0.0750
0.075
0.075
6.90
65189
6.90
65189
25000000
40000000
6.59
68285
288000
6.59
68285
45083240
50000000
100000000
42269000
0.093
50622000
0.001
422000
257200000
30000000
43417342
43417342
265374000
72000
910000
211023000
1156000
163000000
639507000
49364000
43000
15000000
3042000
10974000
157192000
3800000
0
-9000
17503000
0.001
10000000
25195000
30020000
4825000
0
169991000
265374000
36796000
1971000
30000000
241000
0
2174000
3488000
95383000
8.80
-544158000
930642
3557000
0
5904974
12202000
452000
442000
0
92928000
5579000
66681000
0
0
0
66681000
2499000
58603000
0
0
0
0
0
0
0
0
0
45043000
181977000
179000
38345000
143453000
0
38345000
98589000
50622000
248658000
179000
38345000
143453000
66681000
40844000
157192000
171250
7.00
290002
10.43
120000
3000
157309000
157192000
0
0
40844000
40844000
70000
179000
50513000
50622000
5.28
184119
5.28
3730007
6.90
48892
6.59
51214
30000000
0.093
100106
35868000
8938000
10982000
4205000
11743000
5868000
6700000
94595000
96700000
0.17
92928000
18750000
18750000
900000
37500000
8
26000000
0
600000
900000
4.90
65076000
7672000
0.001
472000
163900000
30000000
40646595
40646595
170142000
142000
24000
158633000
3800000
163000000
612474000
66874000
41000
15000000
4236000
8060000
89375000
137000
18047000
0.001
10000000
27381000
29881000
2500000
0
75781000
170142000
33258000
1595000
29900000
200000
0
1888000
3637000
94361000
9.27
-518291000
1588300
2360000
0
5192813
10092000
415000
353000
672000
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
7672000
152705000
176000
52657000
99872000
55658000
89375000
7672000
152705000
176000
52657000
99872000
55658000
89375000
685000
7.00
64502
7.19
23000
2000
89396000
89375000
17000
176000
7513000
7672000
0
0
55658000
55658000
92300000
0
8
23100000
0
0.25
25000000
80000000
30000000
15000000
35800000
5200000
35000000
15000000
5100000
39100000
100000000
600000000
95000000
200000000
74900000
24900000
50000000
19300000
0.75
94200000
44200000
50000000
15000000
41000000
35000000
1.00
40000000
26300000
2246750
700000
90000000
10000000
875656
0.04
40000000
30000000
15000000
P5Y
0.75
0.017
7.00
30000000
15000000
0.03
0.02
0.0731
0.01
15000000
0.0400
36
15000000
16126
1600000
108581
10000000
2040816
0
20000000
9100000
0.01
10000000
2017-01-31
2017-12-31
2018-02-28
2018-03-31
26700000
0.01
10000000
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt">
<b><i>Stock-Based Compensation</i></b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
The Company accounts for stock-based payment awards made to
employees and directors, including employee stock options and
employee stock purchases by measuring the stock-based compensation
cost at the grant date based on the calculated fair value of the
award, and recognizing expense on a straight-line basis over the
employee’s requisite service period, generally the vesting
period of the award. Stock compensation for <font style="WHITE-SPACE: nowrap">non-employees</font> is measured at the fair
value of the award for each period until the award is fully vested.
Compensation cost for restricted stock awards that contain
performance conditions is based on the grant date fair value of the
award and compensation expense is recorded over the implicit or
explicit requisite service period based on management’s best
estimate as to whether it is probable that the shares awarded are
expected to vest.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
The Company reviews the valuation assumptions at each grant date
and, as a result, from time to time it will likely change the
valuation assumptions it uses to value stock based awards granted
in future periods. The assumptions used in calculating the fair
value of share-based payment awards represent management’s
best estimates at the time, but these estimates involve inherent
uncertainties and the application of management judgment. As a
result, if conditions change and the management uses different
assumptions, the Company’s stock-based compensation expense
could be materially different in the future. In addition, the
Company will continue to maintain the current forfeiture policy to
estimate the expected forfeiture rate and recognize expense only
for those shares expected to vest. If the actual forfeiture rate is
materially different from management’s estimate, stock-based
compensation expense could be significantly different from what has
been recorded in the current period.</p>
</div>
CYTOKINETICS INC
10255000
10-Q
0001061983
2017-03-31
-17510000
-0.62
1900000
2017
false
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt">
<b>Note 3 — Supplemental Cash Flow Data</b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
Supplemental cash flow data was as follows (in thousands):</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="76%" align="center" border="0">
<tr>
<td width="78%"></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="6" align="center"><b>Three Months Ended</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>March 31,</b><br />
<b>2017</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>March 31,</b><br />
<b>2016</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Cash paid for interest</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">592</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">382</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Cash paid for taxes</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">69</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">1</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Significant <font style="WHITE-SPACE: nowrap">non-cash</font>
investing and financing activities:</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Debt discount netted against proceeds from long term debt, recorded
in equity</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">288</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Interest paid on the long-term debt, at inception</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">63</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Purchases of property and equipment through accounts payable</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">387</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">229</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Purchases of property and equipment through accrued liabilities</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">728</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">11</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
</table>
</div>
--12-31
8115000
421000
Q1
-26012000
Accelerated Filer
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt">
<b>Note 6 — Fair Value Measurements</b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
The Company follows the fair value accounting guidance to value its
financial assets and liabilities. Fair value is defined as the
price that would be received for assets when sold or paid to
transfer a liability in an orderly transaction between market
participants at the measurement date (exit price). The Company
utilizes market data or assumptions that the Company believes
market participants would use in pricing the asset or liability,
including assumptions about risk and the risks inherent in the
inputs to the valuation technique. These inputs can be readily
observable, market corroborated or generally unobservable.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
The Company primarily applies the market approach for recurring
fair value measurements and endeavors to utilize the best
information reasonably available. Accordingly, the Company utilizes
valuation techniques that maximize the use of observable inputs and
minimize the use of unobservable inputs to the extent possible, and
considers the security issuers’ and the third-party
insurers’ credit risk in its assessment of fair value.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
The Company classifies the determined fair value based on the
observability of those inputs. Fair value accounting guidance
establishes a fair value hierarchy that prioritizes the inputs used
to measure fair value. The hierarchy gives the highest priority to
unadjusted quoted prices in active markets for identical assets or
liabilities (Level 1 measurement) and the lowest priority to
unobservable inputs (Level 3 measurement). The three defined levels
of the fair value hierarchy are as follows:</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
Level 1 — Observable inputs, such as quoted prices in
active markets for identical assets or liabilities;</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
Level 2 — Inputs, other than the quoted prices in active
markets, that are observable either directly or through
corroboration with observable market data; and</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
Level 3 — Unobservable inputs, for which there is little
or no market data for the assets or liabilities, such as
internally-developed valuation models.</p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 1px; MARGIN-TOP: 18px">
 </p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-INDENT: 4%">
<b>Fair value of financial assets:</b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
Financial assets measured at fair value on a recurring basis as of
March 31, 2017 and December 31, 2016 are classified in
the table below in one of the three categories described above (in
thousands):</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="92%" align="center" border="0">
<tr>
<td width="64%"></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="14" align="center"><b>March 31, 2017</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="10" align="center">
<b>Fair Value Measurements Using</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" rowspan="2" colspan="2" align="center"><b>Assets</b><br />
<b>At Fair Value</b></td>
<td valign="bottom" rowspan="2"> </td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Level 1</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Level 2</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Level 3</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
<b>Assets:</b></p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Money market funds</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">38,345</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">38,345</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
U.S. Treasury securities</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">143,453</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">143,453</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Agency bonds</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">66,681</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">66,681</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Equity securities</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">179</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">179</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 5em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Total</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">181,977</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">66,681</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">248,658</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Amounts included in:</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Cash and cash equivalents</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">38,345</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">2,499</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">40,844</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Short-term investments</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">98,589</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">58,603</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">157,192</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Long-term investments</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">45,043</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">5,579</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">50,622</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 5em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Total</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">181,977</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">66,681</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">248,658</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="92%" align="center" border="0">
<tr>
<td width="66%"></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="14" align="center"><b>December 31, 2016</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="10" align="center">
<b>Fair Value Measurements Using</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" rowspan="2" colspan="2" align="center"><b>Assets</b><br />
<b>At Fair Value</b></td>
<td valign="bottom" rowspan="2"> </td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Level 1</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Level 2</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Level 3</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
<b>Assets:</b></p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Money market funds</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">52,657</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">52,657</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
U.S. Treasury securities</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">99,872</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">99,872</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Equity securities</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">176</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">176</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 5em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Total</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">152,705</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">152,705</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Amounts included in:</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Cash and cash equivalents</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">55,658</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">55,658</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Short-term investments</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">89,375</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">89,375</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Long-term investments</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">7,672</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">7,672</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 5em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Total</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">152,705</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">152,705</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
The valuation technique used to measure fair value for the
Company’s Level 1 assets is a market approach, using
prices and other relevant information generated by market
transactions involving identical assets. When quoted market prices
are not available for the specific security, then the Company
estimates fair value by using benchmark yields, reported trades,
broker/dealer quotes, and issuer spreads; these securities are
classified as Level 2. As of March 31, 2017 and
December 31, 2016, the Company had no financial assets
measured at fair value on a recurring basis using significant
Level 3 inputs. The carrying amount of the Company’s
accounts receivable and accounts payable approximates fair value
due to the short-term nature of these instruments.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
<b>Fair value of financial liabilities:</b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
As of March 31, 2017 and December 31, 2016, the fair
value of the long-term debt, payable in installments through year
ended 2020, approximated its carrying value of $30.0 million
and $29.9 million, respectively, because it is carried at a
market observable interest rate, which are considered
Level 2.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
As of March 31, 2017, the fair value of liabilities related to
the sale of future royalties is based on the Company’s
current estimates of future royalties expected to be paid to RPI
over the life of the arrangement, which are considered Level 3
(See Note 9 – “Liability Related to Sale of Future
Royalties”).</p>
</div>
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">
<b><i>Basis of Presentation</i></b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
The condensed consolidated financial statements include the
accounts of Cytokinetics and its wholly owned subsidiary. The
accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles in the United States of America (“GAAP”) for
interim financial information and the instructions to Form
<font style="WHITE-SPACE: nowrap">10-Q</font> and <font style="WHITE-SPACE: nowrap">Rule 10-01</font> of Regulation
<font style="WHITE-SPACE: nowrap">S-X.</font> The financial
statements include all adjustments (consisting only of normal
recurring adjustments) that management believes are necessary for
the fair statement of the Company’s position at
March 31, 2017, and the results of operations for the three
months ended March 31, 2017 and the cash flows for the three
months ended March 31, 2017. These interim financial statement
results are not necessarily indicative of results to be expected
for the full fiscal year or any future interim period. The balance
sheet at December 31, 2016 has been derived from the audited
financial statements at that date, but does not include all of the
information and footnotes required by GAAP for complete financial
statements. The financial statements and related disclosures have
been prepared with the presumption that users of the interim
financial statements have read or have access to the audited
financial statements for the preceding fiscal year. Accordingly,
these financial statements should be read in conjunction with the
audited financial statements and notes thereto contained in the
Company’s Form <font style="WHITE-SPACE: nowrap">10-K</font>
for the year ended December 31, 2016, as filed with the SEC on
March 6, 2017.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States
requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those
estimates.</p>
</div>
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt">
<b>Note 12 — Commitments and Contingencies</b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">
<b><i>Commitments</i></b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 4%; MARGIN-TOP: 6pt">
<b><i>Operating Lease</i></b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
The Company leases office space and equipment under a <font style="WHITE-SPACE: nowrap">non-cancelable</font> operating lease that
expires in 2018, with an option to extend the lease for an
additional three-year period. The lease terms provide for rental
payments on a graduated scale and the Company’s payment of
certain operating expenses. During March 2016, the Company amended
the lease agreement to include certain additional operating
expenses, related to the replacement of two boilers. The Company
recognizes rent expense on a straight-line basis over the lease
period. Rent expense was $0.9 million and $0.8 million,
respectively, for the three months ended March 31, 2017 and
2016.</p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 1px; MARGIN-TOP: 18px">
 </p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 4%; MARGIN-TOP: 0pt">
<b><i><font style="WHITE-SPACE: nowrap">Co-invest</font>
option</i></b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
In December 2016, the Company agreed to exercise its option to
<font style="WHITE-SPACE: nowrap">co-invest</font>
$10.0 million in the Phase 3 development program of omecamtiv
mecarbil under the Amgen Agreement. In connection with exercising
its <font style="WHITE-SPACE: nowrap">co-investment</font> option
at $10.0 million, the Company will be eligible to receive an
incremental royalty of up to 1% on increasing worldwide net sales
of omecamtiv mecarbil outside of Japan. The <font style="WHITE-SPACE: nowrap">co-investment</font> payment is due to Amgen
in eight quarterly installments with the first payment due at the
time of providing notice of the option exercise and is contingent
on Amgen continuing the Phase 3 development program of omecamtiv
mecarbil. In February 2017, the Company provided notice to Amgen of
its further exercise of its <font style="WHITE-SPACE: nowrap">co-invest</font> option in the additional
amount of $30.0 million (i.e. to <font style="WHITE-SPACE: nowrap">co-invest</font> $40.0 million) in the Phase
3 development program of omecamtiv mecarbil under the Amgen
Agreement. As a result, the Company is eligible to receive an
incremental royalty of up to 4% on increasing worldwide sales of
omecamtiv mecarbil outside of Japan. Exercising its option and
fully <font style="WHITE-SPACE: nowrap">co-funding</font>
$40.0 million will afford the Company the right to
<font style="WHITE-SPACE: nowrap">co-promote</font> omecamtiv
mecarbil in institutional care settings in North America, with
reimbursement by Amgen for certain sales force activities.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 10pt; TEXT-INDENT: 4%">
As of March 31, 2017, future minimum payments due to Amgen
were as follows (in thousands):</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="68%" align="center" border="0">
<tr>
<td width="88%"></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Remainder of 2017</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">18,750</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
2018</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">18,750</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Total</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">37,500</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt">
<b><i>Contingencies</i></b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
In the ordinary course of business, the Company may provide
indemnifications of varying scope and terms to vendors, lessors,
business partners and other parties with respect to certain
matters, including, but not limited to, losses arising out of the
Company’s breach of such agreements, services to be provided
by or on behalf of the Company, or from intellectual property
infringement claims made by third parties. In addition, the Company
has entered into indemnification agreements with its directors and
certain of its officers and employees that will require the
Company, among other things, to indemnify them against certain
liabilities that may arise by reason of their status or service as
directors, officers or employees. The Company maintains director
and officer insurance, which may cover certain liabilities arising
from its obligation to indemnify its directors and certain of its
officers and employees, and former officers and directors in
certain circumstances. The Company maintains product liability
insurance and comprehensive general liability insurance, which may
cover certain liabilities arising from its indemnification
obligations. It is not possible to determine the maximum potential
amount of exposure under these indemnification obligations due to
the limited history of prior indemnification claims and the unique
facts and circumstances involved in each particular indemnification
obligation. Such indemnification obligations may not be subject to
maximum loss clauses. Management is not currently aware of any
matters that could have a material adverse effect on the financial
position, results of operations or cash flows of the Company.</p>
</div>
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
Financial assets measured at fair value on a recurring basis as of
March 31, 2017 and December 31, 2016 are classified in
the table below in one of the three categories described above (in
thousands):</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="92%" align="center" border="0">
<tr>
<td width="64%"></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="14" align="center"><b>March 31, 2017</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="10" align="center">
<b>Fair Value Measurements Using</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" rowspan="2" colspan="2" align="center"><b>Assets</b><br />
<b>At Fair Value</b></td>
<td valign="bottom" rowspan="2"> </td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Level 1</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Level 2</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Level 3</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
<b>Assets:</b></p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Money market funds</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">38,345</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">38,345</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
U.S. Treasury securities</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">143,453</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">143,453</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Agency bonds</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">66,681</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">66,681</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Equity securities</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">179</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">179</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 5em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Total</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">181,977</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">66,681</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">248,658</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Amounts included in:</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Cash and cash equivalents</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">38,345</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">2,499</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">40,844</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Short-term investments</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">98,589</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">58,603</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">157,192</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Long-term investments</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">45,043</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">5,579</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">50,622</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 5em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Total</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">181,977</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">66,681</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">248,658</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="92%" align="center" border="0">
<tr>
<td width="66%"></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="14" align="center"><b>December 31, 2016</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="10" align="center">
<b>Fair Value Measurements Using</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" rowspan="2" colspan="2" align="center"><b>Assets</b><br />
<b>At Fair Value</b></td>
<td valign="bottom" rowspan="2"> </td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Level 1</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Level 2</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Level 3</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
<b>Assets:</b></p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Money market funds</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">52,657</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">52,657</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
U.S. Treasury securities</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">99,872</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">99,872</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Equity securities</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">176</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">176</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 5em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Total</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">152,705</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">152,705</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Amounts included in:</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Cash and cash equivalents</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">55,658</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">55,658</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Short-term investments</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">89,375</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">89,375</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Long-term investments</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">7,672</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">7,672</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 5em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Total</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">152,705</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">152,705</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
</table>
</div>
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">
<b>Note 2 — Net Loss Per Share</b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
The following is the calculation of basic and diluted net loss per
share (in thousands, except per share data):</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 8pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="76%" align="center" border="0">
<tr>
<td width="78%"></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="6" align="center"><b>Three Months Ended</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>March 31,</b><br />
<b>2017</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>March 31,</b><br />
<b>2016</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Net loss</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(25,867</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(12,455</td>
<td valign="bottom" nowrap="nowrap">) </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Weighted-average shares used in computing net loss per share
— basic and diluted</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">41,578</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">39,592</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Net loss per share — basic and diluted</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(0.62</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(0.31</td>
<td valign="bottom" nowrap="nowrap">) </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 8pt; TEXT-INDENT: 4%">
Basic net loss per share is computed by dividing net loss by the
weighted average number of vested common shares outstanding during
the period. Diluted net loss per share is computed by giving effect
to all potentially dilutive common shares, including outstanding
stock options, unvested restricted stock units, warrants, and
shares issuable under the Company’s Employee Stock Purchase
Plan (“ESPP”), by applying the treasury stock method,
if they have a dilutive effect. The following instruments were
excluded from the computation of diluted net income (loss) per
share because their effect would have been antidilutive (in
thousands):</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 8pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="76%" align="center" border="0">
<tr>
<td width="78%"></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="6" align="center"><b>Three Months Ended</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>March 31,</b><br />
<b>2017</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>March 31,</b><br />
<b>2016</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Options to purchase common stock</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">5,905</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">5,869</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Warrants to purchase common stock</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">3,830</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">5,710</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Restricted and Performance stock units</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">461</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">758</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Shares issuable related to the ESPP</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">59</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">40</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Total shares</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">10,255</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">12,377</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
</table>
</div>
4153000
<div>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 18pt; margin-bottom: 0pt;">
<b>Note 11 — Interest and Other Income, Net</b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 6pt; margin-bottom: 0pt;">
Interest and other income, net for the three months ended
March 31, 2017 and 2016 primarily consisted of interest income
generated from the Company’s cash, cash equivalents and
investments.</p>
</div>
592000
900000
436000
<div>
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 10pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
<b>Note 1 — Organization and Significant Accounting
Policies</b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
<b><i>Overview</i></b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
Cytokinetics, Incorporated (the “Company”,
“we” or “our”) was incorporated under the
laws of the state of Delaware on August 5, 1997. The Company
is a late stage biopharmaceutical company focused on the discovery
and development of novel small molecule therapeutics that modulate
muscle function for the potential treatment of serious diseases and
medical conditions.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 10pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
The Company’s financial statements contemplate the conduct of
the Company’s operations in the normal course of business.
The Company has incurred an accumulated deficit of
$544.2 million since inception and there can be no assurance
that the Company will attain profitability. The Company had a net
loss of $25.9 million and net cash used in operations of
$20.9 million for the three months ended March 31, 2017.
Cash, cash equivalents and investments increased to
$257.2 million at March 31, 2017 from $163.9 million
at December 31, 2016. The Company anticipates that it will
have operating losses and net cash outflows in future periods.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 10pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
The Company is subject to risks common to late stage
biopharmaceutical companies including, but not limited to,
development of new drug candidates, dependence on key personnel,
and the ability to obtain additional capital as needed to fund its
future plans. The Company’s liquidity will be impaired if
sufficient additional capital is not available on terms acceptable
to the Company. To date, the Company has funded its operations
primarily through sales of its common stock, contract payments
under its collaboration agreements, sale of future royalties, debt
financing arrangements, sales of its convertible preferred stock,
government grants and interest income. Until it achieves profitable
operations, the Company intends to continue to fund operations
through payments from strategic collaborations, additional sales of
equity securities, grants and debt financings. The Company has
never generated revenues from commercial sales of its drugs and may
not have drugs to market for at least several years, if ever. The
Company’s success is dependent on its ability to enter into
new strategic collaborations and/or raise additional capital and to
successfully develop and market one or more of its drug candidates.
As a result, the Company may choose to raise additional capital
through equity or debt financings to continue to fund its
operations in the future. The Company cannot be certain that
sufficient funds will be available from such a financing or through
a collaborator when required or on satisfactory terms.
Additionally, there can be no assurance that the Company’s
drug candidates will be accepted in the marketplace or that any
future products can be developed or manufactured at an acceptable
cost. These factors could have a material adverse effect on the
Company’s future financial results, financial position and
cash flows.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 10pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
Based on the current status of its research and development plans,
the Company believes that its existing cash, cash equivalents and
investments will be sufficient to fund its cash requirements for at
least the next 12 months. If, at any time, the Company’s
prospects for financing its research and development programs
decline, the Company may decide to reduce research and development
expenses by delaying, discontinuing or reducing its funding of one
or more of its research or development programs. Alternatively, the
Company might raise funds through strategic collaborations, public
or private financings or other arrangements. Such funding, if
needed, may not be available on favorable terms, or at all. The
financial statements do not include any adjustments that might
result from the outcome of this uncertainty.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 16pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
<b><i>Use of Estimates</i></b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States
requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those
estimates.</p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 1px; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 16px; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
 </p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
<b><i>Basis of Presentation</i></b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
The condensed consolidated financial statements include the
accounts of Cytokinetics and its wholly owned subsidiary. The
accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles in the United States of America (“GAAP”) for
interim financial information and the instructions to
Form <font style="WHITE-SPACE: nowrap">10-Q</font> and <font style="WHITE-SPACE: nowrap">Rule 10-01</font> of Regulation <font style="WHITE-SPACE: nowrap">S-X.</font> The financial statements
include all adjustments (consisting only of normal recurring
adjustments) that management believes are necessary for the fair
statement of the Company’s position at March 31, 2017,
and the results of operations for the three months ended
March 31, 2017 and the cash flows for the three months ended
March 31, 2017. These interim financial statement results are
not necessarily indicative of results to be expected for the full
fiscal year or any future interim period. The balance sheet at
December 31, 2016 has been derived from the audited financial
statements at that date, but does not include all of the
information and footnotes required by GAAP for complete financial
statements. The financial statements and related disclosures have
been prepared with the presumption that users of the interim
financial statements have read or have access to the audited
financial statements for the preceding fiscal year. Accordingly,
these financial statements should be read in conjunction with the
audited financial statements and notes thereto contained in the
Company’s Form <font style="WHITE-SPACE: nowrap">10-K</font> for the year ended
December 31, 2016, as filed with the SEC on March 6,
2017.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States
requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those
estimates.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 18pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
<b><i>Stock-Based Compensation</i></b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
The Company accounts for stock-based payment awards made to
employees and directors, including employee stock options and
employee stock purchases by measuring the stock-based compensation
cost at the grant date based on the calculated fair value of the
award, and recognizing expense on a straight-line basis over the
employee’s requisite service period, generally the vesting
period of the award. Stock compensation for <font style="WHITE-SPACE: nowrap">non-employees</font> is measured at the fair value
of the award for each period until the award is fully vested.
