 2 weeks
Echocardiogram (or MUGA scan) ^g	X	Within 90 days
Chest imaging (chest CT scan or chest x-ray) ^h	X	Within 6 weeks
Liver imaging ⁱ	X
Bone nuclear imaging ^j	X
Imaging (mammogram, ultrasound, and/or MRI) of ipsilateral axilla ^k	X

Table continued on next page.

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Table 1. Tests, exams, and other requirements for screening and prior to study entry (continued)

Required Assessments ^a	Screening (prior to initiating chemotherapy)		Prior to Study Entry
Bilateral breast imaging ^l	X	Ipsilateral breast (within 90 days) Contralateral breast (within 180 days)
Marking of primary tumor site ^m	X	Before or after study entry (before therapy begins)
Submission of pathology report from diagnostic biopsy ⁿ	X
a Informed consent must be obtained prior to the performance of any screening assessments; however, results of screening tests or examinations performed as standard of care prior to obtaining informed consent but within the timeframes outlined in Table 1 may be used rather than repeating required tests. b Instructions for requesting Celcuity CELx HSF testing kits and for the collection and shipment of tumor tissue to Celcuity can be found in the FB-12 Pathology Instructions. c H&P (by physician or other healthcare professional on Form FDA 1572) appropriate for assessment; include all prior cancer related therapy. d Includes assessment of the primary breast tumor and palpable regional lymph nodes (see Section 11.0 ). e ALT may be substituted for AST if required by the institution's standard practice. f For women of childbearing potential: Pregnancy testing should be performed according to institutional standards within 2 weeks of initiating chemotherapy. g Echocardiogram is the preferred method for assessment of LVEF. However, LVEF assessment by MUGA scan is permitted. h PET scans and PET-CT scans are permitted as an alternative to chest x-ray and CT scan of the chest. i Liver imaging is required if alkaline phosphatase or AST is > ULN. Acceptable methods of liver imaging include CT, MRI, PET-CT, and PET scans to rule out metastatic disease. j Bone nuclear imaging is required if alkaline phosphatase is > ULN or if the patient has unexplained bone pain. PET scan or PET-CT scan is permitted as a substitute for a bone scan. k If suspicious or abnormal nodes are detected, FNA or core biopsy is recommended within 6 weeks prior to initiating chemotherapy. l Patients are required, at a minimum, to have a mammogram of the involved breast and an ultrasound of the ipsilateral axilla. Imaging of the contralateral breast can be done by mammogram or MRI. m Marking of the primary tumor site should be done before therapy begins. n A copy of the pathology report from the diagnostic biopsy, as well as reports describing results from testing for ER and HER2 status, should be submitted before study entry.

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Table 2. Tests, exams, and other requirements during therapy and follow-up

Required Assessments (See footnote a)	Within 3 days of Day 1 of each Cycle of AC	Within 3 days of Day 1 of each Cycle 1-4 of WP+Trastuzumab+Pertuzumab	Prior to surgery 2-4 weeks after the last dose of study therapy	4 to 6 weeks after surgery
History & physical exam ^b	X	X	X	X
Height & weight	X (Weight only)	X (Weight only)
Tumor assessment ^c	X ^d (recommended before each cycle)	X ^d (recommended before each cycle; required before Cycle 1 )	X ^d,e
Adverse event assessment ^f	X	X	X	X
CBC/differential/platelet count	X	X	X
Total bilirubin/alk phos/AST	X	X	X
Serum chemistries: BUN, creatinine, sodium, potassium, calcium, glucose, total protein, albumin	X	X	X
Echocardiogram (or MUGA scan) ^g	X (after AC prior to initiating paclitaxel)	X (after Cycle 2 [before Cycle 3])
Bilateral breast imaging ^h			X (only ipsilateral required)
Submission of pathology report from breast surgery				X
a History and physical, blood tests, x-rays, scans, and other testing may be performed more frequently at the discretion of the investigator. b Updated history and physical with exams (by physician or other healthcare professional) appropriate for therapy-related assessments and follow-up evaluations. c Includes assessment of the primary breast tumor and palpable regional lymph nodes (see Section 11.0 ).

Table continued on next page.

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Table 2. Tests, exams, and other requirements during therapy and follow-up (continued)

d Required assessment by physical exam to determine presence or absence of cCR.

e Surgery should be performed as soon as possible after recovery from neoadjuvant therapy, final tumor assessment, and breast imaging.

f Final AE assessment for preoperative therapy should be performed 2–4 weeks after completion of preoperative chemotherapy (before surgery). See Section 10.6.1 for expedited reporting requirements for AEs that occur > 30 days.

g Echocardiogram is the preferred method of LVEF assessment, but MUGA scan is permitted. If possible, all LVEF assessments should be performed by the same method at the same facility.

h Ipsilateral breast imaging is required for patients who will proceed with lumpectomy.

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6.0

PATHOLOGY AND CORRELATIVE SCIENCE STUDIES

6.1

Overview of requirement

By signing the FB-12 screening consent form, the patient has agreed to the collection or tumor tissue from a research core biopsy and submission for CELx HSF testing. Follow the instructions provided with the CELx Collection Kit and the FB-12 Pathology Instructions.

6.2

CELx HSF testing

Submission of a representative tumor sample from a research core biopsy (2 core biopsies) before study enrollment is required for central HER2 signaling function testing by Celcuity to determine eligibility for FB-12. Note: If tumor tissue cannot be obtained from the primary breast tumor, samples may be obtained from a lymph node. Submission of alternative tissue samples is NOT permitted. The patient must sign the informed consent form for pre-entry HER2 signaling function testing before the submission of her tissue.

Tumor tissue collected from the research core biopsy will be collected, prepared, and shipped to Celcuity for assessment using the materials provided in the CELx Specimen Collection Kit and according to the Specimen Kit instructions (refer to the FB-12 Pathology Instructions).

Central testing for HER2 signaling function will be performed by Celcuity using the CELx HSF test to assess HER2 signaling activity. Patients whose tumor is determined to have abnormal HER2-driven signaling activity based on the CELx HSF test are eligible. Analysis will be performed in a real-time manner, and the results will be provided to the patient's study physician.

Most Celcuity test results will be ready within 10-14 calendar days of the day that the testing is started at Celcuity.

All tissue submitted will be used for the CELx HSF assay. There will be no remaining tumor tissue after the CELx HSF testing.

No correlative science studies will be done for FB-12.

6.3

Residual cancer burden

The local pathologist examining the specimen for pathologic response is required to generate RCB. The information (listed below) is used to calculate RCB.

size of the tumor bed

cellularity of residual primary tumor

percentage of DCIS component

number of positive nodes

size of macrometastasis

For more information on RCB, refer to the publication by WF Symmans et al. ( Symmans 2007 ) or http://mdanderson.org/breastcancer_RCB. Appendix 1 of the WF Symmans et al. article provides detailed pathology methods; note that this appendix is only accessible through the online full text version of the article, published at www.jco.org.

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7.0

study treatment

	7.1	Treatment regimen

The first cycle of AC may be administered prior to receipt of CELx HSF test results. If the tumor is determined to have abnormal HER2-driven signaling activity based on the CELx HSF test, the patient may be enrolled on the study, and subsequent cycles of AC completed.

Do NOT initiate trastuzumab/pertuzumab if post-AC LVEF is < 50%.

Results of laboratory safety assessments are to be reviewed prior to administration of components of study therapy pertinent to that parameter.

Central venous access is strongly recommended.

Table 3. Treatment regimen

Drug	Dose and Administration	Dosing Interval	Planned Duration
Doxorubicin (A)	60 mg/m2 IV over 15 minutes	Day 1 every 3 weeks OR Day 1 every 2 weeks (dose-dense) ^a	Cycles 1-4
Cyclophosphamide (C)	600 mg/m2 IV over 30 minutes
*Initiate 3-4 weeks after the last dose of AC if post-AC is ³ 50%.*
Pertuzumab (P) ^b (Use of premeds is at the investigator’s discretion or institutional policy.)	First dose: 840 mg IV over 60 minutes ( ± 10 minutes) ^c	Day 1 every 3 weeks	Cycles 1-4
	Subsequent doses: 420 mg IV over 30-60 minutes ^c
Trastuzumab (T) ^b (Use of premeds is at the investigator’s discretion or institutional policy.)	First dose: 8 mg/kg IV over 90 minutes ( ± 10 minutes) ^c	Day 1 every 3 weeks	Cycles 1-4
	Subsequent doses: 6 mg/kg IV over 30-60 minutes ^c
Paclitaxel (WP) ^b,d	80 mg/m2 IV over 60 minutes See footnote f for premedications.	Days 1, 8, and 15 every 3 weeks	Weekly for 12 total doses ^e
a Choice of AC schedule (every 3 weeks or every 2 weeks [dose-dense]) is at the investigator’s discretion. *If the dose-dense schedule is used, primary prophylaxis with G-CSF is required during AC* (see Section 7.3.1 for instructions). b Pertuzumab, trastuzumab, and paclitaxel should be administered sequentially. Paclitaxel should be administered after pertuzumab and trastuzumab. An observation period of 30 to 60 minutes is recommended after each pertuzumab infusion and before starting any subsequent infusion of trastuzumab or paclitaxel but may be adjusted by institutional standards. Infusion times and the order of drug administration may be altered per practice standards. c See Table 6 for instructions regarding trastuzumab and pertuzumab infusion-related and allergic reactions. d Patients should receive premedications as follows before each paclitaxel dose: · Dexamethasone 10 mg IV, completed 30 minutes before each paclitaxel administration. · Diphenhydramine hydrochloride 25-50 mg IV or PO and an H-2 blocker IV or PO (cimetidine 300 mg, ranitidine 50 mg, or famotidine 20 mg) before each paclitaxel administration. · At the investigator's discretion, dexamethasone and diphenhydramine hydrochloride doses may be tapered during the paclitaxel cycles. · Doses and routes of premedication administration may be modified per institutional standards. e Paclitaxel must not be continued beyond 16 weeks after initiation of Cycle 1.

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7.2

Dose determinations

7.2.1

Calculation of drug doses

Recalculations of BSA and drug doses are required if the patient has a 10% or greater weight change (+/-) from baseline or from the last weight used to calculate BSA and drug doses. At the investigator's discretion, the BSA and drug doses may also be recalculated prior to each treatment.

7.2.2

Rounding doses

Rounding of drug doses is optional. If the treating physician decides to round the dose(s), follow these guidelines. (These also apply to dose modifications.)

Cyclophosphamid e (600 mg/m 2 IV)

Doses should be rounded to the nearest 20 mg.

Doxorubicin (60 mg/m 2 IV)

Doxorubicin should be rounded to the nearest 1 mg.

Paclitaxel (80 mg/m 2 IV )

Doses should be rounded to the nearest 5 mg.

Pertuzumab (840 mg loading total dose; 420 mg subsequent total dose)

Fixed dose; rounding is not applicable.

Trastuzumab (8 mg/kg IV loading dose; 6 mg/kg IV subsequent doses)

Doses should be rounded to the nearest 20 mg.

7.3

Supportive therapy

7.3.1

G-CSF

	·	*Primary prophylaxis with pegfilgrastim is required during dose-dense AC.* It should be administered according to the package insert for the agent used.

	·	Filgrastim may be used as secondary prophylaxis and to treat neutropenia associated infections during administration of paclitaxel.

	·	Do not administer G-CSF within 24 hours of chemotherapy.

Filgrastim is recommended; however, if required by institutional standards, GM-CSF may be administered as an alternative.

7.3.2

Antiemetic therapy

Antiemetic therapy should be administered according to NCCN or ASCO Clinical Practice Guidelines.

7.3.3

Management of diarrhea

Diarrhea is a commonly occurring toxicity during the therapy included in FB-12. Patient education should include instructions regarding the importance of reporting diarrhea, early use of antidiarrheal medication using loperamide, and non-pharmacologic interventions (e.g., increasing fluid intake, eating frequent small meals, avoiding foods that are high in lactose, etc.). Refer to ASCO Recommended Guidelines for Treatment of Cancer Treatment-Induced Diarrhea for additional recommendations regarding diarrhea ( Benson 2004 ).

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7.4

Surgery

7.4.1

Marking the primary tumor site prior to initiation of therapy

Patients who are considered potential candidates for breast conservation should have the primary tumor site marked prior to initiating chemotherapy or, at least, prior to disappearance of the tumor clinically. This can be achieved with insertion of a radiopaque marker, clip, or similar marking technique, as long as the technique provides assurance that the primary tumor site can be located and excised. If a clip is used, a specimen radiograph should be performed to confirm its removal.

7.4.2

Breast surgery

As soon as possible following recovery from neoadjuvant therapy and after the final clinical tumor assessment, the patient should undergo a lumpectomy or mastectomy.

Breast conservation may be selected according to patient and surgeon preferences.

Patients who are not considered candidates for breast conservation or do not desire breast conservation will undergo a total mastectomy with or without immediate breast reconstruction.

Patients who are deemed to be good candidates for breast conservation will undergo segmental excision of the primary tumor bed. If the residual tumor is non-palpable, methods to insure adequate excision of the primary tumor site should be used to guide the excision. If tumor location was marked with clips, a specimen radiograph should be obtained intraoperatively to document that the lesion has been removed including the clips. Hemoclips should be inserted at the base of the segmental mastectomy operative site to facilitate radiotherapy treatment planning of the actual tumor bed.

The margins of the resected specimen of patients treated with breast conservation must be histologically free of invasive tumor and DCIS. In patients for whom pathologic examination demonstrates tumor at the margin, additional operative procedures should be performed to obtain clear margins.

7.4.3

Nodal staging following neoadjuvant therapy

Post-neoadjuvant therapy axillary staging is required for all patients.

Use of sentinel node (SN) biopsy procedure following completion of neoadjuvant therapy is at the discretion of the investigator. If SN biopsy was not performed, surgical evaluation of the axilla with axillary lymph node dissection is required.

If the post-neoadjuvant therapy SN biopsy is positive, additional surgical evaluation of the axilla is required unless the patient participates in the Alliance A011202 trial.

If the post-neoadjuvant therapy SN biopsy is negative, further surgical nodal staging procedure is not required. NOTE: For patients who had documented node-positive disease prior to neoadjuvant therapy, it is recommended that a minimum of 2 sentinel lymph nodes be removed. The removal of at least 3 sentinel lymph nodes and the use of dual tracer for lymphatic mapping are strongly recommended. However, if the only SN identified by isotope scan is in the internal mammary nodal chain, the axilla should be explored for a blue or suspicious node.

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If axillary nodal staging procedures were performed before initiating chemotherapy (see Sections 4.2.9 and 4.4.4 ), follow these guidelines.

Even if FNA or core biopsy of an axillary node(s) was performed before initiating AC , surgical evaluation of the axilla (either SN biopsy and/or axillary dissection as described in the bullet above) must be performed following completion of neoadjuvant therapy, regardless of whether FNA or core biopsy was positive or negative .

Note: Performance of SN biopsy prior to initiating AC is prohibited.

7.4.4

Tissue processing and collection

See Appendix B for suggested procedures for evaluation of post-neoadjuvant therapy surgical specimens.

7.5

Prohibited therapies

The following types of treatment, in addition to any cancer therapy other than the therapy specified in this protocol, are prohibited while on neoadjuvant study therapy.

7.5.1

Chemotherapy

Administration of chemotherapy other than the chemotherapy specified in this protocol is prohibited.

7.5.2

Targeted therapy

Administration of targeted therapy for malignancy (other than the assigned targeted therapy regimen) is prohibited.

7.5.3

Radiation therapy

Radiation therapy during treatment or before surgery is prohibited

7.6

Participation in other clinical trials

If an FB-12 patient is considering participation in another clinical trial (including supportive therapy trials), contact the DSSM (see Information Resources ).

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8.0

treatment management

8.1

General instructions

The NCI CTCAE v4.0 must be used to grade the severity of AEs.

All treatment decisions must be based on the AE requiring the greatest modification.

Paclitaxel doses that have been reduced may not be escalated.

There are no dose reductions for trastuzumab and pertuzumab.

Paclitaxel should be held for at least 1 week until any AE requiring dose modification returns to £ grade 1 unless indicated otherwise in the treatment management sections/tables. If recovery to £ grade 1 (or to other level specified in instructions) has not occurred after 3 weeks of delay, study therapy must be discontinued.

