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<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b><i>Description
of Business</i></b></font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">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 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,
we have recently brought our anti-PD-L1 monoclonal antibody into Phase 1 development and aim to bring additional pipeline assets
into the clinic in the future.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">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.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">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, 2017. The accompanying condensed consolidated December 31, 2017
balance sheet has been derived from these statements. The results of operations for the six months ended June 30, 2018 are not
necessarily indicative of the results that may be expected for the entire fiscal year or any other interim period.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">Certain
reclassifications have been made to the prior period unaudited condensed consolidated financial statements to conform to the current
period presentation, including:</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" style="width: 100%; font: 8pt Times New Roman, Times, Serif">
<tr style="font: 8pt Times New Roman, Times, Serif">
<td style="vertical-align: top; width: 84px; padding-left: 0.75in; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">●</font></td>
<td style="font: 8pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">Presentation
of restricted cash on the condensed consolidated statements of cash flows for the six months ended June 30, 2017, as a result
of the adoption of Accounting Standards Update No. 2016-18 in the first quarter of 2018.</font></td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b><i>Liquidity
and Capital Resources</i></b></font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">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 June 30, 2018, we have an accumulated deficit of approximately $440.5 million.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">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.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">As
of June 30, 2018, we had approximately $126.3 million in cash, cash equivalents, investment securities, and interest receivable.
The Company believes its cash, cash equivalents, investment securities, and interest receivable on hand as of June 30, 2018 combined
with the proceeds raised subsequent to the quarter end will be sufficient to fund the Company’s planned operations into
the fourth quarter of 2019. 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 provide the cash necessary to execute our current strategic plan, including the commercialization of any of our drug
candidates (see Note 5 for further details).</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">Our
common stock is listed on the Nasdaq Capital Market and trades under the symbol “TGTX.”</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b><i>Recently
Issued Accounting Standards</i></b></font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">In
July 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (“ASU”) No.
2018-11, “Leases - Targeted Improvements” (“ASU 2018-11”) as an update to ASU 2016-02, Leases (“ASU
2016-02” or “Topic 842”) issued on February 25, 2016. ASU 2016-02 is effective for public business entities
for fiscal years beginning January 1, 2019. ASU 2016-02 required companies to adopt the new leases standard at the beginning of
the earliest period presented in the financial statements, which is January 1, 2017, using a modified retrospective transition
method where lessees must recognize lease assets and liabilities for all leases even though those leases may have expired before
the effective date of January 1, 2017. Lessees must also provide the new and enhanced disclosures for each period presented, including
the comparative periods.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">ASU
2018-11 provides an entity with an additional (and optional) transition method to adopt the new leases standard. Under this new
transition method, an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect
adjustment to the opening balance of retained earnings in the period of adoption. Consequently, an entity’s reporting for
the comparative periods presented in the financial statements in which it adopts the new leases standard will continue to be in
accordance with current GAAP (Topic 840, Leases). An entity that elects this additional (and optional) transition method must
provide the required Topic 840 disclosures for all periods that continue to be in accordance with Topic 840. The amendments do
not change the existing disclosure requirements in Topic 840. An entity shall apply the effects of modification using one of the
following two methods:</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" style="width: 100%; font: 8pt Times New Roman, Times, Serif">
<tr style="font: 8pt Times New Roman, Times, Serif">
<td style="vertical-align: top; width: 60px; padding-left: 0.5in; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">●</font></td>
<td style="font: 8pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">Retrospectively
to each prior reporting period presented in the financial statements with the cumulative effect of initially applying ASU
2018-11 recognized at the beginning of the earliest comparative period presented. Under this transition method, the application
date shall be the later of the beginning of the earliest period presented in the financial statements and the commencement
date of the lease.</font></td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" style="width: 100%; font: 8pt Times New Roman, Times, Serif">
<tr style="font: 8pt Times New Roman, Times, Serif">
<td style="vertical-align: top; width: 60px; padding-left: 0.5in; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">●</font></td>
<td style="font: 8pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">Retrospectively
at the beginning of the period of adoption through a cumulative-effect adjustment. Under this transition method, the application
date shall be the beginning of the reporting period in which the entity first applies ASU 2018-11.</font></td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">ASU
2018-11 is effective for public business entities for fiscal years beginning after December 15, 2018, and interim periods within
those fiscal years, with earlier adoption permitted. We are currently evaluating the impact the adoption of ASU 2018-11 will have
on our consolidated financial statements.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">In
June 2018, the FASB issued ASU No. 2018-07, “Improvements to Nonemployee Share-Based Payment Accounting” (“ASU
2018-07”). ASU 2018-07 expands the scope of FASB Topic 718, Compensation – Stock Compensation (“Topic 718”)
to include share-based payment transactions for acquiring goods and services from nonemployees. An entity should only remeasure
equity-classified awards for which a measurement date has not been established through a cumulative-effect adjustment to retained
earnings as of the beginning of the fiscal year of adoption. Upon transition, the entity is required to measure these nonemployee
awards at fair value as of the adoption date. The entity must not remeasure assets that are completed. Disclosures required at
transition include the nature of and reason for the change in accounting principle and, if applicable, quantitative information
about the cumulative effect of the change on retained earnings or other components of equity.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">ASU
2018-07 is effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods
within that fiscal year. Early adoption is permitted, but no earlier than an entity’s adoption date of Topic 606. We are
currently evaluating the impact the adoption of ASU 2018-07 will have on our consolidated financial statements.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">In
May 2017, the FASB issued 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:</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" style="width: 100%; font: 8pt Times New Roman, Times, Serif">
<tr style="font: 8pt Times New Roman, Times, Serif">
<td style="vertical-align: top; width: 60px; padding-left: 0.5in; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">●</font></td>
<td style="font: 8pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">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>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" style="width: 100%; font: 8pt Times New Roman, Times, Serif">
<tr style="font: 8pt Times New Roman, Times, Serif">
<td style="vertical-align: top; width: 60px; padding-left: 0.5in; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">●</font></td>
<td style="font: 8pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">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: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" style="width: 100%; font: 8pt Times New Roman, Times, Serif">
<tr style="font: 8pt Times New Roman, Times, Serif">
<td style="vertical-align: top; width: 60px; padding-left: 0.5in; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">●</font></td>
<td style="font: 8pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">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"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">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 adopted ASU 2017-09 on January 1, 2018. The adoption of ASU 2017-09
did not have a material effect on our consolidated financial statements as of June 30, 2018.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">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:</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" style="width: 100%; font: 8pt Times New Roman, Times, Serif">
<tr style="font: 8pt Times New Roman, Times, Serif">
<td style="vertical-align: top; width: 72px; padding-left: 0.5in; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">●</font></td>
