Quarterly Report (10-q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2015

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-35642

GlobeImmune, Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware	84-1353925
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1450 Infinite Drive, Louisville, CO	80027
(Address of principal executive offices)	(Zip code)

(303) 625-2700
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

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

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨ (do not check if a smaller reporting company)	Smaller reporting company	x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

As of November 6, 2015, the registrant had 5,751,574 shares of common stock, $0.001 par value per share, outstanding.

GLOBEIMMUNE, INC.

FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 30, 2015

PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	3
	Condensed Balance Sheets	3
	Condensed Statements of Operations	4
	Condensed Statements of Cash Flows	5
	Notes to Condensed Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures about Market Risks	26
Item 4.	Controls and Procedures	26
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	27
Item 1A.	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	55
Item 3.	Defaults Upon Senior Securities	56
Item 4.	Mine Safety Disclosures	56
Item 5.	Other Information	56
Item 6.	Exhibits	56
SIGNATURES		57
EXHIBIT INDEX		58

PART I - FINANCIAL INFORMATION

ITEM 1 - Financial Statements

GLOBEIMMUNE, INC.

Condensed Balance Sheets

(unaudited)

	September 30, 2015			December 31, 2014
Assets
Current assets:
Cash and cash equivalents	$	11,295,547			16,812,459
Other current assets		1,586,441			999,892
Total current assets		12,881,988			17,812,351
Property and equipment, net		230,271			455,768
Other assets		100,000			100,000
Total assets	$	13,212,259			18,368,119

Liabilities, Redeemable, Convertible Preferred Stock and Stockholders' Equity
Current liabilities:
Accounts payable	$	285,593			572,586
Accrued liabilities		613,187			1,259,332
Deferred revenue		3,450,582			3,340,571
Total current liabilities		4,349,362			5,172,489
Other long-term liabilities		166,862			148,641
Deferred revenue		4,941,942			7,443,498
Total liabilities		9,458,166			12,764,628

Commitments and contingencies
Stockholders' equity:
Common stock, $0.001 par value. Authorized 100,000,000 shares; issued and outstanding 5,751,574 shares		5,752			5,752
Preferred stock, $0.001 par value. Authorized 5,000,000 shares; issued and outstanding 0 shares		—			—
Additional paid-in capital		228,424,954			228,302,479
Accumulated deficit		(224,676,613	)		(222,704,740	)
Total stockholders' equity		3,754,093			5,603,491
Total liabilities, redeemable, convertible preferred stock and stockholders' equity	$	13,212,259			18,368,119

See accompanying Notes to Condensed Financial Statements

GLOBEIMMUNE, INC.

Condensed Statements of Operations

(unaudited)

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2015		2014			2015			2014

Revenue
Collaboration license and services	$	2,924,114		999,222			5,121,720			3,435,761
Manufacturing services		20,833		307,116			288,099			1,019,941
Total revenue		2,944,947		1,306,338			5,409,819			4,455,702
Operating expenses:
Research and development expenses:
Costs of collaboration license and services		558,989		999,031			2,127,068			2,757,026
Costs of manufacturing services		20,833		307,116			288,099			1,019,941
Research and development for proprietary programs		420,586		453,261			1,393,820			1,661,427
Total research and development		1,000,408		1,759,408			3,808,987			5,438,394
General and administrative		1,030,404		1,006,744			3,404,923			2,877,069
Depreciation		20,533		76,586			167,782			217,867
Total operating expenses		2,051,345		2,842,738			7,381,692			8,533,330
Income (loss) from operations		893,602		(1,536,400	)		(1,971,873	)		(4,077,628	)
Change in value of warrants and put and call options, income (expense)		—		—			—			(1,903,446	)
Loss on extinguishment of convertible notes		—		(4,687,649	)		—			(4,687,649	)
Interest expense		—		(176,809	)		—			(3,890,662	)
Other income		—		39,949			—			39,949
Net income (loss)		893,602		(6,360,909	)		(1,971,873	)		(14,519,436	)
Preferred stock dividends and accretion of offering costs to redemption value		—		(298,793	)		-			(7,173,901	)
Net income (loss) applicable to common stockholders	$	893,602		(6,659,702	)		(1,971,873	)		(21,693,337	)

Earnings per common share - basic:
Weighted average shares outstanding-basic		5,751,574		5,626,137			5,751,574			1,959,385
Net income (loss) per share attributable to common stockholders-basic	$	0.16		(1.18	)		(0.34	)		(11.07	)

Earnings per common share - diluted:
Weighted average shares outstanding-diluted		6,946,413		5,626,137			5,751,574			1,959,385
Net income (loss) per share attributable to common stockholders-diluted	$	0.13		(1.18	)		(0.34	)		(11.07	)

See accompanying Notes to Condensed Financial Statements

GLOBEIMMUNE, INC.

Condensed Statements of Cash Flows

(unaudited)

	Nine Months Ended
	September 30,
	2015			2014
Cash flows from operating activities:
Net loss	$	(1,971,873	)		(14,519,436	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		167,782			217,867
Share-based compensation		109,980			68,734
Stock-based payments for services		12,495			(30,000	)
Noncash interest expense from amortization of debt discount and amortization of debt issuance costs	—				3,562,946
Noncash interest expense on convertible notes	—				330,664
Noncash expense (income) from change in valuation of warrants and put and call options	—				1,903,446
Loss on extinguishment of convertible notes	—				4,687,649
Gain on sale of property and equipment		(146,574	)		(91,285	)
Changes in operating assets and liabilities:
Increase in other current assets		(586,549	)		(286,252	)
Decrease in accounts payable		(286,993	)		(956,251	)
Decrease in accrued liabilities		(646,145	)		(105,025	)
Decrease in deferred revenue		(2,391,545	)		(2,808,665	)
Increase in other long-term liabilities		18,221			17,890
Net cash used in operating activities		(5,721,201	)		(8,007,718	)
Cash flows from investing activities:
Purchase of property and equipment		(35,742	)		(244,363	)
Sale of property and equipment		240,031			127,354
Net cash provided by (used in) investing activities		204,289			(117,009	)
Cash flows from financing activities:
Proceeds from issuance of common stock from stock option exercises	—				25,513
Proceeds from issuance of convertible promissory notes	—				7,500,000
Convertible promissory notes issuance costs	—				(1,051,487	)
Proceeds from issuance of common stock	—				17,250,000
Common stock issuance costs	—				(2,630,141	)
Net cash provided by financing activities		—			21,093,885
Net (decrease) increase in cash and cash equivalents		(5,516,912	)		12,969,158
Cash and cash equivalents, beginning of period		16,812,459			5,924,241
Cash and cash equivalents, end of period	$	11,295,547			18,893,399

Supplemental disclosures of noncash investing and financing activities:
Accretion of preferred stock (dividends)	$ —				6,899,090
Accretion of preferred stock (offering costs)	—				274,811
Fair value of warrants and put option issued in connection with convertible note payable	—				6,121,533
Fair value of warrants issued for debt issuance costs	—				876,778
Non-cash conversion of convertible promissory notes to common stock	—				8,226,658
Non-cash conversion of preferred stock to common stock	—				194,856,289

See accompanying Notes to Condensed Financial Statements

GLOBEIMMUNE, INC.

Notes to Condensed Financial Statements

(unaudited)

(1)Organization and Nature of Business

We were incorporated as Ceres Pharmaceuticals, Ltd. in Colorado on February 10, 1995. We changed our name to GlobeImmune, Inc. on May 26, 2001, and reincorporated in Delaware on June 5, 2002. We are a biopharmaceutical company focused on developing therapeutic products for cancer and infectious diseases based on our proprietary Tarmogen ® platform. We have two strategic collaborations with leading biotechnology companies. In October 2011, Gilead Sciences, Inc., or Gilead, exclusively licensed product candidates to treat chronic hepatitis B virus, or HBV, infection. Celgene Corporation, or Celgene, entered into a collaboration and option agreement for certain oncology product candidates in May 2009. Under this agreement, in July 2013 Celgene exercised its option for a worldwide, exclusive license to the GI-6300 program, which is a Tarmogens program targeting the brachyury protein and in July 2015 Celgene exercised its option for a worldwide, exclusive license to the GI-6200 program, which is a Tarmogen that expresses a modified version of the human carcinoembryonic antigen, or CEA, protein as the target antigen. We have three product candidates in five ongoing clinical trials.

Our operations are subject to certain risks and uncertainties. The risks include negative outcome of clinical trials, inability or delay in completing clinical trials or obtaining regulatory approvals, changing market conditions for products being developed by us, more stringent regulatory environment, the need to retain key personnel and protect intellectual property, product liability, and the availability of additional capital financing on terms acceptable to us. Because of the numerous risks and uncertainties associated with biopharmaceutical product development and commercialization, we are unable to accurately predict the timing or amount of future expenses or when, or if, it will be able to achieve or maintain profitability. Currently, we have no products approved for commercial sale, and to date we have not generated any product revenue. We have financed our operations primarily through the sale of equity securities, upfront payments pursuant to collaboration agreements, government grants and equipment financing. The size of our future net losses will depend, in part, on the rate of growth or contraction of expenses and the level and rate of growth, if any, of revenues. Our ability to achieve profitability is dependent on our ability, alone or with others, to complete the development of our product candidates successfully, obtain the required regulatory approvals, manufacture and market our proposed products successfully or have such products manufactured and marketed by others and gain market acceptance for such products. There can be no assurance as to whether or when we will achieve profitability.

(2)	Liquidity Risks

We have historically financed our operations primarily through the sale of equity securities, payments pursuant to collaboration agreements, government grants and equipment financing. We will continue to be dependent upon such sources of funds until we are able to generate positive cash flows from our operations. We believe that our existing cash and cash equivalents as of September 30, 2015 will be sufficient to fund restructured operations through 2016.

In June 2015, we announced that we were evaluating our strategic options and restructuring the Company. As a result of this restructuring, we eliminated the majority of positions in our workforce and reduced our operating expenses. As of November 9, 2015, we have four full time employees, including our chief executive officer, two additional scientists and one general and administrative employee. These steps are not expected to have an impact on ongoing clinical trials being conducted by our collaborators in oncology and hepatitis B or the preclinical work we are conducting in our tuberculosis program. We have engaged Cantor Fitzgerald & Co. to explore alternative ways to maximize stockholder value, including transactions involving the merger or sale of all or part of our assets.

On July 31, 2015, Celgene exercised its option to an exclusive worldwide-license, with the right to sublicense, to our GI-6200 program, including product candidate GI-6207. The GI-6200 license agreement provided for an upfront option exercise payment of $1,900,000 to us and our eligibility for milestone payments of up to $120,000,000, in the aggregate, and tiered royalty payments in the low teens for any sales of GI-6200 product candidates. Celgene also assumed all development responsibilities of the Company’s GI-6300 program and all development, regulatory and commercialization costs and responsibilities related to GI-6200 product candidates, including all obligations under the Cooperative Research and Development Agreement (NCI reference #02264) dated May 8, 2008 with the National Cancer Institute, or CRADA, except our obligation to make payments due in 2016, which were made in the 3^rd quarter 2015.

GLOBEIMMUNE, INC.

Notes to Condensed Financial Statements

(unaudited)

We will be required to fund future operations through the sale of our equity securities, issuance of convertible debt, receipt of potential milestone payments, if achieved, and possible future collaborations. There can be no assurance that sufficient funds will be available to us when needed from equity or convertible debt financings, or if any such financings are available to us, if they will be on satisfactory terms, or that milestone payments will be earned or that future collaboration partnerships will be entered into. If we are unable to obtain additional funding from these or other sources when needed, or to the extent needed, it may be necessary to significantly reduce our current rate of spending through further reductions in staff and delaying, scaling back, or stopping certain research and development programs. Insufficient liquidity may also require us to relinquish greater rights to product candidates at an earlier stage of development or on less favorable terms to us or our stockholders than we would otherwise choose. These events could prevent us from successfully executing on our restructured operating plan and could raise substantial doubt about our ability to continue as a going concern in future periods.

(3)	Summary of Significant Accounting Policies

(a)	Use of Estimates in the Preparation of Financial Statements

The preparation of the financial statements in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP, requires our management to make estimates and assumptions relating to the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The most significant estimates in the accompanying financial statements relate to the deferral of revenues under our collaboration agreements with Gilead and Celgene; the terms of performance under these collaboration agreements; and the estimated fair values of share-based awards.

(b)	Unaudited Interim Financial Data

The accompanying condensed balance sheet as of September 30, 2015, condensed statements of operations for the three and nine months ended September 30, 2015 and 2014 and condensed statements of cash flows for the nine months ended September 30, 2015 and 2014 are unaudited. The unaudited interim financial statements have been prepared on a basis consistent with the audited financial statements and, in the opinion of management, reflect all adjustments (consisting of normal recurring adjustments) considered necessary to state fairly our financial position as of September 30, 2015 and the results of operations for the three and nine months ended September 30, 2015 and 2014 and cash flows for the nine months ended September 30, 2015 and 2014. The financial data and other information disclosed in these notes to the financial statements related to the three and nine months ended September 30, 2015 and 2014 are unaudited. The results for the three and nine months ended September 30, 2015 are not necessarily indicative of the results to be expected for the year ending December 31, 2015 or for any other interim period. These unaudited financial statements are condensed and should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2014 included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014.

(c)	Reverse Stock Split

On April 25, 2014, we affected a 1-for-4.3 reverse stock split of our common stock after approval by our stockholders. In connection with the reverse stock split, we filed a Certificate of Amendment of our Restated Certificate of Incorporation with the Secretary of State of Delaware on April 25, 2014 effecting the reverse stock split. This reverse stock split has been reflected retroactively for all periods presented in the financial statements.

(d)	Accrued Liabilities

We make estimates of our accrued expenses by identifying services that have been performed on our behalf and estimating the level of service performed and the associated cost incurred for the service when it has not yet been invoiced or otherwise notified of actual cost. The majority of our service providers invoice us monthly in arrears for services performed. Examples of estimated accrued expenses include:

fees owed to contract research organizations in connection with preclinical and toxicology studies and clinical trials;

fees owed to investigative sites in connection with clinical trials;

fees owed to contract manufacturers in connection with the production of clinical trial materials;

fees owed for professional services;

property taxes; and

GLOBEIMMUNE, INC.

Notes to Condensed Financial Statements

(unaudited)

unpaid salaries, wages, and benefits.

Accrued liabilities consisted of the following as of:

	September 30, 2015		December 31, 2014
Accrued compensation	$	127,516		578,091
Accrued clinical trial holdbacks		8,134		32,385
Other		477,537		648,856
Total Accrued Liabilities	$	613,187		1,259,332

As of September 30, 2015 and December 31, 2014, accrued liabilities included $8,134 and $32,385 respectively, of holdbacks representing five percent of payments due to entities conducting clinical trials for patient-related fees. The holdbacks will be paid upon completion of the studies and when all data has been received and validated by us.

(e)	Net Loss per Share

Basic net loss per share is computed by dividing net loss applicable to common stockholders for the period by the weighted average number of common shares outstanding during the period. Diluted net loss per share reflects the additional dilution from potential issuances of common stock, such as stock issuable pursuant to the exercise of stock options and warrants. The treasury stock method is used to calculate the potential dilutive effect of these common stock equivalents. Potentially dilutive shares are excluded from the computation of diluted net loss per share when their effect is anti-dilutive. Potentially dilutive securities, included convertible preferred stock, warrants, stock options and convertible promissory notes, representing 5,074,910, 1,194,930, and 4,856,303 weighted average shares of common stock were excluded for the three months ended September 30, 2014 and nine months ended September 30, 2015 and 2014, respectively, because including them would have an anti-dilutive effect on net loss per share.

(f)	Recently Issued Accounting Standards

On May 28, 2014, the Financial Accounting Standards Board, or FASB, issued the Accounting Standards Update, or ASU, No. 2014-09, Revenue from Contracts with Customers (Topic 606), that will supersede nearly all existing revenue recognition guidance under U.S. GAAP. This guidance requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The guidance will replace most existing revenue recognition guidance when it becomes effective. In July 2015, the FASB voted to approve a one-year deferral of the effective date of ASU 2014-09, which will be effective for us for the annual and interim periods beginning after December 15, 2017 and may be applied on a full retrospective or modified retrospective approach. We are evaluating the effect that this new guidance will have on our financial statements and related disclosures. We have not selected a transition method nor have we determined the effect of the standard on our ongoing financial reporting.

In August 2014, the FASB issued ASU 2014-15, “Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern,” or ASU 2014-15. ASU 2014-15 requires management to evaluate, at each annual and interim reporting period, whether there are conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern and provide related disclosures. ASU 2014-15 is effective for annual and interim reporting periods beginning January 1, 2017 and is not expected to have a material impact on the Company’s Consolidated Financial Statements. As an emerging growth company under the Jumpstart Our Business Startups Act of 2012, or JOBS Act, the Company has elected to opt out of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the JOBS Act. This election is irrevocable.

In April 2015, the FASB issued ASU 2015-03, “Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs,” or ASU 2015-03. The update requires debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability instead of being presented as an asset. Debt disclosures will include the face amount of the debt liability and the effective interest rate. The update requires retrospective application and represents a change in accounting principle. The update is effective for fiscal years beginning after December 15, 2015. Early adoption is permitted for financial statements that have not been previously issued. ASU 2015-03 is not expected to have a material impact on the Company’s condensed consolidated financial statements.

GLOBEIMMUNE, INC.

Notes to Condensed Financial Statements

(unaudited)

(g)	Fair Value Measurements

The carrying amounts of financial instruments, including cash and cash equivalents, accrued compensation, accrued clinical holdbacks and accounts payable, approximate fair value due to their short-term maturities.

In general, asset and liability fair values are determined using the following categories:

Level 1– inputs utilize quoted prices in active markets for identical assets or liabilities.

Level 2– inputs include quoted prices for similar assets or liabilities in active markets, and inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly.

Level 3– inputs are unobservable inputs and include situations where there is little, if any, market activity for the balance sheet items at period end. Pricing inputs are unobservable for the terms and are based on our own assumptions about the assumptions that a market participant would use.

Our financial instruments, including money market investments, are measured at fair value on a recurring basis. The carrying amount of money market investments as of September 30, 2015 and December 31, 2014 approximates fair value based on quoted prices in active markets, or Level 1 inputs. There were no transfers between levels for the nine months ended September 30, 2015 and the year ended December 31, 2014.

Assets and liabilities measured at fair value on a recurring basis consisted of the following types of instruments as of September 30, 2015 and December 31, 2014:

Description

September 30,

2015

Quoted

prices in

active

markets for

identical

assets

(Level 1)

Quoted

prices for

similar assets

observable

in the

marketplace

(Level 2)

Significant

unobservable

inputs

(Level 3)

December 31,

2014

Quoted

prices in

active

markets for

identical

assets

(Level 1)

Quoted

prices for

similar assets

observable

in the

marketplace

(Level 2)

Significant

unobservable

inputs

(Level 3)

Assets measured at fair value:

Money market investments

(included in cash and

cash equivalents)

19,798

—

20,173

—

(4)	Convertible Notes

2013 Notes

In November 2013, we entered into an unsecured convertible promissory note, or the Note, with a service provider, or the Holder, in settlement of $391,730 of accounts payable. The Note bore an interest rate of 8.0%, had a term of three years and could have been prepaid at any time. The Note and unpaid accrued interest converted upon the completion of our initial public offering into common stock at a price per share equal to 80% at which our common stock was first offered to the public. Upon completion of our initial public offering, we issued to the holder of the Note a warrant, equal to 30% of the principal balance of the Note, to purchase common stock for 10 years with an exercise price equal to the initial public offering price.

We recorded the proceeds from the Note based on the fair value of the warrants ($106,087), put option embedded in the Note ($101,222) and the Note and, as such, recorded a debt discount of $207,309 for the allocated value of the warrants and put option. This debt discount was being amortized to interest expense over the term of the Note. Amortization of $1,513 and $35,749 was recorded in the three and nine months ended September 30, 2014.

On July 8, 2014 we completed our initial public offering and the Note converted into 51,556 shares of common stock at $8.00 per share. The carrying amount of the debt for accounting purposes was $352,986, which included accrued interest of $20,718, through the conversion date. We recorded a loss upon the extinguishment of $162,574, equal to the difference between the carrying value and the fair value of the common stock which extinguished the Note. Upon the conversion of the Note, pursuant to the Note’s terms, we issued to the holder of the Note a warrant exercisable for 12,373 shares of our common stock at an exercise price of $10.00 per share.

GLOBEIMMUNE, INC.

Notes to Condensed Financial Statements

(unaudited)

2014 Convertible Notes

In January and February 2014, we entered into unsecured convertible notes, the 2014 Notes, with various holders for a total aggregate principal amount of $7,500,000. The 2014 Notes bore an interest rate of 10.0% and had a maturity date of January 31, 2015. Upon completion of our initial public offering the outstanding principal amount of the 2014 Notes, and any unpaid accrued interest thereon, converted into common stock at a price equal to 70% of the price at which our common stock was first offered to the public.

The holders of the 2014 Notes received warrants, equal to 100% of the principal amount of the 2014 Notes, to purchase equity securities of us for a five-year period. As a result of our initial public offering, the warrants are exercisable into common stock with an exercise price equal to the price at which our common stock was first offered to the public.

We recorded the proceeds from the 2014 Notes based on the fair value of the warrants ($4,454,397), the net of the put and call option embedded in the 2014 Notes ($1,667,136) and the 2014 Notes. As such, we recorded a debt discount of $6,121,533 from the allocated value of the warrants and the put and call options. This debt discount was being amortized to interest expense over the term of the 2014 Notes. Amortization of $131,646 and $2,682,285 was recorded in the three and nine month periods ended September 30, 2014.

We incurred $1,928,265 of debt issuance costs related to the 2014 Notes. Included in the debt issuance costs were warrants issued to the placement agent that had an estimated value of $876,778 at issuance. These costs were included in debt issuance costs and were being amortized to interest expense over the term of the 2014 Notes. Amortization of $41,468 and $844,912 was recorded in the three and nine month periods ended September 30, 2014.

On July 8, 2014 we completed an initial public offering and the 2014 Notes converted into 1,116,372 shares of common stock at a conversion price of $7.00 per share. The carrying amount of the debt for accounting purposes was $6,638,645, which included accrued interest of $314,210, through the conversion date. We recorded a loss upon the extinguishment of $4,525,075, equal to the difference between the carrying value and the fair value of the common stock which extinguished the 2014 Notes. Upon the conversion of the 2014 Notes, pursuant to the terms thereof, we issued to the holders of the 2014 Notes warrants exercisable for 750,000 shares of our common stock at an exercise price of $10.00 per share.

(5)	Deferred Revenue

Deferred revenue consisted of the following as of:

	September 30, 2015			December 31, 2014

Celgene		8,363,694		$	10,751,120

Gilead		28,830			32,949

Total deferred revenue		8,392,524			10,784,069

Less: current portion		(3,450,582	)		(3,340,571	)

Deferred revenue, long-term		4,941,942		$	7,443,498

GLOBEIMMUNE, INC.

Notes to Condensed Financial Statements

(unaudited)

(a)	Celgene Agreements

In May 2009, we entered into a Collaboration and Option Agreement with Celgene for the early development of four oncology products and all future oncology drug candidates (which options to future oncology drug candidates is subject to expiration if Celgene did not license one of the initial four named products). Celgene is also a holder of our common stock. Under the collaboration agreement, Celgene has the option to obtain an exclusive worldwide license to develop and commercialize the product candidates subject to diligence requirements, an up-front development funding fee, milestone payments and royalties. This agreement was amended in June 2011 to replace one of the four named product candidates with another oncology Tarmogen product candidate. The terms of the amendment did not materially modify the agreement as the financial terms and the length of the agreement remained substantially the same. Celgene’s options with respect to the GI-6200 and GI-3000 oncology drug candidate programs will terminate if Celgene does not exercise its options for such programs after we deliver certain reports on predefined clinical trials with respect to such drug programs. In March 2013, Celgene declined to exercise its option to the GI-4000 program and returned all rights and development responsibility to us. In July 2013, Celgene exercised its option to license the GI-6300 program. As a result of the election to license the GI-6300 program, Celgene has an option to license all future oncology drug candidates developed by us on a product by product basis. In July 2015, Celgene exercised its option to license the GI-6200 program and amended the agreement to replace one of the four named product candidates with our GI-6100 program as a drug candidate subject to the Collaboration and Option agreement. The terms of the amendment did not materially modify the agreement as the financial terms and the length of the agreement remained substantially the same.

In July 2013, Celgene exercised its option to license the GI-6300 program, including GI- 6301, in exchange for an upfront payment of $9,000,000. As part of that exercise, the Collaboration and Option Agreement was amended as it related to the GI-6300 program. The agreement, as amended, includes (1) a license granted to Celgene as of the date of the exercise of the option to develop and commercialize the GI-6300 product candidates using all of our related patents, intellectual property and know-how related to these product candidates that existed at the inception of the Collaboration and Option Agreement or any time during the term, (2) us supplying drug product for the Phase 2 clinical trial and (3) our option to perform Phase 2 clinical trials, subject to Celgene’s right to assume performance of those trials. As part of this exercise, certain milestones were modified and adjustments to the royalty rates on net sales were reduced. The modification to the milestones did not materially impact the deliverables that existed at the time of the modification.

In July 2015, Celgene exercised its option to license the GI-6200 program, including GI-6207, in exchange for an upfront payment of $1.9 million. Pursuant to the license granted to Celgene as of the date of the exercise of the option to develop and commercialize the GI-6200 product candidates using all of our related patents, intellectual property and know-how related to these product candidates that existed at the inception of the Collaboration and Option Agreement or any time during the term. As part of this exercise, certain milestones were modified. The modification to the milestones did not materially impact the deliverables that existed at the time of the modification.

The Collaboration and Option agreement, as amended including the amendment relating to the GI-6100 program, contain the following provisions:

We received a $30,000,000 upfront payment to perform research and development and for the option to license products based on the GI-4000, GI-6200, GI-6300 and GI-3000 programs. This payment was made by Celgene in May 2009.

We received $1,000,000 in October 2011 and $300,000 in April 2012 from Celgene for additional immunology work for the GI-4000 program.

We may receive a total of $85,000,000 in development and regulatory milestones for the GI-6100 program; activities for which we are not responsible for completing.

If Celgene exercises its option to the GI-6100 program and these products are commercialized, we may also receive up to $60,000,000 in net sales milestones and tiered royalty rates on net sales in the teens on worldwide net sales; activities for which we are not responsible for completing.

We are eligible to receive a total of $85,000,000 and $60,000,000 in development and regulatory milestone payments for GI-6300 and GI-6200, respectively; activities for which we are not responsible for completing.

If GI-6300 or GI-6200 is commercialized by Celgene, we may receive up to $60,000,000 in sales milestone payments for each program for which we are not responsible for completing. Tiered royalty rates on net sales range from single digits to low double digits.

GLOBEIMMUNE, INC.

Notes to Condensed Financial Statements

(unaudited)

For programs other than GI-6100, GI-6200 and GI-6300, we may be eligible to receive up to $101,000,000 in development and regulatory milestone payments for Celgene’s clinical trials, NDA filing and regulatory approvals; up to $60,000,000 in net sales milestone payments for such programs, and tiered royalty rates on net sales in the teens on worldwide net sales; activities for which we are not responsible for completing.

Upon execution of the May 2009 agreement, we estimated that our obligations to perform research and development under the agreement would continue through September 30, 2016 and, accordingly, were recognizing as revenue the upfront fees received of $31,300,000 as revenue from the date of receipt through September 30, 2016. We review the term of performance on a quarterly basis and adjust the revenue recognition period if there are any changes. As of December 31, 2014 and September 30, 2015, the unamortized balance is expected to be amortized on a straight line basis through March 31, 2018.

We determined that there were two units of accounting under the July 2013 GI-6300 License Agreement with Celgene: the license to further develop and commercialize GI-6300 and undelivered items related to supplying drug product for the Phase 1 clinical trial along with the option to perform the Phase 2 clinical trial (subject to Celgene’s right to assume performance of those trials). We determined that the license had standalone value based on the fact that the drug candidate has been developed and is currently in a clinical trial, Celgene possesses the knowledge, technology, skills, experience and background necessary for all further development of the drug through commercialization, we are not required to perform any additional development work related to GI-6300 and Celgene has the right to sublicense the product. We allocated the $9,000,000 of proceeds to the two units of accounting using the relative selling price method. We determined the estimated selling price for the license based upon a third party valuation and vendor specific objective evidence for the undelivered items. The allocation resulted in $8,766,881 being allocated to the license and the remaining amount of $233,119 allocated to the undelivered items. We recognized $8,766,881 in revenue related to the license in the fourth quarter of 2013 upon the delivery of all intellectual property, reports and documentation for the license to Celgene. Revenue related to the undelivered items will be recognized as the services are performed. The current estimated service period for the undelivered items under the GI-6300 License Agreement is through June 2016.

We determined that there were two units of accounting under the July 2015 GI-6200 License Agreement with Celgene: the license to further develop and commercialize GI-6200 and undelivered items related to supplying drug product for the Phase 2 clinical trial. We determined that the license had standalone value based on the fact that the drug candidate has been developed and is currently in a clinical trial, Celgene possesses the knowledge, technology, skills, experience and background necessary for all further development of the drug through commercialization, we are not required to perform any additional development work related to GI-6200 and Celgene has the right to sublicense the product. We allocated the $1,900,000 of proceeds to the two units of accounting using the relative selling price method. We determined the estimated selling price for the license based upon a valuation and vendor specific objective evidence for the undelivered items. The allocation resulted in $1,828,124 being allocated to the license and the remaining amount of $71,876 allocated to the undelivered items. We recognized $1,828,124 in revenue related to the license in the third quarter of 2015 upon the delivery of all intellectual property, reports and documentation for the license to Celgene. Revenue related to the undelivered items will be recognized as the services are performed. The current estimated service period for the undelivered items under the GI-6200 License Agreement is through June 2016.

We recognized $2,647,891, $819,767, $4,287,426 and $2,598,277 in license and service revenue during the three and nine months ended September 30, 2015 and 2014, respectively. Costs incurred under these agreements, included in costs of collaboration licenses and services in our statement of operations, for the three and nine months ended September 30, 2015 and 2014 were $507,654, $600,661, $1,837,865 and $1,957,518, respectively.

To date, we have not recognized any revenue in connection with milestone payments, other than the license election noted above, or royalties under this agreement.

(b)	Gilead Agreement

In October 2011, we entered into a License and Collaboration Agreement with Gilead, granting Gilead an exclusive license to all hepatitis B Tarmogen product candidates to be developed and commercialized under the collaboration, which includes a license granted at contract outset to develop and commercialize the HBV Tarmogen product candidate GS-4774 using all of our related patents, intellectual property and know-how related to these product candidates. Under the terms of the agreement, in November 2011 Gilead made a $10,000,000 initial nonrefundable payment to us. We conducted preclinical development, filed the Investigational New Drug application, or IND, and performed the initial Phase 1a trial in healthy volunteers for the selected HBV Tarmogen. Gilead reimbursed us on a periodic basis for the costs and expenses of the Phase 1a clinical trial. Gilead will perform any future clinical development, regulatory and commercialization activities. Gilead activities are subject to commercially reasonable diligence, milestone payments and royalties. Upon satisfaction of certain substantive milestone events for which we were partially responsible for completing, we received $2,000,000 upon filing an IND for HBV in 2012 and $3,000,000 at the point of commencement of the

GLOBEIMMUNE, INC.

Notes to Condensed Financial Statements

(unaudited)

Phase 1b/2a clinical trial in 2013. We are also eligible to receive additional proceeds of up to $130,000,000 in development and regulatory milestones based upon achievement of such milestones by Gilead. If products are commercialized, we are eligible to receive tiered royalty rates in the upper single digit to mid-teens and up to $40,000,000 of sales milestone payments based on net sales of the licensed product candidates. We are not responsible for the sales efforts.

We determined there was one unit of accounting under the agreement with Gilead. The non-contingent deliverables under the agreement include: (i) the license to all intellectual property and know-how related to hepatitis B Tarmogen products, (ii) the services to be performed in preclinical development (including the filing of an IND) and in conducting the Phase 1a clinical trial, (iii) participation on the Joint Research and Development Committee, or JRC, and (iv) the requirement to provide consultation to Gilead after Gilead assumes control of development activities. We have estimated the performance period for these deliverables to be from October 2011 through 2020.

When the agreement was signed, we determined that our obligation to supply drug product to Gilead after Gilead assumed control of the development was a contingent deliverable, as the obligation to supply product was contingent on the successful development of the hepatitis B Tarmogen product candidate and the related approval of the IND among other items. Subsequently, Gilead has assumed control of manufacturing. However, a services agreement between the parties also continues to exist. As a result, the services agreement deliverables and the potential incremental fees to be received by us will be accounted for only if and when delivery takes place. We have determined that the consideration to be received is an appropriate incremental fee and, therefore there is not a significant incremental discount associated with the selling price of the services agreement.

We determined that the license did not have standalone value at the inception of the agreement. This determination is based on the fact that the license is not sold on a standalone basis, nor could it be resold by Gilead on a standalone basis because we have proprietary knowledge, technology, skills, experience and background that no other third party, including Gilead, currently possesses and could not readily obtain at contract inception. Such knowledge, technology, skills, experience and background would be necessary for further development of the hepatitis B Tarmogen product candidate as required under the agreement.

We are recognizing the initial consideration of $10,000,000 and the amounts we received as reimbursement from Gilead of costs to perform the initial Phase 1a trial on a proportional performance basis over the estimated period of performance to complete the preclinical development and Phase 1a trial services, JRC and consultation services, which is estimated to be from October 2011 through 2020. We will measure our progress under the proportional performance method based on hours incurred in proportion to total estimated hours. However, the cumulative revenue recognized under this agreement will be limited to the cumulative cash received to date from Gilead. We incurred substantially all of our hours during the preclinical development and Phase 1a trial period, which ended in February 2014.

