0001001316
2017-01-01
2017-09-30
0001001316
2017-09-30
0001001316
2016-12-31
0001001316
2016-01-01
2016-09-30
0001001316
2015-12-31
0001001316
2016-09-30
0001001316
us-gaap:ShortTermInvestmentsMember
us-gaap:USGovernmentAgenciesDebtSecuritiesMember
2016-12-31
0001001316
2016-01-01
2016-12-31
0001001316
us-gaap:ShortTermInvestmentsMember
us-gaap:USGovernmentAgenciesDebtSecuritiesMember
2016-01-01
2016-12-31
0001001316
us-gaap:ConvertibleNotesPayableMember
2017-01-01
2017-09-30
0001001316
us-gaap:ConvertibleNotesPayableMember
2017-09-30
0001001316
us-gaap:FairValueInputsLevel1Member
2017-09-30
0001001316
us-gaap:FairValueInputsLevel2Member
2017-09-30
0001001316
us-gaap:FairValueInputsLevel3Member
2017-09-30
0001001316
us-gaap:FairValueInputsLevel1Member
2016-12-31
0001001316
us-gaap:FairValueInputsLevel2Member
2016-12-31
0001001316
us-gaap:FairValueInputsLevel3Member
2016-12-31
0001001316
us-gaap:RestrictedStockMember
2017-01-01
2017-09-30
0001001316
us-gaap:WarrantMember
2017-01-01
2017-09-30
0001001316
us-gaap:RestrictedStockMember
2016-01-01
2016-09-30
0001001316
tgtx:ConvertibleNotesMember
2017-09-30
0001001316
tgtx:ConvertibleNotesMember
2016-12-31
0001001316
tgtx:AristonMember
us-gaap:ConvertibleNotesPayableMember
2017-01-01
2017-09-30
0001001316
us-gaap:LicensingAgreementsMember
2012-01-01
2012-12-31
0001001316
tgtx:TgOneOneZeroOneMember
2017-01-01
2017-09-30
0001001316
us-gaap:CommonStockMember
2016-12-31
0001001316
us-gaap:AdditionalPaidInCapitalMember
2016-12-31
0001001316
us-gaap:TreasuryStockMember
2016-12-31
0001001316
us-gaap:RetainedEarningsMember
2016-12-31
0001001316
us-gaap:CommonStockMember
2017-01-01
2017-09-30
0001001316
us-gaap:AdditionalPaidInCapitalMember
2017-01-01
2017-09-30
0001001316
us-gaap:RetainedEarningsMember
2017-01-01
2017-09-30
0001001316
us-gaap:CommonStockMember
2017-09-30
0001001316
us-gaap:AdditionalPaidInCapitalMember
2017-09-30
0001001316
us-gaap:TreasuryStockMember
2017-09-30
0001001316
us-gaap:RetainedEarningsMember
2017-09-30
0001001316
tgtx:SharedServicesAgreementMember
2017-01-01
2017-09-30
0001001316
tgtx:LfbLicenseAgreementMember
2016-01-01
2016-09-30
0001001316
tgtx:LfbLicenseAgreementMember
2017-01-01
2017-09-30
0001001316
us-gaap:ConvertibleNotesPayableMember
2016-01-01
2016-12-31
0001001316
us-gaap:RestrictedStockMember
2016-12-31
0001001316
us-gaap:RestrictedStockMember
2017-09-30
0001001316
us-gaap:WarrantMember
2016-12-31
0001001316
us-gaap:WarrantMember
2017-09-30
0001001316
tgtx:TgOneOneZeroOneMember
2016-01-01
2016-09-30
0001001316
us-gaap:RestrictedStockMember
2017-01-01
2017-09-30
0001001316
us-gaap:WarrantMember
2017-01-01
2017-09-30
0001001316
us-gaap:ConvertibleDebtSecuritiesMember
2017-01-01
2017-09-30
0001001316
us-gaap:RestrictedStockMember
2016-01-01
2016-09-30
0001001316
us-gaap:WarrantMember
2016-01-01
2016-09-30
0001001316
us-gaap:ConvertibleDebtSecuritiesMember
2016-01-01
2016-09-30
0001001316
tgtx:ATM2015Member
2017-01-01
2017-09-30
0001001316
tgtx:IncentivePlan2012Member
2017-09-30
0001001316
tgtx:OfficeAgreementMember
2017-01-01
2017-09-30
0001001316
tgtx:OfficeAgreementMember
2017-09-30
0001001316
tgtx:JBETAgreementMember
2017-09-30
0001001316
tgtx:JBETAgreementMember
2017-01-01
2017-09-30
0001001316
us-gaap:ConvertibleNotesPayableMember
2011-01-01
2011-12-31
0001001316
tgtx:LfbLicenseAgreementMember
2017-09-30
0001001316
tgtx:TgOneOneZeroOneMember
2017-09-30
0001001316
tgtx:TgOneOneZeroOneMember
2016-12-31
0001001316
tgtx:SharedServicesAgreementMember
2016-01-01
2016-09-30
0001001316
tgtx:OpusMember
2016-01-01
2016-09-30
0001001316
tgtx:NonEmployeeRestrictedStockMember
2017-09-30
0001001316
tgtx:NonEmployeeRestrictedStockMember
2017-01-01
2017-09-30
0001001316
tgtx:NonEmployeeRestrictedStockMember
2016-01-01
2016-09-30
0001001316
2017-03-09
0001001316
2017-03-01
2017-03-09
0001001316
tgtx:MrWeissMember
2017-01-01
2017-09-30
0001001316
tgtx:AdvisorMember
2017-01-01
2017-09-30
0001001316
2017-07-01
2017-09-30
0001001316
2016-07-01
2016-09-30
0001001316
us-gaap:RestrictedStockMember
2016-07-01
2016-09-30
0001001316
us-gaap:WarrantMember
2016-07-01
2016-09-30
0001001316
us-gaap:ConvertibleDebtSecuritiesMember
2016-07-01
2016-09-30
0001001316
us-gaap:RestrictedStockMember
2017-07-01
2017-09-30
0001001316
us-gaap:WarrantMember
2017-07-01
2017-09-30
0001001316
us-gaap:ConvertibleDebtSecuritiesMember
2017-07-01
2017-09-30
0001001316
us-gaap:RestrictedStockMember
2017-07-01
2017-09-30
0001001316
us-gaap:RestrictedStockMember
2016-07-01
2016-09-30
0001001316
tgtx:TgOneOneZeroOneMember
2017-07-01
2017-09-30
0001001316
tgtx:TgOneOneZeroOneMember
2016-07-01
2016-09-30
0001001316
tgtx:LfbLicenseAgreementMember
2016-12-31
0001001316
tgtx:SharedServicesAgreementMember
2017-07-01
2017-09-30
0001001316
tgtx:SharedServicesAgreementMember
2016-07-01
2016-09-30
0001001316
tgtx:JBETAgreementMember
2016-12-31
0001001316
tgtx:NonEmployeeRestrictedStockMember
2017-07-01
2017-09-30
0001001316
tgtx:NonEmployeeRestrictedStockMember
2016-07-01
2016-09-30
0001001316
tgtx:ATM2017Member
2017-01-01
2017-09-30
0001001316
tgtx:LfbLicenseAgreementMember
2017-07-01
2017-09-30
0001001316
tgtx:LfbLicenseAgreementMember
2016-07-01
2016-09-30
0001001316
2017-11-01
0001001316
tgtx:JBETAgreementMember
2016-01-01
2016-09-30
0001001316
tgtx:OpusMember
2016-07-01
2016-09-30
xbrli:shares
iso4217:USD
iso4217:USD
xbrli:shares
xbrli:pure
utr:sqft
10-Q
false
2017-09-30
2017
Q3
TG THERAPEUTICS, INC.