<td style="padding: 0.75pt; font: 8pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">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>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" style="width: 100%; font: 8pt Times New Roman, Times, Serif">
<tr style="font: 8pt Times New Roman, Times, Serif">
<td style="vertical-align: top; width: 72px; padding-left: 0.5in; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">●</font></td>
<td style="padding: 0.75pt; font: 8pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">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: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" style="width: 100%; font: 8pt Times New Roman, Times, Serif">
<tr style="font: 8pt Times New Roman, Times, Serif">
<td style="vertical-align: top; width: 72px; padding-left: 0.5in; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">●</font></td>
<td style="padding: 0.75pt; font: 8pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">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"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">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 adopted ASU 2017-01 on January 1, 2018. The adoption of ASU
2017-01 did not have a material effect on our consolidated financial statements as of June 30, 2018.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">In
November 2016, the FASB issued ASU No. 2016-18, “Statement of Cash Flows – Restricted Cash” (“ASU 2016-18”).
ASU 2016-18 requires that a statement of cash flows explain the change during the period for the total of cash, cash equivalents,
and amounts generally described as restricted cash or restricted cash equivalents. ASU 2016-18 does not provide a definition of
restricted cash or restricted cash equivalents, and does not change the balance sheet presentation for such items. The Company
adopted ASU 2016-18 on January 1, 2018. The adoption of ASU 2016-18 did not have a material effect on our consolidated financial
statements as of June 30, 2018.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">In
May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers” (Topic 606) (“ASU
2014-09” or “ASC 606”), 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.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">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.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">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 adopted
ASU 2014-09 on January 1, 2018, using the modified retrospective approach. The adoption of ASU 2014-09 did not have a material
effect on our condensed consolidated financial statements as of June 30, 2018.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">Other
pronouncements issued by the FASB or other authoritative accounting standards with future effective dates are either not applicable
or not significant to our consolidated financial statements.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b><i>Use
of Estimates</i></b></font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">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 consolidated financial statements.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b><i>Cash
and Cash Equivalents</i></b></font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">We
treat liquid investments with original maturities of three months or less when purchased as cash and cash equivalents.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b><i>Restricted
Cash</i></b></font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">We
record cash pledged or held in trust as restricted cash. As of June 30, 2018 and December 31, 2017, we have approximately $1.2
million and $0.6 million, respectively, 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).</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b><i>Investment
Securities</i></b></font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">Investment
securities at June 30, 2018 and December 31, 2017 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.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">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.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b><i>Credit
Risk</i></b></font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">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.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b><i>Revenue
Recognition</i></b></font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">We
recognize license revenue in accordance with the revenue recognition guidance of ASC 606. 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 a promise to transfer more than one good or service to the customer, in which case the Company would account for each promised
good or service as a performance obligation only if it is (1) distinct or (2) a series of distinct goods or services that are
substantially the same and have the same pattern of transfer. For each performance obligation, the Company would determine whether
we satisfy the performance obligation over time by transferring control of a good or service over time. To determine whether
the Company’s promise is to provide a right to access its intellectual property or a right to use its intellectual property,
the Company would consider the nature of the intellectual property to which the customer will have rights. The Company has symbolic
intellectual property, derived from its association with the Company’s ongoing activities, including its ordinary business
activities. 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.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b><i>Research
and Development Costs</i></b></font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">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.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">Prepaid
research and development in our consolidated balance sheets includes, among other things, costs related to agreements with CRO’s,
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 June 30, 2018 and
December 31, 2017, we recorded approximately $8.9 million and $8.1 million, respectively, in prepaid research and development
related to such advance agreements.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b><i>Income
Taxes</i></b></font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">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.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b><i>Stock-Based
Compensation</i></b></font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">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.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">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.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">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.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b><i>Basic
and Diluted Net Loss Per Common Share</i></b></font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">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 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:</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"></p>
<table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="6" style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"> 
<b>Three and Six Months Ended June 30,</b></font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>2018</b></font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>2017</b></font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="width: 51%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Unvested
restricted shares</font></td>
<td style="width: 2%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 18%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">4,589,940</font></td>
<td style="width: 2%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 2%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 18%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">4,275,762</font></td>
<td style="width: 5%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Stock
options</font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">560,000</font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">--</font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Shares
issuable upon note conversion</font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">15,950</font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">15,181</font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Total</font></td>
<td style="padding-bottom: 3pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt double; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt double; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">5,165,890</font></td>
<td style="padding-bottom: 3pt; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 3pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt double; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt double; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">4,290,943</font></td>
<td style="padding-bottom: 3pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b><i>Long-Lived
Assets and Goodwill</i></b></font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">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.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">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.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b><i>Rent
Expense and Deferred Rent</i></b></font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">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.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The following tables summarize our cash and cash
equivalents at June 30, 2018 and December 31, 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; 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><font style="font-size: 8pt">(in thousands)</font></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>June 30, 2018</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, 2017</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">Checking and bank deposits</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">96,995</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 15%; text-align: right"><font style="font-size: 8pt">55,682</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Money market funds</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">8,677</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">1,036</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">105,672</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">56,718</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-indent: 0.5in">Our investments as of June 30, 2018 and December
