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45300000
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0.02
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0
300000
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0.001
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0.001
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0.001
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1909000
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7074961
-17000
Clearside Biomedical, Inc.
1470364
S-1/A
0001539029
2011-05-26
2016-09-30
16593000
-1.54
48198000
776000
false
3872000
49000
-16201000
Non-accelerated Filer
60000
16000
P1Y6M
61000
-355000
515000
16356000
-16196000
-20068000
129000
536000
-426000
-15841000
20065000
224000
52914000
-5000
-567000
-515000
-16253000
3000
1326
On May 11, 2016, the Company effected a 1-for-2.2 reverse stock split of its issued and outstanding shares of common stock and a proportional adjustment to the existing conversion ratios for each series of the Company's convertible preferred stock.
6.79
6.03
51377000
0.40
CLSD
12484000
7867000
174736
20454
776000
6330000
10502459
883000
-7000
7000
224000
16000
308000
2017-03
53900000
1597000
P365D
P90D
1414594
55770
16000
23000
0
The number of shares of common stock reserved for issuance under the 2016 Plan will automatically increase on January 1 each year, for a period of ten years, from January 1, 2017 through January 1, 2026, by 4% of the total number of shares of the Company’s common stock outstanding on December 31 of the preceding calendar year, or a lesser number of shares as may be determined by the Company’s board of directors.
0.04
401000
375000
P3Y
Lesser of Useful life or remaining lease term
P5Y
P5Y
15000
2027
Spark could exercise its option to license the IP by paying an additional $2.0 million, or could elect to initiate a second Option Period during which the Company and Spark would conduct further studies specified in the Spark Agreement. If Spark elected to initiate the second Option Period, Spark would be required to pay the Company $1.0 million. If Spark exercised its option to license the IP during the second Option Period, then Spark would be required to pay the Company an additional $3.0 million.
2020-06-01
The Company is required to pay accrued interest only through December 31, 2017 on the outstanding amount, followed by 30 equal payments of principal and accrued interest.
0.07
30-day U.S. LIBOR
0.0050
All unpaid principal, together with the balance of unpaid and accrued interest, were due and payable on demand at any time after the earlier of (i) the maturity date of December 2017, (ii) the date on which the Company has achieved sustainable profitability for a period of at least two consecutive fiscal years in accordance with generally accepted accounting principles, (iii) without the prior written consent of the lender, the date on which an equity financing of the Company in which the Company issues shares of common stock, preferred stock or other equity interests in the Company in a transaction or series of related transactions and receives an investment of cash in consideration of such issuance in the amount of not less than $7.0 million or consolidation of the Company or the sale or transfer by the Company’s stockholders of capital stock of the Company representing more than 50% of the voting power occurs or (iv) upon or after the occurrence of an event of default. The repayment acceleration provision specifically excluded the Series A-1 Preferred Stock financing that occurred in January 2013.
85000
P10Y
2026-09
P8Y6M
P10Y
P10Y
4000000
2016-06-07
51400000
1600000
2015-04-30
2
1
112802
1137652
12700000
0.11
2015-05-20
7000000
35000
30000
2017-12-31
0.50
60291
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6360000
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0.0441
3232000
427000
-0.4179
3131000
0.0000
33000
-0.0115
277000
2500000
18000
0.0000
P5Y
0.3400
7000
198000
231000
5000
9823000
-10189000
371000
-140000
-54000
1154000
-9823000
366000
82000
15624000
1137000
200000
-9124000
140000
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-0.0454
1.0960
0.0210
11501000
0.0000
3.38
3232000
0.15
0.17
5000
6692000
3000000
5000
0.8564
231000
376126
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22899
427000
P7Y
125000
1738660
6000
231000
-9000
602000
1506000
900724
20688
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283000
192000
91000
144000
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0.40
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18000
209000
218000
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5000
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2000
145000
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7074961
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3232000
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6000
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-10189000
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="2"><b><i>Share-based
compensation</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">Compensation cost related to
share-based awards granted to employees is measured at grant date,
based on the estimated fair value of the award. The Company
estimates the fair value of stock options using a Black-Scholes
option pricing model. Compensation expense for options granted to
non-employees is determined as the fair value of consideration
received or the fair value of the equity instruments issued,
whichever is more reliably measured. The fair value of restricted
stock awards is determined based on the fair value of the
Company’s common stock on the date of grant. Share-based
compensation costs are expensed on a straight-line basis (net of
estimated forfeitures) over the relevant vesting period. The fair
value of awards granted to non-employees is re-measured each period
until the related service is complete. All share-based compensation
costs are recorded in general and administrative or research and
development costs in the statements of operations based upon the
underlying employees’ roles within the Company.</font></p>
</div>
10886950
705000
12014000
-7.54
0.0454
705000
-0.3994
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">
The following table summarizes the changes in fair value of the
Level 3 liability, stock purchase warrants (in thousands):</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="76%" align="center" border="0">
<tr>
<td width="85%"></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center">
<b>Level 3 Liabilities</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>Year Ended</b><br />
<b>December 31,</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2014</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2015</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
<b>Stock purchase warrants</b></p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Balance at beginning of period</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">24</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">42</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Issuance of stock purchase warrants</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">164</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Net increase (decrease) in fair value remeasurement</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">18</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">52</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Balance at period end of period</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">42</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">258</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
</table>
</div>
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="2"><b><i>Debt
discount</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The Company follows the authoritative
guidance in Accounting Standards Codification (“ASC”)
470-20-25-2, <i>Debt with Conversion of Other Options</i>, for
accounting for debt discount related to the detachable stock
purchase warrants issued in connection with a debt obligation. The
fair value of the warrant is recorded as a discount against the
related debt obligation, and is amortized using the effective
interest rate method over the term of the underlying debt
obligation and reflected in interest expense.</font></p>
</div>
6555000
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><font style="FONT-FAMILY: arial" size="2"><b><i>Concentration of credit risk
arising from cash deposits in excess of insured
limits</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The Company maintains its cash in
bank deposits that at times may exceed federally insured limits.
The Company has not experienced any loss in such accounts. The
Company believes it is not exposed to any significant risks with
respect to its cash balances.</font></p>
</div>
0.0000
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="2"><b><i>Fair value
measurements</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The Company records certain financial
assets and liabilities at fair value in accordance with the
provisions of ASC Topic 820, <i>Fair Value Measurements and
Disclosures</i>, on fair value measurements. The Company’s
material financial instruments at December 31, 2014 and 2015
consisted primarily of cash and cash equivalents, long-term debt
and stock purchase warrant liabilities. The fair value of cash and
cash equivalents, other current assets, and accounts payable
approximate their respective carrying values due to the short term
nature of these instruments.</font></p>
</div>
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="2"><b><i>Cash
equivalents</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">Cash equivalents consist of
short-term, highly liquid investments with an original term of
three months or less at the date of purchase.</font></p>
</div>
60000
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="3"><b>11. Share-based
compensation</b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">In November 2011, the Company’s
Board adopted and approved the Clearside Biomedical, Inc. 2011
Stock Incentive Plan (the “Plan”) which provides for
the grant of share-based awards to employees, directors and
consultants of the Company. The Company has reserved 1,517,625
shares of common stock for issuance under the Plan. In February
2016, the Company awarded an option grant to a newly appointed
board member. This option grant was outside of the Plan. The Board
shall determine price, term and vesting conditions of all
share-based awards at their grant date. Absent a public market
price for the Company’s common stock, the board of directors
will determine the estimated fair value for the underlying common
stock. Share-based awards vest over variable periods, generally
from one to five years, and expire not more than ten years after
the date of grant.</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 1px; MARGIN-TOP: 8px">
 </p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><font style="FONT-FAMILY: arial" size="2">The total share-based compensation
expense recognized is reflected in the statements of operations as
follows (in thousands):</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="75%" align="center" border="0">
<tr>
<td width="82%"></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="6" align="center"><font style="FONT-FAMILY: arial" size="2"><b>Year Ended</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>December 31,</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>2014</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>2015</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Research and development</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">218</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">327</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">General and administrative</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">209</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">378</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 2em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Total</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">427</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">705</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">Share-based compensation is accounted
for in accordance with the provisions of ASC 718,
<i>Compensation-Stock Compensation</i>. The estimated fair value of
options granted is determined as of the date of grant using the
Black-Scholes option pricing model. The resulting fair value is
recognized ratably over the requisite service period, which is
generally the vesting period of the awards. Options granted to
non-employees are re-measured at each financial reporting period
until required services are performed.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The following table sets forth the
weighted average assumptions utilized in the fair value calculation
for the underlying common stock for the years ended December 31,
2014 and 2015.</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="75%" align="center" border="0">
<tr>
<td width="76%"></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="6" align="center"><font style="FONT-FAMILY: arial" size="2"><b>Year Ended</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>December 31,</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>2014</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>2015</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Expected term (years)</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">7.00</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">7.00</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Expected stock price
volatility</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">85.64%</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">86.63%</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Risk-free interest rate</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">1.99%</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">2.09%</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Expected dividend yield</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">0.00%</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">0.00%</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2"><i>Expected term (in years):</i> The
Company utilized the guidance set forth in ASC 718 to determine the
expected term of options. The Company utilized the simplified
method as prescribed by ASC 718, as the Company does not have
sufficient historical exercise and post-vesting termination data to
provide a reasonable basis upon which to estimate the expected term
of stock options granted to employees.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2"><i>Risk-free interest rate:</i> The
risk-free interest rate is based on the yields of U.S. Treasury
securities with maturities similar to the expected time to a
possible liquidity event.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2"><i>Expected dividend yield:</i> The
Company has not paid and does not anticipate paying any dividends
in the foreseeable future.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2"><i>Expected stock price
volatility:</i> The volatility assumption is based on the
historical volatilities of the stock of several public entities
that are similar to the Company, as the Company does not have
sufficient historical transactions in its own shares on which to
base expected volatility. The same peer group of companies was
utilized for the years ended December 31, 2014 and 2015.</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 1px; MARGIN-TOP: 16px">
 </p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><font style="FONT-FAMILY: arial" size="2"><b><i>Stock
options</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The Company has granted stock option
awards to employees, directors and consultants. Share-based
compensation expense for options granted is reflected in the
statements of operations as follows (in thousands):</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="75%" align="center" border="0">
<tr>
<td width="82%"></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="6" align="center"><font style="FONT-FAMILY: arial" size="2"><b>Year Ended</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>December 31,</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>2014</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>2015</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Research and development</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">91</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">327</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">General and administrative</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">192</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">378</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 2em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Total</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">283</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">705</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The following table summarizes the
activity related to stock options:</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="85%" align="center" border="0">
<tr>
<td width="74%"></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>Number of</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>Shares</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>Weighted</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>Average</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>Exercise Price</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Options outstanding at January 1,
2014</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">770,062</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">0.34</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 2em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Granted</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">376,126</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">3.38</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 2em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Exercised</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">(24,803</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">0.17</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 2em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Cancelled/Forfeited</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">(22,899</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">0.15</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Options outstanding at December 31,
2014</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">1,098,486</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">1.39</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 2em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Granted</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">289,619</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">5.68</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 2em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Exercised</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">(50,980</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">0.27</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 2em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Cancelled/Forfeited</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">(75,488</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">1.67</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Options outstanding at December 31,
2015</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">1,261,637</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">2.40</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The following table provides
additional information about the Company’s stock options that
were outstanding and exercisable at December 31, 2015 (aggregate
intrinsic values in thousands):</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" align="center" border="0">
<tr>
<td width="10%"></td>
<td valign="bottom" width="7%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom" align="center">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px" align="center">
<font style="FONT-FAMILY: arial" size="2"><b>Exercise</b></font></p>
<p style="MARGIN-BOTTOM: 1px; WIDTH: 31pt; BORDER-BOTTOM: rgb(0,0,0) 1px solid; MARGIN-TOP: 0px" align="center"><font style="FONT-FAMILY: arial" size="2"><b>Price</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>Options</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>Outstanding</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>Weighted</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>Average</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>Exercise</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>Price</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>Aggregate</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>Intrinsic</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>Value</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>Average</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>Remaining</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>Contractual</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>Life
(Years)</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>Options</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>Exercisable</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>Weighted</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>Average</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>Exercise</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>Price</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>Aggregate</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>Intrinsic</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>Value</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top" align="center">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em" align="center">
<font style="FONT-FAMILY: arial" size="2">$0.02</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">11,363</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">5.9</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">11,363</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top" align="center">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em" align="center">
<font style="FONT-FAMILY: arial" size="2">  0.15</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">72,987</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">6.4</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">67,510</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top" align="center">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em" align="center">
<font style="FONT-FAMILY: arial" size="2">  0.40</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">544,493</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">7.6</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">329,131</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top" align="center">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em" align="center">
<font style="FONT-FAMILY: arial" size="2">  3.08</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">31,818</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">8.6</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">11,267</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top" align="center">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em" align="center">
<font style="FONT-FAMILY: arial" size="2">  3.41</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">311,357</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">9.0</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">79,254</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top" align="center">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em" align="center">
<font style="FONT-FAMILY: arial" size="2">  5.57</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">232,802</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">9.9</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="2">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top" align="center">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em" align="center">
<font style="FONT-FAMILY: arial" size="2">    6.16</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">56,817</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">9.5</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">2,272</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">1,261,637</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">2.40</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">7,210</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">500,797</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">0.92</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">3,606</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">As of December 31, 2015, the Company
had $3.0 million of unrecognized compensation expense related to
unvested stock options granted under the Plan. This cost is
expected to be recognized over a weighted average period of 1.7
years as of December 31, 2015. The weighted average remaining
contractual life of all outstanding options as of December 31, 2015
was 8.4 years.</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 1px; MARGIN-TOP: 8px">
 </p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><font style="FONT-FAMILY: arial" size="2">The intrinsic value is calculated as
the difference between the estimated fair market value and the
exercise price per share of the stock options. The estimated fair
market value per share of common stock as of December 31, 2015 was
$8.12.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="2"><b><i>Restricted
stock</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">In 2011, the founders of the Company
purchased restricted common stock. These shares are subject to
repurchase rights whereby the Company has the right to repurchase
the unvested shares at price per share equal to the lesser of (i)
the fair market value of the shares at the time the right of
repurchase is exercised and (ii) the original issuance price of the
shares. A summary of the status of unvested restricted stock is
presented below:</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="75%" align="center" border="0">
<tr>
<td width="73%"></td>
<td valign="bottom" width="7%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>Number of</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>Shares</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>Weighted</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>Average</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>Grant Date</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>Fair
Value</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Unvested at January 1,
2014</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">229,208</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">0.51</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 2em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Vested</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">(208,520</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">) </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">0.40</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Unvested at December 31,
2014</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">20,688</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">0.57</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 2em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Vested</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">(14,203</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">) </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">0.55</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Unvested at December 31,
2015</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">6,485</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">0.57</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">Share-based compensation expense for
restricted stock granted is reflected in the statements of
operations as follows (in thousands):</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="75%" align="center" border="0">
<tr>
<td width="84%"></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="6" align="center"><font style="FONT-FAMILY: arial" size="2"><b>Year Ended</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>December 31,</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>2014</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>2015</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Research and development</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">127</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="2"> —</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">General and administrative</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">17</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="2">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 2em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Total</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">144</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="2">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">As of December 31, 2014 and 2015, the
Company had $0 of unrecognized compensation expense related to
unvested restricted stock.</font></p>
</div>
-0.0126
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="2"><b><i>Deferred offering
costs</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The Company capitalizes certain
legal, accounting and other third-party fees that are directly
associated with in-process equity financings as other assets until
such financings are consummated. After consummation of the equity
financing, these costs are recorded in stockholders’ equity
(deficit) as a reduction of additional paid-in capital generated as
a result of the offering or as a reduction to the carrying value of
preferred stock issued, if such stock is classified outside of
stockholders’ equity (deficit). Should the equity financing
no longer be considered probable of being consummated, the deferred
offering costs would be expensed immediately as a charge to
operating expenses in the statement of operations. As of December
31, 2014, the Company had recorded $1.8 million of deferred
offering costs. In September 2015, $1.9 million of deferred
offering costs were charged to operating expenses due to the
postponement of the equity financing. As of December 31, 2015, the
Company had recorded $0.4 million of deferred offering costs in
connection with a new equity financing.</font></p>
</div>
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">
The following tables summarize the fair value of financial assets
and liabilities that are measured at fair value and the
classification by level of input within the fair value hierarchy
(in thousands):</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="92%" align="center" border="0">
<tr>
<td width="72%"></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="14" align="center"><b>December 31, 2014</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Level 1</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Level 2</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Level 3</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Recorded</b><br />
<b>Value</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
<b>Financial Assets:</b></p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Money markets (included in cash and cash equivalents)</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">7,951</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">7,951</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
<b>Financial Liabilities:</b></p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Stock purchase warrants</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">42</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">42</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 1pt">
<td height="16"></td>
<td height="16" colspan="16"></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="14" align="center"><b>December 31, 2015</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Level 1</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Level 2</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Level 3</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Recorded</b><br />
<b>Value</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
<b>Financial Assets:</b></p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Money markets (included in cash and cash equivalents)</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">20,076</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">20,076</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
<b>Financial Liabilities:</b></p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Stock purchase warrants</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">258</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">258</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
</table>
</div>
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="3"><b>15. Fair value
measurements</b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The Company records certain financial
assets and liabilities at fair value in accordance with the
provisions of ASC Topic 820, <i>Fair Value Measurements and
Disclosures</i>, on fair value measurements. As defined in the
guidance, fair value, defined as an exit price, represents the
amount that would be received to sell an asset or pay to transfer a
liability in an orderly transaction between market participants. As
a result, fair value is a market-based approach that should be
determined based on assumptions that market participants would use
in pricing an asset or a liability. As a basis for considering
these assumptions, the guidance defines a three-tier value
hierarchy that prioritizes the inputs used in the valuation
methodologies in measuring fair value.</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0">
<tr>
<td valign="top" width="1%" align="left"><font style="FONT-FAMILY: arial" size="2">•</font></td>
<td valign="top" width="1%"><font size="1"> </font></td>
<td valign="top" align="left">
<p align="left"><font style="FONT-FAMILY: arial" size="2">Level
1—Unadjusted quoted prices in active, accessible markets for
identical assets or liabilities.</font></p>
</td>
</tr>
</table>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0">
<tr>
<td valign="top" width="1%" align="left"><font style="FONT-FAMILY: arial" size="2">•</font></td>
<td valign="top" width="1%"><font size="1"> </font></td>
<td valign="top" align="left">
<p align="left"><font style="FONT-FAMILY: arial" size="2">Level
2—Other inputs that are directly or indirectly observable in
the marketplace.</font></p>
</td>
</tr>
</table>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0">
<tr>
<td valign="top" width="1%" align="left"><font style="FONT-FAMILY: arial" size="2">•</font></td>
<td valign="top" width="1%"><font size="1"> </font></td>
<td valign="top" align="left">
<p align="left"><font style="FONT-FAMILY: arial" size="2">Level
3—Unobservable inputs that are supported by little or no
market activity.</font></p>
</td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The fair value hierarchy also
requires an entity to maximize the use of observable inputs and
minimize the use of unobservable inputs when measuring fair
value.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The Company’s material
financial instruments at December 31, 2014 and 2015 consisted
primarily of cash and cash equivalents, long-term debt and stock
purchase warrant liabilities. The fair value of cash and cash
equivalents, other current assets and accounts payable approximate
their respective carrying values due to the short term nature of
these instruments. The fair value of long-term debt approximates
the carrying value due to variable interest rates that correspond
to market rates. The Company has determined its stock purchase
warrants liability to be a Level 3 fair value
measurement.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">There were no significant transfers
between Levels 1, 2 and 3 during the years ended December 31, 2014
and 2015.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The following tables summarize the
fair value of financial assets and liabilities that are measured at
fair value and the classification by level of input within the fair
value hierarchy (in thousands):</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" align="center" border="0">
<tr>
<td width="71%"></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="14" align="center"><font style="FONT-FAMILY: arial" size="2"><b>December 31, 2014</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>Level 1</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>Level 2</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>Level 3</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>Recorded</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>Value</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr style="FONT-SIZE: 1pt">
<td height="5"></td>
<td height="5" colspan="4"></td>
<td height="5" colspan="4"></td>
<td height="5" colspan="4"></td>
<td height="5" colspan="4"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2"><b>Financial Assets:</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Money markets (included in cash and
cash equivalents)</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">7,951</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="2">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="2">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">7,951</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 1pt">
<td height="5"></td>
<td height="5" colspan="4"></td>
<td height="5" colspan="4"></td>
<td height="5" colspan="4"></td>
<td height="5" colspan="4"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2"><b>Financial
Liabilities:</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Stock purchase warrants</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="2">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="2">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">42</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">42</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" align="center" border="0">
<tr>
<td width="68%"></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="14" align="center"><font style="FONT-FAMILY: arial" size="2"><b>December 31, 2015</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>Level 1</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>Level 2</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>Level 3</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>Recorded</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>Value</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr style="FONT-SIZE: 1pt">
<td height="5"></td>
<td height="5" colspan="4"></td>
<td height="5" colspan="4"></td>
<td height="5" colspan="4"></td>
<td height="5" colspan="4"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2"><b>Financial Assets:</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Money markets (included in cash and
cash equivalents)</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">20,076</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="2">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="2">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">20,076</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 1pt">
<td height="5"></td>
<td height="5" colspan="4"></td>
<td height="5" colspan="4"></td>
<td height="5" colspan="4"></td>
<td height="5" colspan="4"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2"><b>Financial
Liabilities:</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Stock purchase warrants</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="2">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="2">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">258</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">258</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The determination of the fair value
of the stock purchase warrants is discussed in Note 10. Changes in
the fair value of the stock purchase warrants are recorded in other
income (expense), net in the statements of operations. The
following table summarizes the changes in fair value of the Level 3
liability, stock purchase warrants (in thousands):</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" align="center" border="0">
<tr>
<td width="85%"></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="6" align="center"><font style="FONT-FAMILY: arial" size="2"><b>Level 3 Liabilities</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="6" align="center"><font style="FONT-FAMILY: arial" size="2"><b>Year Ended</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>December 31,</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>2014</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>2015</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr style="FONT-SIZE: 1pt">
<td height="5"></td>
<td height="5" colspan="4"></td>
<td height="5" colspan="4"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2"><b>Stock purchase
warrants</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Balance at beginning of
period</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">24</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">42</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Issuance of stock purchase
warrants</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="2">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">164</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Net increase (decrease) in fair value
remeasurement</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">18</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">52</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Balance at period end of
period</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">42</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">258</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
</tr>
</table>
</div>
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2"><b><i>Basis of
presentation</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The Company’s financial
statements have been prepared in conformity with accounting
principles generally accepted in the United States of America
(“U.S. GAAP”).</font></p>
</div>
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="3"><b>12. Commitments and
contingencies</b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2"><b><i>Lease commitment
summary</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The Company leases office space under
non-cancelable operating leases which expire in March 2017. The
operating leases have renewal options and rent escalation clauses.