If necessary, the timing of a treatment may be adjusted to 2 days earlier or 2 days later than the scheduled date of treatment, though paclitaxel doses should not be administered within 5 days of each other.

If alternative (non-protocol) therapy is given at any time, all study therapy must be discontinued.

In the event of tumor progression, study therapy must be discontinued. Further therapy is at the investigator's discretion.

8.2

Management of anemia

Chemotherapy should not proceed with ³ grade 3 anemia. Transfusion is acceptable for improving the hemoglobin value to allow therapy to continue without delay. The patient should be assessed to rule out other causes of anemia. Use of erythropoiesis-stimulating agents is prohibited.

8.3

Treatment management for AC

Treatment management for AC is per institutional standards.

8.4

Treatment decisions when components of paclitaxel, trastuzumab, or pertuzumab must be held or discontinued

When paclitaxel is held, trastuzumab and pertuzumab should be continued.

When paclitaxel is discontinued, trastuzumab and pertuzumab should be discontinued.

If trastuzumab and pertuzumab are discontinued in the absence of progression, the remaining paclitaxel doses should be administered.

If trastuzumab and pertuzumab must be held due to toxicity, maintain the paclitaxel schedule.

8.5

Treatment management for paclitaxel

Paclitaxel must not be continued beyond 16 weeks after initiation of Cycle 1. Any of the 12 paclitaxel doses remaining after 16 weeks following the first paclitaxel dose should not be administered.

Unless otherwise specified, paclitaxel that is held due to toxicity will not resume until the toxicity has resolved to £ Grade 1.

All dose modifications for paclitaxel are based on the dose level changes outlined in Table 4 .

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Table 4. Dose levels for paclitaxel

Dose Level 0

Starting Dose

Dose Level -1

Dose Level -2

Dose Level -3

Paclitaxel (mg/m 2 )

Discontinue

8.5.1

Neutropenia

For an absolute neutrophil count (ANC) < 1000/mm ³ , hold weekly paclitaxel until ³ 1000/mm ³ .

If paclitaxel can be resumed in 1 week, maintain paclitaxel dose.

If paclitaxel can be resumed after holding for 2-3 consecutive weeks for an ANC < 1000/mm ³ , decrease paclitaxel by one dose level.

If paclitaxel cannot be resumed after holding for 3 consecutive weeks for an ANC < 1000/mm ³ , discontinue paclitaxel.

For an ANC < 100/mm ³ or febrile neutropenia, at any time, paclitaxel must be decreased by one dose level for all subsequent doses.

Refer to Section 7.3.1 for the use of filgrastim as secondary prophylaxis during paclitaxel.

8.5.2

Thrombocytopenia

For platelets < 75,000/mm ³ , paclitaxel must be held until platelet count is ³ 75,000/mm ³ .

If paclitaxel is held for 1 week for platelets < 75,000/mm ³ , resume paclitaxel at the current dose.

If paclitaxel is held for 2-3 consecutive weeks for platelets < 75,000/mm ³ , decrease paclitaxel by one dose level for subsequent doses.

If paclitaxel cannot be resumed after holding for 3 consecutive weeks for platelets < 75,000/mm ³ , discontinue paclitaxel.

For platelets ³ 75,000/mm ³ and < 100,000/mm ³ , continue paclitaxel at the current dose level.

8.5.3

Hepatic toxicity

For total bilirubin > 1.5 × ULN, ALT > 5 × ULN, or AST > 5 × ULN related to paclitaxel, hold paclitaxel until total bilirubin is < 1.5 × ULN, ALT < 5 × ULN, and AST < 5 × ULN. Recheck liver function weekly.

If treatment is held for 3 consecutive weeks for hepatic dysfunction due to paclitaxel, discontinue paclitaxel.

8.5.4

Neurologic toxicity

For Grade 2 peripheral neuropathy, decrease paclitaxel one dose level for subsequent doses. Therapy may be held one week per investigator discretion.

For Grade 3 peripheral neuropathy, hold paclitaxel.

When neuropathy improves to £ Grade 2, decrease paclitaxel by one dose level and resume treatment.

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If Grade 3 peripheral neuropathy does not improve within 3 weeks, discontinue paclitaxel.

For Grade 3 neuropathy that has recurred after recovery to £ Grade 2, discontinue paclitaxel.

For Grade 4 peripheral neuropathy, discontinue paclitaxel.

8.5.5

Other clinically significant toxicities attributed to paclitaxel

For management of anemia, see Section 8.2 .

Delay all treatment for any ³ Grade 3 toxicity until toxicity improves to £ Grade 1. When treatment is resumed, if toxicity was attributable to paclitaxel, reduce the dose.

If toxicity related to paclitaxel does not improve to £ Grade 1 within 3 weeks, discontinue paclitaxel.

8.5.6

Hypersensitivity and/or infusion reactions

Grade 1 : Continue paclitaxel infusion. Consider more intensive premedication prior to subsequent doses.

Grade 2 : Interrupt paclitaxel infusion. Manage reaction according to institutional procedures. Resume paclitaxel when reaction has completely resolved. Consider more intensive premedication prior to subsequent doses.

Grade 3 : Stop paclitaxel infusion. Manage reaction according to institutional procedures. Do not resume paclitaxel infusion that day. It is up to the investigator to decide whether to attempt re-treatment with paclitaxel the following week with more intensive premedication or to discontinue paclitaxel.

Grade 4 : Stop paclitaxel infusion. Manage reaction according to institutional procedures. Discontinue paclitaxel.

8.6

Treatment management for trastuzumab and pertuzumab

If LVEF is < 50% following AC, do NOT initiate trastuzumab/pertuzumab. Further therapy is at the investigator's discretion.

There are no reductions in the trastuzumab and pertuzumab doses. If trastuzumab or pertuzumab is held ³ 6 weeks, the loading dose followed by the maintenance dose for the remaining doses may be administered, at the investigator's discretion, when resuming therapy.

If pertuzumab is held or discontinued for toxicity that does not require holding or discontinuing trastuzumab, administration of trastuzumab should continue.

8.7

Heart failure and left ventricular systolic dysfunction

8.7.1

Symptomatic decrease in LVEF

Grade 2, 3, or 4 heart failure

Discontinue trastuzumab and pertuzumab.

Grade 3 or 4 left ventricular systolic dysfunction

Discontinue trastuzumab and pertuzumab.

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Note: The protocol-specified schedule for obtaining LVEF assessments should continue to be followed even after the discontinuation of study therapy or occurrence of a cardiac event.

8.7.2

Asymptomatic decrease in LVEF

The results of the LVEF assessments will be used to determine if trastuzumab and pertuzumab can be continued (see Table 5 ).

Echocardiogram is the preferred method for assessment of LVEF. However, LVEF assessment by MUGA scan is permitted.

All LVEF assessments should be performed by the same method (either echocardiogram or MUGA scan) that was performed at baseline.

Investigators are strongly urged to schedule the LVEF assessment at the same cardiac imaging facility that performed the patient's baseline LVEF assessment.

Table 5. Trastuzumab and pertuzumab management based on LVEF assessments

The following are instructions for patients who have an asymptomatic decrease in LVEF from baseline (prior to AC) to the LVEF assessment after Cycle 2 [before Cycle 3] of paclitaxel, trastuzumab, and pertuzumab.
LVEF	Asymptomatic decrease in LVEF percentage points from baseline
	Decrease of < 10 percentage points	Decrease of ≥ 10 percentage points
³ 50%	Continue trastuzumab and pertuzumab	Continue trastuzumab and pertuzumab
45-49%	Continue trastuzumab and pertuzumab and repeat ECHO/MUGA in 3 weeks	Discontinue trastuzumab and pertuzumab
£ 45%	Discontinue trastuzumab and pertuzumab
*Treatment rules based on "repeat" LVEF results:* · If the repeat LVEF is ³ 45% AND the LVEF drop is < 10 percentage points, continue/resume trastuzumab and pertuzumab at the investigator's discretion. · If the repeat LVEF is < 45%, discontinue trastuzumab and pertuzumab.

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8.8

Other trastuzumab- and pertuzumab-specific instructions

Trastuzumab and pertuzumab management for other adverse events is outlined on Table 6 .

Table 6. Dose modifications and instructions for trastuzumab and pertuzumab

CTCAE v4.0 Adverse Event	CTCAE Grade	Instructions for each Agent Patient is Receiving
CTCAE v4.0 Adverse Event	CTCAE Grade	Trastuzumab/Pertuzumab
Blood and lymphatic system disorders
Cardiac Disorders
Cardiac AEs listed in the Cardiac Disorders Section of the CTCAE v4.0. ( Note:* For heart failure and left ventricular systolic dysfunction, refer to Section 8.7 )*	1	Continue trastuzumab and pertuzumab at the discretion of the investigator.
	2	Hold trastuzumab and pertuzumab and conduct cardiac evaluation. Based on results of this evaluation, refer to Section 8.9 for grade 2 AEs that require discontinuation of trastuzumab and pertuzumab . For other grade 2 cardiac AEs, trastuzumab and pertuzumab should be held during evaluation of the AE and until £ Grade 1; continue or discontinue at investigator's discretion.
	3, 4	Discontinue trastuzumab and pertuzumab.
Gastrointestinal Disorders
Diarrhea Mucositis oral Nausea	2	Hold trastuzumab and pertuzumab until resolved to £ Grade 1, then resume.
	3	Hold trastuzumab until resolved to £ Grade 1, then resume. Discontinue pertuzumab.
	4	Discontinue trastuzumab and pertuzumab.
General Disorders
Infusion-related reaction	1, 2, 3, 4	See instructions for allergic reaction
Immune System Disorders
Allergic reaction	1	Slow the infusion of and assess the patient; management is at the investigator's discretion.
	2	Stop infusion and administer support medications per investigator's discretion. When symptoms resolve to £ Grade 1, infusion may be resumed later that day at a slower rate or on the next day at a slower rate with pre-meds. Pre-meds should be used for all subsequent treatments.
	3	Follow instructions for Grade 2; trastuzumab and/or pertuzumab may be discontinued at the investigator's discretion.
	4	Discontinue trastuzumab and pertuzumab.
Anaphylaxis	3	Follow instructions for Grade 3 allergic reactions or, at investigator's discretion, discontinue trastuzumab and/or pertuzumab.
Anaphylaxis	4	Discontinue trastuzumab and pertuzumab.

Table continued on next page.

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Table 6. Dose modifications and instructions for trastuzumab and pertuzumab (continued)

CTCAE v4.0 Adverse Event	CTCAE Grade	Instructions for each Agent Patient is Receiving
CTCAE v4.0 Adverse Event	CTCAE Grade	Trastuzumab/Pertuzumab
Respiratory, Thoracic, and Mediastinal Disorders
ARDS	3,4	Discontinue trastuzumab and pertuzumab.
Cough	2,3	Follow instructions in footnote a .
Dyspnea	1, 2	Hold trastuzumab and pertuzumab; rule out heart failure and non-infectious lung disease; follow instructions in footnote a .
Dyspnea	3, 4	Discontinue trastuzumab and pertuzumab.
Hypoxia	2	Follow instructions in footnote a .
Hypoxia	3, 4	Discontinue trastuzumab and pertuzumab.
Pneumonitis	2	Follow instructions in footnote a .
Pneumonitis	3, 4	Discontinue trastuzumab and pertuzumab.
Pulmonary edema	2	Follow instructions in footnote a .
Pulmonary edema	3, 4	Discontinue trastuzumab and pertuzumab.
Pulmonary fibrosis	1	If fibrosis was present at baseline, trastuzumab and pertuzumab may be continued at the investigator's discretion. If new or worsening fibrosis, discontinue trastuzumab and pertuzumab.
Pulmonary fibrosis	2, 3, 4	Discontinue trastuzumab and pertuzumab.
Pulmonary hypertension	2, 3, 4	Discontinue trastuzumab and pertuzumab.
Other
Other clinically significant AEs ^b	2	Hold trastuzumab and/or pertuzumab until £ grade 1 or discontinue trastuzumab and/or pertuzumab.
Other clinically significant AEs ^b	3, 4	Discontinue trastuzumab and/or pertuzumab.
a Hold trastuzumab and/or pertuzumab and determine etiology. Unless prohibited based on instructions for other clinical diagnoses (i.e., other AEs), resume trastuzumab and/or pertuzumab when £ grade 1 (if the AE requiring trastuzumab and/or pertuzumab to be held was ³ grade 2). Resume trastuzumab and pertuzumab when grade 0 if the AE requiring trastuzumab and pertuzumab to be held was dyspnea. b Determination of "clinically significant" is at the investigator's discretion and applies to those adverse events that can be attributed to trastuzumab and/or pertuzumab and are not related to chemotherapy.

8.9

CTCAE grade 2 cardiac disorder adverse events that prohibit trastuzumab and pertuzumab therapy

Trastuzumab and pertuzumab will not be continued following any grade 2 cardiac AE listed below. (Trastuzumab and pertuzumab should be administered following any of the other grade 2 AEs listed in the Cardiac Disorders section of the CTCAE v4.0, but not listed below or in Section 8.7 .)

If the patient develops any of the following cardiac AEs during trastuzumab and pertuzumab, discontinue trastuzumab and pertuzumab. Further therapy is at the investigator's discretion.

Acute coronary syndrome

Atrioventricular block complete

Mobitz (type) II atrioventricular block

Pericarditis

Right ventricular dysfunction

Sick sinus syndrome

Ventricular tachycardia

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9.0

drug information

9.1

Doxorubicin, cyclophosphamide, and paclitaxel

Doxorubicin, cyclophosphamide, and paclitaxel are available as commercial supply.

For further details regarding the study drug, see the doxorubicin, cyclophosphamide, and paclitaxel U.S. Package Inserts as well as local prescribing information.

9.2

Trastuzumab

9.2.1

Description

Trastuzumab is a recombinant DNA-derived humanized monoclonal antibody that selectively binds with high affinity in a cell-based assay (Kd=5 nM) to the extracellular domain of the human epidermal growth factor receptor 2 protein, HER2. The antibody is an IgG1 kappa that contains human framework regions with the complementarity-determining regions of a murine antibody (4D5) that binds to HER2.

The humanized antibody against HER2 is produced by a mammalian cell (Chinese Hamster Ovary [CHO]) suspension culture in a nutrient medium containing the antibiotic gentamicin. Gentamicin is not detectable in the final product. Trastuzumab is a sterile, white to pale yellow, preservative-free lyophilized powder for intravenous (IV) administration. The nominal content of each trastuzumab vial is 440 mg trastuzumab, 400 mg α,α-trehalose dihydrate, 9.9 mg L-histidine HCl, 6.4 mg L-histidine, and 1.8 mg polysorbate 20, USP. Reconstitution with 20 mL of the supplied Bacteriostatic Water for Injection (BWFI), USP, containing 1.1% benzyl alcohol as a preservative, yields a multi-dose solution containing 21 mg/mL trastuzumab, at a pH of approximately 6.

9.2.2

Toxicity

Refer to the current trastuzumab IB for toxicity information.

9.2.3

Administration

Reconstitution

The diluent provided has been formulated to maintain the stability and sterility of trastuzumab for up to 28 days. Other diluents have not been shown to contain effective preservatives for trastuzumab. Each vial of trastuzumab should be reconstituted with 20 mL of BWFI, USP, 1.1% benzyl alcohol preserved, as supplied, to yield a multi-dose solution containing 21 mg/mL trastuzumab.

Immediately upon reconstitution with BWFI, the vial of trastuzumab must be labeled in the area marked “Do not use after:” with the future date that is 28 days from the date of reconstitution. Note: When administering trastuzumab to a patient with a known hypersensitivity to benzyl alcohol, trastuzumab must be reconstituted with SWFI, and only one dose per trastuzumab vial should be used. Trastuzumab which has been reconstituted with SWFI must be used immediately and any unused portion must be discarded. Use of other reconstitution diluents should be avoided. Shaking the reconstituted trastuzumab or causing excessive foaming during the addition of diluent may result in problems with dissolution and the amount of trastuzumab that can be withdrawn from the vial. Use appropriate aseptic technique when performing the following reconstitution steps:

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Using a sterile syringe, slowly inject the 20 mL of diluent into the vial containing the lyophilized cake of trastuzumab. The stream of diluent should be directed into the lyophilized cake.