Compensation cost for restricted stock awards that contain
performance conditions is based on the grant date fair value of the
award and compensation expense is recorded over the implicit or
explicit requisite service period based on management’s best
estimate as to whether it is probable that the shares awarded are
expected to vest.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
The Company reviews the valuation assumptions at each grant date
and, as a result, from time to time it will likely change the
valuation assumptions it uses to value stock based awards granted
in future periods. The assumptions used in calculating the fair
value of share-based payment awards represent management’s
best estimates at the time, but these estimates involve inherent
uncertainties and the application of management judgment. As a
result, if conditions change and the management uses different
assumptions, the Company’s stock-based compensation expense
could be materially different in the future. In addition, the
Company will continue to maintain the current forfeiture policy to
estimate the expected forfeiture rate and recognize expense only
for those shares expected to vest. If the actual forfeiture rate is
materially different from management’s estimate, stock-based
compensation expense could be significantly different from what has
been recorded in the current period.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 18pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
<b><i><font style="WHITE-SPACE: nowrap">Non-Cash</font> Interest Expense on
Liabilities Related to Sale of Future Royalties</i></b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
The Company accounted for Liabilities related to sale of future
royalties as a debt financing for accounting purposes, to be
amortized under the effective interest rate method over the life of
the related royalty stream when the Company has a significant
continuing involvement in the generation of royalty streams.</p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 1px; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 12px; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
 </p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
Liabilities related to sale of future royalties and the debt
amortization are based on the Company’s current estimates of
future royalties expected to be paid over the life of the
arrangement. The Company will periodically assess the expected
royalty payments using a combination of internal projections and
forecasts from external sources. To the extent the Company’s
future estimates of future royalty payments are greater or less
than its previous estimates or the estimated timing of such
payments is materially different than its previous estimates, the
Company will adjust the liabilities related to sale of future
royalties and prospectively recognize related non-cash interest
expense.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 18pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
<b><i>Recent Accounting Pronouncements</i></b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
In August 2016, the FASB issued ASU <font style="WHITE-SPACE: nowrap">2016-15,</font> <i>‘Statement of cash
flows (Topic 230): Classification of certain cash receipts and cash
payments’. </i><font style="WHITE-SPACE: nowrap">ASU 2016-15</font> issued guidance to clarify how
certain cash receipts and payments should be presented in the
statement of cash flows. ASU <font style="WHITE-SPACE: nowrap">2016-15</font> is effective for annual and
interim reporting periods beginning after December 15, 2017
and early adoption is permitted. The Company does not expect the
adoption of this standard to have a material effect on its
financial statements or disclosures.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
In June 2016, the FASB issued ASU <font style="WHITE-SPACE: nowrap">2016-13,</font> <i>‘Financial
Instruments — Credit Losses — Measurement of Credit
Losses on Financial Instruments. </i><font style="WHITE-SPACE: nowrap">ASU 2016-13</font> changes the impairment model
for most financial assets and certain other instruments.
ASU <font style="WHITE-SPACE: nowrap">2016-13</font> is effective for annual and
interim reporting periods beginning after December 15, 2019.
The Company is in the process of evaluating the impact the adoption
of this standard would have on its financial statements and
disclosures.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
In March 2016, the FASB issued <i>ASU </i><i>No. </i><i>2016-09 </i><i>— </i><i>Improvements to
Employee Share-Based Payment Accounting</i> which simplifies various
aspects of accounting for share-based payments and presentation in
the financial statements. ASU 2016-09 is effective for annual and
interim reporting periods beginning after December 15, 2016
and early adoption is permitted. During the three months ended
March 31, 2017, the Company adopted ASU No. 2016-09 on a modified
retrospective approach. The guidance requires us, to recognize all
excess tax benefits and tax deficiencies as income tax expense or
benefit in the income statement and recognize previously
unrecognized excess tax benefits upon adoption as a
cumulative-effect adjustment in retained earnings, which eliminates
the need to track unrecognized excess tax benefits for both new and
existing awards. As of January 1, 2017, the Company recognized
excess tax benefit of $0.7 million as an increase to deferred tax
assets related to tax loss carryover. However, the entire amount
was offset by a full valuation allowance. Accordingly, no
cumulative-effect adjustment to retained earnings was recorded as
of March 31, 2017. The Company will maintain its current forfeiture
policy to estimate forfeitures expected to occur to determine
stock-based compensation expense. The adoption of this aspect
of the guidance did not have a material impact on our financial
statements.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 8pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
In February 2016, the FASB issued ASU <font style="WHITE-SPACE: nowrap">2016-02,</font> <i>Leases (Topic
842). </i><font style="WHITE-SPACE: nowrap">ASU 2016-02</font> requires management to
record <font style="WHITE-SPACE: nowrap"><font style="WHITE-SPACE: nowrap">right-to-use</font></font> asset and lease liability on
the statement of financial position for operating
leases<i>.</i> ASU <font style="WHITE-SPACE: nowrap">2016-02</font> is effective for annual and
interim reporting periods beginning on or after December 15,
2018 and the modified retrospective approach is required. The
Company is in the process of evaluating the impact the adoption of
this standard would have on its financial statements and
disclosures.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 8pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
In January 2016, the FASB issued ASU <font style="WHITE-SPACE: nowrap">2016-01,</font> <i>Financial instruments
(Subtopic <font style="WHITE-SPACE: nowrap">825-10).</font> </i><font style="WHITE-SPACE: nowrap">ASU 2016-01</font> requires management to measure
equity investments at fair value with changes in fair value
recognized in net income. ASU <font style="WHITE-SPACE: nowrap">2016-01</font> is effective for annual and
interim reporting periods beginning on or after December 15,
2017 and early adoption is not permitted. The Company does not
expect the adoption of ASU <font style="WHITE-SPACE: nowrap">2016-01</font> to have a material effect upon
its financial statements or disclosures.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 8pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
In May 2014, the FASB issued ASU <font style="WHITE-SPACE: nowrap">2014-09,</font> <i>Revenue from Contracts with
Customers (Topic 606)</i>, which requires an entity to recognize
the amount of revenue to which it expects to be entitled for the
transfer of promised goods or services to customers. The ASU will
replace most existing revenue recognition guidance in U.S. GAAP
when it becomes effective. In March 2016, the FASB amended the
principal-versus-agent implementation guidance and illustrations in
the new standard. In April 2016, the FASB amended the guidance on
identifying performance obligations and the implementation guidance
on licensing in the new standard. In May 2016, the FASB amended the
guidance on collectability, noncash consideration, presentation of
sales tax and transition in the new standard. In December 2016, the
FASB issued ASU <font style="WHITE-SPACE: nowrap">No. 2016-20,</font> T<i>echnical Corrections and
Improvements to Topic 606, Revenue from Contracts with
Customers</i>, which amends certain narrow aspects of the guidance
issued in ASU <font style="WHITE-SPACE: nowrap">2014-09. The</font> new standard will become
effective starting on January 1, 2018. Early application is
permitted to the original effective date of January 1, 2017.
The Company will adopt the standard on January 1, 2018. The
standard permits the use of either the modified retrospective
method or full retrospective approach for all periods presented.
While the Company is continuing to assess all potential impacts of
the standard, the Company believes the most significant accounting
impact will relate to the timing of the recognition of our license,
collaboration, and milestone revenues.</p>
</div>
</div>
21858000
151000
<div>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 18pt; margin-bottom: 0pt;">
<b>Note 13 — Income Taxes</b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 6pt; margin-bottom: 0pt;">
During the three months ended March 31, 2017 and 2016, the
Company did not record a provision for income taxes because it
expected to generate a net operating loss for the year ending
December 31, 2017 and 2016, respectively.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 10pt; margin-bottom: 0pt;">
The Company defines the threshold for recognizing the benefits of
tax return positions in the financial statements as <font style="white-space: nowrap;">“more-likely-than-not”</font> to
be sustained by the taxing authorities based solely on the
technical merits of the position. If the recognition threshold is
met, the tax benefit is measured and recognized as the largest
amount of tax benefit that, in the Company’s judgment, is
greater than 50% likely to be realized.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
The significant jurisdictions in which the Company files income tax
returns are the United States and the state of California. For
jurisdictions in which tax filings are made, the Company is subject
to income tax examination for all fiscal years since inception. The
IRS’s Large Business and International Division concluded its
audit of the 2009 tax year with no material adjustments. However,
in general, the statute of limitations for tax liabilities for
these years remains open for the purpose of adjusting the amounts
of the losses and credits carried forward from those years. The
Company believes that it maintains adequate reserves for uncertain
tax positions.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
In general, under Section 382 of the Internal Revenue Code
(“Section 382”), a corporation that undergoes an
‘ownership change’ is subject to limitations on its
ability to utilize its <font style="white-space: nowrap;">pre-change</font> NOLs and tax credits to
offset future taxable income. The Company does not believe that it
has experienced an ownership change since 2006. A portion of
the Company’s existing NOLs and tax credits are subject to
limitations arising from previous ownership changes. Future changes
in the Company’s stock ownership, some of which are outside
of our control, could result in an ownership change under
Section 382 and result in additional limitations.</p>
<p style="font-size: 1px; margin-top: 6px; margin-bottom: 0px;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="9%" align="left" valign="top">ITEM 2.</td>
<td align="left" valign="top">MANAGEMENT’S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS</td>
</tr>
</table>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 6pt; margin-bottom: 0pt;">
This discussion and analysis should be read in conjunction with our
financial statements and accompanying notes included elsewhere in
this report. Operating results are not necessarily indicative of
results that may occur in future periods.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
This report contains forward-looking statements indicating
expectations about future performance and other forward-looking
statements within the meaning of Section 27A of the Securities
Act of 1933, as amended (the “Securities Act”),
Section 21E of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), and the Private Securities
Litigation Reform Act of 1995, that involve risks and
uncertainties. We intend that such statements be protected by the
safe harbor created thereby. Forward-looking statements involve
risks and uncertainties and our actual results and the timing of
events may differ significantly from the results discussed in the
forward-looking statements. Examples of such forward-looking
statements include, but are not limited to, statements about or
relating to:</p>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">guidance concerning revenues,
research and development expenses and general and administrative
expenses for 2017;</td>
</tr>
</table>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">the sufficiency of existing resources
to fund our operations for at least the next 12 months;</td>
</tr>
</table>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">our capital requirements and needs
for additional financing;</td>
</tr>
</table>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">the initiation, design, conduct,
enrollment, progress, timing and scope of clinical trials and
development activities for our drug candidates conducted by
ourselves or our partners, Amgen Inc. (“Amgen”) and
Astellas Pharma Inc. (“Astellas”), including the
anticipated timing for initiation of clinical trials, anticipated
rates of enrollment for clinical trials and anticipated timing of
results becoming available or being announced from clinical
trials;</td>
</tr>
</table>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">the results from the clinical trials,
the <font style="white-space: nowrap;">non-clinical</font> studies
and chemistry, manufacturing, and controls (“CMC”)
activities of our drug candidates and other compounds, and the
significance and utility of such results;</td>
</tr>
</table>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">anticipated interactions with
regulatory authorities;</td>
</tr>
</table>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">the further development of tirasemtiv
for the potential treatment of amyotrophic lateral sclerosis
(“ALS”);</td>
</tr>
</table>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">the expected acceptability by
regulatory authorities of the effects of tirasemtiv on slow vital
capacity or other measures of clinical benefit related to
respiratory function in patients with ALS as Phase 3 clinical trial
endpoints to support the registration of tirasemtiv as a treatment
for ALS;</td>
</tr>
</table>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">our and our partners’ plans or
ability to conduct the continued research and development of our
drug candidates and other compounds;</td>
</tr>
</table>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">the advancement of omecamtiv mecarbil
in Phase 3 clinical development;</td>
</tr>
</table>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">our expected roles in research,
development or commercialization under our strategic alliances with
Amgen and Astellas;</td>
</tr>
</table>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">the properties and potential benefits
of, and the potential market opportunities for, our drug candidates
and other compounds, including the potential indications for which
they may be developed;</td>
</tr>
</table>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">the sufficiency of the clinical
trials conducted with our drug candidates to demonstrate that they
are safe and efficacious;</td>
</tr>
</table>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">our receipt of milestone payments,
royalties, reimbursements and other funds from current or future
partners under strategic alliances, such as with Amgen or
Astellas;</td>
</tr>
</table>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">our ability to continue to identify
additional potential drug candidates that may be suitable for
clinical development;</td>
</tr>
</table>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">our plans or ability to commercialize
drugs with or without a partner, including our intention to develop
sales and marketing capabilities;</td>
</tr>
</table>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">the focus, scope and size of our
research and development activities and programs;</td>
</tr>
</table>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">the utility of our focus on the
biology of muscle function, and our ability to leverage our
experience in muscle contractility to other muscle functions;</td>
</tr>
</table>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">our ability to protect our
intellectual property and to avoid infringing the intellectual
property rights of others;</td>
</tr>
</table>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">future payments and other obligations
under loan and lease agreements;</td>
</tr>
</table>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">potential competitors and competitive
products;</td>
</tr>
</table>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">retaining key personnel and
recruiting additional key personnel; and</td>
</tr>
</table>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">the potential impact of recent
accounting pronouncements on our financial position or results of
operations.</td>
</tr>
</table>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">
Such forward-looking statements involve risks and uncertainties,
including, but not limited to:</p>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">further clinical development of
tirasemtiv for the potential treatment of ALS will require
significant additional funding and we may be unable to obtain such
additional funding on acceptable terms, if at all;</td>
</tr>
</table>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">the U.S. Food and Drug Administration
(“FDA”) and/or other regulatory authorities may not
accept effects on respiratory function, including slow vital
capacity, as appropriate clinical trial endpoints to support the
registration of tirasemtiv for the treatment of ALS;</td>
</tr>
</table>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">Amgen’s decisions with respect
to the timing, design and conduct of research and development
activities for omecamtiv mecarbil and related compounds,
including decisions to postpone or discontinue research or
development activities relating to omecamtiv mecarbil and related
compounds;</td>
</tr>
</table>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">Astellas’ decisions with
respect to the timing, design and conduct of research and
development activities for <font style="white-space: nowrap;">CK-2127107</font> and other skeletal muscle
activators, including decisions to postpone or discontinue research
or development activities relating to <font style="white-space: nowrap;">CK-2127107</font> and other skeletal muscle
activators, as well as Astellas’ decisions with respect to
its option to enter into a global collaboration for the development
and commercialization of tirasemtiv;</td>
</tr>
</table>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">our ability to enter into strategic
partnership agreements for any of our programs on acceptable terms
and conditions or in accordance with our planned timelines;</td>
</tr>
</table>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">our ability to obtain additional
financing on acceptable terms, if at all;</td>
</tr>
</table>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">our receipt of funds and access to
other resources under our current or future strategic
alliances;</td>
</tr>
</table>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">difficulties or delays in the
development, testing, manufacturing or commercialization of our
drug candidates;</td>
</tr>
</table>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">difficulties or delays, or slower
than anticipated patient enrollment, in our or partners’
clinical trials;</td>
</tr>
</table>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">difficulties or delays in the
manufacture and supply of clinical trial materials;</td>
</tr>
</table>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">failure by our contract research
organizations, contract manufacturing organizations and other
vendors to properly fulfill their obligations or otherwise perform
as expected;</td>
</tr>
</table>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">results from <font style="white-space: nowrap;">non-clinical</font> studies that may
adversely impact the timing or the further development of our drug
candidates and other compounds;</td>
</tr>
</table>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">the possibility that the FDA or
foreign regulatory agencies may delay or limit our or our
partners’ ability to conduct clinical trials or may delay or
withhold approvals for the manufacture and sale of our
products;</td>
</tr>
</table>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">changing standards of care and the
introduction of products by competitors or alternative therapies
for the treatment of indications we target that may limit the
commercial potential of our drug candidates;</td>
</tr>
</table>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">difficulties or delays in achieving
market access and reimbursement for our drug candidates and the
potential impacts of health care reform;</td>
</tr>
</table>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">changes in laws and regulations
applicable to drug development, commercialization or
reimbursement;</td>
</tr>
</table>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">the uncertainty of protection for our
intellectual property, whether in the form of patents, trade
secrets or otherwise;</td>
</tr>
</table>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">potential infringement or misuse by
us of the intellectual property rights of third parties;</td>
</tr>
</table>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">activities and decisions of, and
market conditions affecting, current and future strategic
partners;</td>
</tr>
</table>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">accrual information provided by our
contract research organizations (“CROs”), contract
manufacturing organizations (“CMOs”), and other
vendors;</td>
</tr>
</table>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">potential ownership changes under
Internal Revenue Code Section 382; and</td>
</tr>
</table>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">the timeliness and accuracy of
information filed with the U.S. Securities and Exchange Commission
(the “SEC”) by third parties.</td>
</tr>
</table>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 8pt; margin-bottom: 0pt;">
In addition, such statements are subject to the risks and
uncertainties discussed in the “Risk Factors” section
and elsewhere in this document. Such statements speak only as of
the date on which they are made, and, except as required by law, we
undertake no obligation to update any forward-looking statement to
reflect events or circumstances after the date on which the
statement is made or to reflect the occurrence of unanticipated
events. New factors emerge from time to time, and it is not
possible for us to predict which factors will arise. In addition,
we cannot assess the impact of each factor on our business or the
extent to which any factor, or combination of factors, may cause
actual results to differ materially from those contained in any
forward-looking statements.</p>
<p style="font-size: 1px; margin-top: 8px; margin-bottom: 0px;">
 </p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">
When used in this report, unless otherwise indicated,
“Cytokinetics,” “the Company,”
“we,” “our” and “us” refers to
Cytokinetics, Incorporated. CYTOKINETICS, and our logo used alone
and with the mark CYTOKINETICS, are registered service marks and
trademarks of Cytokinetics. Other service marks, trademarks and
trade names referred to in this report are the property of their
respective owners.</p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 18pt; margin-bottom: 0pt;">
<b>Overview</b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 6pt; margin-bottom: 0pt;">
We were incorporated in Delaware in August 1997 as Cytokinetics,
Incorporated. We are a late-stage biopharmaceutical company focused
on the discovery and developments of <font style="white-space: nowrap;"><font style="white-space: nowrap;">first-in-class</font></font> muscle
activators as potential treatment for debilitating diseases in
which muscle performance is compromised and/or declining. Our
research and development activities relating to the biology of
muscle function have evolved from our knowledge and expertise
regarding the cytoskeleton, a complex biological infrastructure
that plays a fundamental role within every human cell. Our most
advanced research and development programs relate to the biology of
muscle function and are directed to small molecule modulators of
the contractility of skeletal or cardiac muscle. We are also
conducting earlier-stage research directed to other compounds with
the potential to modulate muscle contractility and other muscle
functions.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
Our drug candidates currently in clinical development are our fast
skeletal muscle activators tirasemtiv and <font style="white-space: nowrap;">CK-2127107,</font> and our cardiac muscle
activator omecamtiv mecarbil. Tirasemtiv is being evaluated for the
potential treatment of ALS. <font style="white-space: nowrap;">CK-2127107</font> is being evaluated for the
potential treatment of spinal muscle atrophy (“SMA”)
and chronic obstructive pulmonary disease (“COPD”) and
for the potential use in other indications associated with muscle
weakness (including ALS) under a strategic alliance with Astellas
established in June 2013 and expanded in December 2014 and July
2016. Omecamtiv mecarbil is being evaluated for the potential
treatment of heart failure under a strategic alliance with Amgen
established in 2006.</p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 18pt; margin-bottom: 0pt; margin-left: 2%;">
<b><i>Skeletal Muscle Contractility Program</i></b></p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 6pt; margin-bottom: 0pt; margin-left: 4%;">
<i><u>Overview</u></i></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 6pt; margin-bottom: 0pt;">
Tirasemtiv is our lead drug candidate from our skeletal muscle
contractility program. We conducted a Phase 2 clinical development
program for tirasemtiv, and in July 2015 we started a Phase 3
clinical trial for this drug candidate in patients with ALS known
as <font style="white-space: nowrap;">VITALITY-ALS</font>
(<b>V</b>entilatory <b>I</b>nvestigation of <b>T</b>irasemtiv and
<b>A</b>ssessment of <b>L</b>ongitudinal <b>I</b>ndices after
<b>T</b>reatment for a <b>Y</b>ear in <b>ALS</b>). In October 2016
we started a Phase 3 clinical trial known as <font style="white-space: nowrap;">VIGOR-ALS</font>
(<b>V</b>entilatory<b> I</b>nvestigations
in<b> G</b>lobal<b> O</b><font style="white-space: nowrap;">pen-Label</font><b> R</b>esearch
in<b> ALS</b>). Tirasemtiv has been granted orphan drug
designation and fast track status by the FDA and orphan medicinal
product designation by the European Medicines Agency, in each case
for the potential treatment of ALS. We retain exclusive rights to
tirasemtiv, subject to Astellas’ exercise of its Option on
Tirasemtiv. In collaboration with Astellas, we are also developing
another drug candidate from this program, <font style="white-space: nowrap;">CK-2127107,</font> for potential indications
associated with muscle weakness. We started a Phase 2 clinical
trial for <font style="white-space: nowrap;">CK-2127107</font> in
patients with SMA in December 2015. Astellas, in collaboration with
Cytokinetics, started a Phase 2 clinical trial of <font style="white-space: nowrap;">CK-2127107</font> in patients with chronic
obstructive pulmonary disease in June 2016.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
Tirasemtiv and <font style="white-space: nowrap;">CK-2127107</font>
are structurally distinct and selective small molecules that
activate the fast skeletal troponin complex in the sarcomere by
increasing its sensitivity to calcium, leading to an increase in
skeletal muscle contractility. Tirasemtiv and <font style="white-space: nowrap;">CK-2127107</font> have each demonstrated
pharmacological activity in preclinical models and evidence of
potentially clinically relevant pharmacodynamic effects in humans.
We are evaluating other potential indications for which tirasemtiv
and <font style="white-space: nowrap;">CK-2127107</font> may be
useful.</p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 18pt; margin-bottom: 0pt; margin-left: 4%;">
<i><u>Tirasemtiv</u></i></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 6pt; margin-bottom: 0pt;">
Tirasemtiv, a fast skeletal troponin activator, is the lead drug
candidate from our skeletal muscle contractility program. We
conducted three “evidence of effect” Phase 2a clinical
trials (one in patients with myasthenia gravis, one in patients
with calf muscle claudication, and one in patients with ALS) and a
Phase 2b clinical trial of tirasemtiv in patients with ALS. The
evidence of effect clinical trials were randomized, double-blind,
placebo-controlled, three-period cross-over studies of single doses
of tirasemtiv administered to patients with impaired muscle
function. These studies were intended to translate the mechanism of
action of tirasemtiv into potentially clinically relevant
pharmacodynamic effects. The Company believes the results from the
Phase 2b clinical trial of tirasemtiv in patients with ALS, known
as <font style="white-space: nowrap;">BENEFIT-ALS</font>
(<b>B</b>linded <b>E</b>valuation of <b>N</b>euromuscular
<b>E</b>ffects and <b>F</b>unctional <b>I</b>mprovement with
<b>T</b>irasemtiv in <b>ALS</b>), showed that effects observed on
slow vital capacity (“SVC”), a measure of the strength
of the skeletal muscles responsible for breathing, in patients
treated with tirasemtiv were robust and potentially clinically
meaningful and supported further evaluation of tirasemtiv in a
Phase 3 clinical trial.</p>
<p style="font-size: 1px; margin-top: 18px; margin-bottom: 0px;">
 </p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 4%;">
<i><u>Tirasemtiv Clinical Development</u></i></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 6pt; margin-bottom: 0pt;">
<u><font style="white-space: nowrap;">VITALITY-ALS</font></u>:
<font style="white-space: nowrap;">VITALITY-ALS</font> is a
multi-national, randomized, double-blind, placebo-controlled trial
that was originally designed to enroll 445 patients with possible,
probable or definite ALS diagnosed within 24 months, and with a
baseline vital capacity > 70 % of predicted, based on age,
sex, and height. Patients were eligible whether or not they were on
riluzole therapy. The primary endpoint of the trial will assess
change from baseline in SVC, to be assessed after 24 weeks of
double-blind, placebo-controlled treatment. Secondary endpoints
include time to decline from baseline in percent predicted SVC by
<font style="font-family: SYMBOL;">³</font> 20 percentage
points or the onset of respiratory insufficiency or death; time to
decline from baseline in percent predicted SVC to <font style="font-family: SYMBOL;">£</font> 50 percent predicted or
the onset of respiratory insufficiency or death; time to first
occurrence of any use of assisted ventilation or death; time to
decline in any of the three respiratory domains of the <font style="white-space: nowrap;">ALSFRS-R</font> or death; and change in the
Mega-Score of muscle strength.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
Patients enrolled in <font style="white-space: nowrap;">VITALITY-ALS</font> received <font style="white-space: nowrap;">two-weeks</font> of open-label treatment
with tirasemtiv administered at 250 mg/day and were randomized to
double-blind treatment with placebo or one of three target
tirasemtiv dose levels (250 mg/day, 375 mg/day, 500 mg/day) in a
3:2:2:2 ratio for a total of 48 weeks of randomized, double-blind,
placebo-controlled treatment. Then in a four-week double-blind,
tirasemtiv withdrawal phase, patients on tirasemtiv are randomized
either to continue the double-blind tirasemtiv dose they were
receiving or to be withdrawn to placebo in a 1:1 ratio. Patients
who had been receiving placebo during the 48 weeks of double-blind,
placebo-controlled treatment will continue to receive placebo.