0001001316
--12-31
Accelerated Filer
TGTX
97661296
50864144
796283
216397
5022846
5678755
0
1300000
0
83852
0
19853860
91842167
25031280
55061329
29156521
586259
583208
101781514
54781547
0
164375
799391
799391
268366
328148
2466202
2042281
19789614
16878440
182156
68875
182156
68875
152381
152381
1275305
1389516
18179772
15267668
22235748
18913745
1104762
1219048
1341372
816257
70694
56820
0
0
101781514
54781547
79545766
35867802
56820
272432139
-234337
-236386820
70694
403712474
-234337
-324003065
-324003065
-236386820
234337
234337
403712474
272432139
0.001
0.001
0.001
0.001
10000000
10000000
0
0
0
0
150000000
150000000
70693576
56820422
70652267
56779113
41309
41309
56820422
41309
70693576
41309
29055021
20978947
62787146
4052333
2492
2492
3270
3270
19853860
19853860
19854638
19854638
182156
68875
0
0
182156
0
0
68875
182156
68875
0
0
182156
0
0
68875
182156
68875
182156
68875
0
0
0
0
600000
600000
17300000
16700000
2000000
1000000
1300000
1400000
300000
5000000
5700000
0.05
.05
2015-03-08
5128206
769230
9.75
54000000
131000
200000
0
400000
800000
3600000
70652267
114286
114286
114000
114000
38096
38096
38000
38000
76536742
46948827
27149050
21797756
71150033
45075097
4300000
2300000
25334762
20878108
1800000
1900000
5386709
1873730
1814288
919648
11254564
8106529
4474273
3165811
4265967
3798859
1398438
1251421
6988597
4307670
3075835
1914390
87791306
55055356
31623323
24963567
-87677020
-54941070
-31585227
-24925471
60775
362319
49575
94444
-113281
96863
-29588
6479
174056
265456
79163
87965
60552084
48961582
65079128
49203277
-1.45
-1.11
-0.48
-0.50
-87616245
-54578751
-87616245
-31535652
-24831027
887585
2143085
888
2142197
1112131
1112
-1112
-26625
418371
2960000
-27
27
5897436
53640013
5898
53634115
6002627
63135805
6003
63129802
12375306
12375306
-113281
63822
53860
367673
62009
42464
12375306
6181400
12400000
6200000
4900000
2800000
0
-33042
-147826
1162310
3051
3041
-88179
2517771
-83852
-77563
-161730
3523
2666164
6447215
72942
793968
-114286
-114286
-71908433
-44566263
2227
323015
0
15199922
19797773
15066282
19800000
12589219
0
18000000
118921547
3595173
0
9984
116778462
3504261
2143085
100896
66810887
-25904808
0
30601
-2645
-56988
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>Description of Business</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We are a biopharmaceutical company focused on
the acquisition, development and commercialization of novel treatments for B-cell malignancies and autoimmune diseases. Currently,
we are developing two therapies targeting hematologic malignancies. TG-1101 (ublituximab) is a novel, glycoengineered monoclonal
antibody that targets a specific and unique epitope on the CD20 antigen found on mature B-lymphocytes. We are also developing TGR-1202
(umbralisib), an orally available PI3K delta inhibitor. The delta isoform of PI3K is strongly expressed in cells of hematopoietic
origin and is believed to be important in the proliferation and survival of B-lymphocytes. Both TG-1101 and TGR-1202, or the combination
of which is referred to as "U2," are in Phase 3 clinical development for patients with hematologic malignancies, with TG-1101
also in Phase 3 clinical development for Multiple Sclerosis. Additionally, the Company has recently brought its anti-PD-L1 monoclonal
antibody into Phase 1 development and aims to bring additional pipeline assets into the clinic in the future.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We also actively evaluate complementary products,
technologies and companies for in-licensing, partnership, acquisition and/or investment opportunities. To date, we have not received
approval for the sale of any of our drug candidates in any market and, therefore, have not generated any product sales from our
drug candidates.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">The accompanying unaudited condensed consolidated financial statements
were prepared in accordance with U.S. generally accepted accounting principles, or GAAP, for interim financial information and
with the instructions to Quarterly Report on Form 10-Q and Article 10 of Regulation S-X of the Exchange Act. Accordingly, they
may not include all of the information and footnotes required by GAAP for complete financial statements. All adjustments that are,
in the opinion of management, of a normal recurring nature and are necessary for a fair presentation of the condensed consolidated
financial statements have been included. Nevertheless, these condensed consolidated financial statements should be read in conjunction
with the audited consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31,
2016. The accompanying condensed December 31, 2016 balance sheet has been derived from these statements. The results of operations
for the three and nine months ended September 30, 2017 are not necessarily indicative of the results that may be expected for the
entire fiscal year or any other interim period.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>Liquidity and Capital Resources</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">We have incurred operating losses since our inception and expect
to continue to incur operating losses for the foreseeable future and, may never become profitable. As of September 30, 2017, we
have an accumulated deficit of approximately $324.0 million.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">Our major sources of cash have been proceeds from the private placement
and public offering of equity securities. We have not yet commercialized any of our drug candidates and cannot be sure if we will
ever be able to do so. Even if we commercialize one or more of our drug candidates, we may not become profitable. Our ability to
achieve profitability depends on many factors, including our ability to obtain regulatory approval for our drug candidates; successfully
completing any post-approval regulatory obligations; and successfully commercializing our drug candidates alone or in partnership.
We may continue to incur substantial operating losses even if we begin to generate revenues from our drug candidates.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">As of September 30, 2017, we had approximately $91.8 million in cash
and cash equivalents. The Company believes its cash and cash equivalents on hand as of September 30, 2017 will be sufficient to
fund the Company’s planned operations through 2018. The actual amount of cash that we will need to operate is subject to
many factors, including, but not limited to, the timing, design and conduct of clinical trials for our drug candidates. We are
dependent upon significant future financing to execute our current strategic plan, including the commercialization of any of our
drug candidates (see Note 5 for further details).</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">Our common stock is listed on the Nasdaq Capital Market and trades
under the symbol “TGTX.”</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>Recently Issued Accounting Standards</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt">In May 2017, the Financial
Accounting Standards Board ("FASB") issued Accounting Standards Update (“ASU”) No. 2017-09, “Scope of
Modification Accounting” (“ASU 2017-09”). ASU 2017-09 provides guidance about which changes to the terms or conditions
of a share-based payment award require an entity to apply modification accounting. An entity should account for the effects of
a modification unless all the following are met:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt"> </p>
<table cellpadding="0" style="width: 100%">
<tr>
<td style="vertical-align: top; width: 72px; padding: 0.75pt; font: 12pt Times New Roman, Times, Serif"><font style="font-size: 8pt">●</font></td>
<td style="padding: 0.75pt; font: 12pt Times New Roman, Times, Serif; text-align: justify"><font style="font-size: 8pt">The fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the modified award is the same as the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the original award immediately before the original award is modified. If the modification does not affect any of the inputs to the valuation technique that the entity uses to value the award, the entity is not required to estimate the value immediately before and after the modification.</font></td></tr>
<tr>
<td style="vertical-align: top; font: 12pt Times New Roman, Times, Serif; padding: 0.75pt"><font style="font-size: 8pt">●</font></td>
<td style="padding: 0.75pt; font: 12pt Times New Roman, Times, Serif; text-align: justify"><font style="font-size: 8pt">The vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified.</font></td></tr>
</table>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<table cellpadding="0" style="width: 100%">
<tr>
<td style="vertical-align: top; width: 72px; padding: 0.75pt; font: 12pt Times New Roman, Times, Serif"><font style="font-size: 8pt">●</font></td>
<td style="padding: 0.75pt; font: 12pt Times New Roman, Times, Serif; text-align: justify"><font style="font-size: 8pt">The classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified.</font></td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt">ASU 2017-09 is effective
for annual and interim periods beginning on or after December 15, 2017. Early adoption is permitted for public business entities
for reporting periods for which financial statements have not yet been issued, and all other entities for reporting periods for
which financial statements have not yet been made available for issuance. The amendments should be applied prospectively to an
award modified on or after the adoption date. The Company does not expect the adoption of ASU 2017-09 to have a material impact
on the Company’s condensed consolidated financial statements.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt">In January 2017, the FASB
issued ASU No. 2017-04, “Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”). ASU 2017-04 removes
the requirement to compare the implied fair value of goodwill with its carrying amount as part of step 2 of the goodwill impairment
test. As a result, under ASU 2017-04, an entity should perform its annual, or interim, goodwill impairment test by comparing the
fair value of a reporting unit with its carrying amount and should recognize an impairment charge for the amount by which the carrying
amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill
allocated to that reporting unit. In addition, ASU 2017-04:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt"> </p>
<table cellpadding="0" style="width: 100%; font: 12pt Times New Roman, Times, Serif">
<tr>
<td style="vertical-align: top; width: 72px; padding: 0.75pt"><font style="font-size: 8pt">●</font></td>
<td style="padding: 0.75pt; text-align: justify"><font style="font-size: 8pt">Clarifies the requirements for excluding and allocating foreign currency translation adjustments to reporting units in connection with an entity’s testing of reporting units for goodwill impairment.</font></td></tr>
<tr>
<td style="vertical-align: top; padding: 0.75pt"><font style="font-size: 8pt">●</font></td>
<td style="padding: 0.75pt; text-align: justify"><font style="font-size: 8pt">Clarifies that an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable.</font></td></tr>
</table>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"></p>
<table cellpadding="0" style="width: 100%; font: 12pt Times New Roman, Times, Serif">
<tr>
<td style="vertical-align: top; width: 72px; padding: 0.75pt"><font style="font-size: 8pt">●</font></td>
<td style="padding: 0.75pt; text-align: justify"><font style="font-size: 8pt">Makes minor changes to the overview and background sections of certain Accounting Standards Codification (“ASC” or “Codification”) subtopics and topics as part of the Board’s initiative to unify and improve those sections throughout the Codification.</font></td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt">ASU 2017-04 is effective
prospectively for annual and interim periods beginning on or after December 15, 2019, and early adoption is permitted on testing
dates after January 1, 2017. The Company does not expect the adoption of ASU 2017-04 to have a material impact on the Company’s
condensed consolidated financial statements.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt">In January 2017, the FASB
issued ASU No. 2017-01, “FASB Clarifies the Definition of a Business” (“ASU 2017-01”). ASU 2017-01 clarifies
the definition of a business in ASC 805. The amendments in ASU 2017-01 are intended to make application of the guidance more consistent
and cost-efficient. The amendments in ASU 2017-01:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellpadding="0" style="width: 100%; font: 12pt Times New Roman, Times, Serif">
<tr>
<td style="vertical-align: top; width: 72px; padding: 0.75pt"><font style="font-size: 8pt">●</font></td>
<td style="padding: 0.75pt; text-align: justify"><font style="font-size: 8pt">Provide a screen to determine when a set of assets and activities is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This screen reduces the number of transactions that need to be further evaluated.</font></td></tr>
<tr>
<td style="vertical-align: top; padding: 0.75pt"><font style="font-size: 8pt">●</font></td>
<td style="padding: 0.75pt; text-align: justify"><font style="font-size: 8pt">Provide that if the screen is not met, (1) to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output and (2) remove the evaluation of whether a market participant could replace missing elements. The amendments provide a framework to assist entities in evaluating whether both an input and a substantive process are present. The framework includes two sets of criteria to consider that depend on whether a set has outputs. Although outputs are not required for a set to be a business, outputs generally are a key element of a business; therefore, the Board has developed more stringent criteria for sets without outputs.</font></td></tr>
</table>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"></p>
<table cellpadding="0" style="width: 100%; font: 12pt Times New Roman, Times, Serif">
<tr>
<td style="vertical-align: top; width: 72px; padding: 0.75pt"><font style="font-size: 8pt">●</font></td>
<td style="padding: 0.75pt; text-align: justify"><font style="font-size: 8pt">Narrow the definition of the term output so that the term is consistent with how outputs are described in Topic 606.</font></td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt">ASU 2017-01 is effective
for annual and interim periods beginning after December 15, 2017, with early adoption permitted for transactions that occurred
before the issuance date or effective date of the standard if the transactions were not reported in financial statements that
have been issued or made available for issuance. The Company does not expect the adoption of ASU 2017-01 to have a material impact
on the Company’s condensed consolidated financial statements.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt">In May 2014, the FASB issued
ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which supersedes all
existing revenue recognition requirements, including most industry-specific guidance. ASU 2014-09 provides a single set of criteria
for revenue recognition among all industries. The new standard requires a company to recognize revenue when it transfers goods
or services to customers in an amount that reflects the consideration that the Company expects to receive for those goods or services.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt">ASU 2014-09 includes guidance
for determining whether a license transfers to a customer at a point in time or over time based on the nature of the entity’s
promise to the customer. To determine whether the entity’s promise is to provide a right to access its intellectual property
or a right to use its intellectual property, the entity should consider the nature of the intellectual property to which the customer
will have rights.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 27pt">ASU 2014-09 is effective for interim and annual
periods beginning after December 15, 2017. The standard allows for two transition methods - full retrospective, in which the
standard is applied to each prior reporting period presented, or modified retrospective, in which the cumulative effect of initially