Swirl the vial gently to aid reconstitution. Trastuzumab may be sensitive to shear-induced stress, e.g., agitation or rapid expulsion from a syringe. DO NOT SHAKE.

Slight foaming of the product upon reconstitution is not unusual. Allow the vial to stand undisturbed for approximately 5 minutes. The solution should be essentially free of visible particulates, clear to slightly opalescent, and colorless to pale yellow.

Administration

Determine the dose (mg) of Herceptin. Calculate the volume of the 21 mg/mL reconstituted Herceptin solution needed, withdraw this amount from the vial and add it to an infusion bag containing 250 mL of 0.9% Sodium Chloride Injection, USP. DO NOT USE DEXTROSE (5%) SOLUTION. Gently invert the bag to mix the solution.

Administer as an intravenous infusion only. Do not administer as an IV push or bolus. See Section 7.1 for additional information.

9.2.4

Procurement of trastuzumab

Trastuzumab will be supplied free of charge by Genentech, A Member of the Roche Group, and distributed via an external vendor. Trastuzumab must be requested by the principal investigator (or his/her authorized designee) at each participating institution (see Information Resources for the e-mail address to be used for ordering study drug). The initial supply of trastuzumab may be requested at the time the first patient signs the FB-12 consent form. Trastuzumab will be shipped directly to the investigator whose sites are participating in FB-12.

9.2.5

Shipping

Vials of trastuzumab are shipped at room temperature by overnight express delivery Monday through Thursday excluding holidays .

9.2.6

Storage/stability

Vials of trastuzumab are stable at 2°–8°C (36°–46°F) prior to reconstitution. Do not use beyond the expiration date stamped on the vial. A vial of trastuzumab reconstituted with BWFI, as supplied, is stable for 28 days after reconstitution when stored refrigerated at 2°–8°C (36°–46°F), and the solution is preserved for multiple use. Discard any remaining multi-dose reconstituted solution after 28 days. If unpreserved SWFI (not supplied) is used, the reconstituted trastuzumab solution should be used immediately and any unused portion must be discarded. Do not freeze trastuzumab that has been reconstituted. The solution of trastuzumab for infusion diluted in polyvinylchloride or polyethylene bags containing 0.9% Sodium Chloride Injection, USP, may be stored at 2°–8°C (36°–46°F) for up to 24 hours prior to use. Diluted trastuzumab has been shown to be stable for up to 24 hours at room temperature at 2°–25°C. However, because diluted trastuzumab contains no effective preservative, the reconstituted and diluted solution should be stored refrigerated 2°–8°C.

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9.3

Pertuzumab

9.3.1

Description

Pertuzumab targets the extracellular dimerization domain (Subdomain II) of the human epidermal growth factor receptor 2 protein (HER2) and, thereby, blocks ligand-dependent heterodimerization of HER2 with other HER family members, including EGFR, HER3, and HER4. As a result, pertuzumab inhibits ligand-initiated intracellular signaling through two major signal pathways, mitogen-activated protein (MAP) kinase and phosphoinositide 3-kinase (PI3K). Inhibition of these signaling pathways can result in cell growth arrest and apoptosis, respectively. In addition, pertuzumab mediates antibody-dependent cell-mediated cytotoxicity (ADCC).

Pertuzumab is a recombinant humanized monoclonal antibody produced by recombinant DNA technology in a mammalian cell (Chinese Hamster Ovary) culture containing the antibiotic, gentamicin. Gentamicin is not detectable in the final product. Pertuzumab has an approximate molecular weight of 148 kDa.

Pertuzumab is a sterile, clear to slightly opalescent, colorless to pale brown liquid for intravenous infusion. It is supplied as a single-use 420 mg/14 mL vial of pertuzumab at a concentration of 30 mg/mL in 20 mM L-histidine acetate (pH 6.0), 120 mM sucrose, and 0.02% polysorbate 20. Each 20 mL vial contains 420 mg of pertuzumab (14 mL/vial).

9.3.2

Toxicity

Refer to the current pertuzumab IB for toxicity information.

9.3.3

Administration

Preparation: Prepare the solution for infusion, using aseptic technique, as follows:

Withdraw the prescribed volume of pertuzumab solution from the vial(s).

Add pertuzumab to a 250 mL non-PVC polyolefin or polyvinyl chloride IV bag of 0.9% Sodium Chloride Injection, USP. DO NOT USE DEXTROSE (5%) SOLUTION.

Gently invert the bag to mix the solution; do not shake .

Visually inspect the solution for particulates and discoloration prior to administration.

Administration

Administer as an intravenous infusion only. Do not administer as an intravenous push or bolus. Do not mix pertuzumab with other drugs. See Section 7.1 for additional information.

9.3.4

Procurement of pertuzumab

Pertuzumab will be supplied free of charge by Genentech, A Member of the Roche Group, and distributed via an external vendor. Pertuzumab must be requested by the principal investigator (or his/her authorized designee) at each participating institution (see Information Resources for the e-mail address to be used for ordering study drug). The initial supply of pertuzumab may be requested at the time the first patient signs the FB-12

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consent form. Pertuzumab will be shipped directly to the investigator whose sites are participating in FB-12.

9.3.5

Shipping

Vials of pertuzumab will be sent on ice via FedEx Monday through Thursday for overnight delivery and must be placed in a 2°–8°C (36°–46°F) refrigerator immediately upon receipt to ensure optimal retention of physical and biochemical integrity.

9.3.6

Storage/Stability

Vials of pertuzumab are stable at 2°–8°C (36°–46°F). Do not freeze. Do not use beyond the expiration date stamped on the vial. Pertuzumab solution diluted in polyvinyl chloride (PVC) or non-PVC polyolefin bags containing 0.9% Sodium Chloride Injection, USP, may be stored at 2°–8°C (36°–46°F) for up to 24 hours prior to use. CAUTION: The single-use dosage form contains no antibacterial preservatives. Puncture the seal only once. Discard the vial 8 hours after initial entry.

9.4

Transfer of trastuzumab and pertuzumab

Trastuzumab and pertuzumab may not be used outside the scope of FB-12, nor can trastuzumab and pertuzumab be transferred or licensed to any party not participating in this clinical trial.

9.5

Destruction of trastuzumab and pertuzumab

At the completion of study treatment for all patients, all unopened vials of trastuzumab and pertuzumab shall be destroyed by study sites in accordance with the local institution standard operating procedures after monitoring of the accountability record has been completed by DSSM.

Written documentation of destruction must contain the following:

identity (batch numbers) of trastuzumab or pertuzumab destroyed;

quantity of trastuzumab or pertuzumab destroyed;

date of destruction (date discarded in designated hazardous container for destruction); and

name and signature of the person who discarded the trastuzumab or pertuzumab in a hazardous container for destruction.

9.6

Drug accountability

The investigator, or a responsible party designated by the investigator, must maintain a careful record of the receipt, disposition, and return of all drug received through the FB-12 study using an investigational agent accountability record form.

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10.0

adverse event reporting

The investigator is responsible for the detection and documentation of events meeting the criteria and definition of an adverse event (AE) or a serious adverse event (SAE), as provided in this protocol. Routine and expedited adverse events will be entered on the eCRFs and the supporting documentation must be submitted to DSSM according to the instructions in Section 10.0 at email: industry.trials@nsabp.org .

10.1

Definition of an AE

An AE is any untoward, undesired, or unplanned event in the form of signs, symptoms, disease, laboratory findings, or other physiologic observations occurring in a patient participating in FB-12. The event does not need to be causally related to study therapy or other requirements of the FB-12 trial to be considered an AE.

Examples of an AE include, but are not limited to, the following:

Any toxicity related to study therapy.

Any clinically significant worsening of a pre-existing condition.

An AE occurring from a symptomatic overdose of any study therapy, whether accidental or intentional. Overdose is a dose greater than that specified in the protocol.

A symptomatic AE that has been associated with the discontinuation of the use of any of the agents included in the study therapy.

An AE occurring during a clinical study that is not related to the study therapy, but is considered by the investigator or sponsor to be related to the study requirements, for example, an AE may be an untoward event related to a medical procedure required by the protocol.

Examples of clinical events that should not be considered AEs:

Medical or surgical procedure (e.g., endoscopy, appendectomy). Note, the condition that leads to the procedure may be an AE, but the procedure itself is not.

Anticipated day-to-day fluctuations of pre-existing disease(s) or condition(s) present or detected at the start of the study that do not worsen.

10.2

Definition of an SAE

An SAE is any untoward medical occurrence that, at any dose causes one of the following:

Results in death

Is life-threatening

The term 'life-threatening' in the definition of 'serious' refers to an event in which the patient was at risk of death at the time of the event. It does not refer to an event, which might have caused death, if it were more severe.

Requires inpatient hospitalization or prolongation of existing hospitalization

Hospitalization is any inpatient admission to a health care facility even if for less than 24 hours. Hospitalization or prolongation of a hospitalization constitutes a criterion for an AE to be serious; however, it is not in itself considered an SAE. In the absence of an AE, a hospitalization or prolongation of a hospitalization should not be reported as an SAE. For example, the following hospitalizations would not require expedited reporting for an SAE:

a hospitalization or prolongation of hospitalization needed for a procedure required by the protocol or as part of another routine procedure; or

a hospitalization for a pre-existing condition that has not worsened.

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Results in persistent or significant incapacity or substantial disruption of the ability to conduct normal life functions

This is not intended to include experiences of relatively minor medical significance such as uncomplicated headache, nausea, vomiting, diarrhea, influenza, and accidental trauma (e.g., sprained ankle) which may interfere or prevent everyday life functions but do not constitute a substantial disruption.

Is a congenital anomaly/birth defect

Also, appropriate medical judgment should be exercised in deciding whether SAE reporting is required in other situations, such as important medical events that may not result in death, be life-threatening, or require hospitalization, but may jeopardize the patient and may require medical or surgical intervention to prevent one of the other outcomes listed in the definition of an SAE ( Section 10.2 ). Examples of such events are intensive treatment in an emergency room or at home for allergic bronchospasm, blood dyscrasias or convulsions that do not result in inpatient hospitalization, or development of drug dependency or drug abuse.

10.3

Events requiring expedited reporting

All events listed in Section 10.3 must be reported in an expedited manner according to the instructions in Section 10.6 .

10.3.1

SAEs

All events meeting the definition of an SAE ( Section 10.2 ) require expedited reporting.

10.3.2

Other events requiring expedited reporting

Other events that must be recorded, reported, and followed up as indicated for an SAE (see Sections 10.3 and 10.6 for reporting procedures). This includes the following events:

Pregnancy exposure to study therapy (If a pregnancy is confirmed, use of study therapy must be discontinued immediately. See Section 10.4 .)

Inadvertent or accidental exposure to study therapy, with or without an AE

Medication errors involving study therapy with an AE, including overdose, product confusion, and potential product confusion. (A medication error is any preventable event that may cause or lead to inappropriate use or harm while the study therapy is in control of the healthcare professional or patient. Examples of reportable medication error include administration of unassigned treatment and administration of expired trastuzumab or pertuzumab, when associated with an AE/SAE.)

Death, excluding death due to progression of breast cancer.

10.3.3

Clinical laboratory abnormalities

Not every laboratory abnormality qualifies as an AE. A laboratory test results should be reported as an AE (and SAE) if it meets any of the following criteria:

Accompanied by clinical symptoms

Results in a change in study treatment (e.g., dosage modification, treatment interruption, or treatment discontinuation)

Results in a medical intervention (e.g., potassium supplementation for hypokalemia) or a change in concomitant therapy

Clinically significant in the investigator's judgment

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10.3.4

Disease-related events and/or disease-related outcomes not qualifying as SAEs

An event which is part of the natural course of breast cancer does not need to be reported as an SAE. Progression of breast cancer will be reported on the appropriate page of the eCRF.

10.4

Pregnancy

The investigator will collect pregnancy information on any patient who becomes pregnant while participating in this study. The investigator will record pregnancy information on the FB-12 Pregnancy eCRF and submit supporting documentation to DSSM within 24 hours of learning of a patient’s pregnancy.

Any serious pregnancy complication or elective termination of a pregnancy for medical reasons will be recorded as an AE or SAE. A spontaneous abortion is always considered to be an SAE and will be reported as such.

Any SAE occurring in association with pregnancy brought to the investigator's attention after the patient has completed the study and considered by the investigator as possibly related to study therapy, must be reported to DSSM.

10.5

Grading the severity of the AE

The NCI CTCAE v4.0 must be used to determine the grade of the AE. The CTCAE provides descriptive terminology and a grading scale for each AE listed. Information regarding the CTCAE can be found on the CTEP website at http://ctep.cancer.gov. For further assistance, contact DSSM (see Information Resources ).

10.6

Expedited reporting instructions

10.6.1

Time period for reporting SAEs and other events requiring expedited reporting

All SAEs and other events as noted in Section 10.2 and 10.3 regardless of relationship to study therapy will be reported in an expedited manner as described in Section 10.6.2 . Reporting SAEs (and other applicable events) regardless of relationship to study therapy begins with the first dose of study therapy and continues until 30 days after the last dose of study therapy.

Any SAE assessed as related to study participation (e.g., protocol-mandated procedures) will be recorded from the time a patient consents to participate in the study up to and including the 30 day post study therapy assessment .

Following the AE assessment 30 days after the last dose of study therapy, only SAEs determined to be related to study therapy will be reported in an expedited manner using FB-12 eSAE.

The investigator must follow up on all SAEs until the events have subsided, until values have returned to baseline, or until the condition has stabilized.

10.6.2

Reporting instructions

All SAEs and other events requiring expedited reporting must be reported using FB-12 SAE eCRF and source documentation submitted to DSSM within 24 hours of the study site personnel's initial notification of the event (see Information Resources ).

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NSABP will forward expedited report forms and their supporting documentation for SAEs that meet reporting requirements to the FDA and also to Genentech, a Member of the Roche Group.

Investigators are responsible for reporting AEs that meet specific criteria to their local IRBs.

10.7

Routine reporting of AEs

10.7.1

Time period and frequency for routine reporting of AEs

Patients will be monitored for the occurrence of AEs at each scheduled assessment and during any contact with the patient during the study.

All AEs, including SAEs that have been reported on the FB-12 SAE eCRF, regardless of relationship to study therapy, will be recorded on the AE eCRF from the first dose of study therapy until 30 days after the last dose of study therapy (up to the date that a new therapy begins after disease recurrence/progression, or second primary).

For routine reporting during AC, see Section 10.7.2 .

For routine reporting during paclitaxel, trastuzumab, and pertuzumab, all AEs will be reported on the AE eCRF.

The investigator must follow up on all AEs until the events have subsided, until values have returned to baseline, or until the condition has stabilized.

Following the AE assessment 30 days after the last dose of study therapy, routine reporting is no longer required. (See Section 10.6.1 for expedited reporting requirements.)

10.7.2

Exceptions to routine reporting requirements

During treatment with AC, all ³ Grade 3 AEs will be reported on the AE eCRF.

10.8

Documentation requested following death

For deaths that occur within 30 days of the last dose of study therapy:

	·	Autopsy reports should be secured whenever possible and should be submitted to the DSSM.

	·	A copy of the death certificate should be forwarded to DSSM if it is readily available or if it contains important cause-of-death information that is not documented elsewhere.

Please submit the last clinic/office note made before the death or the investigator’s note summarizing events resulting in death.

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11.0

assessment of effect

For the purposes of this study, all clinical response assessments will be performed by physical examination of the breast and the axilla.

11.1

Timing of clinical response assessments

Tumor measurement by physical exam is required at screening prior to AC. To document the presence or absence of cCR, protocol-required tumor assessments by physical exam must be performed prior to initiating paclitaxel and 2–4 weeks after the last study therapy dose (before surgery) .

It is recommended that patients also have a breast examination for tumor assessment before each cycle of preoperative therapy to ensure there has been no disease progression. In the event of disease progression (defined in Section 11.1.2 ), study therapy must be discontinued. Further therapy is at the investigator's discretion.

11.1.1

Clinical complete response

Complete disappearance of all clinically palpable detectable malignant disease in the breast and ipsilateral axillary nodes in patients who have completed all assigned cycles of preoperative therapy.

11.1.2

Disease progression

Criteria to be used for determination of disease progression are at the investigator's discretion.