<font style="white-space: nowrap;">VITALITY-ALS</font> is being
conducted in 81 centers in 11 countries in North America and Europe
and includes most of the sites which participated in <font style="white-space: nowrap;">BENEFIT-ALS.</font></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
In January 2016, we amended the protocol of <font style="white-space: nowrap;">VITALITY-ALS</font> to increase enrollment
from approximately 445 patients to approximately 600 patients.
Increasing the number of patients enrolled increases the
statistical power to detect a difference in the primary efficacy
endpoint (change from baseline in SVC at 24 weeks) between
tirasemtiv and placebo.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
In August 2016, we announced the completion of patient enrollment
in <font style="white-space: nowrap;">VITALITY-ALS.</font></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
In March 2017, we convened the third Data Monitoring Committee
Meeting for <font style="white-space: nowrap;">VITALITY-ALS</font>
to review unblinded safety and efficacy data; the Committee
recommended continuing the trial without modification.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
We were awarded a $1.5 million grant from The ALS Association
(the “ALSA Grant”) to support the conduct of
<font style="white-space: nowrap;">VITALITY-ALS</font> as well as
the collection of clinical data and plasma samples from patients in
<font style="white-space: nowrap;">VITALITY-ALS</font> in order to
help advance the discovery of potentially useful biomarkers in ALS.
The grant provides funding for collaboration among Cytokinetics,
The ALS Association and the Barrow Neurological Institute to enable
plasma samples collected from patients enrolled in <font style="white-space: nowrap;">VITALITY-ALS</font> to be added to The
Northeastern ALS Consortium (NEALS) Repository, a resource for the
academic research community to identify biomarkers that may help to
assess disease progression and underlying disease mechanisms in
ALS. To date, Cytokinetics has achieved two milestones under the
ALSA Grant receiving $0.8 million in accordance with the ALSA
Grant. As of March 31, 2017, we recorded $0.3 million as
grant revenue as qualified expenses were incurred and approved by
management.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
In March 2017, in collaboration with Origent Data Sciences, Inc. we
announced the advancement of our research collaboration to
prospectively validate Origent’s computer model to predict
the course of ALS disease progression using data from <font style="white-space: nowrap;">VITALITY-ALS.</font> This collaboration,
funded by a grant from The ALS Association to Origent, is designed
to enable the first prospective validation of their predictive
model in a clinical trial for ALS.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
<u><font style="white-space: nowrap;">VIGOR-ALS</font></u>: In
October 2016, we initiated <font style="white-space: nowrap;">VIGOR-ALS,</font> an open-label extension
clinical trial designed to assess the long-term safety and
tolerability of tirasemtiv in patients with ALS who have
completed their participation in <font style="white-space: nowrap;">VITALITY-ALS.</font> <font style="white-space: nowrap;">VIGOR-ALS</font> will provide supplemental
data on the effects of the long-term use of tirasemtiv.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
The clinical trials program for tirasemtiv may proceed for several
years, and we will not be in a position to generate any revenues or
material net cash flows from sales of this drug candidate until the
program is successfully completed, regulatory approval is achieved,
and the drug is commercialized. We cannot yet predict if or when
this may occur. Our expenditures are expected to increase as we
continue to progress tirasemtiv towards potential registration.</p>
<p style="font-size: 1px; margin-top: 18px; margin-bottom: 0px;">
 </p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 4%;">
<i><u><font style="white-space: nowrap;">CK-2127107</font> and
Other Skeletal Muscle Activators</u></i></p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 6pt; margin-bottom: 0pt; margin-left: 4%;">
<i>Astellas Strategic Alliance.</i></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 6pt; margin-bottom: 0pt;">
<font style="white-space: nowrap;">CK-2127107,</font> a
next-generation fast skeletal troponin activator, is being
developed jointly by Cytokinetics and Astellas. In 2013, we formed
a collaboration with Astellas with the primary objective of
advancing novel therapies for diseases and medical conditions
associated with muscle impairment and weakness. Under the
collaboration, we exclusively licensed to Astellas rights to
<font style="white-space: nowrap;">co-develop</font> and
potentially <font style="white-space: nowrap;">co-commercialize</font> <font style="white-space: nowrap;">CK-2127107</font> in <font style="white-space: nowrap;">non-neuromuscular</font> indications. In
2014, we and Astellas agreed to expand the collaboration to include
certain neuromuscular indications, including SMA, and to advance
<font style="white-space: nowrap;">CK-2127107</font> into Phase 2
clinical development, initially in SMA. In connection with the
expanded collaboration, we and Astellas agreed to extend the joint
research program through 2016. In 2016, Cytokinetics and Astellas
further amended the collaboration agreement to expand our
collaboration to include the development of <font style="white-space: nowrap;">CK-2127107</font> for the potential
treatment of ALS, as well as the possible development in ALS of
other fast skeletal regulatory activators previously licensed by us
to Astellas. The 2016 Astellas Amendment became effective in
September 2016. The 2016 Astellas Amendment also extends the
existing joint research program focused on the discovery of
additional next-generation skeletal muscle activators through 2017,
and includes sponsored research at Cytokinetics. Finally, under the
2016 Astellas Amendment, we granted Astellas the Option on
Tirasemtiv, as described above.</p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 18pt; margin-bottom: 0pt; margin-left: 4%;">
<i>Addition of ALS as an Added Indication <font style="white-space: nowrap;">(CK-2127107</font> and other fast skeletal
activators)</i></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 6pt; margin-bottom: 0pt;">
In connection with the execution of the 2016 Astellas Amendment, we
received a <font style="white-space: nowrap;">non-refundable</font>
upfront amendment fee of $35.0 million. In addition, we
received an accelerated $15.0 million milestone payment that
would have been payable upon the initiation of the first Phase 2
clinical trial of <font style="white-space: nowrap;">CK-2127107</font> as the lead compound in
ALS, as if such milestone had been achieved upon the execution of
the 2016 Astellas Amendment.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
We and Astellas are collaborating to develop <font style="white-space: nowrap;">CK-2127107</font> in ALS. Astellas is
primarily responsible for the development of <font style="white-space: nowrap;">CK-2127107</font> in ALS, but we will
conduct the Phase 2 clinical trial of <font style="white-space: nowrap;">CK-2127107</font> in ALS and will share in
the operational responsibility for later clinical trials. Subject
to specified guiding principles, decision making will be by
consensus, subject to escalation and, if necessary, Astellas’
final decision making authority on the development (including
regulatory affairs), manufacturing, medical affairs and
commercialization of <font style="white-space: nowrap;">CK-2127107</font> and other fast skeletal
regulatory activators in ALS. We and Astellas share equally the
costs of developing <font style="white-space: nowrap;">CK-2127107</font> in ALS for potential
registration and marketing authorization in the U.S. and Europe,
provided that (i) Astellas has agreed to solely fund Phase 2
development costs of <font style="white-space: nowrap;">CK-2127107</font> in ALS subject to a right
to recoup our share of such costs plus a 100% premium by reducing
future milestone and royalty payments to us and (ii) we may
defer (but not eliminate) a portion of our <font style="white-space: nowrap;">co-funding</font> obligation for development
activities after Phase 2 for up to 18 months, subject to certain
conditions. We have the right to <font style="white-space: nowrap;">co-fund</font> our share of such Phase 2
development costs on a current basis, in which case there would not
be a premium due to Astellas. Cytokinetics will also receive
approximately $41.0 million in additional sponsored research
and development funding through 2018 which includes Astellas’
funding of Cytokinetics’ conduct of the Phase 2 clinical
development of <font style="white-space: nowrap;">CK-2127107</font>
in ALS (approximately $35.8 million) as well as the continuing
research collaboration (approximately $5.2 million).</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
Based on the achievement of <font style="white-space: nowrap;">pre-specified</font> criteria, Cytokinetics
may receive over $600.0 million in milestone payments relating
to the development and commercial launch of collaboration products,
including up to $112.0 million (of which Cytokinetics has now
received $17.0 million) relating to early development of
<font style="white-space: nowrap;">CK-2127107</font> and for
later-stage development and commercial launch milestones for
<font style="white-space: nowrap;">CK-2127107</font> in
<font style="white-space: nowrap;">non-neuromuscular</font>
indications, and over $100.0 million in development and
commercial launch milestones for <font style="white-space: nowrap;">CK-2127107</font> in each of SMA and other
neuromuscular indications. Cytokinetics may also receive up to
$200.0 million in payments for achievement of <font style="white-space: nowrap;">pre-specified</font> sales milestones
related to net sales of all collaboration products under the
Current Astellas Agreement. If Astellas commercializes any
collaboration products, we will also receive royalties on sales of
such collaboration products, including royalties ranging from the
high single digits to the high teens on sales of products
containing <font style="white-space: nowrap;">CK-2127107.</font> We
can <font style="white-space: nowrap;">co-fund</font> certain
development costs for <font style="white-space: nowrap;">CK-2127107</font> and other compounds in
exchange for increased milestone payments and royalties; such
royalties may increase under certain scenarios to exceed twenty
percent. In addition to the foregoing development, commercial
launch and sales milestones, Cytokinetics may also receive payments
for the achievement of <font style="white-space: nowrap;">pre-specified</font> milestones relating to
the joint research program.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
Cytokinetics retains an option to conduct early-stage development
for certain agreed indications at its initial expense, subject to
reimbursement if development continues under the collaboration.
Cytokinetics also retains an option to <font style="white-space: nowrap;">co-promote</font> collaboration products
containing fast skeletal troponin activators for neuromuscular
indications in the U.S., Canada and Europe, in addition to its
option to <font style="white-space: nowrap;">co-promote</font>
other collaboration products in the U.S. and Canada. Astellas will
reimburse Cytokinetics for certain expenses associated with its
<font style="white-space: nowrap;">co-promotion</font>
activities.</p>
<p style="font-size: 1px; margin-top: 12px; margin-bottom: 0px;">
 </p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">
In December 2014, we and Astellas entered into the 2014 Astellas
Agreement pursuant to which we received a <font style="white-space: nowrap;">non-refundable</font> upfront payment of
$30.0 million. Concurrently, we entered into a common stock
purchase agreement with Astellas, which provided for the sale of
2,040,816 shares of our common stock to Astellas at a price per
share of $4.90 and an aggregate purchase price of
$10.0 million. Pursuant to this agreement, Astellas agreed to
certain trading and other restrictions with respect to our common
stock. Concurrently, Cytokinetics earned a $15.0 million
milestone payment relating to Astellas’ decision to advance
<font style="white-space: nowrap;">CK-2127107</font> into Phase 2
clinical development. Cytokinetics was also eligible to potentially
receive over $20.0 million in reimbursement of sponsored
research and development activities during the two years of the
collaboration following the execution of the 2014 Astellas
Agreement.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
During the three months ended March 31, 2017 and 2016, we
recorded $1.4 million and $4.0 million, respectively, of
license revenue and $2.7 million and $3.7 million,
respectively, in reimbursement of sponsored research and
development activities in connection with our strategic alliance
with Astellas. See our unaudited condensed consolidated financial
statements for a further discussion of our revenue recognition
policy under our agreement with Astellas.</p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 18pt; margin-bottom: 0pt; margin-left: 4%;">
<i><font style="white-space: nowrap;">CK-2127107</font> Clinical
Development</i></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 6pt; margin-bottom: 0pt;">
<u>SMA Clinical Development</u>:Cytokinetics in collaboration with
Astellas is conducting a Phase 2 clinical development program.
Cytokinetics started a Phase 2 clinical trial of <font style="white-space: nowrap;">CK-2127107</font> in patients with SMA in
December 2015. The clinical trial is designed to assess effects of
<font style="white-space: nowrap;">CK-2127107</font> on multiple
measures of muscle function in both ambulatory and <font style="white-space: nowrap;">non-ambulatory</font> patients with SMA, a
severe, genetic neuromuscular disease that leads to debilitating
muscle wasting and weakness. The primary objective of this
double-blind, randomized, placebo-controlled clinical trial is to
determine the potential pharmacodynamic effects of a suspension
formulation of <font style="white-space: nowrap;">CK-2127107</font>
following multiple oral doses in patients with Type II, Type III,
or Type IV SMA. Secondary objectives are to evaluate the safety,
tolerability and pharmacokinetics of <font style="white-space: nowrap;">CK-2127107.</font> The trial will enroll
<font style="white-space: nowrap;">seventy-two</font> patients in
two sequential, ascending dose cohorts (two cohorts of 36 patients
each, stratified approximately half ambulatory and half
<font style="white-space: nowrap;">non-ambulatory).</font></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
The first cohort of patients received 150 mg of <font style="white-space: nowrap;">CK-2127107</font> dosed twice daily for
eight weeks; the second cohort of patients is receiving 450 mg of
<font style="white-space: nowrap;">CK-2127107</font> dosed twice
daily. At the conclusion of the trial, approximately 24 patients
will have been randomized to placebo, approximately 24 patients to
150 mg of <font style="white-space: nowrap;">CK-2127107</font>
twice daily and approximately 24 patients to 450 mg of <font style="white-space: nowrap;">CK-2127107</font> twice daily. In each of
these three treatment groups of approximately 24 patients each,
roughly half will be ambulatory and half will be <font style="white-space: nowrap;">non-ambulatory.</font> Multiple assessments
of skeletal muscle function and fatigability will be performed
including respiratory assessments, upper limb strength and
functionality for <font style="white-space: nowrap;">non-ambulatory</font> patients, as well as
<font style="white-space: nowrap;">six-minute</font> walk and
<font style="white-space: nowrap;"><font style="white-space: nowrap;"><font style="white-space: nowrap;">timed-up-and-go</font></font></font> for
ambulatory patients.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
In March 2017, we announced that we completed enrollment of Cohort
1 and the second cohort of the Phase 2 clinical trial was open to
enrollment. We anticipate that the trial will complete enrollment
and report data in 2017 in collaboration with Astellas.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
<u>COPD Clinical Development</u>: In June 2016, Astellas, in
collaboration with Cytokinetics, started a Phase 2 clinical trial
of <font style="white-space: nowrap;">CK-2127107</font> in patients
with COPD. Astellas is conducting this randomized, double-blind,
placebo controlled two period crossover clinical trial designed to
assess the effect of <font style="white-space: nowrap;">CK-2127107</font> on physical function in
patients with COPD. The trial is expected to enroll approximately
40 patients in the United States and is designed to assess the
effect of <font style="white-space: nowrap;">CK-2127107</font>
compared to placebo on exercise tolerance. Additionally, the trial
will assess the cardiopulmonary and neuromuscular effect of
<font style="white-space: nowrap;">CK-2127107</font> relative to
placebo and the effect of <font style="white-space: nowrap;">CK-2127107</font> on resting spirometry
relative to placebo. The safety, tolerability and pharmacokinetics
of <font style="white-space: nowrap;">CK-2127107</font> also will
be assessed. We expect Astellas to continue enrollment in this
Phase 2 clinical trial of <font style="white-space: nowrap;">CK-2127107</font> in patients with COPD in
2017.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
<u>ALS Clinical Development</u>: We anticipate that we will begin a
Phase 2 clinical trial of <font style="white-space: nowrap;">CK-2127107</font> in patients with ALS
<font style="white-space: nowrap;">mid-2017.</font></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
<u>Frailty Clinical Development</u>: We anticipate that Astellas
will begin a Phase 1b clinical trial of <font style="white-space: nowrap;">CK-2127107</font> in elderly patients with
limited mobility in the second quarter of 2017.</p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 18pt; margin-bottom: 0pt; margin-left: 4%;">
<i><font style="white-space: nowrap;">CK-2127107</font>
Presentations and Publications</i></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 6pt; margin-bottom: 0pt;">
Also in March 2017, we presented preclinical data for <font style="white-space: nowrap;">CK-2127107</font> at the MDA Scientific
Conference in Arlington, Virginia showing that <font style="white-space: nowrap;">CK-2127107</font> improves muscle function
in mouse models of SMA.</p>
<p style="font-size: 1px; margin-top: 12px; margin-bottom: 0px;">
 </p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">
The clinical trials programs <font style="white-space: nowrap;">for CK-2127107 may</font> proceed
for several years, and we will not be in a position to generate any
revenues or material net cash flows from sales of this drug
candidate until the program is successfully completed, regulatory
approval is achieved, and the drug is <font style="white-space: nowrap;">commercialized. CK-2127107 is</font>
at too early a stage of development for us to predict if or when
this may occur. Our expenditures will increase if Astellas
terminates development <font style="white-space: nowrap;">of CK-2127107 or</font> related
compounds and we elect to develop them independently, or if we
conduct early-stage development for certain agreed indications at
our initial expense, subject to reimbursement if development
continues under the collaboration.</p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 18pt; margin-bottom: 0pt; margin-left: 4%;">
<i><u>Ongoing Research in Skeletal Muscle Activators</u></i></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 6pt; margin-bottom: 0pt;">
Our research on the direct activation of skeletal muscle continues
in two areas. We are conducting translational research in
preclinical models of disease and muscle function with fast
skeletal troponin activators to explore the potential clinical
applications of this novel mechanism in diseases or conditions
associated with skeletal muscle dysfunction. We also intend to
conduct preclinical research on other chemically and
pharmacologically distinct mechanisms to activate the skeletal
sarcomere.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
We advanced a next-generation skeletal muscle activator into
<font style="white-space: nowrap;">IND-enabling</font> studies in
2016 and earned a $2.0 million milestone payment from
Astellas. We are conducting a joint research program with Astellas
directed to the discovery of next-generation skeletal muscle
activators. Under the 2016 Astellas Amendment, the joint research
program will continue through 2017 and Astellas will reimburse us
for certain research activities we perform.</p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 18pt; margin-bottom: 0pt; margin-left: 4%;">
<b><i>Cardiac Muscle Contractility Program</i></b></p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 6pt; margin-bottom: 0pt; margin-left: 4%;">
<i><u>Overview</u></i></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 6pt; margin-bottom: 0pt;">
Our lead drug candidate from our cardiac contractility program is
omecamtiv mecarbil, a novel cardiac muscle myosin activator. We
expect omecamtiv mecarbil to be developed as a potential treatment
across the continuum of care in heart failure both for use in the
hospital setting and for use in the outpatient setting. Omecamtiv
mecarbil was studied in nine Phase 1 clinical trials in healthy
subjects, two Phase 2a clinical trials in heart failure patients,
one Phase 2 clinical trial, <font style="white-space: nowrap;">COSMIC-HF</font> (<b>C</b>hronic <b>O</b>ral
<b>S</b>tudy of <b>M</b>yosin <b>A</b>ctivation to <b>I</b>ncrease
<b>C</b>ontractility in <b>H</b>eart <b>F</b>ailure) and one Phase
2b, <font style="white-space: nowrap;">ATOMIC-AHF</font>
(<b>A</b>cute <b>T</b>reatment with <b>O</b>mecamtiv
<b>M</b>ecarbil to <b>I</b>ncrease <b>C</b>ontractility in
<b>A</b>cute <b>H</b>eart <b>F</b>ailure). These clinical trials
were designed to evaluate the safety, tolerability, pharmacodynamic
and pharmacokinetic profiles of both intravenous and oral
formulations in a diversity of patients, including outpatients with
stable heart failure and patients with hospitalized for acutely
decompensated heart failure. In these trials, omecamtiv mecarbil
exhibited generally linear, dose-proportional pharmacokinetics
across the dose ranges studied. The adverse effects observed at
intolerable doses in humans appeared similar to the adverse
findings which occurred in preclinical safety studies at similar
plasma concentrations. These effects are believed to be related to
the mechanism of action of this drug candidate which, at
intolerable doses, resulted in an excessive prolongation of the
systolic ejection time (i.e., the time in which the heart is
contracting). However, these effects resolved promptly with
discontinuation of the infusions of omecamtiv mecarbil.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
<font style="white-space: nowrap;">COSMIC-HF</font> showed
statistically significant improvements in <font style="white-space: nowrap;">pre-specified</font> secondary measures of
cardiac function and dimensions, as well as <font style="white-space: nowrap;"><font style="white-space: nowrap;"><font style="white-space: nowrap;">n-T-pro-BNP</font></font></font> (a
biomarker associated with the severity of heart failure) in the
dose titration group compared to placebo. Adverse events on
omecamtiv mecarbil and placebo were comparable. These results in
patients treated with omecamtiv mecarbil are potentially clinically
meaningful and support further evaluation of omecamtiv mecarbil in
a Phase 3 clinical trial.</p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 18pt; margin-bottom: 0pt; margin-left: 4%;">
<i>Amgen Strategic Alliance</i></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 6pt; margin-bottom: 0pt;">
In December 2006, we entered into a collaboration and option
agreement with Amgen to discover, develop and commercialize novel
small molecule therapeutics, including omecamtiv mecarbil, that
activate cardiac muscle contractility for potential applications in
the treatment of heart failure (the “Amgen Agreement”).