The contractual term of the license is on a product and country basis that begins on the effective date of the contract, October 2011, and runs through the expiration of Gilead’s obligation to pay royalties for such product in such country, or until the agreement is terminated. The JRC term is from the effective date of the agreement and terminates at the end of the Research Term, which is the period of time commencing on the date the agreement was signed and ending upon completion of the final clinical study report for the Gilead Phase 1b/2a trial. The consulting term begins upon the conclusion of the Research Term, and we estimate the term would end upon commercialization, currently estimated in 2020.

We recognized $1,373, $1,373, $4,119 and $220,019 in license and services revenue under the Gilead arrangement during the three and nine months ended September 30, 2015 and 2014, respectively. In addition, we recognized revenue of $20,833, $307,116, $288,099 and $1,019,941 during the three and nine months ended September 30, 2015 and 2014, respectively, related to manufacturing supply for Phase 2 trials for which Gilead is responsible for performing. Collaboration license and service costs incurred under these agreements, included in costs of collaboration licenses and services in our statement of operations, for the three and nine months ended September 30, 2015 and 2014 were $51,335, $398,370, $289,203 and $799,508, respectively. Manufacturing services costs incurred under agreements with Gilead are included in costs of manufacturing services in our statement of operations, for the three and nine months ended September 30, 2015 and 2014 were $20,833, $307,116, $288,099 and $1,019,941, respectively.

GLOBEIMMUNE, INC.

Notes to Condensed Financial Statements

(unaudited)

(6)	Income Taxes

We maintain a valuation allowance for substantially all of our deferred tax assets, including our net operating losses, and therefore do not expect to incur a current U.S. federal tax expense or benefit against our pretax income (loss) during the year ending December 31, 2015.

Our ability to realize the benefit of our deferred tax assets in future periods will depend on the generation of future taxable income and tax planning strategies. Due to our history of losses we have recorded a full valuation allowance against substantially all of our deferred tax assets. We do not expect to reduce the valuation allowance against our deferred tax assets to below 100% of our gross amount until we have a sufficient historical trend of taxable income and can predict future income with a higher degree of certainty.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, and is subject to the safe harbor created by those sections. Forward-looking statements include statements about our future plans, estimates, beliefs, and anticipated, expected or projected performance. You can identify these statements by the fact that they do not relate strictly to historical or current facts. Such statements may include words such as “anticipate,” “will,” “estimate,” “seek,” “expect,” “project,” “intend,” “should,” “plan,” “believe,” “hope,” “enable,” “potential,” and other words and terms of similar meaning in connection with any discussion of, among other things, future operating or financial performance, strategic initiatives and business strategies, clinical trials and U.S. Food and Drug Administration, or FDA, submissions, regulatory or competitive environments, our intellectual property, product development and our ability to enter into and successfully complete any strategic transaction. You are cautioned not to place undue reliance on these forward-looking statements and to note that they speak only as of the date hereof. Such statements are based on current assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially. For a description of such risks and uncertainties, which could cause our actual results, performance, or achievements to materially differ from any anticipated results, performance, or achievements, please see the risk factors in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014 and in this Form 10-Q under the heading “Risk Factors”. Readers are urged to carefully review and consider the various disclosures made in this report and in our other reports filed with the United States Securities and Exchange Commission, or the SEC, that disclose certain risks and factors that may affect our business. This analysis should be should be read in conjunction with the audited financial statements and footnotes thereto for the year ended December 31, 2014 included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014. We disclaim any intention or obligation to update or revise any financial projections or forward-looking statements due to new information or other events.

Overview

We are a biopharmaceutical company focused on developing products for the treatment of cancer and infectious diseases based on our proprietary Tarmogen® platform. We have three Tarmogen product candidates in clinical evaluation for infectious disease and multiple cancer indications. We believe that our Tarmogen platform has applicability to a number of diseases.

We have two strategic collaborations with leading biotechnology companies. In 2011, Gilead Sciences, Inc., or Gilead, exclusively licensed product candidates intended to treat chronic hepatitis B virus, or HBV, infection. A product candidate from the Gilead collaboration, GS-4774 is currently being evaluated in randomized Phase 2 clinical trials. Celgene Corporation, or Celgene, entered into a collaboration and option agreement for GlobeImmune oncology product candidates in 2009. Under this agreement, in 2013, Celgene exercised its option for a worldwide, exclusive license to the GI-6300 program, including the GI-6301 product candidate, which targets the brachyury protein. Brachyury plays a role in the metastatic progression of certain cancers and is believed to be fundamental in the formation of chordomas, rare bone tumors of the spine. GI-6301 is currently being evaluated in a randomized Phase 2 trial at the National Cancer Institute, or NCI, in subjects diagnosed with chordoma. In July 2015, Celgene exercised its option for a worldwide, exclusive license to the GI-6200 program, including the GI-6207 product candidate, which targets carcinoembryonic antigen, or CEA. GI-6207 is the second Tarmogen product candidate licensed by Celgene under the collaboration. Under the terms of the agreement, GlobeImmune received an option exercise payment of $1.9 million, and is eligible for up to $120 million in potential future development, regulatory and sales milestones, and royalties on product sales. GI-6207 is currently being evaluated in a Phase 2 clinical trial at the NCI in subjects with medullary thyroid cancer, or MTC. Through September 30, 2015, we have received over $66 million from these collaborations.

We have incurred operating losses and have an accumulated deficit as a result of ongoing research and development spending. As of September 30, 2015, we had an accumulated deficit of $224.7 million. We had a net income of $0.9 million and a net loss of $2.0 million for the three and nine months ended September 30, 2015. Our losses have resulted principally from costs incurred in our discovery and development activities. We anticipate that operating losses will continue over the next several years. Our plans to advance our own product candidates are dependent on receiving additional financing, which may include milestone payments from our collaboration agreements, public or private equity or debt financings, new collaborative relationships, or other available financing transactions. Because of the numerous risks and uncertainties associated with biopharmaceutical product development and commercialization, we are unable to accurately predict the timing or amount of future expenses or when, or if, we will be able to achieve or maintain profitability. We have no products approved for commercial sale, and to date we have not generated any product revenue. We have financed our operations primarily through the sale of equity and convertible debt securities, upfront and milestone payments pursuant to our collaboration agreements, government grants and capital lease and equipment financing. The size of our future net losses will depend, in part, on the magnitude and timing of changes in our expenses, as well as the level and rate of growth, if any, of our revenues. Our ability to achieve profitability is dependent on our ability, alone or with others, to complete the development of our product candidates successfully, obtain required regulatory approvals, manufacture and market our potential products successfully or have such products manufactured and marketed by others, and gain market acceptance for such products. There can be no assurance as to whether or when we will achieve profitability.

We were incorporated as Ceres Pharmaceuticals, Ltd. in Colorado on February 10, 1995. We changed our name to GlobeImmune, Inc. on May 26, 2001, and reincorporated in Delaware on June 5, 2002.

Financial Operations

Revenue

Infectious Disease Programs

Our lead infectious disease Tarmogen product candidate, GS-4774, is being developed pursuant to a world-wide collaboration with Gilead. GS-4774, currently being evaluated in two randomized Phase 2 trials, is a Tarmogen designed to target patients chronically infected with HBV who are also on, or are candidates for, oral antiviral suppressive therapy. Under this collaboration, in 2011 we received a $10 million upfront payment and Gilead agreed to fund a Phase 1 trial. As a result of our activities under this agreement, we have received an additional $5 million in milestone payments. Gilead is responsible for all future clinical, regulatory and commercial activities. We are eligible to receive up to an additional $130 million in development and regulatory milestones under this collaboration. If products are commercialized, we will be entitled to receive tiered royalty rates based on net sales of GS-4774 from the high single digits to the mid-teens, and up to $40 million of sales milestone payments.

Chronic HBV infection affects approximately 400 million people worldwide. While antiviral drugs have been used effectively to control this disease, cure rates are very low, with less than eight percent cured after four years of daily oral antiviral therapy. Untreated chronic HBV is associated with significant morbidity, including liver cirrhosis, hepatic decompensation, and hepatocellular carcinoma. Rates of mortality are also increased for patients with chronic HBV, with 25–40% of patients dying from complications of liver disease. GS-4774 is being developed as an immunotherapy designed to generate T cell immune responses directed against cells containing HBV antigens in combination with antiviral therapy with the goal of increasing the cure rate in patients with chronic HBV infection.

In 2013, we completed a Phase 1 clinical trial of GS-4774 in 60 healthy volunteers. Twenty subjects were enrolled to one of three arms in the study, receiving either 10YU, 40YU, or 80YU of GS-4774 (one YU, or yeast unit, equals 10 million yeast cells). Within each of the three 20 subject arms, ten subjects were randomized to weekly dosing, and ten subjects to monthly-only dosing, each for a total of three months. The Phase 1 results indicated that GS-4774 was generally well tolerated and elicited HBV specific T cell immune responses. Subjects in all three dose groups displayed immune responses, and there was little difference between the weekly versus the monthly-only immunization regimens in the ability to generate T cell immune responses. Eighty-eight percent of subjects across all three dose groups responded to receiving GS-4774 by at least one measure of T cell immune response.

Subsequent to the Phase 1 trial, Gilead initiated two clinical trials of GS-4774:

a Phase 2 clinical trial initiated in 2013, GS-US-330-0101, or the 0101 trial, investigating GS-4774 in combination with ongoing oral antiviral treatment in patients with chronic HBV infection. The 0101 trial was a multicenter, multinational trial that enrolled 178 patients in a randomized, open-label design comparing three different doses of GS-4774 (2YU, 10YU or 40YU), administered in combination with oral antiviral therapy versus antiviral treatment alone. The primary endpoint for this trial was decline in serum HBV surface antigen, or HBsAg. In May 2015, we announced top line results from this study. Patients treated with the highest dose of GS-4774 plus ongoing oral antiviral therapy, or OAV, did not show a reduction in HBsAg at week 24, the primary endpoint of the study, but at 48 weeks had a mean -0.17 log₁₀ reduction of HBsAg compared with a -0.04 log10 reduction in the OAV alone group

(p=not significant). Three patients receiving the highest dose of GS-4774 had HBsAg reductions between -0.94 and -3.89 log₁₀ at 48 weeks. There was no difference in HBsAg reductions between the two lowest dose groups versus the control arm at 48 weeks. These study results will be presented at The Liver Meeting, November 13-17, 2015 in San Francisco, CA.

a second Phase 2 clinical trial initiated in 2014, GS-US-330-1401, or the 1401 trial, investigating GS-4774 in patients with chronic HBV infection who are currently not receiving treatment. The 1401 trial is a multicenter, multinational trial designed to enroll 175 patients in a randomized, open-label design comparing three different doses of GS-4774 (2YU, 10YU, or 40YU), administered in combination with tenofovir disoproxil fumarate, or TDF, versus TDF alone. The 1401 trial is enrolling patients. The 48-week results are projected to be available in the second half of 2016.

A long-term follow-up registry study was initiated in 2014, GS-US-330-1508, or the 1508 trial, for the study of individuals with chronic HBV infection, previously treated with GS-4774 in a Gilead-sponsored trial.

We have additional preclinical infectious disease programs in various stages of development. In 2013, we received a $4 million Research Project Grant from the National Institute of Allergy and Infectious Diseases, or NIAID, of the National Institutes of Health, or NIH, to support the development of Tarmogen immunotherapy product candidates intended to treat and or prevent tuberculosis infection. The work under this grant is being performed and reimbursed over four years. We have constructed initial Tarmogen product candidates expressing a combination of novel tuberculosis protein targets. Early experiments in mice show antigen-specific T cell immune responses. These constructs are being evaluated with our collaborators at Colorado State University in various mouse and guinea pig models of tuberculosis infection.

Oncology Programs

In 2009, we entered into a worldwide strategic collaboration and option agreement with Celgene focused on the discovery, development and commercialization of certain product candidates intended to treat cancer. Under the terms of this agreement we have received $31.3 million. Celgene also made a $10 million equity investment in us. Under this agreement, the GI-6300 program, including GI-6301, and the GI-6200 program, including GI-6207, were exclusively licensed by Celgene. We have received $10.9 million in payments under these licenses and are eligible to receive up to $265 million in milestone payments as well as royalties on product sales from Celgene. For product candidates subject to option by Celgene, we are responsible for initial development under the agreement, and Celgene has the option to license each of them at specific points in the development plan. Upon the achievement of certain development, regulatory and commercial milestones, we would be eligible to receive milestone payments and tiered royalties based on net sales of each licensed product.

Pursuant to the collaboration and option agreement, in 2013 Celgene exercised its option to obtain an exclusive license to our GI-6300 program, including GI-6301, upon payment of a $9 million option exercise milestone. We are eligible to receive a total of $85 million in additional development and regulatory milestone payments for GI-6301. Additionally, if GI-6301 is commercialized, we may receive up to $60 million in sales milestone payments and tiered royalty rates on net sales ranging from single digits to low double digits. GI-6301 targets cancers expressing the brachyury protein, which is believed to play a role in the metastatic progression of certain cancers and in the initiation of chordomas. GI-6301 is currently being evaluated in a randomized Phase 2 trial at the NCI in subjects diagnosed with chordoma.

Chordoma is a rare cancer of the skull base and spine that is aggressive, locally invasive and has a poor prognosis. Chordomas are generally slow growing and frequently recur after treatment. Because of their proximity to critical structures such as the spinal cord, brainstem, nerves and arteries, they are difficult to treat and require highly specialized care. In the United States, there are approximately 300 new cases annually. We estimate the incidence in the European Union is similar to the U.S., resulting in approximately 400 new EU cases annually. With an average overall survival of approximately seven to nine years, we estimate the prevalence of chordoma is approximately 2,400 in the US and 3,600 in the EU. There are no systemic therapies approved to treat chordoma.

Surgery is the mainstay of treatment for chordomas. The goal of surgery is to remove as much of the tumor as possible without causing unacceptable harm. Complete resection, or removing the entire tumor, is attainable in approximately half of sacral chordomas, with much lower rates for spinal and skull base chordomas, but provides the best chances for local control and long-term survival. It is believed that radiation therapy can reduce the risk of recurrence after surgery and prolong survival for chordoma patients. Even after surgery and/or radiation, chordomas tend to return in the same location or in the areas around the original tumor. Many patients undergo multiple surgeries over several years to treat these local recurrences. Standard cytotoxic chemotherapy agents that generally kill fast-growing cells are ineffective on chordomas.

The National Cancer Institute, or the NCI, is currently completing a safety, immunology and early efficacy Phase 1 trial of GI-6301 in patients with late-stage cancers known to express the brachyury protein including chordoma.

In four previously published Phase 2 chordoma trials since 2005, only 1 of 92 chordoma subjects (1%) had a partial response by the Response Evaluation Criteria In Solid Tumors, or RECIST, defined as at least a 30% reduction in longest dimension of the tumor. In the literature surveyed, the percent of patients with reported stable disease ranged from 22% to 72%, and the objective response rate, or ORR, defined as complete response, or CR, partial response, or PR, and stable disease, or SD, averaged 66%.

Data for the eleven chordoma patients in the GI-6301-01 Phase 1 trial presented in October 2014 at the Connective Tissue Oncology Society (CTOS) Annual Meeting in Berlin, Germany included:

One patient had a partial response (9%) by RECIST that has continued past one year

Eight patients (73%) had stable disease by RECIST. 75% of these (6/8) had progressive disease at study entry which stabilized during administration of GI-6301.

82% (nine of 11 chordoma patients) showed PR or SD.

GI-6301 was generally well tolerated; the most common adverse events in this trial were mild/moderate injection site reactions.

We believe that the summary results from the eleven chordoma patients enrolled in this trial, as discussed above, compare favorably with historically published data. In April 2015, we and our collaborators including the NCI and Celgene opened for enrollment a Phase 2 clinical trial designed to investigate the safety and efficacy of GI-6301 in combination with radiation therapy in patients with chordoma. The GI-6301-02 Phase 2 clinical trial is a randomized, double-blind, placebo controlled trial of GI-6301, in combination with standard of care radiation for patients with locally advanced, unresectable chordoma. The primary endpoint for the trial will be overall response rate defined as CR or PR by RECIST after up to 24 months of treatment. Participants randomized to the placebo arm will be allowed to cross-over to receive GI-6301 at time of confirmed disease progression.

In July 2015, Celgene exercised its option to an exclusive worldwide-license, with the right to sublicense, to our GI-6200 program, including product candidate GI-6207. The GI-6200 license agreement provided for an upfront option exercise payment of $1,900,000 to us and our eligibility for milestone payments of up to $120,000,000, in the aggregate, and tiered royalty payments in the low teens for any sales of GI-6200 product candidates. Celgene also assumed all development responsibilities of the Company’s GI-6300 program and all development, regulatory and commercialization costs and responsibilities related to GI-6200 product candidates, including all obligations under the Cooperative Research and Development Agreement (NCI reference #02264) dated May 8, 2008 with the National Cancer Institute, or CRADA, except our obligation to make payments due in 2016, which were made in the 3^rd quarter 2015.

The NCI has completed a dose escalation Phase 1 clinical trial of GI-6207 in 25 subjects with Stage IV cancers expressing CEA, and has initiated a randomized Phase 2 trial in subjects with MTC. The GI-6207-02 Phase 2 study is planned to enroll a total of 34 subjects in a cross-over trial design. Subjects will be administered either GI-6207 for one year or be observed for six months and then administered GI-6207 for one year. The primary endpoint for the trial will be six months after the last patient enrolls and will be the effect of GI-6207 on changes in calcitonin levels. Calcitonin is a tumor marker that can be measured in a patient’s circulating blood that correlates with tumor burden in MTC. Elevated calcitonin values after surgery indicate persistent or recurrent disease. Based on current enrollment rates, we believe that this trial could be fully enrolled in the fourth quarter 2015 or the first quarter 2016, with results available in the second half of 2016. Celgene exercised its option to the GI-6207 program in July 2015.

We have a third, wholly-owned, clinical stage oncology program, GI-4000, that targets tumors with mutations in a protein called Ras. In March 2013, Celgene declined to exercise its option to GI-4000 and returned all rights and development responsibility to us. Further clinical development of GI-4000 is contingent on identifying additional sources of financing. We have Phase 2 survival data in pancreas and non-small cell lung cancer, or NSCLC, for GI-4000. We conducted a multicenter, placebo controlled Phase 2b pancreas cancer study. While we did not see an improvement in survival in the overall study population, we did see a non-statistically significant three month improvement in survival in a pre-specified subgroup. We also performed a retrospective analysis of 90 pre-administration blood samples using an analytic technique called proteomics. The goal of the analysis was to identify a pre-administration companion diagnostic test that could predict which subjects are likely to respond to GI-4000 to assist in subject selection for future clinical trials. BDX-001, the resulting potential proteomic companion diagnostic test, appeared to predict whether a subject administered GI-4000 and the chemotherapy drug gemcitabine in this trial would have improved recurrence free and overall survival compared to gemcitabine alone. We believe BDX-001 differentiates between subject blood samples using the relationship of 100 different proteins and protein fragments. Overall, 21 of the 44 (48%) studied subjects administered GI-4000 and gemcitabine were classified as BDX-001 positive. In BDX-001 positive subjects administered GI-4000 and gemcitabine, there was an 11.7 month improvement in median recurrence free survival, or RFS, and a 16.6 month improvement in median overall survival, or OS, compared with BDX-001 positive subjects administered placebo and gemcitabine. There was no difference in RFS or OS in the gemcitabine-alone arm based on BDX-001 selection. The proportion of BDX-001 positive patients may vary in any future studies. This study was not powered for, and these results did not reach, statistical significance. If BDX-001 is prospectively validated in a second pancreas

cancer trial, this companion diagnostic could be used to select the patients appropriate for GI-4000 therapy. The BDX-001 test is controlled by Biodesix, Inc.

Investigators at Memorial Sloan Kettering Cancer Center, or MSKCC, also conducted a Phase 2a trial in non-small cell lung cancer, or NSCLC, in 24 subjects. Based on the updated survival analysis from December 2013, this study showed a 43% reduction in the risk of mortality for patients administered GI-4000 compared to a matched set of controls (p=0.24 which is not statistically significant). This was an investigator sponsored study that was funded by MSKCC, and we supplied the study drug. We also conducted a Phase 2a clinical trial studying GI-4000 in colon cancer, which was conducted at the Lombardi Cancer Center at Georgetown University. This was an investigator sponsored study that was funded by the Lombardi Cancer Center, and we supplied the study drug.

Research and Development Expense

Research and development expenses, which include costs of collaboration license and services, cost of manufacturing services and research and development for proprietary programs, in our statement of operations, consists of:

personnel related expenses, including salaries, benefits, stock-based compensation, travel, and related costs for the personnel involved in drug discovery and development;

payments we make to third-party contract research organizations, contract manufacturers, investigative sites, consultants and other clinical trial costs;

technology and intellectual property license costs;

manufacturing costs;

activities relating to regulatory filings and the advancement of our product candidates through preclinical studies and clinical trials; and

facilities and other allocated expenses, which include direct and allocated expenses for rent and facility maintenance, as well as laboratory and other supplies.

We have multiple research and development projects ongoing at any one time. We utilize our internal resources, employees and infrastructure across multiple projects. We do not believe that allocating internal costs on the basis of estimates of time spent by our employees accurately reflects the actual costs of a project. We record and maintain information regarding hours spent on specific projects when needed for our collaboration agreements and for external, out-of-pocket research and development expenses on a project-specific basis.

We expense research and development costs as incurred, including payments made to date under our in-licensing agreements. We believe that significant investment in product development is a competitive necessity and plan to continue these investments in order to realize the potential of our product candidates; therefore, we expect our research and development expense to increase as we continue to develop our product candidates.

The successful development of our product candidates is uncertain. We cannot reasonably estimate or know the nature, timing and costs of the efforts that will be necessary to complete the remainder of the development of, or the period, if any, in which material net cash inflows may commence from any of our clinical or preclinical product candidates. This uncertainty is due to the numerous risks and uncertainties associated with the duration and cost of clinical trials which vary significantly over the life of a project as a result of differences arising during clinical development, including:

the number of clinical sites included in the trials;

the length of time required to enroll suitable patients;

the number of patients that ultimately participate in the trials; and

the results of our clinical trials.

Our expenditures are subject to additional uncertainties, including the terms and timing of collaboration agreements, clinical trial expenses, regulatory approvals, and the expense of filing, prosecuting, defending and enforcing any patent claims or other intellectual property rights. We may obtain unexpected results from our clinical trials. We may elect to discontinue, delay or modify clinical trials of some product candidates or focus on others. A change in the outcome of any of the variables with respect to the development of a product candidate could mean a significant change in the costs and timing associated with the development of that product candidate. For example, if the FDA or other regulatory authorities were to require us to conduct clinical trials beyond those which we anticipate, or if we experience significant delays in enrollment in any of our clinical trials, we could be required to expend significant additional financial resources and time on the completion of clinical development.

On July 31, 2015, Celgene exercised its option to an exclusive worldwide-license, with the right to sublicense, to our GI-6200 program, including product candidate GI-6207. The GI-6200 license agreement provided for an upfront option exercise payment of $1.9 million to us and our eligibility for milestone payments of up to $120 million, in the aggregate, and tiered royalty payments in the low teens for any sales of GI-6200 product candidates. Celgene also assumed all development responsibilities of the Company’s GI-6300 program and all development, regulatory and commercialization costs and responsibilities related to GI-6200 product candidates, including all obligations under the CRADA, except our obligation to make payments due in 2016, which were made in the 3^rd quarter of 2015.

General and Administrative Expense

General and administrative expense primarily consists of salaries, severance and other related costs, including stock-based compensation expense, for employees and consultants in our executive, finance, accounting, legal, information technology and human resource departments. Other general and administrative expenses include facility-related costs not otherwise included in research and development expense, promotional expenses, costs associated with industry and trade shows, and professional fees for legal services, including patent-related expense, insurance and accounting services.

Results of Operations

Comparison of the Three Months Ended September 30, 2015 and 2014

The following table sets forth our results for the periods shown.

	Three months ended September 30,								%
	2015		2014			Increase (Decrease)			Increase (Decrease)
	(in thousands, except percentages)
Revenue
Collaboration license and services	$	2,924		999			1,925			193	%
Manufacturing services		21		307			(286	)		(93	%)
Total revenue		2,945		1,306			1,639			125	%
Operating expenses:
Research and development expenses:
Costs of collaboration license and services		559		999			(440	)		(44	%)
Costs of manufacturing services		21		307			(286	)		(93	%)
Research and development for proprietary programs		421		453			(32	)		(7	%)
Total research and development		1,001		1,759			(758	)		(43	%)
General and administrative		1,030		1,007			23			2	%
Depreciation		20		76			(56	)		(74	%)
Total operating expenses		2,051		2,842			(791	)		(28	%)
Income (loss) from operations		894		(1,536	)		2,430			(158	%)
Loss on extinguishment of convertible notes		—		(4,688	)		4,688			(100	%)
Interest expense		—		(177	)		177			(100	%)
Other income		—		40			(40	)		100	%
Income (loss) before taxes	$	894		(6,361	)		7,255			(114	%)

Collaboration license and services revenues. Collaboration license and services revenues for the three months ended September 30, 2015 were $2.9 million compared to $1.0 million for the three months ended September 30, 2014, an increase of $1.9 million. The increase is due primarily to the recognition of $1.8 million of revenue from the GI-6200 licensing agreement with Celgene in July 2015.

Manufacturing services revenues. Manufacturing services revenues for the three months ended September 30, 2015 were $0.02 compared to $0.3 million for the three months ended September 30, 2014, a decrease of $0.3 million. The decrease was due to a decrease in the revenue relating to manufacturing services for Gilead for the Phase 2 HBV trial.

Costs of Collaboration License and Services. Costs of collaboration license and services expense for the three months ended September 30, 2015 was $0.6 million compared to $1.0 million for the three months ended September 30, 2014, a decrease of $0.4 million. The decrease was primarily due to a decrease in the expenses related to Phase 1 HBV clinical trial expenses and reduction in salary expense due to layoffs during the quarter.

Costs of Manufacturing Services. Costs of manufacturing services for the three months ended September 30, 2015 were $0 compared to $0.3 million for the three months ended September 30, 2014, a decrease of $0.3 million. The decrease was due to a decrease in the expenses relating to manufacturing services for Gilead for the Phase 2 HBV trial.

Research and Development for Proprietary Programs Expense. Research and development for proprietary programs expense for the three months ended September 30, 2015 was $0.4 million compared to $0.5 million for the three months ended September 30, 2014, a decrease of $0.1 million. The decrease was due primarily to a decrease in salary expense due to layoffs during the quarter.

General and Administrative Expense. General and administrative expense for the three months ended September 30, 2015 was $1.0 million compared to $1.0 million for the three months ended September 30, 2014. For the three months ended September 30, 2015 salary expense decreased by $0.1 million due to layoffs during the quarter and we recorded $0.1 million of gains from the sale of fixed assets which was offset by severance costs of $0.1 million and higher legal costs of $0.1 million.

Depreciation Expense. Depreciation expense for the three months ended September 30, 2015 was $0 compared to $0.1 million for the three months ended September 30, 2014.

Loss on the extinguishment of convertible notes. Loss on the extinguishment of convertible notes for the three months ended September 30, 2015 was $0 compared to $4.7 million for the three months ended September 30, 2014. Loss on extinguishment of convertible notes in the three months ended September 30, 2014 was due to our then outstanding convertible notes converting to common stock upon the closing of our initial public offering.

Interest Expense. Interest expense for the three months ended September 30, 2015 was $0 compared to $0.2 million for the three months ended September 30, 2014. Interest expense in the three months ended September 30, 2015 was $0 as the convertible notes were converted to common stock upon the completion of the initial public offering. In the three months ended September 30, 2014, we recorded $0.2 million of interest expense due to the $7.5 million of the convertible notes and the related amortization of debt discount and debt issuance costs.

Comparison of the Nine Months Ended September 30, 2015 and 2014

The following table sets forth our results for the periods shown.

	Nine months ended September 30,									%
	2015			2014			Increase (Decrease)			Increase (Decrease)
	(in thousands, except percentages)
Revenue
Collaboration license and services	$	5,122			3,436			1,686			49	%
Manufacturing services		288			1,020			(732	)		(72	%)
Total revenue		5,410			4,456			954			21	%
Operating expenses:
Research and development expenses:
Costs of collaboration license and services		2,127			2,757			(630	)		(23	%)
Costs of manufacturing services		288			1,020			(732	)		(72	%)
Research and development for proprietary programs		1,394			1,661			(267	)		(16	%)
Total research and development		3,809			5,438			(1,629	)		(30	%)
General and administrative		3,405			2,877			528			18	%
Depreciation		168			218			(50	)		(23	%)
Total operating expenses		7,382			8,533			(1,151	)		(13	%)
Loss from operations		(1,972	)		(4,077	)		2,105			(52	%)
Change in value of warrants, income (expense)		—			(1,903	)		1,903			(100	%)
Loss on extinguishment of convertible notes		—			(4,688	)		4,688			(100	%)
Interest expense		—			(3,891	)		3,891			(100	%)
Other income		—			40			(40	)		100	%
Loss before taxes	$	(1,972	)		(14,519	)		12,547			(86	%)

Collaboration license and services revenues. Collaboration license and services revenues for the nine months ended September 30, 2015 were $5.1 million compared to $3.4 million for the nine months ended September 30, 2014, an increase of $1.7 million. The increase is due to the recognition of $1.8 million of revenue from the GI-6200 licensing agreement with Celgene in July 2015.

Manufacturing services revenues. Manufacturing services revenues for the nine months ended September 30, 2015 were $0.3 million compared to $1.0 million for the nine months ended September 30, 2014, a decrease of $0.7 million. The decrease was due to a decrease in the revenue relating to manufacturing services for Gilead for the Phase 2 HBV trial.

Costs of Collaboration License and Services. Costs of collaboration license and services expense for the nine months ended September 30, 2015 was $2.1 million compared to $2.8 million for the nine months ended September 30, 2014, a decrease of $0.7 million. The decrease was primarily due to a decrease in the expenses related to Phase 1 HBV clinical trial expenses.

Costs of Manufacturing Services. Costs of manufacturing services for the nine months ended September 30, 2015 were $0.3 million compared to $1.0 million for the nine months ended September 30, 2014, a decrease of $0.7 million. The decrease was due to a decrease in the expenses relating to manufacturing services for Gilead for the Phase 2 HBV trial.

Research and Development for Proprietary Programs Expense. Research and development for proprietary programs expense for the nine months ended September 30, 2015 was $1.4 million compared to $1.7 million for the nine months ended September 30,

2014, a decrease of $0.3 million. The decrease was primarily due to a reduction in employees and expenses related to the GI-4000 program and a decrease in salary expense due to layoffs during the third quarter.

General and Administrative Expense. General and administrative expense for the nine months ended September 30, 2015 was $3.4 million compared to $2.9 million for the nine months ended September 30, 2014, an increase of $0.5 million. The increase was related to the increased expense associated with being a public company, including, but not limited to, the costs associated with D&O insurance, board fees, and recurring SEC filing fees. For the nine months ended September 30, 2015 salary expense decreased by $0.1 million due to layoffs during the quarter and offset by severance costs of $0.1 million.

Depreciation Expense. Depreciation expense for the nine months ended September 30, 2015 was $0.2 million compared to $0.2 million for the nine months ended September 30, 2014.

Change in Value of Warrants and Put and Call Options. Change in value of warrants and put and call options for the nine months ended September 30, 2015 was $0 compared to $1.9 million for the nine months ended September 30, 2014. In the nine months ended September 30, 2015, we recorded $0 as the warrants were converted to common stock warrants during 2014 and the put and call options were extinguished when the convertible notes converted into common stock upon the completion of the initial public offering. In the nine months ended September 30, 2014, we recorded $1.9 million of expense related to the increase in the estimated fair value of the outstanding warrants.

Loss on the extinguishment of convertible notes. Loss on the extinguishment of convertible notes for the nine months ended September 30, 2015 was $0 compared to $4.7 million for the nine months ended September 30, 2014. Loss on extinguishment of convertible notes in the nine months ended September 30, 2014 was due to our then outstanding convertible notes converting to common stock upon the closing of our initial public offering.

Interest Expense. Interest expense for the nine months ended September 30, 2015 was $0 million compared to $3.9 million for the nine months ended September 30, 2014. Interest expense in the nine months ended September 30, 2015 was $0 as the convertible notes were converted to common stock upon the completion of the initial public offering during 2014. In the nine months ended September 30, 2014, we recorded $3.9 million of interest expense due to the $7.5 million of the convertible notes and the related amortization of debt discount and debt issuance costs.

Liquidity and Capital Resources

Since our inception through September 30, 2015, we have funded our operations principally through the receipt of $211.0 million, in proceeds, consisting of: $108.2 million of net proceeds from the private placement of preferred equity securities; $14.6 million from the sale of common stock in our initial public offering; $0.5 million from the sale of common stock through stock option exercises; $13.4 million of net proceeds from the private placement of convertible notes; $42.3 million received under the Celgene collaboration and license agreements; $24.6 million received under the Gilead collaboration agreement and additional supply services to Gilead; and receipt of $7.4 million from research grants. We had cash and cash equivalents of $11.3 million as of September 30, 2015. Cash in excess of immediate requirements is invested in accordance with our investment policy, primarily with a view to liquidity and capital preservation. Our funds are currently held in cash and money market funds that are invested in securities issued by the U.S. Treasury. We completed an initial public offering on July 8, 2014. In the offering we sold 1,725,000 shares of our common stock, including the shares sold pursuant to the underwriter’s over-allotment option, at $10.00 per share and raised $17.3 million in proceeds before fees and expenses. Upon completion of the offering, all of our then outstanding preferred stock converted into 2,757,825 shares of common stock in accordance with the terms of the preferred stock. Additionally, all our, outstanding preferred stock warrants were reclassified into additional paid-in capital as all of the preferred stock warrants converted into common stock warrants, the Note and the 2014 Notes, described in Note 4, converted into 51,556 and 1,116,372 shares of common stock, respectively, and the warrant issued to the holder of the Note and the warrants issued to the holders of the 2014 Notes become exercisable for 12,373 and 750,000 shares of common stock, respectively.