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12.0

patient entry procedures

12.1

Patient consent forms

Prescreening HER2-driven signaling activity testing will be performed for all patients in order to determine eligibility for FB-12 (see the Prescreening Sample Consent Form). Tumor tissue from a pretreatment research core biopsy must be submitted to Celcuity (see Section 6.2 ). All tumor specimens will be identified by a Celcuity specimen ID for central testing. Patients eligible for, and consenting to participate in, the FB-12 treatment study, must have the Celcuity specimen ID number recorded on the screening eCRF. Patients will not be able to be enrolled in FB-12 until the investigator receives confirmation that the tumor has abnormal HER2-driven signaling activity. Before prescreening, the prescreening consent form including any addenda, must be signed and dated by the patient and the person obtaining informed consent. In addition, before prescreening entry, a copy of the signed and dated consent form must be forwarded to DSSM. All patient signatures (except initials of first, middle, and last names) should be expunged prior to submission.

Before study entry, the treatment consent form including any addenda, must be signed and dated by the patient and the person obtaining informed consent. In addition, before study entry, a copy of the signed and dated consent form must be forwarded to DSSM. All patient signatures (except initials of first, middle, and last names) should be expunged prior to submission.

12.2

Study entry

DSSM will verify that the institution has current IRB approval for the study. Entry will not take place if the IRB approval is not current for the institution with IRB oversight responsibility.

All patients must be enrolled through DSSM. Once the screening eCRFs have been completed, submit the redacted signed consent form, and supporting documents to industry.trials@nsabp.org.

The entry material must be received by DSSM no later than 4:00 p.m. Eastern Time, Monday through Friday, excluding holidays . Once received the review process will begin. When the review is complete and approved, an enrollment confirmation will be sent.

12.3

Patient study number and treatment assignment

After all the entry materials have been reviewed, the institution will receive the following via e-mail: 1) confirmation of registration and study entry and 2) the patient’s study number.

12.4

Investigator-initiated discontinuation of study therapy

In addition to the conditions outlined in the protocol, the investigator may require a patient to discontinue study therapy if one of the following occurs:

Progression of disease during neoadjuvant treatment

Unacceptable adverse events, or change in underlying condition such that the patient can no longer tolerate therapy

Patient noncompliance, defined as refusal or inability to adhere to the study schedule and/or procedures

At the request of the patient, Principal Investigator, the Sponsor, or regulatory authority

Pregnancy

Patient is lost to follow-up

Patient death

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If study therapy is stopped, study data and other materials should be submitted according to the study schedule unless the patient withdraws from the study.

12.5

Patient-initiated discontinuation of study therapy

Even after a patient agrees to take part in this study, she may stop study therapy at any time. If study therapy is stopped but she still allows the study doctor to submit information, study data and other materials should be submitted according to the study schedule.

12.6

Patient-initiated withdrawal from the study

If a patient chooses to have no further interaction regarding the study, the investigator must provide DSSM with written documentation of the patient’s decision to fully withdraw from the study.

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13.0

data handling and recordkeeping

Please refer to the "FB-12 eCRF Completion Guidelines" for detailed instructions regarding data collection, AE reporting, and electronic case report form completion.

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14.0

statistical considerations

14.1

Study design

The trial is a single-arm interventional clinical trial evaluating the efficacy of a neoadjuvant treatment regimen consisting of anti-HER2 targeted therapy and chemotherapy in early stage HER2-negative, HER2-abnormal breast cancer patients. The primary objective of the study is to evaluate whether patients with abnormal HER2-driven signaling pathways receiving the addition of a HER2-targeted therapy to neoadjuvant chemotherapy have a higher percentage of pathological complete response (pCR) than has been found historically in HER-negative breast patients who only receive chemotherapy.

Because of the significant difference between pCR rates found historically in ER-positive/HER2-negative and ER-negative/HER2-negative breast cancer patients, sample size calculations were derived separately for each sub-group of HER2-negative patients. The sample size calculations for the ER-positive/HER2-negative and ER-negative/HER2-negative sub-groups assumed the historical pathologic complete response rate is 11% and 34%, respectively ( Cortazar 2014 ). In each of these two sub-groups, a Sargent two-stage three-outcome optimal design has been used ( Sargent 2001 ), with the following parameter values:

the probability of a false positive outcome (type I error) is set at 0.05

the probability of a false negative outcome (type II error) is set at 0.1

the probabilities of a true outcome (positive or negative) are both set at 0.8.

In the ER-positive/HER2-negative sub-group, a maximum of 26 evaluable patients are required to rule out a pCR rate of 11% or less, and to accept a pCR rate of 30% or more. In the ER-negative/HER2-negative sub-group, a maximum of 28 evaluable patients are required to rule out a pCR rate of 34% or less, and to accept a pCR rate of 58% or more.

14.2

Study endpoints

14.2.1

Primary endpoint and analysis

The primary endpoint is a demonstration that the investigational group has a higher pCR rate than the historical control group. This will be achieved using the following decision rules.

In the ER-positive/HER2-negative sub-group, the trial will proceed in two stages: 16 patients will be treated in the first stage, and the treatment will be declared insufficiently active if at most 2 pCR are reported. In the second stage, a total of 26 patients will be treated, and

the treatment will be declared insufficiently active if at most 3 pCR are reported

the treatment will be declared active if at least 6 pCR are reported

the trial is inconclusive if 4 or 5 pCR are reported

In the ER-negative/HER2-negative sub-group, the trial will proceed in two stages: 12 patients will be treated in the first stage, and the treatment will be declared insufficiently active if at most 4 pCR are reported. In the second stage, a total of 28 patients will be treated, and

the treatment will be declared insufficiently active if at most 11 pCR are reported

the treatment will be declared active if at least 14 pCR are reported

the trial is inconclusive if 12 or 13 pCR are reported

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If either of the sub-groups is inconclusive, the observed pCR rate in the other sub-group will inform the decision to further investigate the treatment in other trials. If both sub-groups are inconclusive, other considerations will inform the decision to further investigate the treatment in other trials.

In each sub-group and for each analysis performed, the pCR rate of the investigational group will be calculated and reported, along with 95% Wilson score confidence intervals.

14.2.2

Secondary endpoints and analyses

Secondary endpoints of this study are:

Pathologic complete response (breast)

Clinical complete response (cCR)

Residual cancer burden (RCB) 0-1 index

Relationship between quantitative CELx score and pCR rate

Secondary analyses will also be performed with each sub-group involving additional endpoints: pathologic complete response in the breast (ypT0/Tis), clinical complete response, residual cancer burden, CELx score (quantitative). Most of these will be performed in the same way as the primary endpoint analysis. In addition, the relationship between quantitative CELx score and pCR rate in the investigational group will be studied by logistic regression of the pCR outcomes on the CELx score. This analysis will be repeated for the categorical secondary endpoints.

An additional secondary analysis will explore different choices for the cutpoint used to define the investigational group. Cutpoints of 255, 265, 290, and 315 will be used and the calculations of the primary analysis repeated. The confidence intervals of pCR for these cutpoints will be reported.

In an exploratory calculation, the clinical complete response rate of the patients after AC chemotherapy treatment is completed and before HER2 drug treatment is started will be computed along with a 95% Wilson score confidence interval for purposes of comparing the cCR result from this study to historical cCR rates found amongst HER2-negative patients who received neoadjuvant AC chemotherapy.

14.3

Study objectives

14.3.1

Primary objective

To evaluate the efficacy of neoadjuvant chemotherapy plus anti-HER2 therapy in early stage breast cancer subjects with HER2-negative/HER2-abnormal tumors.

The CELx HER2 Signaling Function test (CELx HSF test) will characterize a patient's HER2-driven signaling pathways as either normal or abnormal.

14.3.2

Secondary objective

To compare the efficacy and safety of neoadjuvant therapy in early stage breast cancer patients with HER2-negative/HER2-abnormal tumors to historical data obtained from patients who were deemed HER2-negative based on IHC.

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14.4

Sample size

It is expected that approximately 270 patients will need to be prescreened in order to enroll 54 patients (26 ER-positive/HER2-negative and 28 ER-negative/HER2-negative) who have abnormal HER2 signaling activity. Enrolled patients will be followed until surgical resection of the breast tumor, estimated to be approximately 141 to 192 days, depending on the period of time between the end of paclitaxel treatment (day 132 or 162) and the surgical procedure.

14.5

Accrual time and study duration

The study is expected to take 12 months to enroll 54 patients and an additional 6 months to monitor the last enrolled patient and prepare the Final Study Report.

14.6

Monitoring

A medical review team composed of the Protocol Chair, Protocol Co-Chair, Protocol Officer, NSABP Medical Director, study statistician, designated DSSM physician(s), and designated DSSM staff will formally monitor the study on a monthly basis to identify accrual, toxicity, and any endpoint problems that might be developing.

All grades for each type of toxicity will be recorded for each patient, and frequency tables will be reviewed to determine toxicity patterns.

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15.0

Device Accountability

The investigator, or designee, must maintain an inventory record of CELx Specimen Collection Kits received, used for tissue sample collection, or otherwise discarded or returned. The Investigator is responsible for ensuring that the Specimen Kits are used only for patients enrolled in the study. The Specimen Kits shall be stored in a secure location with limited access. Records of shipment, receipt, disposition, and return shall be maintained by the Investigator and be available for review by NSABP, or designee, and applicable regulatory authorities.

Details and tracking of tumor tissue collected and shipped to Celcuity for analysis will be documented on the patient’s Specimen Information Form provided in each CELx Tissue Specimen Collection Kit (see the FB-12 Pathology Instructions).

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NSABP FB-12 – Page 57

16.0

publication information

The publication or citation of study results will be made in accordance with the publication policy of the NSABP that is in effect at the time the information is to be made publicly available.

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17.0

references

Benson AB III, Ajani JA, Catalano RB, et al. Recommended guidelines for the treatment of cancer treatment-induced diarrhea. J Clin Oncol 2004; 22(14):2918-2926.

Celcuity. Personal Communication, 2017.

Cortazar P, Zhang L, Untch M, et al. Pathological complete response and long-term clinical benefit in breast cancer: the CTNeoBC pooled analysis. Lancet 2014; 384(9938):164:172.

Huang Y, Burns DJ, Rich BE, et al. A functional signal profiling test for identifying a subset of HER2-negative breast cancers with abnormally amplified HER2 signaling activity. Oncotarget 2016; 7(48):78577-78590.

Huang Y, Burns DJ, Rich BE, et al. Development of a test that measures real-time HER2 signaling activity in live breast cancer cell lines and primary cells. BMC Cancer 2017; 17(1):199.

Laing L ^a , et al. Analytical validation of a live cell assay measuring HER2-driven signaling activity, manuscript in process, 2017.

Laing L ^b , et al. A study to evaluate the prevalence of abnormal HER2-driven signaling activity in HER2-negative breast cancer patients, manuscript in process, 2017.

Laing L ^c , et al. Using functional HER2-driven signaling status ex vivo to predict response to HER2 therapy: results from a mouse breast tumor xenograft study. American Society of Clinical Oncologists 2017 Annual Meeting (not released for distribution).

Paik S, Kim C, Wolmark N. HER2 status and benefit from adjuvant trastuzumab in breast cancer. N Engl J Med 2008; 358(13):1409-1411.

Sargent DJ, Chan V, Goldberg RM. A three-outcome design for phase II clinical trials. Control Clin Trials 2001; 22(2):117-125.

Schneeweiss A, Chia S, Hickish T, et al. Pertuzumab plus trastuzumab in combination with standard neoadjuvant anthracycline-containing and anthracycline-free chemotherapy regimens in patients with HER2-positive early breast cancer: a randomized phase II cardiac safety study (TRYPHAENA). Ann Oncol 2013; 24(9):2278-2284.

Symmans WF, Peintinger F, Hatzis C, et al. Measurement of residual breast cancer burden to predict survival after neoadjuvant chemotherapy. J Clin Oncol 2007; 25(28):4414-4422.

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APPENDIX A
ASSESSMENT OF PERFORMANCE STATUS AND ACTIVITIES OF DAILY LIVING

1.0

DETERMINATION OF PERFORMANCE STATUS

ECOG or Zubrod Scale		Karnofsky Score
0	Fully active; able to carry on all pre-disease performance without restriction	90–100%
1	Restricted in physically strenuous activity but ambulatory	70–80%
2	Ambulatory and capable of self-care, but unable to carry out any work activities	50–60%
3	Capable of only limited self-care; confined to bed or chair more than 50% of waking hours	30–40%
4	Completely disabled	10–20%

2.0

NCI DEFINITION FOR ACTIVITIES OF DAILY LIVING

The following definitions for activities of daily living (ADL) should be used when the CTCAE v4.0 grading criteria are based on ADL:

Instrumental ADL refer to preparing meals, shopping for groceries or clothes, using the telephone, managing money, etc.

Self-care ADL refer to bathing, dressing and undressing, feeding self, using the toilet, taking medications, and not bedridden.

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APPENDIX B
SUGGESTED PROCEDURE FOR EVALUATION OF SURGICAL SPECIMENS

The following procedures used for processing breast specimens following neoadjuvant chemotherapy at MD Anderson Cancer Center are provided as guidelines for NSABP investigators. They are provided as suggestions and may be modified as needed to make them functional in participating institutions.

Specimens should be oriented with sutures by the surgeon following removal. The surgeon and breast pathologist should confer to ensure optimal evaluation of the primary tumor site for possible pCR.

In cases showing significant clinical response in the breast:

The breast resection specimen is radiographed to identify metallic markers which were placed during or prior to chemotherapy.

Each specimen is inked using multiple colors to identify each face of the specimen, and then sectioned into 3-5 mm slices.

The sliced specimen is radiographed and a radiologist reviews the films to determine the presence and extent of residual tumor.

The pathologist examines the sliced specimen grossly to identify suspicious areas and notes their proximity to margins.

The radiographic and pathologic evaluation is discussed with the surgeon who decides whether additional margins should be obtained.

Permanent paraffin sections of the suspicious areas and margins are obtained. The number of sections taken is based on the gross inspection, radiologic features, and size of the resection specimen.

The entire radiographic abnormality as well as firm and suspicious appearing breast tissue is submitted for histologic evaluation.

In general, for non-palpable (clinical complete response) cases at least 10-15 blocks are examined to assess the presence of residual microscopic disease.

In cases with residual palpable mass (partial clinical response or no response in the breast):

The resection specimen is inked and sectioned into 3-5 mm slices.

The pathologist examines the slices and determines the tumor size on gross evaluation and confirms the tumor size by microscopic evaluation.

Evaluation of axillary lymph nodes regardless of response:

All axillary lymph nodes are also carefully evaluated by serial gross sectioning.

One or two representative histologic sections are evaluated for lymph nodes that contain grossly identifiable metastatic carcinoma.

The lymph nodes that do not show grossly identifiable tumor are submitted for histologic evaluation in their entirety. One representative histologic section is evaluated per paraffin block. Immunohistochemical staining for cytokeratin is not routinely performed on negative nodes.

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Appendix B

Budget, Payment Schedule, and Task List

1. Celcuity agrees to pay NSABP an amount not to exceed $2,640,921 as set forth in this Appendix B to perform the work under the terms of this Agreement. Such payments assume an actual enrollment of 55 patients.

2. Celcuity will make payments to NSABP in the increments and at the times indicated on the Payment Schedule in this Appendix B. Payments to NSABP shall be made in three phases as follows – Start-Up Activities, Accrual and Treatment Period, and Study Close-Out. Celcuity shall pay NSABP invoices not later than thirty (30) days after receipt of an invoice.

2.1 Start-Up Activities – $300,000 – Within thirty days after receipt of a fully executed Agreement, Celcuity will make an initial payment (“Initial Payment”) to NSABP in the amount of $300,000. The Initial Payment shall become nonrefundable upon execution of this Agreement to the extent it has been expended for costs actually reasonably incurred or committed pursuant to this Agreement. The Initial Payment supports: pre-study activities, site start-up costs, drug distributor and database start-up costs, and other initiation and administration functions, protocol education and awareness building; and site payment for the first five (5) patients enrolled.