The agreement granted Amgen an option to obtain an exclusive
license worldwide, except Japan, to develop and commercialize
omecamtiv mecarbil and other drug candidates arising from the
collaboration. In May 2009, Amgen exercised its option. As a
result, Amgen became responsible for the development and
commercialization of omecamtiv mecarbil and related compounds at
its expense worldwide (excluding Japan), subject to our development
and commercialization participation rights. Amgen reimburses us for
certain research and development activities we perform under the
collaboration.</p>
<p style="font-size: 1px; margin-top: 12px; margin-bottom: 0px;">
 </p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">
In June 2013, Cytokinetics and Amgen executed an amendment to the
Amgen Agreement to include Japan, resulting in a worldwide
collaboration (the “Amgen Agreement Amendment”) and
Amgen paid us a <font style="white-space: nowrap;">non-refundable</font> upfront license fee of
$15.0 million. We are eligible to receive additional
<font style="white-space: nowrap;">pre-commercialization</font>
milestone payments relating to the development of omecamtiv
mecarbil in Japan of up to $50.0 million, and royalties on
sales of omecamtiv mecarbil in Japan. In conjunction with the Amgen
Agreement Amendment, Amgen purchased 1,404,100 shares of our common
stock for $10.0 million that are subject to certain trading
and other restrictions.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
In July 2013, Amgen announced that it had granted an option to
commercialize omecamtiv mecarbil in Europe to Servier, with
Cytokinetics’ consent, pursuant to an Option, License and
Collaboration Agreement (the “Servier Agreement”).</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
In August 2016, we entered into a Letter Agreement with Amgen and
Servier (the “Letter Agreement”), which
(i) expands the territory of the sublicense to Servier to
include specified countries in the CIS, including Russia and
(ii) provides that, if Amgen’s rights under the Amgen
Agreement, as amended, are terminated with respect to the territory
of such sublicense, the sublicensed rights previously granted by
Amgen to Servier under the Servier Agreement will remain in effect
and become a direct license or sublicense of such rights by us to
Servier, on substantially the same terms as set forth in the
Servier Agreement, including but not limited to Servier’s
payment of its share of agreed development costs and future
milestone and royalty payments to us. The Letter Agreement does not
otherwise modify our rights and obligations under the Amgen
Agreement, as amended, or create any additional financial
obligations of Cytokinetics, unless we otherwise agree in
writing.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
In September 2016, Amgen and Servier announced Servier’s
decision to exercise its option to commercialize omecamtiv mecarbil
in Europe as well as the CIS, including Russia. The option and
related commercialization sublicense to Servier is subject to the
terms and conditions of the Amgen Agreement. Amgen remains
responsible for the performance of its obligations under the Amgen
Agreement, as amended, relating to Europe and the CIS, including
the payment of milestones and royalties relating to the development
and commercialization of omecamtiv mecarbil in Europe and the
CIS.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
Under the Amgen Agreement as amended we are eligible for potential
additional <font style="white-space: nowrap;">pre-commercialization</font> and
commercialization milestone payments of over $600.0 million in
the aggregate on omecamtiv mecarbil and other potential products
arising from research under the collaboration, and royalties that
escalate based on increasing levels of annual net sales of products
commercialized under the agreement. The Amgen Agreement also
provides for us to receive increased royalties by <font style="white-space: nowrap;">co-funding</font> Phase 3 development costs
of omecamtiv mecarbil and other drug candidates under the
collaboration.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
In December 2016, we provided notice of our exercise of our option
under the Amgen Agreement to <font style="white-space: nowrap;">co-invest</font> in the Phase 3 development
program of omecamtiv mecarbil at the level of $10.0 million in
exchange for an incremental royalty from Amgen of up to 1% on
increasing worldwide sales of omecamtiv mecarbil outside Japan. In
February 2017, we provided notice to Amgen of our further exercise
of our <font style="white-space: nowrap;">co-invest</font> option
in the additional amount of $30.0 million (i.e. to fully
<font style="white-space: nowrap;">co-invest</font> $40.0 million)
in the Phase 3 development program of omecamtiv mecarbil. As a
result, we are eligible to receive an incremental royalty of up to
4% on increasing worldwide sales of omecamtiv mecarbil outside of
Japan. Exercising our option and fully <font style="white-space: nowrap;">co-funding</font> $40.0 million affords
us the right to <font style="white-space: nowrap;">co-promote</font> omecamtiv mecarbil in
institutional care settings in North America, with reimbursement by
Amgen for certain sales force activities. A joint commercial
operating team comprising representatives of Cytokinetics and Amgen
will then be responsible for the commercialization program of
omecamtiv mecarbil.</p>
<p style="font-size: 1px; margin-top: 18px; margin-bottom: 0px;">
 </p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 4%;">
<i><u>Omecamtiv Mecarbil</u></i></p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 6pt; margin-bottom: 0pt; margin-left: 4%;">
<i><u>Omecamtiv Mecarbil Clinical Development</u></i></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 6pt; margin-bottom: 0pt;">
<u><font style="white-space: nowrap;">GALACTIC-HF</font></u>.
<font style="white-space: nowrap;">GALACTIC-HF</font> is a Phase 3
cardiovascular outcomes clinical trial of omecamtiv mecarbil which
is being conducted by Amgen, in collaboration with Cytokinetics.
Coincident with the start of the trial, Amgen made a
$26.7 million milestone payment to Cytokinetics. The primary
objective of this double-blind, randomized, placebo-controlled
multicenter clinical trial is to determine if treatment with
omecamtiv mecarbil when added to the current standard of care is
superior to standard of care plus placebo in reducing the risk of
cardiovascular death or heart failure events in patients with high
risk chronic heart failure and reduced ejection fraction.
<font style="white-space: nowrap;">GALACTIC-HF</font> is being
conducted under a Special Protocol Assessment (“SPA”)
with the U.S. FDA. <font style="white-space: nowrap;">GALACTIC-HF</font> is planned to enroll
approximately 8,000 symptomatic chronic heart failure patients in
over 900 sites in 35 countries who are either currently
hospitalized for a primary reason of heart failure or have had a
hospitalization or admission to an emergency room for heart failure
within one year prior to screening. In order to be eligible to
participate in <font style="white-space: nowrap;">GALACTIC-HF</font> patients should have an
LVEF <font style="font-family: SYMBOL;">£</font> 35%, be NYHA
class II to IV, and have an elevated BNP or <font style="white-space: nowrap;">NT-proBNP.</font> Patients will be
randomized to either placebo or omecamtiv mecarbil with dose
titration up to a maximum dose of 50 mg twice daily based on the
plasma concentration of omecamtiv mecarbil after initiation of drug
therapy. The primary endpoint is a composite of time to
cardiovascular death or first heart failure event, which is defined
as either a hospitalization for heart failure or other urgent
treatment for worsening heart failure. Secondary endpoints include
time to cardiovascular death; patient reported outcomes as measured
by the Kansas City Cardiomyopathy Questionnaire Total Symptom
Score; time to first heart failure hospitalization; and
<font style="white-space: nowrap;">all-cause</font> death.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
Cytokinetics and Amgen are also planning a potential exercise
performance/cardiac function clinical trial to be conducted by
Cytokinetics. Amgen will be responsible for reimbursing us for the
<font style="white-space: nowrap;"><font style="white-space: nowrap;">out-of-pocket</font></font> development
costs associated with this clinical trial.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
In April 2016, we announced the start of a Phase 2 clinical trial
of omecamtiv mecarbil in Japanese subjects with chronic heart
failure and reduced ejection fraction and we expect data from this
trial in Q3 2017.</p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 18pt; margin-bottom: 0pt; margin-left: 4%;">
<i>Presentations and Publications</i></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 6pt; margin-bottom: 0pt;">
In March 2017, we announced that additional data from our Phase 2
clinical trial of omecamtiv mecarbil <font style="white-space: nowrap;">COSMIC-HF</font> were presented in a in a
Poster Session at the American College of Cardiology’s 66th
Annual Scientific Session. The results presented showed that
omecamtiv mecarbil improved myocardial deformation, a marker of
myocardial function that has been related to outcomes.</p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 18pt; margin-bottom: 0pt; margin-left: 4%;">
<i><u>Ongoing Research in Cardiac Muscle Contractility.</u></i></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 6pt; margin-bottom: 0pt;">
We continued our joint research program with Amgen directed to
next-generation compounds in our cardiac muscle contractility
program in 2016. We expect to continue our joint research program
with Amgen in 2017. Under the Amgen Agreement, Amgen reimburses us
for certain research activities we perform.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
We recorded reimbursement of sponsored research and development
activities in connection with our strategic alliance with Amgen of
$0.9 million and $0.6 million, respectively in the three
months ended March 31, 2017 and 2016. See Note 4,
“Related Party Research and Development Arrangements”
in the Notes to Unaudited Condensed Consolidated Financial
Statements, for a further discussion of our revenue recognition
policy under our agreement with Amgen.</p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 18pt; margin-bottom: 0pt;">
<b>Beyond Muscle Contractility</b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 6pt; margin-bottom: 0pt;">
We developed preclinical expertise in the mechanics of skeletal,
cardiac and smooth muscle that extends from proteins to tissues to
intact animal models. Our translational research in muscle
contractility has enabled us to better understand the potential
impact of small molecule compounds that increase skeletal or
cardiac muscle contractility and to apply those findings to the
further evaluation of our drug candidates in clinical populations.
In addition to contractility, other major functions of muscle play
a role in certain diseases that could benefit from novel mechanism
treatments. Accordingly, our knowledge of muscle contractility may
serve as an entry point to the discovery of novel treatments for
disorders involving muscle functions other than muscle
contractility. We are leveraging our current understandings of
muscle biology to investigate new ways of modulating these other
aspects of muscle function for other potential therapeutic
applications.</p>
<p style="font-size: 1px; margin-top: 18px; margin-bottom: 0px;">
 </p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">
<b>Development Risks</b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 6pt; margin-bottom: 0pt;">
The successful development of any of our drug candidates is highly
uncertain. We cannot estimate with certainty or know the exact
nature, timing and costs of the activities necessary to complete
the development of any of our drug candidates or the date of
completion of these development activities due to numerous risks
and uncertainties, including, but not limited to:</p>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">the results of clinical trials of our
drug candidates conducted by us or our partners may not support the
further clinical development of those drug candidates;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">further clinical development of
tirasemtiv for the potential treatment of ALS will require
significant additional funding and we may be unable to obtain such
additional funding on acceptable terms, if at all;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">the FDA and/or other regulatory
authorities may not accept effects on respiratory function,
including SVC, as appropriate clinical trial endpoints to support
the registration of tirasemtiv for the treatment of ALS;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">the FDA and/or other regulatory
authorities may not accept the data from the clinical trials of
tirasemtiv as sufficient to determine the safest and most effective
dose of tirasemtiv for the treatment of ALS;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">decisions made by Amgen with respect
to the development of omecamtiv mecarbil and by Astellas with
respect to the development of <font style="white-space: nowrap;">CK-2127107;</font></td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">the uncertainty of the timing of the
initiation and completion of patient enrollment and treatment in
our or our partners’ clinical trials;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">the possibility of delays in the
collection of clinical trial data and the uncertainty of the timing
of the analyses of our clinical trial data after these trials have
been initiated and completed;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">our potential inability to obtain
additional funding and resources for our development activities on
acceptable terms, if at all, including, but not limited to, our
potential inability to obtain or retain partners to assist in the
design, management, conduct and funding of clinical trials;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">failure by our clinical trial sites,
clinical research organizations, clinical manufacturing
organizations and other third parties supporting our or our
partners’ clinical trials to fulfill their obligations or
otherwise perform as expected;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">delays or additional costs in
manufacturing of our drug candidates for clinical trial use,
including developing appropriate formulations of our drug
candidates;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">the uncertainty of clinical trial
results, including variability in patient response;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">the uncertainty of obtaining FDA or
other foreign regulatory agency approval required for the clinical
investigation of our drug candidates;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">the uncertainty related to the
development of commercial scale manufacturing processes and
qualification of a commercial scale manufacturing facility;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">the possibility that results from
<font style="white-space: nowrap;">non-clinical</font> studies may
adversely impact the timing or further development of our drug
candidates; and</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">possible delays in the
characterization, formulation and manufacture, packaging, labeling
and distribution of drug candidates and other compounds.</td>
</tr>
</table>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
If we fail to complete the development of any of our drug
candidates in a timely manner, it could have a material adverse
effect on our operations, financial position and liquidity. In
addition, any failure by us or our partners to obtain, or any delay
in obtaining, regulatory approvals for our drug candidates could
have a material adverse effect on our results of operations. A
further discussion of the risks and uncertainties associated with
completing our programs as planned, or at all, and certain
consequences of failing to do so are discussed further in the risk
factors entitled “We will need substantial additional capital
in the future to sufficiently fund our operations,” “We
have never generated, and may never generate, revenues from
commercial sales of our drugs and we may not have drugs to market
for at least several years, if ever,” “Clinical trials
may fail to demonstrate the desired safety and efficacy of our drug
candidates, which could prevent or significantly delay completion
of clinical development and regulatory approval” and
“Clinical trials are expensive, time-consuming and subject to
delay,” and other risk factors.</p>
<p style="font-size: 1px; margin-top: 18px; margin-bottom: 0px;">
 </p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">
<b>Results of Operations</b></p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 6pt; margin-bottom: 0pt;">
<b><i>Revenues</i></b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 6pt; margin-bottom: 0pt;">
Total revenues for the three months ended March 31, 2017 and
2016, respectively, were as follows (in thousands):</p>
<p style="font-size: 12pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="84%" align="center" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr>
<td width="70%"></td>
<td width="6%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td width="6%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td width="6%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 8pt; page-break-inside: avoid;">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td align="center" valign="bottom" style="border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;" colspan="6"><b>Three Months Ended</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom" colspan="2"> </td>
<td valign="bottom"> </td>
</tr>
<tr style="font-family: Times New Roman; font-size: 8pt; page-break-inside: avoid;">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td align="center" valign="bottom" style="border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;" colspan="2"><b>March 31,</b><br />
<b>2017</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td align="center" valign="bottom" style="border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;" colspan="2"><b>March 31,</b><br />
<b>2016</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td align="center" valign="bottom" style="border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;" colspan="2"><b>Increase</b><br />
<b>(Decrease)</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;" bgcolor="#CCEEFF">
<td valign="top">
<p style="text-indent: -1em; font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 1em;">
Research and development revenues from related parties, net</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">2,366</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">4,296</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom">($</td>
<td align="right" valign="bottom">1,930</td>
<td nowrap="nowrap" valign="bottom">) </td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td valign="top">
<p style="text-indent: -1em; font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 1em;">
Research and development, grant and other revenues</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td align="right" valign="bottom">341</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td align="right" valign="bottom">151</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td align="right" valign="bottom">190</td>
<td nowrap="nowrap" valign="bottom"> </td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="4"></td>
<td height="8" colspan="4"></td>
<td height="8" colspan="4"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;" bgcolor="#CCEEFF">
<td valign="top">
<p style="text-indent: -1em; font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 1em;">
License revenues from related parties</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td align="right" valign="bottom">1,446</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td align="right" valign="bottom">3,974</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td align="right" valign="bottom">(2,528</td>
<td nowrap="nowrap" valign="bottom">) </td>
</tr>
<tr style="font-size: 1px;">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 1px; border-top-style: solid;">
 </p>
</td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 1px; border-top-style: solid;">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 1px; border-top-style: solid;">
 </p>
</td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 1px; border-top-style: solid;">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 1px; border-top-style: solid;">
 </p>
</td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 1px; border-top-style: solid;">
 </p>
</td>
<td> </td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td valign="top">
<p style="text-indent: -1em; font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 3em;">
Total revenues</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">4,153</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">8,421</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom">($</td>
<td align="right" valign="bottom">4,268</td>
<td nowrap="nowrap" valign="bottom">) </td>
</tr>
<tr style="font-size: 1px;">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td> </td>
</tr>
</table>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
Research and development revenues from related parties refers to
research and development revenues from our strategic alliances with
Astellas and Amgen. Research and development revenue for the first
quarter of 2017 and 2016 included research and development revenues
from Astellas of $2.7 million and $3.7 million,
respectively, and consisted of reimbursements of internal costs of
certain full-time employee equivalents and reimbursements of
research and development expenses; and research and development
revenues from Amgen of $0.9 million and $0.6 million,
respectively, and consisted of reimbursements of internal costs of
certain full-time employee equivalents. Research and development
revenues from our strategic alliance with Amgen was offset by a
payment of $1.3 million to Amgen related to the option to
<font style="white-space: nowrap;">co-fund</font> the Phase 3
development program of omecamtiv mecarbil in exchange for an
increased royalty upon potential commercialization.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
Research and development, grant and other revenues in the first
quarter of 2017 and 2016 consisted of $0.3 million and
$0.2 million of research and development revenues from our
collaboration with ALSA, respectively.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
License revenues refers to license revenues from our collaboration
with Astellas. License revenues from Astellas for the first quarter
of 2017 and 2016 were $1.4 million and $4.0 million,
respectively and consisted of the recognition of a portion of the
$30.0 million upfront license fee received from Astellas in
January 2015 and a portion of the license fee received from
Astellas under the 2016 Astellas Amendment. We recognize license
revenues over the term of the research and development services
using the proportional performance model.</p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 18pt; margin-bottom: 0pt;">
<b><i>Research and Development Expenses</i></b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 6pt; margin-bottom: 0pt;">
Research and development expenses for the three months ended
March 31, 2017 and 2016, respectively, were as follows (in
thousands):</p>
<p style="font-size: 12pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="84%" align="center" style="font-family: Times New Roman; font-size: 8pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr>
<td width="71%"></td>
<td width="5%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td width="5%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td width="5%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 8pt; page-break-inside: avoid;">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td align="center" valign="bottom" style="border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;" colspan="6"><b>Three Months Ended</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom" colspan="2"> </td>
<td valign="bottom"> </td>
</tr>
<tr style="font-family: Times New Roman; font-size: 8pt; page-break-inside: avoid;">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td align="center" valign="bottom" style="border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;" colspan="2"><b>March 31,</b><br />
<b>2017</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td align="center" valign="bottom" style="border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;" colspan="2"><b>March 31,</b><br />
<b>2016</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td align="center" valign="bottom" style="border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;" colspan="2"><b>Increase</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;" bgcolor="#CCEEFF">
<td valign="top">
<p style="text-indent: -1em; font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 1em;">
Research and development expenses</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">19,289</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">13,534</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">5,755</td>
<td nowrap="nowrap" valign="bottom"> </td>
</tr>
<tr style="font-size: 1px;">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td> </td>
</tr>
</table>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
The increase in research and development expenses in 2017 compared
to the same period in 2016 was primarily due to an increase of
$2.5 million in outsourced clinical costs mainly associated
with <font style="white-space: nowrap;">VITALITY-ALS,</font>
$1.4 million in outsourced research and preclinical costs
mainly associated with clinical manufacturing activities,
$1.3 million in personnel related expenses due to increased
headcount costs, and $0.2 million in laboratory expenses.</p>
<p style="font-size: 1px; margin-top: 12px; margin-bottom: 0px;">
 </p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">
The following presents our research and development expenses by
program for the three months ended March 31, 2017 and 2016,
respectively (in thousands):</p>
<p style="font-size: 12pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="84%" align="center" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr>
<td width="70%"></td>
<td width="5%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td width="5%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td width="5%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 8pt; page-break-inside: avoid;">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td align="center" valign="bottom" style="border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;" colspan="6"><b>Three Months Ended</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom" colspan="2"> </td>
<td valign="bottom"> </td>
</tr>
<tr style="font-family: Times New Roman; font-size: 8pt; page-break-inside: avoid;">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td align="center" valign="bottom" style="border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;" colspan="2"><b>March 31,</b><br />
<b>2017</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td align="center" valign="bottom" style="border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;" colspan="2"><b>March 31,</b><br />
<b>2016</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td align="center" valign="bottom" style="border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;" colspan="2"><b>Increase</b><br />
<b>(Decrease)</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;" bgcolor="#CCEEFF">
<td valign="top">
<p style="text-indent: -1em; font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 1em;">
Skeletal muscle contractility</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">16,267</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">11,038</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">5,229</td>
<td nowrap="nowrap" valign="bottom"> </td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td valign="top">
<p style="text-indent: -1em; font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 1em;">
Cardiac muscle contractility</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td align="right" valign="bottom">2,273</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td align="right" valign="bottom">1,743</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td align="right" valign="bottom">530</td>
<td nowrap="nowrap" valign="bottom"> </td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;" bgcolor="#CCEEFF">
<td valign="top">
<p style="text-indent: -1em; font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 1em;">
All other research programs</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td align="right" valign="bottom">749</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td align="right" valign="bottom">753</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td align="right" valign="bottom">(4</td>
<td nowrap="nowrap" valign="bottom">) </td>
</tr>
<tr style="font-size: 1px;">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 1px; border-top-style: solid;">
 </p>
</td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 1px; border-top-style: solid;">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 1px; border-top-style: solid;">
 </p>
</td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 1px; border-top-style: solid;">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 1px; border-top-style: solid;">
 </p>
</td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 1px; border-top-style: solid;">
 </p>
</td>
<td> </td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td valign="top">
<p style="text-indent: -1em; font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 3em;">
Total research and development expenses</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">19,289</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">13,534</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">5,755</td>
<td nowrap="nowrap" valign="bottom"> </td>
</tr>
<tr style="font-size: 1px;">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td> </td>
</tr>
</table>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
From a program perspective, the increase in research and
development spending in the first quarter 2017, compared to the
same period in 2016 was primarily due to increased spending of
$5.2 million for our skeletal muscle contractility program,
which included our skeletal muscle contractility program for
tirasemtiv for the treatment of ALS and the clinical programs
<font style="white-space: nowrap;">for CK-2127107 under</font> our
collaboration with Astellas, and an increase of $0.5 million
for our cardiac muscle contractility program under our
collaboration with Amgen.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
Clinical development timelines, the likelihood of success and total
completion costs vary significantly for each drug candidate and are
difficult to estimate. We anticipate that we will determine on an
ongoing basis which research and development programs to pursue and
how much funding to direct to each program, taking into account the
scientific and clinical success of each drug candidate. The lengthy
process of seeking regulatory approvals and subsequent compliance
with applicable regulations requires the expenditure of substantial
resources. Any failure by us to obtain and maintain, or any delay
in obtaining, regulatory approvals could cause our research and
development expenditures to increase and, in turn, could have a
material adverse effect on our results of operations.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
We expect our research and development expenditures to increase
significantly in 2017 compared to 2016. We expect to continue the
Phase 3 clinical development of our drug candidate tirasemtiv for
the potential treatment of ALS. Under our strategic alliance with
Astellas, we expect to continue development of our drug
<font style="white-space: nowrap;">candidate CK-2127107 for</font>
the potential treatment of SMA and potentially other diseases and
medical conditions associated with muscle weakness or wasting.