The following table presents future minimum commitments of the
Company due under non-cancelable operating leases with original or
remaining terms in excess of one year.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">Minimum lease payments were as
follows at December 31, 2015 (in thousands):</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="75%" align="center" border="0">
<tr>
<td width="91%"></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">2016</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">90</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">2017</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">23</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 2em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Total minimum lease
payments</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">113</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 1px; MARGIN-TOP: 8px">
 </p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><font style="FONT-FAMILY: arial" size="2">Rent expense, net of sublease income,
was $198,000 and $150,000 for years ended December 31, 2014 and
2015, respectively.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="2"><b><i>Litigation</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The Company is not party to any
litigation and does not have contingency reserves established for
any litigation liabilities.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="2"><b><i>Contract service
providers</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">In the course of the Company’s
normal business operations, it has agreements with contract service
providers to assist in the performance of its research and
development, clinical research and manufacturing. Substantially all
of these contracts are on an as needed basis.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="2"><b><i>Employment
contracts</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The Company has employment agreements
with its executive officers and has at will employment contracts
with substantially all other employees providing for salary,
benefits and bonuses.</font></p>
</div>
60000
5000000
52000
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="2"><b><i>Net loss per share of common
stock</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">Basic net loss per share is
calculated by dividing the net loss by the weighted average number
of shares of common stock outstanding for the period, without
consideration of the dilutive effect of potential common stock
equivalents. Diluted net loss per share gives effect to all
dilutive potential shares of common stock outstanding during this
period.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">For all periods presented, the
Company’s potential common stock equivalents, which include
convertible preferred stock, stock options, unvested restricted
stock and stock purchase warrants, have been excluded from the
computation of diluted net loss per share as their inclusion would
have the effect of reducing the net loss per share. Therefore, the
denominator used to calculate both basic and diluted net loss per
share is the same in all periods presented.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The Company’s potential common
stock equivalents that have been excluded from the computation of
diluted net loss per share for all periods presented because of
their antidilutive effect consisted of the following:</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="85%" align="center" border="0">
<tr>
<td width="75%"></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="6" align="center"><font style="FONT-FAMILY: arial" size="2"><b>Year Ended</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>December
31,</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>2014</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>2015</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Convertible preferred
stock</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">7,074,961</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">9,472,530</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Outstanding stock options</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">1,098,486</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">1,261,637</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Unvested restricted stock</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">20,688</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">6,485</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Stock purchase warrants</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">900,724</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">146,298</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="top" align="right"><font style="FONT-FAMILY: arial" size="2">9,094,859</font></td>
<td valign="top" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="top" align="right"><font style="FONT-FAMILY: arial" size="2">10,886,950</font></td>
<td valign="top" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
</tr>
</table>
</div>
0.0000
P1Y8M12D
P5Y
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="3"><b>4. Accrued
liabilities</b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">Accrued liabilities consisted of the
following (in thousands):</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="85%" align="center" border="0">
<tr>
<td width="82%"></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="6" align="center"><font style="FONT-FAMILY: arial" size="2"><b>December 31,</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>2014</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>2015</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Accrued research and
development</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">427</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">569</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Accrued bonuses</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">279</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">530</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Accrued professional fees</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">178</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">668</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Accrued vacation</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">53</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">64</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Accrued interest payable</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="2">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">15</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Accrued expense</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">220</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">139</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="top" align="right"><font style="FONT-FAMILY: arial" size="2">1,157</font></td>
<td valign="top" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="top" align="right"><font style="FONT-FAMILY: arial" size="2">1,985</font></td>
<td valign="top" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
</tr>
</table>
</div>
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="3"><b>14. Collaborative
agreement</b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">In January 2013, the Company entered
into a collaborative research agreement with one of the holders of
the Series A-1 preferred stock, whereby the two parties agreed to
conduct feasibility studies for certain compounds. Each party to
the collaborative research agreement will bear its own costs,
except that certain costs incurred by the Company are limited to a
defined maximum amount. The Company incurred research and
development costs in relation to the collaborative research
agreement of $98,000 and $145,000 for the years ended December 31,
2014 and 2015, respectively.</font></p>
</div>
0.3400
100000
150000
525000
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><font style="FONT-FAMILY: arial" size="3"><b>3. Property and equipment,
net</b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">Property and equipment, net consisted
of the following (dollar amounts in thousands):</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="85%" align="center" border="0">
<tr>
<td width="73%"></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" rowspan="2" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>Estimated</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>Useful
Lives</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>(Years)</b></font></td>
<td valign="bottom" rowspan="2"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="6" align="center"><font style="FONT-FAMILY: arial" size="2"><b>December 31,</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>2014</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>2015</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Furniture and fixtures</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="center"><font style="FONT-FAMILY: arial" size="2">5</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">95</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">66</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Machinery and equipment</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="center"><font style="FONT-FAMILY: arial" size="2">5</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">105</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">121</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Computer equipment</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="center"><font style="FONT-FAMILY: arial" size="2">3</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">27</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">27</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="bottom">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Leasehold improvements</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"><font style="FONT-FAMILY: arial" size="2"> </font><br />
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><font style="FONT-FAMILY: arial" size="2"> </font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><font style="FONT-FAMILY: arial" size="2"> </font></p>
<p style="MARGIN-BOTTOM: 1px; MARGIN-TOP: 0px"><font style="FONT-FAMILY: arial" size="2"> </font></p>
</td>
<td valign="top" align="center"><font style="FONT-FAMILY: arial" size="2">Lesser of</font><br />
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px" align="center">
<font style="FONT-FAMILY: arial" size="2">useful life or</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px" align="center">
<font style="FONT-FAMILY: arial" size="2">remaining</font></p>
<p style="MARGIN-BOTTOM: 1px; MARGIN-TOP: 0px" align="center">
<font style="FONT-FAMILY: arial" size="2">lease term</font></p>
</td>
<td valign="top" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font><br />
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><font style="FONT-FAMILY: arial" size="2">  </font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><font style="FONT-FAMILY: arial" size="2">  </font></p>
<p style="MARGIN-BOTTOM: 1px; MARGIN-TOP: 0px"><font style="FONT-FAMILY: arial" size="2">  </font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">33</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">45</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">260</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">259</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Less: Accumulated
depreciation</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">(55</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">(103</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">) </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">205</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">156</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
</tr>
</table>
</div>
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="3"><b>7. Income taxes</b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">No provision for U.S. federal or
state income taxes has been recorded as the Company has incurred
net operating losses since inception. Significant components of the
Company’s net deferred income tax assets consist of the
following (in thousands):</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="75%" align="center" border="0">
<tr>
<td width="79%"></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="6" align="center"><font style="FONT-FAMILY: arial" size="2"><b>December 31,</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>2014</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>2015</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr style="FONT-SIZE: 1pt">
<td height="5"></td>
<td height="5" colspan="4"></td>
<td height="5" colspan="4"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Current</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"></td>
<td valign="top"></td>
<td valign="top"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top"></td>
<td valign="top"></td>
<td valign="top"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 2em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Deferred tax asset
(liability)</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Non-deductible accrued
expenses</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">20</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">230</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Deferred rent</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">4</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">3</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Valuation allowance</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">(24</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">(233</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">) </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 4em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Net current deferred tax
asset</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="2">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="2">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 1pt">
<td height="5"></td>
<td height="5" colspan="4"></td>
<td height="5" colspan="4"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Non-current</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"></td>
<td valign="top"></td>
<td valign="top"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top"></td>
<td valign="top"></td>
<td valign="top"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 2em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Deferred tax asset
(liability)</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Stock compensation expense</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">70</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">88</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 2em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Net operating loss
carryforwards</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">7,891</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">14,169</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 2em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Depreciation differences</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">(31</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">(28</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">) </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 2em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Federal tax credits</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">447</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">850</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 2em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">State tax credits</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">196</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">262</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 2em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Deferred revenue</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="2">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">77</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 2em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Deferred rent</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">4</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">1</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 2em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Charitable contributions</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">3</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">3</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 2em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Valuation allowance</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">(8,580</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">(15,422</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">) </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Net non-current deferred tax
asset</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="2">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="2">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 1px; MARGIN-TOP: 8px">
 </p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><font style="FONT-FAMILY: arial" size="2">A reconciliation of the statutory tax
rates and the effective tax rates is as follows:</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="75%" align="center" border="0">
<tr>
<td width="75%"></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="6" align="center"><font style="FONT-FAMILY: arial" size="2"><b>Year Ended</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>December
31,</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>2014</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>2015</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">U.S. federal tax rate</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">34.00%</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">34.00%</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">State tax rate</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">4.41</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">4.54</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Permanent difference and
other</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">(1.15</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">) </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">(1.26</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">) </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Tax credit</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">4.54</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">2.66</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Valuation allowance</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">(41.79</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">) </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">(39.94</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">) </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr>
<td valign="top"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="top" align="right"><font style="FONT-FAMILY: arial" size="2">0.00%</font></td>
<td valign="top" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="top" align="right"><font style="FONT-FAMILY: arial" size="2">0.00%</font></td>
<td valign="top" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">Realization of the future tax
benefits is dependent on the Company’s ability to generate
sufficient taxable income within the carryforward period. Due to
the Company’s history of operating losses, the deferred tax
assets arising from the aforementioned future tax benefits are
currently not likely to be realized and, accordingly, are offset by
a full valuation allowance. The income tax provision varies from
the expected provision determined by applying the federal statutory
income tax rate to income (loss). The reasons for the difference in
the expected provision, as determined by applying the federal
statutory income tax rate to net income (loss) is primarily due to
the increase in the deferred income tax valuation allowance of $4.2
million and $7.0 million for the years ended December 31, 2014 and
2015, respectively.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">As of December 31, 2015, the Company
had net deferred tax assets primarily related to net operating loss
carryforwards of $14.2 million, which expire through 2035.
Utilization of the net operating loss carryforwards and credits may
be subject to a substantial annual limitation due to the ownership
change limitations provided by the Internal Revenue Code of 1986,
as amended, and similar state provisions. The effect of an
ownership change could be an imposition of an annual limitation on
the use of net operating loss carryforwards attributable to periods
before the change.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The U.S. federal statute of
limitations remains open for the periods from inception and
forward. The Company has not been the subject of examination by the
taxing authorities.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The Company has no uncertain tax
positions.</font></p>
</div>
8000
17317000
-17639000
330000
-28000
100000
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">
Property and equipment, net consisted of the following (dollar
amounts in thousands):</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="84%" align="center" border="0">
<tr>
<td width="74%"></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" rowspan="2" align="center"><b>Estimated</b><br />
<b>Useful Lives</b><br />
<b>(Years)</b></td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>December 31,</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2014</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2015</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Furniture and fixtures</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom" align="center">5</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">95</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">66</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Machinery and equipment</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom" align="center">5</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">105</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">121</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Computer equipment</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom" align="center">3</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">27</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">27</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Leasehold improvements</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom" align="center">Lesser of<br />
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt" align="center">useful life or</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt" align="center">remaining</p>
<p style="MARGIN-BOTTOM: 1pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt" align="center">lease term</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">33</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">45</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">260</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">259</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Less: Accumulated depreciation</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(55</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(103</td>
<td valign="bottom" nowrap="nowrap">) </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">205</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">156</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
</table>
</div>
145000
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="2"><b><i>Recent accounting
pronouncements</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">In March 2016, the Financial
Accounting Standards Board (“FASB”) issued Accounting
Standards Update (“ASU”) No. 2016-09,
<i>Compensation-Stock Compensation (Topic 718)</i>. The new
guidance simplifies several aspects of the accounting for
share-based payment transactions, including the income tax
consequences, classification of awards as either equity or
liabilities, and classification on the statement of cash flows. For
public companies, the amendments in this standard are effective for
annual periods beginning after December 15, 2016, and interim
periods within those annual periods. Early adoption is permitted.
The effects of this standard on the Company’s financial
statements or related disclosures are not expected to be
material.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">In February 2016, the FASB issued ASU
No. 2016-02, <i>Leases (ASC 842),</i> which requires lessees to
recognize most leases on the balance sheet. This is expected to
increase both reported assets and liabilities. The new lease
standard does not substantially change lessor accounting. For
public companies, the standard will be effective for the first
interim reporting period within annual periods beginning after
December 15, 2018, although early adoption is permitted. Lessees
and lessors will be required to apply the new standard at the
beginning of the earliest period presented in the financial
statements in which they first apply the new guidance, using a
modified retrospective transition method. The requirements of this
standard include a significant increase in required disclosures.
The Company is currently assessing the impact that adopting this
new accounting guidance will have on its financial statements or
related disclosures.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">In August 2014, the FASB issued ASU
2014-15, <i>Presentation of Financial Statements—Going
Concern (Subtopic 205-40): Disclosure of Uncertainties About
an Entity’s Ability to Continue as a Going Concern,</i> which
provides guidance about management’s responsibility to
evaluate whether there is substantial doubt about an entity’s
ability to continue as a going concern and to provide related
footnote disclosures. The new standard is effective for the Company
for the annual period ending after December 15, 2016 and for annual
and interim periods thereafter, with early adoption permitted. The
Company is currently evaluating the impact of this accounting
standard update on the Company’s financial statements or
related disclosures.</font></p>
</div>
-1763000
-17317000
322000
104000
25944000
-15000
632000
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="3"><b>5. Long-term debt</b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2"><b><i>Note purchase
agreement</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">In December 2012, the Company entered
into a $150,000 unsecured note purchase agreement with a lender and
borrowed $150,000 on that date. Amounts borrowed under the
agreement bore interest at 5% per annum. All unpaid principal,
together with the balance of unpaid and accrued interest, were due
and payable on demand at any time after the earlier of (i) the
maturity date of December 2017, (ii) the date on which the Company
has achieved sustainable profitability for a period of at least two
consecutive fiscal years in accordance with generally accepted
accounting principles, (iii) without the prior written consent of
the lender, the date on which an equity financing of the Company in
which the Company issues shares of common stock, preferred stock or
other equity interests in the Company in a transaction or series of
related transactions and receives an investment of cash in
consideration of such issuance in the amount of not less than $7.0
million or consolidation of the Company or the sale or transfer by
the Company’s stockholders of capital stock of the Company
representing more than 50% of the voting power occurs or (iv) upon
or after the occurrence of an event of default. The repayment
acceleration provision specifically excluded the Series A-1
Preferred Stock financing that occurred in January 2013. The
unsecured promissory note converted into 60,291 shares of
Series B convertible preferred stock in connection with the
Company’s August 2014 Series B convertible preferred stock
financing.</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 1px; MARGIN-TOP: 8px">
 </p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><font style="FONT-FAMILY: arial" size="2">Interest expense on the borrowings
under the note purchase agreement was $5,000 and $0 for the years
ended December 31, 2014 and 2015, respectively. As of December 31,
2014 and 2015, the total amount of borrowings due under this note
purchase agreement was $0.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="2"><b><i>Loan
agreements</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">In April 2013, the Company borrowed
$125,000 under a loan agreement, which borrowings bore interest at
a compounded annual rate of 4.25%. As of December 31, 2013, the
total amount of borrowings due under the loan agreement was
$125,000. All unpaid principal, together with the balance of unpaid
and accrued interest, was due and payable on demand at any time
after the earlier of (i) the maturity date of February 2016, (ii)
the date on which the Company sells, leases, transfers or otherwise
disposes of all or substantially all of its assets now owned or
hereafter acquired, (iii) the date on which the Company makes a
public offering of the Company’s capital stock or equity
interests, (iv) the date on which the Company takes any action
which would result in a change in the direct or indirect control of
50% or more of the capital stock or equity interest ownership of
the Company, (v) the date after December 31, 2013 on which the
Company had received additional equity investments or milestone
payments or license fees totaling $2.5 million in the aggregate
over any 12-month period or (vi) upon or after the occurrence of an
event of default. In May 2014, the Company repaid this loan in
full.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">Interest expense on the borrowings
under the loan agreement was $2,000 and $0 for the years ended
December 31, 2014 and 2015, respectively.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">As of December 31, 2013, the Company
had recorded unamortized debt discount of $7,000, relating to the
detachable warrants issued in conjunction with the loan agreement
(Note 10). Debt discounts are amortized using the effective
interest method through the earlier of the date of maturity or the
conversion of the debt. As of December 31, 2013, cumulative
amortization of debt discount amounted to $3,000. The remaining
debt discount was written off to interest expense during 2014 when
the loan was repaid.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">In April 2015, the Company entered
into a loan agreement with a bank for borrowings up to $6.0
million, with a floating interest rate equal to the Wall Street
Journal’s prime rate minus 0.50 percent. Under the terms of
the loan, an initial tranche of $4.0 million was advanced on April
15, 2015 and an additional tranche of $2.0 million was advanced on
May 15, 2015. The Company is required to pay accrued interest only
for a period of 12 months from the date of each advance, followed
by 30 equal monthly payments of principal and accrued interest. A
final payment of $0.3 million, or 5.50% of the aggregate borrowed
amount, is due at maturity of the loan in 2018 and is being
accreted in long-term debt over the life of the loan. Closing costs
of $24,000 were recorded in long-term debt and are also being
accreted over the life of the loan.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">Interest expense on the borrowings
under the loan agreement was $0.1 million for the year ended
December 31, 2015. Accretion of the scheduled final payment
was $0.1 million for the year ended December 31, 2015. Accretion of
the deferred closing costs was $7,400 for the year ended December
31, 2015.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">As of December 31, 2015, the annual
payments for the loan agreement, including the scheduled final
payment in 2018, were as follows (in thousands):</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="85%" align="center" border="0">
<tr>
<td width="69%"></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom">
<p style="WIDTH: 97pt; BORDER-BOTTOM: rgb(0,0,0) 1px solid">
<font style="FONT-FAMILY: arial" size="2"><b>Year Ending December
31,</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>Principal</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>Interest and</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>Final Payment</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>Total</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">2016</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">1,733</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">166</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">1,899</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">2017</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">2,400</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">96</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">2,496</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">2018</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">1,867</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">354</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">2,221</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">6,000</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">616</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">6,616</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
</tr>
</table>
</div>
500000
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="3"><b>1. The company</b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">Clearside Biomedical, Inc. (the
“Company”) is a late-stage clinical biopharmaceutical
company developing first-in-class drug therapies to treat blinding
diseases of the eye. The Company’s current product candidates
focus on diseases affecting the retina and choroid, especially
diseases associated with macular edema, and are injected into the
suprachoroidal space using its proprietary SCS Microinjector.