applying the standard is recognized at the date of initial adoption. The Company expects to elect the modified retrospective approach
and is continuing to assess the impact of the new guidance on its accounting policies and procedures and is evaluating the new
requirements. The Company does not expect the adoption of ASU 2014-09 to have a material impact on the Company’s condensed
consolidated financial statements.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 27pt">Other pronouncements issued by the FASB or
other authoritative accounting standards with future effective dates are either not applicable or not significant to our
condensed consolidated financial statements.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt"></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>Use of Estimates</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">The preparation of financial statements in conformity with GAAP
requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues
and expenses during the applicable reporting period. Actual results could differ from those estimates. Such differences could
be material to the condensed consolidated financial statements.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>Cash and Cash Equivalents</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">We treat liquid investments with original maturities of three months
or less when purchased as cash and cash equivalents.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>Restricted Cash</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">We record cash pledged or held in trust as restricted cash. As of
September 30, 2017 and December 31, 2016, we have approximately $0.6 million of restricted cash pledged to secure a line of credit
as a security deposit for an <font style="background-color: white">Office Agreement</font> (see Note 8).</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>Investment Securities</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Investment securities at December 31, 2016 consist
of short-term government securities. We classify these securities as held-to-maturity. Held-to-maturity securities are those securities
in which we have the ability and intent to hold the security until maturity. Held-to-maturity securities are recorded at amortized
cost, adjusted for the amortization or accretion of premiums or discounts. Premiums and discounts are amortized or accreted over
the life of the related held-to-maturity security as an adjustment to yield using the effective interest method.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">A decline in the market value of any investment security below cost,
that is deemed to be other than temporary, results in a reduction in the carrying amount to fair value. The impairment is charged
to operations and a new cost basis for the security is established. Other-than-temporary impairment charges would be included in
interest and other (income) expense, net. Dividend and interest income are recognized when earned.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>Credit Risk</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">Financial instruments that potentially subject the Company to concentrations
of credit risk consist primarily of cash and cash equivalents and short-term investments. The Company maintains its cash and cash
equivalents and short-term investments with high-credit quality financial institutions. At times, such amounts may exceed federally-insured
limits.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>Revenue Recognition</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">We recognize license revenue in accordance with the revenue recognition
guidance of the Codification. We analyze each element of our licensing agreement to determine the appropriate revenue recognition.
The terms of the license agreement may include payments to us of non-refundable up-front license fees, milestone payments if specified
objectives are achieved, and/or royalties on product sales. We recognize revenue from upfront payments over the period of significant
involvement under the related agreements unless the fee is in exchange for products delivered or services rendered that represent
the culmination of a separate earnings process and no further performance obligation exists under the contract. We recognize milestone
payments as revenue upon the achievement of specified milestones only if (1) the milestone payment is non-refundable, (2) substantive
effort is involved in achieving the milestone, (3) the amount of the milestone is reasonable in relation to the effort expended
or the risk associated with achievement of the milestone, and (4) the milestone is at risk for both parties. If any of these conditions
are not met, we defer the milestone payment and recognize it as revenue over the estimated period of performance under the contract.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>Research and Development Costs</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">Generally, research and development costs are expensed as incurred.
Non-refundable advance payments for goods or services that will be used or rendered for future research and development activities
are deferred and amortized over the period that the goods are delivered or the related services are performed, subject to an assessment
of recoverability. We make estimates of costs incurred in relation to external clinical research organizations, or CROs, and clinical
site costs. We analyze the progress of clinical trials, including levels of patient enrollment, invoices received and contracted
costs when evaluating the adequacy of the amount expensed and the related prepaid asset and accrued liability. Significant judgments
and estimates must be made and used in determining the accrued liability balance and expense in any accounting period. We review
and accrue CRO expenses and clinical trial study expenses based on work performed and rely upon estimates of those costs applicable
to the stage of completion of a study. Accrued CRO costs are subject to revisions as such trials progress to completion. Revisions
are charged to expense in the period in which the facts that give rise to the revision become known. With respect to clinical site
costs, the financial terms of these agreements are subject to negotiation and vary from contract to contract. Payments under these
contracts may be uneven, and depend on factors such as the achievement of certain events, the successful recruitment of patients,
the completion of portions of the clinical trial or similar conditions. The objective of our policy is to match the recording of
expenses in our financial statements to the actual services received and efforts expended. As such, expense accruals related to
clinical site costs are recognized based on our estimate of the degree of completion of the event or events specified in the specific
clinical study or trial contract.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">Prepaid research and development in our consolidated balance sheets
includes, among other things, costs related to agreements with CROs, certain costs to third party service providers related to
development and manufacturing services as well as clinical development. These agreements often require payments in advance of services
performed or goods received. Accordingly, as of September 30, 2017 and December 31, 2016, we recorded approximately $5.0 million
and $5.7 million, respectively, in prepaid research and development related to such advance agreements.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>Income Taxes</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between
the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, operating losses and
tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets
and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. If the likelihood
of realizing the deferred tax assets or liability is less than “more likely than not,” a valuation allowance is then
created.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">We, and our subsidiaries, file income tax returns in the U.S. Federal
jurisdiction and in various states. We have tax net operating loss carryforwards that are subject to examination for a number of
years beyond the year in which they were generated for tax purposes. Since a portion of these net operating loss carryforwards
may be utilized in the future, many of these net operating loss carryforwards will remain subject to examination. We recognize
interest and penalties, if any, related to uncertain income tax positions in income tax expense.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>Stock-Based Compensation</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">We recognize all share-based payments to employees and non-employee
directors (as compensation for service) as noncash compensation expense in the condensed consolidated financial statements based
on the fair values of such payments. Stock-based compensation expense recognized each period is based on the value of the portion
of share-based payment awards that is ultimately expected to vest during the period. Forfeitures are estimated at the time of grant
and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">For share-based payments to consultants and other third-parties (including
related parties), noncash compensation expense is determined at the “measurement date.” The expense is recognized over
the vesting period of the award. Until the measurement date is reached, the total amount of compensation expense remains uncertain.
We record compensation expense based on the fair value of the award at the reporting date. The awards to consultants and other
third-parties (including related parties) are then revalued, or the total compensation is recalculated based on the then current
fair value, at each subsequent reporting date.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">In addition, because some of the restricted stock issued to employees,
consultants and other third-parties vest upon achievement of certain milestones, the total expense is uncertain. Compensation expense
for such awards that vest upon the achievement of milestones is recognized when the achievement of such milestones becomes probable.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>Basic and Diluted Net Loss Per Common Share</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">Basic net loss per share of our common stock is calculated by dividing
net loss applicable to the common stock by the weighted-average number of our common stock outstanding for the period. Diluted
net loss per share of common stock is the same as basic net loss per share of common stock since potentially dilutive securities
from stock options, stock warrants and convertible preferred stock would have an antidilutive effect either because we incurred
a net loss during the period presented or because such potentially dilutive securities were out of the money and the Company realized
net income during the period presented. The amounts of potentially dilutive securities excluded from the calculation were 4,157,052
and 6,664,591 for the three and nine months ended September 30, 2017 and 2016, respectively. The following outstanding shares of
common stock equivalents were excluded from the computation of net loss per share attributable to common stockholders for the periods
presented because including them would have been antidilutive:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="6" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt">  <b>Three and Nine Months Ended September 30,</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2017</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2016</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 70%"><font style="font-size: 8pt">Unvested restricted shares</font></td>
<td style="width: 1%"> </td>
<td style="width: 0%"> </td>
<td style="width: 11%; text-align: right"><font style="font-size: 8pt">4,141,680</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 0%"> </td>
<td style="width: 11%; text-align: right"><font style="font-size: 8pt">5,507,250</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Shares issuable upon note conversion</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">15,372</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">1,142,208</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Warrants</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">15,133</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"> </td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">4,157,052</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"> </td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">6,664,591</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>Long-Lived Assets and Goodwill</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">Long-lived assets are reviewed for potential impairment when circumstances
indicate that the carrying value of long-lived tangible and intangible assets with finite lives may not be recoverable. Management’s
policy in determining whether an impairment indicator exists, a triggering event, comprises measurable operating performance criteria
as well as qualitative measures. If an analysis is necessitated by the occurrence of a triggering event, we make certain assumptions
in determining the impairment amount. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment
charge is recognized.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">Goodwill is reviewed for impairment annually, or earlier when events
arise that could indicate that an impairment exists. We test for goodwill impairment using a two-step process. The first step compares
the fair value of the reporting unit with the unit's carrying value, including goodwill. When the carrying value of the reporting
unit is greater than fair value, the unit’s goodwill may be impaired, and the second step must be completed to measure the
amount of the goodwill impairment charge, if any. In the second step, the implied fair value of the reporting unit’s goodwill
is compared with the carrying amount of the unit’s goodwill. If the carrying amount is greater than the implied fair value,
the carrying value of the goodwill must be written down to its implied fair value. We will continue to perform impairment tests
annually, at December 31, and whenever events or changes in circumstances suggest that the carrying value of an asset may not be
recoverable.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>Rent Expense and Deferred Rent</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">Rent expense and lease incentives, including landlord construction
allowances, are recognized on a straight-line basis over the lease term, commencing generally on the date the Company takes possession
of the leased property. The Company records lease incentives as deferred rent and recognizes the lease incentives as reductions
of rental expense. The unamortized portion of deferred rent is included in deferred rent in the condensed consolidated balance
sheets.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">The following tables summarize our cash and cash equivalents at September
30, 2017 and December 31, 2016:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>September 30, 2017</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>December 31, 2016</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 64%"><font style="font-size: 8pt">Money market funds</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 15%; text-align: right"><font style="font-size: 8pt">29,055,021</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 15%; text-align: right"><font style="font-size: 8pt">20,978,947</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Checking and bank deposits</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">62,787,146</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">4,052,333</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">91,842,167</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">25,031,280</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">Our investments as of December 31, 2016 are classified as held-to-maturity.