31, 2017 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; text-indent: 0.5in">The following tables summarize our investment
securities at June 30, 2018 and December 31, 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; 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><font style="font-size: 8pt">(in thousands)</font></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>June 30, 2018</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>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: 44%"><font style="font-size: 8pt">Obligations of domestic governmental agencies (maturing between July 2018 and April 2019) (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: 10%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">20,573</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">$</font></td>
<td style="width: 10%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 10%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">17</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">$</font></td>
<td style="width: 10%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">20,556</font></td>
<td style="width: 5%; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total short-term investment securities</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">20,573</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">17</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">20,556</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> </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>December 31, 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>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: 44%"><font style="font-size: 8pt">Obligations of domestic governmental agencies (maturing between January 2018 and November 2018) (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: 10%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">27,999</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"> </td>
<td style="width: 10%; 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: 1%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 10%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">35</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 10%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">27,964</font></td>
<td style="width: 5%; 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 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">27,999</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">35</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">27,964</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-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">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:</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 8pt Times New Roman, Times, Serif">
<tr style="font: 8pt Times New Roman, Times, Serif">
<td style="vertical-align: top; width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">●</font></td>
<td style="width: 99%; font: 8pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">Level
1 – quoted prices in active markets for identical assets and liabilities;</font></td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 8pt Times New Roman, Times, Serif">
<tr style="font: 8pt Times New Roman, Times, Serif">
<td style="vertical-align: top; width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">●</font></td>
<td style="width: 99%; font: 8pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">Level
2 – inputs other than Level 1 quoted prices that are directly or indirectly observable; and</font></td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 8pt Times New Roman, Times, Serif">
<tr style="font: 8pt Times New Roman, Times, Serif">
<td style="vertical-align: top; width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">●</font></td>
<td style="width: 99%; font: 8pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">Level
3 – unobservable inputs that are not corroborated by market data.</font></td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">As
of June 30, 2018 and December 31, 2017, the fair values of cash and cash equivalents, restricted cash, accounts payable, and notes
and interest payable, approximate their carrying value.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif; 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"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif; background-color: white">The
cumulative liability including accrued and unpaid interest of the 5% Notes was approximately $17.9 million at June 30, 2018 and
$17.5 million at December 31, 2017.</font> <font style="font: 8pt Times New Roman, Times, Serif">No payments
have been made on the 5% Notes as of June 30, 2018.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">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.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">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 June 30, 2018 and
December 31, 2017. 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.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">The
following tables provide the fair value measurements of applicable financial liabilities as of June 30, 2018 and December 31,
2017:</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">(in
thousands)</font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="14" style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Financial
liabilities at fair value as of June 30, 2018</b></font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Level
1</b></font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Level
2</b></font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Level
3</b></font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Total</b></font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="text-align: center; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="text-align: center; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="text-align: center; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="text-align: center; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="width: 49%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">5%
Notes</font></td>
<td style="width: 1%; padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">--</font></td>
<td style="width: 1%; padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">--</font></td>
<td style="width: 1%; padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">210</font></td>
<td style="width: 1%; padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">210</font></td>
<td style="width: 4%; padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Total</font></td>
<td style="padding-bottom: 3pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt double; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 1pt double; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">--</font></td>
<td style="padding-bottom: 3pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 3pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt double; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 1pt double; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">--</font></td>
<td style="padding-bottom: 3pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 3pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt double; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 1pt double; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">210</font></td>
<td style="padding-bottom: 3pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 3pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt double; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 1pt double; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">210</font></td>
<td style="padding-bottom: 3pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="14" style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Financial
liabilities at fair value as of December 31, 2017</b></font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Level
1</b></font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Level
2</b></font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Level
3</b></font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Total</b></font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="text-align: center; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="text-align: center; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="text-align: center; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="text-align: center; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="width: 49%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">5%
Notes</font></td>
<td style="width: 1%; padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">--</font></td>
<td style="width: 1%; padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">--</font></td>
<td style="width: 1%; padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">128</font></td>
<td style="width: 1%; padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">128</font></td>
<td style="width: 4%; padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Total</font></td>
<td style="padding-bottom: 3pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt double; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 1pt double; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">--</font></td>
<td style="padding-bottom: 3pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 3pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt double; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 1pt double; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">--</font></td>