Incorporated in the State of Delaware on May 26, 2011, the Company
has its corporate headquarters in Alpharetta, Georgia.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The Company’s activities since
inception have primarily consisted of developing product and
technology rights, raising capital and performing research and
development activities. The Company has no current source of
revenue to sustain present activities, and does not expect to
generate revenue until and unless the Company receives regulatory
approval of and successfully commercialize its product candidates.
The Company is subject to a number of risks and uncertainties
similar to those of other life science companies at a similar stage
of development, including, among others, the need to obtain
adequate additional financing, successful development efforts
including regulatory approval of products, compliance with
government regulations, successful commercialization of potential
products, protection of proprietary technology and dependence on
key individuals.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="2"><b><i>Liquidity</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The Company has funded its operations
to date primarily through the sale of convertible preferred stock
and the issuance of long-term debt. The Company will need to obtain
additional financing to fund future operations, including
completing the development and commercialization of its primary
product candidates. The Company will need to expend substantial
resources for research and development, including costs associated
with the clinical testing of its product candidates. The Company
will need to obtain additional financing to conduct additional
trials for the regulatory approval of its drug candidates if
requested by regulatory bodies, and completing the development of
any additional product candidates that might be acquired. If such
products were to receive regulatory approval, the Company would
need to prepare for the potential commercialization of its product
candidates and fund the commercial launch of the products, if the
Company decides to commercialize the products on its own. Moreover,
the Company’s fixed expenses such as rent and other
contractual commitments are substantial and are expected to
increase in the future.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The Company has incurred losses and
experienced negative operating cash flows since inception, and has
cumulative net cash flows used in operating activities of $33.1
million and cumulative net losses of $39.4 million for the period
from May 26, 2011 (inception) to December 31, 2015. The total
future need for operating capital and research and development
funding significantly exceeds the cash and cash equivalents that
the Company has on its balance sheet. As a result, the Company will
require additional funding in the future and may not be able to
raise such additional funds. In the absence of product or other
revenues, the amount, timing, nature or source of which cannot be
predicted, the Company’s losses will continue as it conducts
its research and development activities. Until the Company can
generate a sufficient amount of revenue, the Company may finance
future cash needs through public or private equity offerings,
license agreements, debt financings, collaborations, strategic
alliances and marketing or distribution arrangements. The
incurrence of indebtedness would result in increased fixed payment
obligations and could also result in restrictive covenants, such as
limitations on the Company’s ability to incur additional
debt, limitations on its ability to acquire, sell or license
intellectual property rights and other operating restrictions that
could adversely impact the ability of the Company to conduct its
business. If adequate funds are not available, the Company plans to
delay, reduce or eliminate research and development programs or
reduce administrative expenses. The Company may seek to access the
public or private capital markets whenever conditions are
favorable, even if the Company does not have an immediate need for
additional capital at that time. In addition, if the Company raises
additional funds through collaborations, strategic alliances or
marketing, distribution or licensing arrangements with third
parties, the Company may have to relinquish valuable rights to its
technologies, future revenue streams or product candidates or to
grant licenses on terms that may not be favorable to the Company.
There is no assurance that the Company will be successful in
obtaining sufficient financing on acceptable terms and conditions
to fund continuing operations, if at all. The failure of the
Company to obtain sufficient funds on acceptable terms when needed
could have a material adverse effect on the Company’s
business, results of operations and financial condition. However,
the Company is able to control spending on development activities
while still advancing clinical trials for key drug candidates
through December 31, 2016 with the cash on hand as of December 31,
2015.</font></p>
</div>
-13902000
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="2"><b><i>Income taxes</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">Deferred tax assets or liabilities
are recorded for temporary differences between financial statement
and tax basis of assets and liabilities, using enacted rates in
effect for the year in which the differences are expected to
reverse. A valuation allowance is recorded if it is more likely
than not that a deferred tax asset will not be realized. The
Company has provided a full valuation allowance on its deferred tax
assets, which primarily consist of cumulative net operating losses
of $14.2 million for the period from May 26, 2011 (inception) to
December 31, 2015. Due to its history of operating losses since
inception and losses expected to be incurred in the foreseeable
future, a full valuation allowance was considered
necessary.</font></p>
</div>
32000
4000
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="3"><b>9. Common stock</b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The Company’s amended and
restated certificate of incorporation authorizes the Company to
issue 40,000,000 shares of $0.001 par value common stock. As of
December 31, 2014 and 2015, there were 1,816,467 and 2,659,262
shares of common stock outstanding, respectively, which excluded
20,688 and 6,485 shares, respectively, of unvested restricted
stock. The terms, rights, preferences and privileges of the
Company’s common stock are as follows:</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="2"><b><i>Voting</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">Each holder of common stock is
entitled to one vote for each share of common stock held on all
matters submitted to a vote of the stockholders, including the
election of directors. The Company’s amended and restated
certificate of incorporation and bylaws do not provide for
cumulative voting rights.</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 1px; MARGIN-TOP: 16px">
 </p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><font style="FONT-FAMILY: arial" size="2"><b><i>Dividends</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">Subject to preferences that may be
attributable to any then outstanding convertible preferred stock,
the holders of the Company’s outstanding shares of common
stock are entitled to receive dividends, if any, as may be declared
by the Company’s board of directors out of legally available
funds.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="2"><b><i>Liquidation</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">In the event of the Company’s
liquidation, dissolution or winding up, holders of common stock
will be entitled to share ratably in the net assets legally
available for distribution to stockholders after the payment of all
the Company’s debts and other liabilities, subject to
satisfaction of the liquidation preferences granted to the holders
of any outstanding preferred stock.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="2"><b><i>Rights and
preference</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">Holders of the Company’s common
stock have no preemptive, conversion or subscription rights, and
there are no redemption or other related provisions attributable to
the common stock. The rights, preferences and privileges of the
holders of common stock are subject to, and may be adversely
affected by, the rights of the holders of shares of any series of
preferred stock of the Company that may be issued.</font></p>
</div>
50980
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="2"><b><i>Use of
estimates</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The preparation of financial
statements in conformity with U.S. GAAP requires management to make
estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and reported
amounts of income and expenses during the reporting periods.
Significant items subject to such estimates and assumptions include
the accounting for useful lives to calculate depreciation and
amortization, accrued liabilities, share-based compensation expense
and income tax valuation allowance. Actual results could differ
from these estimates.</font></p>
</div>
-0.0266
1.1350
0.0213
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="2"><b><i>Segment
information</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">Operating segments are defined as
components of an enterprise about which separate discrete
information is available for evaluation by the chief operating
decision maker, or decision-making group, in deciding how to
allocate resources and in assessing performance. The Company views
its operations and manages its business in one operating segment.
All operations are located in the United States.</font></p>
</div>
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">
The following table provides additional information about the
Company’s stock options that were outstanding and exercisable
at December 31, 2015 (aggregate intrinsic values in thousands):</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" align="center" border="0">
<tr>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="7%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="7%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="7%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="7%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="7%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="7%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="7%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" nowrap="nowrap" align="center"><b>Exercise</b><br />
<b>Price</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Options</b><br />
<b>Outstanding</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Weighted</b><br />
<b>Average</b><br />
<b>Exercise</b><br />
<b>Price</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Aggregate</b><br />
<b>Intrinsic</b><br />
<b>Value</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Average</b><br />
<b>Remaining</b><br />
<b>Contractual</b><br />
<b>Life (Years)</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Options</b><br />
<b>Exercisable</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Weighted</b><br />
<b>Average</b><br />
<b>Exercise</b><br />
<b>Price</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Aggregate</b><br />
<b>Intrinsic</b><br />
<b>Value</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">$</td>
<td valign="top" align="right">0.02</td>
<td valign="top" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">11,363</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">5.9</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">11,363</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top"> </td>
<td valign="top" align="right">0.15</td>
<td valign="top" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">72,987</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">6.4</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">67,510</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top"> </td>
<td valign="top" align="right">0.40</td>
<td valign="top" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">544,493</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">7.6</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">329,131</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top"> </td>
<td valign="top" align="right">3.08</td>
<td valign="top" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">31,818</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">8.6</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">11,267</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top"> </td>
<td valign="top" align="right">3.41</td>
<td valign="top" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">311,357</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">9.0</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">79,254</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top"> </td>
<td valign="top" align="right">5.57</td>
<td valign="top" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">232,802</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">9.9</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top"> </td>
<td valign="top" align="right">6.16</td>
<td valign="top" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">56,817</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">9.5</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">2,272</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top"></td>
<td valign="top"></td>
<td valign="top"></td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">1,261,637</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">2.40</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">7,210</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">500,797</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">0.92</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">3,606</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
</table>
</div>
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="2"><b><i>Property and equipment,
net</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">Property and equipment is recorded at
historical cost. Depreciation is calculated using the straight-line
method over the estimated useful lives of the related assets.
Repairs and maintenance are expensed when incurred. Upon retirement
or sale, the cost of the assets disposed of and the related
accumulated depreciation are removed from the accounts, and any
resulting gain or loss is included in the determination of net
income.</font></p>
</div>
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="2"><b><i>Stock purchase
warrants</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The Company accounts for stock
purchase warrants as liabilities based upon the characteristics and
provisions of the underlying instruments. These liabilities are
recorded at their fair value on the date of issuance within other
non-current liabilities on the balance sheet and are remeasured on
each subsequent reporting date, with fair value changes recognized
as income (decreases in fair value) or expenses (increases in fair
value) in other income (expense), net in the statements of
operations. The fair value of these liabilities is estimated using
the Black-Scholes method.</font></p>
</div>
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The following table sets forth the
weighted average assumptions utilized in the fair value calculation
for the underlying common stock for the years ended December 31,
2014 and 2015.</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="75%" align="center" border="0">
<tr>
<td width="76%"></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="6" align="center"><font style="FONT-FAMILY: arial" size="2"><b>Year Ended</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>December 31,</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>2014</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>2015</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Expected term (years)</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">7.00</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">7.00</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Expected stock price
volatility</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">85.64%</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">86.63%</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Risk-free interest rate</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">1.99%</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">2.09%</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Expected dividend yield</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">0.00%</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">0.00%</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2"> </font></td>
</tr>
</table>
</div>
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">
The Company’s potential common stock equivalents that have
been excluded from the computation of diluted net loss per share
for all periods presented because of their antidilutive effect
consisted of the following:</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="76%" align="center" border="0">
<tr>
<td width="75%"></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>Year Ended</b><br />
<b>December 31,</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2014</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2015</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Convertible preferred stock</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">7,074,961</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">9,472,530</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Outstanding stock options</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">1,098,486</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">1,261,637</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Unvested restricted stock</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">20,688</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">6,485</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Stock purchase warrants</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">900,724</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">146,298</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top"></td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">9,094,859</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">10,886,950</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
</table>
</div>
P8Y4M24D
19954000
<div>
<div>
<p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; WIDOWS: 1; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px">
The total share-based compensation expense recognized is reflected
in the statements of operations as follows (in thousands):</p>
<p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; COLOR: rgb(0,0,0); FONT: 12pt 'Times New Roman'; WIDOWS: 1; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; WORD-SPACING: 0px; BORDER-COLLAPSE: collapse; TEXT-TRANSFORM: none; WIDOWS: 1; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px" cellspacing="0" cellpadding="0" width="76%" align="center" border="0">
<tr>
<td width="78%"></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: 'Times New Roman'">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="6" align="center">
<b>Year Ended December 31,</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: 'Times New Roman'">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>2014</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>2015</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Research and development</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">218</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">327</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
General and administrative</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">209</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">378</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Total</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">427</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">705</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
</table>
<br class="Apple-interchange-newline" />
<p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; WIDOWS: 1; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px">
The Company has granted stock option awards to employees, directors
and consultants. Share-based compensation expense for options
granted is reflected in the statements of operations as follows (in
thousands):</p>
<p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; COLOR: rgb(0,0,0); FONT: 12pt 'Times New Roman'; WIDOWS: 1; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; WORD-SPACING: 0px; BORDER-COLLAPSE: collapse; TEXT-TRANSFORM: none; WIDOWS: 1; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px" cellspacing="0" cellpadding="0" width="76%" align="center" border="0">
<tr>
<td width="78%"></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: 'Times New Roman'">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="6" align="center">
<b>Year Ended December 31,</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: 'Times New Roman'">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>2014</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>2015</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Research and development</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">91</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">327</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
General and administrative</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">192</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">378</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Total</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">283</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">705</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; WIDOWS: 1; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px">
Share-based compensation expense for restricted stock granted is
reflected in the statements of operations as follows (in
thousands):</p>
<p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; COLOR: rgb(0,0,0); FONT: 12pt 'Times New Roman'; WIDOWS: 1; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px">
 </p>
<p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; WIDOWS: 1; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px">
</p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; WORD-SPACING: 0px; BORDER-COLLAPSE: collapse; TEXT-TRANSFORM: none; WIDOWS: 1; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px" cellspacing="0" cellpadding="0" width="76%" align="center" border="0">
<tr>
<td width="84%"></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: 'Times New Roman'">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="6" align="center"><b>Year Ended</b><br />
<b>December 31,</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: 'Times New Roman'">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>2014</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>2015</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Research and development</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">127</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">
 —  </td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
General and administrative</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">17</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Total</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">144</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
</table>
<br class="Apple-interchange-newline" /></div>
</div>
0.0000
5.68
1.67
<div>
<p><font size="2" style="font-family:Arial">Significant components of the
Company’s net deferred income tax assets consist of the
following (in thousands):</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="75%" align="center" border="0">
<tr>
<td width="79%"></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="6" align="center"><font style="FONT-FAMILY: arial" size="2"><b>December 31,</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>2014</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>2015</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr style="FONT-SIZE: 1pt">
<td height="5"></td>
<td height="5" colspan="4"></td>
<td height="5" colspan="4"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Current</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"></td>
<td valign="top"></td>
<td valign="top"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top"></td>
<td valign="top"></td>
<td valign="top"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 2em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Deferred tax asset
(liability)</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Non-deductible accrued
expenses</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">20</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">230</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Deferred rent</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">4</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">3</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Valuation allowance</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">(24</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">(233</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">) </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 4em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Net current deferred tax
asset</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="2">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="2">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 1pt">
<td height="5"></td>
<td height="5" colspan="4"></td>
<td height="5" colspan="4"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Non-current</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"></td>
<td valign="top"></td>
<td valign="top"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top"></td>
<td valign="top"></td>
<td valign="top"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 2em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Deferred tax asset
(liability)</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Stock compensation expense</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">70</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">88</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 2em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Net operating loss
carryforwards</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">7,891</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">14,169</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 2em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Depreciation differences</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">(31</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">(28</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">) </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 2em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Federal tax credits</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">447</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">850</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 2em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">State tax credits</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">196</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">262</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 2em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Deferred revenue</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="2">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">77</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 2em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Deferred rent</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">4</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">1</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 2em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Charitable contributions</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">3</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">3</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 2em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Valuation allowance</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">(8,580</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">(15,422</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">) </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Net non-current deferred tax
asset</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="2">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="2">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
</tr>
</table>
</div>
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">
As of December 31, 2015, the annual payments for the loan
agreement, including the scheduled final payment in 2018, were as
follows (in thousands):</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="84%" align="center" border="0">
<tr>
<td width="74%"></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">
<td valign="bottom" nowrap="nowrap">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; WIDTH: 92.45pt; BORDER-BOTTOM: #000000 1pt solid; MARGIN-TOP: 0pt">
<b>Year Ending December 31,</b></p>
</td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Principal</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Interest</b><br />
<b>and</b><br />
<b>Final</b><br />
<b>Payment</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Total</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
2016</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">1,733</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">166</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">1,899</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
2017</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">2,400</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">96</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">2,496</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
2018</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">1,867</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">354</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">2,221</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">6,000</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">616</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">6,616</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
</table>
</div>
0.27
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">
Minimum lease payments were as follows at December 31, 2015 (in
thousands):</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="68%" align="center" border="0">
<tr>
<td width="91%"></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
2016</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">90</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
2017</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">23</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Total minimum lease payments</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">113</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
</table>
</div>
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="3"><b>2. Significant accounting
policies</b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2"><b><i>Basis of
presentation</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The Company’s financial
statements have been prepared in conformity with accounting
principles generally accepted in the United States of America
(“U.S. GAAP”).</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="2"><b><i>Use of
estimates</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The preparation of financial
statements in conformity with U.S. GAAP requires management to make
estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and reported
amounts of income and expenses during the reporting periods.
Significant items subject to such estimates and assumptions include
the accounting for useful lives to calculate depreciation and
amortization, accrued liabilities, share-based compensation expense
and income tax valuation allowance. Actual results could differ
from these estimates.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="2"><b><i>Segment
information</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">Operating segments are defined as
components of an enterprise about which separate discrete
information is available for evaluation by the chief operating
decision maker, or decision-making group, in deciding how to
allocate resources and in assessing performance. The Company views
its operations and manages its business in one operating segment.
All operations are located in the United States.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="2"><b><i>Property and equipment,
net</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">Property and equipment is recorded at
historical cost. Depreciation is calculated using the straight-line
method over the estimated useful lives of the related assets.
Repairs and maintenance are expensed when incurred. Upon retirement
or sale, the cost of the assets disposed of and the related
accumulated depreciation are removed from the accounts, and any
resulting gain or loss is included in the determination of net
income.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="2"><b><i>Cash
equivalents</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">Cash equivalents consist of
short-term, highly liquid investments with an original term of
three months or less at the date of purchase.</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 1px; MARGIN-TOP: 16px">
 </p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><font style="FONT-FAMILY: arial" size="2"><b><i>Concentration of credit risk
arising from cash deposits in excess of insured
limits</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The Company maintains its cash in
bank deposits that at times may exceed federally insured limits.