6300 program and all development, regulatory and commercialization costs and responsibilities related to GI-6200 product candidates, including all obligations under the CRADA, except our obligation to make payments due in 2016, which were made in the 3^rd quarter of 2015.

Based on our current level of operations, we believe that our existing cash and cash equivalents will provide adequate funds for ongoing operations, planned capital expenditures and working capital requirements through 2016. Successful completion of our research and development programs, and ultimately, the attainment of profitable operations are dependent upon future events, including completion of our development activities resulting in commercial products and/or technology, obtaining adequate financing to complete our development activities, progress of collaboration arrangements, market acceptance and demand for our products, and attracting and retaining qualified personnel. Our plans to advance our own product candidates are dependent on receiving additional financing, which may include milestone payments from our collaboration agreements, public or private equity or debt financings, new collaborative relationships, or other available financing transactions. Changing circumstances may cause us to consume capital significantly faster or slower than we currently anticipate or to alter our operations. We have based these estimates on assumptions that may prove to be wrong, and we could utilize our available financial resources sooner than we currently expect.

We have incurred operating losses and have an accumulated deficit as a result of ongoing research and development spending. As of September 30, 2015, we have an accumulated deficit of approximately $224.7 million. We had net income of $0.9 million and a net loss of $2.0 million for the three and nine months ended September 30, 2015, and net cash used in operating activities of $5.7 million for the nine months ended September 30, 2015. Our losses and net cash used in operating activities have resulted principally from costs incurred in our discovery and development activities. We anticipate that operating losses and net cash used in operating activities will continue to occur over the next several years.

We have historically financed our operations primarily through the sale of equity and convertible debt securities, payments pursuant to collaboration agreements, government grants and capital lease and equipment financing. We will continue to be dependent upon such sources of funds until we are able to generate positive cash flows from our operations.

We will be required to fund future operations through the sale of our equity securities, issuance of convertible debt, potential milestone payments if achieved and possible future collaboration partnerships. There can be no assurance that sufficient funds will be available to us when needed from equity or convertible debt financings, or that milestone payments will be earned or that future collaboration partnerships will be entered into. If we are unable to obtain additional funding from these or other sources when needed, or to the extent needed, it may be necessary to significantly reduce our current rate of spending through additional reductions in staff and delaying, scaling back, or stopping certain research and development programs. Insufficient liquidity may also require us to relinquish greater rights to product candidates at an earlier stage of development or on less favorable terms to us or our stockholders than we would otherwise choose. These events could prevent us from successfully executing on our restructured operating plan and could raise substantial doubt about our ability to continue as a going concern in future periods.

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

	Nine months ended September 30,
	2015			2014
Net cash used in operating activities	$	(5,721	)		(8,008	)
Net cash provided by (used in) investing activities		204			(117	)
Net cash provided by financing activities		-			21,094
Net (decrease) increase in cash and cash equivalents		(5,517	)		12,969

Operating Activities

For the nine months ended September 30, 2015 and 2014, our operating activities used cash of $5.7 million and $8.0 million, respectively. The cash used in operating activities of $5.7 million for the nine months ended September 30, 2015 was primarily due to a net loss of $1.9 million primarily attributed research and development activities and by a decrease in deferred revenue of $2.4 million, which primarily resulted from the recognition of revenue under the Celgene collaboration agreement. The cash used in operating activities of $8.0 million for the nine months ended September 30, 2014 was primarily due to a net loss of $14.5 million primarily attributed to interest expense, change in value of warrants and research and development activities and by a decrease in deferred revenue of $2.8 million, which primarily resulted from the recognition of revenue under the Celgene collaboration agreement, a decrease in accounts payable of $1.0 million offset by a noncash loss on extinguishment of convertible notes of $4.7 million, a noncash interest expense of $3.9 million and noncash change in warrant and put and call option expense of $1.9 million.

Investing Activities

For the nine months ended September 30, 2015 and 2014, we did not engage in any significant investing activities.

Financing Activities

For the nine months ended September 30, 2015, we did not engage in any significant financing activities. For the nine months ended September 30, 2014, our financing activities provided net cash of $6.5 million from the issuance of the 2014 Notes and net proceeds of $14.6 million from our initial public offering.

Operating Capital Requirements

We anticipate that we will continue to generate operating losses for the next several years. We believe that our existing cash and cash equivalents and contingent, future milestone payments under our collaboration agreements will allow us to fund our restructured operations through 2016. The amounts and timing of our actual expenditures depend on numerous factors, including the ongoing status of, and results from, clinical trials and other studies, achievement of milestones under our existing collaborations completion of public or private equity or debt financings, other available financing transactions, any additional collaborations that we may enter into with third parties for our product candidates and any unforeseen cash needs. Changing circumstances may cause us to consume capital significantly faster or slower than we currently anticipate or to alter our operations. We have based these estimates on assumptions that may prove to be wrong, and we could utilize our available financial resources sooner than we currently expect.

We may seek to sell additional equity or debt securities or obtain a credit facility if our available cash and cash equivalents are insufficient to satisfy our liquidity requirements or if we develop additional opportunities to do so. The sale of additional equity and debt securities may result in additional dilution to our stockholders. If we raise additional funds through the issuance of debt securities or preferred stock, these securities could have rights senior to those of our common stock and could contain covenants that would restrict our operations. We may require additional capital beyond our currently forecasted amounts. Any such required additional capital may not be available on reasonable terms, if at all.

Because of the numerous risks and uncertainties associated with research, development and commercialization of biopharmaceutical products, we are unable to estimate the exact amounts of our working capital requirements. Our future funding requirements will depend on many factors, including, but not limited to:

the scope, rate of progress, results and costs of our preclinical studies, clinical trials and other research and development activities;

the cost, timing and outcomes of regulatory proceedings (including FDA review of any Biologics License Application, or BLA, that we file);

payments required with respect to development milestones we achieve under our in-licensing agreements, including any such payments to University of Colorado, or CU, pursuant to our license agreement with them;

the costs involved in preparing, filing, prosecuting, maintaining and enforcing patent claims;

the costs associated with commercializing our product candidates, if they receive regulatory approval;

the cost and timing of developing our ability to establish sales and marketing capabilities;

competing technological efforts and market developments;

changes in our existing research relationships;

our ability to establish collaborative arrangements to the extent necessary;

revenues received from any existing or future products; and

payments received under any future strategic collaborations.

Critical Accounting Policies and Significant Judgments and Estimates

The discussion and analysis of our financial condition and results of operations are based on our financial statements, which we have prepared in accordance with U.S. generally accepted accounting principles. 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 revenues and expenses during the reporting periods. On an ongoing basis, we evaluate our estimates and judgments. 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. Actual results may differ from these estimates under different assumptions or conditions.

Off-Balance Sheet Arrangements

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES

As of the end of the period covered by this report, an evaluation was carried out under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures, as defined in Rule 13(a)-15(e) of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Based on that evaluation, our management, including our principal executive officer and principal financial officer, concluded that as a result of the material weakness described below, our disclosure controls and procedures were not effective as of September 30, 2015 to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. Notwithstanding the material weakness described below, management has concluded that our financial statements for the periods included in this report are fairly stated in all material respects in accordance with U.S. generally accepted accounting principles for each of the periods presented herein.

Internal Control Over Financial Reporting

Assessing our staffing and training procedures to improve our internal control over financial reporting is an ongoing process. We are not currently required to comply with Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, and are therefore not required to make an assessment of the effectiveness of our internal control over financial reporting. As a result, our management did not perform an evaluation of our internal control over financial reporting as of September 30, 2015. Further, our independent registered public accounting firm has not been engaged to express, nor have they expressed, an opinion on the effectiveness of our internal control over financial reporting.

For the year ending December 31, 2015, pursuant to Section 404 of the Sarbanes-Oxley Act, management will be required to deliver a report that assesses the effectiveness of our internal control over financial reporting. Under current SEC rules, our independent registered public accounting firm may also eventually be required to deliver an attestation report on the effectiveness of our internal control over financial reporting when we no longer qualify as an emerging growth company. During the year ended December 31, 2014, we identified a material weakness in our internal controls due to the fact that we only have one employee in our accounting and finance department. As a result, we were unable to allow for proper segregation of duties and reviews of transactions prior to being entered into our books and records. This material weakness continued during the nine months ended September 30, 2015. We may qualify as an emerging growth company for as long as five years, although if the market value of our common stock that is held by non-affiliates exceeds $700 million as of any June 30 before that time or if our annual gross revenues equal or exceed $1 billion, we would cease to be an emerging growth company as of the following December 31.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None

ITEM 1A. RISK FACTORS

Investing in our common stock involves a high degree of risk. In evaluating our business, investors should carefully consider the following risk factors, together with all other information included in this Quarterly Report, before deciding whether to invest in shares of our common stock. These risk factors contain, in addition to historical information, forward-looking statements that involve risks and uncertainties. Our actual results could differ significantly from the results discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below. The order in which the following risks are presented is not intended to reflect the magnitude of the risks described. The occurrence of any of the following risks could have a material adverse effect on our business, financial condition, results of operations and prospects. In that case, the trading price of our common stock could decline, and you may lose part or all of your investment.

FINANCIAL RISKS

We have incurred net operating losses throughout our history. We expect to continue to incur net losses for the foreseeable future, and we may never achieve or maintain profitability.

We are not profitable and have incurred significant net losses in each year since our inception in February 1995, except for 2013 and the third quarter 2015, including net income of $0.9 million and net loss of $2.0 million for the three and nine months ended September 30, 2015, respectively. As of September 30, 2015, we had an accumulated deficit of $224.7 million. Our losses have resulted principally from costs incurred in our discovery and development activities. We anticipate that our operating losses will continue over the next several years. While we reported net income in 2013 and the third quarter of 2015, we do not anticipate that we will have net income again in the foreseeable future.

Because of the numerous risks and uncertainties associated with biopharmaceutical product development and commercialization, we are unable to accurately predict the timing or amount of future expenses or when, or if, we will be able to achieve or maintain profitability. Currently, we have no products approved for commercial sale, and to date we have not generated any product revenue. We have financed our operations primarily through the sale of equity securities, upfront and milestone payments pursuant to our collaboration agreements, government grants and capital lease and equipment financing. The size of our future net losses will depend, in part, on the rate of growth or contraction of our expenses and the level and rate of growth, if any, of our revenues. Our ability to achieve profitability is dependent on our ability, alone or with others, to complete the development of our products successfully, obtain the required regulatory approvals, have such products manufactured and marketed by others, and gain market acceptance for such products. There can be no assurance as to whether or when we will achieve profitability, restructure our business or enter into a strategic transaction. We may never be able to generate a sufficient amount of product revenue to cover our expenses. Our plans to advance our own product candidates are dependent on receiving additional financing, which may include milestone payments from our collaboration agreements, public or private equity or debt financings, new collaborative relationships, or other available financing transactions.

We will require substantial additional capital in the future. If additional capital is not available, we will have to delay, reduce or cease operations.

Development of our Tarmogen product candidates will require substantial additional funds to conduct research, development and clinical trials necessary to bring such product candidates to market and to establish manufacturing, marketing and distribution capabilities. Our future capital requirements will depend on many factors, including, among others:

the scope, rate of progress, results and costs of the preclinical and non-clinical studies, clinical trials and other research and development activities undertaken by our collaborators;

the cost, timing and outcomes of regulatory proceedings, including the U.S. Food and Drug Administration, or FDA, review of any Biologics License Application, or BLA, that we or our collaborators submit;

payments required with respect to development milestones we achieve under our in-licensing agreements, including any such payments to University of Colorado or the National Institutes of Health, pursuant to our license agreements with them;

the costs involved in preparing, filing, prosecuting, maintaining and enforcing patent claims;

the costs associated with commercializing our product candidates, if they receive regulatory approval;

the cost and timing of establishing sales and marketing capabilities;

competing technological efforts and market developments;

changes in our existing research relationships;

our ability to establish collaborative arrangements to the extent necessary;

revenues received from any future products;

the ability to achieve and receive milestone payments for products licensed to collaborators; and

payments received under any future strategic collaborations.

We anticipate that we will continue to generate significant losses for the next several years as we incur expenses to complete our clinical trial programs for our product candidates. We believe that based on our current operations, together with our existing cash and cash equivalents will allow us to fund our restructured operating plan through 2016. Our plans to advance our own product candidates are dependent on receiving additional financing, which may include milestone payments from our collaboration agreements, public or private equity or debt financings, new collaborative relationships, or other available financing transactions. However, our operating plan may change as a result of factors currently unknown to us. Changing circumstances may cause us to consume capital faster or slower than we currently anticipate or to alter our operations. We have based these estimates on assumptions that may prove to be wrong, and we could utilize our available financial resources sooner than we currently expect.

There can be no assurance that our revenue and expense forecasts will prove to be accurate, and any change in the foregoing assumptions could require us to obtain additional financing earlier than anticipated. There is a risk of delay or failure at any stage of developing a product candidate, and the time required and costs involved in successfully accomplishing our objectives cannot be accurately predicted. Actual drug research and development costs could substantially exceed budgeted amounts, which could force us to delay, reduce the scope of or eliminate one or more of our research or development programs.

We may never be able to generate a sufficient amount of product revenue to cover our expenses. Until we do, we expect to seek additional funding through public or private equity or debt financings, collaborative relationships, or other available financing transactions. However, there can be no assurance that additional financing will be available on acceptable terms, if at all, and such financings could be dilutive to existing security holders. Moreover, in the event that additional funds are obtained through arrangements with collaborators, such arrangements may require us to relinquish rights to certain of our technologies, product candidates or products that we would otherwise seek to develop or commercialize ourselves.

If adequate funds are not available, we may be required to further delay, reduce the scope of or eliminate one or more of our research or development programs. For instance, we have determined that any further development of our GI-4000 oncology program is contingent on identifying additional sources of financing. Our failure to obtain adequate financing when needed and on acceptable terms would have a material adverse effect on our business, financial condition and results of operations.

There is no guarantee that even if we do engage in a strategic transaction that such strategic transaction will increase stockholder value.

We have engaged Cantor Fitzgerald & Co. to facilitate possible strategic transactions, including transactions involving the merger or sale of all or part of our assets, and other alternatives with the goal of maximizing stockholder value. We may never complete a strategic transaction, and in the event that we do complete a strategic transaction, implementation of such transactions may impair stockholder value or otherwise adversely affect our business. Any such transaction may require us to incur non-recurring or other charges and may pose significant integration challenges and/or management and business disruptions, any of which could harm our results of operation and business prospects and impair the value of any such strategic transaction to our stockholders.

BUSINESS RISKS

Risks Relating to Clinical Development and Commercialization of Our Product Candidates

If we, or our collaborators, Celgene Corporation, Gilead Sciences, Inc. and the National Cancer Institute, fail to successfully complete clinical trials, fail to obtain regulatory approval or fail to successfully commercialize our Tarmogen product candidates, our business would be harmed and the value of our securities would decline.

Investors should evaluate us in light of the uncertainties and complexities affecting a pre-commercial biopharmaceutical company. We have not completed clinical development for any of our product candidates. Our lead Tarmogen product candidate is GS-4774, which has been exclusively licensed to Gilead Sciences, Inc., or Gilead, and which is in Phase 2 clinical testing. The GI-6300 program, including GI-6301, our oncology product targeting cancers expressing the brachyury protein, and GI-6207, our

oncology product targeting cancers that express carcinoembryonic antigen, or CEA, have been exclusively licensed to Celgene. In April 2015, the National Cancer Institute, or the NCI, opened for enrollment a Phase 2 clinical trial designed to investigate the safety and efficacy of GI-6301 in combination with radiation therapy in patients with chordoma. GI-6207 is currently being evaluated in a Phase 2 clinical trial at the NCI to evaluate GI-6207 in subjects with medullary thyroid cancer, or MTC.

Gilead is responsible for the clinical development and any future commercialization activities for GS-4774. In May 2015, we announced top line results from this study. Patients treated with the highest dose of GS-4774 plus ongoing oral antiviral therapy, or OAV, did not show a reduction in HBV surface antigen, or HBsAg at week 24, the primary endpoint of the study, but at 48 weeks had a mean -0.17 log10 reduction of HBsAg compared with a -0.04 log10 reduction in the OAV alone group (p=not significant). Three patients receiving the highest dose of GS-4774 had HBsAg reductions between -0.94 and -3.89 log10 at 48 weeks. There was no difference in HBsAg reductions between the two lowest dose groups versus the control arm at 48 weeks. A second Phase 2 clinical trial was initiated in 2014, GS-US-330-1401, or the 1401 trial, investigating GS-4774 in patients with chronic HBV infection who are currently not receiving treatment. The 1401 trial is a multicenter, multinational trial designed to enroll 175 patients in a randomized, open-label design comparing three different doses of GS-4774 (2YU, 10YU, or 40YU), administered in combination with tenofovir disoproxil fumarate, or TDF, versus TDF alone. The 1401 trial is enrolling patients. The 48-week results are projected to be available in the second half of 2016. There can be no assurance that this trial will have a better outcome than the first Phase 2 trial.

The GI-6300 program, including GI-6301, which is being developed for the treatment of brachyury-expressing cancers, was exclusively licensed to Celgene. Celgene will lead future clinical development and any future commercialization activities for GI-6301. As a result, we are completely dependent on their ability and willingness to fund and execute clinical development, regulatory approvals and commercialization activities. The Phase 2 program for GI-6301 in chordoma will be run at NCI. We will have no control over the execution of this trial, including the rate of and completion of enrollment of the trial. We have limited control over the amount and timing of resources that Celgene and Gilead dedicate to the development of our product candidates, potentially negatively impacting the likelihood of clinical or commercial success for these products candidates.

The GI-6207 program, which is being developed for the treatment of cancers that express CEA, was exclusively licensed to Celgene in July 2015. Celgene will lead future clinical development and any future commercialization activities for GI-6207. As a result, we will rely on Celgene’s ability and willingness to fund and execute clinical development, regulatory approvals and commercialization activities related to GI-6207. The Phase 2 program for GI-6207 in MTC is currently being run at NCI. We do not control the execution of this trial, including the rate of and completion of enrollment of the trial.

Regulatory agencies, including the FDA, must approve GS-4774, GI-6301, GI-4000 and any of our other product candidates before they can be marketed or sold. The approval process is lengthy, requires significant capital expenditures, and the outcome is uncertain. Our, or our collaborator’s, ability to obtain regulatory approval of any Tarmogen product candidate depends on, among other things, completion of additional clinical trials, whether such clinical trials demonstrate statistically significant efficacy with safety issues that do not potentially outweigh the therapeutic benefit of the product candidates, and whether the regulatory agencies agree that the data from our future clinical trials are sufficient to support approval for any of our product candidates. The final results of our current and future clinical trials may not meet FDA or other regulatory agencies’ requirements to approve a product candidate for marketing. We or our collaborators may need to conduct more clinical trials than we currently anticipate. Even if we do receive FDA or other regulatory agency approval, we or our collaborators may not be successful in commercializing approved product candidates. If any of these events occur, our business could be materially harmed and the value of our securities would decline.

We, or our collaborators, may face delays in completing our clinical trials, and may not be able to complete them at all.

Clinical trials necessary to support an application for approval to market any Tarmogen product candidates have not been completed. Our, or our collaborators’, current and future clinical trials may be delayed, unsuccessful, or terminated as a result of many factors, including:

delays in designing an appropriate clinical trial protocol and reaching agreement on trial design with investigators and regulatory authorities;

governmental or regulatory delays, failure to obtain regulatory approval or changes in regulatory requirements, policy or guidelines;

delays in establishing necessary clinical trial sites or the need to establish new clinical trial sites;

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

the actual performance of CROs and clinical trial sites in ensuring the proper and timely conduct of our clinical trials;

developing and validating companion diagnostics on a timely basis;

adverse effects experienced by subjects in clinical trials;

manufacturing sufficient quantities of product candidates at the sufficient level of quality for use in clinical trials; and

delays in achieving study endpoints and completing data analysis for a trial.

In addition to these factors, our trials may be delayed, unsuccessful or terminated because:

regulators or institutional review boards, or IRBs, may not authorize us to commence or continue a clinical trial;

regulators or IRBs may suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements or concerns about patient safety;

we may suspend or terminate our clinical trials if we believe that they expose the participating patients to unacceptable health risks;

patients may not complete clinical trials due to safety issues, side effects, such as injection site discomfort, a belief that they are receiving placebo instead of our product candidates, the length of follow-up periods, or other reasons;

patients with serious diseases included in our clinical trials may die or suffer other adverse medical events for reasons that may not be related to our product candidates;

in those trials where our product candidate is being tested in combination with one or more other therapies, deaths may occur that may be attributable to the other therapies;

we may have difficulty in maintaining contact with patients after administration of our Tarmogen product candidates, preventing us from collecting the data required by our study protocol;

product candidates may demonstrate a lack of efficacy during clinical trials;

delays in manufacture may delay or hinder completely ongoing or future clinical trials;

diagnostic tests we or our collaborators develop, such as the BDX-001 diagnostic for a potential future GI-4000 clinical trial in pancreas cancer patients, may not effectively identify patients that respond to our product candidates;

we may have difficulty in finding suitable patients to participate in our, or our collaborators’, clinical trials due to a number of factors, including competing clinical trials, a limited number of clinical trial sites, or the inability to identify a sufficient number of patients that meet trial eligibility criteria, including any diagnostic tests being developed by us or our collaborators, including the BDX-001 diagnostic;

personnel conducting clinical trials may fail to properly administer our product candidates; and

our collaborators may decide not to pursue further clinical trials, or may allocate resources to other clinical trials, including clinical trials of competitor product candidates.

We could encounter delays if our clinical trials are suspended or terminated by us, by IRBs of the institutions in which such trials are being conducted, by the Data Safety Monitoring Boards for such trials or by the FDA or other regulatory authorities. Such authorities may impose a suspension or termination due to a number of factors, including potential for unacceptable safety risks to patients, inspection of the clinical trial operation or trial site, changes in government regulations or administrative actions.

In addition, we rely on academic institutions, physician practices and CROs to conduct, supervise or monitor some or all aspects of clinical trials involving our product candidates. For example several of our other trials are being conducted by the NCI, including GI-6207-02 for MTC, the GI-6301-01 Phase 1 trial and the GI-6301 Phase 2 trial in chordoma. We have less control over the timing and other aspects of these clinical trials than if we conducted the monitoring and supervision entirely on our own. Third parties may not perform their responsibilities for our clinical trials on our anticipated schedule or consistent with a clinical trial protocol or applicable regulations. We also may rely on CROs to perform our data management and analysis. They may not provide these services as required or in a timely or compliant manner, and we may be held legally responsible for any or all of their performance failures or inadequacies.

Moreover, our development costs will increase because we will be required to complete additional or larger clinical trials for our Tarmogen product candidates prior to FDA or other regulatory approval. If we or our collaborators experience delays in the completion of, or termination of, any clinical trial of our product candidates, the commercial prospects of our product candidates will be harmed, and our ability to generate product revenues from any of these product candidates will be delayed or eliminated. In addition, any delays in completing our clinical trials will increase our costs, slow down our product candidate development and approval process, and jeopardize our ability to commence product sales and generate revenues. Any of these occurrences may harm

our business, financial condition and prospects. In addition, many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also lead to the denial of regulatory approval of our product candidates.

If we encounter difficulties enrolling patients in our clinical trials, our clinical trials could be delayed or otherwise adversely affected.

Clinical trials for our product candidates require us to identify and enroll a large number of patients with the disease under investigation. We may not be able to enroll a sufficient number of patients, or those with required or desired characteristics, in a timely manner. Patient enrollment is affected by factors including:

severity of the disease under investigation;

design of the trial protocol;

the size and nature of the patient population;

eligibility criteria for the study in question;

lack of a sufficient number of patients who meet the enrollment criteria for our clinical trials;

delays required to characterize tumor types to allow us to select the proper product candidate, which may lead patients to seek to enroll in other clinical trials or seek alternative treatments;

perceived risks and benefits of the product candidate under study;

availability of competing therapies and clinical trials;

efforts to facilitate timely enrollment in clinical trials;

scheduling conflicts with participating clinicians;

patient referral practices of physicians;

the ability to monitor patients adequately during and after administration of our Tarmogen product candidates;

diagnostic tests we or our collaborators develop may not effectively identify patients that respond to our product candidates; and

proximity and availability of clinical trial sites for prospective patients.

We have experienced difficulties enrolling patients in our smaller clinical trials due to lack of referrals and may experience similar difficulties in the future. For example, the GI-4000-05 trial conducted at the Lombardi Cancer Center at Georgetown University commenced enrollment in August 2010. Eleven subjects were enrolled as of September 30, 2015. This enrollment rate was slower than we had anticipated and enrollment has been discontinued.

If we have difficulty enrolling a sufficient number or diversity of patients to conduct our clinical trials as planned, we may need to delay or terminate ongoing or planned clinical trials, either of which would have an adverse effect on our business.

Our Tarmogen product candidates are based on a novel technology, which may raise development issues we may not be able to resolve, regulatory issues that could delay or prevent approval, or personnel issues that may keep us from being able to develop our product candidates.

Our product candidates are based on our novel Tarmogen technology platform. There can be no assurance that development problems related to our novel technology will not arise in the future that cause significant delays or that we are not able to resolve.

Regulatory approval of novel product candidates such as ours can be more expensive and take longer than for other, more well-known or extensively studied pharmaceutical or biopharmaceutical product candidates due to our and regulatory agencies’ lack of experience with them. The novelty of our platform may lengthen the regulatory review process, require us to conduct additional studies or clinical trials, increase our development costs, lead to changes in regulatory positions and interpretations, delay or prevent approval and commercialization of our product candidates or lead to significant post-approval limitations or restrictions. For example, the FDA could require additional studies or characterization related to our use of heat-inactivated yeast that may be difficult to perform.

The novel nature of our product candidates also means that fewer people are trained in or experienced with product candidates of this type, which may make it difficult to find, hire and retain capable personnel, particularly for research and development positions. For example, study personnel may administer the wrong version of our product candidates or assign study therapy to the

wrong study group, resulting in potential disqualification of subjects from data analysis. These factors could potentially cause a trial to fail for a reason unrelated to the efficacy of our product candidates. If we are unable to hire and retain the necessary personnel, the rate and success at which we can develop and commercialize product candidates will be limited. Any such events would increase our costs and could delay or prevent our ability to commercialize our product candidates, which could adversely impact our business, financial condition and results of operations.

If we are unable to successfully develop companion diagnostics for our therapeutic product candidates, or experience significant delays in doing so, we may not realize the full commercial potential of our product candidates.

An important component of our business strategy is to use molecular profiling of patients to target our Tarmogen product candidates to those patients we believe may be most likely to benefit from them, including profiling necessary to determine which version of our GI-4000 series should be given to a patient with Ras mutated cancer and determining which patients should be enrolled in our future GI-4000 pancreas cancer trials, if any, based on the BDX-001 proteomic signature. The BDX-001 test is controlled by Biodesix, Inc. and we may not be able to obtain rights to use the test on commercially reasonable terms, if at all. If we do not obtain rights to BDX-001, we will not be able to use it in clinical development or commercialization. If we do not have access to BDX-001, our future GI-4000 trials, if any, may not be successful and we may never obtain approval to market GI-4000. There has been limited experience in our industry in prospective development of companion diagnostics required to perform the required testing. To be successful, we will need to address a number of scientific, technical and logistical challenges related to the use of companion diagnostics in the development and regulatory approval of our product candidates.

The FDA and similar regulatory authorities outside the United States regulate companion diagnostics. Companion diagnostics require separate or coordinated regulatory approval prior to commercialization of the therapeutic product. The regulatory pathway for co-development of therapeutics and companion diagnostics could delay our development programs or delay or prevent eventual marketing approval for our product candidates that may otherwise be approvable. For our oncology product candidate, GI-4000 we may require in vitro companion diagnostics that will help identify pancreas cancer patients we believe may be likely to benefit from our product candidates. In vitro diagnostics are tests used on specimens taken from the patient being tested.

The FDA may limit our ability to use retrospective data, otherwise disagree with our approaches to trial design, biomarker qualification, clinical and analytical validity, and clinical utility, or make us repeat aspects of a trial or initiate new trials in order to obtain approval of our therapeutic and companion diagnostic product candidates.

Assays that can be used as companion diagnostics for detecting Ras mutations are commercially available, but in some cases they do not yet have regulatory approval for use as companion diagnostics. In future clinical trials, we may use commercially available companion diagnostics or we may co-develop companion diagnostics ourselves or with collaborators. We have limited experience in the development of diagnostics and may not be successful in developing necessary diagnostics to pair with those product candidates that require a companion diagnostic.

Certain proteomic analyses have been performed on plasma samples from 90 of the subjects from the GI-4000-02 trial, potentially identifying a patient selection test named BDX-001 for future trials. Proteomic analyses were not specified in the original trial protocol for GI-4000-02 and the predictive value of the proteomic analyses will need to be validated in another clinical trial. We were only able to review a limited number of samples from the subjects in the trial and future analysis may not confirm the analytical results we have observed to date. Future testing with a companion diagnostic designed to detect the specific protein pattern identified by the initial proteomic testing may show a different proportion of the specific protein signatures which were correlated with later recurrence of the cancer and it may also fail to show the specific protein signature is predictive of the response to GI-4000.

Given our limited experience in developing diagnostics, we expect to rely in part on third parties for their design and manufacture. If we, or any third parties that we engage to assist us, are unable to successfully develop companion diagnostics for our product candidates that require such diagnostics, or experience delays in doing so, the development of our product candidates may be adversely affected, our product candidates may not receive marketing approval and we may not realize the full commercial potential of any products that receive marketing approval. As a result, our business could be materially harmed.

Results of earlier studies and clinical trials may not be predictive of future trial results.

Clinical testing is expensive and can take many years to complete, and its outcome is inherently uncertain. Failure can occur at any time during the clinical trial process. The results of preclinical studies and early clinical trials of our product candidates may not be predictive of the design or results of later-stage clinical trials. The positive results generated to date in clinical trials for our Tarmogen product candidates do not ensure that later clinical trials will demonstrate similar results. For instance, in May 2015, we announced top line results for the 0101 trial of GS-4774. These results showed that patients treated with the highest dose of GS-4774 plus ongoing OAV, did not show a reduction in serum HbsAg at week 24, the primary endpoint of the study, but at 48 weeks had a mean -0.17 log₁₀ reduction of HBsAg compared with a -0.04 log10 reduction in the OAV alone group (p=not significant).

Additionally, while we have observed statistically significant improvements in the outcomes of some of our clinical trials, many of the improvements we have seen have not reached statistical significance. The test for the specific proteomic signature, called BDX-001, which we have identified through proteomic testing of subjects from our GI-4000-02 trial, may fail to predict which subjects respond to GI-4000 in our future pancreas cancer clinical trials, if any. Statistical significance is a statistical term that means that an effect is unlikely to have occurred by chance. In order to be approved, product candidates must demonstrate that their effect on patients’ diseases in the trial is statistically significant. Product candidates in later stages of clinical trials may fail to show the desired safety and efficacy traits despite having progressed through preclinical studies and initial clinical trials. Early clinical trials frequently enroll patient populations that are different from the patient populations in later trials, resulting in different outcomes in later clinical trials from those in earlier stage clinical trials. In addition, adverse events may not occur in early clinical trials and only emerge in larger, late-stage clinical trials or after commercialization. A number of companies in the biopharmaceutical industry have suffered significant setbacks in advanced clinical trials due to lack of efficacy or adverse safety profiles, notwithstanding promising results in earlier clinical trials. If later stage clinical trials do not demonstrate efficacy and safety of our product candidates we will not be able to market them and our business will be materially harmed.

We have not completed clinical development of any of our product candidates and do not have any products approved for sale by the FDA or any other regulatory bodies. Regulatory authorities may not approve our product candidates even if they meet safety and efficacy endpoints in clinical trials.

We and our collaborators have discussions with and obtain guidance from regulatory authorities regarding certain aspects of our clinical development activities. These discussions are not binding commitments on the part of regulatory authorities. Under certain circumstances, regulatory authorities may revise or retract previous guidance during the course of our clinical activities or after the completion of our clinical trials. A regulatory authority may also disqualify a clinical trial in whole or in part from consideration in support of approval of a potential product for commercial sale or otherwise deny approval of that product. Prior to regulatory approval, a regulatory authority may elect to obtain advice from outside experts regarding scientific issues and/or marketing applications under a regulatory authority review. In the United States, these outside experts are convened through the FDA’s Advisory Committee process, which would report to the FDA and make recommendations that may ultimately differ from the views of the FDA.

The FDA and foreign regulatory agencies may delay, limit or deny marketing approval for many reasons, including:

a product candidate may not be considered safe or effective;

changes in the agencies’ approval policies or adoption of new regulations may require additional work on our part, for example, the FDA may require us to submit a separate BLA for each product version of GI-4000;

different divisions of the FDA are reviewing different product candidates and those divisions may have different requirements for approval; and

changes in regulatory law, FDA or foreign regulatory agency organization, or personnel may result in different requirements for approval than anticipated.

Our product candidates may not be approved even if they achieve their endpoints in clinical trials. Regulatory agencies, including the FDA, or their advisors may disagree with our trial design and our interpretations of data from preclinical studies and clinical trials. Regulatory agencies also may approve a product candidate for fewer or more limited indications than requested or may grant approval subject to the performance of post-marketing studies. In addition, regulatory agencies may not approve the labeling claims that are necessary or desirable for the successful commercialization of our product candidates.

Any delay in or failure to receive or maintain approval for any of our product candidates could prevent us from ever generating revenues or achieving profitability.

We may be required to suspend, repeat or terminate our clinical trials if they are not conducted in accordance with regulatory requirements, the results are negative or inconclusive, or the trials are not well designed.