2.2 Accrual and Treatment Period – $2,070,921 – Celcuity will pay NSABP $2,070,921 during the Accrual and Treatment Period. These payments support the costs of regulatory, administrative, and other services as anticipated in the performance of FB-12. In addition, payments include support for activities performed and costs incurred at Participating Sites, such as: patient screening, eligibility assessment and recruitment activities, patient instruction, incidental supplies and materials, tissue acquisition and storage, other unfunded costs related to the study, and the cost of patient care procedures that are considered non-routine care.

2.2.1 Per-Patient Randomized – Celcuity shall pay an amount up to $1,770,921 commencing with enrollment of the sixth (6) Subject randomized to FB-12 and in increments as indicated on the Payment Schedule contained in this Appendix B.

2.2.2 Quarterly Payments – Celcuity shall pay an amount up to $300,000 in six (6) quarterly payments of $50,000 each. Invoices for quarterly payments will be submitted at the beginning of the calendar quarters for which the payments are related.

2.3 Study Close Out - $250,000 – Celcuity will make a final payment of $250,000 upon completion of the primary endpoint analysis and submission of the primary endpoint manuscript to Celcuity.

3. Celcuity shall not be obligated to make any payments to NSABP in excess of the amounts provided herein, unless such excess amounts have been agreed upon in advance and in writing by NSABP and Celcuity.

4. If, for any reason, FB-12 is terminated, or FB-12 is closed to accrual prior to completion, or FB-12 is not completed with final analysis, in accordance with Article XVIII herein, Celcuity agrees to pay NSABP for services rendered and commitments for services rendered through the termination date. Payment of the outstanding amount due determined by the final accounting analysis and will be made by Celcuity after Celcuity has received a final report and accounting for the FB-12 Study and all queries are resolved.

5. Invoices are to be submitted to:

Brian Sullivan

Celcuity, LLC

16305 36th Ave North, Suite 450

Minneapolis, MN 55446

763-392-0767

bsullivan@celcuity.com

6. Checks shall be made payable to “NSABP Foundation, Inc.” (Tax Identification Number 25-1781357) and sent to:

Accounts Receivables

NSABP Foundation, Inc.

Nova Tower 2

Two Allegheny Center, Suite 1200

Pittsburgh, PA 15212

Appendix B

FB-12
Budget
May 5, 2017

	Unit Type	Unit Volume		Cost Per Unit		Total Budget

Site Costs
Site Start Up and Annual Administrative Fees	CM sites *		15	$	12,000	$	180,000
Pharmacy Fees	CM sites *		15		2,000		30,000
Site IRB Fees	IRBs		18		9,500		171,000
Participating Site Payment	Patients		55		7,200		396,000
Non-Routine Patient Care Costs	Procedures		275		1,100		302,500
Screen Failures	Screen Failures		220		250		55,000
Participating Site - Tissue Samples	Samples		330		300		99,000
Overhead on Site Payments							308,375
Subtotal Site Costs	Patients		55	$	28,034	$	1,541,875

Specimen Procurement/Storage
NSABP Biospecimen Bank						$	5,500
Subtotal Specimen Procurement/Storage						$	5,500

Program and Administrative Services
NSABP Operations Center						$	606,035
Biostatistical, Data Management, EDC Support							413,528
Drug Distribution							46,564
NSABP Central IRB Fees							7,419
Travel Reimbursement (Pass-Through)							20,000
Subtotal Program and Administrative Services						$	1,093,546

Total Budget	Patients		55	$	48,017	$	2,640,921

* Central Monitored Sites

Appendix B

FB-12
Payment Schedule
May 5, 2017

PAYMENT PERIOD	PAYMENT TIMING	PATIENT MILESTONES	CALENDAR YEAR	PAYMENT AMOUNT		CUMULATIVE TOTAL		TOTAL AMOUNT PER PAYMENT PERIOD

Start-Up Activities	Initial Payment - Within 30 days of execution of the Agreement	0 to 5	2017	$	300,000	$	300,000	$	300,000

Accrual and Treatment Period
Per-Patient Randomized	$35,418.41	6 - 10	2017		177,092		477,092
		11 - 20	2018		354,184		831,276
	amount per patient to be invoiced as actual	21 - 30	2018		354,184		1,185,460
	accrual reaches enrollment milestone (projected	31 - 40	2018		354,184		1,539,644
	payment plan is based upon budgeted accrual)	41 - 50	2018		354,184		1,893,829
		51 - 55	2019		177,093		2,070,921		1,770,921

Quarterly Payments @	$50,000
	Yr 01 - 2017 (1 quarterly payment)		2017		50,000		2,120,921
	Yr 02 - 2018 (4 quarterly payments)		2018		200,000		2,320,921
	Yr 03 - 2019 (1 quarterly payments)		2019		50,000		2,370,921		300,000

Close Out Period	Upon completion of the primary endpoint analysis and submission of the primary endpoint manuscript to Celcuity		2019		250,000		2,620,921		250,000


Pass Through Costs	Travel Reimbursement - invoice as incurred		2017-2019		20,000		2,640,921		20,000

	TOTAL CELCUITY SUPPORT					$	2,640,921	$	2,640,921

Appendix B

FB-12
Task List

COMPOUND : Trastuzumab and Pertuzumab (collectively, “Study Drugs”)

PROTOCOL: FB-12

VERSION DATE: 04/07/2017

KEY: E = EXECUTE; R = REVIEW; S = SUPPORT A = APPROVE; AC = ACCEPT	CELCUITY	NSABP	GENENTECH
1. PROTOCOL PREPARATION
A. Approve / Accept final Study proposal	E	AC	AC
B. Write draft Protocol (consultants, literature review, background research)	E
C. Review draft Protocol		R	R
D. Write final Protocol	AC	E	AC
E. Write Protocol amendments	AC	E	AC
F. Provide copies of Protocol		E
2. INFORMED CONSENT DOCUMENT PREPARATION
A. Prepare informed consent template		E
B. Assist sites with informed consent modification(s)		E
C. Prepare and review translations		E
3. ECRF DEVELOPMENT & ECRF COMPLETION GUIDE
A. Design eCRF		E
B. Write eCRF Completion Guidelines		E
C. eCRF Distribution		E
4. DESIGN SYSTEMS REQUIRED FOR DATA MANAGEMENT
A. IT Set-Up, System Administration and Maintenance		E
5. DESIGN & IMPLEMENT PATIENT REGISTRATION
A. Develop registration mechanism		E
6. DATABASE DESIGN & IMPLEMENTATION
A. Design clinical database		E
B. Programming and mapping of SAS datasets		E
7. DISTRIBUTION OF STUDY DOCUMENTS
A. Distribute Protocol to Sites		E
B. Distribute amendments to Sites		E
C. Distribution of IB to NSABP			E
D. Distribution of IB to Sites		E
8. SITE QUALIFICATIONS
A. Develop list of Sites for qualification		E
B. Site qualification		E
C. Site selection		E
9. INVESTIGATOR SITE CONTRACTS & BUDGETS
A. Negotiate and finalize Site-specific CDAs		E

KEY: E = EXECUTE; R = REVIEW; S = SUPPORT A = APPROVE; AC = ACCEPT	CELCUITY	NSABP	GENENTECH
B. Negotiate and finalize Site-specific Study Agreements		E
10. SITE REGULATORY DOCUMENTS
A. Collect the following regulatory documents for Sites:
Ø FDA Form 1572		E
Ø CVs for Investigators and Subinvestigators		E
Ø Medical licenses for Investigators and Subinvestigators		E
Ø Financial Disclosure for Investigators and Subinvestigators		E
Ø Protocol Signature Page signed by Investigator		E
Ø IB Acknowledgement Page signed by Investigator		E
Ø IRB-approved Institution Informed Consent Form		E
Ø IRB approval documents	S	E
Ø OHRP IRB registration		E
11. AGENCY REGULATORY DOCUMENTS
A. IND-related filings with the FDA	S	E	S
B. IDE-related filings with the FDA	E	S
C. clinicaltrials.gov registration		E
12. STUDY INITIATION VISITS (SIV)
A. Plan, organize, manage webcast SIV		E
B. Record and post SIV content		E
C. Present Science / Protocol / Safety Profile		E
D. Present regulatory topics		E
E. Present AE / SAE reporting		E
F. Present monitoring information		E
G. Present eCRFs		E
H. Present Biologic Repository lab procedures / information	E	E
I. Present Study Drugs Ordering Process to Sites		E
13. SITE MONITORING
A. Develop and Implement monitoring plan		E
B. Conduct monitoring (Source document verification, drug accountability, regulatory document review, eCRF review, supply inventory, etc.)		E
C. Identify and report non-compliance		E
D. Provide written monitoring reports		E
E. Conduct Site close-out procedure (final source document verification, drug accountability, regulatory document review, eCRF review, study supply disposition, etc.)		E
14 . QUALITY CONTROL & QUALITY ASSURANCE AUDITS
A. Develop Protocol-specific Audit Plan		E
B. Perform QC review of Study Data and TMF		E
C. Perform QA audits according to Audit Plan		E
D. Perform audits of vendors		E
15. OPERATIONAL ISSUES
A. Provide on-going Site support		E

KEY: E = EXECUTE; R = REVIEW; S = SUPPORT A = APPROVE; AC = ACCEPT	CELCUITY	NSABP	GENENTECH
16. SERIOUS ADVERSE EVENT MANAGEMENT
A. Receive SAE report from Sites and review		E
B. Write Protocol-specific SAE Reporting Work Instruction		E
C. Maintain a tracking log of all SAE reports from Sites		E
D. Write SAE Narrative		E
E. SAE follow-up and resolution		E
F. SAE reporting to FDA		E
G. SAE reporting to Genentech		E
H. Distribution of IND Safety Reports (expedited reports) to Investigators		E
I. SAE reconciliation		E
J. Global SUSARS reporting		E	S
17. SAMPLE MANAGEMENT
A. Tumor Samples to determine eligibility for study	E
B. Tumor Samples to NSABP at time of progression		E
18. PROJECT MANAGEMENT
A. Process and provide payments to Sites		E
B. Organize and participate in periodic conference calls with Celcuity (agenda, logistics, etc.)	S	E
C. Prepare meeting and conference call minutes following meeting/call completion and distribute to project team		E
D. Manage project management issues		E
19. MANAGEMENT OF STUDY KITS
A. Supply Study Kits	E
B. Process Study Kit orders and reorders	E
C. Distribute Study Kits to Sites	E
D. Coordinate post-Study disposition of Study Kits	E	S
E. Manage general Study Kit issues	E	S
20. MANAGEMENT OF STUDY DRUGS
A. Manufacture of the Study Drugs			E
B. Labeling (investigational use)			E
C. Distribute to the designated NSABP drug distributor			E
D. Receipt of the Study Drugs from the manufacturer		E
E. Process Site Study orders and reorders		E
F. Coordinate post-Study disposition of Study Drugs		E
G. Provide post-Study accountability of Study Drugs		E
H. Manage general Study Drugs issues		E
21. DATA MANAGEMENT
A. Write data validation plan		E
B. Write data management plan		E
C. Write statistical analysis plan		E
D. Provide Electronic Data Capture System		E
E. Validate EDC System		E
F. Resolve queries		E
G. Perform QC review of eCRFs		E
H. Code terms		E

KEY: E = EXECUTE; R = REVIEW; S = SUPPORT A = APPROVE; AC = ACCEPT	CELCUITY	NSABP	GENENTECH
I. Approve coding		E
22. TABLES, LISTINGS & FIGURINES
A. Define safety listings and tables		E
B. Define efficacy listings and tables		E
C. Produce safety listings and tables		E
D. Produce efficacy listings and tables		E
E. Validate safety listings and tables		E
F. Validate efficacy listings and tables		E
23. STUDY REPORTS
A. Provide final statistical report	R	E
B. Prepare primary publication	R	E
C. Prepare subsequent publications / abstracts	R	E

Appendix C

NSABP OWNERSHIP OF DATA/MATERIALS POLICY

A PPENDIX C is set out on the following pages.

NSABP FOUNDATION, INC.

POLICY MANUAL

Subject: OWNERSHIP OF DATA/MATERIALS POLICY

STATEMENT OF POLICY REGARDING OWNERSHIP OF DATA/MATERIALS

This Statement sets forth the policy of the NSABP Foundation, Inc. (“Foundation” or “NSABP”) with respect to ownership of certain data, physical specimens and intellectual property resulting from the conduct of NSABP sponsored clinical research.

It is the policy of the Foundation that the aggregate data, serum, tissues and other materials resulting from the conduct of NSABP clinical research and provided by a participating facility to the Foundation or to a participating research site or designated contracted entity at the direction of the Foundation (“Data/Materials”) constitute property entrusted to the care and management of the Foundation to be used for the benefit of the public, and that the Foundation is the owner of such Data/Materials. All worldwide right, title and interest in the intellectual property rights with respect to such Data/Materials shall be owned by NSABP, including the right of first publication as provided in the NSABP Publication Policy, all patent rights and all rights of copyright.

All Research Collaborators of the NSABP and all contracted entities of the NSABP participating in its clinical research shall be responsible for protecting and preserving the integrity of the Data/Materials in their possession and shall deliver the same to the Foundation or its designee as required by the contractual agreement and protocol.

The foregoing notwithstanding, nothing in this statement shall be construed as granting NSABP ownership of any intellectual property, including original works of authorship, inventions, discoveries or any patents or copyrights issued thereon, made by participants or their personnel independently of information, drugs or instructional materials provided by NSABP or the study sponsors. Research Collaborators and other contracted entities shall not, however, obtain intellectual property rights to any of the data, information, protocols or drugs provided by NSABP or study sponsors, nor shall Research Collaborators and other contracted entities have any interest in intellectual property rights resulting merely from their routine activities in carrying out the study protocols or other activities in accordance with instructions from NSABP or the study sponsors. Any invention or discovery made jointly by staff or employees of NSABP and Research Collaborators or contracted entities shall be jointly owned and the parties shall confer regarding patenting/licensing.

Should any applicable and controlling federal or state laws or regulations be inconsistent with the intellectual property rights and obligations of the parties as set forth in this statement, then such laws or regulations shall control in lieu of the inconsistent provisions in this statement.

Entities such as laboratories and other service providers (“Service Providers”) which are sent Data/Materials by or at the direction of the Foundation are custodians only of the Data/Materials developed or acquired during the conduct of NSABP clinical research. Service Providers have possession of Data/Materials only for the purpose of performing specific services, e.g., archiving, banking and analytical services, in some way related to the Data/Materials that enable the NSABP: (a) to reach conclusions about the safety, efficacy and comparative value in treating and preventing cancers in accordance with the various protocol studies; (b) to translate this information into medical/surgical practice standards and commercial products; and/or (c) to

perform other specific services requested by the Foundation. Individual Service Providers do not have the right independently of the NSABP to disclose, publish or otherwise use the Data/Materials or work product produced by the Service Providers based upon the underlying Data/Materials. All work product provided to NSABP by Service Providers shall be deemed “work made for hire” pursuant to the U.S. Copyright Act.

/s/ Joan Beyer Goldberg, MPH		3/14/16
Signature		Date

Approved:	6/10/00
Revised:	November 2015
	March 2016

Appendix D

NSABP P UBLICATION P OLICY

A PPENDIX D is set out on the following pages.

NSABP FOUNDATION, INC.

POLICY MANUAL

Subject: PUBLICATIONS POLICY

STATEMENT OF GENERAL PRINCIPLES

The NSABP Foundation recognizes the importance of the accurate and timely publication of the results of its research. This policy applies to any publications and presentations in which data from Foundation studies have been used.

1.1.

Purpose

In addition to conducting clinical trials research, the NSABP Foundation aims to disseminate its research results to the scientific community. These include reports of primary study outcomes, secondary analyses, and ancillary studies. Peer-reviewed journals and national and international scientific meetings are the vehicles of choice for publishing and presenting the results of our research.

1.2

Responsibilities

The chairman and the board of directors are responsible for the following:

a) providing guidelines for publications,

b) monitoring the timeliness of the publication of study results,

c) assuring compliance with this publications policy, and

d) adjudicating disputes involving publication issues.

The NSABP Foundation will maintain an up-to-date bibliography and repository of all publications resulting from NSABP studies. It is the responsibility of the primary author to provide the Department of Scientific Publications at the Foundation with the most up-to-date version of all publications.

1.3

Authority

The publication of NSABP data is not permitted without prior written consent from the chairman of the Foundation.