Held-to-maturity investments are recorded at amortized cost.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">The following table summarizes our investment securities at December
31, 2016:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Amortized cost, as adjusted</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Gross unrealized holding gains</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Gross unrealized holding losses</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Estimated fair value</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Short-term investments:</font></td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 52%"><font style="font-size: 8pt">Obligations of domestic governmental agencies (maturing between February 2017 and September 2017) (held-to-maturity)</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">19,853,860</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">3,270</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">2,492</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">19,854,638</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total short-term investment securities</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">19,853,860</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">3,270</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">2,492</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">19,854,638</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">We measure certain financial assets and liabilities at fair value
on a recurring basis in the condensed consolidated financial statements. The fair value hierarchy ranks the quality and reliability
of inputs, or assumptions, used in the determination of fair value and requires financial assets and liabilities carried at fair
value to be classified and disclosed in one of the following three categories:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">●Level 1 – quoted prices in active markets for identical
assets and liabilities;</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">●Level 2 – inputs other than Level 1 quoted prices that
are directly or indirectly observable; and</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">●Level 3 – unobservable inputs that are not corroborated
by market data.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">As of September 30, 2017 and December 31, 2016, the fair values of
cash and cash equivalents, restricted cash, accounts payable, and notes and interest payable, current portion approximate their
carrying value.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="background-color: white">At the time of our merger (we
were then known as Manhattan Pharmaceuticals, Inc. (“Manhattan”)) with Ariston Pharmaceuticals, Inc. (“Ariston”)
in March 2010, Ariston issued $15.5 million of five-year 5% notes payable (the “5% Notes”) in satisfaction of several
note payable issuances. The 5% Notes and accrued and unpaid interest thereon are convertible at the option of the holder into common
stock at the conversion price of $1,125 per share. Ariston agreed to make quarterly payments on the 5% Notes equal to 50% of the
net product cash flow received from the exploitation or commercialization of Ariston’s product candidates, AST-726 and AST-915.
We have no obligations under the 5% Notes aside from (a) 50% of the net product cash flows from Ariston’s product candidates,
if any, payable to noteholders; and (b) the conversion feature, discussed above.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="background-color: white">The cumulative liability including
accrued and unpaid interest of the 5% Notes was approximately $17.3 million at September 30, 2017 and $16.7 million at December
31, 2016.</font> No payments have been made on the 5% Notes as of September 30, 2017.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">In December 2011, we elected the fair value option for valuing the
5% Notes. The fair value option was elected in order to reflect in our financial statements the assumptions that market participants
use in evaluating these financial instruments.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">As of December 31, 2013, as a result of expiring intellectual property
rights and other factors, it was determined that net product cash flows from AST-726 were unlikely. As we have no other obligations
under the 5% Notes aside from the net product cash flows and the conversion feature, the conversion feature was used to estimate
the 5% Notes’ fair value as of September 30, 2017 and December 31, 2016. The assumptions, assessments and projections of
future revenues are subject to uncertainties, difficult to predict, and require significant judgment. The use of different assumptions,
applying different judgment to inherently subjective matters and changes in future market conditions could result in significantly
different estimates of fair value and the differences could be material to our condensed consolidated financial statements.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">The following tables provide the fair value measurements of applicable
financial liabilities as of September 30, 2017 and December 31, 2016:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="14" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Financial liabilities at fair value as of September 30, 2017</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Level 1</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Level 2</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Level 3</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Total</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 52%"><font style="font-size: 8pt">5% Notes</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">182,156</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">182,156</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">182,156</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">182,156</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="14" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Financial liabilities at fair value as of December 31, 2016</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Level 1</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Level 2</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Level 3</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Total</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 52%"><font style="font-size: 8pt">5% Notes</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">68,875</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">68,875</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">68,875</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">68,875</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">The Level 3 amounts above represent the fair value of the 5% Notes
and related accrued interest.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">The following table summarizes the changes in Level 3 instruments
during the nine months ended September 30, 2017:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td style="width: 88%"><font style="font-size: 8pt">Fair value at December 31, 2016</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">68,875</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Interest accrued on face value of 5% Notes</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">630,003</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Conversion of 5% notes</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Change in fair value of Level 3 liabilities</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(516,722</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 8pt">)</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Fair value at September 30, 2017</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">182,156</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">The change in the fair value of the Level 3 liabilities is reported
in other (income) expense in the accompanying condensed consolidated statements of operations.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>Preferred Stock</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">Our amended and restated certificate of incorporation authorizes
the issuance of up to 10,000,000 shares of preferred stock, $0.001 par value, with rights senior to those of our common stock,
<font style="background-color: white">issuable in one or more series. Upon issuance, we can determine the rights, preferences,
privileges and restrictions thereof. These rights, preferences and privileges could include dividend rights, conversion rights,
voting rights, terms of redemption, liquidation preferences, sinking fund terms and the number of shares constituting any series
or the designation of such series, any or all of which may be greater than the rights of common stock.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>Common Stock</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Our amended and restated certificate of incorporation
authorizes the issuance of up to 150,000,000 shares of $0.001 par value common stock.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In December 2014, we filed a shelf registration
statement on Form S-3 (the "2015 S-3"), which was declared effective in January 2015. Under the 2015 S-3, the Company may
sell up to a total of $250 million of its securities. In connection with the 2015 S-3, we amended our 2013 At-the-Market Issuance
Sales Agreement with MLV & Co. LLC (the "2015 ATM") such that we may issue and sell additional shares of our common
stock, having an aggregate offering price of up to $175.0 million, from time to time through MLV & Co. LLC ("MLV")
and FBR Capital Markets & Co. ("FBR", each of MLV and FBR individually an "Agent" and collectively the "Agents"),
acting as the sales agents. Under the 2015 ATM we pay the Agents a commission rate of up to 3.0% of the gross proceeds from the
sale of any shares of common stock sold through the Agents.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">During the nine months ended September 30, 2017,
we sold a total of 3,104,253 shares of common stock under the 2015 ATM for total gross proceeds of approximately $31.6 million
at an average selling price of $10.18 per share, resulting in net proceeds of approximately $31.0 million after deducting commissions
and other transaction costs.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In March 2017, we completed an underwritten
public offering of 5,128,206 shares of our common stock (plus a 30-day underwriter overallotment option to purchase up to an additional
769,230 shares of common stock, which was exercised) at a price of $9.75 per share. Net proceeds from this offering, including
the overallotment option, were approximately $54 million, net of underwriting discounts and offering expenses of approximately
$3.6 million.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">In May 2017, we filed a shelf registration statement on Form S-3
(the "2017 S-3"), which was declared effective in June 2017, replacing the 2015 S-3. Under the 2017 S-3, the Company may
sell up to a total of $300 million of its securities. In connection with the 2017 S-3, we entered into an At-the-Market Issuance
Sales Agreement (the "2017 ATM") with Jefferies LLC, Cantor Fitzgerald & Co., FBR Capital Markets & Co., SunTrust
Robinson Humphrey, Inc., Raymond James & Associates, Inc., Ladenburg Thalmann & Co. Inc. and H.C. Wainwright & Co.,
LLC (each a "2017 Agent" and collectively, the "2017 Agents"), relating to the sale of shares of our common stock.
Under the 2017 ATM we pay the 2017 Agents a commission rate of up to 3.0% of the gross proceeds from the sale of any shares of
common stock.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">During the nine months ended September 30, 2017, we sold a total
of 2,898,374 shares of common stock under the 2017 ATM for aggregate total gross proceeds of approximately $32.7 million at an
average selling price of $11.30 per share, resulting in net proceeds of approximately $32.2 million after deducting commissions
and other transactions costs.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">The 2017 S-3 is currently our only active shelf registration statement.