<td style="padding-bottom: 3pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 3pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt double; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 1pt double; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">128</font></td>
<td style="padding-bottom: 3pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 3pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt double; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 1pt double; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">128</font></td>
<td style="padding-bottom: 3pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">The
Level 3 amounts above represent the fair value of the 5% Notes and related accrued interest.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">The
following table summarizes the changes in Level 3 instruments during the six months ended June 30, 2018:</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"></p>
<table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="width: 88%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">(in
thousands)</font></td>
<td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 9%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Fair
value at December 31, 2017</font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">128</font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Interest
accrued on face value of 5% Notes</font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">436</font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Change
in fair value of Level 3 liabilities</font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(354</font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Fair
value at June 30, 2018</font></td>
<td style="padding-bottom: 3pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt double; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 1pt double; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">210</font></td>
<td style="padding-bottom: 3pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">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.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">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>June 30, 2018</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>2017</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">(in thousands)</font></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: 36%"><font style="font-size: 8pt">Convertible 5% Notes Payable</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: 7%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">210</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">$</font></td>
<td style="width: 7%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 7%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">210</font></td>
<td style="width: 3%; 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">$</font></td>
<td style="width: 7%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">128</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 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: 1%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 7%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">128</font></td>
<td style="width: 3%; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">210</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">-</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">210</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">128</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt 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 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">128</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"> </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; text-indent: 0.5in">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; text-indent: 0.5in">The cumulative liability
including accrued and unpaid interest of these notes was approximately $17.9 million at June 30, 2018 and $17.5 million at December
31, 2017. No payments have been made on the 5% Notes as of June 30, 2018.</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: 0.5in">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"></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b><i>TG-1101</i></b></font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">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.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">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 June 30, 2018 and 2017, and $76,000 for each of the six months ended June 30, 2018 and 2017 and, at June 30,
2018 and December 31, 2017, have deferred revenue of approximately $1.1 million and $1.2 million, respectively, associated with
this $2.0 million payment (approximately $152,000 of which has been classified in current liabilities at June 30, 2018 and December
31, 2017).</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">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.</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="font: 8pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b><i>TG-1701:
BTK</i></b></font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">In
January 2018, we entered into a global exclusive license agreement with Jiangsu Hengrui Medicine Co. (“Jiangsu”),
to acquire worldwide intellectual property rights, excluding Asia but including Japan, and for the research, development, manufacturing,
and commercialization of products containing or comprising of any of Jiangsu’s Bruton’s Tyrosine Kinase inhibitors
containing the compounds of either TG1701 (SHR1459or EBI1459) or TG1702 (SHR1266 or EBI1266). Pursuant to the agreement, in April
2018, we paid Jiangsu an upfront fee of $1.0 million in our common stock. Jiangsu is eligible to receive milestone payments totaling
approximately $350 million upon and subject to the achievement of certain milestones. Various provisions allow for payments in
conjunction with the agreement to be made in cash or our common stock, while others limit the form of payment. Royalty payments
in the low double digits are due on net sales of licensed products and revenue from sublicenses.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><b>TG-1801:
anti-CD47/anti-CD19</b></font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">In
June 2018, we entered into a Joint Venture and License Option Agreement with Novimmune SA (“Novimmune”) to collaborate
on the development and commercialization of Novimmune’s novel first-in-class anti-CD47/anti-CD19 bispecific antibody known
as TG-1801 (previously NI-1701). The companies will jointly develop the product on a worldwide basis, focusing on indications
in the area of hematologic B-cell malignancies. We serve as the primary responsible party for the development, manufacturing and
commercialization of the product. Pursuant to the agreement, in June 2018 we paid Novimmnue an upfront payment of $3.0 million
in our common stock. Further milestone payments will be paid based on early clinical development, and the Company will be responsible
for the costs of clinical development of the product through the end of the Phase 2 clinical trials, after which the Company and
Novimmune will be jointly responsible for all development and commercialization costs. The Company and Novimmune will each maintain
an exclusive option, exercisable at specific times during development, for the Company to license the rights to TG-1801, in which
case Novimmune is eligible to receive additional milestone payments totaling approximately $185 million as well as tiered royalties
on net sales in the high single to low double digits upon and subject to the achievement of certain milestones.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b><i>LFB
Biotechnologies</i></b></font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">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, LFB Group was issued 5,000,000 shares of common stock, and a warrant to purchase
2,500,000 shares of common stock at a purchase price of $0.001 per share.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">Under
the terms of the LFB License Agreement, we utilize LFB Group for certain development and manufacturing services. We incurred expenses
of approximately $38,000 and $400,000 during the three months ended June 30, 2018 and 2017, respectively, and $0.2 million and
$0.5 million during the six months ended June 30, 2018 and 2017, respectively, which have been included in other research and
development expenses in the accompanying condensed consolidated statements of operations. As of June 30, 2018 and December 31,
2017, we had approximately $37,000 and zero, respectively, recorded in accounts payable related to the LFB License Agreement.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b><i>Other
Parties</i></b></font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif; background-color: white">In
October 2014, we entered into an agreement (the “Office Agreement”) with Fortress Biotech, Inc. (“FBIO”),
to occupy approximately 45% of the 24,000 square feet of New York City office space leased by FBIO, 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 three and six months ended June
30, 2018, we recorded rent expense of approximately $0.3 million and $0.7 million, respectively, and at June 30, 2018, have deferred
rent of approximately $1.4 million.</font> <font style="font: 8pt Times New Roman, Times, Serif">As of June
30, 2018 and December 31, 2017, we have approximately $1.2 million and $0.6 million, respectively, of restricted cash pledged
to secure a line of credit as a security deposit related to the <font style="background-color: white">Office Agreement. Mr. Weiss,
our Executive Chairman and CEO, is also Executive Vice Chairman of FBIO.</font></font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">Under
the Office Agreement, we agreed to pay FBIO our portion of the build out costs, which have been allocated to us at the 45% rate
mentioned above. The allocated buildout 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 FBIO 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 June 30, 2018, we had approximately $0.4 million recorded in accounts
payable related to FBIO, none of which related to rent and build-out costs.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif; background-color: white">In