PUBLICATION OF PRIMARY STUDY OUTCOMES

The Foundation will be the clearinghouse for all NSABP abstracts and for all manuscripts submitted for publication. This will allow a complete, accurate, and up-to- date bibliography to be maintained at all times.

2.1

Manuscript Process

When the endpoints described in the protocol document have been reached, the biostatistician will begin an initial full analysis of results, leading to manuscript development. If early stopping of a study is recommended by the Data Monitoring Committee and approved by the Chairman, data analysis will commence at that point.

The evaluation of protocol records necessary for final analysis will begin when 80% of the necessary protocol events have occurred. This review will be performed by the protocol chair, protocol officer, and other members of the NSABP scientific leadership, as required.

The protocol committee, consisting of the protocol chair, the protocol officer, and the protocol statistician, will be responsible for assuring the production of the initial draft of the manuscript and for submitting it for review to the chairman, the director of the Biostatistical Center and the appropriate senior scientist.

The protocol committee will set a timetable for the production of the manuscript once they receive the final analysis of the data. This timetable will be conveyed in writing by the protocol officer to the chairman, who will be informed and updated on a regular basis regarding the development of the manuscript. Development of the primary manuscript is expected to proceed in a timely manner. If the manuscript is unable to be completed in a timely fashion, the protocol officer, with the agreement of the chairman, may delegate the responsibility for the manuscript to other investigators.

The initial draft will be approved by the chairman, the director of the Biostatistical Center, and the senior scientist. The manuscript to be submitted will undergo review by these persons and also by all co-authors.

After this review, the revised draft will be submitted to the Foundation for distribution to all other authors. Following further revisions, the protocol chair will formally submit the final manuscript to the director of the Department of Scientific Publications. The chairman and the director of the Biostatistical Center will review and approve the final manuscript before it is submitted to an appropriate publication.

Copies of journal reviewers’ criticisms, responses, and the final revised manuscript will be sent to all co-authors. Copies of the published article will be maintained in the Foundation office, Department of Scientific Publications.

2.2

Authorship

Authorship is granted to researchers who have contributed to the work in question and have fulfilled ICMJE authorship criteria. http://www.icmje.org/recommendations/browse/roles-and-responsibilities/defining-the-role- of-authors-and-contributors.html). Authorship implies responsibility and accountability for the published work.

Principal authors of initial manuscripts of NSABP trials will include, but will not be restricted to, the protocol chair, the protocol officer, and the protocol statistician.

Additional authors may be identified from given institutions based on contribution and involvement in the research projects, quality of data submitted, and other contributions. The principal investigator at an institution will ordinarily be an author, but he or she may defer to another investigator at the site. Additional authors may be named from the Foundation or the Biostatistical Center based on specific contributions. Each author is responsible for obtaining appropriate clearances at his/her institution.

All NSABP manuscripts must acknowledge in the title, when the journal so permits, that this is a group effort of the Foundation. The manuscript cover page must acknowledge the source of financial support and include such other notices as are required by the sponsor as well as any disclaimers required by the sponsor or the Foundation.

2.3

Obligations to Collaborating Organizations and Companies

Final manuscripts for some trials may necessitate review by a specific pharmaceutical company based on prior written agreements. It is the responsibility of the protocol chair to be aware of such arrangements and to comply with them.

PUBLICATION OF SECONDARY MANUSCRIPTS AND ANCILLARY OR CORRELATIVE STUDY RESULTS

3.1

Concept Development

Proposals for ancillary or correlative studies may be submitted by standing committees or by individual investigators. A concept proposal should be developed and submitted to the NSABP internal review committee. This committee is comprised of the chairman, the director of the Biostatistical Center, and senior staff personnel, who will review these concepts rapidly. Concepts that are approved will be returned for the development of a more detailed proposal. The detailed proposal may require review by a committee of scientists having expertise in the area under consideration. Appointment to this committee will be made by the chairman.

3.2

Concept Approval Process

Approval of ancillary or correlative projects will be determined on a case-by-case basis. When such projects have been proposed by non-NSABP investigators or institutions, the Foundation and the Biostatistical Center will be involved in the analysis and will assist in or, if deemed necessary by the director of the Biostatistical Center, may coordinate the conduct of such studies in accordance with Sections 1.2 and 1.3. It is expected that the Foundation and Biostatistical Center personnel will share in the authorship of such manuscript, as set forth in Section 3.3.

A companion or ancillary study should not report on results of the primary study before the principal results of the primary study are published. Development of primary manuscripts is expected to proceed in a timely manner to avoid the loss of data access and to promote data access by authors of prospective secondary studies.

3.3

Authorship

Authorship of manuscripts from ancillary projects will be determined based on a variety of parameters, including overall contribution. Authorship is granted to researchers who fulfill ICMJE criteria.

PUBLICATION OF SITE-SPECIFIC RESULTS

4.1

Site Specific

After publication of the primary manuscript by the NSABP, an individual site may publish data related to a site-specific study conducted in connection with the protocol. Such publications will be sent to the chairman for review and comment at least 30 days before submission for publication.

If the NSABP has not published the primary study within 18 months after the statistical analysis required in the protocol is completed, or within the timeframe required by a contract with a research partner, an individual site may publish data related to the site-specific study conducted in connection with the NSABP protocol. A copy of the manuscript will be sent to the chairman for review and comment at least 30 days before submission for publication.

INVITED PRESENTATIONS

Invited presentations requiring the submission of a manuscript involving previously unpublished NSABP data must conform to NSABP publication guidelines, and the presenters must obtain permission from the chair and director of Biostatistical Center at least 30 days before submission of the abstract or talk. These requirements should be considered before one accepts such an invitation.

ABSTRACTS

The protocol committee may initiate a proposal for the submission of an abstract.

Abstracts may also be submitted by individual investigators. The concept and general content of the abstract must be approved by the chairman and director of Biostatistics before submission. Guidelines for abstracts will follow those established for manuscripts. Authors will generally include members of the protocol committee and others, based on the guidelines established for manuscripts.

NSABP FOUNDATION WEBSITE

Information appearing on the Foundation’s website in the Members’ Section is confidential and not to be distributed or divulged other than to the membership.

/s/ Joan Beyer Goldberg, MPH		11/20/16
Signature		Date

Appendix E

S ELECTED T ERMS OF A GREEMENT FOR D ISCLOSURE TO S ITES

This is to confirm that Celcuity and NSABP have agreed to the following for the FB-12 trial:

(a)

(b)

(c)

any claimed design defect, manufacturing defect, contamination or adulteration, or failure to warn relating to the Study Kit;

(d)

medical procedures performed pursuant to the Protocol that are not part of routine medical care and would not have been done but for the conduct of the Study; and/or

(e)

Celcuity’s failure to follow the Protocol, breach of this Agreement, or failure to comply with Applicable Law.

REGARDLESS OF WHETHER THE SAME ARE CAUSED, IN WHOLE OR IN PART, BY THE CONCURRENT NEGLIGENCE OF THE NSABP INDEMNITEES; PROVIDED, HOWEVER , that:

(i)

(ii)

such loss does not arise out of the gross negligence or willful malfeasance of any NSABP Indemnitees; and

(iii)

the NSABP Indemnitee promptly notifies Celcuity in writing of any written complaint or claim, or any serious injury relating to any loss subject to this indemnification; and

(iv)

Celcuity shall have the right to select defense counsel and to direct the defense or settlement of any such claim or suit. Notwithstanding the foregoing, this Section 1(iv) shall apply to state universities or institutions only to the extent permissible under applicable state law.

Celcuity shall have no obligation to defend, indemnify, or hold harmless NSABP or the NSABP Indemnitees from and against any liability for Claims to the extent such Claims result from:

(A)

any negligence in the use or administration of the Study Drugs by NSABP or any NSABP Indemnitee in connection with the Study; and/or

(B)

any claimed design defect, manufacturing defect, or contamination or adulteration, relating to the Study Drugs.

Celcuity shall provide diligent defense against or settlement of any Claims, whether such Claims are rightfully or wrongfully brought or filed.

The NSABP Indemnitee(s) shall reasonably cooperate with Celcuity and its legal representatives in the investigation and defense of any Claim covered under this Agreement. In the event a Claim is or may be asserted, NSABP, or Participating Sites, shall have the right to select and to obtain representation by separate legal counsel. Legal counsel selected by NSABP or Participating Sites may participate in any settlement negotiations or legal proceedings subject to the terms of this APPENDIX E, but Celcuity shall retain the right to direct the settlement or defense of any Claim, subject to NSABP Indemnitee’s consent and to the extent allowed under state law for Participating Sites that are state universities and institutions, which consent shall not be unreasonably withheld or delayed. If NSABP, or Participating Sites that are state universities and institutions, exercises such right, all costs and expenses incurred by NSABP, or such Participating Sites, for such separate counsel shall be borne by NSABP, or such Participating Site.

Celcuity, LLC

/s/ Brian F. Sullivan
Signature

Brian F. Sullivan
Printed Name

Chief Executive Officer
Title

May 10, 2017
Date

Exhibit 10.14

CONFIDENTIALITY, ASSIGNMENT OF INVENTIONS

AND NON-COMPETITION AGREEMENT

Parties:
“Company ”:	Celcuity LLC (a Minnesota limited liability company) 2400 Bantle Farm Road Medina, MN 55340
“Sullivan”:	Brian F. Sullivan [address]
Effective Date:	November 15, 2011

This Confidentiality, Assignment of Inventions and Non-Competition Agreement (“ Agreement ”) is entered into by and between the Company and Sullivan as of the Effective Date set forth above. The parties agree as follows:

1. Purpose of Agreement; Consideration . Sullivan acknowledges and agrees that the Company is engaged in a continuous program of research, development, production and marketing in connection with its business, and that it is critical for the Company to preserve and protect its confidential and proprietary information, its rights in inventions and all related intellectual property rights. Accordingly, Sullivan is entering into this Agreement as a condition to becoming a Member of the Company and providing services to the Company, whether or not he is expected to create inventions of value for the Company.

2. Term . The term of this Agreement will begin on the Effective Date set forth above and will continue for so long as Sullivan is associated with the Company as a member of the Board of Governors, officer, employee, consultant or other service provider, or owner of more than five percent (5%) of the outstanding membership units of the Company (the “ Term ”).

3. Confidentiality .

3.1. Definition . “ Confidential Information ” means any proprietary, confidential and/or trade secret information that relates to the actual or anticipated business or research and development of the Company, that is commercially valuable to the Company and is not generally known. “Confidential Information” includes but is not limited to technical data, trade secrets or know-how, research, product plans, developments, inventions, processes, formulas, technology, designs, drawings, engineering information, software, hardware configuration information, customer lists and customer information, supplier lists and supplier information, other information regarding the Company’s products or services and markets, and other marketing, financial or business information. Confidential Information does not include information that (i) has become publicly known and made generally available through no wrongful act of Sullivan or (ii) has been rightfully received by Sullivan from a third party who is authorized to make such disclosure.

3.2. Non-Use and Nondisclosure . Sullivan acknowledges that in the course of his dealings with the Company, including but not limited to his role as a founder, member of the Board of Governors, officer, employee, consultant or other service provider, or owner of membership units, he will be exposed to the Company’s Confidential Information. Sullivan agrees that he will not at any time (a) use the Confidential Information for any purpose whatsoever other than on behalf of or for the benefit of the Company or (b) disclose the Confidential Information to any third party unless such disclosure (i) is for the benefit of the Company in the course of his services to the Company or (ii) Sullivan is authorized in writing to make such disclosure by the Chief Executive Officer (unless Sullivan is then serving as Chief Executive Officer) or the Board of Governors of the Company. Sullivan agrees that all Confidential Information will remain the sole property of the Company. Sullivan also agrees to take all reasonable precautions to prevent any unauthorized disclosure of such Confidential Information.

3.3. Confidential Information Received by Company from Third-Parties . Sullivan recognizes that the Company has received and in the future will receive from third parties their confidential or proprietary information subject to a duty on the Company’s part to maintain the confidentiality of such information and to use it only for certain limited purposes. Sullivan agrees that he owes the Company and such third parties a duty to hold all such confidential or proprietary information in the strictest confidence and not to disclose it to any person, firm or corporation or to use it except as necessary to assist the Company in performing its obligations to such third party and consistent with the Company’s agreement with such third party.

3.4. Confidential Information Belonging to Others . Sullivan agrees that he or she will not improperly use for the benefit of the Company or disclose to the Company any proprietary information or trade secrets of any former or current employer of Sullivan or other person or entity with which Sullivan has an agreement or duty to keep such information confidential. Sullivan also agrees that he will not bring onto the Company’s premises any unpublished document or proprietary information belonging to any such employer, person or entity unless consented to in writing by such employer, person or entity.

3.5. Return of Materials . Upon the Company’s request, Sullivan will deliver to the Company all of the Company’s Confidential Information and other Company property that Sullivan may have in his possession or control, including but not limited to all electronically stored information and passwords to access such property. Sullivan will use his best efforts to regain possession of any Company property that may be in the hands of any of his agents or any third party who received it from him, and will return such property in accordance with this Section 3.5.

4. Ownership of Work Product and Inventions .

4.1. Definitions .

(a) “ Work Product ” means any work of authorship, including any and all documents, material, notes, records, drawings, software code, tangible expressions, and designs, generated or created by Sullivan, solely or in collaboration with others, during the Term of this Agreement that relates to or is directly or indirectly

connected with the Company’s existing, planned or reasonably foreseeable business, products, services or research and development.

(b) “ Covered Invention ” means any invention, discovery, concept, improvement, enhancement, extension, mask work, trademark, trade secret or Work Product (whether or not patentable, copyrightable or otherwise protectable) made, conceived, discovered, developed or reduced to practice by Sullivan, solely or in collaboration with others, that relates to or is directly or indirectly connected with the Company’s existing, planned or reasonably foreseeable business, products, services or research and development.

4.2. Copyrights . Sullivan acknowledges that any Work Product is a “work made for hire” under U.S. copyright laws and that, accordingly, the Company exclusively owns all copyright rights in such Work Product. Sullivan agrees that if for any reason the Work Product is not found to have been created as a “work made for hire,” he hereby assigns to the Company all of his right, title, and interest in and to the Work Product.

4.3. Assignment of Covered Inventions . Sullivan hereby contributes, conveys, transfers and assigns to the Company his entire right, title and interest in and to all Covered Inventions existing at the date of this Agreement, except for those Prior Inventions (if any) listed in Section 4.5, and agrees to contribute, convey, transfer and assign to the Company his entire right, title and interest in and to any and all Covered Inventions made, conceived, discovered, developed or reduced to practice by Sullivan, solely or in collaboration with others, during the Term of this Agreement.

4.4. Exception to Assignment . The provisions of this Agreement requiring assignment of future Covered Inventions to the Company do not apply to any invention for which no equipment, supplies, facility, or trade secret information of the Company was used and that was developed entirely on Sullivan’s own time, and that (a) does not relate (i) directly to the Company’s business or (ii) to the Company’s actual or demonstrably anticipated research or development, or (b) does not result from any work performed by Sullivan for the Company.

4.5. Prior Inventions . Set forth below are all inventions, original works of authorship, developments, improvements, and trade secrets that were made by Sullivan prior to the Effective Date of this Agreement (collectively, “ Prior Inventions ”) that relate to the Company’s current, proposed or reasonably foreseeable business, products or research and development and that are NOT intended to be assigned to the Company under this Agreement ( check the applicable box ):

None

The Prior Inventions listed below:

If “None,” or if no list of Prior Inventions is provided, Sullivan represents that there are no such Prior Inventions. Sullivan agrees that if, in the course of his association with the Company, he

incorporates any Prior Invention into any Covered Invention, (a) Sullivan will inform the Company in writing before incorporating such Prior Invention into any Covered Invention and (b) the Company is hereby granted a nonexclusive, royalty-free, perpetual, irrevocable, worldwide license to make, have made, modify, use and sell such item as part of or in connection with the Covered Invention. Sullivan will not incorporate any invention, improvement, development, concept, discovery or other proprietary information owned by any third party into any Covered Invention without the Company’s prior written permission.