Under our strategic alliance with Amgen, we expect to continue the
Phase 3 development of our drug candidate omecamtiv mecarbil for
the potential treatment of heart failure.</p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 18pt; margin-bottom: 0pt;">
<b><i>General and Administrative Expenses</i></b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 6pt; margin-bottom: 0pt;">
General and administrative expenses for the three months ended
March 31, 2017 and 2016, respectively, were as follows (in
thousands):</p>
<p style="font-size: 12pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="84%" align="center" style="font-family: Times New Roman; font-size: 8pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr>
<td width="73%"></td>
<td width="5%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td width="5%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td width="5%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 8pt; page-break-inside: avoid;">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td align="center" valign="bottom" style="border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;" colspan="6"><b>Three Months Ended</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom" colspan="2"> </td>
<td valign="bottom"> </td>
</tr>
<tr style="font-family: Times New Roman; font-size: 8pt; page-break-inside: avoid;">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td align="center" valign="bottom" style="border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;" colspan="2"><b>March 31,</b><br />
<b>2017</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td align="center" valign="bottom" style="border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;" colspan="2"><b>March 31,</b><br />
<b>2016</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td align="center" valign="bottom" style="border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;" colspan="2"><b>Increase</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;" bgcolor="#CCEEFF">
<td valign="top">
<p style="text-indent: -1em; font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 1em;">
General and Administrative expenses</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">8,115</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">6,841</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">1,274</td>
<td nowrap="nowrap" valign="bottom"> </td>
</tr>
<tr style="font-size: 1px;">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td> </td>
</tr>
</table>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
The increase in general and administrative expenses in the first
quarter of 2017, compared to the same period in 2016, was primarily
due to an increase of $0.7 million in personnel related
expenses due to increased headcount and <font style="white-space: nowrap;">non-cash</font> stock compensation expense,
an increase of $0.8 million in outsourced costs primarily
related to commercial development, partially offset by a decrease
in corporate legal fees of $0.5 million.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
We expect that general and administrative expenses in 2017 will
increase significantly compared to 2016, mainly due to increased
headcount.</p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 18pt; margin-bottom: 0pt;">
<b><i>Interest Expense</i></b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 6pt; margin-bottom: 0pt;">
Interest expenses for the three months ended March 31, 2017
and 2016, respectively, were as follows (in thousands):</p>
<p style="font-size: 12pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="84%" align="center" style="font-family: Times New Roman; font-size: 8pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr>
<td width="71%"></td>
<td width="6%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td width="6%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td width="6%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 8pt; page-break-inside: avoid;">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td align="center" valign="bottom" style="border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;" colspan="6"><b>Three Months Ended</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom" colspan="2"> </td>
<td valign="bottom"> </td>
</tr>
<tr style="font-family: Times New Roman; font-size: 8pt; page-break-inside: avoid;">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td align="center" valign="bottom" style="border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;" colspan="2"><b>March 31,</b><br />
<b>2017</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td align="center" valign="bottom" style="border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;" colspan="2"><b>March 31,</b><br />
<b>2016</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td align="center" valign="bottom" style="border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;" colspan="2"><b>Increase</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;" bgcolor="#CCEEFF">
<td valign="top">
<p style="text-indent: -1em; font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 1em;">
Interest expense</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">3,052</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">563</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">2,489</td>
<td nowrap="nowrap" valign="bottom"> </td>
</tr>
<tr style="font-size: 1px;">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td> </td>
</tr>
</table>
<p style="font-size: 1px; margin-top: 12px; margin-bottom: 0px;">
 </p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">
Interest expense for the three months ended March 31, 2017
primarily consisted of accretion expense related to the liability
related to the sale of future royalties of $2.3 million, as
well as interest expense related to the loan and security agreement
with Oxford Finance LLC and Silicon Valley Bank entered into in
October 2015 of $0.7 million.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
We anticipate that interest expenses in 2017 will increase
significantly compared to 2016 mainly due to accretion expense
related to the liability related to the sale of future
royalties.</p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 18pt; margin-bottom: 0pt;">
<b>Critical Accounting Policies</b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 6pt; margin-bottom: 0pt;">
The accounting policies that we consider to be our most critical
(i.e., those that are most important to the portrayal of our
financial condition and results of operations and that require our
most difficult, subjective or complex judgments), the effects of
those accounting policies applied and the judgments made in their
application are summarized in “<i>Item 7 —
Management’s Discussion and Analysis of Financial Condition
and Results of Operations — Critical Accounting Policies and
Estimates”</i> in our Annual Report on Form <font style="white-space: nowrap;">10-K</font> for the fiscal year ended
December 31, 2016. See Note 1 in the Notes to Unaudited
Condensed Consolidated Financial Statements for changes to our
critical accounting policies since then.</p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 18pt; margin-bottom: 0pt;">
<b>Recent Accounting Pronouncements</b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 6pt; margin-bottom: 0pt;">
See Note 1, “Recent Accounting Pronouncements” in the
Notes to Unaudited Condensed Consolidated Financial Statements for
a discussion of recently adopted accounting pronouncements and
accounting pronouncements not yet adopted, and their expected
impact on our financial position and results of operations.</p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 18pt; margin-bottom: 0pt;">
<b>Liquidity and Capital Resources</b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 6pt; margin-bottom: 0pt;">
Our financial condition is summarized as follows:</p>
<p style="font-size: 12pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="84%" align="center" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr>
<td width="73%"></td>
<td width="4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td width="4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td width="4%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 8pt; page-break-inside: avoid;">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td align="center" valign="bottom" style="border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;" colspan="6"><b>As of March 31,</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td align="center" valign="bottom" style="border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;" colspan="2"><b>Increase</b><br />
<b>(Decrease)</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="font-family: Times New Roman; font-size: 8pt; page-break-inside: avoid;">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td align="center" valign="bottom" style="border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;" colspan="2"><b>2017</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td align="center" valign="bottom" style="border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;" colspan="2"><b>2016</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td align="center" valign="bottom" style="border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;" colspan="2"><b>2017</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;" bgcolor="#CCEEFF">
<td valign="top">
<p style="text-indent: -1em; font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 1em;">
Financial assets:</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td valign="top">
<p style="text-indent: -1em; font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 3em;">
Cash and cash equivalents</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">49.4</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">42.3</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">7.1</td>
<td nowrap="nowrap" valign="bottom"> </td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;" bgcolor="#CCEEFF">
<td valign="top">
<p style="text-indent: -1em; font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 3em;">
Short-term investments</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td align="right" valign="bottom">157.2</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td align="right" valign="bottom">61.2</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td align="right" valign="bottom">96.0</td>
<td nowrap="nowrap" valign="bottom"> </td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td valign="top">
<p style="text-indent: -1em; font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 3em;">
Long-term investments</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td align="right" valign="bottom">50.6</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td align="right" valign="bottom">5.1</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td align="right" valign="bottom">45.5</td>
<td nowrap="nowrap" valign="bottom"> </td>
</tr>
<tr style="font-size: 1px;">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 1px; border-top-style: solid;">
 </p>
</td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 1px; border-top-style: solid;">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 1px; border-top-style: solid;">
 </p>
</td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 1px; border-top-style: solid;">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 1px; border-top-style: solid;">
 </p>
</td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 1px; border-top-style: solid;">
 </p>
</td>
<td> </td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;" bgcolor="#CCEEFF">
<td valign="top">
<p style="text-indent: -1em; font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 5em;">
Total cash, cash equivalents and marketable securities</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">257.2</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">108.6</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">148.6</td>
<td nowrap="nowrap" valign="bottom"> </td>
</tr>
<tr style="font-size: 1px;">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td> </td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td valign="top">
<p style="text-indent: -1em; font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 1em;">
Borrowings:</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;" bgcolor="#CCEEFF">
<td valign="top">
<p style="text-indent: -1em; font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 3em;">
Current portions of long-term debt</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">4.8</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td nowrap="nowrap" valign="bottom">$</td>
<td align="right" nowrap="nowrap" valign="bottom">
—  </td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">4.8</td>
<td nowrap="nowrap" valign="bottom"> </td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td valign="top">
<p style="text-indent: -1em; font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 3em;">
Long-term debt</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td align="right" valign="bottom">25.2</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td align="right" valign="bottom">29.5</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td align="right" valign="bottom">(4.3</td>
<td nowrap="nowrap" valign="bottom">) </td>
</tr>
<tr style="font-size: 1px;">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 1px; border-top-style: solid;">
 </p>
</td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 1px; border-top-style: solid;">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 1px; border-top-style: solid;">
 </p>
</td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 1px; border-top-style: solid;">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 1px; border-top-style: solid;">
 </p>
</td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 1px; border-top-style: solid;">
 </p>
</td>
<td> </td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;" bgcolor="#CCEEFF">
<td valign="top">
<p style="text-indent: -1em; font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 5em;">
Total borrowings</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">30.0</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">29.5</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">0.5</td>
<td nowrap="nowrap" valign="bottom"> </td>
</tr>
<tr style="font-size: 1px;">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td> </td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td valign="top">
<p style="text-indent: -1em; font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 1em;">
Liability related to the sale of future royalties, net</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">92.9</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td nowrap="nowrap" valign="bottom">$</td>
<td align="right" nowrap="nowrap" valign="bottom">
—  </td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">92.9</td>
<td nowrap="nowrap" valign="bottom"> </td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="4"></td>
<td height="8" colspan="4"></td>
<td height="8" colspan="4"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;" bgcolor="#CCEEFF">
<td valign="top">
<p style="text-indent: -1em; font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 1em;">
Working capital:</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td valign="top">
<p style="text-indent: -1em; font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 3em;">
Current assets</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">211.0</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">106.1</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">104.9</td>
<td nowrap="nowrap" valign="bottom"> </td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;" bgcolor="#CCEEFF">
<td valign="top">
<p style="text-indent: -1em; font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 3em;">
Current liabilities</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td align="right" valign="bottom">(33.8</td>
<td nowrap="nowrap" valign="bottom">) </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td align="right" valign="bottom">(24.7</td>
<td nowrap="nowrap" valign="bottom">) </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td align="right" valign="bottom">(9.1</td>
<td nowrap="nowrap" valign="bottom">) </td>
</tr>
<tr style="font-size: 1px;">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 1px; border-top-style: solid;">
 </p>
</td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 1px; border-top-style: solid;">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 1px; border-top-style: solid;">
 </p>
</td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 1px; border-top-style: solid;">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 1px; border-top-style: solid;">
 </p>
</td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 1px; border-top-style: solid;">
 </p>
</td>
<td> </td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td valign="top">
<p style="text-indent: -1em; font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 5em;">
Total working capital</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">177.2</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">81.4</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">95.8</td>
<td nowrap="nowrap" valign="bottom"> </td>
</tr>
<tr style="font-size: 1px;">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td> </td>
</tr>
</table>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
From August 5, 1997, our date of inception, through
March 31, 2017, we funded our operations through the sale of
equity securities, <font style="white-space: nowrap;">non-equity</font> payments from
collaborators, long term debt, capital equipment financings, grants
and interest income. Due to our substantial research and
development expenditures, we have generated significant operating
losses since our inception. Our expenditures are primarily related
to research and development activities. As of March 31, 2017,
we had available cash, cash equivalents and investments of
$257.2 million. Based on the current status of its research
and development plans, the Company believes that its existing cash,
cash equivalents and investments will be sufficient to fund its
cash requirements for at least the next 12 months.</p>
<p style="font-size: 1px; margin-top: 18px; margin-bottom: 0px;">
 </p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">
<i>Original Astellas Agreement</i></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 6pt; margin-bottom: 0pt;">
In June 2013, we entered into the Original Astellas Agreement (see
Note 4, “Related Party Research and Development
Arrangements” in the Notes to Consolidated Financial
Statements). In July 2013, we received an upfront <font style="white-space: nowrap;">non-refundable</font> license payment of
$16.0 million in connection with the execution of the Original
Astellas Agreement. Pursuant to that agreement we were eligible to
potentially receive over $24.0 million in reimbursement of
sponsored research and development activities during the initial
two years of the collaboration. In addition, the agreement also
provided for payments for the achievement of <font style="white-space: nowrap;">pre-specified</font> milestones relating to
the joint research and development program.</p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 18pt; margin-bottom: 0pt;">
<i>2014 Astellas Agreement</i></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 6pt; margin-bottom: 0pt;">
In December 2014, we entered into the 2014 Astellas Agreement,
which superseded the Original Astellas Agreement (see Note 7,
“Related Party Research and Development Arrangements”
in the Notes to Consolidated Financial Statements). Under the terms
of the 2014 Astellas Agreement, we received a <font style="white-space: nowrap;">non-refundable</font> upfront license fee of
$30.0 million in January 2015. In conjunction with the 2014
Astellas Agreement, we also entered into a common stock purchase
agreement pursuant to which we sold 2,040,816 shares common stock
to Astellas at a price per share of $4.90. The aggregate purchase
price of $10.0 million was received in December 2014. We
determined the fair value of the stock issued to Astellas to be
$9.1 million. The excess of cash received over fair value of
$0.9 million was deferred and will be recognized as revenue as
services are performed over approximately 24 months.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
We were eligible to potentially receive over $20.0 million in
reimbursement of sponsored research and development activities
during the two years of the collaboration following execution of
the 2014 Astellas Agreement.</p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 18pt; margin-bottom: 0pt;">
<i>2016 Astellas Amendment (Inclusion of ALS as an Added Indication
and Option on Tirasemtiv)</i></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 6pt; margin-bottom: 0pt;">
The 2016 Amendment to the 2014 Astellas Agreement (“2016
Astellas Amendment”) became effective in September 2016
(collectively with the 2014 Astellas Agreement, the “Current
Astellas Agreement”). Under the 2016 Astellas Amendment, we
granted Astellas an option to enter into a <font style="white-space: nowrap;">pre-negotiated</font> agreement for a global
collaboration for the development and commercialization of
tirasemtiv. If Astellas exercises the option, Astellas will receive
exclusive worldwide commercialization rights for Astellas outside
Cytokinetics’ commercialization territory in North America,
Europe and other select countries. In addition, the 2016 Astellas
Amendment expands our collaboration with Astellas to include the
development of <font style="white-space: nowrap;">CK-2127107</font>
for the potential treatment of ALS, as well as other fast skeletal
regulatory activators licensed to Astellas under the 2014 Astellas
Agreement. Finally, the 2016 Astellas Amendment extends the
existing joint research program focused on the discovery of
additional next-generation skeletal muscle activators through 2017,
including sponsored research at Cytokinetics.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
In connection with the execution of the 2016 Astellas Amendment, we
received a $15.0 million <font style="white-space: nowrap;">non-refundable</font> option fee for the
grant of the Option on Tirasemtiv. Prior to Astellas’
exercise of the option, we will continue the development of
tirasemtiv, including <font style="white-space: nowrap;">VITALITY-ALS,</font> at our own expense to
support regulatory approval in the U.S., EU and certain other
jurisdictions and will retain the final decision making authority
on the development of tirasemtiv. If Astellas exercises the option,
we will grant Astellas an exclusive license to develop and
commercialize tirasemtiv outside Cytokinetics’ own
commercialization territory of North America, Europe and other
select countries. Each party would be primarily responsible for the
further development of tirasemtiv in its territory and have the
exclusive right to commercialize tirasemtiv in its territory.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
Also in connection with the execution of the 2016 Astellas
Amendment, we received a <font style="white-space: nowrap;">non-refundable</font> upfront amendment fee
of $35.0 million. We also received the accelerated payment of
a $15.0 million milestone payment for the initiation of the
first Phase 2 clinical trial of <font style="white-space: nowrap;">CK-2127107</font> as the lead compound in
ALS that was otherwise provided for in the 2014 Astellas Agreement,
as if such milestone had been achieved upon the execution of the
2016 Astellas Amendment. The parties will share equally the costs
of developing <font style="white-space: nowrap;">CK-2127107</font>
in ALS for the potential registration and marketing authorization
in the U.S. and Europe, provided that (i) Astellas has agreed
to solely fund Phase 2 development costs of <font style="white-space: nowrap;">CK-2127107</font> in ALS, subject to a right
to recoup Cytokinetics’ share of such costs plus a 100%
premium by reducing future milestone and royalty payments to
Cytokinetics, and (ii) Cytokinetics may defer (but not
eliminate) a portion of its <font style="white-space: nowrap;">co-funding</font> obligation for development
activities after Phase 2 for up to 18 months, subject to certain
conditions. Cytokinetics has the right to <font style="white-space: nowrap;">co-fund</font> its share of such Phase 2
development costs on a current basis, in which case there would not
be a premium due to Astellas. We are also eligible to receive up to
approximately $41.0 million in additional sponsored research
and development funding through 2018 which includes Astellas’
funding of Cytokinetics’ conduct of the Phase 2 clinical
development of <font style="white-space: nowrap;">CK-2127107</font>
in ALS (approximately $35.8 million) as well as the continuing
research collaboration (approximately $5.2 million).</p>
<p style="font-size: 1px; margin-top: 12px; margin-bottom: 0px;">
 </p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">
Under the Current Astellas Agreement, based on the achievement of
<font style="white-space: nowrap;">pre-specified</font> criteria,
Cytokinetics may receive over $600.0 million in milestone
payments relating to the development and commercial launch of
collaboration products, including up to $95.0 million relating
to <font style="white-space: nowrap;">CK-2127107</font> in
<font style="white-space: nowrap;">non-neuromuscular</font>
indications, and over $100.0 million in development and
commercial launch milestones for <font style="white-space: nowrap;">CK-2127107</font> in each of SMA, ALS and
other neuromuscular indications. Cytokinetics may also receive up
to $200.0 million in payments for achievement of <font style="white-space: nowrap;">pre-specified</font> sales milestones
related to net sales of all collaboration products under the
Current Astellas Agreement. If Astellas commercializes any
collaboration products, Cytokinetics will also receive royalties on
sales of such collaboration products, including royalties ranging
from the high single digits to the high teens on sales of products
containing <font style="white-space: nowrap;">CK-2127107.</font>
Cytokinetics can <font style="white-space: nowrap;">co-fund</font>
certain development costs for <font style="white-space: nowrap;">CK-2127107</font> and other compounds in
exchange for increased milestone payments and royalties; such
royalties may increase under certain scenarios to exceed twenty
percent. In addition to the foregoing development, commercial
launch and sales milestones, Cytokinetics may also receive payments
for the achievement of <font style="white-space: nowrap;">pre-specified</font> milestones relating to
the joint research program.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
If Astellas exercises its option for a global collaboration for the
development and commercialization of tirasemtiv, Cytokinetics will
receive an option exercise payment ranging from $25.0 million
(if exercise occurs following receipt of data from <font style="white-space: nowrap;">VITALITY-ALS)</font> to $80.0 million
(if exercise occurs following receipt of FDA approval) and a
milestone payment of $30.0 million from Astellas associated
with Cytokinetics’ initiation of the open-label extension
trial for tirasemtiv <font style="white-space: nowrap;">(VIGOR-ALS).</font> Cytokinetics will be
responsible for the development costs of tirasemtiv during the
option period, but if Astellas’ exercises the option after
the defined review period following receipt of data from
<font style="white-space: nowrap;">VITALITY-ALS,</font> Astellas
will at the time of option exercise reimburse Cytokinetics for a
share of any additional costs incurred after such review
period.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
If Astellas exercises the option for tirasemtiv, the parties will
share the future development costs of tirasemtiv in North America,
Europe and certain other countries (with Cytokinetics bearing 75%
of such shared costs and Astellas bearing 25% of such costs), and
Astellas will be solely responsible for the development costs of
tirasemtiv specific to its commercialization territory. Contingent
upon the successful development of tirasemtiv, we may receive
milestone payments up to $100.0 million for the initial
indication and up to $50.0 million for each subsequent
indication. If tirasemtiv is commercialized, Astellas will pay us
royalties (at rates ranging from the <font style="white-space: nowrap;">mid-teens</font> to twenty percent) on sales
of tirasemtiv in Astellas’ territory, and we will pay
Astellas royalties (at rates up to the <font style="white-space: nowrap;">mid-teens)</font> on sales of tirasemtiv in
our commercialization territory, in each case subject to various
possible adjustments.</p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 18pt; margin-bottom: 0pt;">
<i>Amgen Agreement Amendment</i></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 6pt; margin-bottom: 0pt;">
In June 2013, we entered into the Amgen Agreement Amendment, which
expanded our strategic alliance to include Japan (see Note 4,
“Related Party Research and Development Arrangements”
in the Notes to the Condensed Consolidated Financial Statements -
Unaudited). Under the terms of the Amgen Agreement Amendment, we
received a <font style="white-space: nowrap;">non-refundable</font>
upfront license fee of $15 million in June 2013. In
conjunction with the Amgen Agreement Amendment, we also entered
into a common stock purchase agreement pursuant to which we sold
1,404,100 shares common stock to Amgen at a price per share of
$7.12. The aggregate purchase price of $10.0 million was
received in June 2013. We determined the fair value of the stock
issued to Amgen to be $7.5 million. The excess of cash
received over fair value of $2.5 million was deferred and was
recognized as revenue as services were performed over approximately
12 months.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
Under the Amgen Agreement as amended, we are eligible for potential
additional <font style="white-space: nowrap;">pre-commercialization</font> and
commercialization milestone payments of over $600.0 million in
the aggregate on omecamtiv mecarbil and other potential products
arising from research under the collaboration, and royalties that
escalate based on increasing levels of annual net sales of products
commercialized under the agreement. In December 2016, we provided
notice of our initial exercise of our option to <font style="white-space: nowrap;">co-invest</font> at the $10.0 million
level in the Phase 3 development program of omecamtiv mecarbil in
exchange for an incremental royalty from Amgen of up to 1% on
increasing worldwide sales of omecamtiv mecarbil outside Japan. In
February 2017, we agreed to increase our <font style="white-space: nowrap;">co-funding</font> to $40 million, which
will make us eligible to receive an incremental royalty of up to 4%
on increasing worldwide sales of omecamtiv mecarbil outside of
Japan and afford us the right to <font style="white-space: nowrap;">co-promote</font> omecamtiv mecarbil in
institutional care settings in North America, with reimbursement by
Amgen for certain sales force activities.</p>
<p style="font-size: 1px; margin-top: 18px; margin-bottom: 0px;">
 </p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">
<i>Royalty Monetization Agreement</i></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 6pt; margin-bottom: 0pt;">
In February 2017, we entered into a Royalty Purchase Agreement
(“Royalty Agreement”) with RPI Finance Trust
(“RPI”), an entity related to Royalty Pharma. Under the
Royalty Agreement, we sold a portion of our right to receive
royalties on future net sales of omecamtiv mecarbil (and
potentially other compounds with the same mechanism of action)
under the Amgen Agreement (as amended) to RPI for a payment of
$90.0 million. In addition, RPI purchased $10.0 million
of our common stock pursuant to a concurrently executed Common
Stock Purchase Agreement with RPI. See Note 9, “Liability
related to sale of future royalties”, for further
details.</p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 18pt; margin-bottom: 0pt;">
<i>Cantor Fitzgerald</i></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 6pt; margin-bottom: 0pt;">
On September 4, 2015, we entered into a $40.0 million
Controlled Equity Offering Sales Agreement (“CE
Offering”) with Cantor Fitzgerald & Co., pursuant to
which we issue and sold, through March 31, 2017, 2,246,750
shares for total net proceeds of approximately
$26.3 million.</p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 18pt; margin-bottom: 0pt;">
<i>Warrants issued in June 2012 Public Offerings</i></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 6pt; margin-bottom: 0pt;">
On June 20, 2012, we entered into underwriting agreements for
two separate, concurrent offerings of our securities (the
“June 2012 Public Offerings”). The warrants issued in
the June 2012 Public Offerings have an exercise price of $5.28. In
March 2017, we issued 292,700 shares of common stock in exchange
for warrants to purchase 374,959 shares of our common stock. As of
March 31, 2017, warrants to purchase 3,730,007 shares of our
common stock were outstanding and exercisable until June 25,
2017.</p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 18pt; margin-bottom: 0pt;">
<i>October 2015 Loan Agreement</i></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 6pt; margin-bottom: 0pt;">
On October 19, 2015 and February 10, 2016, we entered
into a loan and security agreement (the “Loan
Agreement”) with Oxford Finance LLC (“Oxford”) as
the collateral agent and a lender, and Silicon Valley Bank
(“SVB”) as a lender (Oxford and SVB collectively the
“Lenders”) to fund our working capital and other
general corporate needs, for Term A and Term B, respectively.</p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 18pt; margin-bottom: 0pt;">
<i>Sources and Uses of Cash</i></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 6pt; margin-bottom: 0pt;">
Our cash, cash equivalents and investments totaled
$257.2 million at March 31, 2017, compared to
$108.6 million at March 31, 2016. The increase of
$148.6 million was primarily due to the receipt of
$100.0 million from RPI in February 2017, the receipt of
$65.0 million from Astellas in October 2016, the receipt of a
$26.7 million milestone payment from Amgen in December 2016,
and net proceeds of $17.4 million from the CE Offering, offset
by the use of cash to fund operations.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 6pt; margin-bottom: 0pt;">
Net cash used in operating activities was $20.9 million in the
three months ended March 31, 2017 and was largely due to
ongoing research and development activities and general and
administrative spend to support those activities. Net loss for the
three months ended March 31, 2017 included <font style="white-space: nowrap;">non-cash</font> stock based compensation of
$1.9 million and <font style="white-space: nowrap;">non-cash</font> interest expense related to
sale of future royalties of $2.3 million. Net cash used in
operating activities was $17.5 million in the three months
ended March 31, 2016 and was largely due to the ongoing
research and development activities. The net loss for the three
months ended March 31, 2016 included <font style="white-space: nowrap;">non-cash</font> stock based compensation of
$1.6 million.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
Net cash used in investing activities of $112.3 million in the
three months ended March 31, 2017 was primarily due to
purchases of investments, exceeding proceeds from the maturity of
investments by $110.9 million and purchases of equipment of
$1.4 million. Net cash used in investing activities was
$20.2 million in the first three months of 2016 was primarily
due to purchases of investments, exceeding proceeds from the
maturity of investments, by $19.7 million.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
Net cash provided by financing activities was $115.7 million
in the three months ended March 31, 2017 was primarily due to
net proceeds from the liability related to sales of future