July 2015, we entered into a Shared Services Agreement (the “Shared Services Agreement”) with FBIO 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>
<font style="font: 8pt Times New Roman, Times, Serif">incurred expenses of <font style="background-color: white">approximately
$1.1 million and $0.7 million for shared services for the six months ended June 30, 2018 and 2017, respectively, and expenses
of approximately $0.7 million and $0.4 million for the three months ended June 30, 2018 and 2017, primarily related to shared
personnel.</font></font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">In
May 2016, as part of a broader agreement with Jubilant Biosys (“Jubilant”), an India-based biotechnology company,
we entered into a sublicense agreement (“JBET Agreement”) with Checkpoint Therapeutics, Inc. (“Checkpoint”),
a subsidiary of FBIO, 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 which is recorded in other research
and development in the accompanying consolidated statement of operations. As of June 30, 2018 and 2017, we had approximately $0.1
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.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">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 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, we have recently brought our anti-PD-L1 monoclonal antibody
into Phase 1 development and aim 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-indent: 0.5in">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-indent: 0.5in"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">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,
2017. The accompanying condensed consolidated December 31, 2017 balance sheet has been derived from these statements. The results
of operations for the six months ended June 30, 2018 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; text-align: justify; text-indent: 0.5in">Certain reclassifications
have been made to the prior period unaudited condensed consolidated financial statements to conform to the current period presentation,
including:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<table cellpadding="0" style="width: 100%">
<tr>
<td style="vertical-align: top; width: 84px; padding-left: 0.75in; font: 12pt Times New Roman, Times, Serif"><font style="font-size: 8pt">●</font></td>
<td style="font: 12pt Times New Roman, Times, Serif; text-align: justify"><font style="font-size: 8pt">Presentation of restricted cash on the condensed consolidated statements of cash flows for the six months ended June 30, 2017, as a result of the adoption of Accounting Standards Update No. 2016-18 in the first quarter of 2018.</font></td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">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 June 30, 2018, we have an accumulated deficit of approximately $440.5 million.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">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.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">As
of June 30, 2018, we had approximately $126.3 million in cash, cash equivalents, investment securities, and interest receivable.
The Company believes its cash, cash equivalents, investment securities, and interest receivable on hand as of June 30, 2018 combined
with the proceeds raised subsequent to the quarter end will be sufficient to fund the Company’s planned operations into
the fourth quarter of 2019. 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 provide the cash necessary to execute our current strategic plan, including the commercialization of any of our drug
candidates (see Note 5 for further details).</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">Our
common stock is listed on the Nasdaq Capital Market and trades under the symbol “TGTX.”</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">In
July 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (“ASU”) No.
2018-11, “Leases - Targeted Improvements” (“ASU 2018-11”) as an update to ASU 2016-02, Leases (“ASU
2016-02” or “Topic 842”) issued on February 25, 2016. ASU 2016-02 is effective for public business entities
for fiscal years beginning January 1, 2019. ASU 2016-02 required companies to adopt the new leases standard at the beginning of
the earliest period presented in the financial statements, which is January 1, 2017, using a modified retrospective transition
method where lessees must recognize lease assets and liabilities for all leases even though those leases may have expired before
the effective date of January 1, 2017. Lessees must also provide the new and enhanced disclosures for each period presented, including
the comparative periods.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">ASU
2018-11 provides an entity with an additional (and optional) transition method to adopt the new leases standard. Under this new
transition method, an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect
adjustment to the opening balance of retained earnings in the period of adoption. Consequently, an entity’s reporting for
the comparative periods presented in the financial statements in which it adopts the new leases standard will continue to be in
accordance with current GAAP (Topic 840, Leases). An entity that elects this additional (and optional) transition method must
provide the required Topic 840 disclosures for all periods that continue to be in accordance with Topic 840. The amendments do
not change the existing disclosure requirements in Topic 840. An entity shall apply the effects of modification using one of the
following two methods:</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" style="width: 100%; font: 8pt Times New Roman, Times, Serif">
<tr style="font: 8pt Times New Roman, Times, Serif">
<td style="vertical-align: top; width: 60px; padding-left: 0.5in; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">●</font></td>
<td style="font: 8pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">Retrospectively
to each prior reporting period presented in the financial statements with the cumulative effect of initially applying ASU
2018-11 recognized at the beginning of the earliest comparative period presented. Under this transition method, the application
date shall be the later of the beginning of the earliest period presented in the financial statements and the commencement
date of the lease.</font></td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" style="width: 100%; font: 8pt Times New Roman, Times, Serif">
<tr style="font: 8pt Times New Roman, Times, Serif">
<td style="vertical-align: top; width: 60px; padding-left: 0.5in; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">●</font></td>
<td style="font: 8pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">Retrospectively
at the beginning of the period of adoption through a cumulative-effect adjustment. Under this transition method, the application
date shall be the beginning of the reporting period in which the entity first applies ASU 2018-11.</font></td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">ASU
2018-11 is effective for public business entities for fiscal years beginning after December 15, 2018, and interim periods within
those fiscal years, with earlier adoption permitted. We are currently evaluating the impact the adoption of ASU 2018-11 will have
on our consolidated financial statements.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">In
June 2018, the FASB issued ASU No. 2018-07, “Improvements to Nonemployee Share-Based Payment Accounting” (“ASU
2018-07”). ASU 2018-07 expands the scope of FASB Topic 718, Compensation – Stock Compensation (“Topic 718”)
to include share-based payment transactions for acquiring goods and services from nonemployees. An entity should only remeasure
equity-classified awards for which a measurement date has not been established through a cumulative-effect adjustment to retained
earnings as of the beginning of the fiscal year of adoption. Upon transition, the entity is required to measure these nonemployee
awards at fair value as of the adoption date. The entity must not remeasure assets that are completed. Disclosures required at
transition include the nature of and reason for the change in accounting principle and, if applicable, quantitative information
about the cumulative effect of the change on retained earnings or other components of equity.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">ASU
2018-07 is effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods
within that fiscal year. Early adoption is permitted, but no earlier than an entity’s adoption date of Topic 606. We are
currently evaluating the impact the adoption of ASU 2018-07 will have on our consolidated financial statements.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">In
May 2017, the FASB issued 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:</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" style="width: 100%; font: 8pt Times New Roman, Times, Serif">
<tr style="font: 8pt Times New Roman, Times, Serif">
<td style="vertical-align: top; width: 60px; padding-left: 0.5in; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">●</font></td>
<td style="font: 8pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">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>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" style="width: 100%; font: 8pt Times New Roman, Times, Serif">
<tr style="font: 8pt Times New Roman, Times, Serif">
<td style="vertical-align: top; width: 60px; padding-left: 0.5in; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">●</font></td>
<td style="font: 8pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">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: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" style="width: 100%; font: 8pt Times New Roman, Times, Serif">
<tr style="font: 8pt Times New Roman, Times, Serif">
<td style="vertical-align: top; width: 60px; padding-left: 0.5in; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">●</font></td>
<td style="font: 8pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">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"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">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 adopted ASU 2017-09 on January 1, 2018. The adoption of ASU 2017-09