After deducting shares already sold there is approximately $267.3 million of common stock that remains available for sale under
the 2017 S-3. We may offer the securities under the 2017 S-3 from time to time in response to market conditions or other circumstances
if we believe such a plan of financing is in the best interests of our stockholders. We believe that the 2017 S-3 provides us with
the flexibility to raise additional capital to finance our operations as needed.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>Equity Incentive Plans</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The TG Therapeutics, Inc. Amended and Restated
2012 Incentive Plan (“2012 Incentive Plan”) was approved by stockholders in June 2015. As of September 30, 2017, no
options were outstanding and up to an additional 1,201,258 shares may be issued under the 2012 Incentive Plan.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">Effective as of January 1, 2017, we entered into an amendment (the
“Amendment”) to the employment agreement entered into as of December 15, 2011 (together with the Amendment, the “Employment
Agreement”) with Michael S. Weiss, our Executive Chairman and Chief Executive Officer and President. Under the Amendment,
Mr. Weiss will remain as Chief Executive Officer and President, removing the interim status. Simultaneously, we entered into a
Strategic Advisory Agreement (the “Advisory Agreement”) with Caribe BioAdvisors, LLC (the “Advisor”) owned
by Mr. Weiss to provide the services of Mr. Weiss as Chairman of the Board and as Executive Chairman. As part of the Amendment,
Mr. Weiss also agreed to forfeit 3,381,866 restricted shares previously granted under the Employment Agreement that were predominantly
subject to time-based vesting over the next three years. Simultaneously, (i) Mr. Weiss was issued 418,371 restricted shares under
the Employment Agreement that vest in 2018 and 2019 and (ii) the Advisor was issued 2,960,000 restricted shares under the Advisory
Agreement that vested on market capitalization thresholds ranging from $375 million to $750 million. In accordance with GAAP, there
was no incremental stock compensation expense recognition as a result of the modification.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><u>Restricted Stock</u></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">Certain employees, directors and consultants have been awarded restricted
stock. The restricted stock vesting consists of milestone and time-based vesting. The following table summarizes restricted share
activity for the nine months ended September 30, 2017:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Number of Shares</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Weighted Average Grant Date Fair Value</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 76%"><font style="font-size: 8pt">Outstanding at December 31, 2016</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">8,642,055</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">7.20</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Granted</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">1,112,131</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">6.10</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Vested</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">(4,085,881</font></td>
<td><font style="font-size: 8pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">5.23</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Forfeited</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(26,625</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"><font style="font-size: 8pt">6.72</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Outstanding at September 30, 2017</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"> </td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">5,641,680</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">7.06</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">Total expense associated with restricted stock grants was approximately
$4.9 million and $2.8 million during the three months ended September 30, 2017 and 2016, respectively, and $12.4 million, and $6.2
million during the nine months ended September 30, 2017 and 2016, respectively. As of September 30, 2017, there was approximately
$14.9 million of total unrecognized compensation cost related to unvested time-based restricted stock, which is expected to be
recognized over a weighted-average period of 0.9 years. The unrecognized compensation amount does not include, as of September
30, 2017, 180,000 shares of restricted stock outstanding which are milestone-based and vest upon certain corporate milestones;
and 2,289,917 shares of restricted stock outstanding issued to non-employees, the expense for which is determined each reporting
period at the measurement date. The expense for non-employee awards is recognized over the vesting period of the award. Until the
measurement date is reached, the total amount of compensation expense remains uncertain. We record compensation expense based on
the fair value of the award at the reporting date.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><u>Warrants</u></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">The following table summarizes warrant activity for the nine months
ended September 30, 2017:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Warrants</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Weighted-average exercise price</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Aggregate Intrinsic Value</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 64%"><font style="font-size: 8pt">Outstanding at December 31, 2016</font></td>
<td style="width: 1%; padding-bottom: 3pt"> </td>
<td style="width: 1%; padding-bottom: 3pt"> </td>
<td style="width: 9%; padding-bottom: 3pt; text-align: right"><font style="font-size: 8pt">913,381</font></td>
<td style="width: 1%; padding-bottom: 3pt"> </td>
<td style="width: 1%; padding-bottom: 3pt"> </td>
<td style="width: 1%; padding-bottom: 3pt"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; padding-bottom: 3pt; text-align: right"><font style="font-size: 8pt">2.41</font></td>
<td style="width: 1%; padding-bottom: 3pt"> </td>
<td style="width: 1%; padding-bottom: 3pt"> </td>
<td style="width: 1%; border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">1,961,403</font></td>
<td style="width: 1%; padding-bottom: 3pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Issued</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Exercised</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">(887,585</font></td>
<td><font style="font-size: 8pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">2.41</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Expired</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(25,796</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"> </td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Outstanding at September 30, 2017</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"> </td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>Stock-Based Compensation</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">We did not grant any stock options during the nine months ended September
30, 2017 and 2016.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">The following table summarizes stock-based compensation expense information
about restricted stock for the three and nine months ended September 30, 2017 and 2016:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="6" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Three months ended September 30,</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="6" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Nine months ended September 30,</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2017</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2016</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2017</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2016</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 52%"><font style="font-size: 8pt">Stock-based compensation expense associated with restricted stock</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">4,890,123</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">2,834,038</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">12,375,306</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">6,181,400</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">4,890,123</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">2,834,038</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">12,375,306</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">6,181,400</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">The following is a summary of notes payable:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="10" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>September 30, 2017</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="10" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>December 31</b>, <b>2016</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Current portion, net</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Non-current portion, net</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Total</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Current portion, net</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Non-current portion, net</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Total</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 40%"><font style="font-size: 8pt">Convertible 5% Notes Payable</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 7%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">182,156</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 7%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 7%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">182,156</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 7%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">68,875</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 7%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 7%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">68,875</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">182,156</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">-</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">182,156</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">68,875</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">-</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">68,875</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>Convertible 5% Notes Payable</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The 5% Notes and accrued and unpaid interest
thereon are convertible at the option of the holder into common stock at the conversion price of $1,125 per share. We have no obligation
under the 5% Notes aside from (a) 50% of the net product cash flows from Ariston’s product candidates, if any, payable to
noteholders; and (b) the conversion feature, discussed above. Interest accrues monthly, is added to principal on an annual basis,
every March 8, and is payable at maturity, which was March 8, 2015 (see Note 4 for further details).</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The cumulative liability including accrued and
unpaid interest of these notes was approximately $17.3 million at September 30, 2017 and $16.7 million at December 31, 2016. No
payments have been made on the 5% Notes as of September 30, 2017.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">In December 2011, we elected the fair value option for valuing the
5% Notes. The fair value option was elected in order to reflect in our financial statements the assumptions that market participants
use in evaluating these financial instruments (see Note 4 for further details).</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>BET</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In May 2016, as part of a broader agreement
with Jubilant Biosys (“Jubilant”), an India-based biotechnology company, we entered into a sub-license agreement (“JBET
Agreement”) with Checkpoint Therapeutics, Inc. (“Checkpoint”) (see Note 8) for the development and commercialization
of Jubilant’s novel BET inhibitor program in the field of hematological malignancies.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">Under the terms of the JBET agreement, we paid Checkpoint an up-front
licensing fee of $1.0 million and will make additional payments contingent on certain preclinical, clinical, and regulatory milestones,
including commercial milestones totaling up to approximately $177 million and a single-digit royalty on net sales. TG will also
provide funding to support certain targeted research efforts at Jubilant.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>TG-1101</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">In November 2012, we entered into an exclusive (within the territory)
sublicense agreement with Ildong relating to the development and commercialization of TG-1101 in South Korea and Southeast Asia.
Under the terms of the sublicense agreement, Ildong has been granted a royalty bearing, exclusive right, including the right to
grant sublicenses, to develop and commercialize TG-1101 in South Korea, Taiwan, Singapore, Indonesia, Malaysia, Thailand, Philippines,
Vietnam, and Myanmar.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">An upfront payment of $2.0 million, which was received in December
2012, <font style="background-color: white">net of $0.3 million of income tax withholdings</font>, is being recognized as license
revenue on a straight-line basis over the life of the agreement, which is through the expiration of the last licensed patent right
or 15 years after the first commercial sale of a product in such country, unless the agreement is earlier terminated, and represents
the estimated period over which we will have certain ongoing responsibilities under the sublicense agreement. We recorded license
revenue of approximately $38,000 for each of the three months ended September 30, 2017 and 2016, and $114,000 for each of the nine
months ended September 30, 2017 and 2016 and, at September 30, 2017 and December 31, 2016, have deferred revenue of approximately
$1.3 million and $1.4 million, respectively, associated with this $2.0 million payment (approximately $0.2 million of which has
been classified in current liabilities at September 30, 2017 and December 31, 2016).</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We may receive up to an additional $5.0 million
in payments upon the achievement of pre-specified milestones. In addition, upon commercialization, Ildong will make royalty payments
to us on net sales of TG-1101 in the sublicense territory.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>LFB Biotechnologies</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">On January 30, 2012, we entered into an exclusive license agreement
with LFB Biotechnologies, GTC Biotherapeutics and LFB/GTC LLC, all wholly-owned subsidiaries of LFB Group, relating to the development
of ublituximab (the “LFB License Agreement”). In connection with the LFB License Agreement, we nominated Dr. Yann Echelard
to our Board of Directors as LFB Group’s nominee. LFB Group maintains the right to nominate a board member until such time
as LFB Group owns less than 10% of the outstanding common stock.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">Under the terms of the LFB License Agreement, we utilize LFB Group
for certain development and manufacturing services. We incurred expenses of $1.8 million and $1.9 million during the three months
ended September 30, 2017 and 2016, respectively, and $2.3 million and $4.3 million during the nine months ended September 30, 2017
and 2016, respectively, which have been included in other research and development expenses in the accompanying condensed consolidated
statements of operations. As of September 30, 2017 and December 31, 2016, we had approximately $0 and $0.4 million, respectively,
recorded in accounts payable related to the LFB License Agreement. In conjunction with the development and manufacturing services
discussed above, certain agreements between us and LFB Group require payments in advance of services performed or goods delivered.