Clinical trials must be conducted in accordance with FDA regulations governing clinical studies, or other applicable foreign government guidelines, and are subject to oversight by the FDA, other foreign governmental agencies and IRBs at the medical institutions where the clinical trials are conducted. In addition, clinical trials must be conducted with product candidates produced under current Good Manufacturing Practices, or cGMP, and may require large numbers of test subjects. Clinical trials may be suspended by the FDA, other foreign governmental agencies or us for various reasons, including:

deficiencies in the conduct of the clinical trials, including failure to conduct the clinical trial in accordance with regulatory requirements or clinical protocols;

deficiencies in the clinical trial operations or trial sites;

the product candidate may have unforeseen adverse side effects;

the time required to determine whether the product candidate is effective may be longer than expected;

deaths or other adverse events arising during a clinical trial due to medical problems that may not be related to clinical trial administration of our Tarmogen product candidates;

the product candidate may not appear to be more effective than current therapies;

the quality or stability of the product candidate may fall below acceptable standards; and

insufficient quantities of the product candidate might be available to complete the trials.

In addition, changes in regulatory requirements and guidance may occur and we may need to amend clinical trial protocols to reflect these changes. Amendments to our clinical trial protocols may require resubmission to IRBs for reexamination, which may impact the costs, timing or successful completion of a clinical trial. Due to these and other factors, our Tarmogen product candidates could take longer to gain regulatory approval than we expect or we may never gain approval for any product candidates, which could reduce or eliminate our revenue by delaying or terminating the commercialization of our Tarmogen product candidates.

Certain of our product candidates are being and will be studied in clinical trials conducted by the NCI, and in investigator-initiated clinical trials, the conduct of which we do not control.

Early clinical studies of our GI-6207 and GI-6301 product candidates are being conducted in collaboration with and under the direction of the NCI. These include a Phase 1 trial of GI-6301 in patients with metastatic cancer and chordoma, a Phase 2 trial of GI-6301 in patients with chordoma, and a Phase 2 clinical trial of GI-6207 in patients with MTC. In addition, there is an investigator-initiated clinical trial ongoing with our GI-4000 product candidate, a Phase 2a clinical study in colorectal cancer at the Lombardi Cancer Center at Georgetown University. We do not control the design protocols, administration or conduct of these trials and, as a result, we are subject to risks associated with the way these types of trials are conducted, in particular should any problems arise. These risks include difficulties or delays in communicating with investigators or administrators, procedural delays and other timing issues, inappropriate trial design or trial protocols and difficulties or differences in interpreting data. Many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials or the trials not being conducted according to protocols may ultimately lead to the denial of regulatory approval of our product candidates, which would adversely affect our business and lead to a decline in the trading price of our securities.

We do not control the conduct of certain clinical trials conducted by our collaborators, Gilead and Celgene.

We have exclusively licensed three of our Tarmogen product candidates to collaborators for further clinical development and commercialization. GS-4774 is licensed to Gilead and the GI-6300 program, including GI-6301, and the GI-6200 program, including GI-6207, are each licensed to Celgene. Control for the GS-4774 program, including but not limited to future clinical development, regulatory strategy and any commercialization activities, has been transferred to Gilead under the terms of our collaboration agreement. Control of the GI-6300 and GI-6200 programs, including but not limited to future clinical development, regulatory strategy, and any commercialization activities, has been transferred to Celgene. As a result, we do not have control over the design protocols, administration or conduct for any future trials and we are therefore subject to risks associated with the way these types of trials are conducted, in particular should any problems arise. These risks include difficulties or delays in communicating with investigators or administrators, procedural delays and other timing issues, inappropriate trial design or trial protocols and difficulties or differences in interpreting data. Many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials or the trials not being conducted according to protocols may ultimately lead to the denial of regulatory approval of these product candidates, which would adversely affect our business and lead to a decline in the trading price of our securities.

Any product candidate for which we, or our collaborators, obtain marketing approval could be subject to restrictions or withdrawal from the market, and we may be subject to penalties if we fail to comply with regulatory requirements or if we experience unanticipated problems with our products, when and if any of them are approved.

Any product candidate that we, or our collaborators obtain marketing approval for, along with the manufacturing processes, post-approval clinical data, post-approval stability data, labeling, advertising and promotional activities for such product, will be subject to ongoing requirements of the FDA and other regulatory authorities. These requirements include submissions of safety and other post-marketing information, reports, registration and listing and annual payment requirements, cGMP requirements relating to quality control, quality assurance and corresponding maintenance of records and documents, requirements regarding the distribution of samples to physicians and recordkeeping. Even if marketing approval of a product candidate is granted, the approval will be subject to limitations on the indicated uses for which the product may be marketed or to conditions of approval, or contain requirements for

costly post-marketing testing and surveillance to monitor the safety or efficacy of the product. The FDA closely regulates the post-approval marketing and promotion of drugs to ensure drugs are marketed only for the approved indications and in accordance with the provisions of the approved labeling. The FDA imposes stringent restrictions on manufacturers’ communications regarding off-label use. If we market our products outside of their approved indications, we will be subject to enforcement action for off-label marketing.

In addition, later discovery of previously unknown problems with these products, manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may yield various results, including:

restrictions on such products, manufacturers or manufacturing processes;

restrictions on the labeling or marketing of a product;

restrictions on product distribution or use;

requirements to conduct post-marketing clinical trials;

warning or untitled letters;

withdrawal of the products from the market;

refusal to approve pending applications or supplements to approved applications that we submit;

recall of products, fines, restitution or disgorgement of profits or revenue;

suspension or withdrawal of marketing approvals;

refusal to permit the import or export of our products;

product seizure; and

injunctions or the imposition of civil or criminal penalties.

The FDA’s policies may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of our product candidates. If we, or our collaborators, are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we, or our collaborators, are not able to maintain regulatory compliance, any marketing approval that was obtained could be lost, which would adversely affect our business, prospects and ability to achieve or sustain profitability.

If we, or our collaborators, are unable to comply with foreign regulatory requirements or obtain foreign regulatory approvals, our ability to develop foreign markets for our products could be impaired.

Sales of our products outside the United States will be subject to foreign regulatory requirements governing clinical trials, marketing approval, manufacturing, product licensing, pricing and reimbursement. These regulatory requirements vary greatly from country to country. As a result, the time required to obtain approvals outside the United States may differ from that required to obtain FDA approval and we may not be able to obtain foreign regulatory approvals on a timely basis or at all. Approval by the FDA does not ensure approval by regulatory authorities in other countries, and approval by one foreign regulatory authority does not ensure approval by regulatory authorities in other countries or by the FDA and foreign regulatory authorities could require additional testing. Failure to comply with these regulatory requirements or obtain required approvals could impair our ability to develop foreign markets for our products.

Developing product candidates in combination with other therapies may lead to unforeseen side effects or failures in our clinical trials.

We, and our collaborators, are studying our product candidates in clinical trials in combination with approved therapies, including chemotherapies and antivirals, and we anticipate that if any Tarmogen product candidates are approved for marketing, they will be approved to be used only in combination with other therapies. Our, and our collaborators’, development programs and planned studies carry all the risks inherent in drug development activities, including the risk that they will fail to demonstrate meaningful efficacy or acceptable safety. In addition, our development programs are subject to additional regulatory, commercial, manufacturing and other risks because of the use of other therapies in combination with our product candidates. For example, the other therapies may lead to toxicities that are improperly attributed to our product candidates or the combination of our product candidates with other therapies may result in toxicities that the product candidate or other therapy does not produce when used alone. The other therapies we are using in combination may be removed from the market and thus be unavailable for testing or commercial use with any of our approved products. The other therapies we are using in combination may be replaced with newer therapies that may be effective without our product candidates or that are not compatible with our product candidates. Testing product candidates in combination with other therapies may increase the risk of significant adverse effects or test failures. The timing, outcome and cost of developing

products to be used in combination with other therapies is difficult to predict and dependent on a number of factors that are outside our reasonable control. If any safety or toxicity issues arise in these clinical trials or with any approved products, the products may not be approved, which could prevent us from ever generating revenues or achieving profitability.

Competitive products for treatment of pancreas cancer, non-small cell lung cancer, colorectal cancer, MTC, chordoma and chronic hepatitis B infection may reduce or eliminate the commercial opportunity for our Tarmogen product candidates.

The clinical and commercial landscape for pancreas cancer, non-small cell lung cancer, colorectal cancer, MTC, chordoma and chronic hepatitis B infection is rapidly changing. New data from commercial and clinical-stage products continue to emerge. It is possible that these data may alter current standards of care, completely precluding us from further developing our Tarmogen product candidates, or getting them approved by regulatory agencies. Further, it is possible that we may initiate a clinical trial or trials for these product candidates, only to find that data from competing products make it impossible for us to complete enrollment in these trials, resulting in our inability to file for marketing approval with regulatory agencies. Even if these products are approved for marketing in a particular indication or indications, they may have limited sales due to particularly intense competition in these markets.

We expect to depend on existing and future collaborations with third parties for the development of some of our product candidates. If those collaborations are not successful, we may not be able to complete the development of these product candidates.

We currently have a collaboration and option agreement, or Option Agreement, with Celgene for the development of our oncology product candidates. Under the Option Agreement, Celgene has a worldwide exclusive license to the GI-6300 program, including GI-6301, and the GI-6200 program, including GI-6207. Celgene did not exercise its option to GI-4000 and returned all rights and development responsibility, including any future expenses, to us. Gilead has taken a worldwide exclusive license to all of our hepatitis B virus, or HBV, Tarmogen product candidates. Celgene and Gilead can terminate their respective collaborations with us at any time, subject to certain notice provisions. We plan to seek third-party collaborators for the development of certain other Tarmogen product candidates.

Under our current arrangements with Celgene and Gilead, we have limited control over the amount and timing of resources that our collaborators dedicate to the development of our product candidates. This is also likely to be true for any future collaborations with third parties. Our ability to generate revenues from these arrangements will depend on our collaborators’ abilities to successfully perform the functions assigned to them in these arrangements.

Collaborations involving our product candidates pose the following risks to us:

Celgene may not exercise any more options to any of our oncology product candidates, for example, Celgene did not elect to exercise their option to license GI-4000;

Celgene may return all rights to GI-6301 or GI-6207 to us;

Gilead may return all rights to HBV product candidates to us;

collaborators have significant discretion in determining the efforts and resources, if any, that they will apply to these collaborations;

collaborators may not pursue development and commercialization of our product candidates, such as Celgene not exercising more of its option to any oncology programs other than GI-6301or GI-6207, or may elect not to continue or renew development or commercialization programs based on clinical trial results, changes in the collaborator’s strategic focus or available funding, or external factors such as an acquisition that diverts resources or creates competing priorities;

collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing;

collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our product candidates if the collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours;

collaborators may not properly maintain or defend our intellectual property rights or may use our proprietary information in such a way as to invite litigation that could jeopardize or invalidate our proprietary information or expose us to potential litigation;

disputes may arise between the collaborators and us that result in the delay or termination of the research, development or commercialization of our product candidates or that result in costly litigation or arbitration that diverts management attention and resources;

collaborations may be terminated and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable product candidates;

collaborators may elect to take over manufacturing, for example, Gilead has elected to take over manufacturing for GS-4774. Collaborators may encounter problems in starting up or gaining approval for their manufacturing facility and so be unable to continue development and manufacturing of product candidates;

we may be required to undertake the expenditure of substantial operational, financial and management resources in connection with any collaboration;

we may be required to issue equity securities to collaborators that would dilute our existing security holders’ percentage ownership;

we may be required to assume substantial actual or contingent liabilities;

collaborators may not commit adequate resources to the marketing and distribution of our product candidates, limiting our potential revenues from these products; and

collaborators may experience financial difficulties.

We face a number of challenges in seeking additional collaborations. The process to establish a collaboration is complex and any potential discussions may not result in a definitive agreement for many reasons. For example, whether we reach a definitive agreement for a collaboration will depend, among other things, upon our assessment of the collaborator’s resources and expertise, the terms and conditions of the proposed collaboration, and the proposed collaborator’s evaluation of a number of factors, such as the design or results of our clinical trials, the potential market for our product candidates, the costs and complexities of manufacturing and delivering our product candidates to patients, the potential of competing products, the existence of uncertainty with respect to ownership or the coverage of our intellectual property, and industry and market conditions generally. If we were to determine that additional collaborations for our Tarmogen product candidates are necessary and were unable to enter into such collaborations on acceptable terms, we might elect to delay or scale back the development or commercialization of our product candidates in order to preserve our financial resources or to allow us adequate time to develop the required physical resources and systems and expertise ourselves.

Collaboration agreements may not lead to development or commercialization of product candidates in the most efficient manner, or at all. In addition, there have been a significant number of recent business combinations among large pharmaceutical companies that have resulted in a reduced number of potential future collaborators. If a present or future collaborator of ours were to be involved in a business combination, the continued pursuit and emphasis on our product development or commercialization program could be delayed, diminished or terminated.

We will need to outsource our manufacturing activities to a third party manufacturing organization in order to commercialize any of our product candidates if and when they gain regulatory approval. This will reduce our control over the manufacturing process of our product candidates and may decrease the profitability of our commercialization of these product candidates.

If and when any of our product candidates gain regulatory approval, we will have to outsource all of our manufacturing activities to a third party contract manufacturing organization, or CMO. Under any agreement with a CMO, we would have less control over the timing and quality of manufacturing than if we were to perform such manufacturing ourselves. A CMO would be manufacturing other pharmaceutical products in the same facilities as our Tarmogen product candidates, increasing the risk of cross product contamination. Further, there is no guarantee that any CMO will have adequate capacity for meeting all of our product needs, or be able to manufacture products for an adequate price. There is also no guarantee that any CMO will continue their ongoing operations, causing potential delays in product supply, reduced revenues and other liabilities for us. A CMO may also be subject to regulatory holds or production interruptions for a variety of reasons, which could also cause shortfalls or delays in our product supply.

Any such events would increase our costs and could delay or prevent our ability to commercialize our product candidates, which could adversely impact our business, financial condition and results of operations.

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

Undesirable side effects caused by our product candidates could cause us, our collaborators, or regulatory authorities to interrupt, delay or halt clinical trials and could result in a more restrictive label or the delay or denial of regulatory approval by the FDA or other comparable foreign regulatory authorities. To date, patients who have received Tarmogens have experienced drug-related side effects, including local skin reactions and systemic and constitutional symptoms including muscle aches, fever and fatigue. Subjects have also reported developing a taste in their mouths similar to yeast following injection of our product candidates. In one instance, a patient in the GI-6207 clinical trial who had pleural and pericardial metastases, or cancer in the spaces surrounding the heart and lungs, experienced pleural and pericardial effusions, or fluid buildup in those areas of the body, following immunization with GI-6207. GI-6207 had to be discontinued in this patient because of this adverse event. For this reason, we have excluded patients with large pericardial metastases from current and future clinical trials.

Our Tarmogen product candidates are intended to stimulate the immune system. As such, results of our clinical trials could reveal an unacceptable severity and prevalence of side effects, including, but not limited to, adverse immune responses that lead to previously unobserved autoimmune complications or yeast allergies. As a result of any side effects, our clinical trials could be suspended or terminated and the FDA or comparable foreign regulatory authorities could order us to cease further development, or deny approval, of our product candidates for any or all targeted indications. The drug-related side effects could affect patient recruitment or the ability of enrolled patients to complete the trial or result in potential product liability claims. Any of these occurrences may harm our business, financial condition and prospects significantly.

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

regulatory authorities may withdraw approvals of such product;

regulatory authorities may require additional warnings on the label;

we may be required to create a medication guide outlining the risks of such side effects for distribution to patients;

we may be sued and held liable for harm caused to patients; and

our reputation may suffer.

Any such event noted in this risk factor could prevent us from achieving or maintaining market acceptance of the particular product candidate, if approved, and could significantly harm our business, results of operations and prospects.

If we cannot demonstrate an acceptable toxicity profile for our product candidates in non-clinical studies, we will not be able to initiate or continue clinical trials or obtain approval for our product candidates.

In order to move a product candidate into human clinical trials, we must first demonstrate an acceptable toxicity profile in preclinical testing. Furthermore, in order to obtain approval, we must also demonstrate safety in various non-clinical tests. For example, we are conducting preclinical testing for GI-19000 in anticipation of filing an investigational new drug application, or IND, subject to obtaining additional funding. We may not have conducted or may not conduct the types of non-clinical testing required by regulatory authorities, or future non-clinical tests may indicate that our product candidates are not safe for use. Non-clinical testing is expensive, time-consuming and has an uncertain outcome. In addition, success in initial non-clinical testing does not ensure that later non-clinical testing will be successful. We may experience numerous unforeseen events during, or as a result of, the non-clinical testing process, which could delay or prevent our ability to develop or commercialize our product candidates, including:

our non-clinical testing may produce inconclusive or negative safety results, which may require us to conduct additional non-clinical testing or to abandon product candidates;

our product candidates may have unfavorable pharmacology or toxicity characteristics;

our product candidates may cause undesirable side effects such as negative immune responses that lead to autoimmune complications;

our enrolled patients may have yeast allergies that lead to complications after administration of Tarmogen product candidates; and

the FDA or other regulatory authorities may determine that additional safety testing is required.

We may need to enter into additional agreements with third parties to sell and market our product candidates, without any such agreement we may not be successful in commercializing our product candidates if and when they are approved.

We do not have a sales and marketing infrastructure or any experience in the sales, marketing or distribution of pharmaceutical products. We currently have collaboration agreements with Celgene for the development and commercialization of our oncology product candidates, other than GI-4000, and with Gilead for HBV Tarmogens. We may seek additional third-party collaborators for the commercialization of our other product candidates. If and when any of our product candidates are approved we will likely elect to outsource these functions to third parties.

As a result of our arrangements with Celgene and Gilead, as well as any other arrangements with third parties we may enter into to perform sales, marketing and distribution services, our product revenues or the profitability of these product revenues are likely to be lower than if we were to market and sell any products that we develop ourselves. In addition, we may not be successful in entering into additional arrangements with third parties to sell and market our product candidates or doing so on terms that are favorable to us. We likely will have limited control over such third parties, and any of them may fail to devote the necessary resources and attention to sell and market our products effectively. If we do not establish sales and marketing capabilities successfully in collaboration with third parties, we may not be successful in commercializing our product candidates.

The availability and amount of reimbursement for our product candidates, if approved, and the manner in which government and private payors may reimburse for any potential Tarmogen products, are uncertain.

In both U.S. and foreign markets, sales of any Tarmogen products will depend in part on the availability of reimbursement from third-party payors such as government health administration authorities, private health insurers and other organizations. The future magnitude of our revenues and profitability may be affected by the continuing efforts of governmental and third-party payors to contain or reduce the costs of health care. We cannot predict the effect that private sector or governmental health care reforms may have on our business, and there can be no assurance that any such reforms will not have a material adverse effect on our business, financial condition and results of operations.

In addition, in both the United States and elsewhere, sales of prescription drugs are dependent in part on the availability of reimbursement to the consumer from third-party payors, such as government and private insurance plans. The ability to obtain reimbursement of our products from these parties is a critical factor in the commercial success for any of our products. We do not have any personnel with experience in the establishing reimbursement by government or private insurance plans, and we may not be able to effectively recruit such personnel in the future. Failure to obtain reimbursement could result in reduced or no sales of our products.

Third-party payors are increasingly challenging the price and cost-effectiveness of medical products and services. Significant uncertainty exists as to the reimbursement status of newly-approved health care products. There can be no assurance that our products will be considered cost-effective or that adequate third-party reimbursement will be available to enable us to maintain price levels sufficient to realize an appropriate return on our investment in product development. Legislation and regulations affecting the pricing of pharmaceuticals may change before any of our products are approved for marketing. Adoption of such legislation could further limit reimbursement for medical products and services.

Recently enacted and future legislation may increase the difficulty and cost for us to commercialize our product candidates and affect the prices we may obtain.

In the United States and some foreign jurisdictions, there have been a number of legislative and regulatory changes and proposed changes regarding the healthcare system that could restrict or regulate post-approval activities and affect our revenues from future sales of our products. Many foreign jurisdictions, the legislative landscape continues to evolve. There have been a number of enacted or proposed legislative and regulatory changes affecting the healthcare system and pharmaceutical industry that could, among other things, prevent or delay marketing approval of our product candidates, restrict or regulate post-approval activities and affect our ability to profitably sell any product candidate for which we obtain marketing approval.

In March 2010, President Obama signed into law the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, or, collectively, the ACA, a law intended to, among other things, broaden access to health insurance, reduce or constrain the growth of healthcare spending, enhance remedies against healthcare fraud and abuse, add new transparency requirements for healthcare and health insurance industries, impose new taxes and fees on pharmaceutical and medical device manufacturers and impose additional health policy reforms. Among other things, the ACA created a new approval pathway for biosimilars intended to encourage competition and lower prices, and it amended Medicare Part B reimbursement rules for

physician-administered biologic products by making the purchase of lower cost biosimilars more attractive to providers reimbursed by Medicare Part B. As the FDA approves biosimilars, it is possible that similar rules will be adopted by commercial managed care organizations. Substantial new provisions affecting compliance have also been enacted, which may affect our business practices with healthcare practitioners. Notably, a significant number of provisions are not yet, or have only recently become, effective.

Moreover, the Drug Quality and Security Act imposes new obligations on manufacturers of pharmaceutical products, among others, related to product tracking and tracing. Among the requirements of this legislation, manufacturers will be required to provide certain information regarding the drug products they produce to individuals and entities to which product ownership is transferred, label drug products with a product identifier, and keep certain records regarding the drug products. The transfer of information to subsequent product owners by manufacturers will eventually be required to be done electronically. Manufacturers will also be required to verify that purchasers of the manufacturers’ products are appropriately licensed. Further, under this legislation, manufacturers will have drug product investigation, quarantine, disposition, and FDA and trading partner notification responsibilities related to counterfeit, diverted, stolen, and intentionally adulterated products, as well as products that are the subject of fraudulent transactions or which are otherwise unfit for distribution such that they would be reasonably likely to result in serious health consequences or death. In the European Union, the Falsified Medicines Directive imposes similar requirements, which are expected to add materially to product costs.

We expect that the ACA, as well as other federal and state healthcare reform measures that have been and may be adopted in the future, may result in more rigorous coverage criteria and in additional downward pressure on the price that we receive for any approved product, and could seriously harm our future revenues. Any reduction in reimbursement from Medicare, Medicaid or other government programs may result in a similar reduction in payments from private payors. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability or commercialize our products.

Failure to attract and retain key personnel could impede our ability to develop our products and to obtain new collaborations or other sources of funding.

Because of the specialized scientific nature of our business and the unique properties of our Tarmogen platform, our success is highly dependent upon our ability to attract and retain qualified scientific and technical personnel, consultants and advisors. We are dependent on the principal members of our scientific and management staff, particularly Dr. Timothy C. Rodell. The loss of Dr. Rodell’s services might significantly delay or prevent the achievement of our research, development and business objectives. We currently maintain key-man life insurance on Dr. Rodell. However, we may not continue to maintain such insurance in the future or the proceeds of such insurance may not be adequate.

The reduction of our workforce in 2015, and any future workforce and expense reductions, may have an adverse impact on our internal programs and may divert management attention.

We have substantially reduced the number of our executive and non-executive officers within the last twelve months. Additionally, the restructuring of our operations in June 2015 included dismissal of a large number of our staff, some of whom had advanced or specialized skills. As a result, our headcount has decreased to four full time employees as of November 9, 2015. This workforce reduction was primarily implemented to preserve our capital resources and to manage our operating expenses. This workforce reduction may also limit our ability to complete our corporate objectives. We may also be required to implement further workforce and expense reductions in the future. Further workforce and expense reductions could result in reduced progress on our internal programs. In addition, employees, whether or not directly affected by a reduction, may seek future employment with our business partners or competitors. While our employees are required to sign a confidentiality agreement at the time of hire, the confidential nature of certain proprietary information may not be maintained in the course of any such future employment. In addition, the implementation of expense reduction programs may result in the diversion of efforts of our executive management team and other key employees, which could adversely affect our business.

We may expend our limited resources to pursue a particular product candidate or indication and fail to capitalize on product candidates or indications that may be more profitable or for which there is a greater likelihood of success.

Because we have limited financial and managerial resources, we focus on research programs and product candidates for the indications that we believe are the most scientifically and commercially promising. Our resource allocation decisions may cause us to fail to capitalize on viable scientific or commercial products or profitable market opportunities. In addition, we may spend valuable time and managerial and financial resources on research programs and product candidates for specific indications that ultimately do not yield any scientifically or commercially viable products. If we do not accurately evaluate the scientific and commercial potential or target market for a particular product candidate, we may relinquish valuable rights to that product candidate through collaboration,

licensing or other royalty arrangements in situations where it would have been more advantageous for us to retain sole rights to development and commercialization.

RISKS RELATING TO MANUFACTURING ACTIVITIES

We do not have the ability to manufacture our product candidates at commercial scale, and there can be no assurance that our product candidates can be manufactured in compliance with regulations at a cost or in quantities necessary to make them commercially viable.

During the restructuring of our operations we decommissioned our manufacturing facility and laid off all of our manufacturing staff. While we maintain the lease on the manufacturing facility, should we decide in the future to restart it, there can be no assurance we could rebuild and staff a new facility successfully. We have limited experience in commercial-scale manufacturing of Tarmogens. We may develop our manufacturing capacity in part by restarting and expanding our current facility or building additional facilities. This activity would require substantial additional funds and we would need to hire and train significant numbers of qualified employees to staff these facilities. We may not be able to restart or develop commercial-scale manufacturing facilities that are adequate to produce materials for additional later-stage clinical trials or commercial use. Since our product candidates are produced by a biological process, we may find that our recombinant yeast strains will not exhibit the same growth characteristics if we restart our facility or other sites, or do not result in a comparable product. All of our manufacturing of Tarmogen product candidates was performed in our Colorado facility. Since we have decommissioned our manufacturing facility, we cannot currently manufacture Tarmogens on our own.

We currently rely on CMOs for sterile fill and finish of our products, and these contractors currently fill our product candidates at a scale that is not adequate for commercial supply. Failure to find and maintain satisfactory commercial-scale fill and finish contractors could impair our ability to supply product for clinical and commercial needs. Additionally, we will likely outsource all of our bulk product manufacturing activities to a third party CMO. Failure of any of these contractors to maintain compliance with cGMPs and other regulatory and legal requirements could result in a clinical hold on our clinical trials or other government actions that would limit or eliminate clinical trial and commercial product supply. Under any agreement with a CMO, we would have less control over the timing and quality of manufacturing than if we were perform such manufacturing ourselves. A CMO would be manufacturing other pharmaceutical products in the same facilities as our Tarmogen product candidates, increasing the risk of cross product contamination. Further, there is no guarantee that any CMO will have adequate capacity for meeting all of our product needs, or be able to manufacture products for an adequate price. There is also no guarantee that any CMO will continue ongoing operations, causing potential delays in product supply, reduced revenues and other liabilities for us.

The equipment and facilities employed in the manufacture of pharmaceuticals are subject to stringent qualification requirements by regulatory agencies, including validation of equipment, systems and processes. We may be subject to lengthy delays and expense in conducting validation studies, if we can meet the requirements at all.

If we are unable to manufacture or contract for a sufficient supply of our product candidates on acceptable terms, or if we encounter delays or difficulties in our relationships with other manufacturers, our preclinical and clinical testing schedule would be delayed. This in turn would delay the submission of product candidates for regulatory approval and thereby delay the market introduction and subsequent sales of any products that receive regulatory approval, which would have a material adverse effect on our business, financial condition and results of operations. Furthermore, our contract manufacturers must supply all necessary documentation in support of our regulatory approval applications on a timely basis and must adhere to cGMP regulations enforced by the FDA and other regulatory bodies through their facilities inspection programs. If these facilities cannot pass a pre-approval plant inspection, the approval by the FDA or other regulatory bodies of the products will not be granted. If the FDA or a comparable foreign regulatory authority does not approve our facilities and processes for the manufacture of our product candidates or if they withdraw any such approval in the future, we may need to correct the issues or find alternative manufacturing facilities, which would significantly impact our ability to develop, obtain regulatory approval for or market our product candidates, if approved.

Our contract manufacturers are subject to significant regulation with respect to manufacturing of our products.

All entities involved in the preparation of a product candidate for clinical trials or commercial sale, including our CMOs used for filling and finishing of our bulk product, are subject to extensive regulation. Components of a finished product approved for commercial sale or used in clinical trials must be manufactured in accordance with cGMP. These regulations govern manufacturing processes and procedures, including record keeping, and the implementation and operation of quality systems to control and assure the quality of investigational products and products approved for sale. The facilities and quality systems of some or all of our third-party contractors must pass a pre-approval inspection for compliance with the applicable regulations as a condition of any regulatory approval of our product candidates. In addition, the regulatory authorities may, at any time, audit or inspect a manufacturing facility involved with the preparation of our product candidates or the associated quality systems for compliance with the regulations applicable to the activities being conducted. The regulatory authorities also may, at any time following approval of a product for sale,

audit our third-party contractors or raw material suppliers. If any such inspection or audit identifies a failure to comply with applicable regulations or if a violation of our product specifications or applicable regulations occurs independent of such an inspection or audit, we or the relevant regulatory authority may require remedial measures that may be costly and time-consuming for us or a third party to implement and that may include the temporary or permanent suspension of a clinical trial or commercial sales or the temporary or permanent closure of a facility. Our third-party contractors or raw material suppliers may refuse to implement remedial measures required by regulatory authorities. Any failure to comply with applicable manufacturing regulations or failure to implement required remedial measures imposed upon us or third parties with whom we contract could materially harm our business.

We rely on relationships with third-party CMOs, which limits our ability to control the availability of, and manufacturing costs for, our product candidates.

Problems with any of our CMOs’ or raw material suppliers’ facilities or processes, could prevent or delay the production of adequate supplies of finished Tarmogens. This could delay clinical trials or delay and reduce commercial sales and materially harm our business. Any prolonged delay or interruption in the operations of our collaborators’ facilities or CMOs’ facilities could result in cancellation of shipments, loss of components in the process of being manufactured or a shortfall in availability of a product candidate or products. A number of factors could cause interruptions, including:

the inability of a supplier to provide raw materials;

equipment malfunctions or failures at the facilities of our collaborators or suppliers;

high process failure rates;

damage to facilities due to natural or man-made disasters;

changes in regulatory requirements or standards that require modifications to our or our collaborators’ and suppliers’ manufacturing processes;

action by regulatory authorities or by us that results in the halting or slowdown of production of components or finished product at our facilities or the facilities of our collaborators or suppliers;

problems that delay or prevent manufacturing technology transfer to another facility, contract manufacturer or collaborator with subsequent delay or inability to start up a commercial facility;

a contract manufacturer or supplier going out of business, undergoing a capacity shortfall or otherwise failing to produce product as contractually required;

employee or contractor misconduct or negligence;

shipping delays, losses or interruptions; and

other similar factors.

Because manufacturing processes are complex and are subject to a lengthy regulatory approval process, alternative qualified production capacity and sufficiently trained or qualified personnel may not be available on a timely or cost-effective basis or at all. Difficulties or delays in our CMOs’ production of drug substances could delay our clinical trials, increase our costs, damage our reputation and cause us to lose revenue and market share if we are unable to timely meet market demand for any products that are approved for sale.

The manufacturing process for our Tarmogen product candidates has several components that are sourced from a single manufacturer. If we utilize an alternative manufacturer or alternative component, we may be required to demonstrate comparability of the drug product before releasing the product for clinical use and we may not be to find an alternative supplier. For example, the stoppers used to seal the vials of our products are made by a single supplier using a proprietary formula and process. Any change to the stopper would require us to carry out lengthy studies to verify that our product remains stable with the replacement stopper. The loss of any of our current suppliers could result in manufacturing delays for the component substitution, and we may need to accept changes in terms or price from our existing supplier in order to avoid such delays.

Further, if our CMOs are not in compliance with regulatory requirements at any stage, including post-marketing approval, we may be fined, forced to remove a product from the market and/or experience other adverse consequences, including delays, which could materially harm our business.

We use and generate hazardous materials in our business and must comply with environmental laws and regulations, which can be expensive.

Our research and development involves the controlled use of hazardous materials, chemicals, various active microorganisms and volatile organic compounds, and we may incur significant costs as a result of the need to comply with numerous laws and regulations. For example, as a pharmacologically-active material, any residual Tarmogen in process-waste streams must be disposed of as hazardous waste. We are subject to laws and regulations enforced by the FDA, the Drug Enforcement Agency, foreign health authorities and other regulatory requirements, including the Occupational Safety and Health Act, the Environmental Protection Act, the Toxic Substances Control Act, the Resource Conservation and Recovery Act, and other current and potential federal, state, local and foreign laws and regulations governing the use, manufacture, storage, handling and disposal of our products, materials used to develop and manufacture our product candidates, and resulting waste products. Although we believe that our safety procedures for handling and disposing of such materials, and for killing any unused microorganisms before disposing of them, comply with the standards prescribed by state and federal regulations, the risk of accidental contamination or injury from these materials cannot be completely eliminated. In the event of such an accident, we could be held liable for any damages that result and any such liability could exceed our resources.

We do not have a manufacturing site to manufacture our clinical product candidates.

We initially grow all yeast cells for our products internally using a complex process. During the recent restructuring we decommissioned our manufacturing facility and laid off all of our manufacturing staff. While we still maintain the lease on the manufacturing facility, should we decide in the future to restart it, there can be no assurance we could rebuild and staff a new facility successfully.

Consistent manufacture of our products relies on maintenance of a master yeast bank, or MYB, as an essential starting material for all production. We currently store our MYB in ultra-low temperature freezers at one location. We may discover storage stability problems that prevent use of the MYB. We may also suffer catastrophic events at the storage location that would destroy all available stocks of the MYB. Should we lose the MYB of any of our product candidates we would experience significant delays in producing, characterizing, and gaining regulatory approval to use a replacement MYB. We may not be able to replicate the original MYB with sufficient fidelity to assure regulatory authorities that we are able to produce a comparable product, which could require us to perform clinical trials to gain approval of a product candidate made with the replacement MYB. This could result in a lengthy period in which we are unable to contract to have our product candidates manufactured for clinical trials or, if any of our product candidates are approved, for sale.