did not have a material effect on our consolidated financial statements as of June 30, 2018.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">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:</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" style="width: 100%; font: 8pt Times New Roman, Times, Serif">
<tr style="font: 8pt Times New Roman, Times, Serif">
<td style="vertical-align: top; width: 72px; padding-left: 0.5in; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">●</font></td>
<td style="padding: 0.75pt; font: 8pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">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>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" style="width: 100%; font: 8pt Times New Roman, Times, Serif">
<tr style="font: 8pt Times New Roman, Times, Serif">
<td style="vertical-align: top; width: 72px; padding-left: 0.5in; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">●</font></td>
<td style="padding: 0.75pt; font: 8pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">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: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" style="width: 100%; font: 8pt Times New Roman, Times, Serif">
<tr style="font: 8pt Times New Roman, Times, Serif">
<td style="vertical-align: top; width: 72px; padding-left: 0.5in; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">●</font></td>
<td style="padding: 0.75pt; font: 8pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">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"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">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 adopted ASU 2017-01 on January 1, 2018. The adoption of ASU
2017-01 did not have a material effect on our consolidated financial statements as of June 30, 2018.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">In
November 2016, the FASB issued ASU No. 2016-18, “Statement of Cash Flows – Restricted Cash” (“ASU 2016-18”).
ASU 2016-18 requires that a statement of cash flows explain the change during the period for the total of cash, cash equivalents,
and amounts generally described as restricted cash or restricted cash equivalents. ASU 2016-18 does not provide a definition of
restricted cash or restricted cash equivalents, and does not change the balance sheet presentation for such items. The Company
adopted ASU 2016-18 on January 1, 2018. The adoption of ASU 2016-18 did not have a material effect on our consolidated financial
statements as of June 30, 2018.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">In
May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers” (Topic 606) (“ASU
2014-09” or “ASC 606”), 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.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">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.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">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 adopted
ASU 2014-09 on January 1, 2018, using the modified retrospective approach. The adoption of ASU 2014-09 did not have a material
effect on our condensed consolidated financial statements as of June 30, 2018.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">Other
pronouncements issued by the FASB or other authoritative accounting standards with future effective dates are either not applicable
or not significant to our consolidated financial statements.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">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 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: 0.5in">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; text-indent: 0.5in">We record cash pledged or held in trust as restricted
cash. As of June 30, 2018 and December 31, 2017, we have approximately $1.2 million and $0.6 million, respectively, 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; text-indent: 0.5in">Investment securities at
June 30, 2018 and December 31, 2017 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; text-indent: 0.5in">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-indent: 0.5in">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; text-indent: 0.5in">We recognize license revenue in accordance with
the revenue recognition guidance of ASC 606. 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 a promise to transfer more than one good
or service to the customer, in which case the Company would account for each promised good or service as a performance obligation
only if it is (1) distinct or (2) a series of distinct goods or services that are substantially the same and have the same pattern
of transfer. For each performance obligation, the Company would determine whether we satisfy the performance obligation over time
by transferring control of a good or service over time. To determine whether the Company’s promise is to provide a right
to access its intellectual property or a right to use its intellectual property, the Company would consider the nature of the intellectual
property to which the customer will have rights. The Company has symbolic intellectual property, derived from its association with
the Company’s ongoing activities, including its ordinary business activities. 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; text-indent: 0.5in">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; text-indent: 0.5in">Prepaid research and development in our consolidated
balance sheets includes, among other things, costs related to agreements with CRO’s, 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 June 30, 2018 and December 31, 2017, we recorded approximately
$8.9 million and $8.1 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-indent: 0.5in"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">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; text-indent: 0.5in">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; text-indent: 0.5in">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; text-indent: 0.5in">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; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">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 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:</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"></p>
<table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="6" style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"> 
<b>Three and Six Months Ended June 30,</b></font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>2018</b></font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>2017</b></font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="width: 51%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Unvested
restricted shares</font></td>
<td style="width: 2%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 18%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">4,589,940</font></td>
<td style="width: 2%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 2%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 18%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">4,275,762</font></td>
<td style="width: 5%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Stock
options</font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">560,000</font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">--</font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Shares
issuable upon note conversion</font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">15,950</font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">15,181</font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Total</font></td>
<td style="padding-bottom: 3pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt double; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt double; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">5,165,890</font></td>
<td style="padding-bottom: 3pt; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 3pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt double; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt double; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">4,290,943</font></td>
<td style="padding-bottom: 3pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">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; text-indent: 0.5in">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; text-indent: 0.5in">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="margin: 0pt; font: 8pt Times New Roman, Times, Serif"></p>
<table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="6" style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"> 
<b>Three and Six Months Ended June 30,</b></font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>2018</b></font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>2017</b></font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="width: 51%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Unvested
restricted shares</font></td>
<td style="width: 2%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 18%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">4,589,940</font></td>
<td style="width: 2%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 2%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 18%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">4,275,762</font></td>
<td style="width: 5%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Stock
options</font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">560,000</font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">--</font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Shares
issuable upon note conversion</font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">15,950</font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">15,181</font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Total</font></td>
<td style="padding-bottom: 3pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt double; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt double; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">5,165,890</font></td>