royalties of $90.6 million, net proceeds pursuant to the CE
Offering of $17.4 million, net proceeds issuance of common
stock to RPI as part of the Royalty Monetization transaction of
$7.6 million, and proceeds from common stock issuances from
warrant exercises of $0.2 million. Net cash provided by
financing activities was $14.9 million in the first three
months of 2016 and primarily consisted of net proceeds received of
$15.0 million from long-term debt.</p>
<p style="font-size: 1px; margin-top: 18px; margin-bottom: 0px;">
 </p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">
<i>Shelf Registration Statements</i></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 6pt; margin-bottom: 0pt;">
In September 2015, we filed a registration statement on Form
<font style="white-space: nowrap;">S-3</font> with the SEC, which
was declared effective in September 2015 (the “September 2015
Registration Statement”) in conjunction with the CE Offering
with Cantor Fitzgerald & Co. Pursuant to the terms of the
CE Offering we may offer and sell, from time to time through Cantor
Fitzgerald, shares of our common stock, having an aggregate
offering price of up to $40.0 million. As of March 31,
2017, we issued 2,246,750 shares for total net proceeds of
approximately $26.3 million.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
In December 2016, we filed a registration statement on Form
<font style="white-space: nowrap;">S-3</font> with the SEC, which
was declared effective in January 2017 (the “January 2017
Shelf”). The January 2017 Shelf registered up to
$200.0 million of our common stock and preferred stock, and/or
warrants to purchase any of such securities. The specific terms any
offering pursuant to under the January 2017 Shelf will be
established at the time of such offering.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
Our contractual obligations for the next five years and thereafter
are as follows (in thousands):</p>
<p style="font-size: 12pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" align="center" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr>
<td width="65%"></td>
<td width="2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td width="2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td width="2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td width="2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td width="2%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 8pt; page-break-inside: avoid;">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td align="center" valign="bottom" style="border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;" colspan="18"><b>Payments Due by Period</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="font-family: Times New Roman; font-size: 8pt; page-break-inside: avoid;">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td align="center" valign="bottom" style="border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;" colspan="2"><b>Remainder</b><br />
<b>of 2017</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td align="center" valign="bottom" style="border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;" colspan="2"><b><font style="white-space: nowrap;">2018-2019</font></b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td align="center" valign="bottom" style="border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;" colspan="2"><b><font style="white-space: nowrap;">2020-2021</font></b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td align="center" valign="bottom" style="border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;" colspan="2"><b>Beyond</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td align="center" valign="bottom" style="border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;" colspan="2"><b>Total</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;" bgcolor="#CCEEFF">
<td valign="top">
<p style="text-indent: -1em; font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 1em;">
Liability related to sale of future royalties (1)</p>
</td>
<td valign="bottom">  </td>
<td nowrap="nowrap" valign="bottom">$</td>
<td align="right" nowrap="nowrap" valign="bottom">
—  </td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td nowrap="nowrap" valign="bottom">$</td>
<td align="right" nowrap="nowrap" valign="bottom">
—  </td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td nowrap="nowrap" valign="bottom">$</td>
<td align="right" nowrap="nowrap" valign="bottom">
—  </td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">94,595</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">94,595</td>
<td nowrap="nowrap" valign="bottom"> </td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td valign="top">
<p style="text-indent: -1em; font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 1em;">
Long-term debt (2)</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">2,500</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">20,000</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">7,500</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td nowrap="nowrap" valign="bottom">$</td>
<td align="right" nowrap="nowrap" valign="bottom">
—  </td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">30,000</td>
<td nowrap="nowrap" valign="bottom"> </td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;" bgcolor="#CCEEFF">
<td valign="top">
<p style="text-indent: -1em; font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 1em;">
Interest obligation on long-term debt (3)</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">1,705</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">2,725</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">1,438</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td nowrap="nowrap" valign="bottom">$</td>
<td align="right" nowrap="nowrap" valign="bottom">
—  </td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">5,868</td>
<td nowrap="nowrap" valign="bottom"> </td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td valign="top">
<p style="text-indent: -1em; font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 1em;">
Operating lease obligations (4)</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">2,746</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">1,860</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td nowrap="nowrap" valign="bottom">$</td>
<td align="right" nowrap="nowrap" valign="bottom">
—  </td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td nowrap="nowrap" valign="bottom">$</td>
<td align="right" nowrap="nowrap" valign="bottom">
—  </td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">4,606</td>
<td nowrap="nowrap" valign="bottom"> </td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;" bgcolor="#CCEEFF">
<td valign="top">
<p style="text-indent: -1em; font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 1em;">
<font style="white-space: nowrap;">Co-investment</font> option
(5)</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">18,750</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">18,750</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td nowrap="nowrap" valign="bottom">$</td>
<td align="right" nowrap="nowrap" valign="bottom">
—  </td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td nowrap="nowrap" valign="bottom">$</td>
<td align="right" nowrap="nowrap" valign="bottom">
—  </td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">37,500</td>
<td nowrap="nowrap" valign="bottom"> </td>
</tr>
<tr style="font-size: 1px;">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 1px; border-top-style: solid;">
 </p>
</td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 1px; border-top-style: solid;">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 1px; border-top-style: solid;">
 </p>
</td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 1px; border-top-style: solid;">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 1px; border-top-style: solid;">
 </p>
</td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 1px; border-top-style: solid;">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 1px; border-top-style: solid;">
 </p>
</td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 1px; border-top-style: solid;">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 1px; border-top-style: solid;">
 </p>
</td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 1px; border-top-style: solid;">
 </p>
</td>
<td> </td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td valign="top">
<p style="text-indent: -1em; font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 1em;">
Total obligations</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">25,701</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">43,335</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">8,938</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">94,595</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">172,569</td>
<td nowrap="nowrap" valign="bottom"> </td>
</tr>
<tr style="font-size: 1px;">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td> </td>
</tr>
</table>
<p style="width: 10%; line-height: 8pt; margin-top: 0pt; margin-bottom: 2pt; border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1px; border-bottom-style: solid;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="4%" align="left" valign="top">(1)</td>
<td align="left" valign="top">Liability based on the carrying value
at the latest balance sheet date. Actual payments to RPI may
differ. For further discussion regarding the liability related to
the sale of future royalties, see Note 9.</td>
</tr>
</table>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="4%" align="left" valign="top">(2)</td>
<td align="left" valign="top">For further discussion regarding
long-term debt, see Note 8, “Long-Term Debt” of the
Notes to the Condensed Consolidated Financial Statements.</td>
</tr>
</table>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="4%" align="left" valign="top">(3)</td>
<td align="left" valign="top">Interest obligation on long-term debt
has been calculated based on the interest rate applicable as of
March 31, 2017.</td>
</tr>
</table>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="4%" align="left" valign="top">(4)</td>
<td align="left" valign="top">Our long-term commitment under
operating lease relates to payments under our facility lease in
South San Francisco, California, which expires in 2018.</td>
</tr>
</table>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="4%" align="left" valign="top">(5)</td>
<td align="left" valign="top">In February 2017, the Company
provided notice to Amgen of its further exercise of its
<font style="white-space: nowrap;">co-invest</font> option in the
additional amount of $30.0 million (i.e. to fully <font style="white-space: nowrap;">co-invest</font> $40.0 million) in the Phase
3 development program of omecamtiv mecarbil under the Amgen
Agreement. For further discussion regarding <font style="white-space: nowrap;">co-investment</font> option, see Note 4,
“Related Parties and Related Party Transactions” of the
Notes to the Condensed Consolidated Financial Statements.</td>
</tr>
</table>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
In future periods, we expect to incur substantial costs as we
continue to expand our research programs and related research and
development activities. We plan to continue development of our fast
skeletal troponin activator tirasemtiv for the potential treatment
of ALS. We plan to continue development of our fast skeletal
troponin activator <font style="white-space: nowrap;">CK-2127107</font> for the potential
treatment of SMA, COPD, ALS and potentially other diseases and
conditions related to skeletal muscle weakness or wasting and
research of potential next-generation compounds as part of our
strategic alliance with Astellas. We plan to continue to support
the development of our cardiac muscle myosin activator omecamtiv
mecarbil for the potential treatment of heart failure and the
research of potential next-generation compounds as part of our
strategic alliance with Amgen. We expect to incur significant
research and development expenses as we advance the research and
development of compounds from our other muscle biology programs
through research to candidate selection.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
Our future capital uses and requirements depend on numerous
factors. These factors include, but are not limited to, the
following:</p>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">the initiation, progress, timing,
scope and completion of preclinical research, <font style="white-space: nowrap;">non-clinical</font> development, chemistry,
manufacturing, and controls (CMC), and clinical trials for our drug
candidates and other compounds;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">the time and costs involved in
obtaining regulatory approvals;</td>
</tr>
</table>
<p style="font-size: 1px; margin-top: 6px; margin-bottom: 0px;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">delays that may be caused by
requirements of regulatory agencies;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">Amgen’s decisions with regard
to funding of development and commercialization of omecamtiv
mecarbil or other compounds for the potential treatment of heart
failure under our collaboration;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">Astellas’ decisions with regard
to funding of development and commercialization of <font style="white-space: nowrap;">CK-2127107</font> or other skeletal muscle
activators under our collaboration;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">our level of funding for the
development of current or future drug candidates;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">the number of drug candidates we
pursue;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">the costs involved in filing and
prosecuting patent applications and enforcing or defending patent
claims;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">our ability to establish and maintain
selected strategic alliances required for the development of drug
candidates and commercialization of our potential drugs;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">our plans or ability to expand our
drug development capabilities, including our capabilities to
conduct clinical trials for our drug candidates;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">our plans or ability to engage third
party manufacturers for our drug candidates and potential
drugs;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">our plans or ability to build or
access sales and marketing capabilities and to achieve market
acceptance for potential drugs;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">the expansion and advancement of our
research programs;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">the hiring of additional employees
and consultants;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">the expansion of our facilities;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">the acquisition of technologies,
products and other business opportunities that require financial
commitments; and</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">our revenues, if any, from successful
development of our drug candidates and commercialization of
potential drugs.</td>
</tr>
</table>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
We have incurred an accumulated deficit of $544.2 million
since inception and there can be no assurance that we will attain
profitability. We are subject to risks common to clinical-stage
companies including, but not limited to, development of new
drug candidates, dependence on key personnel, and the ability to
obtain additional capital as needed to fund our future plans. Our
liquidity will be impaired if sufficient additional capital is not
available on terms acceptable to us, if at all. To date, we have
funded our operations primarily through sales of our common stock
and convertible preferred stock, contract payments under our
collaboration agreements, debt financing arrangements, grants and
interest income. Until we achieve profitable operations, we intend
to continue to fund operations through payments from strategic
collaborations, additional sales of equity securities, grants and
debt financings. We have never generated revenues from commercial
sales of our drugs and may not have drugs to market for at least
several years, if ever. Our success is dependent on our ability to
obtain additional capital by entering into new strategic
collaborations and/or through equity or debt financings, and
ultimately on our and our collaborators’ ability to
successfully develop and market one or more of our drug candidates.
We cannot be certain that sufficient funds will be available from
such collaborators or financings when needed or on satisfactory
terms. Additionally, there can be no assurance that any of drugs
based on our drug candidates will be accepted in the marketplace or
that any future products can be developed or manufactured at an
acceptable cost. These factors could have a material adverse effect
on our future financial results, financial position and cash
flows.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
Based on the current status of our development plans, we believe
that our existing cash and cash equivalents, investments and
interest earned on investments will be sufficient to meet our
projected operating requirements for at least the next
12 months. If, at any time, our prospects for internally
financing our research and development programs decline, we may
decide to reduce research and development expenses by delaying,
discontinuing or reducing our funding of development of one or more
of our drug candidates or of other research and development
programs. Alternatively, we might raise funds through strategic
relationships, public or private financings or other arrangements.
There can be no assurance that funding, if needed, will be
available on attractive terms, or at all, or in accordance with our
planned timelines. Furthermore, financing obtained through future
strategic relationships may require us to forego certain
commercialization and other rights to our drug candidates.
Similarly, any additional equity financing may be dilutive to
stockholders and debt financing, if available, may involve
restrictive covenants. Our failure to raise capital as and when
needed could have a negative impact on our financial condition and
our ability to pursue our business strategy.</p>
<p style="font-size: 1px; margin-top: 18px; margin-bottom: 0px;">
 </p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">
<b><font style="white-space: nowrap;">Off-Balance</font> Sheet
Arrangements</b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 6pt; margin-bottom: 0pt;">
We are not party to any <font style="white-space: nowrap;">off-balance</font> sheet arrangements that
have, or are reasonably likely to have, a material current or
future effect on our financial condition, revenues or expenses,
results of operations, liquidity, capital expenditures or capital
resources.</p>
<p style="font-size: 18pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="9%" align="left" valign="top">ITEM 3.</td>
<td align="left" valign="top">QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK</td>
</tr>
</table>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 6pt; margin-bottom: 0pt;">
Our exposure to market risk has not changed materially since our
disclosures in Item 7A, “Quantitative and Qualitative
Disclosures About Market Risk” in our Annual Report on Form
<font style="white-space: nowrap;">10-K</font> for the year ended
December 31, 2016.</p>
<p style="font-size: 18pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="9%" align="left" valign="top">ITEM 4.</td>
<td align="left" valign="top">CONTROLS AND PROCEDURES</td>
</tr>
</table>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 6pt; margin-bottom: 0pt;">
(a) Evaluation of disclosure controls and procedures</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
Our management evaluated, with the participation and under the
supervision of our Chief Executive Officer and our Chief Financial
Officer, the effectiveness of our disclosure controls and
procedures as of the end of the period covered by this report.
Based on this evaluation, our Chief Executive Officer and our Chief
Financial Officer have concluded, subject to the limitations
described below, that our disclosure controls and procedures are
effective to ensure that information we are required to disclose in
reports that we file or submit under the Securities Exchange Act of
1934 is recorded, processed, summarized and reported within the
time periods specified in Securities and Exchange Commission rules
and forms, and that such information is accumulated and
communicated to management as appropriate to allow timely decisions
regarding required disclosures.</p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
(b) Changes in internal control over financial reporting</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
There was no change in our internal control over financial
reporting that occurred during the period covered by this report
that has materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting.</p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
(c) Limitations on the effectiveness of controls</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
A control system, no matter how well-conceived and operated, can
provide only reasonable, not absolute, assurance that the
objectives of the controls are met. Because of the inherent
limitations in all control systems, no evaluation of controls can
provide absolute assurance that all control issues, if any, within
a company have been detected. Accordingly, our disclosure controls
and procedures are designed to provide reasonable, not absolute,
assurance that the objectives of our disclosure control system are
met.</p>
<p style="font-size: 1pt; margin-top: 12pt; margin-bottom: 0pt;">
 </p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">
PART II. OTHER INFORMATION</p>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="10%" align="left" valign="top">ITEM 1.</td>
<td align="left" valign="top">LEGAL PROCEEDINGS</td>
</tr>
</table>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 6pt; margin-bottom: 0pt;">
None</p>
<p style="font-size: 18pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="10%" align="left" valign="top">ITEM 1A.</td>
<td align="left" valign="top">RISK FACTORS</td>
</tr>
</table>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 6pt; margin-bottom: 0pt;">
<i>In evaluating our business, you should carefully consider the
following risks in addition to the other information in this
report. Any of the following risks could materially and adversely
affect our business, results of operations, financial condition or
your investment in our securities, and many are beyond our control.
The risks and uncertainties described below are not the only ones
facing us. Additional risks and uncertainties not presently known
to us, or that we currently see as immaterial, may also adversely
affect our business.</i></p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 18pt; margin-bottom: 0pt;">
<b>Risks Related To Our Business</b></p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 6pt; margin-bottom: 0pt; margin-left: 2%;">
<b><i>We have a history of significant losses and may not achieve
or sustain profitability and, as a result, you may lose all or part
of your investment.</i></b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 6pt; margin-bottom: 0pt;">
We have generally incurred operating losses in each year since our
inception in 1997, due to costs incurred in connection with our
research and development activities and general and administrative
costs associated with our operations. Our drug candidates are all
in early through late-stage clinical testing, and we and our
partners must conduct significant additional clinical trials before
we and our partners can seek the regulatory approvals necessary to
begin commercial sales of our drugs. We expect to incur increasing
losses for at least several more years, as we continue our research
activities and conduct development of, and seek regulatory
approvals for, our drug candidates, and commercialize any approved
drugs. If our drug candidates fail or do not gain regulatory
approval, or if our drugs do not achieve market acceptance, we will
not be profitable. If we fail to become and remain profitable, or
if we are unable to fund our continuing losses, you could lose all
or part of your investment.</p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 18pt; margin-bottom: 0pt; margin-left: 2%;">
<b><i>We will need substantial additional capital in the future to
sufficiently fund our operations.</i></b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 6pt; margin-bottom: 0pt;">
We have consumed substantial amounts of capital to date, and our
operating expenditures will increase over the next several years if
we expand our research and development activities. We have funded
all of our operations and capital expenditures with proceeds from
private and public sales of our equity securities, strategic
alliances with Amgen, Astellas and others, long term debt,
equipment financings, interest on investments, government grants
and other grants. We believe that our existing cash and cash
equivalents, short-term investments and interest earned on
investments should be sufficient to meet our projected operating
requirements for at least the next 12 months. We have based this
estimate on assumptions that may prove to be wrong, and we could
utilize our available capital resources sooner than we currently
expect. Because of the numerous risks and uncertainties associated
with the development of our drug candidates and other research and
development activities, including risks and uncertainties that
could impact the rate of progress of our development activities, we
are unable to estimate with certainty the amounts of capital
outlays and operating expenditures associated with these
activities.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
For the foreseeable future, our operations will require significant
additional funding, in large part due to our research and
development expenses and the absence of any revenues from product
sales. For example, we will require significant additional funding
to enable us to conduct further development of tirasemtiv for the
potential treatment of ALS, including any additional Phase 3
clinical trials that may be required by regulatory authorities to
receive marketing approval for tirasemtiv. Until we can generate a
sufficient amount of product revenue, we expect to raise future
capital through strategic alliance and licensing arrangements,
public or private equity offerings and debt financings. We do not
currently have any commitments for future funding other than
reimbursements, milestone and royalty payments that we may receive
under our collaboration agreements with Amgen and Astellas. We may
not receive any further funds under those agreements. Our ability
to raise funds may be adversely impacted by current economic
conditions. As a result of these and other factors, we do not know
whether additional financing will be available when needed, or
that, if available, such financing would be on terms favorable to
our stockholders or us.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
To the extent that we raise additional funds through strategic
alliances or licensing and other arrangements with third parties,
we will likely have to relinquish valuable rights to our
technologies, research programs or drug candidates, or grant
licenses on terms that may not be favorable to us. To the extent
that we raise additional funds by issuing equity securities, our
stockholders will experience additional dilution and our share
price may decline. To the extent that we raise additional funds
through debt financing, the financing may involve covenants that
restrict our business activities. In addition, funding from any of
these sources, if needed, may not be available to us on favorable
terms, or at all, or in accordance with our planned timelines.</p>
<p style="font-size: 1px; margin-top: 12px; margin-bottom: 0px;">
 </p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">
If we cannot raise the funds we need to operate our business, we
will need to delay or discontinue certain research and development
activities. For example, if we cannot raise the funds necessary to
enable the conduct of further development for tirasemtiv for the
potential treatment of ALS, our ability to continue the development
of tirasemtiv will be delayed or suspended. If we delay or
discontinue research and development activities, our stock price
may be negatively affected.</p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt; margin-left: 2%;">
<b><i>Covenants in our loan and security agreement restrict our
business and operations in many ways and if we do not effectively
manage our covenants, our financial conditions and results of
operations could be adversely affected. In addition, our operations
may not provide sufficient revenue to meet the condition required
in order to access the final loan available under the agreement and
may also not provide sufficient cash to meet the repayment
obligations of our debt incurred under the loan and security
agreement.</i></b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 6pt; margin-bottom: 0pt;">
Our loan and security agreement with Oxford Finance LLC and Silicon
Valley Bank provided for up to $40.0 million in term loans due
on October 1, 2020, of which $30.0 million in term loans
has been borrowed. All of our current and future assets, except for
intellectual property, are secured for our borrowings under the
loan and security agreement. The loan and security agreement
requires that we comply with certain covenants applicable to us,
including among other things, covenants restricting dispositions,
changes in business, management, ownership or business locations,
mergers or acquisitions, indebtedness, encumbrances, distributions,
investments, transactions with affiliates and subordinated debt,
any of which could restrict our business and operations,
particularly our ability to respond to changes in our business or
to take specified actions to take advantage of certain business
opportunities that may be presented to us. Our failure to comply
with any of the covenants could result in a default under the loan
and security agreement, which could permit the lenders to declare
all or part of any outstanding borrowings to be immediately due and
payable, or to refuse to permit additional borrowings under the
loan and security agreement. If we are unable to repay those
amounts, the lenders under the loan and security agreement could
proceed against the collateral granted to them to secure that debt,
which would seriously harm our business. In addition, should we be
unable to comply with these covenants or if we default on any
portion of our outstanding borrowings, the lenders can also impose
a 5.0% penalty and restrict access to additional borrowings under
the loan and security agreement. Moreover, our ability to access
the final $10.0 million under the loan and security agreement
was subject to our ability to achieve certain conditions prior to
March 31, 2017, including certain clinical development
milestones or an equity financing milestone, which conditions we
did not meet.</p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 18pt; margin-bottom: 0pt; margin-left: 2%;">
<b><i>We have never generated, and may never generate, revenues
from commercial sales of our drugs and we will not have drugs to
market for at least several years, if ever.</i></b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 6pt; margin-bottom: 0pt;">
We currently have no drugs for sale and we cannot guarantee that we
will ever develop or obtain approval to market any drugs. To
receive marketing approval for any drug candidate, we must
demonstrate that the drug candidate satisfies rigorous standards of
safety and efficacy to the FDA in the United States and other
regulatory authorities abroad. We and our partners will need to
conduct significant additional research and preclinical and
clinical testing before we or our partners can file applications
with the FDA or other regulatory authorities for approval of any of
our drug candidates. In addition, to compete effectively, our drugs
must be easy to use, cost-effective and economical to manufacture
on a commercial scale, compared to other therapies available for
the treatment of the same conditions. We may not achieve any of
these objectives. Currently, our only drug candidates in clinical
development are tirasemtiv for the potential treatment of ALS,
<font style="white-space: nowrap;">CK-2127107</font> for the
potential treatment of SMA, COPD, ALS and potentially other
neuromuscular and <font style="white-space: nowrap;">non-neuromuscular</font> indications
associated with muscle weakness and omecamtiv mecarbil for the
potential treatment of heart failure. We cannot be certain that the
clinical development of these or any future drug candidates will be
successful, that they will receive the regulatory approvals
required to commercialize them, that they will ultimately be
accepted by prescribers or reimbursed by insurers or that any of
our other research programs will yield a drug candidate suitable
for clinical testing or commercialization. Our commercial revenues,
if any, will be derived from sales of drugs that we do not expect
to be commercially marketed for at least several years, if at all.
The development of any one or all of these drug candidates may be
discontinued at any stage of our clinical trials programs and we
may not generate revenue from any of these drug candidates.</p>
<p style="font-size: 1px; margin-top: 18px; margin-bottom: 0px;">
 </p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 2%;">
<b><i>Clinical trials may fail to demonstrate the desired safety
and efficacy of our drug candidates, which could prevent or
significantly delay completion of clinical development and
regulatory approval.</i></b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 6pt; margin-bottom: 0pt;">
Prior to receiving approval to commercialize any of our drug
candidates, we or our partners must adequately demonstrate to the
satisfaction of FDA and foreign regulatory authorities that the
drug candidate is sufficiently safe and effective with substantial
evidence from well-controlled clinical trials. We or our partners
will need to demonstrate efficacy in clinical trials for the
treatment of specific indications and monitor safety throughout the
clinical development process and following approval. None of our
drug candidates have yet met the safety and efficacy standards
required for regulatory approval for commercialization and they may
never do so. In addition, for each of our preclinical compounds, we
or our partners must adequately demonstrate satisfactory chemistry,
formulation, stability and toxicity in order to submit an
investigational new drug application (“IND”) to the
FDA, or an equivalent application in foreign jurisdictions, that
would allow us to advance that compound into clinical trials.
Furthermore, we or our partners may need to submit separate INDs
(or foreign equivalent) to different divisions within the FDA (or
foreign regulatory authorities) in order to pursue clinical trials
in different therapeutic areas. Each new IND (or foreign
equivalent) must be reviewed by the new division before the
clinical trial under its jurisdiction can proceed, entailing all
the risks of delay inherent to regulatory review. If our or our
partners’ current or future preclinical studies or clinical
trials are unsuccessful, our business will be significantly harmed
and our stock price could be negatively affected.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
All of our drug candidates are prone to the risks of failure
inherent in drug development. Preclinical studies may not yield
results that would adequately support the filing of an IND (or a
foreign equivalent) with respect to our potential drug candidates.
Even if the results of preclinical studies for a drug candidate are
sufficient to support such a filing, the results of preclinical
studies do not necessarily predict the results of clinical trials.