Accordingly, as of September 30, 2017 and December 31, 2016, we recorded approximately $0 and $1.3 million, respectively, in prepaid
research and development for such advance payments.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>Other Parties</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">In March 2014, we entered into a shared services agreement (the “Opus
Shared Services Agreement”) with Opus Point Partners Management, LLC (“Opus”) in which the parties agreed to
share the costs of a rented facility and certain other services. Our Executive Chairman and Chief Executive Officer is a Managing
Member of Opus. During the three and nine months ended September 30, 2017, we incurred no expenses related to this agreement, as
compared to expenses incurred of approximately $0.02 million and $0.1 million during the three and nine months ended September
30, 2016, respectively. The Opus Shared Services Agreement is no longer in effect as we began occupying new office space in April
2016.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="background-color: white">In October 2014, we entered
into an agreement (the “Office Agreement”) with Fortress Biotech, Inc. (“Fortress”), to occupy approximately
45% of the 24,000 square feet of New York City office space leased by Fortress, which is now our corporate headquarters. The Office
Agreement requires us to pay our respective share of the average annual rent and other costs of the 15-year lease. We approximate
an average annual rental obligation of $1.1 million under the Office Agreement. We began to occupy this new space in April 2016,
with rental payments beginning in the third quarter of 2016. During the nine months ended September 30, 2017, we recorded rent
expense of approximately $0.9 million and at September 30, 2017, have deferred rent of approximately $1.3 million. Mr. Weiss is
also Executive Vice Chairman of Fortress.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="background-color: white">Under the Office Agreement,
we agreed to pay Fortress our portion of the build out costs, which have been allocated to us at the 45% rate mentioned above.
The allocated build-out costs have been recorded in Leasehold Interest and will be amortized over the 15-year term of the Office
Agreement. After an initial commitment of the 45% rate for a period of three (3) years, we and Fortress will determine actual office
space utilization annually and if our utilization differs from the amount we have been billed, we will either receive credits or
be assessed incremental utilization charges. As of September 30, 2017, we had approximately $131,000 recorded in accounts payable
related to Fortress of which approximately $30,000 related to rent and build-out costs.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="background-color: white">In July 2015, we entered into
a Shared Services Agreement (the “Shared Services Agreement”) with Fortress to share the cost of certain services such
as facilities use, personnel costs and other overhead and administrative costs. This Shared Services Agreement requires us to pay
our respective share of services utilized. In connection with the Shared Services Agreement, we</font> incurred expenses of <font style="background-color: white">approximately
$1.0 million and $0.5 million in shared services for the nine months ended September 30, 2017 and 2016, respectively, and expenses
of approximately $0.3 million for each of the three months ended September 30, 2017 and 2016, primarily related to shared personnel.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">In May 2016, as part of a broader agreement with Jubilant, an India-based
biotechnology company, we entered into the JBET Agreement with Checkpoint, a subsidiary of Fortress, for the development and commercialization
of Jubilant’s novel BET inhibitor program in the field of hematological malignancies. We paid Checkpoint an up-front licensing
fee of $1.0 million in July 2016 and incurred expenses of $0.2 million in March 2017 for the first milestone achievement as part
of the JBET Agreement recorded in other research and development. As of September 30, 2017 and December 31, 2016, we had approximately
$0.2 million and $0.8 million, respectively, recorded in accounts payable, related mostly to the JBET Agreement. Mr. Weiss is also
the Executive Chairman of Checkpoint.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We are a biopharmaceutical company focused on
the acquisition, development and commercialization of novel treatments for B-cell malignancies and autoimmune diseases. Currently,
we are developing two therapies targeting hematologic malignancies. TG-1101 (ublituximab) is a novel, glycoengineered monoclonal
antibody that targets a specific and unique epitope on the CD20 antigen found on mature B-lymphocytes. We are also developing TGR-1202
(umbralisib), an orally available PI3K delta inhibitor. The delta isoform of PI3K is strongly expressed in cells of hematopoietic
origin and is believed to be important in the proliferation and survival of B-lymphocytes. Both TG-1101 and TGR-1202, or the combination
of which is referred to as "U2," are in Phase 3 clinical development for patients with hematologic malignancies, with TG-1101
also in Phase 3 clinical development for Multiple Sclerosis. Additionally, the Company has recently brought its anti-PD-L1 monoclonal
antibody into Phase 1 development and aims to bring additional pipeline assets into the clinic in the future.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We also actively evaluate complementary products,
technologies and companies for in-licensing, partnership, acquisition and/or investment opportunities. To date, we have not received
approval for the sale of any of our drug candidates in any market and, therefore, have not generated any product sales from our
drug candidates.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">The accompanying unaudited condensed consolidated financial statements
were prepared in accordance with U.S. generally accepted accounting principles, or GAAP, for interim financial information and
with the instructions to Quarterly Report on Form 10-Q and Article 10 of Regulation S-X of the Exchange Act. Accordingly, they
may not include all of the information and footnotes required by GAAP for complete financial statements. All adjustments that are,
in the opinion of management, of a normal recurring nature and are necessary for a fair presentation of the condensed consolidated
financial statements have been included. Nevertheless, these condensed consolidated financial statements should be read in conjunction
with the audited consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31,
2016. The accompanying condensed December 31, 2016 balance sheet has been derived from these statements. The results of operations
for the three and nine months ended September 30, 2017 are not necessarily indicative of the results that may be expected for the
entire fiscal year or any other interim period.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">We have incurred operating losses since our inception and expect
to continue to incur operating losses for the foreseeable future and, may never become profitable. As of September 30, 2017, we
have an accumulated deficit of approximately $324.0 million.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">Our major sources of cash have been proceeds from the private placement
and public offering of equity securities. We have not yet commercialized any of our drug candidates and cannot be sure if we will
ever be able to do so. Even if we commercialize one or more of our drug candidates, we may not become profitable. Our ability to
achieve profitability depends on many factors, including our ability to obtain regulatory approval for our drug candidates; successfully
completing any post-approval regulatory obligations; and successfully commercializing our drug candidates alone or in partnership.
We may continue to incur substantial operating losses even if we begin to generate revenues from our drug candidates.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">As of September 30, 2017, we had approximately $91.8 million in cash
and cash equivalents. The Company believes its cash and cash equivalents on hand as of September 30, 2017 will be sufficient to
fund the Company’s planned operations through 2018. The actual amount of cash that we will need to operate is subject to
many factors, including, but not limited to, the timing, design and conduct of clinical trials for our drug candidates. We are
dependent upon significant future financing to execute our current strategic plan, including the commercialization of any of our
drug candidates (see Note 5 for further details).</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">Our common stock is listed on the Nasdaq Capital Market and trades
under the symbol “TGTX.”</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">The preparation of financial statements in conformity with GAAP
requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues
and expenses during the applicable reporting period. Actual results could differ from those estimates. Such differences could
be material to the condensed consolidated financial statements.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">We treat liquid investments with original maturities of three months
or less when purchased as cash and cash equivalents.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">We record cash pledged or held in trust as restricted cash. As of
September 30, 2017 and December 31, 2016, we have approximately $0.6 million of restricted cash pledged to secure a line of credit
as a security deposit for an <font style="background-color: white">Office Agreement</font> (see Note 8).</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Investment securities at December 31, 2016 consist
of short-term government securities. We classify these securities as held-to-maturity. Held-to-maturity securities are those securities
in which we have the ability and intent to hold the security until maturity. Held-to-maturity securities are recorded at amortized
cost, adjusted for the amortization or accretion of premiums or discounts. Premiums and discounts are amortized or accreted over
the life of the related held-to-maturity security as an adjustment to yield using the effective interest method.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">A decline in the market value of any investment security below cost,
that is deemed to be other than temporary, results in a reduction in the carrying amount to fair value. The impairment is charged
to operations and a new cost basis for the security is established. Other-than-temporary impairment charges would be included in
interest and other (income) expense, net. Dividend and interest income are recognized when earned.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">Financial instruments that potentially subject the Company to concentrations
of credit risk consist primarily of cash and cash equivalents and short-term investments. The Company maintains its cash and cash
equivalents and short-term investments with high-credit quality financial institutions. At times, such amounts may exceed federally-insured
limits.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">We recognize license revenue in accordance with the revenue recognition
guidance of the Codification. We analyze each element of our licensing agreement to determine the appropriate revenue recognition.
The terms of the license agreement may include payments to us of non-refundable up-front license fees, milestone payments if specified
objectives are achieved, and/or royalties on product sales. We recognize revenue from upfront payments over the period of significant
involvement under the related agreements unless the fee is in exchange for products delivered or services rendered that represent
the culmination of a separate earnings process and no further performance obligation exists under the contract. We recognize milestone
payments as revenue upon the achievement of specified milestones only if (1) the milestone payment is non-refundable, (2) substantive
effort is involved in achieving the milestone, (3) the amount of the milestone is reasonable in relation to the effort expended
or the risk associated with achievement of the milestone, and (4) the milestone is at risk for both parties. If any of these conditions
are not met, we defer the milestone payment and recognize it as revenue over the estimated period of performance under the contract.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">Generally, research and development costs are expensed as incurred.