4.6. Further Assurances . Sullivan agrees to assist the Company, or its designee, at the Company’s expense, in every proper way to secure the Company’s rights in any Covered Invention in any and all countries, including the disclosure to the Company of all pertinent information and data with respect to all Covered Inventions, the execution of all applications, specifications, oaths, assignments and all other instruments that the Company may deem necessary in order to apply for and obtain such rights and in order to assign and convey to the Company, its successors, assigns and nominees the sole and exclusive right, title and interest in and to all Covered Inventions. Sullivan also agrees that his obligation to execute or cause to be executed any such instrument or papers will continue after the termination of this Agreement.

4.7. Attorney-in-Fact . Sullivan agrees that, if the Company is unable because of Sullivan’s unavailability, mental or physical incapacity, or for any other reason, to secure Sullivan’s signature for the purpose of applying for or pursuing any application for any United States or foreign patents or mask work, trademark or copyright registrations covering the Covered Inventions assigned to the Company in Section 4.3, Sullivan hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as his agent and attorney-in-fact, to act for and on behalf of Sullivan to execute and file any such applications and to do all other lawfully permitted acts to further the prosecution and issuance of patents, mask work, trademark or copyright registrations with the same legal force and effect as if executed by Sullivan.

5. Non-Competition; Non-Solicitation .

5.1. Substantially Similar Designs . In view of Sullivan’s access to the Company’s trade secrets and proprietary know-how, Sullivan agrees that during the Term of this Agreement and for a period of 24 months after the termination of this Agreement, he will not, without the Company’s prior written approval, create for any third party designs that are identical or substantially similar to the designs that are subject to this Agreement. Sullivan acknowledges that the obligations in this Section 5.1 are ancillary to his confidentiality obligations under Section 3 and are in addition to any rights the Company may have under applicable laws, including intellectual property laws.

5.2. Non-Competition; Non-Solicitation . Sullivan agrees that during the Term of this Agreement, and for a period of 24 months after the termination of this Agreement, he will not directly or indirectly, either on behalf of himself or herself or any other person or entity:

(a) engage in any business activity that competes with the business in which the Company is now involved or becomes involved during the Term of this

Agreement, or any planned business of the Company as of the date of the termination of this Agreement;

(b) render advice or assistance, including but not limited to financial assistance as an investor (except as permitted in Section 5.2(c)), lender or otherwise, to any business in which the Company is now involved or becomes involved during the Term of this Agreement, or any planned business of the Company as of the date of the termination of this Agreement;

(c) acquire an ownership interest (except as the holder of not more than 5% of the stock of a publicly held company, provided that Sullivan does not actively participate in the business of that company or render advice or assistance to it) in any business in which the Company is now involved or becomes involved during the Term of this Agreement, or any business of the Company planned as of the date of the termination of this Agreement;

(d) solicit, induce, recruit or encourage any employees of or consultants to the Company to leave their employment or terminate or limit their services to the Company, or interfere in any manner with the contractual or employment relationship between the Company and any employee or consultant; or

(e) interfere in any manner with the contractual relationship between the Company and any customer or supplier (or any prospective customer or supplier) of the Company, or cause or seek to cause any such customer or supplier to cease doing business with or reduce the amount of business it does with the Company, or cause or seek to cause any such prospective customer or supplier not to do business with the Company.

6. No Conflicting Obligations . Sullivan certifies that he has no outstanding agreement or obligation that is in conflict with any of the provisions of this Agreement or that would preclude him from complying with the provisions of this Agreement. Sullivan will not enter into any conflicting agreement during the Term of this Agreement.

7. Indemnification . Sullivan agrees to indemnify and hold harmless the Company and its directors, officers and employees from and against all taxes, losses, damages, liabilities, costs and expenses, including attorneys’ fees and other legal expenses, arising directly or indirectly from or in connection with (a) any negligent, reckless or intentionally wrongful act of Sullivan or his assistants, employees or agents, (b) any breach by Sullivan or his assistants, employees or agents of any of the covenants contained in this Agreement, or (c) any violation or claimed violation of a third party’s rights resulting in whole or in part from the Company’s use of the work product of Sullivan that is subject to this Agreement.

8. Miscellaneous .

writing and signed by both parties. None of the terms of this Agreement may be waived except by an express agreement in writing signed by the party against whom enforcement of such waiver is sought. The failure or delay of a party in enforcing its rights under this Agreement will not be deemed a continuing waiver of such right, and the waiver of one breach hereunder will not constitute the waiver of any other or subsequent breach.

8.2. Severability . Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law. If any provision of this Agreement is held to be illegal, invalid or unenforceable, in whole or in part, under applicable law by a court of competent jurisdiction, such provision will be ineffective only to the extent of such illegality, invalidity or unenforceability, without affecting the remainder of such provision or the remaining provisions of this Agreement. If a court of competent jurisdiction determines that the scope of any provisions of this Agreement is too broad in scope or long in duration to permit enforcement under applicable law, the parties agree that the court will limit such provision to the minimum extent required to be enforceable. This Agreement will be construed in a manner that renders its provisions valid and enforceable to the maximum extent (not exceeding its express terms) possible under applicable law.

8.3. Assignment . Neither party may assign any of its rights or delegate any of its obligations under this Agreement (whether by voluntary act or by operation of law) without the prior written consent of the other party, except that the Company may assign this Agreement in connection with a sale or transfer of all or substantially all of the Company’s business, whether by sale of assets, merger, exchange of shares, or similar transaction. Any purported assignment of rights or delegation of obligations in violation of this section is void.

8.4. Availability of Injunctive Relief . A breach of this Agreement may cause irreparable harm for which monetary damages may be inadequate. Sullivan agrees that the Company may petition the court for injunctive relief without having to post a bond or other security where the Company alleges or claims a violation of Section 3 (Confidentiality), Section 4 (Ownership of Work Product and Inventions), Section 5 (Non-Competition; Non-Solicitation) or Section 6 (No Conflicting Obligations) of this Agreement or any other agreement regarding trade secrets, Confidential Information, non-competition or non-solicitation.

8.5. Remedies . The remedies provided in this Agreement will be cumulative and will not limit any rights or remedies provided by law or equity.

8.6. Governing Law; Venue . This Agreement will be governed by and interpreted under the laws of the state of Minnesota, without regard to its conflict of laws principles. The parties hereby expressly consent and submit to the exclusive jurisdiction of either the federal or state district courts located in such state.

8.7. Headings . The headings contained in this Agreement are for convenience of reference only and will not affect the meaning or interpretation of this Agreement.

will have the same legal effect as manual signatures. If a party delivers its executed copy of this Agreement by facsimile signature or email, such party will promptly execute and deliver to the other party a manually signed original if requested by the other party.

SIGNATURES

The parties have executed this Agreement as of the Effective Date set forth above.

COMPANY:		SULLIVAN:
CELCUITY LLC

By:	/s/ Lance G. Laing	/s/ Brian F. Sullivan
Name: Lance G. Laing		Name: Brian F. Sullivan
Title: Vice President and Secretary

Exhibit 10.15

CONFIDENTIALITY, ASSIGNMENT OF INVENTIONS

AND NON-COMPETITION AGREEMENT

Parties:
“Company ”:	Celcuity LLC (a Minnesota limited liability company) 2400 Bantle Farm Road Medina, MN 55340
“Laing”:	Lance G. Laing [address]
Effective Date:	November 15, 2011

This Confidentiality, Assignment of Inventions and Non-Competition Agreement (“ Agreement ”) is entered into by and between the Company and Laing as of the Effective Date set forth above. The parties agree as follows:

1. Purpose of Agreement; Consideration . Laing acknowledges and agrees that the Company is engaged in a continuous program of research, development, production and marketing in connection with its business, and that it is critical for the Company to preserve and protect its confidential and proprietary information, its rights in inventions and all related intellectual property rights. Accordingly, Laing is entering into this Agreement as a condition to becoming a Member of the Company and providing services to the Company, whether or not he is expected to create inventions of value for the Company.

2. Term . The term of this Agreement will begin on the Effective Date set forth above and will continue for so long as Laing is associated with the Company as a member of the Board of Governors, officer, employee, consultant or other service provider, or owner of more than five percent (5%) of the outstanding membership units of the Company (the “ Term ”).

3. Confidentiality .

3.1. Definition . “ Confidential Information ” means any proprietary, confidential and/or trade secret information that relates to the actual or anticipated business or research and development of the Company, that is commercially valuable to the Company and is not generally known. “Confidential Information” includes but is not limited to technical data, trade secrets or know-how, research, product plans, developments, inventions, processes, formulas, technology, designs, drawings, engineering information, software, hardware configuration information, customer lists and customer information, supplier lists and supplier information, other information regarding the Company’s products or services and markets, and other marketing, financial or business information. Confidential Information does not include information that (i) has become publicly known and made generally available through no wrongful act of Laing or (ii) has been rightfully received by Laing from a third party who is authorized to make such disclosure.

3.2. Non-Use and Nondisclosure . Laing acknowledges that in the course of his dealings with the Company, including but not limited to his role as a founder, member of the Board of Governors, officer, employee, consultant or other service provider, or owner of membership units, he will be exposed to the Company’s Confidential Information. Laing agrees that he will not at any time (a) use the Confidential Information for any purpose whatsoever other than on behalf of or for the benefit of the Company or (b) disclose the Confidential Information to any third party unless such disclosure (i) is for the benefit of the Company in the course of his services to the Company or (ii) Laing is authorized in writing to make such disclosure by the Chief Executive Officer (unless Laing is then serving as Chief Executive Officer) or the Board of Governors of the Company. Laing agrees that all Confidential Information will remain the sole property of the Company. Laing also agrees to take all reasonable precautions to prevent any unauthorized disclosure of such Confidential Information.

3.3. Confidential Information Received by Company from Third-Parties . Laing recognizes that the Company has received and in the future will receive from third parties their confidential or proprietary information subject to a duty on the Company’s part to maintain the confidentiality of such information and to use it only for certain limited purposes. Laing agrees that he owes the Company and such third parties a duty to hold all such confidential or proprietary information in the strictest confidence and not to disclose it to any person, firm or corporation or to use it except as necessary to assist the Company in performing its obligations to such third party and consistent with the Company’s agreement with such third party.

3.4. Confidential Information Belonging to Others . Laing agrees that he or she will not improperly use for the benefit of the Company or disclose to the Company any proprietary information or trade secrets of any former or current employer of Laing or other person or entity with which Laing has an agreement or duty to keep such information confidential. Laing also agrees that he will not bring onto the Company’s premises any unpublished document or proprietary information belonging to any such employer, person or entity unless consented to in writing by such employer, person or entity.

3.5. Return of Materials . Upon the Company’s request, Laing will deliver to the Company all of the Company’s Confidential Information and other Company property that Laing may have in his possession or control, including but not limited to all electronically stored information and passwords to access such property. Laing will use his best efforts to regain possession of any Company property that may be in the hands of any of his agents or any third party who received it from him, and will return such property in accordance with this Section 3.5.

4. Ownership of Work Product and Inventions .

4.1. Definitions .

(a) “ Work Product ” means any work of authorship, including any and all documents, material, notes, records, drawings, software code, tangible expressions, and designs, generated or created by Laing, solely or in collaboration with others, during the Term of this Agreement that relates to or is directly or indirectly connected with the Company’s existing, planned or reasonably foreseeable business, products, services or research and development.

(b) “ Covered Invention ” means any invention, discovery, concept, improvement, enhancement, extension, mask work, trademark, trade secret or Work Product (whether or not patentable, copyrightable or otherwise protectable) made, conceived, discovered, developed or reduced to practice by Laing, solely or in collaboration with others, that relates to or is directly or indirectly connected with the Company’s existing, planned or reasonably foreseeable business, products, services or research and development.

4.2. Copyrights . Laing acknowledges that any Work Product is a “work made for hire” under U.S. copyright laws and that, accordingly, the Company exclusively owns all copyright rights in such Work Product. Laing agrees that if for any reason the Work Product is not found to have been created as a “work made for hire,” he hereby assigns to the Company all of his right, title, and interest in and to the Work Product.

4.3. Assignment of Covered Inventions . Laing hereby contributes, conveys, transfers and assigns to the Company his entire right, title and interest in and to all Covered Inventions existing at the date of this Agreement, except for those Prior Inventions (if any) listed in Section 4.5, and agrees to contribute, convey, transfer and assign to the Company his entire right, title and interest in and to any and all Covered Inventions made, conceived, discovered, developed or reduced to practice by Laing, solely or in collaboration with others, during the Term of this Agreement.

4.4. Exception to Assignment . The provisions of this Agreement requiring assignment of future Covered Inventions to the Company do not apply to any invention for which no equipment, supplies, facility, or trade secret information of the Company was used and that was developed entirely on Laing’s own time, and that (a) does not relate (i) directly to the Company’s business or (ii) to the Company’s actual or demonstrably anticipated research or development, or (b) does not result from any work performed by Laing for the Company.

4.5. Prior Inventions . Set forth below are all inventions, original works of authorship, developments, improvements, and trade secrets that were made by Laing prior to the Effective Date of this Agreement (collectively, “ Prior Inventions ”) that relate to the Company’s current, proposed or reasonably foreseeable business, products or research and development and that are NOT intended to be assigned to the Company under this Agreement ( check the applicable box ):

None

The Prior Inventions listed below:

If “None,”, or if no list of Prior Inventions is provided, Laing represents that there are no such Prior Inventions. Laing agrees that if, in the course of his association with the Company, he incorporates any Prior Invention into any Covered Invention, (a) Laing will inform the Company in writing before incorporating such Prior Invention into any Covered Invention and (b) the

Company is hereby granted a nonexclusive, royalty-free, perpetual, irrevocable, worldwide license to make, have made, modify, use and sell such item as part of or in connection with the Covered Invention. Laing will not incorporate any invention, improvement, development, concept, discovery or other proprietary information owned by any third party into any Covered Invention without the Company’s prior written permission.

4.6. Further Assurances . Laing agrees to assist the Company, or its designee, at the Company’s expense, in every proper way to secure the Company’s rights in any Covered Invention in any and all countries, including the disclosure to the Company of all pertinent information and data with respect to all Covered Inventions, the execution of all applications, specifications, oaths, assignments and all other instruments that the Company may deem necessary in order to apply for and obtain such rights and in order to assign and convey to the Company, its successors, assigns and nominees the sole and exclusive right, title and interest in and to all Covered Inventions. Laing also agrees that his obligation to execute or cause to be executed any such instrument or papers will continue after the termination of this Agreement.

4.7. Attorney-in-Fact . Laing agrees that, if the Company is unable because of Laing’s unavailability, mental or physical incapacity, or for any other reason, to secure Laing’s signature for the purpose of applying for or pursuing any application for any United States or foreign patents or mask work, trademark or copyright registrations covering the Covered Inventions assigned to the Company in Section 4.3, Laing hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as his agent and attorney-in-fact, to act for and on behalf of Laing to execute and file any such applications and to do all other lawfully permitted acts to further the prosecution and issuance of patents, mask work, trademark or copyright registrations with the same legal force and effect as if executed by Laing.

5. Non-Competition; Non-Solicitation .

5.1. Substantially Similar Designs . In view of Laing’s access to the Company’s trade secrets and proprietary know-how, Laing agrees that during the Term of this Agreement and for a period of 24 months after the termination of this Agreement, he will not, without the Company’s prior written approval, create for any third party designs that are identical or substantially similar to the designs that are subject to this Agreement. Laing acknowledges that the obligations in this Section 5.1 are ancillary to his confidentiality obligations under Section 3 and are in addition to any rights the Company may have under applicable laws, including intellectual property laws.

5.2. Non-Competition; Non-Solicitation . Laing agrees that during the Term of this Agreement, and for a period of 24 months after the termination of this Agreement, he will not directly or indirectly, either on behalf of himself or herself or any other person or entity:

(a) engage in any business activity that competes with the business in which the Company is now involved or becomes involved during the Term of this Agreement, or any planned business of the Company as of the date of the termination of this Agreement;

(b) render advice or assistance, including but not limited to financial assistance as an investor (except as permitted in Section 5.2(c)), lender or otherwise, to

any business in which the Company is now involved or becomes involved during the Term of this Agreement, or any planned business of the Company as of the date of the termination of this Agreement;

(c) acquire an ownership interest (except as the holder of not more than 5% of the stock of a publicly held company, provided that Laing does not actively participate in the business of that company or render advice or assistance to it) in any business in which the Company is now involved or becomes involved during the Term of this Agreement, or any business of the Company planned as of the date of the termination of this Agreement;

6. No Conflicting Obligations . Laing certifies that he has no outstanding agreement or obligation that is in conflict with any of the provisions of this Agreement or that would preclude him from complying with the provisions of this Agreement. Laing will not enter into any conflicting agreement during the Term of this Agreement.