As an example, because the physiology of animal species used in
preclinical studies may vary substantially from other animal
species and from humans, it may be difficult to assess with
certainty whether a finding from a study in a particular animal
species will result in similar findings in other animal species or
in humans. For any of our drug candidates, the results from Phase 1
clinical trials in healthy volunteers and clinical results from
Phase 1 and 2 trials in patients are not necessarily indicative of
the results of later and larger clinical trials that are necessary
to establish whether the drug candidate is safe and effective for
the applicable indication. Likewise, interim results from a
clinical trial may not be indicative of the final results from that
trial, and results from early Phase 2 clinical trials may not be
indicative of the results from later clinical trials. For example,
early Phase 2 clinical trials of tirasemtiv in patients with ALS
showed encouraging dose-related trends in measurements of the ALS
Functional Rating Scale in its revised form <font style="white-space: nowrap;">(ALSFRS-R),</font> a clinically validated
instrument designed to measure disease progression and changes in
functional status, for patients receiving tirasemtiv compared to
those receiving placebo. However, <font style="white-space: nowrap;">BENEFIT-ALS,</font> a Phase 2b clinical
trial of tirasemtiv in patients with ALS, did not achieve its
primary efficacy endpoint, the mean change from baseline in the
<font style="white-space: nowrap;">ALSFRS-R</font> for patients
receiving tirasemtiv compared to those receiving placebo.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
In addition, while the clinical trials of our drug candidates are
designed based on the available relevant information, such
information may not accurately predict what actually occurs during
the course of the trial itself, which may have consequences for the
conduct of an ongoing clinical trial or for the eventual results of
that trial. For example, the number of patients planned to be
enrolled in a placebo-controlled clinical trial is determined in
part by estimates relating to expected treatment effect and
variability about the primary endpoint. These estimates are based
upon earlier nonclinical and clinical studies of the drug candidate
itself and clinical trials of other drugs thought to have similar
effects in a similar patient population. If information gained
during the conduct of the trial shows these estimates to be
inaccurate, we may elect to adjust the enrollment accordingly,
which may cause delays in completing the trial, additional expense
or a statistical penalty to apply to the evaluation of the trial
results.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
Furthermore, in view of the uncertainties inherent in drug
development, such clinical trials may not be designed with focus on
indications, patient populations, dosing regimens, endpoints,
safety, efficacy or pharmacokinetic parameters or other variables
that will provide the necessary safety or efficacy data to support
regulatory approval to commercialize the resulting drugs. For
example, we believe that effects on respiratory function, including
slow vital capacity (SVC), may be appropriate as a clinical
endpoint for tirasemtiv; however, regulatory authorities may not
accept these effects as a clinical endpoint to support registration
of tirasemtiv for the treatment of ALS. Clinical trials of our drug
candidates are designed based on guidance or advice from regulatory
agencies, which is subject to change during the development of the
drug candidate at any time. Such a change in a regulatory
agency’s guidance or advice may cause that agency to deem
results from trials to be insufficient to support approval of the
drug candidate and require further clinical trials of that drug
candidate to be conducted. In addition, individual patient
responses to the dose administered of a drug may vary in a manner
that is difficult to predict. Also, the methods we select to assess
particular safety, efficacy or pharmacokinetic parameters may not
yield the same statistical precision in estimating our drug
candidates’ effects as may other methodologies. Even if we
believe the data collected from clinical trials of our drug
candidates are promising, these data may not be sufficient to
support approval by the FDA or foreign regulatory authorities.
<font style="white-space: nowrap;">Non-clinical</font> and clinical
data can be interpreted in different ways. Accordingly, the FDA or
foreign regulatory authorities could interpret these data in
different ways from us or our partners, which could delay, limit or
prevent regulatory approval.</p>
<p style="font-size: 1px; margin-top: 12px; margin-bottom: 0px;">
 </p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">
Administering any of our drug candidates or potential drug
candidates may produce undesirable side effects, also known as
adverse events. Toxicities and adverse events observed in
preclinical studies for some compounds in a particular research and
development program may also occur in preclinical studies or
clinical trials of other compounds from the same program. Potential
toxicity issues may arise from the effects of the active
pharmaceutical ingredient itself or from impurities or degradants
that are present in the active pharmaceutical ingredient or could
form over time in the formulated drug candidate or the active
pharmaceutical ingredient. These toxicities or adverse events could
delay or prevent the filing of an IND (or a foreign equivalent)
with respect to our drug candidates or potential drug candidates or
cause us, our partners or the FDA or foreign regulatory authorities
to modify, suspend or terminate clinical trials with respect to any
drug candidate at any time during the development program. Further,
the administration of two or more drugs contemporaneously can lead
to interactions between them, and our drug candidates may interact
with other drugs that trial subjects are taking. For example,
<font style="white-space: nowrap;">co-administration</font> of
tirasemtiv and riluzole (an approved treatment for ALS)
approximately doubles the average maximum riluzole plasma level. If
the adverse events are severe or frequent enough to outweigh the
potential efficacy of a drug candidate, the FDA or other regulatory
authorities could deny approval of that drug candidate for any or
all targeted indications. Even if one or more of our drug
candidates were approved for sale as drugs, the occurrence of even
a limited number of toxicities or adverse events when used in large
populations may cause the FDA or foreign regulatory authorities to
impose restrictions on, or stop, the further marketing of those
drugs. Indications of potential adverse events or toxicities which
do not seem significant during the course of clinical trials may
later turn out to actually constitute serious adverse events or
toxicities when a drug is used in large populations or for extended
periods of time.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
We have observed certain adverse events in the clinical trials
conducted with our drug candidates. For example, in <font style="white-space: nowrap;">BENEFIT-ALS,</font> adverse events of
dizziness, fatigue, nausea, confusional state, muscle spasms,
somnolence (sleepiness), decreased appetite, headache, insomnia,
dyspnea (difficulty breathing) and dysathria (difficulty speaking)
occurred more frequently during treatment with tirasemtiv than with
placebo. In addition, weight loss was significantly greater in
patients with gastrointestinal adverse events (e.g., nausea and
decreased appetite), which occurred more frequently on tirasemtiv
than on placebo. In clinical trials of omecamtiv mecarbil, adverse
events of chest discomfort, palpitations, dizziness and feeling
hot, increases in heart rate, declines in blood pressure,
electrocardiographic changes consistent with acute myocardial
ischemia and transient rises in the MB fraction of creatine kinase
and cardiac troponins I and T, which are indicative of myocardial
infarction were observed during treatment with omecamtiv
mecarbil.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
In addition, clinical trials of tirasemtiv and omecamtiv mecarbil
enroll patients who typically suffer from serious diseases which
put them at increased risk of death. These patients may die while
receiving our drug candidates. In such circumstances, it may not be
possible to exclude with certainty a causal relationship to our
drug candidate, even though the responsible clinical investigator
may view such an event as not study drug-related.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
Any failure or significant delay in completing preclinical studies
or clinical trials for our drug candidates, or in receiving and
maintaining regulatory approval for the sale of any resulting
drugs, may significantly harm our business and negatively affect
our stock price.</p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt; margin-left: 2%;">
<b><i>The failure of a number of Phase 3 clinical trials evaluating
other compounds as potential treatments for patients with ALS may
suggest an increased risk that our planned Phase 3 clinical
development program of tirasemtiv in patients with ALS will also
fail.</i></b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
The FDA has not approved any drug for the treatment of ALS since
its approval of riluzole in 1995. In recent years, a number of
Phase 3 clinical trials of potential treatments for ALS have failed
to demonstrate the requisite efficacy for approval or for their
continued development. These include Biogen’s trial of
dexpramipexole, known as EMPOWER, the National Institute of
Neurological Disorders and Stroke’s trial of ceftriaxone, and
Trophos SA’s trial of olesoxime. Tirasemtiv, like these
compounds, may fail in Phase 3 clinical development if it does not
show a statistically significant level of clinical efficacy or if
the adverse event profile is too great compared to it benefits.
Further, even if we believe the data collected from our planned
Phase 3 clinical development program of tirasemtiv are promising
and should support approval, the FDA or other regulatory
authorities may not deem these data to be sufficient to support
approval.</p>
<p style="font-size: 1px; margin-top: 12px; margin-bottom: 0px;">
 </p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 2%;">
<b><i>We have never before conducted a Phase 3 clinical trial nor
submitted an application for marketing authorization to regulatory
authorities, and may be unable to do so for tirasemtiv or any other
drug candidates we are developing.</i></b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
We are conducting <font style="white-space: nowrap;">VITALITY-ALS,</font> a Phase 3 clinical
trial, designed to assess the effects of tirasemtiv versus placebo
on slow vital capacity (“SVC”) and other measure of
respiratory function in patients with ALS. Conducting Phase 3
clinical trials and submitting a successful application for
marketing authorization is complex, time consuming and expensive.
We have not previously conducted a Phase 3 clinical trial and have
limited experience in preparing, submitting and prosecuting a
marketing authorization. Consequently, we may be unable to
effectively and efficiently execute and complete the trial in a
manner that leads to the submission to and approval by regulatory
authorities of a marketing application for tirasemtiv. We may
require more time and incur greater costs than our competitors and
may not succeed in obtaining regulatory approvals of products that
we develop. Failure to commence or complete, or delays in, our
planned clinical trials, would prevent us from or delay us in
commercializing tirasemtiv, and other product candidates we are
developing.</p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt; margin-left: 2%;">
<b><i>Neither the FDA nor European regulatory authorities has
accepted the primary endpoint in our Phase 3 clinical trial in
patients with ALS (a statistically significant reduction in the
decline in SVC) as a sufficient measure of clinical significance
alone to support regulatory approval of tirasemtiv for the
treatment of ALS.</i></b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
To commercialize tirasemtiv, we must first demonstrate to the
satisfaction of the FDA or foreign regulatory authorities that
tirasemtiv is sufficiently safe and effective. To date, neither the
FDA nor European regulatory authorities has indicated that the
primary endpoint that we have specified in our Phase 3 clinical
trial in patients with ALS (change from baseline to 24 weeks in
SVC) is, in and of itself, a sufficient measure of clinical
significance to establish the efficacy of tirasemtiv. Our Phase 3
clinical trial will also be measuring secondary endpoints of
respiratory function and patient condition to provide further
evidence of the potential clinical significance of a treatment
effect. However, there is no assurance as to which of these
secondary endpoints (if any) will be affected even if treatment
with tirasemtiv achieves the primary efficacy objective of the
trial. Further, there is no assurance as to whether regulatory
authorities would accept the outcome of the trial as being a
sufficient demonstration of clinical efficacy even if the primary
endpoint and all secondary endpoints are achieved. We will continue
interactions with regulatory authorities regarding the appropriate
assessment(s) of the clinical meaningfulness and potential efficacy
of therapy in the ALS population. If the results of our Phase 3
clinical trial in ALS are not sufficient to persuade regulatory
authorities of the safety and efficacy of tirasemtiv, either
because of a failure to achieve <font style="white-space: nowrap;">pre-specified</font> endpoints or because
the authorities do not accept such endpoints as being sufficient,
then we would be required to conduct successfully one or more
additional Phase 3 clinical trials, prior to receiving marketing
authorization, which would be expensive, time consuming and
uncertain.</p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 18pt; margin-bottom: 0pt; margin-left: 2%;">
<b><i>It is not known whether the FDA or other regulatory
authorities would accept a single Phase 3 clinical trial as being
adequate to support marketing approval of tirasemtiv, even if the
results of such trial are positive.</i></b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
The conventional standard for granting marketing authorization of a
new investigational medicine is the demonstration of safety and
efficacy in two large, well-controlled Phase 3 clinical trials. The
Phase 3 trial of tirasemtiv in ALS that we are currently conducting
will be the first Phase 3 trial of this drug candidate. In the case
of diseases with high unmet medical need, such as ALS, regulatory
authorities may exercise their discretion to approve a new
pharmaceutical on the basis of a single outcomes trial (sometimes
subject to the conduct of subsequent confirmatory trial(s)).
However, this is always within the judgment of the regulatory
authorities and is dependent on their assessment of the degree of
success achieved in the clinical trial as balanced by the potential
risks associated with treatment. In addition, the design of the
Phase 3 clinical trial, <font style="white-space: nowrap;">VITALITY-ALS,</font> may not provide
conclusive data on the most safe and effective dose of tirasemtiv
in patients with ALS that meets the satisfaction of regulatory
authorities, thereby requiring us to conduct another Phase 3 trial.
Even if our first Phase 3 trial of tirasemtiv shows positive
results, and provides all necessary data to determine appropriate
dosing, regulatory authorities may nonetheless require us to
successfully conduct one or more additional Phase 3 clinical trials
prior to receiving marketing authorization, which would be
expensive, time consuming and uncertain.</p>
<p style="font-size: 1px; margin-top: 12px; margin-bottom: 0px;">
 </p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 2%;">
<b><i>Clinical trials are expensive, time-consuming and subject to
delay.</i></b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
Clinical trials are subject to rigorous regulatory requirements and
are very expensive, difficult and time-consuming to design and
implement. The length of time and number of trial sites and
patients required for clinical trials vary substantially based on
the type, complexity, novelty, intended use of the drug candidate
and safety concerns. We estimate that the clinical trials of our
current drug candidates will each continue for several more years.
However, the clinical trials for all or any of our drug candidates
may take significantly longer to complete. The commencement and
completion of our or our partners’ clinical trials could be
delayed or prevented by many factors, including, but not limited
to:</p>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">delays in obtaining, or inability to
obtain, regulatory or other approvals to commence and conduct
clinical trials in the manner we or our partners deem necessary for
the appropriate and timely development of our drug candidates and
commercialization of any resulting drugs;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">delays in identifying and reaching
agreement, or inability to identify and reach agreement, on
acceptable terms, with prospective clinical trial sites and other
entities involved in the conduct of our or our partners’
clinical trials;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">delays or additional costs in
developing, or inability to develop, appropriate formulations of
our drug candidates for clinical trial use, including an
appropriate modified release oral formulation for omecamtiv
mecarbil;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">slower than expected rates of patient
recruitment and enrollment, including as a result of competition
for patients with other clinical trials; limited numbers of
patients that meet the enrollment criteria; patients’,
investigators’ or trial sites’ reluctance to agree to
the requirements of a protocol; or the introduction of alternative
therapies or drugs by others;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">for those drug candidates that are
the subject of a strategic alliance, delays in reaching agreement
with our partner as to appropriate development strategies;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">a regulatory authority may require
changes to a protocol for a clinical trial that then may require
approval from regulatory agencies in other jurisdictions where the
trial is being conducted;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">an institutional review board
(“IRB”) or its foreign equivalent may require changes
to a protocol that then require approval from regulatory agencies
and other IRBs and their foreign equivalents, or regulatory
authorities may require changes to a protocol that then require
approval from the IRBs or their foreign equivalents;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">for clinical trials conducted in
foreign countries, the time and resources required to identify,
interpret and comply with foreign regulatory requirements or
changes in those requirements, and political instability or natural
disasters occurring in those countries;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">lack of effectiveness of our drug
candidates during clinical trials;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">unforeseen safety issues;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">inadequate supply, or delays in the
manufacture or supply, of clinical trial materials;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">uncertain dosing issues;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">failure by us, our partners, or
clinical research organizations, investigators or site personnel
engaged by us or our partners to comply with good clinical
practices and other applicable laws and regulations, including
those concerning informed consent;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">inability or unwillingness of
investigators or their staffs to follow clinical protocols;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">failure by our clinical research
organizations, clinical manufacturing organizations and other third
parties supporting our or our partners’ clinical trials to
fulfill their obligations;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">inability to monitor patients
adequately during or after treatment;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">introduction of new therapies or
changes in standards of practice or regulatory guidance that render
our drug candidates or their clinical trial endpoints obsolete;
and</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">results from <font style="white-space: nowrap;">non-clinical</font> studies that may
adversely impact the timing or further development of our drug
candidates.</td>
</tr>
</table>
<p style="font-size: 1px; margin-top: 12px; margin-bottom: 0px;">
 </p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">
We do not know whether planned clinical trials will begin on time,
or whether planned or currently ongoing clinical trials will need
to be restructured or will be completed on schedule, if at all.
Significant delays in clinical trials will impede our ability to
commercialize our drug candidates and generate revenue and could
significantly increase our development costs.</p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt; margin-left: 2%;">
<b><i>We depend on Amgen for the conduct and funding of the
development and commercialization of omecamtiv
mecarbil.</i></b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
Under our strategic alliance, Amgen holds an exclusive worldwide
license to our drug candidate omecamtiv mecarbil. As a result,
Amgen is responsible for the development and obtaining and
maintaining regulatory approval of omecamtiv mecarbil for the
potential treatment of heart failure worldwide.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
While we announced in September 2016 that Amgen was advancing
omecamtiv mecarbil into Phase 3 clinical development, we do not
control the development activities being conducted or that may be
conducted in the future by Amgen, including, but not limited to,
the timing of initiation, termination or completion of clinical
trials, the analysis of data arising out of those clinical trials
or the timing of release of data concerning those clinical trials,
which may impact our ability to report on Amgen’s results.
Amgen may conduct these activities more slowly or in a different
manner than we would if we controlled the development of omecamtiv
mecarbil. Amgen is responsible for submitting future applications
with the FDA and other regulatory authorities for approval of
omecamtiv mecarbil and will be the owner of marketing approvals
issued by the FDA or other regulatory authorities for omecamtiv
mecarbil, subject to Servier’s exclusive rights for the
commercialization of omecamtiv mecarbil in Europe, as well as the
CIS, including Russia. If the FDA or other regulatory authorities
approve omecamtiv mecarbil, Amgen will also be responsible for the
marketing and sale of the resulting drug, subject to our right to
<font style="white-space: nowrap;">co-promote</font> omecamtiv
mecarbil in North America if we exercise our option to <font style="white-space: nowrap;">co-fund</font> Phase 3 development costs of
omecamtiv mecarbil under the collaboration and subject to
Servier’s exclusive rights for the commercialization of
omecamtiv mecarbil in Europe, as well as the CIS, including Russia.
However, we cannot control whether Amgen will devote sufficient
attention and resources to the development of omecamtiv mecarbil or
will proceed in an expeditious manner, even with our exercise of
our option and <font style="white-space: nowrap;">co-funding</font>
of the Phase 3 development program of omecamtiv mecarbil. Even if
the FDA or other regulatory agencies approve omecamtiv mecarbil,
Amgen or Servier may elect not to proceed with the
commercialization of the resulting drug in one or more
countries.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
Disputes may arise between us and Amgen, which may delay or cause
the termination of any omecamtiv mecarbil clinical trials, result
in significant litigation or cause Amgen to act in a manner that is
not in our best interest. The costs associated with the continuing
development of omecamtiv mecarbil may cause Amgen to reconsider the
terms of its investment and seek to amend or terminate our
collaboration agreement or to suspend the development of omecamtiv
mecarbil. If development of omecamtiv mecarbil does not progress
for these or any other reasons, we would not receive further
milestone payments or royalties on product sales from Amgen with
respect to omecamtiv mecarbil. If the results of one or more
clinical trials with omecamtiv mecarbil do not meet Amgen’s
expectations at any time, Amgen may elect to terminate further
development of omecamtiv mecarbil or certain of the potential
clinical trials for omecamtiv mecarbil, even if the actual number
of patients treated at that time is relatively small. In addition,
Amgen generally has discretion to elect whether to pursue or
abandon the development of omecamtiv mecarbil and may terminate our
strategic alliance for any reason upon six months prior notice.
With our consent, Amgen granted Servier an option to commercialize
omecamtiv mecarbil in Europe and the CIS, including Russia, which
Servier decided to exercise. In August 2016, we entered into a
letter agreement with Amgen and Servier, which provides that if
Amgen’s rights to omecamtiv mecarbil are terminated with
respect to the territory subject to Servier’s sublicense, the
sublicensed rights previously granted by Amgen to Servier with
respect to omecamtiv mecarbil, will remain in effect and become a
direct license or sublicense of such rights by us to Servier, on
substantially the same terms as those in the Option, License and
Collaboration Agreement between Amgen and Servier. If Amgen
abandons omecamtiv mecarbil, it would result in a delay in or could
prevent us from commercializing omecamtiv mecarbil, and would delay
and could prevent us from obtaining revenues for this drug
candidate. In addition, we would be required to provide Servier
with a direct license or sublicense and the rights to commercialize
omecamtiv mecarbil in Europe and the CIS, including Russia on terms
that were not negotiated by us. There can be no assurance that we
would be able to negotiate and enter into a definitive agreement
with Servier on terms favorable or acceptable to us, or at all.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
If Amgen abandons development of omecamtiv mecarbil prior to
regulatory approval or if it elects not to proceed with
commercialization of the resulting drug following regulatory
approval, we would have to seek a new partner for development or
commercialization, curtail or abandon that development or
commercialization, or undertake and fund the development of
omecamtiv mecarbil or commercialization of the resulting drug
ourselves. If we seek a new partner but are unable to do so on
acceptable terms, or at all, or do not have sufficient funds to
conduct the development or commercialization of omecamtiv mecarbil
ourselves, we would have to curtail or abandon that development or
commercialization, which could harm our business.</p>
<p style="font-size: 1px; margin-top: 12px; margin-bottom: 0px;">
 </p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 2%;">
<b><i>We depend on Astellas for the conduct and funding of the
development and commercialization of <font style="white-space: nowrap;">CK-2127107.</font></i></b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
In December 2014, we expanded our strategic alliance with Astellas
focused on the research, development and commercialization of
skeletal muscle activators, other than tirasemtiv and certain
related compounds. The primary objective of the strategic alliance
is to advance novel therapies for indications associated with
muscle weakness.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
Under this strategic alliance, we have granted Astellas an
exclusive license to <font style="white-space: nowrap;">co-develop</font> and commercialize
<font style="white-space: nowrap;">CK-2127107</font> for potential
application in spinal muscular atrophy (SMA) and potentially other
indications worldwide. We have initiated a Phase 2 clinical trial
of patients with SMA and in June 2016, Astellas, in collaboration
with us, initiated a Phase 2 clinical trial of <font style="white-space: nowrap;">CK-2127107</font> in patients with COPD.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
In September 2016, we expanded our collaboration with Astellas and
granted Astellas an option to enter into a <font style="white-space: nowrap;">pre-negotiated</font> agreement for a global
collaboration for the development and commercialization of
tirasemtiv, including worldwide commercialization rights for
Astellas outside our commercialization territory in North America,
Europe and other select countries. In addition, under this 2016
expansion, we will collaborate with Astellas to develop
<font style="white-space: nowrap;">CK-2127107</font> in ALS.
Astellas will be primarily responsible for the development of
<font style="white-space: nowrap;">CK-2127107</font> in ALS, and
the Company will conduct the Phase 2 clinical trial of <font style="white-space: nowrap;">CK-2127107</font> in ALS.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
We do not control the development activities that may be conducted
by Astellas, including, but not limited to, the timing of
initiation, termination or completion of clinical trials, the
analysis of data arising out of those clinical trials or the timing
of release of data concerning those clinical trials, which may
impact our ability to report on Astellas’ results. Astellas
may conduct these activities more slowly or in a different manner
than we would. In general, Astellas is responsible for submitting
future applications with the FDA or other regulatory authorities
for approval of <font style="white-space: nowrap;">CK-2127107</font> and will be the owner of
any marketing approvals issued by the FDA or other regulatory
authorities for <font style="white-space: nowrap;">CK-2127107.</font> If the FDA or other
regulatory authorities approve <font style="white-space: nowrap;">CK-2127107,</font> Astellas will also be
responsible for the marketing and sale of the resulting drug,
subject to our right to <font style="white-space: nowrap;">co-promote</font> the drug in the United
States, Canada and, for neuromuscular indications, Europe. However,
we cannot control whether Astellas will devote sufficient attention
and resources to the development of <font style="white-space: nowrap;">CK-2127107</font> or will proceed in an
expeditious manner. Even if the FDA or other regulatory agencies
approve <font style="white-space: nowrap;">CK-2127107,</font>
Astellas may elect not to proceed with the commercialization of the
resulting drug in one or more countries.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
If the results of one or more clinical trials with <font style="white-space: nowrap;">CK-2127107</font> do not meet
Astellas’ expectations at any time, Astellas may elect to
terminate further development of <font style="white-space: nowrap;">CK-2127107</font> or certain of the
potential clinical trials for <font style="white-space: nowrap;">CK-2127107,</font> even if the actual number
of patients treated at that time is relatively small. In addition,
Astellas generally has discretion to elect whether to pursue or
abandon the development of <font style="white-space: nowrap;">CK-2127107.</font> Astellas may terminate
our strategic alliance in whole or in part for any reason upon six
months prior notice at any time following expiration of the
strategic alliance’s research term, which will expire
December 31, 2017. If Astellas abandons <font style="white-space: nowrap;">CK-2127107,</font> it would result in a
delay in or could prevent us from further developing or
commercializing <font style="white-space: nowrap;">CK-2127107,</font> and would delay and could
prevent us from obtaining revenues for this drug candidate.