Our MYB contains specialized equipment and utilizes complicated production processes developed over a number of years, which will be difficult, time-consuming and costly to replace. If we were to lose our MYB we may suffer losses that exceed the coverage available under our insurance policies or any losses may be excluded under our insurance policies. Certain events, such as natural disasters, fire, political disturbances, sabotage or business accidents, which could impact our current or future MYBs, could have a significant negative impact on our operations by disrupting our product development efforts.

RISKS RELATING TO REGULATION OF OUR INDUSTRY

The biopharmaceutical industry is subject to significant regulation and oversight in the United States, in addition to approval of products for sale and marketing.

In addition to FDA restrictions on marketing of biopharmaceutical products, several other types of state and federal laws have been applied to restrict certain marketing practices in the biopharmaceutical industry in recent years. These laws include anti-kickback statutes and false claims statutes.

The federal health care program anti-kickback statute prohibits, among other things, knowingly and willfully offering, paying, soliciting or receiving remuneration to induce or in return for purchasing, leasing, ordering or arranging for the purchase, lease or order of any health care item or service reimbursable under Medicare, Medicaid or other federally financed healthcare programs. This statute has been interpreted to apply to arrangements between pharmaceutical manufacturers on the one hand and prescribers, purchasers and formulary managers on the other. Although there are a number of statutory exemptions and regulatory safe harbors protecting certain common activities from prosecution, the exemptions and safe harbors are drawn narrowly, and practices that involve remuneration intended to induce prescribing, purchases or recommendations may be subject to scrutiny if they do not qualify for an exemption or safe harbor. Our practices may not in all cases meet all of the criteria for safe harbor protection from anti-kickback liability.

Federal false claims laws prohibit any person from knowingly presenting, or causing to be presented, a false claim for payment to the federal government, or knowingly making, or causing to be made, a false statement to get a false claim paid. Several pharmaceutical and other health care 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 marketing of the product for unapproved, and thus non-reimbursable, uses. The majority of states also have statutes or regulations similar to the federal anti-kickback law and false claims laws, which apply to items and services reimbursed under Medicaid and other state programs, or, in several states, apply regardless of the payor. Sanctions under these federal and state laws may include civil monetary penalties, exclusion of a manufacturer’s products from reimbursement under government programs, criminal fines and imprisonment.

Because of the breadth of these laws and the narrowness of the safe harbors, it is possible that some of our business activities could be subject to challenge under one or more of these laws, which could have a material adverse effect on our business, financial condition and results of operations.

We may be subject, directly or indirectly, to federal and state healthcare fraud and abuse laws and health information privacy and security laws. If we are unable to comply, or have not fully complied, with such laws, we could face substantial penalties.

If we obtain FDA approval for any of our product candidates and begin commercializing those products in the United States, our operations may be directly, or indirectly through our customers, subject to various federal and state fraud and abuse laws, including, without limitation, the federal anti-kickback statute. These laws may impact, among other things, our proposed sales, marketing and education programs. In addition, we may be subject to patient privacy regulation by both the federal government and the states in which we conduct our business. The laws that may affect our ability to operate include:

the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created new federal criminal statutes that prohibit executing a scheme to defraud any healthcare benefit program and making false statements relating to healthcare matters;

HIPAA, as amended by the Health Information Technology and Clinical Health Act and its implementing regulations, which impose certain requirements relating to the privacy, security and transmission of individually identifiable health information; and

state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers, and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.

If our operations are found to be in violation of any of the laws described above or any other governmental regulations that apply to us, we may be subject to penalties, including civil and criminal penalties, damages, fines 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.

Our employees may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, which could have a material adverse effect on our business.

We are exposed to the risk of employee fraud or other misconduct. Misconduct by employees could include intentional failures to comply with FDA regulations, provide accurate information to the FDA, comply with manufacturing standards we have established, comply with federal and state health-care fraud and abuse laws and regulations, report financial information or data accurately or disclose unauthorized activities to us. In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. Employee misconduct could also involve the improper use of information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to our reputation. It is not always possible to identify and deter employee misconduct, and the precautions we take to detect and prevent misconduct may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business and results of operations, including the imposition of significant fines or other sanctions.

RISKS RELATING TO COMPETITIVE FACTORS

We compete in an industry characterized by extensive research and development efforts and rapid technological progress. New discoveries or commercial developments by our competitors could render our potential products obsolete or non-competitive.

New developments occur and are expected to continue to occur at a rapid pace in our industry, and there can be no assurance that discoveries or commercial developments by our competitors will not render some or all of our potential products obsolete or non-competitive, which could have a material adverse effect on our business, financial condition and results of operations.

We expect to compete with fully integrated and well-established pharmaceutical and biotechnology companies in the near- and long-term. These companies have substantially greater financial, research and development, manufacturing and marketing experience and resources than we do and represent substantial long-term competition for us. Such companies may succeed in discovering and developing pharmaceutical products more rapidly than we do or pharmaceutical products that are safer, more effective or less costly than any that we may develop. Smaller companies may also prove to be significant competitors, particularly through collaborative arrangements with large pharmaceutical and established biotechnology companies. Academic institutions, governmental agencies and other public and private research organizations also conduct clinical trials, seek patent protection and establish collaborative arrangements for the development of product candidates.

We expect competition among products will be based on product efficacy and safety, the timing and scope of regulatory approvals, availability of supply, marketing and sales capabilities, reimbursement coverage, price and patent position. There can be no assurance that our competitors will not develop safer and more effective products, commercialize products earlier or more effectively than we do, or obtain patent protection or intellectual property rights that limit our ability to commercialize our products.

There can be no assurance that our issued patents or pending patent applications, if issued, will not be challenged, invalidated or circumvented or that the rights granted thereunder will provide us with proprietary protection or a competitive advantage.

Our competitors may develop and market products that are less expensive, more effective, safer or reach the market sooner than our product candidates, which may diminish or eliminate the commercial success of any products we may commercialize.

The biopharmaceutical industry is highly competitive. There are many public and private biopharmaceutical companies, public and private universities and research organizations actively engaged in the discovery and research and development of products for cancer and infectious disease. Given the significant unmet patient need for new therapies, oncology is an area of focus for large and small companies as well as research institutions. As a result, there are and will likely continue to be extensive research and substantial financial resources invested in the discovery and development of new oncology products. In addition, there are a number of multinational pharmaceutical companies and large biotechnology companies currently marketing or pursuing the development of products or product candidates targeting the same cancer indications as our product candidates, and several large public biopharmaceutical companies have approved or are developing cancer immunotherapy products.

There are several immuno-oncology products approved for use by the FDA. The first to be FDA-approved was Dendreon Corporation’s sipuleucel-T, an active cellular immunotherapy for the treatment of asymptomatic or minimally symptomatic metastatic castrate resistant hormone refractory prostate cancer. In addition, Bristol-Myers Squibb Company has two immunomodulatory products, ipilimumab and nivolumab that are FDA-approved for the treatment of certain melanomas. Nivolumab was also approved for the treatment of advanced squamous non-small cell lung cancer. Merck also has an immunomodulatory drug, pembrolizumab, which has been FDA-approved for the treatment of certain melanomas. Additionally, several public and private biopharmaceutical companies have cancer immunotherapy product candidates in the late stage of development, including Dendreon Corporation, Bristol-Myers Squibb Company, GlaxoSmithKline plc, Merck & Co., Inc., NewLink Genetics Corporation, Juno Therapeutics, Kite Pharma, bluebird bio, Bellicium Pharmaceuticals, Merck KGaA and Sanofi. Further, both large public and smaller private biopharmaceutical companies have competing immunotherapy programs for the treatment of chronic infection include Gilead, LG LifeSciences, Arrowhead Research Corporation, Replicor, Heptara/Myr GmbH, Novira, Isis, GlaxoSmithKline, Romark Laboratories, Tetralogic, Dynavax Technologies Corporation, AiCuris, Agenix, Tekmira, Transgene S.A., Alnylam, Assembly Biosciences and Emergent BioSolutions Inc.

There are several marketed products indicated for pancreas cancer, including Astellas Pharma Inc.’s erlotinib, Celgene Corporation’s protein bound paclitaxel protein-bound particles for injectable suspension (albumin-bound), Teva Pharmaceutical Industries Limited’s streptozocin, and gemcitabine, fluorouracil, or 5-FU, and mitomycin that are marketed by several generic pharmaceutical firms. In addition, there are multiple companies or institutions conducting active clinical trials of immunotherapy products in pancreas cancer including Bristol-Myers Squibb, Merck & Co., Bavarian Nordic, NewLink Genetics Corporation, Aduro BioTech Inc., Advantagene, Inc. AlphaVax, Inc., Duke University, Fukushima Medical University, NCI, Providence Health & Services, University of Pennsylvania, and Sidney Kimmel Comprehensive Cancer Center.

There are numerous marketed therapeutics indicated for NSCLC, including Roche Holding AG’s bevacizumab, Eli Lilly’s pemetrexed, Astellas Pharma’s erlotinib, AstraZeneca PLC’s gefitinib, Bristol-Myers Squibb’s nivolumab, as well as generically available gemcitabine, platinum-based chemotherapeutics (cisplatin, oxaliplatin and carboplatin) and mitotic inhibitors (paclitaxel and vinorelbine), which are marketed by several generic pharmaceutical firms. In addition, there are multiple companies or institutions with active clinical trials of immunotherapy products in late stage lung cancer, including Merck & Co., Bioven Sdn., Heat Biologics, New Link Genetics, NIH/NCI, Kael-GemVax Co., Lee Moffitt Cancer Center, Oslo University, University of Pittsburgh, Recombio SL, Shiga University, Transgene SA, UbiVac, and Vaxn Biotech.

There are numerous marketed therapeutics indicated for colorectal cancer, including Roche Holding AG’s bevacizumab, Bristol Myers-Squibb’s cetuximab, Amgen’s panitumumab, as well as irinotecan, oxaliplatin, leucovorin and 5-FU, which are marketed by several generic pharmaceutical firms. In addition, there are multiple companies or institutions with active clinical trials of immunotherapy products in colorectal cancer including Bristol-Myers Squibb, Merck & Co., Biothera, AlphaVax Inc., Duke University, Immunovative Therapies Ltd., University of Michigan Cancer Center, Instituto Cientifico y Tecnological de Navara, NCI, Radboud University, Ohio State University Comprehensive Cancer Center and Stanford University.

AstraZeneca’s vandetanib and Exelixis’ cabozantinib are FDA approved for late-stage, or metastatic, MTC in adult patients who are ineligible for resection. Further, there are several companies or institutions with clinical trials of immunotherapy products generally targeting carcinoembryonic antigen, or CEA, including Bavarian Nordic, Guangdong Provincial Hospital of Traditional Chinese Medicine, Radboud University and NCI.

There are several marketed therapeutics indicated for the treatment of chronic HBV infection, including Roche Holding AG’s pegylated interferon 2a, Gilead’s tenofovir and adefovir, Bristol Myers-Squibb’s entecavir, Novartis’ telbivudine, and lamivudine, which is marketed by several generic pharmaceutical firms. In addition, there are several companies or institutions with clinical trials of competing immunotherapy products for the treatment of chronic HBV infection, including but not limited to Gilead, LG LifeSciences, Arrowhead Research Corporation, Replicor, Heptara/Myr GmbH, Novira, Isis, GlaxoSmithKline, Romark Laboratories, Tetralogic, Dynavax Technologies Corporation, AiCuris, Agenix, Tekmira, Transgene S.A., Alnylam, Assembly Biosciences and Emergent BioSolutions.

Many of our competitors, either alone or with their strategic collaborators, have substantially greater financial, technical and human resources than we do and significantly greater experience in the discovery and development of drugs, obtaining FDA and other regulatory approvals, and the commercialization of those products. Accordingly, our competitors may be more successful in obtaining approval for drugs and achieving widespread market acceptance. Our competitors’ drugs may be more effective, or more effectively marketed and sold, than any drug we may commercialize and may render our product candidates obsolete or non-competitive before we can recover the significant expenses of developing and commercializing any of our product candidates. We anticipate that we will face intense and increasing competition as new drugs enter the market and advanced technologies become available.

There are many different approaches to using immunotherapies to treat cancer, including anti-idiotype, whole cell, DNA, peptide/antigen, viral, tumor lysate, immune check-point inhibitors, shed antigens, and modified dendritic cells. Cancer immunotherapies are also distinguished by whether or not they are derived from autologous or allogeneic sources. Each of the various approaches to cancer immunotherapy has potential advantages and disadvantages based on factors such as its immunostimulatory mechanisms, formulation characteristics and manufacturing requirements.

We also compete with other clinical-stage companies and institutions for clinical trial participants, which could reduce our ability to recruit participants for our clinical trials. Delay in recruiting clinical trial participants could adversely affect our ability to bring a product to market prior to our competitors. Further, research and discoveries by others may result in breakthroughs that render our product candidates obsolete even before they begin to generate any revenue.

In addition, our competitors may obtain patent protection or FDA approval and commercialize products more rapidly than we do, which may impact future sales of any of our product candidates that receive marketing approval. If the FDA approves the commercial sale of any of our product candidates, we will also be competing with respect to marketing capabilities and manufacturing efficiency, areas in which we have limited or no experience. We expect competition among products will be based on product efficacy and safety, the timing and scope of regulatory approvals, availability of supply, marketing and sales capabilities, product price, reimbursement coverage by government and private third-party payors, and patent position. Our profitability and financial position will suffer if our products receive regulatory approval, but cannot compete effectively in the marketplace.

If any of our product candidates are approved and commercialized, we may face competition from biosimilars. The route to market for biosimilars was established with the passage of the ACA in March 2010, providing 12 years of marketing exclusivity for reference products and an additional six months of exclusivity if pediatric studies are conducted. In Europe, the European Medicines Agency has issued guidelines for approving products through an abbreviated pathway, and biosimilars have been approved in Europe.

If a biosimilar version of one of our potential products were approved in the United States or Europe, it could have a negative effect on sales and gross profits of the potential product and our financial condition.

Even if we achieve market acceptance for our products, we may experience downward pricing pressure on the price of our drugs because of generic and biosimilar competition and social pressure to lower the cost of drugs.

Several of the FDA approved products for HBV face patent expiration in the next several years. As a result, generic versions and biosimilars of these drugs and biologicals may become available. We expect to face competition from these products, including price-based competition. Pressure from government and private reimbursement groups, plus patient awareness and other social activist groups to reduce drug prices may also put downward pressure on the prices of drugs, including our product candidates, if they are commercialized. Also, if a biosimilar to any of our product candidates is approved by regulatory agencies, there will be significant pricing pressure on our products, causing us or our collaborators to reduce the sales price of our products.

Our product candidates may not be accepted in the marketplace; therefore, we may not be able to generate significant revenue, if any.

Even if our Tarmogen product candidates are approved for sale, physicians and the medical community may not ultimately use them or may use them only in applications more restricted than we expect. Our product candidates, if successfully developed, will compete with a number of traditional products and immunotherapies manufactured and marketed by major pharmaceutical and other biotechnology companies. Our product candidates will also compete with new products currently under development by such companies and others. Physicians will prescribe a product only if they determine, based on experience, clinical data, side effect profiles, reimbursement for their patients and other factors, that it is beneficial as compared to other products currently in use. Many other factors influence the adoption of new products, including marketing and distribution restrictions, course of treatment, adverse publicity, product pricing, the views of thought leaders in the medical community and reimbursement by government and private third-party payors.

For our products that are developed in combination with other therapies, changes in standard of care or use patterns could make those combinations obsolete. For example, we are developing GI-4000 for pancreas cancer in combination with gemcitabine. If GI-4000 is approved for marketing in combination with gemcitabine and use of another therapy becomes more prevalent than gemcitabine, sales of the combination of GI-4000 with gemcitabine could be negatively impacted and our financial results and the value of our securities would be adversely affected.

RISKS RELATING TO OUR ARRANGEMENTS WITH THIRD PARTIES

We rely on third parties to conduct our non-clinical studies and some of our clinical trials. If these third parties do not perform as contractually required or expected, we may not be able to obtain regulatory approval for our product candidates, or we may be delayed in doing so.

We often rely on third parties, such as CROs, medical institutions, academic institutions, clinical investigators and contract laboratories, to conduct our non-clinical studies and clinical trials. For example, the NCI is conducting clinical trials for GI-6207 and GI-6301. We are responsible for confirming that our preclinical studies are conducted in accordance with applicable regulations and that each of our clinical trials is conducted in accordance with its general investigational plan and protocol. The FDA requires us to comply with Good Laboratory Practice for conducting and recording the results of our preclinical studies and Good Clinical Practices, or GCP, for conducting, monitoring, recording and reporting the results of clinical trials, to ensure that data and reported results are accurate and that the clinical trial participants are adequately protected. Our reliance on third parties does not relieve us of these responsibilities. If the third parties conducting our clinical trials do not perform their contractual duties or obligations, do not meet expected deadlines, fail to comply with GCP, do not adhere to our clinical trial protocols or otherwise fail to generate reliable clinical data, we may need to enter into new arrangements with alternative third parties and our clinical trials may be more costly than expected or budgeted, extended, delayed or terminated or may need to be repeated, and we may not be able to obtain regulatory approval for or commercialize the product candidate being tested in such trials.

We may explore strategic collaborations that may never materialize or may fail.

We may, in the future, periodically explore a variety of possible strategic collaborations in an effort to gain access to additional product candidates or resources. At the current time, we cannot predict what form such a strategic collaboration might take. We are likely to face significant competition in seeking appropriate strategic collaborators, and these strategic collaborations can be

complicated and time-consuming to negotiate and document. We may not be able to negotiate strategic collaborations on acceptable terms, or at all. We are unable to predict when, if ever, we will enter into any additional strategic collaborations because of the numerous risks and uncertainties associated with establishing strategic collaborations.

RISKS RELATING TO PROTECTING OUR INTELLECTUAL PROPERTY

If we are unable to protect our proprietary rights or to defend against infringement claims, we may not be able to compete effectively or operate profitably.

Our success will depend, in part, on our ability to obtain patents, operate without infringing the proprietary rights of others and maintain trade secrets, both in the United States and other countries. Patent matters in the biotechnology and pharmaceutical industries can be highly uncertain and involve complex legal and factual questions. Accordingly, the validity, breadth and enforceability of our patents and the existence of potentially blocking patent rights of others cannot be predicted, either in the United States or in other countries.

There can be no assurance that we will discover or develop patentable products or processes or that patents will issue from any of the currently pending patent applications or that claims granted on issued patents will be sufficient to protect our technology or adequately cover the actual products we may actually sell. Potential competitors or other researchers in the field may have filed patent applications, been issued patents, published articles or otherwise created prior art that could restrict or block our efforts to obtain additional patents. There also can be no assurance that our issued patents or pending patent applications, if issued, will not be challenged, invalidated, rendered unenforceable or circumvented or that the rights granted hereunder will provide us with proprietary protection or competitive advantages. Our patent rights also depend on our compliance with technology and patent licenses upon which our patent rights are based and upon the validity of assignments of patent rights from consultants and other inventors that were, or are, not employed by us.

In addition, competitors may manufacture and sell our potential products in those foreign countries where we have not filed for patent protection or where patent protection may be unavailable, not obtainable or ultimately not enforceable. In addition, even where patent protection is obtained, third-party competitors may challenge our patent claims in the various patent offices, for example via opposition in the European Patent Office or reexamination, inter partes review, post-grant review or interference proceedings in the United States Patent and Trademark Office, or USPTO. The ability of such competitors to sell such products in the United States or in foreign countries where we have obtained patents is usually governed by the patent laws of the countries in which the product is sold.

We will incur significant ongoing expenses in maintaining our patent portfolio. Should we lack the funds to maintain our patent portfolio or to enforce our rights against infringers, we could be adversely impacted. Even if claims of infringement are without merit, any such action could divert the time and attention of management and impair our ability to access additional capital and/or cost us significant funds to defend.

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

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

Others may be able to make compounds that are similar to our product candidates but that are not covered by the claims of the patents that we own or have exclusively licensed.

We or our licensors or strategic collaborators might not have been the first to make the inventions covered by the issued patents or pending patent applications that we own or have exclusively licensed.

We or our licensors or strategic collaborators might not have been the first to file patent applications covering certain of our inventions.

Others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights.

It is possible that our pending patent applications will not lead to issued patents.

Issued patents that we own or have exclusively licensed may not provide us with any competitive advantages, or may be held invalid or unenforceable, as a result of legal challenges by our competitors.

Our competitors might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets.

We may not develop additional proprietary technologies that are patentable.

The patents of others may have an adverse effect on our business.

Should any of these events occur, they could significantly harm our business, results of operations and prospects.

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

On September 16, 2011, the Leahy-Smith America Invents Act, or the Leahy-Smith Act, was signed into law. The Leahy-Smith Act includes a number of significant changes to U.S. patent law. These include provisions that affect the way patent applications will be prosecuted and may also affect patent litigation. Many of the substantive changes to patent law associated with the Leahy-Smith Act have only become effective within the last three years. Accordingly, it is yet not clear what, if any, impact the Leahy-Smith Act will have on the operation of our business, our current and pending patent portfolio and future intellectual property strategy. 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.

We may be subject to litigation with respect to the ownership and use of intellectual property that will be costly to defend or pursue and uncertain in its outcome.

Our success also will depend, in part, on our refraining from infringing patents or otherwise violating intellectual property owned or controlled by others. Pharmaceutical companies, biotechnology companies, universities, research institutions and others may have filed patent applications or have received, or may obtain, issued patents in the United States or elsewhere relating to aspects of our technology. It is uncertain whether the issuance of any third-party patents will require us to alter our products or processes, obtain licenses, or cease certain activities. Some third-party applications or patents may conflict with our issued patents or pending applications. Any such conflict could result in a significant reduction of the scope or value of our issued or licensed patents.

In addition, if patents issued to other companies contain blocking, dominating or conflicting claims and such claims are ultimately determined to be valid, we may be required to obtain licenses to these patents or to develop or obtain alternative non-infringing technology and cease practicing those activities, including potentially selling any products deemed to infringe those patents. If any licenses are required, there can be no assurance that we will be able to obtain any such licenses on commercially favorable terms, if at all, and if these licenses are not obtained, we might be prevented from pursuing the development and commercialization of certain of our potential products. Our failure to obtain a license to any technology that we may require to commercialize our products on favorable terms may have a material adverse impact on our business, financial condition and results of operations.

Litigation, which could result in substantial costs to us (even if determined in our favor), may also be necessary to enforce any patents issued or licensed to us or to determine the scope and validity of the proprietary rights of others. The FDA has published draft, and in some areas, final guidance documents for implementation of the Biologics Price Competition and Innovation Act, or the BPCIA, under the ACA, related to the development of follow-on biologics (biosimilars), although detailed guidance for patent litigation procedures under this act has not yet been provided.

If another company files for approval to market a competing follow-on biologic, and/or if such approval is given to such a company, we may be required to promptly initiate patent litigation to prevent the marketing of such biosimilar version of our product prior to the normal expiration of the patent. There can be no assurance that our issued or licensed patents would be held valid by a court of competent jurisdiction or that any follow-on biologic would be found to infringe our patents.

In addition, if our competitors file or have filed patent applications in the United States that claim technology also claimed by us, we may have to participate in interference proceedings to determine priority of invention. These proceedings, if initiated by the USPTO, could result in substantial costs to us, even if the eventual outcome is favorable to us. Such proceedings can be lengthy, are costly to defend and involve complex questions of law and fact, the outcomes of which are difficult to predict. Moreover, we may have to participate in post-grant review proceedings or third-party ex parte reexamination or inter partes review proceedings under the USPTO. An adverse outcome with respect to a third-party claim or in an interference proceeding could subject us to significant liabilities, require us to license disputed rights from third parties, or require us to cease using such technology, any of which could have a material adverse effect on our business, financial condition and results of operations.

We also rely on trade secrets to protect technology, especially where patent protection is not believed to be appropriate or obtainable or where patents have not issued. For example, the process for manufacturing Tarmogens involves a number of trade secret steps, processes, and conditions. We attempt to protect these proprietary technology and processes, in part, with confidentiality agreements and assignment of invention agreements with our employees and confidentiality agreements with our consultants and certain contractors. There can be no assurance that these agreements will not be breached, that we would have adequate remedies for any breach, or that our trade secrets will not otherwise become known or be independently discovered by competitors. We may fail in certain circumstances to obtain the necessary confidentiality agreements, or their scope or term may not be sufficiently broad to protect our interests.

If our trade secrets or other intellectual property become known to our competitors, it could result in a material adverse effect on our business, financial condition and results of operations. To the extent that we or our consultants or research collaborators use intellectual property owned by others in work for us, disputes may also arise as to the rights to related or resulting know-how and inventions.

The patent protection and patent prosecution for some of our product candidates is dependent or may be dependent in the future on third parties.

While we normally seek and gain the right to fully prosecute the patents relating to our product candidates, there may be times when platform technology patents or product-specific patents that relate to our product candidates are controlled by our licensors. In addition, our licensors and/or licensees may have back-up rights to prosecute patent applications in the event that we do not do so or choose not to do so, and our licensees may have the right to assume patent prosecution rights after certain milestones are reached. If any of our licensing collaborators fails to appropriately prosecute and maintain patent protection for patents covering any of our product candidates, our ability to develop and commercialize those product candidates may be adversely affected and we may not be able to prevent competitors from making, using and selling competing products.

RISKS RELATING TO OUR EXPOSURE TO LITIGATION

We are exposed to potential product liability or similar claims, and insurance against these claims may not be available to us at a reasonable rate in the future.

Our business exposes us to potential liability risks that are inherent in the testing, manufacturing and marketing of human therapeutic products. Clinical trials involve the testing of product candidates on human subjects or volunteers under a research plan, and carry a risk of liability for personal injury or death to patients due to unforeseen adverse side effects, improper administration of the product candidate, or other factors. Many of these patients are already seriously ill and are therefore particularly vulnerable to further illness or death.

We currently carry clinical trial liability insurance in the amount of $5 million in the aggregate, but there can be no assurance that we will be able to maintain such insurance or that the amount of such insurance will be adequate to cover claims. We could be materially and adversely affected if we were required to pay damages or incur defense costs in connection with a claim outside the scope of indemnity or insurance coverage, if the indemnity is not performed or enforced in accordance with its terms, or if our liability exceeds the amount of applicable insurance. In addition, there can be no assurance that insurance will continue to be available on terms acceptable to us, if at all, or that if obtained, the insurance coverage will be sufficient to cover any potential claims or liabilities. Similar risks would exist upon the commercialization or marketing of any products by us or our collaborators.

Regardless of their merit or eventual outcome, product liability claims may result in:

decreased demand for our product;

injury to our reputation and significant negative media attention;

withdrawal of clinical trial volunteers;

costs of litigation;

distraction of management; and

substantial monetary awards to plaintiffs.

Should any of these events occur, it could have a material adverse effect on our business and financial condition.

Claims for indemnification by our directors and officers may reduce our available funds to satisfy successful third-party claims against us and may reduce the amount of money available to the Company.

Our amended and restated certificate of incorporation provides that we will indemnify our directors to the fullest extent permitted by Delaware law.

In addition, as permitted by Section 145 of the Delaware General Corporation Law, our amended and restated bylaws and the indemnification agreements that we have entered into with our directors and executive officers provide that:

We will indemnify our directors and executive officers for serving us in those capacities or for serving other business enterprises at our request, to the fullest extent permitted by Delaware law. Delaware law provides that a corporation may indemnify such person if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal proceeding, had no reasonable cause to believe such person’s conduct was unlawful.

We may, in our discretion, indemnify other officers, employees and agents in those circumstances where indemnification is permitted by applicable law.

We are required to advance expenses, as incurred, to our directors and executive officers in connection with defending a proceeding, except that such directors or executive officers shall undertake to repay such advances if it is ultimately determined that such person is not entitled to indemnification.

We will not be obligated pursuant to our amended and restated bylaws to indemnify any director or executive officer in connection with any proceeding (or part thereof) initiated by such person unless (i) such indemnification is expressly required to be made by law, (ii) the proceeding was authorized by our Board of Directors, (iii) such indemnification is provided by us, in our sole discretion, pursuant to the powers vested in the corporation under applicable law or (iv) such indemnification is required to be made pursuant to our amended and restated bylaws.

The rights conferred in our amended and restated bylaws are not exclusive, and we are authorized to enter into indemnification agreements with our directors, officers, employees and agents and to obtain insurance to indemnify such persons.

We may not retroactively amend our amended and restated bylaw provisions to reduce our indemnification obligations to directors, officers, employees and agents.

As a result, if we are required to indemnify one or more of our directors or executive officers, it may reduce our available funds to satisfy successful third-party claims against us, may reduce the amount of money available to us and may have a material adverse effect on our business and financial condition.

RISKS RELATING TO OWNING OUR COMMON STOCK

The market price of our common stock has been and may continue to be highly volatile.

Our common stock has experienced wide fluctuations, and may continue to experience wide fluctuations, in price in response to various factors, many of which are beyond our control, including those described elsewhere in this “Risk Factors” section and the following:

new products, product candidates or new uses for existing products introduced or announced by our competitors or our collaborators, and the timing of these introductions or announcements;

actual or anticipated results from and any delays in our clinical trials as well as results of regulatory reviews relating to the approval of our product candidates;

variations in the level of expenses related to any of our product candidates or clinical development programs, including relating to the timing of invoices from, and other billing practices of, our CROs and clinical trial sites;

disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our technologies;

announcements by us or our competitors of significant acquisitions, strategic collaborations, joint ventures and capital commitments;

additions or departures of key scientific or management personnel;

changes in the status of our relationships with Celgene, Gilead, NCI and other collaborators;

conditions or trends in the biotechnology and biopharmaceutical industries;

actual or anticipated changes in earnings estimates, development timelines or recommendations by securities analysts;

actual and anticipated fluctuations in our quarterly operating results;

financial projections we may provide to the public, any changes in these projections or our failure to meet these projections;

deviations from securities analysts’ estimates or the impact of other analyst ratings downgrades by any securities analysts who follow our common stock;

the results of our efforts to discover, develop, acquire or in-license additional product candidates or products;

other events or factors, including those resulting from war, incidents of terrorism, natural disasters or responses to these events;

changes in accounting principles or accounting judgments;

discussion of us or our stock price by the financial and scientific press and in online investor communities;

general economic and market conditions and other factors that may be unrelated to our operating performance or the operating performance of our competitors, including changes in market valuations of similar companies; and

sales of common stock by us or our stockholders in the future, as well as the overall trading volume of our common stock.

In addition, the stock market in general and the market for biotechnology and biopharmaceutical companies in particular have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies. These broad market and industry factors may seriously harm the market price of our common stock, regardless of our operating performance. In the past, following periods of volatility in the market, securities class action litigation has often been instituted against companies. Such litigation, if instituted against us, could result in substantial costs and diversion of management’s attention and resources, which could materially and adversely affect our business and financial condition.

We do not expect to pay any cash dividends for the foreseeable future and our stockholders may never obtain a return on their investment.

You should not rely on an investment in our securities to provide dividend income. We do not anticipate we will pay any cash dividends to holders of our securities in the foreseeable future. Instead, we plan to retain any earnings to maintain and expand our existing operations. In addition, any future debt financing arrangement may contain terms prohibiting or limiting the amount of dividends that may be declared or paid on our securities. Accordingly, investors must rely on sales of their securities after price appreciation, which may never occur, as the only way to realize any return on their investment. As a result, investors seeking cash dividends should not purchase our securities.

Our security holders may be diluted by future issuances of securities by us.

We may issue additional securities or security units convertible into or exchangeable for our securities. The issuance of additional securities or security units convertible into or exchangeable for our securities would dilute the ownership of us by existing investors and could adversely affect the value of our securities. In addition, we may issue securities in the future with rights senior to the rights of our common stock.

The requirements of being a public company may strain our resources, divert management’s attention and affect our ability to attract and retain executive management and qualified board members.

As a public company, we are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act, the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of The NASDAQ Stock Market and other applicable securities rules and regulations. Compliance with these rules and regulations will increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly and increase demand on our systems and resources, particularly after we are no longer an emerging growth company. The Exchange Act requires, among other things, that we file annual, quarterly and current reports with respect to our business and operating results. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. In order to maintain and, if required, improve our disclosure controls and procedures and internal control over financial reporting to meet this standard, significant resources and management oversight may be required. As a result, management’s attention may be diverted from other business concerns, which could adversely affect our business and operating results. We will need to hire additional employees in the future or engage outside consultants to help us comply with these requirements, which will increase our costs and expenses. For example, during the year ended December 31, 2014, we identified a material weakness in our internal controls due to the fact that we only have one employee in our accounting and finance

department. As a result, we were unable to allow for proper segregation of duties and reviews of transactions prior to being entered into our books and records.

In addition, changing laws, regulations and standards relating to corporate governance and public disclosure create uncertainty for public companies, increase legal and financial compliance costs and make some activities more time-consuming. These laws, regulations and standards are 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. We intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from our business activities to compliance activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies, regulatory authorities may initiate legal proceedings against us and our business may be adversely affected.

Being a public company and the associated public company rules and regulations make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These factors could also make it more difficult for us to attract and retain qualified members of our board of directors, particularly to serve on our audit committee and compensation committee, and qualified executive officers.

As a result of disclosure of information in filings required of a public company, our business and financial condition has become more visible, which we believe may result in threatened or actual litigation. If such claims are successful, our business and operating results would be adversely affected, and even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and adversely affect our business and operating results.

As a result of being a public company, we are obligated to develop and maintain proper and effective internal control over financial reporting. We may not complete our analysis of our internal control over financial reporting in a timely manner, or these internal controls may not be determined to be effective, which may adversely affect investor confidence in our company and, as a result, the value of our common stock.