The Company has not experienced any loss in such accounts. The
Company believes it is not exposed to any significant risks with
respect to its cash balances.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="2"><b><i>Deferred offering
costs</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The Company capitalizes certain
legal, accounting and other third-party fees that are directly
associated with in-process equity financings as other assets until
such financings are consummated. After consummation of the equity
financing, these costs are recorded in stockholders’ equity
(deficit) as a reduction of additional paid-in capital generated as
a result of the offering or as a reduction to the carrying value of
preferred stock issued, if such stock is classified outside of
stockholders’ equity (deficit). Should the equity financing
no longer be considered probable of being consummated, the deferred
offering costs would be expensed immediately as a charge to
operating expenses in the statement of operations. As of December
31, 2014, the Company had recorded $1.8 million of deferred
offering costs. In September 2015, $1.9 million of deferred
offering costs were charged to operating expenses due to the
postponement of the equity financing. As of December 31, 2015, the
Company had recorded $0.4 million of deferred offering costs in
connection with a new equity financing.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="2"><b><i>Research and development
costs</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">Research and development costs are
charged to expense as incurred and include, but are not limited
to:</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0">
<tr>
<td valign="top" width="1%" align="left"><font style="FONT-FAMILY: arial" size="2">•</font></td>
<td valign="top" width="1%"><font size="1"> </font></td>
<td valign="top" align="left">
<p align="left"><font style="FONT-FAMILY: arial" size="2">employee-related expenses, including salaries, benefits, travel
and share-based compensation expense for research and development
personnel;</font></p>
</td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0">
<tr>
<td valign="top" width="1%" align="left"><font style="FONT-FAMILY: arial" size="2">•</font></td>
<td valign="top" width="1%"><font size="1"> </font></td>
<td valign="top" align="left">
<p align="left"><font style="FONT-FAMILY: arial" size="2">expenses
incurred under agreements with contract research organizations,
contract manufacturing organizations and consultants that conduct
clinical and preclinical studies;</font></p>
</td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0">
<tr>
<td valign="top" width="1%" align="left"><font style="FONT-FAMILY: arial" size="2">•</font></td>
<td valign="top" width="1%"><font size="1"> </font></td>
<td valign="top" align="left">
<p align="left"><font style="FONT-FAMILY: arial" size="2">costs
associated with preclinical and development activities;</font></p>
</td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0">
<tr>
<td valign="top" width="1%" align="left"><font style="FONT-FAMILY: arial" size="2">•</font></td>
<td valign="top" width="1%"><font size="1"> </font></td>
<td valign="top" align="left">
<p align="left"><font style="FONT-FAMILY: arial" size="2">costs
associated with technology and intellectual property
licenses;</font></p>
</td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0">
<tr>
<td valign="top" width="1%" align="left"><font style="FONT-FAMILY: arial" size="2">•</font></td>
<td valign="top" width="1%"><font size="1"> </font></td>
<td valign="top" align="left">
<p align="left"><font style="FONT-FAMILY: arial" size="2">costs for
the Company’s research and development facility;
and</font></p>
</td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0">
<tr>
<td valign="top" width="1%" align="left"><font style="FONT-FAMILY: arial" size="2">•</font></td>
<td valign="top" width="1%"><font size="1"> </font></td>
<td valign="top" align="left">
<p align="left"><font style="FONT-FAMILY: arial" size="2">depreciation expense for assets used in research and
development activities.</font></p>
</td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">Costs for certain development
activities, such as clinical studies, are recognized based on an
evaluation of the progress to completion of specific tasks using
data such as patient enrollment, clinical site activations, or
information provided to the Company by its vendors on their actual
costs incurred. Payments for these activities are based on the
terms of the individual arrangements, which may differ from the
patterns of costs incurred, and are reflected in the financial
statements as prepaid or accrued expense, which are reported in
accounts payable. No material adjustments to these estimates have
been recorded in these financial statements.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="2"><b><i>Share-based
compensation</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">Compensation cost related to
share-based awards granted to employees is measured at grant date,
based on the estimated fair value of the award. The Company
estimates the fair value of stock options using a Black-Scholes
option pricing model. Compensation expense for options granted to
non-employees is determined as the fair value of consideration
received or the fair value of the equity instruments issued,
whichever is more reliably measured. The fair value of restricted
stock awards is determined based on the fair value of the
Company’s common stock on the date of grant. Share-based
compensation costs are expensed on a straight-line basis (net of
estimated forfeitures) over the relevant vesting period. The fair
value of awards granted to non-employees is re-measured each period
until the related service is complete. All share-based compensation
costs are recorded in general and administrative or research and
development costs in the statements of operations based upon the
underlying employees’ roles within the Company.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="2"><b><i>Debt
discount</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The Company follows the authoritative
guidance in Accounting Standards Codification (“ASC”)
470-20-25-2, <i>Debt with Conversion of Other Options</i>, for
accounting for debt discount related to the detachable stock
purchase warrants issued in connection with a debt obligation. The
fair value of the warrant is recorded as a discount against the
related debt obligation, and is amortized using the effective
interest rate method over the term of the underlying debt
obligation and reflected in interest expense.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="2"><b><i>Fair value
measurements</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The Company records certain financial
assets and liabilities at fair value in accordance with the
provisions of ASC Topic 820, <i>Fair Value Measurements and
Disclosures</i>, on fair value measurements. The Company’s
material financial instruments at December 31, 2014 and 2015
consisted primarily of cash and cash equivalents, long-term debt
and stock purchase warrant liabilities. The fair value of cash and
cash equivalents, other current assets, and accounts payable
approximate their respective carrying values due to the short term
nature of these instruments.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="2"><b><i>Stock purchase
warrants</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The Company accounts for stock
purchase warrants as liabilities based upon the characteristics and
provisions of the underlying instruments. These liabilities are
recorded at their fair value on the date of issuance within other
non-current liabilities on the balance sheet and are remeasured on
each subsequent reporting date, with fair value changes recognized
as income (decreases in fair value) or expenses (increases in fair
value) in other income (expense), net in the statements of
operations. The fair value of these liabilities is estimated using
the Black-Scholes method.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="2"><b><i>Income taxes</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">Deferred tax assets or liabilities
are recorded for temporary differences between financial statement
and tax basis of assets and liabilities, using enacted rates in
effect for the year in which the differences are expected to
reverse. A valuation allowance is recorded if it is more likely
than not that a deferred tax asset will not be realized. The
Company has provided a full valuation allowance on its deferred tax
assets, which primarily consist of cumulative net operating losses
of $14.2 million for the period from May 26, 2011 (inception) to
December 31, 2015. Due to its history of operating losses since
inception and losses expected to be incurred in the foreseeable
future, a full valuation allowance was considered
necessary.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="2"><b><i>Recent accounting
pronouncements</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">In March 2016, the Financial
Accounting Standards Board (“FASB”) issued Accounting
Standards Update (“ASU”) No. 2016-09,
<i>Compensation-Stock Compensation (Topic 718)</i>. The new
guidance simplifies several aspects of the accounting for
share-based payment transactions, including the income tax
consequences, classification of awards as either equity or
liabilities, and classification on the statement of cash flows. For
public companies, the amendments in this standard are effective for
annual periods beginning after December 15, 2016, and interim
periods within those annual periods. Early adoption is permitted.
The effects of this standard on the Company’s financial
statements or related disclosures are not expected to be
material.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">In February 2016, the FASB issued ASU
No. 2016-02, <i>Leases (ASC 842),</i> which requires lessees to
recognize most leases on the balance sheet. This is expected to
increase both reported assets and liabilities. The new lease
standard does not substantially change lessor accounting. For
public companies, the standard will be effective for the first
interim reporting period within annual periods beginning after
December 15, 2018, although early adoption is permitted. Lessees
and lessors will be required to apply the new standard at the
beginning of the earliest period presented in the financial
statements in which they first apply the new guidance, using a
modified retrospective transition method. The requirements of this
standard include a significant increase in required disclosures.
The Company is currently assessing the impact that adopting this
new accounting guidance will have on its financial statements or
related disclosures.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">In August 2014, the FASB issued ASU
2014-15, <i>Presentation of Financial Statements—Going
Concern (Subtopic 205-40): Disclosure of Uncertainties About
an Entity’s Ability to Continue as a Going Concern,</i> which
provides guidance about management’s responsibility to
evaluate whether there is substantial doubt about an entity’s
ability to continue as a going concern and to provide related
footnote disclosures. The new standard is effective for the Company
for the annual period ending after December 15, 2016 and for annual
and interim periods thereafter, with early adoption permitted. The
Company is currently evaluating the impact of this accounting
standard update on the Company’s financial statements or
related disclosures.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="2"><b><i>Net loss per share of common
stock</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">Basic net loss per share is
calculated by dividing the net loss by the weighted average number
of shares of common stock outstanding for the period, without
consideration of the dilutive effect of potential common stock
equivalents. Diluted net loss per share gives effect to all
dilutive potential shares of common stock outstanding during this
period.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">For all periods presented, the
Company’s potential common stock equivalents, which include
convertible preferred stock, stock options, unvested restricted
stock and stock purchase warrants, have been excluded from the
computation of diluted net loss per share as their inclusion would
have the effect of reducing the net loss per share. Therefore, the
denominator used to calculate both basic and diluted net loss per
share is the same in all periods presented.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The Company’s potential common
stock equivalents that have been excluded from the computation of
diluted net loss per share for all periods presented because of
their antidilutive effect consisted of the following:</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="85%" align="center" border="0">
<tr>
<td width="75%"></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="6" align="center"><font style="FONT-FAMILY: arial" size="2"><b>Year Ended</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>December
31,</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>2014</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>2015</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Convertible preferred
stock</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">7,074,961</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">9,472,530</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Outstanding stock options</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">1,098,486</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">1,261,637</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Unvested restricted stock</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">20,688</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">6,485</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Stock purchase warrants</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">900,724</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">146,298</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="top" align="right"><font style="FONT-FAMILY: arial" size="2">9,094,859</font></td>
<td valign="top" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="top" align="right"><font style="FONT-FAMILY: arial" size="2">10,886,950</font></td>
<td valign="top" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
</table>
</div>
14000
10762000
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="2"><b><i>Research and development
costs</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">Research and development costs are
charged to expense as incurred and include, but are not limited
to:</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0">
<tr>
<td valign="top" width="1%" align="left"><font style="FONT-FAMILY: arial" size="2">•</font></td>
<td valign="top" width="1%"><font size="1"> </font></td>
<td valign="top" align="left">
<p align="left"><font style="FONT-FAMILY: arial" size="2">employee-related expenses, including salaries, benefits, travel
and share-based compensation expense for research and development
personnel;</font></p>
</td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0">
<tr>
<td valign="top" width="1%" align="left"><font style="FONT-FAMILY: arial" size="2">•</font></td>
<td valign="top" width="1%"><font size="1"> </font></td>
<td valign="top" align="left">
<p align="left"><font style="FONT-FAMILY: arial" size="2">expenses
incurred under agreements with contract research organizations,
contract manufacturing organizations and consultants that conduct
clinical and preclinical studies;</font></p>
</td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0">
<tr>
<td valign="top" width="1%" align="left"><font style="FONT-FAMILY: arial" size="2">•</font></td>
<td valign="top" width="1%"><font size="1"> </font></td>
<td valign="top" align="left">
<p align="left"><font style="FONT-FAMILY: arial" size="2">costs
associated with preclinical and development activities;</font></p>
</td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0">
<tr>
<td valign="top" width="1%" align="left"><font style="FONT-FAMILY: arial" size="2">•</font></td>
<td valign="top" width="1%"><font size="1"> </font></td>
<td valign="top" align="left">
<p align="left"><font style="FONT-FAMILY: arial" size="2">costs
associated with technology and intellectual property
licenses;</font></p>
</td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0">
<tr>
<td valign="top" width="1%" align="left"><font style="FONT-FAMILY: arial" size="2">•</font></td>
<td valign="top" width="1%"><font size="1"> </font></td>
<td valign="top" align="left">
<p align="left"><font style="FONT-FAMILY: arial" size="2">costs for
the Company’s research and development facility;
and</font></p>
</td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0">
<tr>
<td valign="top" width="1%" align="left"><font style="FONT-FAMILY: arial" size="2">•</font></td>
<td valign="top" width="1%"><font size="1"> </font></td>
<td valign="top" align="left">
<p align="left"><font style="FONT-FAMILY: arial" size="2">depreciation expense for assets used in research and
development activities.</font></p>
</td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">Costs for certain development
activities, such as clinical studies, are recognized based on an
evaluation of the progress to completion of specific tasks using
data such as patient enrollment, clinical site activations, or
information provided to the Company by its vendors on their actual
costs incurred. Payments for these activities are based on the
terms of the individual arrangements, which may differ from the
patterns of costs incurred, and are reflected in the financial
statements as prepaid or accrued expense, which are reported in
accounts payable. No material adjustments to these estimates have
been recorded in these financial statements.</font></p>
</div>
5976000
14000
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">
Accrued liabilities consisted of the following (in thousands):</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="76%" align="center" border="0">
<tr>
<td width="82%"></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>December 31,</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2014</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2015</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Accrued research and development</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">427</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">569</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Accrued bonuses</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">279</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">530</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Accrued professional fees</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">178</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">668</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Accrued vacation</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">53</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">64</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Accrued interest payable</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">15</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Accrued expense</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">220</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">139</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top"></td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">1,157</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">1,985</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
</table>
</div>
0.8663
525000
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">
A reconciliation of the statutory tax rates and the effective tax
rates is as follows:</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="76%" align="center" border="0">
<tr>
<td width="82%"></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>Year Ended</b><br />
<b>December 31,</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2014</b></td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2015</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
U.S. federal tax rate</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">34.00</td>
<td valign="bottom" nowrap="nowrap">% </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">34.00</td>
<td valign="bottom" nowrap="nowrap">% </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
State tax rate</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">4.41</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">4.54</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Permanent difference and other</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(1.15</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(1.26</td>
<td valign="bottom" nowrap="nowrap">) </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Tax credit</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">4.54</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">2.66</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Valuation allowance</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(41.79</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(39.94</td>
<td valign="bottom" nowrap="nowrap">) </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top"></td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">% </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">0.00</td>
<td valign="bottom" nowrap="nowrap">% </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
</table>
</div>
<div>
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">
The following table summarizes the activity related to stock
options:</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="76%" align="center" border="0">
<tr>
<td width="78%"></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Number of</b><br />
<b>Shares</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Weighted</b><br />
<b>Average</b><br />
<b>Exercise</b><br />
<b>Price</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Options outstanding at January 1, 2014</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">770,062</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">0.34</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Granted</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">376,126</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">3.38</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Exercised</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(24,803</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">0.17</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Cancelled/Forfeited</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(22,899</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">0.15</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Options outstanding at December 31, 2014</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">1,098,486</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">1.39</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Granted</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">289,619</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">5.68</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Exercised</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(50,980</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">0.27</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Cancelled/Forfeited</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(75,488</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">1.67</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Options outstanding at December 31, 2015</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">1,261,637</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">2.40</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
</table>
</div>
<p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; COLOR: rgb(0,0,0); FONT: 10pt 'Times New Roman'; WIDOWS: 1; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px">
A summary of the status of unvested restricted stock is presented
below:</p>
<p style="MARGIN-BOTTOM: 0pt; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; COLOR: rgb(0,0,0); FONT: 12pt 'Times New Roman'; WIDOWS: 1; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; WORD-SPACING: 0px; BORDER-COLLAPSE: collapse; TEXT-TRANSFORM: none; WIDOWS: 1; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px" cellspacing="0" cellpadding="0" width="76%" align="center" border="0">
<tr>
<td width="79%"></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: 'Times New Roman'">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Number of</b><br />
<b>Shares</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Weighted</b><br />
<b>Average</b><br />
<b>Grant</b><br />
<b>Date</b><br />
<b>Fair</b><br />
<b>Value</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Unvested at January 1, 2014</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">229,208</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">0.51</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Vested</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(208,520</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">0.40</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Unvested at December 31, 2014</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">20,688</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">0.57</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Vested</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(14,203</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">0.55</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman'; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Unvested at December 31, 2015</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">6,485</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">0.57</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
</table>
<br class="Apple-interchange-newline" /></div>
289619
0.0209
75488
705000
P7Y
2338950
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><font style="FONT-FAMILY: arial" size="3"><b>16. Subsequent
events</b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2"><b><i>Reverse stock
split</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">On May 11, 2016, the Company effected
a 1-for-2.2 reverse stock split of its issued and outstanding
shares of common stock and a proportional adjustment to the
existing conversion ratios for each series of the Company’s
convertible preferred stock (see Notes 8 and 9). Accordingly, all
share and per share amounts for all periods presented in these
financial statements and notes thereto have been adjusted
retroactively, where applicable, to reflect this reverse stock
split and adjustment of the preferred stock conversion
ratios.</font></p>
</div>
1
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="3"><b>13. License
agreements</b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">In July 2012, the Company entered
into an Exclusive License Agreement with Emory University and
Georgia Tech Research Corporation (“Emory/GTRC”),
whereby the Company purchased a license for Methods and Devices For
Drug Delivery Using Microneedles. The Company paid $30,000 for the
license and made a milestone payment of $35,000 during the year
ended December 31, 2012. No payments were made to Emory/GTRC during
the years ended December 31, 2014 or 2015. The Exclusive License
Agreement requires the Company to make a milestone payment upon the
occurrence of a specified event relating to the commercialization
of a drug developed using the licensed patents. Beginning on the
third anniversary of this license agreement, the Company will be
obligated to pay an annual license maintenance fee of $25,000,
which will continue until the first commercial sale of a product
covered by the licensed patents. Additionally, the Company will owe
a low single-digit royalty on any worldwide net product sales
related to the licensed patents, with minimum annual royalties of
$15,000 after commercialization. The minimum annual royalty
increases thereafter to $100,000.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">In August 2014, the Company entered
into a royalty-bearing license agreement with NovaMedica LLC
(“NovaMedica”). Under this agreement, the Company
granted to NovaMedica the right to use the Company’s
intellectual property to develop and commercialize the intended
products (the “Covered Products”) and to have the
exclusive right to sell those products in Russia and specified
adjacent territories involving the use of the corticosteroid
triamcinolone acetonide as the sole active pharmaceutical
ingredient for administration in the suprachoroidal space. In
addition, NovaMedica agreed to make royalty payments equal to the
amount of any royalties the Company owes to Emory or GTRC pursuant
to the Emory/GTRC License Agreement as a result of
NovaMedica’s sales of products and services covered by the
license granted to NovaMedica, up to a maximum of a low
single-digit percentage of net sales of such products or services
by NovaMedica. NovaMedica has also agreed to make milestone
payments, totaling $12.7 million in the aggregate, primarily
related to the achievement of specified commercial product sales.