Non-refundable advance payments for goods or services that will be used or rendered for future research and development activities
are deferred and amortized over the period that the goods are delivered or the related services are performed, subject to an assessment
of recoverability. We make estimates of costs incurred in relation to external clinical research organizations, or CROs, and clinical
site costs. We analyze the progress of clinical trials, including levels of patient enrollment, invoices received and contracted
costs when evaluating the adequacy of the amount expensed and the related prepaid asset and accrued liability. Significant judgments
and estimates must be made and used in determining the accrued liability balance and expense in any accounting period. We review
and accrue CRO expenses and clinical trial study expenses based on work performed and rely upon estimates of those costs applicable
to the stage of completion of a study. Accrued CRO costs are subject to revisions as such trials progress to completion. Revisions
are charged to expense in the period in which the facts that give rise to the revision become known. With respect to clinical site
costs, the financial terms of these agreements are subject to negotiation and vary from contract to contract. Payments under these
contracts may be uneven, and depend on factors such as the achievement of certain events, the successful recruitment of patients,
the completion of portions of the clinical trial or similar conditions. The objective of our policy is to match the recording of
expenses in our financial statements to the actual services received and efforts expended. As such, expense accruals related to
clinical site costs are recognized based on our estimate of the degree of completion of the event or events specified in the specific
clinical study or trial contract.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">Prepaid research and development in our consolidated balance sheets
includes, among other things, costs related to agreements with CROs, certain costs to third party service providers related to
development and manufacturing services as well as clinical development. These agreements often require payments in advance of services
performed or goods received. Accordingly, as of September 30, 2017 and December 31, 2016, we recorded approximately $5.0 million
and $5.7 million, respectively, in prepaid research and development related to such advance agreements.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between
the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, operating losses and
tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets
and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. If the likelihood
of realizing the deferred tax assets or liability is less than “more likely than not,” a valuation allowance is then
created.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">We, and our subsidiaries, file income tax returns in the U.S. Federal
jurisdiction and in various states. We have tax net operating loss carryforwards that are subject to examination for a number of
years beyond the year in which they were generated for tax purposes. Since a portion of these net operating loss carryforwards
may be utilized in the future, many of these net operating loss carryforwards will remain subject to examination. We recognize
interest and penalties, if any, related to uncertain income tax positions in income tax expense.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">We recognize all share-based payments to employees and non-employee
directors (as compensation for service) as noncash compensation expense in the condensed consolidated financial statements based
on the fair values of such payments. Stock-based compensation expense recognized each period is based on the value of the portion
of share-based payment awards that is ultimately expected to vest during the period. Forfeitures are estimated at the time of grant
and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">For share-based payments to consultants and other third-parties (including
related parties), noncash compensation expense is determined at the “measurement date.” The expense is recognized over
the vesting period of the award. Until the measurement date is reached, the total amount of compensation expense remains uncertain.
We record compensation expense based on the fair value of the award at the reporting date. The awards to consultants and other
third-parties (including related parties) are then revalued, or the total compensation is recalculated based on the then current
fair value, at each subsequent reporting date.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">In addition, because some of the restricted stock issued to employees,
consultants and other third-parties vest upon achievement of certain milestones, the total expense is uncertain. Compensation expense
for such awards that vest upon the achievement of milestones is recognized when the achievement of such milestones becomes probable.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">Basic net loss per share of our common stock is calculated by dividing
net loss applicable to the common stock by the weighted-average number of our common stock outstanding for the period. Diluted
net loss per share of common stock is the same as basic net loss per share of common stock since potentially dilutive securities
from stock options, stock warrants and convertible preferred stock would have an antidilutive effect either because we incurred
a net loss during the period presented or because such potentially dilutive securities were out of the money and the Company realized
net income during the period presented. The amounts of potentially dilutive securities excluded from the calculation were 4,157,052
and 6,664,591 for the three and nine months ended September 30, 2017 and 2016, respectively. The following outstanding shares of
common stock equivalents were excluded from the computation of net loss per share attributable to common stockholders for the periods
presented because including them would have been antidilutive:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="6" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt">  <b>Three and Nine Months Ended September 30,</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2017</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2016</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 70%"><font style="font-size: 8pt">Unvested restricted shares</font></td>
<td style="width: 1%"> </td>
<td style="width: 0%"> </td>
<td style="width: 11%; text-align: right"><font style="font-size: 8pt">4,141,680</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 0%"> </td>
<td style="width: 11%; text-align: right"><font style="font-size: 8pt">5,507,250</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Shares issuable upon note conversion</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">15,372</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">1,142,208</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Warrants</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">15,133</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"> </td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">4,157,052</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"> </td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">6,664,591</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">Long-lived assets are reviewed for potential impairment when circumstances
indicate that the carrying value of long-lived tangible and intangible assets with finite lives may not be recoverable. Management’s
policy in determining whether an impairment indicator exists, a triggering event, comprises measurable operating performance criteria
as well as qualitative measures. If an analysis is necessitated by the occurrence of a triggering event, we make certain assumptions
in determining the impairment amount. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment
charge is recognized.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">Goodwill is reviewed for impairment annually, or earlier when events
arise that could indicate that an impairment exists. We test for goodwill impairment using a two-step process. The first step compares
the fair value of the reporting unit with the unit's carrying value, including goodwill. When the carrying value of the reporting
unit is greater than fair value, the unit’s goodwill may be impaired, and the second step must be completed to measure the
amount of the goodwill impairment charge, if any. In the second step, the implied fair value of the reporting unit’s goodwill
is compared with the carrying amount of the unit’s goodwill. If the carrying amount is greater than the implied fair value,
the carrying value of the goodwill must be written down to its implied fair value. We will continue to perform impairment tests
annually, at December 31, and whenever events or changes in circumstances suggest that the carrying value of an asset may not be
recoverable.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">Rent expense and lease incentives, including landlord construction
allowances, are recognized on a straight-line basis over the lease term, commencing generally on the date the Company takes possession
of the leased property. The Company records lease incentives as deferred rent and recognizes the lease incentives as reductions
of rental expense. The unamortized portion of deferred rent is included in deferred rent in the condensed consolidated balance
sheets.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="6" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt">  <b>Three and Nine Months Ended September 30,</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2017</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2016</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 70%"><font style="font-size: 8pt">Unvested restricted shares</font></td>
<td style="width: 1%"> </td>
<td style="width: 0%"> </td>
<td style="width: 11%; text-align: right"><font style="font-size: 8pt">4,141,680</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 0%"> </td>
<td style="width: 11%; text-align: right"><font style="font-size: 8pt">5,507,250</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Shares issuable upon note conversion</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">15,372</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">1,142,208</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Warrants</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">15,133</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"> </td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">4,157,052</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"> </td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">6,664,591</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>September 30, 2017</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>December 31, 2016</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 64%"><font style="font-size: 8pt">Money market funds</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 15%; text-align: right"><font style="font-size: 8pt">29,055,021</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 15%; text-align: right"><font style="font-size: 8pt">20,978,947</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Checking and bank deposits</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">62,787,146</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">4,052,333</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">91,842,167</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">25,031,280</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Amortized cost, as adjusted</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Gross unrealized holding gains</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Gross unrealized holding losses</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Estimated fair value</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Short-term investments:</font></td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 52%"><font style="font-size: 8pt">Obligations of domestic governmental agencies (maturing between February 2017 and September 2017) (held-to-maturity)</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">19,853,860</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">3,270</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">2,492</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">19,854,638</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total short-term investment securities</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">19,853,860</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">3,270</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">2,492</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">19,854,638</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="14" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Financial liabilities at fair value as of September 30, 2017</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Level 1</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Level 2</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Level 3</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Total</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 52%"><font style="font-size: 8pt">5% Notes</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">182,156</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">182,156</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">182,156</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">182,156</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="14" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Financial liabilities at fair value as of December 31, 2016</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Level 1</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Level 2</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Level 3</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Total</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 52%"><font style="font-size: 8pt">5% Notes</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">68,875</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">68,875</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">68,875</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">68,875</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td style="width: 88%"><font style="font-size: 8pt">Fair value at December 31, 2016</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">68,875</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Interest accrued on face value of 5% Notes</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">630,003</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Conversion of 5% notes</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Change in fair value of Level 3 liabilities</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(516,722</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 8pt">)</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Fair value at September 30, 2017</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">182,156</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Number of Shares</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Weighted Average Grant Date Fair Value</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 76%"><font style="font-size: 8pt">Outstanding at December 31, 2016</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">8,642,055</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">7.20</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Granted</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">1,112,131</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">6.10</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Vested</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">(4,085,881</font></td>
<td><font style="font-size: 8pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">5.23</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Forfeited</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(26,625</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"><font style="font-size: 8pt">6.72</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Outstanding at September 30, 2017</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"> </td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">5,641,680</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">7.06</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Warrants</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Weighted-average exercise price</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Aggregate Intrinsic Value</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 64%"><font style="font-size: 8pt">Outstanding at December 31, 2016</font></td>