<td style="padding-bottom: 3pt; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 3pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt double; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt double; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">4,290,943</font></td>
<td style="padding-bottom: 3pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<p style="margin: 0pt; font: 8pt Times New Roman, Times, Serif"></p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">(in thousands)</font></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>June 30, 2018</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, 2017</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">Checking and bank deposits</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">96,995</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 15%; text-align: right"><font style="font-size: 8pt">55,682</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Money market funds</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">8,677</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">1,036</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">105,672</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">56,718</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><font style="font-size: 8pt">(in thousands)</font></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>June 30, 2018</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>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: 44%"><font style="font-size: 8pt">Obligations of domestic governmental agencies (maturing between July 2018 and April 2019) (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: 10%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">20,573</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">$</font></td>
<td style="width: 10%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 10%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">17</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">$</font></td>
<td style="width: 10%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">20,556</font></td>
<td style="width: 5%; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total short-term investment securities</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">20,573</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">17</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">20,556</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> </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>December 31, 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>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: 44%"><font style="font-size: 8pt">Obligations of domestic governmental agencies (maturing between January 2018 and November 2018) (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: 10%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">27,999</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"> </td>
<td style="width: 10%; 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: 1%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 10%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">35</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 10%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">27,964</font></td>
<td style="width: 5%; 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 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">27,999</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">35</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">27,964</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; text-indent: 0.5in"> </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><font style="font-size: 8pt">(in thousands)</font></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 June 30, 2018</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: 49%"><font style="font-size: 8pt">5% Notes</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">--</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">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">210</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">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">210</font></td>
<td style="width: 4%; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt 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 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">210</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">210</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> </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, 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: 49%"><font style="font-size: 8pt">5% Notes</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">--</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">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">128</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">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">128</font></td>
<td style="width: 4%; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt 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 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">128</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">128</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="margin: 0pt; font: 8pt Times New Roman, Times, Serif"></p>
<table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="width: 88%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">(in
thousands)</font></td>
<td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 9%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Fair
value at December 31, 2017</font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">128</font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Interest
accrued on face value of 5% Notes</font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">436</font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Change
in fair value of Level 3 liabilities</font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(354</font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Fair
value at June 30, 2018</font></td>
<td style="padding-bottom: 3pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt double; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 1pt double; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">210</font></td>
<td style="padding-bottom: 3pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<p style="margin: 0pt; font: 8pt Times New Roman, Times, Serif"></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>June 30, 2018</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>2017</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">(in thousands)</font></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: 36%"><font style="font-size: 8pt">Convertible 5% Notes Payable</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: 7%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">210</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">$</font></td>
<td style="width: 7%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 7%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">210</font></td>
<td style="width: 3%; 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">$</font></td>
<td style="width: 7%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">128</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 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: 1%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 7%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">128</font></td>
<td style="width: 3%; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">210</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">-</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">210</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">128</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt 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 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">128</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
5165890
4290943
4589940
15950
4275762
15181
560000
0
5165890
4290943
4589940
4275762
560000
0
15950
15181
1200000
600000
210000
128000
436000
-354000
560000
0
560000
0
0
0
3381866
0
0
11.56
0.00
11.56
0.00
0.00
0.00
11.56
P9Y7M24D
897250000
0
6321643
6089943
1420511
1521550
130661
7.17
8.01
13.32
9.46
8.30
1125
0.50
P1Y2M12D
5000000
2500000
0.001
0.45
24000
1100000
700000
300000
1400000
P15Y
1100000
700000
700000
400000
4654278
145900000
6000000
<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; text-indent: 0.5in">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; text-indent: 0.5in">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-indent: 0.5in">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; text-indent: 0.5in">In July 2018, we filed a shelf registration statement
on Form S-3 (the “2018 S-3”) pursuant to the Joint Venture and License Option Agreement, dated June 18, 2018, by and
between TG Therapeutics, Inc. and Novimmune S.A. (“Novimmune”), pursuant to which we issued 216,294 common shares to
Novimmune. The 2018 S-3 was declared effective in July 2018.</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: 0.5in">During the six months ended June 30, 2018, we
sold a total of 7,733,949 shares of common stock under the 2017 ATM for aggregate total gross proceeds of approximately $106.3
million at an average selling price of $13.75 per share, resulting in net proceeds of approximately $104.5 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; text-indent: 0.5in">Subsequent to the second quarter, from July 1,
2018 through August 7, 2018, we sold an aggregate of 358,000 shares of common stock pursuant to the 2017 ATM for total gross proceeds
of approximately $4.7 million at an average selling price of $13.00 per share, resulting in net proceeds of approximately $4.6
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; text-indent: 0.5in">The 2017 S-3 is currently our only active shelf
registration statement, pursuant to which we can issue shares in an offering. After deducting shares already sold there is approximately
$145.9 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> </i></b></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; text-indent: 0.5in">The TG Therapeutics, Inc.