The agreement also includes provisions whereby the Company and
NovaMedica may enter into a future development and research
collaboration agreement and a supply agreement for the Company to
manufacture and supply the Covered Products. Terms and conditions
of these agreements would be negotiated in good faith in the
future. The term of the NovaMedica license agreement will expire
upon the expiration of the last-to-expire valid claim within the
patents licensed to NovaMedica pursuant to the agreement. Either
the Company or NovaMedica may terminate the agreement upon written
notice in the event of the other party’s material breach that
is not cured within 20 business days of receiving written notice
requesting a cure of a payment breach, and within 60 business days
of receiving written notice requesting a cure in the case of all
other breaches. Each party also has the right to terminate the
agreement in the event of the other party’s bankruptcy or
insolvency. The Company may terminate the agreement immediately
upon written notice in the event that NovaMedica commences or
participates in any action challenging the validity or
enforceability of the patents licensed to NovaMedica under the
agreement. In connection with this royalty-bearing license,
NovaMedica made an upfront payment to the Company of $200,000. The
Company is currently developing product candidates that when
completed would be subject to this license giving NovaMedica the
exclusive right to then sell the products in the specified
geographic territories. During 2014 and 2015, the Company deferred
the $200,000 given the early stage of development of the
intellectual property and uncertainty regarding commercial
feasibility. In mid-December 2015, the Company received positive
results from the Phase 2 clinical trial relating to the product
candidate and determined, based on these results, that the
intellectual property could become commercially feasible. Beginning
in the first quarter ended March 31, 2016, the Company began
recognizing the $200,000 to revenue over the period of time to
complete clinical development and commercialization of the Covered
Products and the beginning of the first set of patent expirations
in 2027. NovaMedica is jointly owned by Rusnano MedInvest LLC, or
Rusnano MedInvest, and Domain Russia Investments Limited. RMI,
which beneficially owns approximately 11% of the Company’s
voting securities, is a wholly owned subsidiary of Rusnano
MedInvest.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">On April 27, 2015, the Company
entered into a license and collaboration agreement (the
“Spark Agreement”) with Spark Therapeutics, Inc.
(“Spark”) under which Spark could acquire the exclusive
rights to license the Company’s microinjector technology and
access to the suprachoroidal space within the eye (collectively
“the IP”) for development and ultimate
commercialization of Spark’s gene therapy treatments to be
delivered via the microinjector. If Spark made the decision to
license the IP, Spark would be responsible for the costs of the
future development and commercialization. The Company would be
responsible for providing the microinjector technology as well as
other defined support to Spark as part of Spark’s development
efforts.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The Spark Agreement was structured to
allow Spark certain periods of time (the “Option
Periods”) before actually entering into the IP license. In
conjunction with executing the Spark Agreement, Spark made an
upfront, non-refundable payment to the Company of $500,000. During
the initial Option Period, the parties agreed to have a third-party
research organization perform an initial preclinical study under
the direction of the Company. At any time during this Option
Period, Spark could exercise its option to license the IP by paying
an additional $2.0 million, or could elect to initiate a second
Option Period during which the Company and Spark would conduct
further studies specified in the Spark Agreement. If Spark elected
to initiate the second Option Period, Spark would be required to
pay the Company $1.0 million. If Spark exercised its option to
license the IP during the second Option Period, then Spark would be
required to pay the Company an additional $3.0 million. If
Spark did not exercise its option to license the IP or elect to
initiate the second Option Period, then the Spark Agreement would
terminate at the end of the first Option Period. Spark had the
right to terminate the Spark Agreement at any time upon written
notice to the Company. The Company and Spark could also terminate
the Spark Agreement upon 90 days’ written notice in the event
of an uncured material breach by the other party.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">If Spark decided to license the
technology, the Company would be eligible to receive aggregate
payments of up to $13.5 million from Spark upon the achievement of
specified future development and commercialization milestones as
described in the agreement, as well as aggregate payments of up to
$12.0 million upon the achievement of specified annual net sales
milestones. In addition, the Company would be eligible to receive
low to mid single-digit percentage royalties on net sales of
licensed products. Subject to specified exceptions, the license
would expire on a licensed product-by-licensed product basis and on
a country-by-country basis upon the expiration of the specified
licensed intellectual property.</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 1px; MARGIN-TOP: 8px">
 </p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><font style="FONT-FAMILY: arial" size="2">In evaluating the Option Periods
granted to Spark to determine whether Spark would license the IP,
the Company determined that these Option Periods combined had
stand-alone value apart from the IP license as Spark was deriving
value from its ability to evaluate the technology through defined
preclinical studies conducted by the Company and Spark during these
Option Periods. The Company also determined that the two Option
Periods represented one unit of accounting providing Spark with an
overall evaluation period in which to decide whether to license the
IP. This determination was made based on the fact that the planned
studies are not independent of each other, but instead are designed
to build on the results of the prior studies in order to further
the preclinical analysis to be in a position to ultimately file an
investigational new drug application and begin the onset of
clinical trials in human patients as contemplated in the Spark
Agreement.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The Company determined that the
$500,000 upfront payment should be recognized to revenue over the
expected period of time to perform and complete the planned studies
during the Option Periods contemplated at the date the agreement
was executed. The Company estimated that this time period would be
approximately 30 months from the start of the initial study to the
end and evaluation of the planned studies to be performed during
the Option Periods. The Company did not record any revenue from the
$500,000 upfront payment during 2015.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">In February 2016, the initial study
was completed and Spark elected not to extend the arrangement nor
license the technology which terminated the agreement in accordance
with the agreement terms. During the quarter ended March 31, 2016,
the Company recorded as revenue the $500,000 upfront payment as the
amount was non-refundable and the Company had no further
obligations under this arrangement.</font></p>
</div>
2018
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="3"><b>10. Stock purchase
warrants</b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">During 2013, in connection with the
loan agreement (Note 5), the Company issued a warrant to the lender
to purchase up to 16,550 shares of Series A-1 preferred stock at a
price per share of $1.8132. The term of the warrant extends until
10 years from the grant date and the warrant is exercisable at any
time during that <font style="WHITE-SPACE: nowrap">10-year</font>
period. This warrant was outstanding at December 31, 2014 and 2015
and had a weighted average remaining life of 8.1 and 7.1 years,
respectively.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The Company estimated the fair value
of the warrants at issuance using the Black-Scholes option-pricing
model utilizing the fair value of the underlying preferred stock.
The estimates in the Black-Scholes option pricing model are based,
in part, on assumptions, including but not limited to the
volatility of comparable public companies, the expected life of the
warrants, the risk-free interest rate and the fair value of the
equity underlying the warrants.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">Key assumptions utilized in the fair
value calculation for the warrants appear in the table
below:</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="85%" align="center" border="0">
<tr>
<td width="78%"></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="6" align="center"><font style="FONT-FAMILY: arial" size="2"><b>December 31,</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>2014</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>2015</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Expected term (years)</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">5.00</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">5.00</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Volatility</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">109.60%</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">113.50%</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Risk-free interest rate</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">2.10%</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">2.13%</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Dividend yield</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">0.00%</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">0.00%</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The fair value of the Series A-1
warrant was $42,000 and $58,000 at December 31, 2014 and 2015,
respectively.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">During 2014, in connection with the
issuance of the Bridge Notes (Note 6), the Company issued warrants
to the lenders to purchase up to 112,802 shares of common stock at
a price per share of $0.02. These warrants were outstanding at
December 31, 2014 and December 31, 2015 and had a remaining life of
9.2 and 8.2 years, respectively. If unexercised, these warrants
will expire upon the closing of an initial public
offering.</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 1px; MARGIN-TOP: 8px">
 </p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><font style="FONT-FAMILY: arial" size="2">In connection with its Series B
convertible preferred stock financing in August 2014, the Company
issued warrants to purchase an aggregate of 780,400 shares of
common stock at an exercise price of $0.02 per share. These
warrants were exercised on May 20, 2015.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">At the date of issuance, the total
value of the common stock warrants issued in connection with the
Series B financing was estimated to be $1.2 million. In order to
determine the fair value of these common warrants, the Company used
a hybrid of an option pricing model and a probability-weighted
expected return method (“PWERM”). The estimates in the
option pricing model were based, in part, on assumptions, including
but not limited to the volatility of comparable public companies,
the expected life of the warrants, the risk-free interest rate and
the fair value of the equity underlying the warrants. Significant
inputs for the PWERM included an estimate of the Company’s
equity value and an estimated probability and timing for each
valuation scenario. The Company attributed a 60% weighting to
option pricing model, a 24% weighting to an early 2015 IPO scenario
within the PWERM and a 16% weighting to a late 2015 IPO scenario
within the PWERM.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">In April 2015, in connection with the
loan agreement, the Company issued a warrant to the lenders to
purchase up to 57,143 shares of Series B preferred stock at a price
per share of $3.50. The term of the warrant extends until 10 years
from the grant date and the warrant is exercisable at any time
during that 10-year period. This warrant was outstanding at
December 31, 2015 and had a weighted average remaining life of 9.25
years.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The Company estimated the fair value
of the Series B preferred warrants under three scenarios, the
option price modeling, for which the Company took the value from
the model discounted for the lack of marketability, and two IPO
scenarios, early and late. Under the IPO scenarios, the Company
calculated the value of the warrant based on a call option of the
common share at IPO (assuming the Series B preferred stock would
convert to common stock) given the time to exit and the term of the
warrants stipulated in the contract. The Company then applied a
discount for lack of marketability.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The Company also ran the valuation
for the Series B preferred warrants at the issue date of April 15,
2015 based on the model, financials, and capitalization table as of
March 31, 2015, assuming there had been no material changes to the
business over the 15-day period since the March 31, 2015 valuation.
The Company utilized the same methodology to calculate the value of
the warrants as of December 31, 2015. The fair value of the Series
B preferred warrant was $200,000 at December 31, 2015.</font></p>
</div>
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">
The following table summarizes the activity of convertible
preferred stock (dollar amounts in thousands, except per share
amounts):</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" align="center" border="0">
<tr>
<td width="37%"></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>Series A</b><br />
<b>Preferred Stock</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>Series A-1</b><br />
<b>Preferred Stock</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>Series B</b><br />
<b>Preferred Stock</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>Series C</b><br />
<b>Preferred Stock</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" rowspan="2" colspan="2" align="center"><b>Total</b><br />
<b>Convertible</b><br />
<b>Preferred</b><br />
<b>Stock</b></td>
<td valign="bottom" rowspan="2"> </td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Shares</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Amount</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Shares</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Amount</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Shares</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Amount</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Shares</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Amount</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Balance at January 1, 2014</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">5,198,826</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">4,040</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">4,356,931</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">7,831</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">11,871</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Issuance of Series B at $2.69783 per share on August 29, 2014, net
of issuance cost of $236</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">4,811,259</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">11,501</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">11,501</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Conversion of promissory notes and interest payable at $2.69783 per
share on August 29, 2014</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">1,197,943</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">3,232</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">3,232</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Accretion of stock issuance costs</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">46</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">27</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">158</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">231</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Balance at December 31, 2014</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">5,198,826</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">4,086</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">4,356,931</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">7,858</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">6,009,202</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">14,891</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">26,835</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Issuance of Series C at $3.7917 per share in November and December
2015, net of issuance cost of $46</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">5,274,674</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">19,954</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">19,954</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Accretion of stock issuance costs</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">42</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">481</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">2</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">525</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Balance at December 31, 2015</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">5,198,826</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">4,086</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">4,356,931</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">7,900</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">6,009,202</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">15,372</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">5,274,674</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">19,956</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">47,314</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
</table>
</div>
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="3"><b>8. Convertible preferred
stock</b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The Company has authorized 20,913,331
shares of preferred stock. Of the authorized shares of preferred
stock, 5,198,826 shares have been designated as Series A
Convertible Preferred Stock (“Series A”), 4,373,481
shares have been designated as Series A-1 Preferred Stock
(“Series A-1”), 6,066,345 shares have been designated
as Series B Preferred Stock (“Series B”) and 5,274,679
shares have been designated as Series C Preferred Stock
(“Series C”). The Series A, Series A-1, Series B and
Series C shares were issued at a price of $0.78589, $1.81320,
$2.69783 and $3.79170 per share, respectively.</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 1px; MARGIN-TOP: 8px">
 </p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><font style="FONT-FAMILY: arial" size="2">The following table summarizes the
activity of convertible preferred stock (dollar amounts in
thousands, except per share amounts):</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" align="center" border="0">
<tr>
<td width="40%"></td>
<td valign="bottom" width="1%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="1%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="1%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="1%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="1%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="1%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="1%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="1%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="1%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="6" align="center"><font style="FONT-FAMILY: arial" size="1"><b>Series A</b></font><br />
<font style="FONT-FAMILY: arial" size="1"><b>Preferred
Stock</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="6" align="center"><font style="FONT-FAMILY: arial" size="1"><b>Series A-1</b></font><br />
<font style="FONT-FAMILY: arial" size="1"><b>Preferred
Stock</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="6" align="center"><font style="FONT-FAMILY: arial" size="1"><b>Series B</b></font><br />
<font style="FONT-FAMILY: arial" size="1"><b>Preferred
Stock</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="6" align="center"><font style="FONT-FAMILY: arial" size="1"><b>Series C</b></font><br />
<font style="FONT-FAMILY: arial" size="1"><b>Preferred
Stock</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" rowspan="2" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="1"><b>Total</b></font><br />
<font style="FONT-FAMILY: arial" size="1"><b>Convertible</b></font><br />
<font style="FONT-FAMILY: arial" size="1"><b>Preferred</b></font><br />
<font style="FONT-FAMILY: arial" size="1"><b>Stock</b></font></td>
<td valign="bottom" rowspan="2"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="1"><b>Shares</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="1"><b>Amount</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="1"><b>Shares</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="1"><b>Amount</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="1"><b>Shares</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="1"><b>Amount</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="1"><b>Shares</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="1"><b>Amount</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="1">Balance at January 1, 2014</font></p>
</td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="1">5,198,826</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="1">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="1">4,040</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="1">4,356,931</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="1">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="1">7,831</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">$</font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">$</font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="1">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="1">11,871</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="1">Issuance of Series B at $2.69783
per share on August 29, 2014, net of issuance cost
of $236</font></p>
</td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="1">4,811,259</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="1">11,501</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="1">11,501</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="1">Conversion of promissory notes and
interest payable at $2.69783 per share on August 29,
2014</font></p>
</td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="1">1,197,943</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="1">3,232</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="1">3,232</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="1">Accretion of stock issuance
costs</font></p>
</td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="1">46</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="1">27</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="1">158</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="1">231</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="1">Balance at December 31,
2014</font></p>
</td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="1">5,198,826</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="1">4,086</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="1">4,356,931</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="1">7,858</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="1">6,009,202</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="1">14,891</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="1">26,835</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="1">Issuance of Series C at $3.7917
per share in November and December 2015, net of issuance cost
of $46</font></p>
</td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="1">5,274,674</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="1">19,954</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="1">19,954</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="1">Accretion of stock issuance
costs</font></p>
</td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="1">42</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="1">481</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="1">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="1">2</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="1">525</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="1">Balance at December 31,
2015</font></p>
</td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="1">5,198,826</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="1">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="1">4,086</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="1">4,356,931</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="1">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="1">7,900</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="1">6,009,202</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="1">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="1">15,372</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="1"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="1">5,274,674</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="1">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="1">19,956</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="1">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="1">47,314</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="1">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="2"><b><i>Dividends</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">Holders of Series A, Series A-1,
Series B and Series C shares, in preference of common stockholders,
shall be entitled to receive (a) when, as and if declared by the
board of directors (the “Board”), but only out of funds
that are legally available therefore, or (b) upon the liquidation,
dissolution or winding up of the Company, whether voluntary or
involuntary, cumulative cash dividends at the rate of 8% per annum
of the applicable original issuance price of such series of
preferred stock.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The total cumulative preferred
dividends in arrears, if declared, for the preferred stock as of
December 31, 2014 and 2015 were $2.5 million and $5.0 million,
respectively.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="2"><b><i>Liquidation</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">Upon a liquidation event (as defined
in the amended and restated certificate of incorporation) the
Series A, Series A-1, Series B and Series C holders will be paid
their liquidation preference of $0.78589, $1.81320, $2.69783 and
$3.79170 per share, respectively, which is the original issue price
plus any accrued and declared but unpaid dividends on such class of
capital stock. If the net assets of the Company are insufficient to
cover the liquidation preference, the Company will distribute the
available funds among the holders of Series A, <font style="WHITE-SPACE: nowrap">Series A-1,</font> Series B and Series C
shares at the time outstanding, ratably in proportion to the full
amounts to which they would otherwise be entitled if such amounts
had been paid in full.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="2"><b><i>Conversion</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">Each share of Series A, Series A-1,
Series B and Series C is convertible into a number of fully paid
shares of common stock at any time at the option of the
stockholder. The Series A, Series A-1, Series B and Series C shares
may be converted into common stock at a conversion price per share
of $1.72896, $3.98904, $5.93523, and $8.34174, respectively. In
addition, the Series A, Series A-1, Series B and Series C shares
are convertible into common stock immediately upon: (i) the closing
of an initial public offering generating net proceeds of not less
than $50.0 million to the Company, at a price per share of at least
$12.51261; or (ii) the written consent of the holders of at least a
majority of the outstanding shares of preferred stock and the
holders of at least 50% of the outstanding shares of Series C
convertible preferred stock. As described in the amended and
restated certificate of incorporation, a reduction in the
conversion price will occur if the Company sells common stock for
less than the conversion price of the Series A, Series A-1, Series
B and Series C shares. Based on the conversion terms, there were no
beneficial conversion features associated with Series A, Series
A-1, Series B and Series C shares.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">In addition, the potential reduction
in the conversion price did not result in the conversion price
feature meeting the definition of a derivative, which would require
separate accounting.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="2"><b><i>Voting</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">Each holder of the Series A, Series
A-1, Series B and Series C shares shall be entitled to the number
of votes equal to the number of shares of common stock into which
such shares of Series A, Series A-1, Series B and Series C may be
converted, and shall have voting rights and powers equal to the
voting rights and powers of the common stock, with certain
limitations.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="2"><b><i>Redemption</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">Series A, Series A-1, Series B and
Series C will be subject to redemption at the option of the
investors holding a majority of the Series A, Series A-1, Series B
and Series C shares at any time after the sixth anniversary of the
issuance in an amount equal to the liquidation preference. On such
redemption date, the Company shall redeem, on a pro rata basis in
accordance with the number of shares of Series A, Series A-1,
Series B and Series C owned by each holder, that number of
outstanding shares of Series A, Series A-1, Series B and Series C
determined by dividing (i) the total number of shares of Series A,
Series A-1, Series B and Series C outstanding immediately prior to
such redemption date by (ii) the number of remaining redemption
dates including the redemption date to which such calculation
applies. If the Company does not have sufficient funds legally
available to redeem on any redemption date all Series A, Series
A-1, Series B and Series C shares to be redeemed on such redemption
date, the Company shall redeem a pro rata portion of each
holder’s Series A, Series A-1, Series B and Series C shares
out of funds legally available therefor, based on the respective
amounts which would otherwise be payable in respect of the shares
to be redeemed if the legally available funds were sufficient to
redeem all such shares, and shall redeem the remaining shares to
have been redeemed as soon as practicable after the Company has
funds legally available therefor.</font></p>
</div>
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><font style="FONT-FAMILY: arial" size="3"><b>6. Convertible shareholder notes
payable</b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">In April 2014, the Company authorized
the sale of convertible promissory notes (the “Bridge
Notes”) to its existing stockholders, including two of its
executive officers and one of its directors in their individual
capacities, in the aggregate principal amount of $6.0 million. In
April 2014, the Company issued $3.0 million in aggregate principal
amount of Bridge Notes. The outstanding notes accrued interest at a
rate of 7%, with principal plus interest due upon maturity in April
2015, unless earlier converted. The Bridge Notes were convertible
upon the occurrence of a qualified financing. The Company’s
August 2014 Series B convertible preferred stock financing was a
qualified financing as contemplated by the Bridge Notes, and
accordingly the principal and interest under all of the Bridge
Notes was converted automatically into an aggregate of 1,137,652
shares of Series B convertible preferred stock in connection with
this financing. In connection with the issuance of the Bridge
Notes, the Company also issued warrants to the lenders to purchase
an aggregate of 112,802 shares of common stock at an exercise price
of $0.02 per share. Unless earlier exercised, these warrants will
expire upon the closing of an initial public offering.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">Interest expense on the borrowings
under the Bridge Notes was $69,000 for the year ended December 31,
2014.</font></p>
</div>
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">Key assumptions utilized in the fair
value calculation for the warrants appear in the table
below:</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="85%" align="center" border="0">
<tr>
<td width="78%"></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="6" align="center"><font style="FONT-FAMILY: arial" size="2"><b>December 31,</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>2014</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>2015</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Expected term (years)</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">5.00</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">5.00</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Volatility</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">109.60%</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">113.50%</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Risk-free interest rate</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">2.10%</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">2.13%</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Dividend yield</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">0.00%</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">0.00%</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2"> </font></td>
</tr>
</table>
</div>
-1000
525000
-9000
7400
100000
410000
164000
2017-03
146298
6485
1261637
705000
378000
327000
14203
0.55
164000
52000
P1Y
15000
50000000
P5Y
P10Y
P9Y10M24D
5.57
P7Y7M6D
0.40
P9Y
3.41
P8Y7M6D
3.08
P9Y6M
6.16
P5Y10M24D
0.02
P6Y4M24D
0.15
378000
327000
P3Y
Lesser of useful life or remaining lease term
P5Y
P5Y
25000
0
100000
0
0
0
2016-02
The Company is required to pay accrued interest only for a period of 12 months from the date of each advance, followed by 30 equal monthly payments of principal and accrued interest.