We will be required pursuant to Section 404 of the Sarbanes-Oxley Act to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting for the fiscal year ended December 31, 2015. This assessment will need to include disclosure of any material weaknesses identified by our management in our internal control over financial reporting. We will also be required to disclose changes made in our internal control and procedures on a quarterly basis. Eventually, after we are no longer an emerging growth company, we may be required to obtain a statement that our independent registered public accounting firm has issued an opinion on our internal control over financial reporting.

We are in the very early stages of the costly and challenging process of compiling the system and processing documentation necessary to perform the evaluation needed to comply with Section 404. We may not be able to complete our evaluation, testing and any required remediation in a timely fashion. For example, during the year ended December 31, 2014, we identified a material weakness in our internal controls due to the fact that we only have one employee in our accounting and finance department. As a result, we were unable to allow for proper segregation of duties and reviews of transactions prior to being entered into our books and records. During the evaluation and testing process, if we identify one or more material weaknesses in our internal control over financial reporting, we will be unable to assert that our internal controls are effective.

If we are unable to assert that our internal control over financial reporting is effective, or, if when required, our independent registered public accounting firm is unable to express an opinion on the effectiveness of our internal controls, we could lose investor confidence in the accuracy and completeness of our financial reports, which would cause the price of our common stock to decline, and we may be subject to investigation or sanctions by the SEC.

As an emerging growth company, we are subject to reduced reporting obligations and eligible for various exemptions from public reporting obligations which may reduce demand for our common stock.

For as long as we remain an emerging growth company as defined in the Jumpstart our Business Startups Act of 2012, or the JOBS Act, we intend to take advantage of certain exemptions from various reporting requirements, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our public filings, periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We intend to take advantage of these reporting exemptions until we are no longer an emerging growth company.

We will remain an emerging growth company for up to five years, although if the market value of our common stock that is held by non-affiliates exceeds $700 million as of any date before that time, we would cease to be an emerging growth company as of the following December 31 or if our annual gross revenues equal or exceed $1 billion, we would cease to be an emerging growth company on the last day of the year in which that occurs. Investors may find our common stock less attractive because we may rely on the exemptions from certain reporting standards as an emerging growth company. If some investors find our common stock less attractive, there may be a less active trading market for our common stock, and our stock price may be more volatile or decline.

New accounting pronouncements may impact our reported results of operations and financial position.

The JOBS Act provides that an emerging growth company can take advantage of an extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. However, we chose to opt out of such extended transition period, and as a result, we comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable. U.S. generally accepted accounting principles, or GAAP, and related implementation guidelines and interpretations can be highly complex and involve subjective judgments. Changes in these rules or their interpretation, the adoption of new pronouncements or the application of existing pronouncements to changes in our business could significantly alter our reported financial statements and results of operations.

Provisions in our amended and restated certificate of incorporation, our amended and restated bylaws or Delaware law might discourage, delay or prevent a change-of-control of our company or changes in our management and, therefore, depress the trading price of our common stock.

Provisions of our amended and restated certificate of incorporation, our amended and restated bylaws or Delaware law may have the effect of deterring unsolicited takeovers or delaying or preventing a change-of-control of our company or changes in our management, including transactions in which our stockholders might otherwise receive a premium for their shares over then current market prices. In addition, these provisions may limit the ability of stockholders to approve transactions that they may deem to be in their best interest. These provisions include:

advance notice requirements for stockholder proposals and nominations of directors;

the inability of stockholders to act by written consent or to call special meetings;

limitations on the ability of stockholders to remove directors or amend our bylaws; and

the ability of our Board of Directors to designate the terms of and issue new series of preferred stock without stockholder approval, which could include the right to approve an acquisition or other change-of-control or could be used to institute a rights plan, also known as a poison pill, that would work to dilute the stock ownership of a potential hostile acquirer, likely preventing acquisitions that have not been approved by our Board of Directors.

In addition, Section 203 of the Delaware General Corporation Law prohibits a publicly-held Delaware corporation from engaging in a business combination with an interested stockholder, generally a person that together with its affiliates owns, or within the last three years has owned, 15% of our voting stock, for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner.

The existence of the foregoing provisions and anti-takeover measures could limit the price that investors might be willing to pay in the future for shares of our common stock. They could also deter potential acquirers of the Company, thereby reducing the likelihood that you could receive a premium for your common stock in an acquisition.

Our ability to use our net operating loss carry-forwards and certain other tax attributes is limited by Sections 382 and 383 of the Internal Revenue Code.

Subject to certain limitations, a corporation may offset a net operating loss carryforward against profit earned in a future year to determine its U.S. federal income tax expenses for such year. Sections 382 and 383 of the Internal Revenue Code of 1986 limit a corporation’s ability to utilize its net operating loss carryforwards and certain other tax attributes (including research credits) to offset future federal taxable income or tax if, in general, the corporation experiences a cumulative ownership change of more than 50% over any rolling three year period. State net operating loss carryforwards (and certain other tax attributes) may be similarly limited. For the year ended December 31, 2013, we recorded a current state tax liability of $115,765 due to statutory limitations in the use of state net operating loss carryforwards. An ownership change can therefore result in significantly greater tax liabilities than a corporation would incur in the absence of such a change and any increased liabilities could adversely affect the corporation’s business, results of operations, financial condition and cash flow.

As of September 30, 2015, we had available total federal and state net operating loss carryforwards of approximately $120.8 million, which expire in the years 2022 through 2034, and federal research credit carryforwards of $7.2 million, which expire in the years 2022 through 2034. Based on an analysis from our inception through December 31, 2013, we have experienced Section 382 ownership changes in June 2003 and August 2007. These two ownership changes limit our ability to utilize our federal net operating loss carryforwards (and certain other tax attributes) in future years. We have not completed our analysis of any potential Section 382 ownership changes for the year ended December 31, 2014, but we anticipate that such an ownership change may have occurred in July 2014 upon the closing of our initial public offering which we believe will limit our ability to utilize our federal net operating loss carryforwards (and certain other tax attributes) that accrued prior to the initial public offering.

Additional ownership changes may occur in the future as a result of additional equity offerings or events over which we will have little or no control, including purchases and sales of our equity by our five-percent security holders, the emergence of new five-percent security holders, redemptions of our securities or certain changes in the ownership of any of our five percent security holders.

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

The trading market for our common stock depends in part on the research and reports that securities or industry analysts publish about us or our business. We do not currently have and may never obtain research coverage by securities and industry analysts. If no securities or industry analysts commence coverage of our company, the trading price for our stock would be negatively impacted. If we obtain securities or industry analyst coverage and if one or more of the analysts who covers us downgrades our stock, or publishes unfavorable research about our business, our stock price would likely decline. If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, demand for our stock could decrease, which could cause our stock price and trading volume to decline.

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

We are listed on the NASDAQ Capital Market. To maintain the listing of our common stock on The NASDAQ Capital Market, we are required to meet certain listing requirements, including, among others:

•

a minimum closing bid price of $1.00 per share, and

•

a market value of publicly held shares (excluding shares held by our executive officers, directors and 10% or more stockholders) of at least $1 million and

In addition to the above requirements, we must meet at least one of the following requirements:

•

stockholders’ equity of at least $2.5 million; or

•

a market value of listed securities of at least $35 million; or

•

net income from continuing operations of $500,000.

There can be no assurance that we will be successful in maintaining our listing of our common stock on The Nasdaq Capital Market. If we are not successful in maintaining our listing, it could impair the liquidity and market price of our common stock. In addition, the delisting of our common stock from a national exchange could materially adversely affect our ability to access capital markets. As of November 6, 2015, the total market value of our publicly held shares of our common stock (excluding shares held by our executive officers, directors, affiliates and 10% or more stockholders) was $7.9 million, the total market value of our listed securities was $13.9 million and the closing bid price of our common stock was $2.42 per share. As of September 30, 2015, we had a stockholders’ equity of $3.8 million.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Use of Proceeds

Our initial public offering, or IPO, of common stock was effected through a Registration Statement on Form S-1 (File No. 333-194606) declared effective by the SEC on July 1, 2014. On July 8, 2014, we sold 1,725,000 shares of common stock, including 225,000 shares sold to the underwriter pursuant to its option to purchase such shares to cover over allotments, at an initial public offering price of $10.00 per share, for aggregate gross proceeds of $17.3 million. The underwriter of the offering was Aegis Capital Corp. Following the sale of the shares in connection with the closing of the IPO, the offering terminated.

We sold the shares to the underwriter with aggregate underwriting discounts totaling $1.0 million. In addition, we incurred expenses of $1.7 million, which, when added to the underwriting discounts, amounted to total expenses of $2.7 million. Thus, the net offering proceeds to us, after deducting underwriting discounts and offering costs were $14.6 million. No offering costs were paid directly or indirectly to any of our directors or officers (or their associates) or persons owning ten percent or more of any class of our equity securities or to any other affiliates.

As of September 30, 2015, $7.2 million of the net proceeds from the IPO were held in cash and cash equivalents. We intend to invest these funds in the future in short-term, investment-grade instruments, certificates of deposit or direct or guaranteed obligations of the U.S. government in accordance with our investment policy. Through September 30, 2015, we have used $5.4 million of our IPO proceeds for working capital or general corporate expenses. There has been no material change in our planned use of the net proceeds from the IPO as described in the final prospectus for the offering filed with the SEC pursuant to Rule 424(b), other than our plan to advance an additional infectious disease product into clinical trials and through a Phase 1 study is now dependent on receiving additional financing, which may include milestone payments from our collaboration agreements, public or private equity or debt financings, new collaborative relationships, or other available financing transactions and that we are no longer preparing our manufacturing facility for commercial scale manufacturing.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Not applicable.

ITEM 6. EXHIBITS

See the Exhibit Index following the signature page to this Quarterly Report on Form 10-Q for a list of exhibits filed or furnished with this report, which Exhibit Index is incorporated herein by reference.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.


GlobeImmune, Inc.

By:	/s/ Timothy C. Rodell
Timothy C. Rodell, M.D.
Chief Executive Officer, President and Director
(Principal Executive Officer)
Date: November 13, 2015

By:	/s/ C. Jeffrey Dekker
C. Jeffrey Dekker
Vice President, Finance and Treasurer
(Principal Financial and Accounting Officer)
Date: November 13, 2015

EXHIBIT INDEX

The following documents are filed as part of this quarterly report on Form 10-Q. The Company will furnish a copy of any exhibit listed to requesting stockholders upon payment of the Company’s reasonable expenses in furnishing those materials.

3.1		Restated Certificate of Incorporation. (1)

3.2		Amended and Restated Bylaws. (2)

4.1		Reference is made to Exhibits 3.1 and 3.2 hereof


10.1§‡		Amendment #5 to the Collaboration and Option Agreement between the Registrant and Celgene Corporation, dated as of July 31, 2015.
10.2§‡		GI-6200 Program License Agreement between the Registrant, Celgene Corporation and Celgene Alpine Investment Co., LLC, dated as of July 31, 2015.
10.3§‡		Amendment #3 to CRADA #02264 Assignment, Assumption and Consent Agreement between the Registrant, Celgene Corporation and the U.S. Department of Health and Human Services, as represented by the National Cancer Institute, an Institute, Center or Division of the National Institutes of Health, dated as of July 31, 2015.
10.4§‡		The National Institutes of Health Patent License Agreement – Exclusive (License Number A-360-2014) between the Registrant and the NIH, dated as of July 31, 2015.

31.1		Certification of principal executive officer required by Rule 13a-14(a) / 15d-14(a) ‡

31.2		Certification of principal financial officer required by Rule 13a-14(a) / 15d-14(a) ‡

32.1		Section 1350 Certification ‡

101.INS		XBRL Instance Document ‡

101.SCH		XBRL Taxonomy Extension Schema Document ‡

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document ‡

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document ‡

101.LAB		XBRL Taxonomy Extension Label Linkbase Document ‡

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document ‡

‡	Furnished herewith.

§	Confidential treatment has been requested for portions of this document, which are omitted and filed separately with the SEC. Omitted portions have been filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

(1)	Incorporated by reference to exhibits to our periodic filing on Form 8-K (File No. 001-35642) as filed with the SEC on July 9, 2014.

(2)	Incorporated by reference to exhibits to our Registration Statement on Form S-1 filed on March 17, 2014, as amended (File No. 333-194606).

Exhibit 10.1

Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

AMENDMENT #5 TO THE COLLABORATION AND OPTION AGREEMENT

THIS AMENDMENT #5 TO THE COLLABORATION AND OPTION AGREEMENT (together with any appendices attached hereto, this “Amendment #5”) is made and entered into as of July 31, 2015 (the “Amendment #5 Effective Date”), by and between GlobeImmune, Inc., a Delaware corporation located at 1450 Infinite Drive, Louisville, Colorado 80027, United States of America (“GlobeImmune”), and Celgene Corporation, a Delaware corporation located at 86 Morris Avenue, Summit, New Jersey 07901, United States of America (“Celgene”). GlobeImmune and Celgene are sometimes referred to herein individually as a “Party” and collectively as the “Parties.”

RECITALS

WHEREAS, GlobeImmune and Celgene are parties to the Collaboration and Option Agreement, effective as of May 14, 2009, as amended on November 6, 2009 (via Amendment #1 to the Collaboration and Option Agreement), February 9, 2010 (via Amendment #2 to the Collaboration and Option Agreement), June 16, 2011 (via Amendment #3 to the Collaboration and Option Agreement), and October 14, 2011 (via Amendment #4 to the Collaboration and Option Agreement) (collectively, the “Agreement”), which sets forth certain rights and obligations of both Parties relating to a certain collaboration, research and development activities for certain drug candidates and future drug programs;

WHEREAS, Celgene and GlobeImmune desire to revise and amend the Agreement to add the Collaboration Compound known as GI-6100 as a Drug Candidate under the Agreement and to remove the Collaboration Compound known as GI-3000 as a Drug Candidate under the Agreement;

WHERAS, Celgene and GlobeImmune desire to update various Collaboration and Option Agreement exhibits; and

WHEREAS, capitalized terms used herein but not defined herein shall have the definitions set forth in the Agreement.

AGREEMENT

NOW, THEREFORE, GlobeImmune and Celgene agree as follows:

1. Section 1.34 of the Agreement shall be deleted in its entirety and replaced with the following:

“1.34 “Drug Candidate” means GI-4000, GI-6200, GI-6300, or GI-6100.”

2. Section 1.53 of the Agreement shall be deleted in its entirety and replaced with the following:

“1.48 “GI-6100” has the meaning set forth on Exhibit 1.34.”

3. Section 3.2.1 of the Agreement shall be deleted in its entirety and replaced with the following:

“3.2.1 Commencement of GlobeImmune Development Activities. GlobeImmune represents and warrants that GlobeImmune, as of the Effective Date, has initiated research and development activities for the Programs containing GI-4000 and GI-6200. GlobeImmune represents and warrants that GlobeImmune, as of the Amendment #3 Effective Date (as that term is defined in Amendment #3 to the Agreement), has initiated research activities for the Program containing GI-6300. GlobeImmune represents and warrants that GlobeImmune, as of the Amendment #5 Effective Date, has initiated research activities for the Program containing GI-6108, through a Cooperative Research and Development Agreement (NCI reference #02264), between GlobeImmune and The U.S. Department of Health and Human Services, as represented by National Cancer Institute, an Institute, Center, or Division of the National Institutes of Health, effective May 8, 2008, as amended August 8, 2011 and May 8, 2013 (the “CRADA”). After the Effective Date, GlobeImmune shall provide written notice to Celgene promptly after commencing any additional Development efforts for any Collaboration Compound. After exercise of a Celgene Program Option, upon the request of Celgene and agreement of GlobeImmune, in GlobeImmune’s sole discretion, GlobeImmune may conduct Development activities with respect to the applicable Celgene Development Compound.”

4. Section 6.2.3 of the Agreement (“Research and Development Milestones for Drug Candidates Other than the GI-4000 Program”) shall be deleted in its entirety and replaced with the following:

“6.2.3 Research and Development Milestones for Drug Candidates Other than the GI-4000 Program.

(a) GI-6200. The Parties agree that, in consideration of the research and Development work performed by GlobeImmune under this Agreement and the Option Agreement for the GI-6200 program, Celgene will pay, within thirty (30) days following the date of achievement of each milestone below (or, if achievement of such milestone is within the control of GlobeImmune, within thirty (30) days following Celgene’s receipt of notice of the achievement of such milestone), to GlobeImmune the following milestone payments once each upon the achievement of the designated milestone events per each Program. Each payment will be made once regardless of how many Collaboration Compounds in the GI-6200 Program may achieve each milestone event.

Milestone Event for the GI-6200 Program		Payment
[*]		$[*]
[*]		$[*]
[*]		$[*]
Total For the GI-6200 Program		$60,000,000

(b) GI-6300. The Parties agree that, in consideration of the research and Development work performed by GlobeImmune under this Agreement and the Option Agreement for the GI-6300 Program Celgene will pay, within thirty (30) days following the date of achievement of each milestone below (or, if achievement of such milestone is within the control of GlobeImmune, within thirty (30) days following Celgene’s receipt of notice of the achievement of such milestone), to GlobeImmune the following milestone payments once each upon the achievement of the designated milestone events per each Program. Each payment will be made once regardless of how many Collaboration Compounds in the GI-6300 Program may achieve each milestone event. If any milestone event relating to development (excluding Regulatory Approval milestones) is achieved, all previously listed development milestone events, if not already achieved, shall be considered to be simultaneously achieved.

Milestone Event for the GI-6300 Program		Payment
[]		$[*]
[*]		$[*]
[*]		$[*]
[*]		$[*]
[*]		$[*]
Total for the GI-6300 Program		$85,000,000

*For the avoidance of doubt, [*].

(c) GI-6100. If Celgene exercises the Celgene Program Option with respect to the Program containing GI-6100, in consideration of the research and Development work performed by GlobeImmune under this Agreement for the Program for GI-6100, Celgene will pay, within thirty (30) days following the date of achievement of each milestone below (or, if achievement of such milestone is within the control of GlobeImmune, within thirty (30) days following Celgene’s receipt of notice of the achievement of such milestone), to GlobeImmune the following milestone payments once each upon the achievement of the designated milestone events per the Program for GI-6100. Each payment will be made once regardless of how many Collaboration Compounds in the GI-6100 Program may achieve each milestone event. If any milestone event relating to development (excluding Regulatory Approval milestones) is achieved, all previously listed development milestone events, if not already achieved, shall be considered to be simultaneously achieved.

Milestone Event for the GI-6100 Program		Payment
[*]		$[*]
[*]		$[*]
[*]		$[*]
[*]		$[*]
[*]		$[*]
Total for the GI-6100 Program		$85,000,000

”

Execution Copy

[*] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

5. The following shall be added as a new Section 5.1.3 to the Agreement:

“5.1.3 CRADA Research License. Subject to the terms and conditions of this Agreement (including the reservation of rights in Sections 4.8 and 5.4, and the payment by Celgene of all amounts as and when such amounts become due and payable under this Agreement), GlobeImmune hereby grants to Celgene and its Affiliates the non-exclusive, worldwide, nontransferable (except as provided in Section 13.4) and non-sublicensable license, under the Licensed Intellectual Property, solely as necessary to support research and development activities conducted by the NIH under the CRADA that pertain to certain Collaboration Compounds. The Parties agree that, as of the Amendment #5 Effective Date, all of GlobeImmune’s rights in and obligations under the CRADA are being assigned to Celgene pursuant to the Assignment, Assumption and Consent Agreement between GlobeImmune, Celgene and the NIH. The foregoing license shall automatically terminate upon any termination of the CRADA for any reason.”

6. Exhibit 1.34 of the Agreement shall be deleted in its entirety and replaced with the Exhibit 1.34 set forth in Appendix A attached hereto.

7. Section 4 of Exhibit 1.68 of the Agreement (“Drug Candidate GI-3000”) shall be deleted in its entirety and replaced with the following:

“4) Drug Candidate - GI-6100

[*]

8. Pursuant to Section 8.2.8 of the Agreement, Exhibit 1.57 of the Agreement shall be deleted in its entirety and replaced with the Exhibit 1.57 set forth in Appendix B attached hereto.

9. Pursuant to Section 8.2.8 of the Agreement, Exhibit 1.91 of the Agreement shall be deleted in its entirety and replaced with the Exhibit 1.91 set forth in Appendix C attached hereto.

10. Schedule A of the Agreement shall be deleted in its entirety and replaced with the Schedule A set forth in Appendix D attached hereto.

11. Schedule B of the Agreement shall be deleted in its entirety and replaced with the Schedule B set forth in Appendix E attached hereto.

12. Celgene hereby acknowledges and agrees that the Collaboration Compound known as GI-3000 shall not be deemed a Drug Candidate under the Agreement. GlobeImmune hereby acknowledges and agrees that (a) the Collaboration Compound known as GI-3000 may become a Future Program Compound under the Agreement (if the terms and conditions thereof of the Agreement are met) and remains subject to the terms and conditions of the Agreement, including the obligations of Section 5.6 of the Agreement; and (b) this Amendment #5 shall not be deemed a termination of the Program containing GI-3000 under the Agreement.

13. Except as otherwise amended by this Amendment #5, the Agreement shall remain in full force and effect as presently written, and the rights, duties, liabilities and obligations of the Parties, as presently constituted, will continue in full effect.

14. In the event of any conflict between the terms of the Agreement and this Amendment #5, the terms of this Amendment #5 shall govern but only to the extent necessary to accomplish its purpose.

15. This Amendment #5, together with the Agreement, constitutes the entire agreement between the Parties with respect to the subject matter contained therein and herein, supersedes and replaces any and all prior and contemporaneous understandings, arrangements and agreements, whether oral or written, with respect to such subject matter.

16. This Amendment #5 may be executed in counterparts, each of which shall be deemed an original, but both of which together shall constitute one and the same instrument. Signatures to this Amendment #5 transmitted by facsimile, by email in “portable document format” (“.pdf”), or by any other electronic means intended to preserve the original graphic and pictorial appearance of this Amendment #5 shall have the same effect as physical delivery of the paper document bearing original signature.

[Signature Page(s) Follows]

Execution Copy

IN WITNESS WHEREOF, GlobeImmune and Celgene have executed this Amendment #5 by their duly authorized representatives as of the Amendment #5 Effective Date.

GLOBEIMMUNE, INC.		CELGENE CORPORATION

By:	/s/ Timothy C. Rodell, M.D.	By:	/s/ Angus J. Grant
Name:	Timothy C. Rodell, M.D.	Name:	Angust J. Grant
Title:	President and CEO	Title:	Vice President, Business Dev.

[Signature Page to Amendment #5 to Collaboration and Option Agreement]

Execution Copy

Appendix A

Exhibit 1.34

Drug Candidates

GI-4000 means the series of Tarmogen products that express mutated Ras and/or one or more peptides thereof. GI-4014, GI-4015, GI-4016 and GI-4020 are part of the GI-4000 series and are the subject of [*].

GI-6200 means the series of Tarmogen products that solely express human carcinoembryonic antigen (CEA). GI-6207 is part of the GI-6200 series and means the single Tarmogen product that is the subject of [*], and that solely expresses human CEA having a N610D mutation.

GI-6100 means the series of Tarmogen products that express human MUC-1 antigen(s). GI-6108 is part of the GI-6100 series and is the single Tarmogen product that is the current lead product for the GI-6100 program. GI-6108 is currently undergoing preclinical development at the National Institutes of Health under the terms of the CRADA. As of the Amendment #5 Effective Date, GI-6108 is believed to be the specific product intended to be subject of [*], then it is understood such product shall become the Drug Candidate associated with the GI-6100 designation.

GI-6300 means the series of Tarmogen products that express brachyury. GI-6301 is part of the GI-6300 series and means the single Tarmogen product that is the subject of [*].

Execution Copy

Appendix B

Exhibit 1.57

GlobeImmune Licensed Patent(s)

Patents and Patent Applications Owned or Co-Owned by GlobeImmune:

GI Docket No.

Application No.

Filing Date

Country

Status

Owners or Co-Owners

[*]

Patents and Patent Applications Licensed from The Regents of the University of Colorado:

GI Docket No.

Application No.

Filing Date

Country

Status

[*]

Patents Licensed from National Institutes of Health:

Application No.

Filing Date

Country

Status

[*]

Execution Copy

Appendix C

Exhibit 1.91

Platform Patents

Patents and Patent Applications Owned or Co-owned by GlobeImmune:

GI Docket No.

Application No.

Filing Date

Country

Status

[*]

Patents and Patent Applications Licensed from The Regents of the University of Colorado:

GI Docket No.

Application No.

Filing Date

Country

Status

[*]

Execution Copy

Appendix D

Schedule A

Third Party Agreement(s)

Agreements as of the Effective Date

“Cooperative Research and Development Agreement (CRADA) for Intramural-PHS Clinical Research” between GlobeImmune, Inc. and The U.S. Department of Health and Human Services, as represented by National Cancer Institute, an Institute, Center, or Division of the NIH, effective May 8, 2008, as amended August 8, 2011 and May 8, 2013.

“Materials Transfer Agreement” between GlobeImmune, Inc. and The Regents of the University of Colorado (James DeGregori, Ph.D., principal investigator), effective February 18, 2009, expired February 18, 2010.

“Materials Transfer Agreement” between GlobeImmune, Inc. and The Regents of the University of Colorado (James DeGregori, Ph.D., principal investigator), effective March 5, 2009, expired March 5, 2010.

[*]

Agreements Following the Effective Date

[*]

Execution Copy

Appendix E

Schedule B

Third Party License Agreement(s)

The “CU Agreement”:

Agreement, effective as of May 30, 2006, between The Regents of The University of Colorado and GlobeImmune (as successor-in-interest to Ceres Pharmaceuticals, Ltd.), and the Restated Intellectual Property License Agreement, dated September 18, 1997 (restating the Intellectual Property License Agreement, dated September 18, 1997, as amended March 18, 1998, June 1, 2001, and October 16, 2003), among the Regents of the University of Colorado, The University License Equity Holdings, Inc. (as successor to University Technology Corporation), and GlobeImmune, each as amended May 5, 2009.

The “NIH License Agreements”:

Patent License Agreement between GlobeImmune and the National Institutes of Health or the Food and Drug Administration (referred to as PHS), agencies of the United States Public Health Service within the Department of Health and Human Services, dated June 12, 2007 (“Agonist and Antagonist Peptides of Carcinoembryonic Antigen (CEA)”), terminated effective July 10, 2015.

Patent License Agreement between GlobeImmune and the National Institutes of Health or the Food and Drug Administration (referred to as PHS), agencies of the United States Public Health Service within the Department of Health and Human Services, dated August 23, 2011 (“Combination Immunotherapy Compositions and Methods”).

Patent License Agreement between GlobeImmune and the National Institutes of Health or the Food and Drug Administration (referred to as PHS), agencies of the United States Public Health Service within the Department of Health and Human Services, dated January 3, 2012 (“Yeast Brachyury Immunotherapeutic Compositions”), as amended on November 9, 2014.

Patent License Agreement between GlobeImmune and the National Institutes of Health or the Food and Drug Administration (referred to as PHS), agencies of the United States Public Health Service within the Department of Health and Human Services, dated March 12, 2012 (“Yeast MUCI Immunotherapeutic Compositions and Uses Thereof”).

Patent License Agreement between GlobeImmune and the National Institutes of Health or the Food and Drug Administration (referred to as PHS), agencies of the United States Public Health Service within the Department of Health and Human Services, effective July 31, 2015 (“Identification and Characterization of HLA-A24 Agonist Epitopes of MUC1-Oncoprotein”).

[*]

Execution Copy

Exhibit 10.2

GI-6200 PROGRAM LICENSE AGREEMENT

This GI-6200 Program License Agreement (together with any appendices attached hereto, this “Agreement”) is made and entered into as of July 31, 2015 (the “GI-6200 Effective Date”), by and among GlobeImmune, Inc., a Delaware corporation located at 1450 Infinite Drive, Louisville, Colorado 80027, United States of America, (“GlobeImmune”) and Celgene Corporation, a Delaware corporation located at 86 Morris Avenue, Summit, New Jersey 07901, United States of America ( “Celgene”). GlobeImmune and Celgene are sometimes referred to herein individually as a “Party” and collectively as the “Parties.”

RECITALS

WHEREAS, GlobeImmune and Celgene are parties to the Collaboration and Option Agreement, effective as of May 14, 2009, as amended pursuant to that certain Amendment # 1 to Collaboration and Option Agreement on November 6, 2009, Amendment # 2 to Collaboration and Option Agreement on February 9, 2010, Amendment # 3 to Collaboration and Option Agreement on June 16, 2011, letter agreement on October 24, 2011, and that certain GI-6300 Program License Agreement on July 24, 2013 (the “Option Agreement”), which sets forth certain rights and obligations of both Parties relating to certain collaboration, research and development activities for certain drug candidates and future drug programs;

WHEREAS, GlobeImmune and Celgene are parties to that certain Supply Agreement, dated February 1, 2011, which is the “Supply Agreement” as defined by the Option Agreement;

WHEREAS, pursuant to Section 4.1.5(a) of the Option Agreement, Celgene, at any time, is entitled to exercise an option to take a license with respect to the GI-6200 Program, including GI-6207, under certain terms;

WHEREAS, Celgene desires to take a license under the GI-6200 Program under new and different terms;

WHEREAS, GlobeImmune is willing to agree to the terms for the new license, subject to Celgene making an upfront license payment to GlobeImmune; and

WHEREAS, to effectuate the granting of the license, the Parties will agree to make modify certain provisions of the Option Agreement, solely as they pertain to the GI-6200 Program;

NOW, THEREFORE, in consideration of the covenants contained herein, the Parties hereto, intending to be legally bound hereby, agree as follows:

AGREEMENT

License.

(a)

License Fee for GI-6200 Program. In consideration of the terms and conditions of this Agreement, including the grant of the license with respect to the GI-6200 Program set forth in this Agreement, Celgene, within five Business Days following the GI-6200 Effective Date, shall pay to GlobeImmune $1.9 million.

(b)

License Grant for GI-6200 Program. Pursuant to Section 4.1.5(a) of the Option Agreement, Celgene hereby exercises its Celgene Program Option with respect to the GI-6200 Program, subject to the new terms and conditions set forth in this Agreement. In furtherance thereof (and in furtherance of the other terms and conditions of this Agreement, including the modifications to the Option Agreement made herein), the Parties hereby confirm the following license granted to Celgene with respect to the GI-6200 Program, including GI-6207:

Subject to the terms and conditions of the Option Agreement (including the reservation of rights in Section 5.4 thereof, and the payment by Celgene of all amounts with respect to the GI-6200 Program as and when such amounts become due and payable under this Agreement and the Option Agreement), GlobeImmune hereby grants to Celgene and its Affiliates the exclusive (even as to GlobeImmune and its Affiliates), worldwide, nontransferable (except as provided in Section 13.4 of the Option Agreement) license, with the right to grant sublicenses solely in accordance with Section 5.2 of the Option Agreement, under the Licensed Intellectual Property, to use, sell, offer to sell, import, make and have made, and otherwise Develop, Commercialize or manufacture any Celgene Development Compound within the GI-6200 Program and any Licensed Product containing any such Celgene Development Compound, during the Term, in the Territory in the Field, such license to be effective as of the GI-6200 Effective Date.

(c)

Royalties for the GI-6200 Program. The Parties agree that, as consideration for the license rights granted to Celgene with respect to the GI-6200 Program and in modification of the existing provisions of Section 6.3.1 of the Option Agreement, the royalties to be paid to GlobeImmune on Net Sales by Celgene, its Affiliates and its Sublicensees of all Licensed Products from the GI-6200 Program as further provided in Section 6.3.1 of the Option Agreement (and subject to the other terms and conditions of the Option Agreement) will be as follows:

Net Sales in the Territory in a Calendar Year Per Each Licensed Product in the GI-6200 Program		Royalty Rate for the GI-6200 Program
Up to and equal to $[*]		[*]%
Greater than $[] and less than or equal to $[]		[*]%
Greater than $[*]		[*]%

(d)

Research and Development Milestones for the GI-6200 Program. The Parties agree that, in consideration of the research and Development work performed by GlobeImmune under this Agreement and the Option Agreement for the GI-6200 Program and in modification of the existing provisions of Section 6.2.3(b) of the Option Agreement, the research and development milestones to be paid to GlobeImmune with respect to the GI-6200 Program as further provided in Section 6.2.3(b) of the Option Agreement (and subject to the other terms and conditions of the Option Agreement) will be as follows:

Milestone Event for the GI-6200 Program		Payment
[*]		$[*]
[*]		$[*]
[*]		$[*]
Total for the GI-6200 Program		$60,000,000

(e)

Net Sales Milestones for the GI-6200 Program. The Parties agree that, in consideration of the research and Development work performed by GlobeImmune under this Agreement and the Option Agreement for the GI-6200 Program, the Net Sales milestones to be paid to GlobeImmune with respect to the GI-6200 Program as further provided in Section 6.2.5 of the Option Agreement (and subject to the other terms and conditions of the Option Agreement) will be as follows:

Cumulative Net Sales for Licensed Products in the GI-6200 Program worldwide		Payment
Greater than $[*]		$[*]
Greater than $[*]		$[*]
Greater than $[*]		$[*]
Total for the GI-6200 Program		$60,000,000

Execution Copy

(f)

GlobeImmune Licensed Patents and Platform Patents with respect to GI-6200 Program. As of the GI-6200 Effective Date, the GlobeImmune Licensed Patents with respect to the GI-6200 Program are as set forth on Appendix A attached hereto. As of the GI-6200 Effective Date, the Platform Patents with respect to the GI-6200 Program are as set forth on Appendix B attached hereto. If any Patent with respect to the GI-6200 Program as of the GI-6200 Effective Date is not listed on Appendix A, but otherwise falls within the definition of GlobeImmune Licensed Patents (i.e., is a Patent Controlled by GlobeImmune during the Term that (i) describes, claims, or covers a Collaboration Compound within the GI-6200 Program, or (ii) is necessary or useful for the Development, Commercialization, or manufacture of a Collaboration Compound within the GI-6200 Program), such Patent shall be deemed to be a GlobeImmune Licensed Patent, even though not listed on such appendix.