Amended and Restated 2012 Incentive Plan (“2012 Incentive Plan”) was approved by stockholders in June 2018. Pursuant
to this amendment, 6,000,000 shares were added to the 2012 Incentive Plan. As of June 30, 2018, 560,000 options were outstanding
and up to an additional 4,654,278 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; text-indent: 0.5in">Effective as of January 1, 2017, we entered into
an amendment (the “Amendment”) to the employment agreement entered 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
of the Company. 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>Stock Options</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; text-indent: 0.5in">The fair value of stock options granted is estimated
at the date of grant using the Black-Scholes pricing model. The expected term of options granted is derived from historical data
and the expected vesting period. Expected volatility is based on the historical volatility of our common stock. The risk-free interest
rate is based on the U.S. Treasury yield for a period consistent with the expected term of the option in effect at the time of
the grant. We have assumed no expected dividend yield, as dividends have never been paid to stock or option holders and will not
be paid for the foreseeable future. We granted 560,000 and zero stock options during the six months ended June 30, 2018 and 2017,
respectively.</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: 0.5in">The following table summarizes stock option activity
for the three months ended June 30, 2018:</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">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Number</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>of shares</b></p></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Weighted-</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>average</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>exercise price</b></p></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Weighted-</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>average</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Contractual Term</b></p></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Aggregate Intrinsic Value</b></p></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"><font style="font-size: 8pt"><b>(in years)</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 56%"><font style="font-size: 8pt">Outstanding at December 31, 2017</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 8%; padding-bottom: 1.5pt; 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: 1%; padding-bottom: 1.5pt"><font style="font-size: 8pt">$</font></td>
<td style="width: 8%; padding-bottom: 1.5pt; 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: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 8%; padding-bottom: 1.5pt; 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: 1%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 8%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-left: 0.25in"><font style="font-size: 8pt">Granted</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">560,000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">11.56</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-left: 0.25in"><font style="font-size: 8pt">Exercised</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>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-left: 0.25in"><font style="font-size: 8pt">Forfeited</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>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-left: 0.25in"><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">--</font></td>
<td style="padding-bottom: 1.5pt"> </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">--</font></td>
<td style="padding-bottom: 1.5pt"> </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>
<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 June 30, 2018</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">560,000</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">11.56</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">9.65</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">897,250</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Exercisable at June 30, 2018</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">11.56</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt 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 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt 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; text-indent: 0.5in">As of June 30, 2018, the stock options outstanding
include options granted to both employees and non-employees which are milestone-based and vest upon certain corporate milestones.
Stock-based compensation will be recorded if and when a milestone occurs.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"> </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; text-indent: 0.5in">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 six months ended June 30, 2018:</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, 2017</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">6,321,643</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">7.17</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">1,420,511</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">13.32</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">(1,521,550</font></td>
<td><font style="font-size: 8pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">9.46</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">(130,661</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 8pt">)</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">8.30</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Outstanding at June 30, 2018</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">6,089,943</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">8.01</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-indent: 0.5in">Total expense associated with restricted stock
grants was approximately $4.3 million and $1.5 million during the three months ended June 30, 2018 and 2017, respectively, and
$11.6 million, and $7.5 million during the six months ended June 30, 2018 and 2017, respectively. As of June 30, 2018, there was
approximately $11.0 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 1.2 years. The unrecognized compensation amount does not include, as of June
30, 2018, 1,128,011 shares of restricted stock outstanding which are milestone-based and vest upon certain corporate milestones;
and 2,224,167 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>
<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">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Number</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>of shares</b></p></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Weighted-</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>average</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>exercise price</b></p></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Weighted-</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>average</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Contractual Term</b></p></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Aggregate Intrinsic Value</b></p></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"><font style="font-size: 8pt"><b>(in years)</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 56%"><font style="font-size: 8pt">Outstanding at December 31, 2017</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 8%; padding-bottom: 1.5pt; 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: 1%; padding-bottom: 1.5pt"><font style="font-size: 8pt">$</font></td>
<td style="width: 8%; padding-bottom: 1.5pt; 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: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 8%; padding-bottom: 1.5pt; 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: 1%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 8%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-left: 0.25in"><font style="font-size: 8pt">Granted</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">560,000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">11.56</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-left: 0.25in"><font style="font-size: 8pt">Exercised</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>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-left: 0.25in"><font style="font-size: 8pt">Forfeited</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>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-left: 0.25in"><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">--</font></td>
<td style="padding-bottom: 1.5pt"> </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">--</font></td>
<td style="padding-bottom: 1.5pt"> </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>
<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 June 30, 2018</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">560,000</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">11.56</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">9.65</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">897,250</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Exercisable at June 30, 2018</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">11.56</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt 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 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Number of Shares</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Weighted Average Grant Date Fair Value</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 76%"><font style="font-size: 8pt">Outstanding at December 31, 2017</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">6,321,643</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">7.17</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">1,420,511</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">13.32</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">(1,521,550</font></td>
<td><font style="font-size: 8pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">9.46</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">(130,661</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 8pt">)</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">8.30</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Outstanding at June 30, 2018</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">6,089,943</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">8.01</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>