0.0050
98000
P8Y2M12D
P7Y1M6D
0.24
0.16
9472530
0.60
P9Y3M
P10Y
19954000
0
481000
0
46000
19954000
5274674
2000
0
42000
P6Y9M18D
P10Y
0.08
705000
525000
14000
-2000
50980
14203
777612
1000
-17639000
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="2"><b><i>Share-based
compensation</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">Compensation cost related to
share-based awards granted to employees is measured at grant date,
based on the estimated fair value of the award. The Company
estimates the fair value of stock options using a Black-Scholes
option pricing model. Compensation expense for options granted to
non-employees is determined as the fair value of consideration
received or the fair value of the equity instruments issued,
whichever is more reliably measured. The fair value of restricted
stock awards is determined based on the fair value of the
Company’s common stock on the date of grant. Share-based
compensation costs are expensed on a straight-line basis (net of
estimated forfeitures) over the relevant vesting period. The fair
value of awards granted to non-employees is re-measured each period
until the related service is complete. All share-based compensation
costs are recorded in general and administrative or research and
development costs in the statements of operations based upon the
underlying employees’ roles within the Company.</font></p>
</div>
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">
The following table summarizes the Company’s
available-for-sale investments as of September 30, 2016:</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="84%" align="center" border="0">
<tr>
<td width="70%"></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="10" align="center"><b>September 30, 2016</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Amortized</b><br />
<b>Cost</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Unrealized</b><br />
<b>Loss</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Fair</b><br />
<b>Value</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Government bonds and agency obligations</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">11,032</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(3</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">11,029</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Certificates of deposit</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">4,658</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">4,658</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Corporate bonds</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">4,358</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(2</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">4,356</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Total available-for-sale investments</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">20,048</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(5</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">20,043</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
</table>
</div>
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">
The following table summarizes the changes in fair value of the
Level 3 liability, stock purchase warrants (in thousands):</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="76%" align="center" border="0">
<tr>
<td width="72%"></td>
<td valign="bottom" width="11%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="11%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>Level 3 Liabilities</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Nine Months</b><br />
<b>Ended</b><br />
<b>September 30,</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Year Ended</b><br />
<b>December 31,</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2016</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2015</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
<b>Stock purchase warrants</b></p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Balance at beginning of period</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">258</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">42</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Issuance of stock purchase warrants</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">164</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Exercise of stock purchase warrants</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(23</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Net increase in fair value remeasurement</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">16</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">52</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Balance at end of period</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">251</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">258</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
</table>
</div>
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="2"><b><i>Concentration of credit risk
arising from cash deposits in excess of insured
limits</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The Company maintains its cash in
bank deposits that at times may exceed federally insured limits.
The Company has not experienced any loss in such accounts. The
Company believes it is not exposed to any significant risks with
respect to its cash balances.</font></p>
</div>
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="2"><b><i>Cash
equivalents</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">Cash equivalents consist of
short-term, highly liquid investments with an original term of
three months or less at the date of purchase.</font></p>
</div>
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><font style="FONT-FAMILY: arial" size="3"><b>9. Share-based
compensation</b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">In January 2016, the Company’s
board of directors adopted and approved the Clearside Biomedical,
Inc. 2016 Equity Incentive Plan (the “2016 Plan”) which
became effective in connection with the IPO on June 1, 2016. The
2016 Plan provides for the grant of share-based awards to
employees, directors and consultants of the Company. The Company
has reserved 1,818,182 shares of common stock for issuance under
the 2016 Plan. The 2016 Plan provides for the grant of incentive
stock options to employees, and for the grant of nonqualified stock
options, restricted stock awards, restricted stock unit awards,
stock appreciation rights, performance stock awards and other forms
of stock compensation to the Company’s employees, directors,
and non-employee third parties. The number of shares of common
stock reserved for issuance under the 2016 Plan will automatically
increase on January 1 each year, for a period of ten years,
from January 1, 2017 through January 1, 2026, by 4% of the
total number of shares of the Company’s common stock
outstanding on December 31 of the preceding calendar year, or
a lesser number of shares as may be determined by the
Company’s board of directors. At September 30, 2016, under
the 2016 Plan, options to purchase 157,500 shares of the
Company’s common stock were outstanding at a weighted average
price of $6.64 per share and 1,660,682 shares remained available
for future grant.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">As a result of the adoption of the
2016 Plan, no further grants may be made under the Company’s
2011 Stock Incentive Plan (the “2011 Plan”). The 2011
Plan provided for the grant of share-based awards to employees,
directors and consultants of the Company. At September 30, 2016,
options to purchase 1,239,858 shares of the Company’s common
stock were outstanding under the 2011 Plan at a weighted average
exercise price of $2.35 per share.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">Share-based compensation is accounted
for in accordance with the provisions of ASC 718,
<i>Compensation-Stock Compensation</i>. The estimated fair value of
options granted is determined as of the date of grant using the
Black-Scholes option pricing model. The resulting fair value is
recognized ratably over the requisite service period, which is
generally the vesting period of the awards. Options granted to
non-employees are re-measured at each financial reporting period
until required services are performed.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The Company has granted stock option
awards to employees, directors and consultants. Share-based
compensation expense for options granted is reflected in the
statements of operations as follows (in thousands):</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="75%" align="center" border="0">
<tr>
<td width="78%"></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="6" align="center"><font style="FONT-FAMILY: arial" size="2"><b>Nine Months Ended</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>September 
30,</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>2016</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>2015</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Research and development</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">375</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">229</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">General and administrative</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">401</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">273</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 2em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Total</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">776</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">502</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 1px; MARGIN-TOP: 8px">
 </p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><font style="FONT-FAMILY: arial" size="2">The following table summarizes the
activity related to stock options during the nine months ended
September 30, 2016:</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="85%" align="center" border="0">
<tr>
<td width="74%"></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>Number of</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>Shares</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>Weighted</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>Average</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>Exercise Price</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Options outstanding at January 1,
2016</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">1,261,638</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">2.41</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 2em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Granted</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">174,736</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">6.79</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 2em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Exercised</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">(1,326</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">0.40</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 2em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Cancelled/Forfeited</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">(20,454</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">6.03</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Options outstanding at September 30,
2016</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">1,414,594</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">2.90</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Options exercisable at December 31,
2015</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">500,797</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">0.92</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Options exercisable at September 30,
2016</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">686,439</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">1.22</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">As of September 30, 2016, the Company
had $3.1 million of unrecognized compensation expense related to
unvested stock options, which is expected to be recognized over a
weighted average period of 1.5 years.</font></p>
</div>
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">
The following tables summarize the fair value of financial assets
and liabilities that are measured at fair value and the
classification by level of input within the fair value hierarchy
(in thousands):</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="92%" align="center" border="0">
<tr>
<td width="70%"></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="14" align="center"><b>September 30, 2016</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Level 1</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Level 2</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Level 3</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Recorded</b><br />
<b>Value</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
<b>Financial Assets:</b></p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Cash and money markets</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">35,666</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">35,666</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Certificates of deposit</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">5,868</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">5,868</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Government bonds</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">2,499</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">2,499</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Agency obligations</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">8,530</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">8,530</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Corporate bonds</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">4,356</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">4,356</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Total financial assets</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">44,033</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">12,886</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">56,919</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
<b>Financial Liabilities:</b></p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Stock purchase warrants</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">251</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">251</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="92%" align="center" border="0">
<tr>
<td width="72%"></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="14" align="center"><b>December 31, 2015</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Level 1</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Level 2</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Level 3</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Recorded</b><br />
<b>Value</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
<b>Financial Assets:</b></p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Money markets (included in cash and cash equivalents)</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">20,076</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">20,076</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
<b>Financial Liabilities:</b></p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Stock purchase warrants</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">258</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">258</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
</table>
</div>
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="3"><b>14. Fair value
measurements</b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The Company records certain financial
assets and liabilities at fair value in accordance with the
provisions of ASC Topic 820, <i>Fair Value Measurements and
Disclosures</i>, on fair value measurements. As defined in the
guidance, fair value, defined as an exit price, represents the
amount that would be received to sell an asset or pay to transfer a
liability in an orderly transaction between market participants. As
a result, fair value is a market-based approach that should be
determined based on assumptions that market participants would use
in pricing an asset or a liability. As a basis for considering
these assumptions, the guidance defines a three-tier value
hierarchy that prioritizes the inputs used in the valuation
methodologies in measuring fair value.</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0">
<tr>
<td valign="top" width="1%" align="left"><font style="FONT-FAMILY: arial" size="2">•</font></td>
<td valign="top" width="1%"><font size="1"> </font></td>
<td valign="top" align="left">
<p align="left"><font style="FONT-FAMILY: arial" size="2">Level
1—Unadjusted quoted prices in active, accessible markets for
identical assets or liabilities.</font></p>
</td>
</tr>
</table>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0">
<tr>
<td valign="top" width="1%" align="left"><font style="FONT-FAMILY: arial" size="2">•</font></td>
<td valign="top" width="1%"><font size="1"> </font></td>
<td valign="top" align="left">
<p align="left"><font style="FONT-FAMILY: arial" size="2">Level
2—Other inputs that are directly or indirectly observable in
the marketplace.</font></p>
</td>
</tr>
</table>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0">
<tr>
<td valign="top" width="1%" align="left"><font style="FONT-FAMILY: arial" size="2">•</font></td>
<td valign="top" width="1%"><font size="1"> </font></td>
<td valign="top" align="left">
<p align="left"><font style="FONT-FAMILY: arial" size="2">Level
3—Unobservable inputs that are supported by little or no
market activity.</font></p>
</td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The fair value hierarchy also
requires an entity to maximize the use of observable inputs and
minimize the use of unobservable inputs when measuring fair
value.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The Company’s material
financial instruments at September 30, 2016 and December 31, 2015
consisted primarily of cash and cash equivalents, short-term
investments, long-term debt and stock purchase warrant liabilities.
The fair value of cash and cash equivalents, other current assets
and accounts payable approximate their respective carrying values
due to the short term nature of these instruments. The fair value
of long-term debt approximates the carrying value due to variable
interest rates that correspond to market rates. The Company has
determined its short-term investments, comprised of certificates of
deposit, corporate bonds and government bonds and agency
obligations, to be Level 2 in the fair value hierarchy. The fair
value was determined using a market approach, based on prices and
other relevant information generated by market transactions
involving similar assets. The short-term investments consist of
investments with original maturity dates from date of acquisition
of 90 to 365 days and are classified as available-for-sale. The
Company has determined its stock purchase warrants liability to be
Level 3 in the fair value hierarchy.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">There were no significant transfers
between Levels 1, 2 and 3 during the nine months ended September
30, 2016 and the year ended December 31, 2015.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The following tables summarize the
fair value of financial assets and liabilities that are measured at
fair value and the classification by level of input within the fair
value hierarchy (in thousands):</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="85%" align="center" border="0">
<tr>
<td width="63%"></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="14" align="center"><font style="FONT-FAMILY: arial" size="2"><b>September 30, 2016</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>Level 1</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>Level 2</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>Level 3</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>Recorded</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>Value</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="bottom">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2"><b>Financial Assets:</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Cash and money markets</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">35,666</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="2">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="2">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">35,666</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Certificates of deposit</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">5,868</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="2">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="2">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">5,868</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Government bonds</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">2,499</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="2">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="2">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">2,499</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Agency obligations</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="2">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">8,530</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="2">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">8,530</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Corporate bonds</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="2">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">4,356</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="2">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">4,356</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 2em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Total financial assets</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">44,033</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">12,886</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="2">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">56,919</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
</tr>
<tr>
<td valign="bottom">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2"><b>Financial
Liabilities:</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Stock purchase warrants</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="2">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="2">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">251</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">251</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="85%" align="center" border="0">
<tr>
<td width="64%"></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="14" align="center"><font style="FONT-FAMILY: arial" size="2"><b>December 31, 2015</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>Level 1</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>Level 2</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>Level 3</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>Recorded</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>Value</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="bottom">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2"><b>Financial Assets:</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Money markets (included in cash and
cash equivalents)</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">20,076</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="2">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="2">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">20,076</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="bottom">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2"><b>Financial
Liabilities:</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Stock purchase warrants</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="2">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="2">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">258</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">258</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 1px; MARGIN-TOP: 8px">
 </p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><font style="FONT-FAMILY: arial" size="2">Prior to the IPO, the Company
estimated the fair value of its warrants to purchase preferred
stock using an option pricing model that included three valuation
scenarios, a non-IPO scenario and two IPO scenarios. Under the IPO
scenarios, the Company calculated the value of the warrant based on
a call option of the common share at IPO (assuming the underlying
preferred stock would convert to common stock) given the time to
exit and the term of the warrants stipulated in the contract. The
Company then applied a discount for lack of marketability. Changes
in the fair value of the stock purchase warrants were recorded in
other income (expense), net in the statements of operations.
Subsequent to the IPO, the Company used the Black-Scholes option
pricing model to estimate the fair value of the remaining warrants.
The estimates in the Black-Scholes option pricing model are based,
in part, on assumptions, including but not limited to the
volatility of comparable public companies, the expected life of the
warrants, the risk-free interest rate and the fair value of the
underlying warrants. The following table summarizes the changes in
fair value of the Level 3 liability, stock purchase warrants (in
thousands):</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="75%" align="center" border="0">
<tr>
<td width="66%"></td>
<td valign="bottom" width="14%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="13%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="6" align="center"><font style="FONT-FAMILY: arial" size="2"><b>Level 3 Liabilities</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>Nine Months</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>Ended</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>September 30,</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>Year Ended</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>December 31,</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>2016</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>2015</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="bottom">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2"><b>Stock purchase
warrants</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Balance at beginning of
period</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">258</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">42</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Issuance of stock purchase
warrants</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="2">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">164</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Exercise of stock purchase
warrants</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">(23</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">) </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="2">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Net increase in fair value
remeasurement</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">16</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">52</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Balance at end of period</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">251</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">258</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
</tr>
</table>
</div>
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2"><b><i>Basis of
presentation</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The Company’s financial
statements have been prepared in conformity with accounting
principles generally accepted in the United States of America
(“U.S. GAAP”).</font></p>
</div>
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="3"><b>10. Commitments and
contingencies</b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2"><b><i>Lease commitment
summary</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The Company leases office space under
non-cancelable operating leases which expire in March 2017. The
operating leases have renewal options and rent escalation
clauses.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">Minimum lease payments were as
follows at September 30, 2016 (in thousands):</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="75%" align="center" border="0">
<tr>
<td width="92%"></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">2016</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">23</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">2017</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">23</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 2em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Total minimum lease
payments</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">46</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">Rent expense, net of sublease income,
was $61,000 for the nine months ended September 30, 2016 and
2015.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="2"><b><i>Contract service
providers</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">In the course of the Company’s
normal business operations, it has agreements with contract service
providers to assist in the performance of its research and
development, clinical research and manufacturing. Substantially all
of these contracts are on an as needed basis.</font></p>
</div>
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="3"><b>15. Net loss per
share</b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">Basic net loss per share is
calculated by dividing the net loss by the weighted average number
of shares of common stock outstanding for the period, without
consideration of the dilutive effect of potential common stock
equivalents. Diluted net loss per share gives effect to all
dilutive potential shares of common stock outstanding during this
period.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">For all periods presented, the
Company’s potential common stock equivalents, which include
convertible preferred stock, stock options, unvested restricted
stock and stock purchase warrants, have been excluded from the
computation of diluted net loss per share as their inclusion would
have the effect of reducing the net loss per share. Therefore, the
denominator used to calculate both basic and diluted net loss per
share is the same in all periods presented.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The Company’s potential common
stock equivalents that have been excluded from the computation of
diluted net loss per share for all periods presented because of
their antidilutive effect consisted of the following:</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="75%" align="center" border="0">
<tr>
<td width="70%"></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="6" align="center"><font style="FONT-FAMILY: arial" size="2"><b>Nine Months Ended</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>September
30,</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>2016</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>2015</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Convertible preferred
stock</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="2">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">7,074,961</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Outstanding stock options</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">1,414,594</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">1,030,025</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Unvested restricted stock</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="2">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">10,030</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Stock purchase warrants</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">55,770</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">146,298</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="top" align="right"><font style="FONT-FAMILY: arial" size="2">1,470,364</font></td>
<td valign="top" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="top" align="right"><font style="FONT-FAMILY: arial" size="2">8,261,314</font></td>
<td valign="top" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
</tr>
</table>
</div>
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="3"><b>4. Accrued
liabilities</b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">Accrued liabilities consisted of the
following (in thousands):</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="85%" align="center" border="0">
<tr>
<td width="72%"></td>
<td valign="bottom" width="9%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="9%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>September 30,</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>2016</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>December 31,</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>2015</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Accrued research and
development</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">790</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">569</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Accrued bonuses</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">478</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">530</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Accrued professional fees</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">78</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">668</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Accrued vacation</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">88</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">64</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Accrued interest payable</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">5</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">15</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Accrued expense</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">117</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">139</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="top" align="right"><font style="FONT-FAMILY: arial" size="2">1,556</font></td>
<td valign="top" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="top"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="top" align="right"><font style="FONT-FAMILY: arial" size="2">1,985</font></td>
<td valign="top" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
</tr>
</table>
</div>
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="3"><b>12. Collaborative
agreement</b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">In January 2013, the Company entered
into a collaborative research agreement with a stockholder, whereby
the parties agreed to conduct feasibility studies for certain
compounds. Each party to the collaborative research agreement will
bear its own costs, except that certain costs incurred by the
Company are limited to a defined maximum amount. The Company
incurred research and development costs in relation to the
collaborative research agreement of $85,000 and $124,000 for the
nine months ended September 30, 2016 and 2015,
respectively.</font></p>
</div>
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="3"><b>3. Property and equipment,
net</b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">Property and equipment, net consisted
of the following (dollar amounts in thousands):</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="85%" align="center" border="0">
<tr>
<td width="58%"></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" align="center"><font style="FONT-FAMILY: arial" size="2"><b>Estimated</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>Useful Lives</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>(Years)</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>September 30,</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>2016</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>December 31,</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>2015</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Furniture and fixtures</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="center"><font style="FONT-FAMILY: arial" size="2">5</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">69</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">66</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Machinery and equipment</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="center"><font style="FONT-FAMILY: arial" size="2">5</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">121</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">121</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Computer equipment</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="center"><font style="FONT-FAMILY: arial" size="2">3</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">27</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">27</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Leasehold improvements</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="center"><font style="FONT-FAMILY: arial" size="2">Lesser of</font><br />
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px" align="center">
<font style="FONT-FAMILY: arial" size="2">Useful life or</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px" align="center">
<font style="FONT-FAMILY: arial" size="2">remaining</font></p>
<p style="MARGIN-BOTTOM: 1px; MARGIN-TOP: 0px" align="center">
<font style="FONT-FAMILY: arial" size="2">lease term</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">45</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">45</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">262</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">259</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Less: Accumulated
depreciation</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">(152</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">(103</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">) </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">110</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">156</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
</tr>
</table>
</div>
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><font style="FONT-FAMILY: arial" size="2"><b><i>Short-term
investments</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">Short-term investments are
investments with original maturities of between 90 and 365 days
when purchased and are comprised of corporate and government bonds
and government agency securities. The Company classifies its
short-term investments as available-for-sale securities. Short-term
investments are recorded at fair value and unrealized gains and
losses are recorded within accumulated other comprehensive income
(loss) until realized. In addition, the Company evaluates the
short-investments with unrealized losses to determine whether such
losses are other-than-temporary.</font></p>
</div>
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">Property and equipment, net consisted
of the following (dollar amounts in thousands):</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="85%" align="center" border="0">
<tr>
<td width="58%"></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" align="center"><font style="FONT-FAMILY: arial" size="2"><b>Estimated</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>Useful Lives</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>(Years)</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>September 30,</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>2016</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>December 31,</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>2015</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Furniture and fixtures</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="center"><font style="FONT-FAMILY: arial" size="2">5</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">69</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">66</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Machinery and equipment</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="center"><font style="FONT-FAMILY: arial" size="2">5</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">121</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">121</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Computer equipment</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="center"><font style="FONT-FAMILY: arial" size="2">3</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">27</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">27</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Leasehold improvements</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="center"><font style="FONT-FAMILY: arial" size="2">Lesser of</font><br />
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px" align="center">
<font style="FONT-FAMILY: arial" size="2">Useful life or</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px" align="center">
<font style="FONT-FAMILY: arial" size="2">remaining</font></p>
<p style="MARGIN-BOTTOM: 1px; MARGIN-TOP: 0px" align="center">
<font style="FONT-FAMILY: arial" size="2">lease term</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">45</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">45</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">262</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">259</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Less: Accumulated
depreciation</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">(152</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">(103</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">) </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">110</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">156</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
</table>
</div>
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="2"><b><i>Recent accounting
pronouncements</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">In August 2016, the Financial
Accounting Standards Board (“FASB”) issued Accounting
Standards Update (“ASU”) 2016-15, <i>Statement of Cash
Flows Classification of Certain Cash Receipts and Cash
Payments</i>. The update addresses eight specific cash flow matters
with the objective of reducing diversity in practice in how certain
cash receipts and payments are classified in the statement of cash
flows. The update is effective for annual periods beginning after
December 15, 2017, and interim periods within the period. Early
adoption is permitted. The Company is currently evaluating the
impact the adoption of ASU 2016-15 will have on its financial
statements and related disclosures.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">In March 2016, the FASB issued ASU
No. 2016-09, <i>Compensation-Stock Compensation (Topic 718).</i>
The new guidance simplifies several aspects of the accounting for
share-based payment transactions, including the income tax
consequences, classification of awards as either equity or
liabilities, and classification on the statement of cash flows. For
public companies, the amendments in this standard are effective for
annual periods beginning after December 15, 2016, and interim
periods within those annual periods. Early adoption is permitted.