(g)

Technology Transfer; Supply Agreement.

(i)

In addition to any technology transfer pursuant to Section 5.5 of the Option Agreement, beginning no later than GI-6200 Effective Date, GlobeImmune shall use Commercially Reasonable Efforts to promptly transfer to Celgene, at no cost to Celgene, (A) any existing Third Party manufacturing agreements to the extent applicable to the GI-6200 Program or any Celgene Development Compounds therein, to the extent permitted under the terms of such agreements, and (B) all Licensed Intellectual Property applicable to the GI-6200 Program and process development study reports, analytical study reports, method development documents supporting IND filing and any other study reports or annual reports relating to the Manufacture of any Celgene Development Compounds in the GI-6200 Program (collectively “Manufacturing Intellectual Property”) and shall use Commercially Reasonable Efforts to complete such transfer in a timely manner but no later than ninety (90) days after the initiation date. In addition, GlobeImmune shall use Commercially Reasonable Efforts, including making its personnel available for meetings or teleconferences, to support and assist Celgene, at no cost to Celgene in transferring such Manufacturing Intellectual Property to Celgene and shall continue to support and assist Celgene continuously until the technology transfer is complete.

(ii)

The Parties agree as follows:

(A)

Prior to the GI-6200 Effective Date, the Supply Agreement has not previously become effective with respect to the GI-6200 Program, and no activities have occurred under the Supply Agreement with respect to the GI-6200 Program.

(B)

The GI-6200 Program (and all “Products” (as defined in the Supply Agreement) in such Program) will be excluded from the scope of the Supply Agreement, effective immediately prior to the GI-6200 Effective Date. As such, Celgene’s exercise of the Celgene Program Option with respect to the GI-6200 Program, as described in this Agreement, will not trigger a “Product Option Effective Date” under the Supply Agreement and will not cause the Supply Agreement to become effective with respect to the GI-6200 Program.

(C)

As described in Section 1(b) above and in Section 4.8 of the Option Agreement , Celgene shall have no obligation to obtain any supply from GlobeImmune or a GlobeImmune authorized Third Party second source of supply of Celgene’s requirements for any Celgene Development Compounds in the GI-6200 Program; and Celgene’s license with respect to the GI-6200 Program shall not be subject to any reservation of rights by GlobeImmune to make and have made Celgene Development Compound(s) and Licensed Product(s) in the GI-6200 Program, except as part of the limited right, for GlobeImmune to perform any final fills of previously made bulk product and the associated release activities.

(D)

For the avoidance of doubt, neither the exclusion of the GI-6200 Program from the Supply Agreement nor any transfer of Manufacturing Intellectual Property under Section 1(g)(i) will trigger any obligation of Celgene to make any Step In Payment (as defined in the Supply Agreement) to GlobeImmune.

(h)

Confirmation of Certain Terms With Respect to the GI-6200 Program. The Parties acknowledge and agree that, with Celgene’s exercise of its Celgene Program Option with respect to the GI-6200 Program, effective as of the GI-6200 Effective Date:

(i)

All Collaboration Compounds (and any Follow-On Compounds with respect to such Collaboration Compounds) within the GI-6200 Program, including GI-6207, shall be designated as Celgene Development Compound(s) in accordance with Section 4.1.3 of the Option Agreement;

(ii)

All proprietary and confidential information with respect to the GI-6200 Program will be treated as Confidential Information of both GlobeImmune and Celgene, as provided in Section 3.2.8 of the Option Agreement;

Execution Copy

(iii)

Celgene’s license under Section 5.1.1 of the Option Agreement will be effective with respect to all Celgene Development Compounds in the GI-6200 Program and all Licensed Products containing any such Celgene Development Compounds;

(iv)

The provisions of Section 8.3 and 8.9 of the Option Agreement shall apply with respect to the GI-6200 Program in the manner applicable following Celgene’s exercise of the Celgene Program Option; and

(v)

Any termination rights or termination consequences under Article 11 applicable with respect to a Program for which Celgene previously exercised its Celgene Program Option shall apply to the GI-6200 Program.

(i)

Acknowledgement. The Parties acknowledge that:

(i)

For purposes of calculating Net Sales under this Agreement and the Option Agreement, as provided in Section 1.46 of the Option Agreement, “GAAP” will be defined as follows: generally accepted accounting principles in the United States, consistently applied; provided that, to the extent that a Party adopts International Financial Reporting Standards (IFRS), then “GAAP” means International Financial Reporting Standards (IFRS), consistently applied; and

(ii)

(A) The grant of the license by GlobeImmune to Celgene pursuant to Section 1(b) above includes a grant of a sublicense by GlobeImmune to Celgene of rights granted to GlobeImmune under the Parent Licenses (as defined by the Option Agreement) including, without limitation, the NIH Agreements (as defined by the Option Agreement), (B) such grant of a sublicense under the NIH Agreements requires prior written consent of the National Institutes of Health, (C) GlobeImmune will use Commercially Reasonable Efforts to obtain written consent of the National Institutes of Health for such grant of a sublicense, and (D) the effective date of such sublicense will be the date of such written consent of the National Institutes of Health.

Publicity. Each Party agrees not to issue any press release or other public statement related to this Agreement or the transactions contemplated hereby, except as permitted under Section 9.8 of the Option Agreement. Notwithstanding the previous sentence, the Parties have agreed that GlobeImmune may issue a press release describing this transaction and the terms and conditions of this Agreement substantially in the form of Appendix C attached hereto. Any other disclosures regarding this Agreement (including the financial details) or the transactions contemplated hereby will only be permitted as provided in Section 9.8 of the Option Agreement.

3.	Definitions. Capitalized terms used herein but not defined herein shall have the definitions set forth in the Option Agreement.

Effect on the Agreement. Except as expressly modified by this Agreement, the Option Agreement shall remain in full force and effect as presently written, and the rights, duties, liabilities and obligations of the Parties, as presently constituted, will continue in full effect. In the event of any conflict between the terms of the Option Agreement and this Agreement, the terms of this Agreement shall govern but only to the extent necessary to accomplish its purpose.

5.	Incorporation. Article 13 of the Option Agreement (as modified by this Agreement) is hereby incorporated mutatis mutandis into this Agreement.

[Signature Page(s) Follows]

Execution Copy

In Witness Whereof, GlobeImmune and Celgene have executed this GI-6200 Program License Agreement by their duly authorized representatives as of the GI-6200 Effective Date.

GlobeImmune, Inc.		Celgene Corporation

By:	/s/ Timothy C. Rodell, M.D.	By:	/s/ August J. Grant
Name:	Timothy C. Rodell, M.D.	Name:	August J. Grant
Title:	President and CEO	Title:	VP Business Devel.

[Signature Page to GI-6200 Program License Agreement]

Execution Copy

Appendix A

GlobeImmune Licensed Patent(s)

as of GI-6200 Effective Date

Patents and Patent Applications Owned or Co-Owned by GlobeImmune:

GI Docket No.

Application No.

Filing Date

Country

Status

Owners or Co-Owners

[*]

Execution Copy

Patents and Patent Applications Licensed from The Regents of the University of Colorado:

GI Docket No.

Application No.

Filing Date

Country

Status

[*]

Execution Copy

Appendix B

Platform Patents

as of the GI-6200 Effective Date

Patents and Patent Applications Owned or Co-owned by GlobeImmune:

GI Docket No.

Application No.

Filing Date

Country

Status

Owners or Co-Owners

[*]

Execution Copy

Patents and Patent Applications Licensed from The Regents of the University of Colorado:

GI Docket No.

Application No.

Filing Date

Country

Status

[*]

Execution Copy

Appendix C: Press Release

(Begins next page)

Execution Copy

Celgene Exercises Early Option to Exclusively License GI-6207, a Novel Cancer Immunotherapy

LOUISVILLE, Colo., August X, 2015 – GlobeImmune, Inc. announced today that Celgene Corporation exercised its option under the 2009 Collaboration and Option Agreement to exclusively license GI-6207, a Tarmogen® product candidate targeting cancers that express carcinoembryonic antigen (CEA). GI-6207 is the second Tarmogen product candidate licensed by Celgene under the collaboration. Under the terms of the agreement, GlobeImmune will receive an option exercise payment of $1.9 million, and is eligible for regulatory and sales milestones, as well as royalties on product sales in exchange for a worldwide license. GI-6207 is currently being evaluated in a Phase 2 clinical trial at the National Cancer Institute (NCI) to evaluate GI-6207 in subjects with medullary thyroid cancer (MTC).

“We are very pleased that Celgene has exercised their option to license this program,” said Timothy C. Rodell, M.D., FCCP, President and CEO of GlobeImmune, Inc. “We look forward to results from the MTC phase 2 trial in the second half of 2016.”

GI-6207-02 - Phase 2 MTC Trial

GI-6207-02 is a 34 patient, randomized Phase 2 study being conducted at the NCI, which is approximately 80% enrolled. Under the protocol, patients are administered either GI-6207 for one year or observed for six months and then administered GI-6207 for one year. The primary endpoint for the trial will be the effect of GI-6207 on changes in calcitonin levels. Calcitonin is a tumor marker that correlates with tumor size in MTC. Elevated calcitonin values after surgery indicate persistent or recurrent disease. [www.clinicaltrials.gov; NCT01856920]

Medullary Thyroid Cancer

Thyroid cancer is the most common type of endocrine malignancy in the U.S. with approximately 62,450 new cases estimated in 2015. Medullary thyroid cancer, a subtype of thyroid cancer has a poor prognosis with approximately 25 percent and 10 percent of patients alive at five and ten years, respectively. Furthermore, metastatic MTC is largely unresponsive to conventional chemotherapy and radiotherapy. Two drugs have been approved for the treatment of metastatic MTC. Both of these products were approved on the basis of improved progression free survival; neither has yet shown improved overall survival, and both of them have substantial side effects that limit their use.

GI-6207

The GI-6207 is a Tarmogen that expresses a modified version of CEA protein as the target cancer antigen. CEA is over-expressed in multiple human epithelial cancers, including MTC, where studies have indicated CEA is almost universally expressed and is a diagnostic marker of the disease. Preclinical studies have shown that GI-6207 can induce an immune response to CEA as well as therapeutic anti-tumor responses. In a previous Phase 1 study of monotherapy GI-6207, 20% of subjects (5/25) had stable or decreased CEA levels and stable disease after receiving GI-6207.

About GlobeImmune

GlobeImmune is a biopharmaceutical company focused on developing products for the treatment of cancer and infectious diseases based on its proprietary Tarmogen® platform. Tarmogens activate the immune system by stimulating cellular immunity, known as T cell immunity, in contrast to traditional vaccines that predominately stimulate antibody production. To date, Tarmogen product candidates have been generally well tolerated in clinical trials for multiple disease indications and are efficient to manufacture. In 2009, the Company entered into a worldwide strategic collaboration and option agreement with Celgene Corporation focused on the discovery, development and commercialization of product candidates intended to treat cancer. Under this agreement, Celgene exercised their option to take an exclusive worldwide license to the GI-6300 Tarmogen product series, including GI-6301, targeting brachyury, as well as taking a license to the GI-6200 product series, including GI-6207, targeting carcinoembryonic antigen. In 2011, the Company entered into a worldwide, strategic collaboration with Gilead Sciences, Inc., to develop Tarmogens intended for the treatment of chronic hepatitis B infection. For additional information, please visit the company’s website at www.globeimmune.com.

Execution Copy

Safe Harbor Statement

This press release contains "forward-looking statements" for purposes of the safe harbor provided by the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements regarding the adequacy of the Company's capital to fund its ongoing operations, the potential for Tarmogens to treat or prevent any disease, potential Tarmogen side effect profiles, the Company and its collaborators' abilities to successfully complete clinical trials, timing and eventual prospects for completion of clinical trials and any approval to market any of the Company's products and the prospects for the Company's collaborations. Such statements are based on management's current expectations and involve risks and uncertainties. Actual results and performance could differ materially from those projected in the forward-looking statements as a result of many factors, including, without limitation, the risks and uncertainties associated with: the Company's financial resources and whether they will be sufficient to meet the Company's business objectives and operational requirements; results of earlier studies and trials may not be predictive of future clinical trial results, the protection and market exclusivity provided by the Company's intellectual property; risks related to the drug discovery and the regulatory approval process; and, the impact of competitive products and technological changes. The Company's forward-looking statements also involve assumptions that, if they prove incorrect, would cause its results to differ materially from those expressed or implied by such forward-looking statements. These and other risks concerning GlobeImmune's business are described in additional detail in the Company's Annual Report on Form 10-K for the year ended December 31, 2014, and the Company's other Periodic and Current Reports filed with the Securities and Exchange Commission. Forward-looking statements contained in this announcement are made as of this date, and the Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise.

Tarmogen is a registered trademark of GlobeImmune, Inc.

###

GLOBEIMMUNE CONTACT

Timothy C. Rodell M.D.

President and Chief Executive Officer

T: 303-625-2820

information@globeimmune.com

GLOBEIMMUNE MEDIA CONTACTS

Lena Evans or Tony Russo, Ph.D.

Russo Partners, LLC

T: 212-845-4262 or 212-845-4251

lena.evans@russopartnersllc.com

tony.russo@russopartnersllc.com

GLOBEIMMUNE INVESTOR CONTACT

Susan Noonan

S.A. Noonan Communications

T: 917-513-5303

susan@sanoonan.com

Execution Copy

Exhibit 10.3

Amendment #3 to CRADA #02264

ASSIGNMENT, ASSUMPTION AND CONSENT AGREEMENT

This Assignment, Assumption and Consent Agreement (this “Assignment Agreement”) is entered into July 31, 2015 (the “Effective Date”), by and between the U.S. Department of Health and Human Services, as represented by the National Cancer Institute, an Institute, Center or Division of the National Institutes of Health (the “NCI”), GlobeImmune, Inc., a Delaware corporation (“Assignor”), and Celgene Corporation, a Delaware corporation (“Assignee”).

RECITALS

A. The NCI and Assignor have entered into a Cooperative Research and Development Agreement (NCI reference #02264) dated May 8, 2008, as amended by Amendment #1, dated August 8, 2011, and Amendment #2, dated July 30, 2013 (the “CRADA”). The term of the CRADA extends through May 8, 2018. Any capitalized terms not defined herein shall have the meanings given such terms in the CRADA.

B. Assignor desires to assign the CRADA to Assignee and Assignee desires to assume from Assignor all of Assignor’s obligations under the CRADA for the remainder of the term.

C. The NCI is willing to accept and consent to such assignment and assumption upon the terms and conditions set forth herein.

NOW THEREFORE, in consideration of the payment of CRADA funds and the performance of the covenants and agreements by the parties as hereinafter set forth, the parties agree as follows:

1. Assignment of the CRADA. Assignor assigns to Assignee, effective as of the Effective Date, all of Assignor’s right, title and interest in the CRADA. Assignor will reasonably cooperate with Assignee in the transition to Assignee of any outstanding research and development activities currently being conducted under the CRADA.

2. Assumption of Obligations Under the CRADA. Assignee hereby accepts such assignment and assumes and agrees to perform each and every obligation of Assignor under the CRADA that arises on or after the Effective Date. Assignee acknowledges that it shall have no claim against the NCI for any matters arising prior to the Effective Date under the CRADA.

3. The NCI’s Consent to Assignment. The NCI hereby consents to the assignment of the CRADA to Assignee pursuant to the terms of this Assignment Agreement. Such consent will not be deemed to be a consent to any subsequent assignment of the CRADA, rather, any subsequent assignment will require the consent of the NCI to the extent required pursuant to the CRADA.

4. CRADA funds. The 2015 CRADA payment for $[*] was due to NCI on June 8, 2015, and Assignor will make this payment by July 31, 2015. Also, Assignor will make the 2016 CRADA payment for $[*] within thirty (30) days of the execution of Amendment #3. Assignee will make CRADA payments for 2017 and future years according to the payment schedule of Appendix B. After the 2015 CRADA payment is made, the NCI and Assignor represents to Assignee that neither NCI nor Assignor have current knowledge of a monetary or non-monetary default by Assignor presently existing under the CRADA.

5. Entire Agreement. This Assignment Agreement embodies the entire agreement of the NCI, Assignor, and Assignee with respect to the subject matter contained herein, and this Assignment Agreement supersedes any prior agreements, whether written or oral, with respect to the subject matter contained herein. This Assignment Agreement may be modified only by written instrument duly executed by the NCI, Assignor, and Assignee.


Execution Copy	Page 1 of 3

6. Collaborator Principal Investigator. Beginning as of the Effective Date, the “Collaborator Principal Investigator” acting on behalf of Assignee under the CRADA shall be:

Stanley Frankel, M.D.

Corporate Vice President & Head, Immuno-oncology Clinical Development

Notices. Any notices required to be given to Assignor under the CRADA shall be addressed as follows:

For CRADA Notices:	Celgene Corporation

	Attention:	Stanley Frankel, M.D.
	Telephone:	908-673-9210
	Facsimile:	908-673-2774
	Email:	stfrankel@celgene.com

For Patents and Licensing Notices:	Celgene Corporation

	Attention:	Carla Kuhner
	Telephone:	908-673-2114
	Facsimile:	908-673-9321
	Email:	ckuhner@celgene.com

For Delivery of CRADA Materials:	Celgene Corporation
(As identified in Appendix B)

	Attention:	Stanley Frankel, M.D.
	Telephone:	908-673-9210
	Facsimile:	908-673-2774
	Email:	stfrankel@celgene.com

or at such address as Assignee shall subsequently designate in writing.

The contact information for patents and licensing for NCI is changed to the following:

NCI Technology Transfer Center

9609 Medical Center Drive, Rm. 1E530

Bethesda, MD 20892-9702 (for USPS mail)

Rockville, MD 20850-9702 (for couriers)

Phone: 240-276-5530

Fax: 240-276-5504

7. Continuing Effect of CRADA. Except as modified by the terms of this Assignment Agreement, the CRADA shall remain in full force and effect.

8. Counterparts. This Assignment Agreement may be executed in one or more counterparts which, when taken together, shall be deemed an original and constitute one and the same agreement. Facsimile or electronic transmission in .pdf format of executed signature pages of this Assignment Agreement shall be sufficient to bind the executing party.

[Signature Page(s) Follow]


Execution Copy	Page 2 of 3

IN WITNESS WHEREOF, the parties have executed this Assignment, Assumption and Consent Agreement as of the Effective Date above.

FOR THE NCI:		FOR ASSIGNOR:

National Cancer Institute		GlobeImmune, Inc.

By:	/s/ James H. Doroshow, M.D.	By:	/s/ Timothy C. Rodell, M.D.
Name:	James H. Doroshow, M.D.	Name:	Timothy C. Rodell, M.D.
Title:	Deputy Director for Clinical and	Title:	President & Chief Executive Officer
	Translational Research, NCI

FOR ASSIGNEE:

Celgene Corporation

By:	/s/ Stanley R. Frankel MD
Name:	Stanley R. Frankel MD
Title:	Corporate Vice President


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Exhibit 10.4

THE NATIONAL INSTITUTES OF HEALTH

PATENT LICENSE AGREEMENT – EXCLUSIVE

COVER PAGE

For the NIH internal use only:

License Number:

License Application Number: A-360-2014

Serial Number(s) of Licensed Patent(s) or Patent Application(s):

[*]

Licensee:

GlobeImmune, Inc.

Cooperative Research and Development Agreement (CRADA) Number (if a subject invention):

C-043-2008/0 [*]

Additional Remarks:

Public Benefit(s):

Yeast-Tarmogen® based Immunotherapy for cancer and other diseases will serve the public.

This Patent License Agreement, hereinafter referred to as the “Agreement”, consists of this Cover Page, an attached Agreement, a Signature Page, Appendix A (List of Patent(s) or Patent Application(s)), Appendix B (Fields of Use and Territory), Appendix C (Royalties), Appendix D (Benchmarks and Performance), Appendix E (Commercial Development Plan), Appendix F (Example Royalty Report), and Appendix G (Royalty Payment Options). The Parties to this Agreement are:

The National Institutes of Health (“NIH”), an agency within the Department of Health and Human Services (“HHS”); and

The person, corporation, or institution identified above or on the Signature Page, having offices at the address indicated on the Signature Page, hereinafter referred to as the “Licensee”.

The NIH and the Licensee agree as follows:

1.	BACKGROUND

1.1

In the course of conducting biomedical and behavioral research, the NIH or the FDA investigators made inventions that may have commercial applicability.

1.2

By assignment of rights from NIH or FDA employees and other inventors, HHS, on behalf of the Government, co-owns with Licensee intellectual property rights claimed in any United States or foreign patent applications or patents corresponding to the assigned inventions. HHS also owns any tangible embodiments of these inventions actually reduced to practice by the NIH or the FDA.

1.3

The Secretary of HHS has delegated to the NIH the authority to enter into this Agreement for the licensing of rights to these inventions.

1.4

The NIH desires to transfer these inventions to the private sector through commercialization licenses to facilitate the commercial development of products and processes for public use and benefit.

1.5

The Licensee desires to acquire commercialization rights to certain of these inventions in order to develop processes, methods, or marketable products for public use and benefit.

2.	DEFINITIONS

2.1

“Affiliate(s)” means a corporation or other business entity, which directly or indirectly is controlled by or controls, or is under common control with the Licensee. For this purpose, the term “control” shall mean ownership of more than fifty percent (50%) of the voting stock or other ownership interest of the corporation or other business entity, or the power to elect or appoint more than fifty percent (50%) of the members of the governing body of the corporation or other business entity.

2.2

“Benchmarks” mean the performance milestones that are set forth in Appendix D.

2.3

“Commercial Development Plan” means the written commercialization plan attached as Appendix E.

2.4

“Covered” means that, with respect to Licensed Products and/or Licensed Processes, (except for the license granted hereunder) the practice of Licensed Processes and/or manufacture, use, sale, offer for sale or importation of Licensed Products would infringe one or more claims of the Licensed Patent Rights.

2.5

“CRADA” means a Cooperative Research and Development Agreement.

2.6

“FDA” means the Food and Drug Administration.

2.7

“First Commercial Sale” means the initial transfer by or on behalf of the Licensee or its sublicensees of the Licensed Products or the initial practice of a Licensed Process by or on behalf of the Licensee or its sublicensees in exchange for cash or some equivalent to which value can be assigned for the purpose of determining Net Sales.

2.8

“Government” means the Government of the United States of America.

2.9

“Licensed Fields of Use” means the fields of use identified in Appendix B.

2.10

“Licensed Patent Rights” shall mean:

(a)

Patent applications (including provisional patent applications and PCT patent applications) or patents listed in Appendix A, all divisions and continuations of these applications, all patents issuing from these applications, divisions, and continuations, and any reissues, reexaminations, and extensions of these patents;

(b)

to the extent that the following contain one or more claims directed to the invention or inventions disclosed in 2.10(a):

(i)

continuations‑in‑part of 2.10(a);

(ii)

all divisions and continuations of these continuations‑in‑part;

(iii)

all patents issuing from these continuations‑in‑part, divisions, and continuations;

(iv)

priority patent application(s) of 2.10(a); and

(v)

any reissues, reexaminations, and extensions of these patents;

(c)

to the extent that the following contain one or more claims directed to the invention or inventions disclosed in 2.10(a): all counterpart foreign and U.S. patent applications and patents to 2.10(a) and 2.10(b), including those listed in Appendix A; and

(d)

Licensed Patent Rights shall not include 2.10(b) or 2.10(c) to the extent that they contain one or more claims directed to new matter which is not the subject matter disclosed in 2.10(a).

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2.11

Licensed Processes” means processes which, in the course of being practiced, would be Covered by one or more claims of the Licensed Patent Rights that have not been held unpatentable, invalid or unenforceable by an unappealed or unappealable judgment of a court of competent jurisdiction.

2.12

“Licensed Products” means tangible materials which, in the course of manufacture, use, sale, offer for sale or importation, would be Covered by one or more claims of the Licensed Patent Rights that have not been held unpatentable, invalid or unenforceable by an unappealed or unappealable judgment of a court of competent jurisdiction.

2.13

“Licensed Territory” means the geographical area identified in Appendix B.

2.14

“Net Sales” means [*]

2.15

“Practical Application” means to manufacture in the case of a composition or product, to practice in the case of a process or method, or to operate in the case of a machine or system; and in each case, under these conditions as to establish that the invention is being utilized and that its benefits are to the extent permitted by law or Government regulations available to the public on reasonable terms.

2.16

“Research License” means a nontransferable, nonexclusive license to make and to use the Licensed Products or the Licensed Processes as defined by the Licensed Patent Rights for purposes of research and not for purposes of commercial manufacture or distribution or in lieu of purchase.

2.17

“Tarmogen®” or “Tarmogens®” mean any whole, recombinant yeast genetically modified to express one or more protein targets that stimulate the immune system against diseased cells.

3.	GRANT OF RIGHTS

3.1

The NIH hereby grants and the Licensee accepts, subject to the terms and conditions of this Agreement, an exclusive license under the Licensed Patent Rights in the Licensed Territory to make and have made, to use and have used, to sell and have sold, to offer to sell and have offered for sale, and to import and have imported any Licensed Products in the Licensed Fields of Use and to practice and have practiced any Licensed Process(es) in the Licensed Fields of Use.

3.2

This Agreement confers no license or rights by implication, estoppel, or otherwise under any patent applications or patents of the NIH other than the Licensed Patent Rights regardless of whether these patents are dominant or subordinate to the Licensed Patent Rights.

4.	SUBLICENSING

4.1

Upon written approval by NIH, Licensee and any sublicensees of Licensed Patent Rights under this Agreement may enter into sublicensing agreements under the Licensed Patent Rights, such approval will not be unreasonably delayed or withheld, unless the provisions set forth in Paragraph 4.2 below are not included and/or otherwise not made binding upon the sublicensee. For purposes of clarification, NIH agrees that modification of the terms of this Agreement will not be a condition for approval by NIH for Licensee or any third party sublicensee to enter into sublicensing agreements. Licensee shall provide written notice to NIH in the event Licensee or any sublicensee desires to grant a sublicense to a third party to develop or commercialize a Licensed Product. In the event that NIH does not provide a written objection to Licensee within ten (10) business days after receiving notice under the preceding sentence, NIH shall be deemed to have given its approval to the sublicense arrangement described in the notice.

4.2

Licensee agrees that any sublicenses granted by it or any sublicensee shall provide that the obligations to PHS of paragraphs 5.1-5.4, 8.1, 10.1, 10.2, 12.5 and 13.7-13.10 of this Agreement shall be binding upon the sublicensee as if it were a party to this Agreement. Licensee further agrees to provide copies of these Paragraphs to all sublicense agreements.

4.3

With respect to the rights licensed hereunder, any sublicenses granted by the Licensee shall provide for the termination of the sublicense, or the conversion to a license directly between the sublicensees and the NIH, at the option of the sublicensee, upon termination of this Agreement under Article 13. This conversion is subject to the NIH approval and contingent upon acceptance by the sublicensee of the remaining provisions of this Agreement.

4.4

Licensee agrees to forward to PHS a complete copy of each fully executed sublicense agreement entered into by Licensee or any sublicensee, postmarked within thirty (30) days of the execution of such agreement. To the extent permitted by law, PHS agrees to maintain each such sublicense agreement in confidence.

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4.5

Notwithstanding the foregoing, NIH agrees that the conditions of Paragraphs 4.1, 4.3 and 4.4 will not apply to the granting of rights under the Licensed Patent Right by Licensee to an Affiliate of Licensee, or by a sublicensee of Licensee to an Affiliate of the sublicensee, and that such a grant will not be a “sublicense” for purposes of this Agreement [*]. Licensee shall be responsible for any breach of this Agreement by an Affiliate of Licensee.

5.	STATUTORY AND NIH REQUIREMENTS AND RESERVED GOVERNMENT RIGHTS

5.1

(a) the NIH reserves on behalf of the Government an irrevocable, nonexclusive, nontransferable, royalty‑free license for the practice of all inventions licensed under the Licensed Patent Rights throughout the world by or on behalf of the Government and on behalf of any foreign government or international organization pursuant to any existing or future treaty or agreement to which the Government is a signatory. Prior to the First Commercial Sale, the Licensee agrees to provide the NIH with reasonable quantities of the Licensed Products or materials made through the Licensed Processes for NIH research use; and

(b)

in the event that the Licensed Patent Rights are Subject Inventions made under CRADA, the Licensee grants to the Government, pursuant to 15 U.S.C. §3710a(b)(1)(A), a nonexclusive, nontransferable, irrevocable, paid‑up license to practice the Licensed Patent Rights or have the Licensed Patent Rights practiced throughout the world by or on behalf of the Government. In the exercise of this license, the Government shall not publicly disclose trade secrets or commercial or financial information that is privileged or confidential within the meaning of 5 U.S.C. §552(b)(4) or which would be considered as such if it had been obtained from a non‑Federal party. Prior to the First Commercial Sale, the Licensee agrees to provide the NIH with reasonable quantities of the Licensed Products or materials made through the Licensed Processes for NIH research use.

5.2

The Licensee agrees that products used or sold in the United States embodying the Licensed Products or produced through use of the Licensed Processes shall be manufactured substantially in the United States, unless a written waiver is obtained in advance from the NIH.

5.3

The Licensee acknowledges that the NIH may enter into future CRADAs under the Federal Technology Transfer Act of 1986 that relate to the subject matter of this Agreement. The Licensee agrees not to unreasonably deny requests for a Research License from future collaborators with the NIH when acquiring these rights is necessary in order to make a CRADA project feasible. The Licensee may request an opportunity to join as a party to the proposed CRADA.

5.4

(a) in addition to the reserved license of Paragraph 5.1, the NIH reserves the right to grant Research Licenses directly or to require the Licensee to grant Research Licenses on reasonable terms. The purpose of these Research Licenses is to encourage basic research, whether conducted at an academic or corporate facility. In order to safeguard the Licensed Patent Rights, however, the NIH shall consult with the Licensee before granting to commercial entities a Research License or providing to them research samples of materials made through the Licensed Processes; and

(b)

in exceptional circumstances, and in the event that the Licensed Patent Rights are Subject Inventions made under a CRADA, the Government, pursuant to 15 U.S.C. §3710a(b)(1)(B), retains the right to require the Licensee to grant to a responsible applicant a nonexclusive, partially exclusive, or exclusive sublicense to use the Licensed Patent Rights in the Licensed Field of Use on terms that are reasonable under the circumstances, or if the Licensee fails to grant this license, the Government retains the right to grant the license itself. The exercise of these rights by the Government shall only be in exceptional circumstances and only if the Government determines:

(i)

the action is necessary to meet health or safety needs that are not reasonably satisfied by the Licensee;

(ii)

the action is necessary to meet requirements for public use specified by Federal regulations, and these requirements are not reasonably satisfied by the Licensee; or

(iii)

the Licensee has failed to comply with an agreement containing provisions described in 15 U.S.C. §3710a(c)(4)(B); and

(c)

the determination made by the Government under this Paragraph 5.4 is subject to administrative appeal and judicial review under 35 U.S.C. §203(b).

6.	ROYALTIES AND REIMBURSEMENT

6.1

The Licensee agrees to pay the NIH [*].

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6.2

The Licensee agrees to pay the NIH a [*] royalty as set forth in Appendix C.

6.3

The Licensee agrees to pay the NIH earned royalties as set forth in Appendix C.

6.4

The Licensee agrees to pay the NIH benchmark royalties as set forth in Appendix C.

6.5

The Licensee agrees to pay the NIH [*].

6.6

A patent or patent application licensed under this Agreement shall cease to fall within the Licensed Patent Rights for the purpose of computing earned royalty payments in any given country on the earliest of the dates that:

(a)

the application has been abandoned and not continued;

(b)

the application has been pending for five (5) years after the Effective Date of this Agreement; provided, however, that should the application later issue as a patent, that patent will fall within the Licensed Patent Rights for the purpose of computing earned royalty payments hereunder;

(c)

the patent expires or irrevocably lapses, or

(d)

the patent has been held to be invalid or unenforceable by an unappealed or unappealable decision of a court of competent jurisdiction or administrative agency.

6.7

No multiple royalties shall be payable because any Licensed Products or Licensed Processes are covered by more than one of the Licensed Patent Rights.

6.8

On sales of Licensed Products by Licensee to [*].

6.9

With regard to unreimbursed expenses associated with the preparation, filing, prosecution, and maintenance of all patent applications and patents included within the Licensed Patent Rights and paid by the NIH prior to the Effective Date of this Agreement , the Licensee shall pay the NIH, [*].

6.10

With regard to unreimbursed expenses associated with the preparation, filing, prosecution, and maintenance of all patent applications and patents included within the Licensed Patent Rights and paid by the NIH on or after the Effective Date of this Agreement, the NIH, at its sole option, may require the Licensee:

(a)

[*].

6.11

The NIH agrees, upon written request, to provide the Licensee with summaries of [*]. The Licensee agrees that all information provided by the NIH related to patent prosecution costs shall be treated as confidential commercial information and shall not be released to a third party except as required by law or a court of competent jurisdiction.

6.12

Licensee may elect to surrender its rights in any country of the Licensed Territory under any of the Licensed Patent Rights upon sixty (60) days written notice to NIH, and [*].

7.	PATENT FILING, PROSECUTION, AND MAINTENANCE

7.1

Except as otherwise provided in this Article 7, the NIH agrees to take responsibility for, but to consult with, the Licensee in the preparation, filing, prosecution, and maintenance of any and all patent applications or patents included in the Licensed Patent Rights and shall furnish copies of relevant patent‑related documents to the Licensee. The Licensee has the option to take responsibility for, but thereafter to consult with, the NIH in the preparation, filing, prosecution, and maintenance of any and all patent applications or patents included in the Licensed Patent Rights and shall furnish copies of relevant patent‑related documents to the NIH. Licensee may exercise its option to assume responsibility for patent prosecution under this Paragraph 7.1 on thirty (30) day’s prior written notice and written approval of such request to the NIH. .