<td style="width: 1%; padding-bottom: 3pt"> </td>
<td style="width: 1%; padding-bottom: 3pt"> </td>
<td style="width: 9%; padding-bottom: 3pt; text-align: right"><font style="font-size: 8pt">913,381</font></td>
<td style="width: 1%; padding-bottom: 3pt"> </td>
<td style="width: 1%; padding-bottom: 3pt"> </td>
<td style="width: 1%; padding-bottom: 3pt"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; padding-bottom: 3pt; text-align: right"><font style="font-size: 8pt">2.41</font></td>
<td style="width: 1%; padding-bottom: 3pt"> </td>
<td style="width: 1%; padding-bottom: 3pt"> </td>
<td style="width: 1%; border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">1,961,403</font></td>
<td style="width: 1%; padding-bottom: 3pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Issued</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Exercised</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">(887,585</font></td>
<td><font style="font-size: 8pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">2.41</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Expired</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(25,796</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"> </td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Outstanding at September 30, 2017</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"> </td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="6" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Three months ended September 30,</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="6" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Nine months ended September 30,</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2017</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2016</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2017</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2016</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 52%"><font style="font-size: 8pt">Stock-based compensation expense associated with restricted stock</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">4,890,123</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">2,834,038</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">12,375,306</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">6,181,400</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">4,890,123</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">2,834,038</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">12,375,306</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">6,181,400</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="10" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>September 30, 2017</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="10" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>December 31</b>, <b>2016</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Current portion, net</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Non-current portion, net</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Total</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Current portion, net</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Non-current portion, net</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Total</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 40%"><font style="font-size: 8pt">Convertible 5% Notes Payable</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 7%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">182,156</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 7%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 7%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">182,156</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 7%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">68,875</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 7%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 7%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">68,875</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">182,156</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">-</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">182,156</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">68,875</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">-</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">68,875</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
4157052
6664591
4141680
0
15372
5507250
15133
1142208
4157052
6664591
5507250
15133
1142208
4141680
0
15372
91800000
182156
68875
630003
0
-516722
8642055
5641680
1112131
4085881
26625
7.20
7.06
6.10
5.23
6.72
913381
0
0
887585
25796
2.41
0.00
0.00
2.41
0.00
1961403
0
12375306
6181400
4890123
2834038
12375306
6181400
4890123
2834038
177000000
0.45
30000
P15Y
24000
1100000
900000
1300000
1000000
500000
100000
300000
300000
20000
1125
0.50
2289917
3104253
2898374
31600000
32700000
31000000
32200000
10.18
11.30
1201258
3381866
267300000
1000000
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt">In May 2017, the Financial
Accounting Standards Board ("FASB") issued Accounting Standards Update (“ASU”) No. 2017-09, “Scope of
Modification Accounting” (“ASU 2017-09”). ASU 2017-09 provides guidance about which changes to the terms or conditions
of a share-based payment award require an entity to apply modification accounting. An entity should account for the effects of
a modification unless all the following are met:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt"> </p>
<table cellpadding="0" style="width: 100%">
<tr>
<td style="vertical-align: top; width: 72px; padding: 0.75pt; font: 12pt Times New Roman, Times, Serif"><font style="font-size: 8pt">●</font></td>
<td style="padding: 0.75pt; font: 12pt Times New Roman, Times, Serif; text-align: justify"><font style="font-size: 8pt">The fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the modified award is the same as the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the original award immediately before the original award is modified. If the modification does not affect any of the inputs to the valuation technique that the entity uses to value the award, the entity is not required to estimate the value immediately before and after the modification.</font></td></tr>
<tr>
<td style="vertical-align: top; font: 12pt Times New Roman, Times, Serif; padding: 0.75pt"><font style="font-size: 8pt">●</font></td>
<td style="padding: 0.75pt; font: 12pt Times New Roman, Times, Serif; text-align: justify"><font style="font-size: 8pt">The vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified.</font></td></tr>
</table>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<table cellpadding="0" style="width: 100%">
<tr>
<td style="vertical-align: top; width: 72px; padding: 0.75pt; font: 12pt Times New Roman, Times, Serif"><font style="font-size: 8pt">●</font></td>
<td style="padding: 0.75pt; font: 12pt Times New Roman, Times, Serif; text-align: justify"><font style="font-size: 8pt">The classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified.</font></td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt">ASU 2017-09 is effective
for annual and interim periods beginning on or after December 15, 2017. Early adoption is permitted for public business entities
for reporting periods for which financial statements have not yet been issued, and all other entities for reporting periods for
which financial statements have not yet been made available for issuance. The amendments should be applied prospectively to an
award modified on or after the adoption date. The Company does not expect the adoption of ASU 2017-09 to have a material impact
on the Company’s condensed consolidated financial statements.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt">In January 2017, the FASB
issued ASU No. 2017-04, “Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”). ASU 2017-04 removes
the requirement to compare the implied fair value of goodwill with its carrying amount as part of step 2 of the goodwill impairment
test. As a result, under ASU 2017-04, an entity should perform its annual, or interim, goodwill impairment test by comparing the
fair value of a reporting unit with its carrying amount and should recognize an impairment charge for the amount by which the carrying
amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill
allocated to that reporting unit. In addition, ASU 2017-04:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt"> </p>
<table cellpadding="0" style="width: 100%; font: 12pt Times New Roman, Times, Serif">
<tr>
<td style="vertical-align: top; width: 72px; padding: 0.75pt"><font style="font-size: 8pt">●</font></td>
<td style="padding: 0.75pt; text-align: justify"><font style="font-size: 8pt">Clarifies the requirements for excluding and allocating foreign currency translation adjustments to reporting units in connection with an entity’s testing of reporting units for goodwill impairment.</font></td></tr>
<tr>
<td style="vertical-align: top; padding: 0.75pt"><font style="font-size: 8pt">●</font></td>
<td style="padding: 0.75pt; text-align: justify"><font style="font-size: 8pt">Clarifies that an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable.</font></td></tr>
</table>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"></p>
<table cellpadding="0" style="width: 100%; font: 12pt Times New Roman, Times, Serif">
<tr>
<td style="vertical-align: top; width: 72px; padding: 0.75pt"><font style="font-size: 8pt">●</font></td>
<td style="padding: 0.75pt; text-align: justify"><font style="font-size: 8pt">Makes minor changes to the overview and background sections of certain Accounting Standards Codification (“ASC” or “Codification”) subtopics and topics as part of the Board’s initiative to unify and improve those sections throughout the Codification.</font></td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt">ASU 2017-04 is effective
prospectively for annual and interim periods beginning on or after December 15, 2019, and early adoption is permitted on testing
dates after January 1, 2017. The Company does not expect the adoption of ASU 2017-04 to have a material impact on the Company’s
condensed consolidated financial statements.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt">In January 2017, the FASB
issued ASU No. 2017-01, “FASB Clarifies the Definition of a Business” (“ASU 2017-01”). ASU 2017-01 clarifies
the definition of a business in ASC 805. The amendments in ASU 2017-01 are intended to make application of the guidance more consistent
and cost-efficient. The amendments in ASU 2017-01:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellpadding="0" style="width: 100%; font: 12pt Times New Roman, Times, Serif">
<tr>
<td style="vertical-align: top; width: 72px; padding: 0.75pt"><font style="font-size: 8pt">●</font></td>
<td style="padding: 0.75pt; text-align: justify"><font style="font-size: 8pt">Provide a screen to determine when a set of assets and activities is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This screen reduces the number of transactions that need to be further evaluated.</font></td></tr>
<tr>
<td style="vertical-align: top; padding: 0.75pt"><font style="font-size: 8pt">●</font></td>
<td style="padding: 0.75pt; text-align: justify"><font style="font-size: 8pt">Provide that if the screen is not met, (1) to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output and (2) remove the evaluation of whether a market participant could replace missing elements. The amendments provide a framework to assist entities in evaluating whether both an input and a substantive process are present. The framework includes two sets of criteria to consider that depend on whether a set has outputs. Although outputs are not required for a set to be a business, outputs generally are a key element of a business; therefore, the Board has developed more stringent criteria for sets without outputs.</font></td></tr>
</table>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"></p>
<table cellpadding="0" style="width: 100%; font: 12pt Times New Roman, Times, Serif">
<tr>
<td style="vertical-align: top; width: 72px; padding: 0.75pt"><font style="font-size: 8pt">●</font></td>
<td style="padding: 0.75pt; text-align: justify"><font style="font-size: 8pt">Narrow the definition of the term output so that the term is consistent with how outputs are described in Topic 606.</font></td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt">ASU 2017-01 is effective
for annual and interim periods beginning after December 15, 2017, with early adoption permitted for transactions that occurred
before the issuance date or effective date of the standard if the transactions were not reported in financial statements that
have been issued or made available for issuance. The Company does not expect the adoption of ASU 2017-01 to have a material impact
on the Company’s condensed consolidated financial statements.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt">In May 2014, the FASB issued
ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which supersedes all
existing revenue recognition requirements, including most industry-specific guidance. ASU 2014-09 provides a single set of criteria
for revenue recognition among all industries. The new standard requires a company to recognize revenue when it transfers goods
or services to customers in an amount that reflects the consideration that the Company expects to receive for those goods or services.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt">ASU 2014-09 includes guidance
for determining whether a license transfers to a customer at a point in time or over time based on the nature of the entity’s
promise to the customer. To determine whether the entity’s promise is to provide a right to access its intellectual property
or a right to use its intellectual property, the entity should consider the nature of the intellectual property to which the customer
will have rights.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 27pt">ASU 2014-09 is effective for interim and annual
periods beginning after December 15, 2017. The standard allows for two transition methods - full retrospective, in which the
standard is applied to each prior reporting period presented, or modified retrospective, in which the cumulative effect of initially
applying the standard is recognized at the date of initial adoption. The Company expects to elect the modified retrospective approach
and is continuing to assess the impact of the new guidance on its accounting policies and procedures and is evaluating the new
requirements. The Company does not expect the adoption of ASU 2014-09 to have a material impact on the Company’s condensed
consolidated financial statements.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 27pt">Other pronouncements issued by the FASB or
other authoritative accounting standards with future effective dates are either not applicable or not significant to our
condensed consolidated financial statements.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 27pt">On January 6, 2017, a purported securities class
action complaint was filed in New York federal court against the Company and certain of its directors, officers or consultants
on behalf of all shareholders who purchased or otherwise acquired TG Therapeutics common stock between September 15, 2014 and October
12, 2016 (the “Class Period”). The case was captioned <i>John Lyon v. TG Therapeutics, Michael S. Weiss, Sean A. Power
and Robert Niecestro</i>, Case No. 1:17-cv-00112-VM (S.D.N.Y.). The complaint alleged that, throughout the Class Period various
statements made by the Company regarding its GENUINE Phase 3 trial were materially false or misleading when made in violation of
the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. On January 24, 2017, a second purported class action
complaint was filed in New York federal court against the Company and certain of its directors, officers or consultants on behalf
of all shareholders who purchased or otherwise acquired TG Therapeutics common stock between September 15, 2014 and October 12,
2016. The case was captioned <i>Kenneth C. Wyzgoski v. TG Therapeutics, Michael S. Weiss, Sean A. Power and Robert Niecestro</i>,
Case No. 1:17-cv-00508-VM (S.D.N.Y.). The claims and allegations in the Wyzgoski complaint were substantially identical to those
in the Lyon case. By order dated March 23, 2017, the court consolidated the Lyon and Wyzgoski cases into one action, captioned
<i>In re TG Therapeutics Securities Litigation</i>, Case No. 1:17-cv-00112-VM (S.D.N.Y.), appointed lead plaintiffs in the case,
and approved lead plaintiffs’ selection of lead counsel. On April 5, 2017 the Court so ordered a stipulation pursuant to
which lead plaintiffs voluntarily dismissed the consolidated action in its entirety without prejudice. The Company denies the allegations
and claims made in the above-referenced actions and no consideration was given by the Company in connection with lead plaintiffs’
voluntary dismissal of the consolidated action.</p>