The effects of this standard on the Company’s financial
statements and related disclosures are not expected to be
material.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">In February 2016, the FASB issued ASU
No. 2016-02, <i>Leases (ASC 842),</i> which requires lessees to
recognize most leases on the balance sheet. This is expected to
increase both reported assets and liabilities. The new lease
standard does not substantially change lessor accounting. For
public companies, the standard will be effective for the first
interim reporting period within annual periods beginning after
December 15, 2018, although early adoption is permitted. Lessees
and lessors will be required to apply the new standard at the
beginning of the earliest period presented in the financial
statements in which they first apply the new guidance, using a
modified retrospective transition method. The requirements of this
standard include a significant increase in required disclosures.
The Company is currently assessing the impact that adopting this
new accounting standard will have on its financial statements and
related disclosures.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">In August 2014, the FASB issued ASU
2014-15, <i>Presentation of Financial Statements-Going Concern
(Subtopic 205-40): Disclosure of Uncertainties About an
Entity’s Ability to Continue as a Going Concern</i>, which
provides guidance about management’s responsibility to
evaluate whether there is substantial doubt about an entity’s
ability to continue as a going concern and to provide related
footnote disclosures. The new standard is effective for the Company
for the annual period ending after December 15, 2016 and for annual
and interim periods thereafter, with early adoption permitted. The
Company does not expect this accounting standard to have an impact
on its financial statements and related disclosures.</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 1px; MARGIN-TOP: 8px">
 </p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><font style="FONT-FAMILY: arial" size="2">In May 2014, FASB issued ASU 2014-09,
<i>Revenue from Contracts with Customers</i>. Under ASU 2014-09,
companies will be required to recognize revenue to depict the
transfer of goods or services to customers in amounts that reflect
the consideration (that is, payment) to which the company expects
to be entitled in exchange for those goods or services. The new
standard also will result in enhanced disclosures about revenue,
provide guidance for transactions that were not previously
addressed comprehensively (for example, service revenue and
contract modifications) and modify guidance for multiple-element
arrangements. In August 2015, the FASB issued ASU 2015-14, which
deferred by one year the effective date of ASU 2014-09. The one
year deferral of the effective date of this standard changes the
effective date for the Company to January 1, 2018. Early adoption
is permitted, but not before the original effective date. The
Company is currently evaluating the effect this standard may have
on its financial statements and related disclosures.</font></p>
</div>
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="3"><b>5. Long-term debt</b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2"><b><i>Loan and security
agreements</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">In September 2016, the Company
entered into an amended and restated loan and security agreement
(the “loan agreement”) with Silicon Valley Bank
(“SVB”), MidCap Funding XII Trust and MidCap Financial
Trust (together, “MidCap” and collectively with SVB,
the “Lenders”), which amended and restated in its
entirety the Company’s prior loan and security agreement with
SVB dated as of April 14, 2015 (the “original loan
agreement”), under which the Company had borrowed $6.0
million in April and May 2015. The loan agreement provides for new
term loans of up to $15.0 million, with a floating interest rate
equal to 7% plus the greater of (i) the 30-day U.S. LIBOR, reported
in the Wall Street Journal on the last business day of the month
that immediately precedes the month in which the interest will
accrue, or (ii) 0.50%. The interest rate on the original loan
agreement was equal to the lender’s prime rate less 0.50
percent.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">Under the terms of the new loan, an
initial tranche of $8.0 million was advanced on September 28, 2016.
The remaining $7.0 million will become available beginning on the
later of (i) September 30, 2017 and (ii) the date on which the
Lenders have received evidence, in form and substance reasonably
satisfactory to them, that the Company has produced clinical trial
data sufficient to file a New Drug Application, or NDA, for its
drug candidate CLS-1001 for the treatment of uveitis. Once the draw
period for the remaining $7.0 million has commenced, the Company
may draw funds at its discretion until the earlier of (i) December
31, 2017 and (ii) the occurrence of an event of default under the
loan agreement. The Company is required to pay accrued interest
only through December 31, 2017 on the outstanding amount, followed
by 30 equal payments of principal and accrued interest. The Company
has the option to prepay the outstanding balance of the term loans
in full, subject to a prepayment fee of (i) 3% of the original
principal amount of the aggregate term loans for any prepayment
prior to September 28, 2017 or (ii) 2% of the original principal
amount of the aggregate term loans for any prepayment between
September 28, 2017 and May 31, 2020. A final payment of $0.5
million, or 6.50% of the aggregate borrowed amount, is due at
maturity of the loan on June 1, 2020, or upon the prepayment of the
facility or the acceleration of amounts due under the facility as a
result of an event of default, and is being accreted in long-term
debt over the life of the loan. Of the initial $8.0 million
advanced on September 28, 2016, $5.3 million was used to repay all
amounts outstanding under the original loan agreement. Closing
costs incurred in the refinancing portion of the loan were recorded
as expense while the financing costs for the new portion of the
loan are recorded in long-term debt and being accreted over the
life of the loan. Upon repayment of the original loan agreement,
all remaining closing costs associated with the original loan
agreement are being accreted to long-term debt over the life of the
new loan.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The term loans under the loan
agreement are secured by substantially all of the Company’s
assets, except that the collateral does not include any of the
Company’s intellectual property. However, pursuant to the
terms of a negative pledge arrangement, the Company has agreed not
to encumber any of its intellectual property.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">Interest expense on the borrowings
under the original loan agreement was $129,000 and $72,000 for the
nine months ended September 30, 2016 and 2015, respectively.
Accretion of the scheduled final payment was $224,000 and $64,000
for the nine months ended September 30, 2016 and 2015,
respectively. Accretion of the deferred closing costs was $7,000
and $5,000 for the nine months ended September 30, 2016 and 2015,
respectively.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">As of September 30, 2016, the
scheduled payments for the loan agreement, including the scheduled
final payment in 2020, were as follows (in thousands):</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="75%" align="center" border="0">
<tr>
<td width="60%"></td>
<td valign="bottom" width="7%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="7%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="7%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom">
<p style="WIDTH: 97pt; BORDER-BOTTOM: rgb(0,0,0) 1px solid">
<font style="FONT-FAMILY: arial" size="2"><b>Year Ending December
31,</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>Principal</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>Interest and</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>Final Payment</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>Total</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">2016</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="2">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">158</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">158</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">2017</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="2">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">608</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">608</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">2018</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">3,200</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">476</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">3,676</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">2019</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">3,200</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">234</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">3,434</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">2020</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">1,600</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">545</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">2,145</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">8,000</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">2,021</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">10,021</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
</tr>
</table>
</div>
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="3"><b>13. Available-for sale
securities</b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The following table summarizes the
Company’s available-for-sale investments as of September 30,
2016:</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="85%" align="center" border="0">
<tr>
<td width="68%"></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="10" align="center"><font style="FONT-FAMILY: arial" size="2"><b>September 30, 2016</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>Amortized</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>Cost</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>Unrealized</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>Loss</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>Fair</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>Value</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Government bonds and agency
obligations</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">11,032</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">(3</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">11,029</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Certificates of deposit</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">4,658</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: arial" size="2">—</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">4,658</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Corporate bonds</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">4,358</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">(2</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">4,356</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Total available-for-sale
investments</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">20,048</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">(5</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">20,043</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
</tr>
</table>
</div>
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="3"><b>1. The company</b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">Clearside Biomedical, Inc. (the
“Company”) is a late-stage clinical biopharmaceutical
company developing first-in-class drug therapies to treat blinding
diseases of the eye. The Company’s current product candidates
focus on treatments for diseases affecting the retina and choroid,
especially diseases associated with macular edema, and are injected
into the suprachoroidal space using its proprietary SCS
Microinjector. Incorporated in the State of Delaware on May 26,
2011, the Company has its corporate headquarters in Alpharetta,
Georgia.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The Company’s activities since
inception have primarily consisted of developing product and
technology rights, raising capital and performing research and
development activities. The Company has no current source of
revenue to sustain present activities, and does not expect to
generate meaningful revenue until and unless the Company receives
regulatory approval of and successfully commercializes its product
candidates. The Company is subject to a number of risks and
uncertainties similar to those of other life science companies at a
similar stage of development, including, among others, the need to
obtain adequate additional financing, successful development
efforts including regulatory approval of products, compliance with
government regulations, successful commercialization of potential
products, protection of proprietary technology and dependence on
key individuals.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="2"><b><i>Liquidity</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">On June 1, 2016, the Company’s
registration statement on Form S-1 relating to its initial public
offering of its common stock (the “IPO”) was declared
effective by the Securities and Exchange Commission
(“SEC”). The IPO closed on June 7, 2016 and the Company
sold 7,200,000 shares of common stock at a price to the public of
$7.00 per share, for net proceeds of $45.3 million. On June 30,
2016, the underwriters of the IPO partially exercised their option
to purchase additional shares, and on July 6, 2016, the Company
sold 948,843 additional shares of common stock at a price to the
public of $7.00 per share, for net proceeds of $6.1 million. The
Company paid to the underwriters underwriting discounts and
commissions of $4.0 million in connection with the IPO, including
the underwriters’ exercise of their option to purchase
additional shares. In addition, the Company incurred expenses of
$1.6 million in connection with the IPO. Thus, the aggregate net
offering proceeds to the Company, after deducting underwriting
discounts and commissions and offering expenses, were $51.4
million.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">Prior to the IPO, the Company had
funded its operations primarily through the sale of convertible
preferred stock and the issuance of long-term debt, resulting in
aggregate proceeds of approximately $53.9 million. Even with the
completion of the IPO, the Company will continue to need to obtain
additional financing to fund future operations, including
completing the development and commercialization of its primary
product candidates. The Company will need to expend substantial
resources for research and development, including costs associated
with the clinical testing of its product candidates. The Company
will also need to obtain additional financing to conduct additional
trials for the regulatory approval of its drug candidates if
requested by regulatory bodies, and completing the development of
any additional product candidates that might be acquired. If such
products were to receive regulatory approval, the Company would
need to prepare for the potential commercialization of its product
candidates and fund the commercial launch of the products, if the
Company decides to commercialize the products on its own. Moreover,
the Company’s fixed expenses such as rent and other
contractual commitments are substantial and are expected to
increase in the future.</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 1px; MARGIN-TOP: 8px">
 </p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><font style="FONT-FAMILY: arial" size="2">The Company had cash, cash
equivalents and short-term investments of $56.9 million as of
September 30, 2016 and cumulative net cash flows used in operating
activities of $49.4 million and cumulative net losses of
$55.6 million through September 30, 2016. In the absence of
product or other revenues, the amount, timing, nature or source of
which cannot be predicted, the Company’s losses will continue
as it conducts its research and development activities. Until the
Company can generate a sufficient amount of revenue, the Company
may finance future cash needs through public or private equity
offerings, license agreements, debt financings, collaborations,
strategic alliances and marketing or distribution arrangements. The
Company has incurred losses and negative cash flows since inception
and expects operating losses and negative cash flows to continue
into the foreseeable future. However, the Company is able to
control spending on development activities while still advancing
clinical trials for key drug and candidates and expects that the
cash on hand as of September 30, 2016 will be sufficient to fund
its operations for at least the next 12 months from that
date.</font></p>
</div>
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="3"><b>7. Common stock</b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The Company’s amended and
restated certificate of incorporation authorizes the Company to
issue 100,000,000 shares of $0.001 par value common stock. As of
September 30, 2016 and December 31, 2015, there were 20,545,752 and
2,659,262 shares of common stock outstanding, respectively, which
excluded 6,478 shares of unvested restricted stock at December 31,
2015. There was no unvested restricted stock as of September 30,
2016.</font></p>
</div>
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="2"><b><i>Use of
estimates</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The preparation of financial
statements in conformity with U.S. GAAP requires management to make
estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and reported
amounts of income and expenses during the reporting periods.
Significant items subject to such estimates and assumptions include
the accounting for useful lives to calculate depreciation and
amortization, accrued liabilities, share-based compensation expense
and income tax valuation allowance. Actual results could differ
from these estimates.</font></p>
</div>
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">
Share-based compensation expense for options granted is reflected
in the statements of operations as follows (in thousands):</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="76%" align="center" border="0">
<tr>
<td width="84%"></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>Nine Months Ended</b><br />
<b>September 30,</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2016</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2015</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Research and development</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">375</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">229</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
General and administrative</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">401</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">273</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Total</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">776</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">502</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
</table>
</div>
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">
As of September 30, 2016, the scheduled payments for the loan
agreement, including the scheduled final payment in 2020, were as
follows (in thousands):</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="84%" align="center" border="0">
<tr>
<td width="69%"></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">
<td valign="bottom" nowrap="nowrap">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; WIDTH: 92.45pt; BORDER-BOTTOM: #000000 1pt solid; MARGIN-TOP: 0pt">
<b>Year Ending December 31,</b></p>
</td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Principal</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Interest and</b><br />
<b>Final Payment</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>Total</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
2016</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">158</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">158</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
2017</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">608</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">608</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
2018</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">3,200</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">476</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">3,676</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
2019</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">3,200</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">234</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">3,434</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
2020</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">1,600</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">545</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">2,145</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">8,000</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">2,021</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">10,021</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
</table>
</div>
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">
Minimum lease payments were as follows at September 30, 2016 (in
thousands):</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="68%" align="center" border="0">
<tr>
<td width="93%"></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
2016</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">23</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
2017</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">23</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Total minimum lease payments</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">46</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
</table>
</div>
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="3"><b>2. Significant accounting
policies</b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2"><b><i>Basis of
presentation</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The Company’s financial
statements have been prepared in conformity with accounting
principles generally accepted in the United States of America
(“U.S. GAAP”).</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="2"><b><i>Unaudited interim financial
information</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The accompanying balance sheet as of
September 30, 2016, statements of operations for the nine months
ended September 30, 2016 and 2015 and statements of cash flows for
the nine months ended September 30, 2016 and 2015 are unaudited.
The unaudited interim financial statements have been prepared on
the same basis as the annual financial statements and, in the
opinion of management, reflect all adjustments, which include only
normal recurring adjustments, necessary for the fair presentation
of the Company’s financial position as of September 30, 2016
and its results of its operations for the nine months ended
September 30, 2016 and 2015 and its cash flows for the nine months
ended September 30, 2016 and 2015. The financial data and other
information disclosed in these notes related to the nine months
ended September 30, 2016 and 2015 are unaudited. The results for
the nine months ended September 30, 2016 are not indicative of
results to be expected for the year ending December 31, 2016, any
other interim periods or any future year or period. These unaudited
financial statements should be read in conjunction with the audited
financial statements and related footnotes for the year ended
December 31, 2015, which are included in the Company’s
prospectus dated June 1, 2016, as filed pursuant to Rule 424(b)
under the Securities and Exchange Act of 1933 filed, as amended,
with the SEC.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="2"><b><i>Use of
estimates</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The preparation of financial
statements in conformity with U.S. GAAP requires management to make
estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and reported
amounts of income and expenses during the reporting periods.