7.2

If Licensee elects to take exercise its option, pursuant to section 7.1, then Licensee shall thereafter assume the responsibility for the preparation, filing, prosecution, and maintenance of any and all patent applications or patents included in the Licensed Patent Rights and shall, on an ongoing basis, promptly furnish copies of all patent‑related documents to the NIH in order to provide NIH an opportunity to provide comments regarding such documents to Licensee. In the event that NIH provides comments to Licensee, Licensee will consider such comments in good faith and, if reasonable, revise such documents to include NIH’s comments. In this event, the Licensee shall, subject to the prior approval of the NIH, select registered patent attorneys or patent agents to provide these services on behalf of the

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Licensee and the NIH. The NIH shall provide appropriate powers of attorney and other documents necessary to undertake this action to the patent attorneys or patent agents providing these services. The Licensee and its attorneys or agents shall consult with the NIH in all aspects of the preparation, filing, prosecution and maintenance of patent applications and patents included within the Licensed Patent Rights and shall provide the NIH sufficient opportunity to comment on any document that the Licensee intends to file or to cause to be filed with the relevant intellectual property or patent office.

7.3

At any time, the NIH may provide the Licensee with written notice that the NIH wishes to assume control of the preparation, filing, prosecution, and maintenance of any and all patent applications or patents included in the Licensed Patent Rights. If the NIH elects to reassume these responsibilities, and Licensee agrees by providing written approval the Licensee agrees to cooperate fully with the NIH, its attorneys, and agents in the preparation, filing, prosecution, and maintenance of any and all patent applications or patents included in the Licensed Patent Rights and to provide the NIH with complete copies of any and all documents or other materials that the NIH deems necessary to undertake such responsibilities. In this event, the Licensee shall be responsible for all costs associated with transferring patent prosecution responsibilities to an attorney or agent of the NIH’s choice. NIH and its attorneys or agents shall consult with Licensee in all aspects of the preparation, filing, prosecution and maintenance of patent applications and patents included within the Licensed Patent Rights and shall provide Licensee sufficient opportunity to comment on any document that Licensee intends to file or to cause to be filed with the relevant intellectual property or patent office.

7.4

Each party shall promptly inform the other as to all matters that come to its attention that may affect the preparation, filing, prosecution, or maintenance of the Licensed Patent Rights and permit each other to provide comments and suggestions with respect to the preparation, filing, prosecution, and maintenance of the Licensed Patent Rights, which comments and suggestions shall be considered by the other party.

8.	RECORD KEEPING

8.1

The Licensee agrees to keep accurate and correct records of the Licensed Products made, used, sold, or imported and the Licensed Processes practiced under this Agreement appropriate to determine the amount of royalties due the NIH. These records shall be retained for at least five (5) years following a given reporting period and shall be available during normal business hours for inspection, but not more than once during any twelve (12) month period (whether the audit is pursuant to this Paragraph 8.1 or Paragraph 8.2), at the expense of the NIH, by an accountant or other designated auditor selected by the NIH for the sole purpose of verifying reports and royalty payments hereunder. The accountant or auditor shall only disclose to the NIH information relating to the accuracy of reports and royalty payments made under this Agreement. If an inspection shows an underreporting or underpayment in excess of [*] for any [*] period, then [*] at the time the Licensee pays the unreported royalties, including any additional royalties as required by Paragraph 9.8. All royalty payments required under this Paragraph shall be due within [*] of the date the NIH provides to the Licensee notice of the payment due.

8.2

Beginning after the First Commercial Sale, Licensee agrees, upon NIH’s written request, to have an audit of sales and royalties conducted by an independent auditor that is paid for by NIH if annual sales of the Licensed Products or Licensed Processes are over [*]; provided that NIH may only make such a request once every two years. The audit shall address, at a minimum, the amount of gross sales by or on behalf of Licensee during the audit period, terms of the license as to percentage or fixed royalty to be remitted to the Government, the amount of royalties owed to the Government under this Agreement, and whether the royalties owed have been paid to the Government and is reflected in the records of the Licensee. The audit shall also indicate the NIH license number, product, and the time period being audited. A report certified by the auditor shall be submitted promptly by the auditor directly to NIH on completion. [*].

9.	REPORTS ON PROGRESS, BENCHMARKS, SALES, AND PAYMENTS

9.1

Prior to signing this Agreement, the Licensee has provided the NIH with the Commercial Development Plan in Appendix E, under which the Licensee intends to bring the subject matter of the Licensed Patent Rights to the point of Practical Application. This Commercial Development Plan is hereby incorporated by reference into this Agreement. Based on this plan, performance Benchmarks are determined as specified in Appendix D.

9.2

The Licensee shall provide written annual reports on its product development progress or efforts to commercialize under the Commercial Development Plan for each of the Licensed Fields of Use within sixty (60) days after December 31 of each calendar year. These progress reports shall include, but not be limited to: progress on research and development, status of applications for regulatory approvals, manufacture, sublicensing, marketing, importing, and sales during the

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preceding calendar year, as well as, plans for the present calendar year. The NIH also encourages these reports to include information on any of the Licensee's public service activities that relate to the Licensed Patent Rights. If reported progress differs from that projected in the Commercial Development Plan and Benchmarks, the Licensee shall explain the reasons for these differences. In the annual report, the Licensee may propose amendments to the Commercial Development Plan, acceptance of which by the NIH may not be denied unreasonably. The Licensee agrees to provide any additional information reasonably required by the NIH to evaluate the Licensee's performance under this Agreement. The Licensee may amend the Benchmarks at any time upon written approval by the NIH. The NIH shall not unreasonably withhold approval of any request of the Licensee to extend the time periods of this schedule if the request is supported by a reasonable showing by the Licensee of diligence in its performance under the Commercial Development Plan and toward bringing the Licensed Products to the point of Practical Application as defined in 37 C.F.R. §404.3(d). The Licensee shall amend the Commercial Development Plan and Benchmarks at the request of the NIH to address any Licensed Fields of Use not specifically addressed in the plan originally submitted.

9.3

The Licensee shall report to the NIH the dates for achieving Benchmarks specified in Appendix D and the First Commercial Sale in each country in the Licensed Territory within thirty (30) days of such occurrences.

9.4

After the First Commercial Sale, Licensee shall submit to the NIH, within sixty (60) days after each calendar half‑year ending June 30 and December 31, a royalty report, as described in the example in Appendix F, setting forth for the preceding half‑year period the amount of the Licensed Products sold or Licensed Processes practiced by or on behalf of the Licensee in each country within the Licensed Territory, the Net Sales, and the amount of royalty accordingly due. With each royalty report, the Licensee shall submit payment of earned royalties due. If no earned royalties are due to the NIH for any reporting period, the written report shall so state. The royalty report shall be certified as correct by an authorized officer of the Licensee and shall include a detailed listing of all deductions made under Paragraph 2.13 to determine Net Sales made under Article 6 to determine royalties due. The royalty report shall also identify the site of manufacture for the Licensed Product(s) sold in the United States.

9.5

The Licensee agrees to forward semi‑annually to the NIH a copy of these reports received by the Licensee from its sublicensees during the preceding half‑year period as shall be pertinent to a royalty accounting to the NIH by the Licensee for activities under the sublicense.

9.6

Royalties due under Article 6 shall be paid in U.S. dollars and payment options are listed in Appendix G. For conversion of foreign currency to U.S. dollars, the conversion rate shall be the average of the New York foreign exchange buy and sell rates quoted in The Wall Street Journal on the day that the payment is due. Any loss of exchange, value, taxes, or other expenses incurred in the transfer or conversion to U.S. dollars shall be paid entirely by the Licensee. The royalty report required by Paragraph 9.4 shall be mailed to the NIH at its address for Agreement Notices indicated on the Signature Page.

9.7

The Licensee shall be solely responsible for determining if any tax on royalty income is owed outside the United States and shall pay the tax and be responsible for all filings with appropriate agencies of foreign governments.

9.8

Additional royalties may be assessed by the NIH on any payment that is more than [*] overdue at the rate of [*]. This [*] rate may be applied retroactively from the original due date until the date of receipt by the NIH of the overdue payment and additional royalties. The payment of any additional royalties shall not prevent the NIH from exercising any other rights it may have as a consequence of the lateness of any payment.

9.9

All plans and reports required by this Article 9 marked as “confidential” by the Licensee shall, to the extent permitted by law, be treated by the NIH as commercial and financial information obtained from a person and as privileged and confidential, and any proposed disclosure of these records by the NIH under the Freedom of Information Act (FOIA), 5 U.S.C. §552 shall be subject to the predisclosure notification requirements of 45 C.F.R. §5.65(d).

10.	PERFORMANCE

10.1

The Licensee shall use its reasonable commercial efforts to bring the Licensed Products and the Licensed Processes to Practical Application. “Reasonable commercial efforts” for the purposes of this provision means reasonable efforts that are consistent with those made by a business of similar size and resources, in similar circumstances and context to achieve a particular result in a timely manner in accordance with the Commercial Development Plan in Appendix E and with the intention to adhere to the time-based Benchmarks in Appendix D. The efforts of a sublicensee shall be considered the efforts of the Licensee.

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10.2

Upon the First Commercial Sale, until the expiration or termination of this Agreement, the Licensee shall use its reasonable commercial efforts to make the Licensed Products and the Licensed Processes reasonably accessible to the United States public.

10.3

The Licensee agrees, after its First Commercial Sale, to make reasonable quantities of the Licensed Products or materials produced through the use of the Licensed Processes available on a compassionate use basis to patients, either through the patient’s physician(s) or the medical center treating the patient.

10.4

The Licensee agrees, after its First Commercial Sale and as part of its marketing and product promotion, to use its reasonable commercial efforts to develop educational materials (e.g., brochures, website, etc.) directed to patients and physicians detailing the Licensed Products or medical aspects of the prophylactic and therapeutic uses of the Licensed Products.

10.5

The Licensee agrees, after its First Commercial Sale to supply to the Mailing Address for Agreement Notices indicated on the Signature Page, the Office of Technology Transfer, NIH with inert samples of the Licensed Products or materials produced through the use of the Licensed Processes or their packaging for educational and display purposes only.

11.	INFRINGEMENT AND PATENT ENFORCEMENT

11.1

The NIH and the Licensee agree to notify each other promptly of each infringement or possible infringement of the Licensed Patent Rights, as well as, any facts which may affect the validity, scope, or enforceability of the Licensed Patent Rights of which either party becomes aware.

11.2

Pursuant to this Agreement and the provisions of 35 U.S.C. Chapter 29, the Licensee may:

(a)

bring suit in its own name, at its own expense, and on its own behalf for infringement of presumably valid claims in the Licensed Patent Rights;

(b)

in any suit, enjoin infringement and collect for its use, damages, profits, and awards of whatever nature recoverable for the infringement; or

(c)

Upon written approval of NIH, settle any claim or suit for infringement of the Licensed Patent Rights; and

(d)

if the Licensee desires to initiate a suit for patent infringement, the Licensee shall notify the NIH in writing. If the NIH does not notify the Licensee of its intent to pursue legal action within ninety (90) days, the Licensee shall be free to initiate suit. The NIH shall have a continuing right to intervene in the suit. The Licensee shall take no action to compel the Government either to initiate or to join in any suit for patent infringement. The Licensee may request the Government to initiate or join in any suit if necessary to avoid dismissal of the suit. Should the Government be made a party to any suit, the Licensee shall reimburse the Government for any costs, expenses, or fees which the Government incurs as a result of the motion or other action, including all costs incurred by the Government in opposing the motion or other action. In all cases, the Licensee agrees to keep the NIH reasonably apprised of the status and progress of any litigation. Before the Licensee commences an infringement action, the Licensee shall notify the NIH and give careful consideration to the views of the NIH and to any potential effects of the litigation on the public health in deciding whether to bring suit.

11.3

In the event that a declaratory judgment action alleging invalidity or non‑infringement of any of the Licensed Patent Rights shall be brought against the Licensee or raised by way of counterclaim or affirmative defense in an infringement suit brought by the Licensee under Paragraph 11.2, pursuant to this Agreement and the provisions of 35 U.S.C. Part 29 or other statutes, the Licensee may:

(a)

defend the suit in its own name, at its own expense, and on its own behalf for presumably valid claims in the Licensed Patent Rights;

(b)

in any suit, ultimately to enjoin infringement and to collect for its use, damages, profits, and awards of whatever nature recoverable for the infringement; and

(c)

Upon written approval of NIH, settle any claim or suit for declaratory judgment involving the Licensed Patent Rights- and NIH shall have a continuing right to intervene in the suit; and

(d)

if the NIH does not notify the Licensee of its intent to respond to the legal action within a reasonable time, the Licensee shall be free to do so. The Licensee shall take no action to compel the Government either to initiate or to

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join in any declaratory judgment action. The Licensee may request the Government to initiate or to join any suit if necessary to avoid dismissal of the suit. Should the Government be made a party to any suit by motion or any other action of the Licensee, the Licensee shall reimburse the Government for any costs, expenses, or fees, which the Government incurs as a result of the motion or other action. If the Licensee elects not to defend against the declaratory judgment action, the NIH, at its option, may do so at its own expense. In all cases, the Licensee agrees to keep the NIH reasonably apprised of the status and progress of any litigation. Before the Licensee commences an infringement action, the Licensee shall notify the NIH and give careful consideration to the views of the NIH and to any potential effects of the litigation on the public health in deciding whether to bring suit.

11.4

In any action by NIH under Paragraphs 11.2 or 11.3 the expenses including costs, fees, attorney fees, and disbursements, shall be paid by the Licensee. The value of any recovery, after deducting all expenses incurred in such action, made by the Licensee through court judgment or settlement [*].

11.5

The NIH shall cooperate fully with the Licensee in connection with any action under Paragraphs 11.2 or 11.3. The NIH agrees promptly to provide access to all necessary documents and to render reasonable assistance in response to a request by the Licensee.

12.	NEGATION OF WARRANTIES AND INDEMNIFICATION

12.1

The NIH offers no warranties other than those specified in Article 1. (Notwithstanding the forgoing, NIH warrants that it has the authority to enter into this Agreement.

12.2

The NIH does not warrant the validity of the Licensed Patent Rights and makes no representations whatsoever with regard to the scope of the Licensed Patent Rights, or that the Licensed Patent Rights may be exploited without infringing other patents or other intellectual property rights of third parties.

12.3

THE NIH MAKES NO WARRANTIES, EXPRESS OR IMPLIED, OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF ANY SUBJECT MATTER DEFINED BY THE CLAIMS OF THE LICENSED PATENT RIGHTS OR TANGIBLE MATERIALS RELATED THERETO.

12.4

The NIH does not represent that it shall commence legal actions against third parties infringing the Licensed Patent Rights.

12.5

The Licensee shall indemnify and hold the NIH, its employees, students, fellows, agents, and consultants harmless from and against all liability, demands, damages, expenses, and losses, including but not limited to death, personal injury, illness, or property damage in connection with or arising out of:

(a)

the use by or on behalf of the Licensee, its sublicensees, directors, employees, or third parties of any Licensed Patent Rights; or

(b)

the design, manufacture, distribution, or use of any Licensed Products, or Licensed Processes by the Licensee, or other products or processes developed by Licensee in connection with or arising out of the Licensed Patent Rights.

12.6

The Licensee agrees to maintain a liability insurance program consistent with sound business practice for a business of similar size and resources, in similar circumstances and context.

13.	TERM, TERMINATION, AND MODIFICATION OF RIGHTS

13.1

This Agreement is effective on August 1, 2015 (the “Effective Date”), only after being signed by all parties, unless the provisions of Paragraph 14.16 are not fulfilled, and shall extend to the expiration of the last to expire of the Licensed Patent Rights unless sooner terminated as provided in this Article 13.

13.2

In the event that the Licensee is in default in the performance of any material obligations under this Agreement, including but not limited to the obligations listed in Paragraph 13.5, and if the default has not been remedied within ninety (90) days after the date of notice in writing of the default, the NIH may terminate this Agreement by written notice and pursue outstanding royalties owed through procedures provided by the Federal Debt Collection Act.

13.3

In the event that the Licensee becomes insolvent, files a petition in bankruptcy, has such a petition filed against it, determines to file a petition in bankruptcy, or receives notice of a third party's intention to file an involuntary petition in bankruptcy, the Licensee shall immediately notify the NIH in writing. Furthermore, PHS shall have the right to terminate this Agreement immediately upon Licensee's receipt of written notice.

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13.4

The Licensee shall have a unilateral right to terminate this Agreement or any licenses in any country or territory by giving the NIH sixty (60) days written notice to that effect.

13.5

The NIH shall specifically have the right to terminate or modify, at its option, this Agreement, pursuant to Paragraph 13.2, if the NIH determines that the Licensee:

(a)

is not executing the Commercial Development Plan pursuant to its obligations under Paragraph 10.1 and the Licensee cannot otherwise demonstrate to the NIH’s satisfaction that the Licensee has taken, or can be expected to take within a reasonable time, effective steps to achieve the Practical Application of the Licensed Products or the Licensed Processes;

(b)

has not achieved the Benchmarks as may be modified under Paragraph 9.2;

(c)

has willfully made a false statement of, or willfully omitted a material fact in the license application or in any report required by this Agreement;

(d)

has committed a material breach of a covenant or agreement contained in this Agreement;

(e)

is not keeping the Licensed Products or the Licensed Processes reasonably available to the public after commercial use commences;

(f)

cannot, after First Commercial Sale, reasonably satisfy unmet health and safety needs; or

(g)

cannot reasonably justify a failure to comply with the domestic production requirement of Paragraph 5.2 unless waived.

13.6

In making the determination referenced in Paragraph 13.5, the NIH shall take into account the normal course of such commercial development programs conducted with sound and reasonable business practices and judgment and the annual reports submitted by the Licensee under Paragraph 9.2. Prior to invoking termination or modification of this Agreement under Paragraph 13.5, the NIH shall give written notice to the Licensee providing the Licensee specific notice of, and a ninety (90) day opportunity to respond to, the NIH’s concerns as to the items referenced in 13.5(a)-13.5(g). If the Licensee fails to alleviate the NIH’s concerns as to the items referenced in 13.5(a)-13.5(g) or fails to initiate corrective action to the NIH’s satisfaction, the NIH may terminate this Agreement.

13.7

When the public health and safety so require, and after written notice to the Licensee providing the Licensee a sixty (60) day opportunity to respond, the NIH shall have the right to require the Licensee to grant sublicenses to responsible applicants, on reasonable terms, in any Licensed Fields of Use under the Licensed Patent Rights, unless the Licensee can reasonably demonstrate that the granting of the sublicense would not materially increase the availability to the public of the subject matter of the Licensed Patent Rights. The NIH shall not require the granting of a sublicense unless the responsible applicant has first negotiated in good faith with the Licensee.

13.8

The NIH reserves the right according to 35 U.S.C. §209(d)(3) to terminate or modify this Agreement if it is determined that this action is necessary to meet the requirements for public use specified by federal regulations issued after the date of the license and these requirements are not reasonably satisfied by the Licensee.

13.9

Within thirty (30) days of receipt of written notice of the NIH's unilateral decision to modify or terminate this Agreement, the Licensee may, consistent with the provisions of 37 C.F.R. §404.11, appeal the decision by written submission to the designated NIH official. The decision of the designated NIH official shall be the final agency decision. The Licensee may thereafter exercise any and all administrative or judicial remedies that may be available.

13.10

Within ninety (90) days of expiration or termination of this Agreement under this Article 13, a final report shall be submitted by the Licensee. Any royalty payments, including those incurred but not yet paid (such as the [*] royalty), and those related to patent expenses, due to the NIH shall become immediately due and payable upon termination or expiration. If terminated under this Article 13, sublicensees may elect to convert their sublicenses to direct licenses with the NIH pursuant to Paragraph 4.3. Unless otherwise specifically provided for under this Agreement, upon termination or expiration of this Agreement, the Licensee shall return all Licensed Products or other materials included within the Licensed Patent Rights to the NIH or provide the NIH with certification of the destruction thereof. The Licensee may not be granted additional NIH licenses if the final reporting requirement is not fulfilled.

14.	GENERAL PROVISIONS

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14.1

Neither party may waive or release any of its rights or interests in this Agreement except in writing. The failure of the Government to assert a right hereunder or to insist upon compliance with any term or condition of this Agreement shall not constitute a waiver of that right by the Government or excuse a similar subsequent failure to perform any of these terms or conditions by the Licensee.

14.2

This Agreement constitutes the entire agreement between the parties relating to the subject matter of the Licensed Patent Rights, the Licensed Products and the Licensed Processes, and all prior negotiations, representations, agreements, and understandings (except the Licensee CRADA No. C-043-2008/0, 1; [*]) are merged into, extinguished by, and completely expressed by this Agreement.

14.3

The provisions of this Agreement are severable, and in the event that any provision of this Agreement shall be determined to be invalid or unenforceable under any controlling body of law, this determination shall not in any way affect the validity or enforceability of the remaining provisions of this Agreement.

14.4

If either party desires a modification to this Agreement, the parties shall, upon reasonable notice of the proposed modification by the party desiring the change, confer in good faith to determine the desirability of the modification. No modification shall be effective until a written amendment is signed by the signatories to this Agreement or their designees.

14.5

The construction, validity, performance, and effect of this Agreement shall be governed by Federal law as applied by the Federal courts in the District of Columbia.

14.6

All Agreement notices required or permitted by this Agreement shall be given by prepaid, first class, registered or certified mail or by an express/overnight delivery service provided by a commercial carrier, properly addressed to the other party at the address designated on the following Signature Page, or to another address as may be designated in writing by the other party. Agreement notices shall be considered timely if the notices are received on or before the established deadline date or sent on or before the deadline date as verifiable by U.S. Postal Service postmark or dated receipt from a commercial carrier. Parties should request a legibly dated U.S. Postal Service postmark or obtain a dated receipt from a commercial carrier or the U.S. Postal Service. Private metered postmarks shall not be acceptable as proof of timely mailing.

14.7

This Agreement shall not be assigned or otherwise transferred (including any transfer by legal process or by operation of law, and any transfer in bankruptcy or insolvency, or in any other compulsory procedure or order of court) except to the Licensee’s Affiliate(s) without the prior written consent of the NIH. NIH shall provide its decision to such a request by Licensee within ten (10) business days from date of receipt of such request. The parties agree that the identity of the parties is material to the formation of this Agreement and that the obligations under this Agreement are nondelegable without the prior written consent of NIH, such consent not to be unreasonably delayed or withheld, nor will any additional payments to NIH be requested as contingent on its consent to assign to a third party. In such an event, Licensee shall provide written notice to NIH identifying the party to which Licensee desires to assign or otherwise transfer this Agreement. In the event that NIH does not provide a written objection to Licensee within ten (10) business days after receiving notice under the preceding sentence, NIH shall be deemed to have given its approval to the assignment or transfer arrangement described in the notice.

14.8

The Licensee agrees in its use of any NIH‑supplied materials to comply with all applicable statutes, regulations, and guidelines, including NIH and HHS regulations and guidelines. The Licensee agrees not to use the materials for research involving human subjects or clinical trials in the United States without complying with 21 C.F.R. Part 50 and 45 C.F.R. Part 46. The Licensee agrees not to use the materials for research involving human subjects or clinical trials outside of the United States without notifying the NIH, in writing, of the research or trials and complying with the applicable regulations of the appropriate national control authorities. Written notification to the NIH of research involving human subjects or clinical trials outside of the United States shall be given no later than sixty (60) days prior to commencement of the research or trials.

14.9

The Licensee acknowledges that it is subject to and agrees to abide by the United States laws and regulations (including the Export Administration Act of 1979 and Arms Export Control Act) controlling the export of technical data, computer software, laboratory prototypes, biological material, and other commodities. The transfer of these items may require a license from the appropriate agency of the U.S. Government or written assurances by the Licensee that it shall not export

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these items to certain foreign countries without prior approval of this agency. The NIH neither represents that a license is or is not required or that, if required, it shall be issued.

14.10

The Licensee agrees to mark the Licensed Products or their packaging sold in the United States with all applicable U.S. patent numbers and similarly to indicate “Patent Pending” status. All the Licensed Products manufactured in, shipped to, or sold in other countries shall be marked in a manner to preserve the NIH’s patent rights in those countries.

14.11

By entering into this Agreement, the NIH does not directly or indirectly endorse any product or service provided, or to be provided, by the Licensee whether directly or indirectly related to this Agreement. The Licensee shall not state or imply that this Agreement is an endorsement by the Government, the NIH, any other Government organizational unit, or any Government employee. Additionally, the Licensee shall not use the names of the NIH, the FDA or the HHS or the Government or their employees in any advertising, promotional, or sales literature without the prior written approval of the NIH.

14.12

The parties agree to attempt to settle amicably any controversy or claim arising under this Agreement or a breach of this Agreement, except for appeals of modifications or termination decisions provided for in Article 13. The Licensee agrees first to appeal any unsettled claims or controversies to the designated NIH official, or designee, whose decision shall be considered the final agency decision. Thereafter, the Licensee may exercise any administrative or judicial remedies that may be available.

14.13

Nothing relating to the grant of a license, nor the grant itself, shall be construed to confer upon any person any immunity from or defenses under the antitrust laws or from a charge of patent misuse, and the acquisition and use of rights pursuant to 37 C.F.R. Part 404 shall not be immunized from the operation of state or Federal law by reason of the source of the grant.

14.14

Any formal recordation of this Agreement required by the laws of any Licensed Territory as a prerequisite to enforceability of the Agreement in the courts of any foreign jurisdiction or for other reasons will be carried out by the Licensee at its expense, and appropriately verified proof of recordation will be promptly furnished to the NIH.

14.15

Paragraphs 4.3, 8.1, 9.5-9.8, 9.9 12.1-12.5, 13.9, 13.10, 14.12 and 14.15 of this Agreement shall survive termination of this Agreement.

14.16

The terms and conditions of this Agreement shall, at the NIH’s sole option, be considered by the NIH to be withdrawn from the Licensee’s consideration and the terms and conditions of this Agreement, and the Agreement itself to be null and void, unless this Agreement is executed by the Licensee and a fully executed original is received by the NIH within sixty (60) days from the date of the NIH’s signature found at the Signature Page.

SIGNATURES BEGIN ON NEXT PAGE

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NIH PATENT LICENSE AGREEMENT – EXCLUSIVE

SIGNATURE PAGE

For the NIH:

/s/ Richard U. Rodriguez		August 3, 2015
Richard U. Rodriguez		Date
Director, Division of Technology Development and Transfer
Office of Technology Transfer
National Institutes of Health

Mailing Address or E-mail Address for Agreement notices and reports:

Chief, Monitoring & Enforcement Branch
Office of Technology Transfer
National Institutes of Health
6011 Executive Boulevard, Suite 325
Rockville, Maryland 20852-3804 U.S.A.

E-mail: LicenseNotices_Reports@mail.nih.gov

For the Licensee (Upon, information and belief, the undersigned expressly certifies or affirms that the contents of any statements of the Licensee made or referred to in this document are truthful and accurate.):

by:

/s/ Timothy C. Rodell M.D.		July 31, 2015
Signature of Authorized Official		Date

Timothy C. Rodell M.D.
Printed Name

President and Chief Executive Officer
Title

Official and Mailing Address for Agreement notices:

Jeff Dekker
Name

Vice President Finance
Title

Mailing Address

1450 Infinite Dr.
Louisville CO 80027
USA
Email Address:	jeff.dekker@globeimmune.com

Phone:	1.303.625.2777

Fax:	1.303.625.2710

II.

Official and Mailing Address for Financial notices (the Licensee’s contact person for royalty payments)

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Jeff Dekker
Name

Vice President Finance
Title

Mailing Address:

1450 Infinite Dr.
Louisville CO 80027
USA

Email Address:	jeff.dekker@globeimmune.com

Phone:	1.303.625.2744

Fax:	1.303.625.2710

Any false or misleading statements made, presented, or submitted to the Government, including any relevant omissions, under this Agreement and during the course of negotiation of this Agreement are subject to all applicable civil and criminal statutes including Federal statutes 31 U.S.C. §§3801-3812 (civil liability) and 18 U.S.C. §1001 (criminal liability including fine(s) or imprisonment).

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APPENDIX A – PATENT(S) OR PATENT APPLICATION(S)

Patent(s) or Patent Application(s):

[*]

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APPENDIX B – LICENSED FIELDS OF USE AND TERRITORY

I.	Licensed Fields of Use:

[*]

II.	Licensed Territory:

Worldwide

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APPENDIX C – ROYALTIES

Royalties:

I.	The Licensee agrees to pay to the NIH [] royalty in the amount of [].

II.	The Licensee agrees to pay to the NIH [] royalty in the amount of [].

III.	The Licensee agrees to pay the NIH earned royalties of [*].

IV.	The Licensee agrees to pay the NIH Benchmark royalties within [*] of achieving each Benchmark:

(a)

[*]

V.	Licensee agrees to pay PHS [] royalties of [].

VI.	Pursuant to Paragraph 6.9, Licensee shall pay the NIH, [*].

VII.	Pursuant to Paragraph 6.10, Licensee shall pay the NIH, [*].

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APPENDIX D – BENCHMARKS AND PERFORMANCE

Licensee agrees to the following Benchmarks for its performance under this Agreement Effective Date as measured from the date an IND becomes effective for a Licensed Product, and within [*] of achieving a Benchmark, shall notify NIH that the Benchmark has been achieved.

Duration

Cumulative

[*]

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APPENDIX E – COMMERCIAL DEVELOPMENT PLAN

Commercial Development and Marketing Plan

Based on the outcome of pre-clinical studies and human clinical trials and the subsequent approval by the appropriate regulatory agencies, marketing and sales strategies in the designated countries will be finalized. The Licensed Product will be marketed in the Licensed Territory by Licensee or through one or several pharmaceutical companies with established regional marketing capabilities. An outline of the development plan is provided below.

Under CRADA [*], Licensee and the NIH will jointly explore combination preclinical studies with various other immunotherapy platform technologies.

[*]

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APPENDIX F – EXAMPLE ROYALTY REPORT

Required royalty report information includes:

·	OTT license reference number (L-XXX-200X/0)

·	Reporting period

·	Catalog number and units sold of each Licensed Product (domestic and foreign)

·	Gross Sales per catalog number per country

·	Total Gross Sales

·	Itemized deductions from Gross Sales

·	Total Net Sales

·	Earned Royalty Rate and associated calculations

·	Gross Earned Royalty

·	Adjustments for [] Royalty ([]R) and other creditable payments made

·	Net Earned Royalty due

Example

Catalog Number	Product Name	Country	Units Sold	Gross Sales (US$)
1	A	US	250	62,500
1	A	UK	32	16,500
1	A	France	25	15,625
2	B	US	0	0
3	C	US	57	57,125
4	D	US	12	1,500

Total Gross Sales	153,250
Less Deductions:
Freight	3,000
Returns	7,000
Total Net Sales	143,250
Royalty Rate	8	%
Royalty Due	11,460
Less Creditable Payments	10,000
Net Royalty Due	1,460

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APPENDIX G – ROYALTY PAYMENT OPTIONS

The OTT License Number MUST appear on payments, reports and correspondence.

Automated Clearing House (ACH) for payments through U.S. banks only

The NIH encourages its licensees to submit electronic funds transfer payments through the Automated Clearing House (ACH). Submit your ACH payment through the U.S. Treasury web site located at: https://www.pay.gov. Locate the “NIH Agency Form” through the Pay.gov “Agency List”.

Electronic Funds Wire Transfers

The following account information is provided for wire payments. In order to process payment via Electronic Funds Wire Transfer sender MUST supply the following information within the transmission:

[*]

Checks

All checks should be made payable to “NIH Patent Licensing”

Checks drawn on a U.S. bank account and sent by US Postal Service should be sent directly to the following address:

National Institutes of Health (NIH)

P.O. Box 979071

St. Louis, MO 63197-9000

Checks drawn on a U.S. bank account and sent by overnight or courier should be sent to the following address:

US Bank

Government Lockbox SL-MO-C2GL

1005 Convention Plaza

St. Louis, MO 63101

Phone: 314-418-4087

Checks drawn on a foreign bank account should be sent directly to the following address:

National Institutes of Health (NIH)

Office of Technology Transfer

Royalties Administration Unit

6011 Executive Boulevard

Suite 325, MSC 7660

Rockville, Maryland 20852

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Exhibit 31.1

CERTIFICATIONS

I, Timothy C. Rodell, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of GlobeImmune, Inc.:

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 13, 2015		/s/ Timothy C. Rodell
		Timothy C. Rodell, M.D.
		Chief Executive Officer, President and Director

Exhibit 31.2

CERTIFICATIONS

I, C. Jeffrey Dekker, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of GlobeImmune, Inc.:

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 13, 2015		/s/ C. Jeffrey Dekker
		C. Jeffrey Dekker
		Vice President, Finance and Treasurer

Exhibit 32.1

CERTIFICATION

Pursuant to the requirement set forth in Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. § 1350), Timothy C. Rodell, Chief Executive Officer, President and Director of GlobeImmune, Inc. (the “Company”), and C. Jeffrey Dekker, the Vice President, Finance and Treasurer, each hereby certifies that, to the best of his knowledge:

1. The Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2015, to which this Certification is attached as Exhibit 32.1 (the “Periodic Report”), fully complies with the requirements of Section 13(a) or Section 15(d) of the Exchange Act; and

2. The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

In Witness Whereof, the undersigned have set their hands hereto as of the 13^th day of November 2015.

/s/ Timothy C. Rodell		/s/ C. Jeffrey Dekker
Timothy C. Rodell		C. Jeffrey Dekker
Chief Executive Officer, President and Director		Vice President, Finance and Treasurer

This certification accompanies the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of GlobeImmune, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.

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