As of September 30,
2017, our management, with the participation of our principal executive officer and principal financial officer, evaluated the
effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report. Our management
recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of
achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible
controls and procedures. Our principal executive officer and principal financial officer have concluded based upon the evaluation
described above that, as of September 30, 2017 our disclosure controls and procedures were effective at the reasonable assurance
We continue to review
and document our disclosure controls and procedures, including our internal controls and procedures for financial reporting, and
may from time to time make changes aimed at enhancing their effectiveness and to ensure that our systems evolve with our business.
Changes in Internal Control Over
During the nine months
ended September 30, 2017, there have been no changes in our internal control over financial reporting, as such term is defined
in Rules 13a-15(f) and 15(d)-15(f) promulgated under the Securities Exchange Act of 1934, that have materially affected, or are
reasonably likely to materially affect, our internal control over financial reporting.
PART II—OTHER INFORMATION
Item 1. Legal Proceedings
From time to time we
may become subject to various legal proceedings and claims that arise in the ordinary course of our business activities. Although
the results of litigation and claims cannot be predicted with certainty, as of the date of this Quarterly Report on Form 10-Q,
we do not believe we are party to any claim or litigation, the outcome of which, if determined adversely to us, would individually
or in the aggregate be reasonably expected to have a material adverse effect on our business. Regardless of the outcome, litigation
can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.
Item 1A. Risk Factors
in our Common Stock involves a high degree of risk. The following risk factors and other information included in this Quarterly
Report on Form 10-Q should be carefully considered. The risks and uncertainties described below are not the only ones we face.
Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect
our business. We refer you to our “Cautionary Note Regarding Forward-Looking Statements,” which identifies certain
forward-looking statements contained in this report that are qualified by these risk factors. If any of the following risks occur,
our business, financial condition, results of operations and future growth prospects could be materially and adversely affected.
Risks Related to Our Financial Condition
and Need for Additional Capital
We have a limited operating history
and have incurred significant losses since our inception, and we anticipate that we will continue to incur losses for the foreseeable
We are a late-stage
biotechnology company, and we have not commercialized any products or generated any revenues from the sale of products. We have
incurred losses from operations in each year since our inception, and our net losses were $28.5 million and $21.4 million for the
years ended December 31, 2016 and 2015, respectively, and $12.3 million and $24.4 million for the nine months ended September 30,
2017 and 2016, respectively. As of September 30, 2017, we had an accumulated deficit of $184.2 million. We do not expect to generate
any product revenues in the foreseeable future. We do not know whether or when we will generate revenue or become profitable.
We have devoted most
of our financial resources to research and development, including our clinical and preclinical development activities. To date,
we have financed our operations primarily through the sale of equity securities and, prior to our initial public offering, the
sale of convertible debt. Our current product candidate, vonapanitase, is in clinical trials and we have no commercial sales, which,
together with our limited operating history, make it difficult to assess our future viability. The amount of our future net losses
will depend, in part, on the rate of our future expenditures and our ability to obtain funding through equity or debt financings
or strategic collaborations. We have not completed pivotal clinical trials for any product candidate and it will be several years,
if ever, before we have vonapanitase or any future product candidates ready for commercialization. Even if we obtain regulatory
approval to market vonapanitase or any additional product candidates, our future revenues will depend upon the size of any markets
in which vonapanitase or any additional product candidates have received approval, our ability to achieve sufficient market acceptance,
reimbursement from third-party payors and other factors.