Significant items subject to such estimates and assumptions include
the accounting for useful lives to calculate depreciation and
amortization, accrued liabilities, share-based compensation expense
and income tax valuation allowance. Actual results could differ
from these estimates.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="2"><b><i>Reverse stock
split</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">On May 11, 2016, the Company effected
a 1-for-2.2 reverse stock split of its issued and outstanding
shares of common stock and a proportional adjustment to the
existing conversion ratios for each series of the Company’s
convertible preferred stock. Accordingly, all share and per share
amounts for all periods presented in these financial statements and
notes thereto have been adjusted retroactively, where applicable,
to reflect this reverse stock split and adjustment of the preferred
stock conversion ratios. The adjustment to the conversion ratio for
the Series C convertible preferred stock also included an
anti-dilution adjustment based on the initial public offering price
of the Company’s common stock.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="2"><b><i>Research and development
costs</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">Research and development costs are
charged to expense as incurred and include, but are not limited
to:</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0">
<tr>
<td valign="top" width="1%" align="left"><font style="FONT-FAMILY: arial" size="2">•</font></td>
<td valign="top" width="1%"><font size="1"> </font></td>
<td valign="top" align="left">
<p align="left"><font style="FONT-FAMILY: arial" size="2">employee-related expenses, including salaries, benefits, travel
and share-based compensation expense for research and development
personnel;</font></p>
</td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0">
<tr>
<td valign="top" width="1%" align="left"><font style="FONT-FAMILY: arial" size="2">•</font></td>
<td valign="top" width="1%"><font size="1"> </font></td>
<td valign="top" align="left">
<p align="left"><font style="FONT-FAMILY: arial" size="2">expenses
incurred under agreements with contract research organizations,
contract manufacturing organizations and consultants that conduct
clinical and preclinical studies;</font></p>
</td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0">
<tr>
<td valign="top" width="1%" align="left"><font style="FONT-FAMILY: arial" size="2">•</font></td>
<td valign="top" width="1%"><font size="1"> </font></td>
<td valign="top" align="left">
<p align="left"><font style="FONT-FAMILY: arial" size="2">costs
associated with preclinical and development activities;</font></p>
</td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0">
<tr>
<td valign="top" width="1%" align="left"><font style="FONT-FAMILY: arial" size="2">•</font></td>
<td valign="top" width="1%"><font size="1"> </font></td>
<td valign="top" align="left">
<p align="left"><font style="FONT-FAMILY: arial" size="2">costs
associated with technology and intellectual property
licenses;</font></p>
</td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0">
<tr>
<td valign="top" width="1%" align="left"><font style="FONT-FAMILY: arial" size="2">•</font></td>
<td valign="top" width="1%"><font size="1"> </font></td>
<td valign="top" align="left">
<p align="left"><font style="FONT-FAMILY: arial" size="2">costs for
the Company’s research and development facility;
and</font></p>
</td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0">
<tr>
<td valign="top" width="1%" align="left"><font style="FONT-FAMILY: arial" size="2">•</font></td>
<td valign="top" width="1%"><font size="1"> </font></td>
<td valign="top" align="left">
<p align="left"><font style="FONT-FAMILY: arial" size="2">depreciation expense for assets used in research and
development activities.</font></p>
</td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">Costs for certain development
activities, such as clinical studies, are recognized based on an
evaluation of the progress to completion of specific tasks using
data such as patient enrollment, clinical site activations, or
information provided to the Company by its vendors on their actual
costs incurred. Payments for these activities are based on the
terms of the individual arrangements, which may differ from the
patterns of costs incurred, and are reflected in the financial
statements as prepaid or accrued expense, which are reported in
accounts payable. No material adjustments to these estimates have
been recorded in these financial statements.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="2"><b><i>Share-based
compensation</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">Compensation cost related to
share-based awards granted to employees is measured at grant date,
based on the estimated fair value of the award. The Company
estimates the fair value of stock options using a Black-Scholes
option pricing model. Compensation expense for options granted to
non-employees is determined as the fair value of consideration
received or the fair value of the equity instruments issued,
whichever is more reliably measured. The fair value of restricted
stock awards is determined based on the fair value of the
Company’s common stock on the date of grant. Share-based
compensation costs are expensed on a straight-line basis (net of
estimated forfeitures) over the relevant vesting period. The fair
value of awards granted to non-employees is re-measured each period
until the related service is complete. All share-based compensation
costs are recorded in general and administrative or research and
development costs in the statements of operations based upon the
underlying employees’ roles within the Company.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="2"><b><i>Cash
equivalents</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">Cash equivalents consist of
short-term, highly liquid investments with an original term of
three months or less at the date of purchase.</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 1px; MARGIN-TOP: 16px">
 </p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><font style="FONT-FAMILY: arial" size="2"><b><i>Short-term
investments</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">Short-term investments are
investments with original maturities of between 90 and 365 days
when purchased and are comprised of corporate and government bonds
and government agency securities. The Company classifies its
short-term investments as available-for-sale securities. Short-term
investments are recorded at fair value and unrealized gains and
losses are recorded within accumulated other comprehensive income
(loss) until realized. In addition, the Company evaluates the
short-investments with unrealized losses to determine whether such
losses are other-than-temporary.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="2"><b><i>Concentration of credit risk
arising from cash deposits in excess of insured
limits</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The Company maintains its cash in
bank deposits that at times may exceed federally insured limits.
The Company has not experienced any loss in such accounts. The
Company believes it is not exposed to any significant risks with
respect to its cash balances.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="2"><b><i>Recent accounting
pronouncements</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">In August 2016, the Financial
Accounting Standards Board (“FASB”) issued Accounting
Standards Update (“ASU”) 2016-15, <i>Statement of Cash
Flows Classification of Certain Cash Receipts and Cash
Payments</i>. The update addresses eight specific cash flow matters
with the objective of reducing diversity in practice in how certain
cash receipts and payments are classified in the statement of cash
flows. The update is effective for annual periods beginning after
December 15, 2017, and interim periods within the period. Early
adoption is permitted. The Company is currently evaluating the
impact the adoption of ASU 2016-15 will have on its financial
statements and related disclosures.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">In March 2016, the FASB issued ASU
No. 2016-09, <i>Compensation-Stock Compensation (Topic 718).</i>
The new guidance simplifies several aspects of the accounting for
share-based payment transactions, including the income tax
consequences, classification of awards as either equity or
liabilities, and classification on the statement of cash flows. For
public companies, the amendments in this standard are effective for
annual periods beginning after December 15, 2016, and interim
periods within those annual periods. Early adoption is permitted.
The effects of this standard on the Company’s financial
statements and related disclosures are not expected to be
material.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">In February 2016, the FASB issued ASU
No. 2016-02, <i>Leases (ASC 842),</i> which requires lessees to
recognize most leases on the balance sheet. This is expected to
increase both reported assets and liabilities. The new lease
standard does not substantially change lessor accounting. For
public companies, the standard will be effective for the first
interim reporting period within annual periods beginning after
December 15, 2018, although early adoption is permitted. Lessees
and lessors will be required to apply the new standard at the
beginning of the earliest period presented in the financial
statements in which they first apply the new guidance, using a
modified retrospective transition method. The requirements of this
standard include a significant increase in required disclosures.
The Company is currently assessing the impact that adopting this
new accounting standard will have on its financial statements and
related disclosures.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">In August 2014, the FASB issued ASU
2014-15, <i>Presentation of Financial Statements-Going Concern
(Subtopic 205-40): Disclosure of Uncertainties About an
Entity’s Ability to Continue as a Going Concern</i>, which
provides guidance about management’s responsibility to
evaluate whether there is substantial doubt about an entity’s
ability to continue as a going concern and to provide related
footnote disclosures. The new standard is effective for the Company
for the annual period ending after December 15, 2016 and for annual
and interim periods thereafter, with early adoption permitted. The
Company does not expect this accounting standard to have an impact
on its financial statements and related disclosures.</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 1px; MARGIN-TOP: 8px">
 </p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><font style="FONT-FAMILY: arial" size="2">In May 2014, FASB issued ASU 2014-09,
<i>Revenue from Contracts with Customers</i>. Under ASU 2014-09,
companies will be required to recognize revenue to depict the
transfer of goods or services to customers in amounts that reflect
the consideration (that is, payment) to which the company expects
to be entitled in exchange for those goods or services. The new
standard also will result in enhanced disclosures about revenue,
provide guidance for transactions that were not previously
addressed comprehensively (for example, service revenue and
contract modifications) and modify guidance for multiple-element
arrangements. In August 2015, the FASB issued ASU 2015-14, which
deferred by one year the effective date of ASU 2014-09. The one
year deferral of the effective date of this standard changes the
effective date for the Company to January 1, 2018. Early adoption
is permitted, but not before the original effective date. The
Company is currently evaluating the effect this standard may have
on its financial statements and related disclosures.</font></p>
</div>
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="2"><b><i>Research and development
costs</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">Research and development costs are
charged to expense as incurred and include, but are not limited
to:</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0">
<tr>
<td valign="top" width="1%" align="left"><font style="FONT-FAMILY: arial" size="2">•</font></td>
<td valign="top" width="1%"><font size="1"> </font></td>
<td valign="top" align="left">
<p align="left"><font style="FONT-FAMILY: arial" size="2">employee-related expenses, including salaries, benefits, travel
and share-based compensation expense for research and development
personnel;</font></p>
</td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0">
<tr>
<td valign="top" width="1%" align="left"><font style="FONT-FAMILY: arial" size="2">•</font></td>
<td valign="top" width="1%"><font size="1"> </font></td>
<td valign="top" align="left">
<p align="left"><font style="FONT-FAMILY: arial" size="2">expenses
incurred under agreements with contract research organizations,
contract manufacturing organizations and consultants that conduct
clinical and preclinical studies;</font></p>
</td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0">
<tr>
<td valign="top" width="1%" align="left"><font style="FONT-FAMILY: arial" size="2">•</font></td>
<td valign="top" width="1%"><font size="1"> </font></td>
<td valign="top" align="left">
<p align="left"><font style="FONT-FAMILY: arial" size="2">costs
associated with preclinical and development activities;</font></p>
</td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0">
<tr>
<td valign="top" width="1%" align="left"><font style="FONT-FAMILY: arial" size="2">•</font></td>
<td valign="top" width="1%"><font size="1"> </font></td>
<td valign="top" align="left">
<p align="left"><font style="FONT-FAMILY: arial" size="2">costs
associated with technology and intellectual property
licenses;</font></p>
</td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0">
<tr>
<td valign="top" width="1%" align="left"><font style="FONT-FAMILY: arial" size="2">•</font></td>
<td valign="top" width="1%"><font size="1"> </font></td>
<td valign="top" align="left">
<p align="left"><font style="FONT-FAMILY: arial" size="2">costs for
the Company’s research and development facility;
and</font></p>
</td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0">
<tr>
<td valign="top" width="1%" align="left"><font style="FONT-FAMILY: arial" size="2">•</font></td>
<td valign="top" width="1%"><font size="1"> </font></td>
<td valign="top" align="left">
<p align="left"><font style="FONT-FAMILY: arial" size="2">depreciation expense for assets used in research and
development activities.</font></p>
</td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">Costs for certain development
activities, such as clinical studies, are recognized based on an
evaluation of the progress to completion of specific tasks using
data such as patient enrollment, clinical site activations, or
information provided to the Company by its vendors on their actual
costs incurred. Payments for these activities are based on the
terms of the individual arrangements, which may differ from the
patterns of costs incurred, and are reflected in the financial
statements as prepaid or accrued expense, which are reported in
accounts payable. No material adjustments to these estimates have
been recorded in these financial statements.</font></p>
</div>
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">
Accrued liabilities consisted of the following (in thousands):</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="76%" align="center" border="0">
<tr>
<td width="72%"></td>
<td valign="bottom" width="9%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="9%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>September 30,</b><br />
<b>2016</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>December 31,</b><br />
<b>2015</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Accrued research and development</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">790</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">569</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Accrued bonuses</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">478</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">530</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Accrued professional fees</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">78</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">668</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Accrued vacation</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">88</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">64</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Accrued interest payable</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">5</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">15</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Accrued expense</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">117</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">139</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top"></td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">1,556</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">1,985</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: #000000 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
</table>
</div>
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><font style="FONT-FAMILY: arial" size="2">The following table summarizes the
activity related to stock options during the nine months ended
September 30, 2016:</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 8px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="85%" align="center" border="0">
<tr>
<td width="74%"></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>Number of</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>Shares</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: arial" size="2"><b>Weighted</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>Average</b></font><br />
<font style="FONT-FAMILY: arial" size="2"><b>Exercise Price</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Options outstanding at January 1,
2016</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">1,261,638</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">2.41</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 2em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Granted</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">174,736</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">6.79</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 2em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Exercised</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">(1,326</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">0.40</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 2em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Cancelled/Forfeited</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">(20,454</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">6.03</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Options outstanding at September 30,
2016</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">1,414,594</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">2.90</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Options exercisable at December 31,
2015</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">500,797</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">0.92</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: arial" size="2">Options exercisable at September 30,
2016</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">686,439</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: arial" size="2">1.22</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
</tr>
</table>
</div>
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><font style="FONT-FAMILY: arial" size="3"><b>16. Subsequent
events</b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">Subsequent to September 30, 2016, we
entered into a new office lease agreement for our corporate
headquarters, under which we have agreed to lease approximately
20,000 square feet of space in Alpharetta, Georgia. We expect to
move into this new space in the first half of 2017. Under this
lease, we will pay an initial annual base rent of $421,740, or
$35,145 per month, subject to an increase of 3% per
year.</font></p>
</div>
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="3"><b>11. License
agreements</b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">In August 2014, the Company entered
into a royalty-bearing license agreement with NovaMedica LLC
(“NovaMedica”). Under this agreement, the Company
granted to NovaMedica the right to use the Company’s
intellectual property to develop and commercialize the intended
products (the “Covered Products”) and to have the
exclusive right to sell those products in Russia and specified
adjacent territories involving the use of the corticosteroid
triamcinolone acetonide as the sole active pharmaceutical
ingredient for administration in the suprachoroidal space. In
connection with this royalty-bearing license, NovaMedica made an
upfront payment to the Company of $200,000. The Company is
currently developing product candidates that when completed would
be subject to this license giving NovaMedica the exclusive right to
then sell the products in the specified geographic territories. In
mid-December 2015, the Company received positive results from the
Phase 2 clinical trial relating to the product candidate and
determined, based on these results, that the intellectual property
could become commercially feasible. Beginning in the first quarter
ended March 31, 2016, the Company began recognizing the $200,000 to
revenue over the period of time to complete clinical development
and commercialization of the Covered Products and the beginning of
the first set of patent expirations in 2027. The Company recorded
$5,000 and $15,000 of license revenue during the three and nine
months ended September 30, 2016, respectively, for this license
agreement. NovaMedica is jointly owned by Rusnano MedInvest LLC, or
Rusnano MedInvest, and Domain Russia Investments Limited. RMI,
which beneficially owns approximately 11% of the Company’s
voting securities, is a wholly owned subsidiary of Rusnano
MedInvest.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">In April 2015, the Company entered
into a license and collaboration agreement (the “Spark
Agreement”) with Spark Therapeutics, Inc.
(“Spark”) under which Spark could acquire the exclusive
rights to license the Company’s microinjector technology and
access to the suprachoroidal space within the eye for development
and ultimate commercialization of Spark’s gene therapy
treatments to be delivered via the microinjector. In conjunction
with executing the Spark Agreement, Spark made an upfront,
non-refundable payment to the Company of $500,000.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">In February 2016, the initial study
was completed and Spark elected not to extend the arrangement nor
license the technology which terminated the agreement in accordance
with the agreement terms. During the quarter ended March 31, 2016,
the Company recorded as revenue the $500,000 upfront payment as the
amount was non-refundable and the Company had no further
obligations under this arrangement.</font></p>
</div>
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="3"><b>8. Stock purchase
warrants</b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2"><b><i>Preferred stock
warrants</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">During 2013, in connection with a
loan agreement, the Company issued a warrant to the lender to
purchase up to 16,550 shares of Series A-1 preferred stock at a
price per share of $1.8132. The term of the warrant extended until
10 years from the grant date and the warrant was exercisable at any
time during that 10-year period. This warrant was outstanding at
December 31, 2015 and had a weighted average remaining life of 6.8
years and a fair value of $58,000. The warrant was automatically
converted to a common stock warrant and was net exercised on June
6, 2016, resulting in the issuance of 3,236 shares of common
stock.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">In April 2015, in connection with
another loan agreement, the Company issued a warrant to the lenders
to purchase up to 57,143 shares of Series B preferred stock at a
price per share of $3.50. The term of the warrant extends until 10
years from the grant date and the warrant is exercisable at any
time during that 10-year period. The warrant was automatically
converted into a warrant to purchase 25,974 shares of common stock
at an exercise price of $7.70 upon the closing of the IPO. This
warrant was outstanding at September 30, 2016 and December 31, 2015
and had a weighted average remaining life of 8.5 and 9.25 years,
respectively. The fair value of the warrant was $0.3 million and
$0.2 million at September 30, 2016 and December 31, 2015,
respectively.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="2"><b><i>Common stock
warrants</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">During 2014, in connection with the
sale of convertible promissory notes in connection with a preferred
stock financing, the Company issued warrants to the lenders to
purchase up to an aggregate of 112,802 shares of common stock at a
price per share of $0.02. These warrants were outstanding at
December 31, 2015 and had a remaining life of 8.2 years. These
warrants, which would have otherwise expired upon the closing of
the IPO, were automatically net exercised for an aggregate of
112,441 shares of common stock upon the closing of the
IPO.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">In September 2016, in connection with
the amended and restated loan and security agreement, the Company
issued warrants to the lenders to purchase up to 29,796 shares of
common stock at a price per share of $10.74. The warrants expire in
September 2026, or earlier upon the occurrence of specified mergers
or acquisitions of the Company, and are immediately exercisable.
The warrants were recorded in equity and have a weighted average
remaining life of 10 years and a fair value of $0.3 million at
September 30, 2016.</font></p>
</div>
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="2"><b><i>Unaudited interim financial
information</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">The accompanying balance sheet as of
September 30, 2016, statements of operations for the nine months
ended September 30, 2016 and 2015 and statements of cash flows for
the nine months ended September 30, 2016 and 2015 are unaudited.
The unaudited interim financial statements have been prepared on
the same basis as the annual financial statements and, in the
opinion of management, reflect all adjustments, which include only
normal recurring adjustments, necessary for the fair presentation
of the Company’s financial position as of September 30, 2016
and its results of its operations for the nine months ended
September 30, 2016 and 2015 and its cash flows for the nine months
ended September 30, 2016 and 2015. The financial data and other
information disclosed in these notes related to the nine months
ended September 30, 2016 and 2015 are unaudited. The results for
the nine months ended September 30, 2016 are not indicative of
results to be expected for the year ending December 31, 2016, any
other interim periods or any future year or period. These unaudited
financial statements should be read in conjunction with the audited
financial statements and related footnotes for the year ended
December 31, 2015, which are included in the Company’s
prospectus dated June 1, 2016, as filed pursuant to Rule 424(b)
under the Securities and Exchange Act of 1933 filed, as amended,
with the SEC.</font></p>
</div>
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><font style="FONT-FAMILY: arial" size="3"><b>6. Convertible debt</b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">As of December 31, 2015, the Company
had authorized an aggregate of 20,913,331 shares of Series A, A-1,
B and C convertible preferred stock, par value $0.001 per share.
Upon the closing of the Company’s IPO on June 1, 2016, all
20,839,633 shares of the Company’s convertible preferred
stock that were issued and outstanding on that date were
automatically converted into an aggregate of 9,614,159 shares of
its common stock.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">As of September 30, 2016, there were
10,000,000 shares of preferred stock authorized, none of which were
issued and outstanding.</font></p>
</div>
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 16px"><font style="FONT-FAMILY: arial" size="2"><b><i>Reverse stock
split</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 8px"><font style="FONT-FAMILY: arial" size="2">On May 11, 2016, the Company effected
a 1-for-2.2 reverse stock split of its issued and outstanding
shares of common stock and a proportional adjustment to the
existing conversion ratios for each series of the Company’s
convertible preferred stock. Accordingly, all share and per share
amounts for all periods presented in these financial statements and
notes thereto have been adjusted retroactively, where applicable,
to reflect this reverse stock split and adjustment of the preferred
stock conversion ratios. The adjustment to the conversion ratio for
the Series C convertible preferred stock also included an
anti-dilution adjustment based on the initial public offering price
of the Company’s common stock.</font></p>
</div>
421740
0.03
35145
5000
500000
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