7. Indemnification . Laing agrees to indemnify and hold harmless the Company and its directors, officers and employees from and against all taxes, losses, damages, liabilities, costs and expenses, including attorneys’ fees and other legal expenses, arising directly or indirectly from or in connection with (a) any negligent, reckless or intentionally wrongful act of Laing or his assistants, employees or agents, (b) any breach by Laing or his assistants, employees or agents of any of the covenants contained in this Agreement, or (c) any violation or claimed violation of a third party’s rights resulting in whole or in part from the Company’s use of the work product of Laing that is subject to this Agreement.

8. Miscellaneous .

8.1. Entire Agreement; Amendments; Waivers . This Agreement constitutes the entire agreement between the parties with regard to the subject matter hereof, and supersedes all prior written or oral understandings, representations and agreements by or between the parties relating thereto. No amendments or supplements to this Agreement will be binding unless in writing and signed by both parties. None of the terms of this Agreement may be waived except by an express agreement in writing signed by the party against whom enforcement of such waiver is sought. The failure or delay of a party in enforcing its rights under this Agreement will not be deemed a continuing waiver of such right, and the waiver of one breach hereunder will not constitute the waiver of any other or subsequent breach.

8.4. Availability of Injunctive Relief . A breach of this Agreement may cause irreparable harm for which monetary damages may be inadequate. Laing agrees that the Company may petition the court for injunctive relief without having to post a bond or other security where the Company alleges or claims a violation of Section 3 (Confidentiality), Section 4 (Ownership of Work Product and Inventions), Section 5 (Non-Competition; Non-Solicitation) or Section 6 (No Conflicting Obligations) of this Agreement or any other agreement regarding trade secrets, Confidential Information, non-competition or non-solicitation.

8.5. Remedies . The remedies provided in this Agreement will be cumulative and will not limit any rights or remedies provided by law or equity.

8.7. Headings . The headings contained in this Agreement are for convenience of reference only and will not affect the meaning or interpretation of this Agreement.

8.8. Counterparts; Facsimile Signatures . This Agreement may be executed in any number of counterparts, each of which will be deemed an original and all of which together will constitute one and the same document. This Agreement may be executed and delivered by facsimile or in portable document format (.pdf) via email, and any such signatures will have the same legal effect as manual signatures. If a party delivers its executed copy of this Agreement by facsimile signature or email, such party will promptly execute and deliver to the other party a manually signed original if requested by the other party.

SIGNATURES

The parties have executed this Agreement as of the Effective Date set forth above.

COMPANY:		LAING:

CELCUITY LLC

By:	/s/ Brian F. Sullivan	/s/ Lance G. Laing
Name: Brian F. Sullivan		Name: Lance G. Laing
Title: Chief Executive Officer

Exhibit 10.16

CONFIDENTIALITY, NON-COMPETE,

AND PROPRIETARY RIGHTS AGREEMENT

This, Confidentiality, Non-Compete, and Proprietary Rights Agreement, effective as of May 17, 2017, between Celcuity, LLC, having an address at 16305 36 ^th Avenue North, Suite 450, Plymouth, MN 55446 (hereinafter referred to as “Celcuity”), and Vicky Hahne (hereinafter referred to as “Hahne”) having an address at [address].

W I T N E S S E T H:

WHEREAS , Celcuity desires to have the benefit of Hahne’s knowledge and experience, and Hahne desires to work for Celcuity, all as hereinafter provided in this Agreement;

WHEREAS , Hahne will have access to the Company’s trade secrets and other confidential information, and she will engage in activities for the Company that create Work Product for Celcuity;

WHEREAS , Hahne will receive cash compensation and options to purchase Membership Units of Celcuity LLC, which would not be made available and on such terms but for Hahne’s willingness to enter into this Agreement;

NOW, THEREFORE , in consideration and as a condition of Celcuity’s offer to contract with and employ Hahne, hereinafter set forth, effective the date hereof, Celcuity and Hahne hereby agree as follows:

1. Confidential Information. “Confidential Information” means any information relating to Celcuity’s business that is not generally known or publicly disclosed, including but not limited to information relating to Celcuity’s technology, trade secrets, business strategy, regulatory status, marketing practices, operations, financial and pricing data, customer lists, active prospects, and business methods, whether furnished before or after the date of this Agreement, whether furnished orally or in writing or gathered by inspection, and whether or not specifically marked or identified as “confidential”; provided , however , that Confidential Information will not include information which (i) is or becomes generally available to the public other than by disclosure by Hahne, (ii) was or becomes available to Hahne on a non-confidential basis from a third party who, to the best of Hahne’s knowledge, was not under an obligation of confidentiality to Celcuity or (iii) was or is independently developed by Hahne without reference to the Confidential Information.

2. Non-Disclosure of Confidential Information . Hahne agrees that she will not at any time directly or indirectly disclose or make available any Confidential Information to any person. Hahne agrees to treat the Confidential Information as confidential, using the same degree of care, but no less than a reasonable degree of care, as Hahne uses to protect her own confidential information of a like nature. Hahne shall be responsible for any disclosure of the Confidential Information not permitted by the terms of this Agreement.

3. Return of Materials . Hahne hereby agrees that, when her employment with Celcuity ends, for whatever reason, she will promptly deliver to Celcuity all originals and copies of all documents, records, software programs, media and other materials containing any of Celcuity’s Confidential Information. She will also return to Celcuity all equipment, files, software programs and other personal property belonging to Celcuity.

4. Confidentiality Obligation Survives Employment . Hahne understands that her obligation to maintain the confidentiality and security of Celcuity’s Confidential Information remains binding on her

even after her employment with Celcuity ends and continues for so long as such material remains confidential.

5. Work Product, Proprietary Rights and Disclosures

(a)

Hahne agrees to disclose promptly to Celcuity all inventions, discoveries, designs, data, ideas, concepts, specifications, research, processes, techniques, methods, formulae, improvements and all other intellectual property rights (collectively referred to as "Work Product") made or perfected in the performance of, or arising out of, the work to be performed by Hahne alone or jointly with others for Celcuity during the period of this agreement or during the six-month period next succeeding the termination of her work with Celcuity, whether or not patentable or subject to copyright or trademark protection, whether or not reduced to tangible form or reduced to practice, whether or not made during regular working hours, and whether or not made on Celcuity property and will maintain adequate and current records (in the form of notes, sketches, drawings, digital information and as may be specified by Celcuity), properly corroborated, to document the conception and/or first actual reduction to practice of any Work Product. Such records shall be available to and remain the sole property of Celcuity at all times. If the work provided by Hahne entail laboratory work or experiments, the details of such work or experiments performed will be recorded in laboratory notebooks (digital and/or paper) and used only for recording work done on behalf of Celcuity. This will be of sufficient detail that other skilled persons, without reference to other material, could directly repeat the experiments. Results of all experiments will be documented, whether deemed to have been successful or not. All raw data will be included in the laboratory notebooks and will be available for inspection upon request. Data will be fully annotated such that cross-reference with records in laboratory notebooks is easily achieved. At no such time, shall records, experimental results, notebooks, other data or information, be removed physically from Celcuity’s premises or transferred digitally or electronically in any manner from computers Hahne uses on Celcuity’s premises.

(b)

Hahne agrees that all such Work Product and patents therefor shall be the sole property of Celcuity and that all Work Product shall constitute work made for hire under laws pertaining to copyright, patents, trade secrets, trademarks and other proprietary rights. Hahne agrees to waive, and hereby waive, all moral or proprietary rights which Hahne may have in or to any Work Product and, to the extent that such rights may not be waived, Hahne agrees not so assert such rights against the Company or its licensees, successors or assigns.

(c)

Hahne hereby undertakes and agrees to execute such assignments and other papers which, in the opinion of Celcuity, are necessary at any time to permit the filing and prosecution of copyrights, applications for copyrights, applications for patents covering the Work Product or are otherwise required for compliance with the provisions of this paragraph.

(d)

If Celcuity is unable for any reason to secure Hahne’s signature to apply for or to pursue any application for any United States or foreign patents, copyright or trademark registrations covering the assignments to Celcuity above, then Hahne hereby irrevocably designates and appoints Celcuity and its duly authorized officers and agents as Hahne’s agent and attorney in fact, to act for and in Hahne’s behalf and stead, to execute and file any such applications and to do all other lawfully permitted acts to further the prosecution and issuance of patents, copyright, mask work and trademark registrations thereon with the same legal force and effect as if executed by Hahne.

(e)

Hahne agrees that (a) the work to be performed hereunder, (b) the data and Work Product generated by the said work and (c) any and all scientific, technical, trade or business

information, data, specifications, techniques, formulae, manufacturing processes and other information possessed or obtained by, developed for or given to Celcuity which is treated by Celcuity as confidential or proprietary, whether or not labeled “Confidential” (collectively referred to as "Confidential Information") are the property of Celcuity and are confidential and proprietary to Celcuity. Hahne agrees that she shall not use Confidential Information for any purpose other than as advised or directed by Celcuity regardless of whether such Confidential Information has been furnished or made available to Hahne by or on behalf of Celcuity or is original with Hahne. Without Celcuity' express written consent first obtained, Hahne agrees that he shall not disclose or make available any Confidential Information to any third party regardless of whether such Confidential Information has been furnished or made available to Hahne by Celcuity or is original with Hahne. Hahne shall not discuss the nature of her activities in connection with Celcuity with anyone except authorized representatives of Celcuity. At Celcuity' request, Hahne shall provide Celcuity with all Confidential Information furnished to Hahne by Celcuity or original with Hahne in connection with her services furnished hereunder which has been reduced to writing and retain no copies thereof . Hahne understands that in receiving Confidential Information, he receives no right to a license, implied or otherwise, under any patent or other rights now or hereafter owned or controlled by Celcuity. If required, Hahne may disclose Confidential Information to a governmental authority or by order of a court of competent jurisdiction, provided that such disclosure is subject to all applicable governmental or judicial protection available for like material and reasonable advance notice is given, if possible, to Celcuity.

(f)

Hahne warrants and represents that no trade secrets or other confidential information of any other person, firm, corporation, institution or other entity will be wrongfully disclosed by her to Celcuity in connection with any of the services called for hereunder. Hahne further warrants and represents that none of the provisions of this Agreement, nor the services which will be performed by Hahne pursuant to the work to be performed hereunder, contravenes or is in conflict with any agreement of Hahne with, or obligation to, any other person, firm, corporation, institution or other entity including, without limiting the generality of the foregoing, employment agreements, consulting agreements, disclosure agreements or agreements for assignment of inventions.

6. Prior Developments . As a matter of record, Hahne has identified all prior developments relevant to the subject matter of her employment by Celcuity (‘Prior Developments”) that have been conceived or reduced to practice or learned by her, alone or jointly with others, before her employment Celcuity, which she desires to remove from the operation of this Agreement. The Prior Developments consist of:

None (cross out “None” if Prior Developments are listed)

Hahne represents and warrants that this list is complete. If there is no such list, Hahne represents that she had made no such Prior Developments at the time her employment with the Company

commenced.

7. Conflict of Interest . Hahne agrees that, during her employment with the Company, she will not engage in any business activity competitive with the Company’s business activities, nor will she engage in any other activities that conflict with the Company’s best interests.

8. Non-Competition Agreement . Hahne understands that during her work with Celcuity she will become familiar with Confidential Information of Celcuity. Celcuity therefore believes, and Hahne hereby acknowledges, that her employment by or her otherwise providing assistance to a competitor of Celcuity could cause material and irreparable damage to Celcuity. Accordingly, Hahne agrees that, for a period ending twenty-four (24) months after the end of her work with the company, she will not:

(a)

accept employment with any person or entity that is engaged in the development, offering, or sale of any product, process, service, or apparatus which is functionally similar to those under development, offered, marketed or sold by Celcuity;

(b)

engage in, or contribute her knowledge to, any work that is functionally similar to a product, process, service, or apparatus provided by Celcuity during her period of employment; or

(c)

divert or attempt to divert from Celcuity any suppliers to, or any customers or prospective customers (or any business from such customers or prospective customers) of, Celcuity.

Hahne acknowledges and agrees that the services under development by Celcuity are, or are intended to be, used by customers nationally throughout the United States and internationally. Accordingly, she agrees that these restrictions on her post-employment competitive activity are reasonable and necessary to protect the legitimate business interests of Celcuity, and shall apply throughout the entire United States and all other countries.

9. Non-Interference with Celcuity Employees . Hahne agrees that during the Term and for two (2) years thereafter, Hahne shall not directly or indirectly:

(a)

retain the services of any employees of Celcuity (including any former employees who have left the employ of Celcuity within the preceding six months) or assist anyone else doing so; or

(b)

cause any person or entity rendering services to Celcuity to discontinue her or its relationship with Celcuity.

10. General Provisions .

(a)

Survival of Provisions . Hahne’s rights and obligations under this Agreement shall survive the termination of her service to Celcuity, in any capacity, and shall inure to the benefit and shall be binding upon her heirs and personal representatives.

(b)

Assignability and Binding Effect . This Agreement, and the rights and obligations hereunder, may not be assigned or transferred by either party without the prior written consent of the other party, except that Celcuity may assign this Agreement, in whole or in part, to an affiliated company or in connection with the merger, consolidation, sale or transfer of all or substantially all of the assets to which this Agreement relates.

(c)

Headings . The paragraph headings contained herein are included solely for convenience of reference and shall not control or affect the meaning or interpretation of any of the provisions of this Agreement.

(d)

No Modification. This Agreement may be changed only by a writing signed by authorized representatives of both parties.

(e)

Severability. In the event that any one or more of the provisions contained in this Agreement shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such

invalidity, illegality or unenforceability shall not affect any other provisions of this Agreement, and all other provisions shall remain in full force and effect. If any of the provisions of this Agreement are held to be excessively broad, it shall be reformed and construed by limiting and reducing it so as to be enforceable to the maximum extent permitted by law.

(f)

Waiver . Celcuity and Hahne agree that either party to this Agreement may overlook violations of any part of this Agreement without waiving the right in the future to insist on strict compliance with all parts of this Agreement.

(g)

Injunctive Relief . Hahne acknowledges and agrees that her violation of this Agreement would cause irreparable harm and significant injury to Celcuity to an extent that may be extremely difficult to ascertain, and Hahne therefore agrees that, in addition to all other remedies available to Celcuity at law, in equity or otherwise, Celcuity shall be entitled to seek injunctive relief to prevent an actual or threatened violation of this Agreement.

(h)

Entire Agreement. This Agreement constitutes the entire agreement of the parties with regard to its subject matter, and supersedes all previous written or oral representations, agreements and understandings between the parties.

(i)

Governing Law . This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Minnesota applicable to contracts made and to be performed therein, without giving effect to the principles thereof relating to the conflict of laws.

(j)

Construction . The parties acknowledge that each party and its counsel have reviewed and participated in the preparation of this Agreement and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or any amendments hereto. As the context requires, words connoting the singular include the plural, words connoting the masculine gender include the feminine or neutral gender, and vice versa.

(k)

Counterparts . This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

(l)

Enforcement . This Agreement, and Hahne’s obligations hereunder, shall apply to and may be enforced by Celcuity and each of its subsidiaries and affiliated entities.

IN WITNESS WHEREOF , the parties hereto have duly executed this Agreement under seal effective on the day and year first above-written.

Celcuity, LLC:		Vicky Hahne:

By:	/s/ Brian F. Sullivan	By:	/s/ Vicky Hahne

Name:	Brian F. Sullivan	Name:	Vicky Hahne

Title:	CEO	Title:	CFO

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

The Board of Governors and Members

Celcuity LLC.:

We consent to the use of our report dated June 9, 2017 with respect to the balance sheets of Celcuity LLC. as of December 31, 2016 and 2015, and the related statements of operations, changes in members’ equity, and cash flows for each of the years ended December 31, 2016 and 2015 contained in this registration statement and to the reference to our firm under the heading “Experts” in the prospectus.

/s/ Boulay PLLP

Minneapolis, Minnesota

August 23, 2017