Disputes may arise between us and Astellas, which may delay or
cause the termination of any <font style="white-space: nowrap;">CK-2127107</font> clinical trials, result in
significant litigation or cause Astellas to act in a manner that is
not in our best interest. If development of <font style="white-space: nowrap;">CK-2127107</font> does not progress for
these or any other reasons, we would not receive further milestone
payments or royalties on product sales from Astellas with respect
to <font style="white-space: nowrap;">CK-2127107.</font> If
Astellas abandons development of <font style="white-space: nowrap;">CK-2127107</font> prior to regulatory
approval or if it elects not to proceed with commercialization of
the resulting drug following regulatory approval, we would have to
seek a new partner for development or commercialization, curtail or
abandon that development or commercialization, or undertake and
fund the development of <font style="white-space: nowrap;">CK-2127107</font> or commercialization of
the resulting drug ourselves. If we seek a new partner but are
unable to do so on acceptable terms, or at all, or do not have
sufficient funds to conduct the development or commercialization of
<font style="white-space: nowrap;">CK-2127107</font> ourselves, we
would have to curtail or abandon that development or
commercialization, which could harm our business.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
<b><i>The successful development of <font style="white-space: nowrap;">CK-2127107</font> in ALS under our expanded
collaboration with Astellas could reduce the commercial potential
of tirasemtiv, and our share of the costs of developing
<font style="white-space: nowrap;">CK-2127107</font> in ALS could
limit our ability to pay for other programs, including
tirasemtiv.</i></b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
Tirasemtiv is the lead drug candidate from our skeletal muscle
contractility program. We have conducted a Phase 2b clinical trial
for tirasemtiv, and started a Phase 3 clinical development program
for tirasemtiv in patients with ALS in July 2015. In collaboration
with Astellas, we are also developing <font style="white-space: nowrap;">CK-2127107</font> for potential indications
associated with muscle weakness and in 2016 we expanded our
collaboration with Astellas to develop <font style="white-space: nowrap;">CK-2127107</font> in ALS. We expect that we
will commence a Phase 2 clinical development program of
<font style="white-space: nowrap;">CK-2127107</font> with Astellas
in ALS in 2017.</p>
<p style="font-size: 1px; margin-top: 12px; margin-bottom: 0px;">
 </p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">
Since we will be developing both tirasemtiv and <font style="white-space: nowrap;">CK-2127107</font> for ALS, if both drugs are
successfully developed and commercialized, they would potentially
compete with one another in the same indication. If approved for
commercial sale, the commercial launch of <font style="white-space: nowrap;">CK-2127107</font> following the commercial
launch of tirasemtiv could negatively affect the sales of
tirasemtiv. Successful development of <font style="white-space: nowrap;">CK-2127107</font> in ALS, or <font style="white-space: nowrap;">CK-2127107</font> data that Astellas views
as positive, may reduce the likelihood that Astellas will exercise
its option to develop and commercialize tirasemtiv, in which case
we would not receive any of the payments from Astellas associated
with the option exercise, and our ability to commercially launch
tirasemtiv in markets outside of North America and Europe may be
diminished.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 10pt; margin-bottom: 0pt;">
In addition, Astellas and Cytokinetics will share equally the costs
of developing <font style="white-space: nowrap;">CK-2127107</font>
in ALS for potential registration and marketing authorization in
the U.S. and Europe, provided that (i) Astellas has agreed to
solely fund Phase 2 development costs of <font style="white-space: nowrap;">CK-2127107</font> in ALS subject to a right
to recoup our share of such costs plus a 100% premium by reducing
future milestone and royalty payments to the Company and
(ii) we may defer (but not eliminate) a portion of our
<font style="white-space: nowrap;">co-funding</font> obligation for
development activities after Phase 2 for up to 18 months, subject
to certain conditions. We will, however, be required to fund one
half the cost of any Phase 3 development of <font style="white-space: nowrap;">CK-2127107</font> in ALS with limited
ability to defer or offset such costs. Our <font style="white-space: nowrap;">one-half</font> share of the costs of any
Phase 3 clinical trial of <font style="white-space: nowrap;">CK-2127107</font> in ALS could be
significant, and could negatively impact our ability to finance
other programs, including potentially limiting our ability to pay
for the development and/or commercial launch of tirasemtiv.</p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 10pt; margin-bottom: 0pt; margin-left: 2%;">
<b><i>If we do not enter into strategic alliances for our
unpartnered drug candidates or research and development programs or
fail to successfully maintain our current or future strategic
alliances, we may have to reduce, delay or discontinue our
advancement of our drug candidates and programs or expand our
research and development capabilities and increase our
expenditures.</i></b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 10pt; margin-bottom: 0pt;">
Drug development is complicated and expensive. We currently have
limited financial and operational resources to carry out drug
development. Our strategy for developing, manufacturing and
commercializing our drug candidates currently requires us to enter
into and successfully maintain strategic alliances with
pharmaceutical companies or other industry participants to advance
our programs and reduce our expenditures on each program.
Accordingly, the success of our development activities depends in
large part on our current and future strategic partners’
performance, over which we have little or no control.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 10pt; margin-bottom: 0pt;">
Our ability to commercialize drugs that we develop with our
partners and that generate royalties from product sales depends on
our partners’ abilities to assist us in establishing the
safety and efficacy of our drug candidates, obtaining and
maintaining regulatory approvals and achieving market acceptance of
the drugs once commercialized. Our partners may elect to delay or
terminate development of one or more drug candidates, independently
develop drugs that could compete with ours or fail to commit
sufficient resources to the marketing and distribution of drugs
developed through their strategic alliances with us. Our partners
may not proceed with the development and commercialization of our
drug candidates with the same degree of urgency as we would because
of other priorities they face. In addition, new business
combinations or changes in a partner’s business strategy may
adversely affect its willingness or ability to carry out its
obligations under a strategic alliance.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 10pt; margin-bottom: 0pt;">
If we are not able to successfully maintain our existing strategic
alliances or establish and successfully maintain additional
strategic alliances, we will have to limit the size or scope of, or
delay or discontinue, one or more of our drug development programs
or research programs, or undertake and fund these programs
ourselves. Alternatively, if we elect to continue to conduct any of
these drug development programs or research programs on our own, we
will need to expand our capability to conduct clinical development
by bringing additional skills, technical expertise and resources
into our organization. This would require significant additional
funding, which may not be available to us on acceptable terms, or
at all.</p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 10pt; margin-bottom: 0pt; margin-left: 2%;">
<b><i>To the extent we elect to fund the development of a drug
candidate, such as tirasemtiv, <font style="white-space: nowrap;">CK-2127107,</font> or omecamtiv mecarbil, or
the commercialization of a drug at our expense, we will need
substantial additional funding.</i></b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 10pt; margin-bottom: 0pt;">
The discovery, development and commercialization of new drugs is
costly. As a result, to the extent we elect to fund the development
of a drug candidate, such as tirasemtiv, <font style="white-space: nowrap;">CK-2127107</font> or omecamtiv mecarbil, or
the commercialization of a drug, we will need to raise additional
capital to:</p>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">fund clinical trials and seek
regulatory approvals;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">expand our development
capabilities;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">engage third party manufacturers for
such drug candidate or drug;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">build or access commercialization
capabilities;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">implement additional internal systems
and infrastructure;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">maintain, defend and expand the scope
of our intellectual property; and</td>
</tr>
</table>
<p style="font-size: 1px; margin-top: 6px; margin-bottom: 0px;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">hire and support additional
management and scientific personnel.</td>
</tr>
</table>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
Our future funding requirements will depend on many factors,
including, but not limited to:</p>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">the rate of progress and costs of our
or our partners’ clinical trials and other research and
development activities;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">the costs and timing of seeking and
obtaining regulatory approvals;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">the costs associated with
establishing manufacturing and commercialization capabilities;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">the costs of filing, prosecuting,
defending and enforcing any patent claims and other intellectual
property rights;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">the costs of acquiring or investing
in businesses, products and technologies;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">the effect of competing technological
and market developments; and</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">the status of, payment and other
terms, and timing of any strategic alliance, licensing or other
arrangements that we have entered into or may establish.</td>
</tr>
</table>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
Until we can generate a sufficient amount of product revenue to
finance our cash requirements, which we may never do, we expect to
continue to finance our future cash needs primarily through
strategic alliances, public or private equity offerings and debt
financings. We cannot be certain that additional funding will be
available on acceptable terms, or at all. If we are not able to
secure additional funding when needed, we may have to delay, reduce
the scope of or eliminate one or more of our clinical trials or
research and development programs or future commercialization
initiatives.</p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt; margin-left: 2%;">
<b><i>We depend on contract research organizations
(“CROs”) to conduct our clinical trials and have
limited control over their performance. If these CROs do not
successfully carry out their contractual duties or meet expected
deadlines, or if we lose any of our CROs, we may not be able to
obtain regulatory approval for or commercialize our product
candidates on a timely basis, if at all.</i></b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
We have used and intend to continue to use a limited number of CROs
within and outside of the United States to conduct clinical trials
of our drug candidates, such as tirasemtiv, <font style="white-space: nowrap;">CK-2127107</font> and omecamtiv mecarbil,
and related activities. We do not have control over many aspects of
our CROs’ activities, and cannot fully control the amount,
timing or quality of resources that they devote to our programs.
CROs may not assign as high a priority to our programs or pursue
them as diligently as we would if we were undertaking these
programs ourselves. The activities conducted by our CROs therefore
may not be completed on schedule or in a satisfactory manner. CROs
may also give higher priority to relationships with our competitors
and potential competitors than to their relationships with us.
Outside of the United States, we are particularly dependent on our
CROs’ expertise in communicating with clinical trial sites
and regulatory authorities and ensuring that our clinical trials
and related activities and regulatory filings comply with
applicable laws.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
Our CROs’ failure to carry out development activities on our
behalf as agreed and in accordance with our and the FDA’s or
other regulatory agencies’ requirements and applicable U.S.
and foreign laws, or our failure to properly coordinate and manage
these activities, could increase the cost of our operations and
delay or prevent the development, approval and commercialization of
our drug candidates. For example, in June 2013, we learned from our
data management vendor for <font style="white-space: nowrap;">BENEFIT-ALS</font> that a programming error
in the electronic data capture system controlling study drug
assignment caused 58 patients initially randomized to and treated
with tirasemtiv to receive placebo instead at a certain trial visit
and for the remainder of the trial. In order to maintain the
originally intended statistical power of the trial, we amended the
protocol to permit enrollment of approximately 680 patients, or 180
patients in addition to the 500 patients allowed under the existing
protocol. This protocol amendment resulted in additional costs and
delays in conducting <font style="white-space: nowrap;">BENEFIT-ALS.</font> Further, for the quarter
ended September 30, 2016, we determined that there was an
error in the accounting for the recognition of clinical research
and development expenses related to the information received from
one of our CROs, which resulted in a restatement of our clinical
research and development expenses, related clinical accrual
accounts and related financial disclosures as of and for the three
and nine month periods ended September 30, 2016. In addition,
if a CRO fails to perform as agreed, our ability to collect damages
may be contractually limited. If we fail to effectively manage the
CROs carrying out the development of our drug candidates or if our
CROs fail to perform as agreed, the commercialization of our drug
candidates will be delayed or prevented. In many cases, our CROs
have the right to terminate their agreements with us in the event
of an uncured material breach. Identifying, qualifying and managing
performance of third-party service providers can be difficult, time
consuming and cause delays in our development programs. In
addition, there is a natural transition period when a new CRO
commences work and the new CRO may not provide the same type or
level of services as the original provider. If any of our
relationships with our third-party CROs terminate, we may not be
able to enter into arrangements with alternative CROs or to do so
timely or on commercially reasonable terms.</p>
<p style="font-size: 1px; margin-top: 12px; margin-bottom: 0px;">
 </p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 2%;">
<b><i>We have no manufacturing capacity and depend on our strategic
partners and contract manufacturers to produce our clinical trial
materials, including our drug candidates, and anticipate continued
reliance on contract manufacturers for the development and
commercialization of our potential drugs.</i></b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
We do not currently operate manufacturing facilities for clinical
or commercial production of our drug candidates. We have limited
experience in drug formulation and manufacturing, and we lack the
resources and the capabilities to manufacture any of our drug
candidates on a clinical or commercial scale. Amgen has assumed
responsibility to conduct these activities for the ongoing
development of omecamtiv mecarbil worldwide. Following our conduct
of the early development of <font style="white-space: nowrap;">CK-2127107,</font> including the ongoing
Phase 2 clinical trial in patients with SMA, Astellas will assume
primary responsibility to conduct the manufacturing for the ongoing
development of <font style="white-space: nowrap;">CK-2127107</font>
worldwide. For tirasemtiv, we rely on a limited number of contract
manufacturers. In particular, we rely on single-source contract
manufacturers for the active pharmaceutical ingredient and the drug
product supply for our clinical trials, as well as other materials
required to conduct our clinical trials. We expect to rely on
contract manufacturers to supply all future drug candidates for
which we conduct development, as well as other materials required
to conduct our clinical trials. If any of our existing or future
contract manufacturers fail to perform satisfactorily, it could
delay development or regulatory approval of our drug candidates or
commercialization of our drugs, producing additional losses and
depriving us of potential product revenues. In addition, if a
contract manufacturer fails to perform as agreed, our ability to
collect damages may be contractually limited.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
Our drug candidates require precise high-quality manufacturing. The
failure to achieve and maintain high manufacturing standards,
including failure to detect or control anticipated or unanticipated
manufacturing errors or the frequent occurrence of such errors,
could result in patient injury or death, discontinuance or delay of
ongoing or planned clinical trials, delays or failures in product
testing or delivery, cost overruns, product recalls or withdrawals
and other problems that could seriously hurt our business. Contract
drug manufacturers often encounter difficulties involving
production yields, quality control and quality assurance and
shortages of qualified personnel. These manufacturers are subject
to stringent regulatory requirements, including the FDA’s
current good manufacturing practices regulations and similar
foreign laws and standards. Each contract manufacturer must pass a
<font style="white-space: nowrap;">pre-approval</font> inspection
before we can obtain marketing approval for any of our drug
candidates and following approval will be subject to ongoing
periodic unannounced inspections by the FDA, the U.S. Drug
Enforcement Agency and other regulatory agencies, to ensure strict
compliance with current good manufacturing practices and other
applicable government regulations and corresponding foreign laws
and standards. We seek to ensure that our contract manufacturers
comply fully with all applicable regulations, laws and standards.
However, we do not have control over our contract
manufacturers’ compliance with these regulations, laws and
standards. If one of our contract manufacturers fails to pass its
<font style="white-space: nowrap;">pre-approval</font> inspection
or maintain ongoing compliance at any time, the production of our
drug candidates could be interrupted, resulting in delays or
discontinuance of our clinical trials, additional costs and
potentially lost revenues. In addition, failure of any third party
manufacturers or us to comply with applicable regulations,
including <font style="white-space: nowrap;">pre-</font> or
post-approval inspections and the current good manufacturing
practice requirements of the FDA or other comparable regulatory
agencies, could result in sanctions being imposed on us. These
sanctions could include fines, injunctions, civil penalties,
failure of regulatory authorities to grant marketing approval of
our products, delay, suspension or withdrawal of approvals, license
revocation, product seizures or recalls, operational restrictions
and criminal prosecutions, any of which could significantly and
adversely affect our business.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
In addition, our existing and future contract manufacturers may not
perform as agreed or may not remain in the contract manufacturing
business for the time required to successfully produce, store and
distribute our drug candidates. If a natural disaster, business
failure, strike or other difficulty occurs, we may be unable to
replace these contract manufacturers in a timely or cost-effective
manner and the production of our drug candidates would be
interrupted, resulting in delays and additional costs.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
Switching manufacturers or manufacturing sites would be difficult
and time-consuming because the number of potential manufacturers is
limited. In addition, before a drug from any replacement
manufacturer or manufacturing site can be commercialized, the FDA
and, in some cases, foreign regulatory agencies, must approve that
site. These approvals would require regulatory testing and
compliance inspections. A new manufacturer or manufacturing site
also would have to be educated in, or develop substantially
equivalent processes for, production of our drugs and drug
candidates. It may be difficult or impossible to transfer certain
elements of a manufacturing process to a new manufacturer or for us
to find a replacement manufacturer on acceptable terms quickly, or
at all, either of which would delay or prevent our ability to
develop drug candidates and commercialize any resulting drugs.</p>
<p style="font-size: 1px; margin-top: 12px; margin-bottom: 0px;">
 </p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 2%;">
<b><i>We may not be able to successfully manufacture our drug
candidates in sufficient quality and quantity, which would delay or
prevent us from developing our drug candidates and commercializing
resulting approved drugs, if any.</i></b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
To date, our drug candidates have been manufactured in quantities
adequate for preclinical studies and early through late-stage
clinical trials. In order to conduct large scale clinical trials
for a drug candidate and for commercialization of the resulting
drug if that drug candidate is approved for sale, we will need to
manufacture some drug candidates in larger quantities. We may not
be able to successfully repeat or increase the manufacturing
capacity for any of our drug candidates, whether in collaboration
with third-party manufacturers or on our own, in a timely or
cost-effective manner or at all. If a contract manufacturer makes
improvements in the manufacturing process for our drug candidates,
we may not own, or may have to share, the intellectual property
rights to those improvements. Significant changes or <font style="white-space: nowrap;">scale-up</font> of manufacturing may require
additional validation studies, which are costly and which
regulatory authorities must review and approve. In addition,
quality issues may arise during those changes or <font style="white-space: nowrap;">scale-up</font> activities because of the
inherent properties of a drug candidate itself or of a drug
candidate in combination with other components added during the
manufacturing and packaging process, or during shipping and storage
of the finished product or active pharmaceutical ingredients. If we
are unable to successfully manufacture of any of our drug
candidates in sufficient quality and quantity, the development of
that drug candidate and regulatory approval or commercial launch
for any resulting drugs may be delayed or there may be a shortage
in supply, which could significantly harm our business. In
addition, data demonstrating the stability of both drug substance
and drug product, using the commercial manufacturing process and at
commercial scale, are required for marketing applications. Failure
to produce drug substance and drug products in a timely manner and
obtain stability data could result in delay of submission of
marketing applications.</p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt; margin-left: 2%;">
<b><i>The mechanisms of action of our drug candidates are unproven,
and we do not know whether we will be able to develop any drug of
commercial value.</i></b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
We have discovered and are currently developing drug candidates
that have what we believe are novel mechanisms of action directed
against cytoskeletal targets, and intend to continue to do so.
Because no currently approved drugs appear to operate via the same
biochemical mechanisms as our compounds, we cannot be certain that
our drug candidates will result in commercially viable drugs that
safely and effectively treat the indications for which we intend to
develop them. The results we have seen for our compounds in
preclinical models may not translate into similar results in
humans, and results of early clinical trials in humans may not be
predictive of the results of larger clinical trials that may later
be conducted with our drug candidates. Even if we are successful in
developing and receiving regulatory approval for a drug candidate
for the treatment of a particular disease, we cannot be certain
that it will be accepted by prescribers or be reimbursed by
insurers or that we will also be able to develop and receive
regulatory approval for that or other drug candidates for the
treatment of other diseases. If we or our partners are unable to
successfully develop and commercialize our drug candidates, our
business will be materially harmed.</p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt; margin-left: 2%;">
<b><i>Our success depends substantially upon our ability to obtain
and maintain intellectual property protection relating to our drug
candidates, compounds and research technologies.</i></b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
We own, or hold exclusive licenses to, a number of U.S. and foreign
patents and patent applications directed to our drug candidates,
compounds and research technologies. Our success depends on our
ability to obtain patent protection both in the United States and
in other countries for our drug candidates, their methods of
manufacture and use, and our technologies. Our ability to protect
our drug candidates, compounds and technologies from unauthorized
or infringing use by third parties depends substantially on our
ability to obtain and enforce our patents. If our issued patents
and patent applications, if granted, do not adequately describe,
enable or otherwise provide coverage of our technologies and drug
candidates, including tirasemtiv, <font style="white-space: nowrap;">CK-2127107</font> and omecamtiv mecarbil, we
or our licensees would not be able to exclude others from
developing or commercializing these drug candidates. Furthermore,
the degree of future protection of our proprietary rights is
uncertain because legal means may not adequately protect our rights
or permit us to gain or keep our competitive advantage.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
Due to evolving legal standards relating to the patentability,
validity and enforceability of patents covering pharmaceutical
inventions and the claim scope of these patents, our ability to
enforce our existing patents and to obtain and enforce patents that
may issue from any pending or future patent applications is
uncertain and involves complex legal, scientific and factual
questions. The standards which the U.S. Patent and Trademark Office
and its foreign counterparts use to grant patents are not always
applied predictably or uniformly and are subject to change. To
date, no consistent policy has emerged regarding the breadth of
claims allowed in biotechnology and pharmaceutical patents. Thus,
we cannot be sure that any patents will issue from any pending or
future patent applications owned by or licensed to us. Even if
patents do issue, we cannot be sure that the claims of these
patents will be held valid or enforceable by a court of law, will
provide us with any significant protection against competitive
products, or will afford us a commercial advantage over competitive
products. In particular:</p>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">we or our licensors might not have
been the first to make the inventions covered by each of our
pending patent applications and issued patents;</td>
</tr>
</table>
<p style="font-size: 1px; margin-top: 6px; margin-bottom: 0px;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">we or our licensors might not have
been the first to file patent applications for the inventions
covered by our pending patent applications and issued patents;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">others may independently develop
similar or alternative technologies or duplicate any of our
technologies without infringing our intellectual property
rights;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">some or all of our or our
licensors’ pending patent applications may not result in
issued patents or the claims that issue may be narrow in scope and
not provide us with competitive advantages;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">our and our licensors’ issued
patents may not provide a basis for commercially viable drugs or
therapies or may be challenged and invalidated by third
parties;</td>
</tr>
</table>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">our or our licensors’ patent
applications or patents may be subject to interference, opposition
or similar administrative proceedings that may result in a
reduction in their scope or their loss altogether;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">we may not develop additional
proprietary technologies or drug candidates that are patentable;
or</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">the patents of others may prevent us
or our partners from discovering, developing or commercializing our
drug candidates.</td>
</tr>
</table>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
Patent protection is afforded on a <font style="white-space: nowrap;"><font style="white-space: nowrap;">country-by-country</font></font> basis. Some
foreign jurisdictions do not protect intellectual property rights
to the same extent as in the United States. Many companies have
encountered significant difficulties in protecting and defending
intellectual property rights in foreign jurisdictions. Some of our
development efforts are performed in countries outside of the
United States through third party contractors. We may not be able
to effectively monitor and assess intellectual property developed
by these contractors. We therefore may not be able to effectively
protect this intellectual property and could lose potentially
valuable intellectual property rights. In addition, the legal
protection afforded to inventors and owners of intellectual
property in countries outside of the United States may not be as
protective of intellectual property rights as in the United States.
Therefore, we may be unable to acquire and protect intellectual
property developed by these contractors to the same extent as if
these development activities were being conducted in the United
States. If we encounter difficulties in protecting our intellectual
property rights in foreign jurisdictions, our business prospects
could be substantially harmed.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
We rely on intellectual property assignment agreements with our
corporate partners, employees, consultants, scientific advisors and
other collaborators to grant us ownership of new intellectual
property that is developed. These agreements may not result in the
effective assignment to us of that intellectual property. As a
result, our ownership of key intellectual property could be
compromised.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
Changes in either the patent laws or their interpretation in the
United States or other countries may diminish the value of our
intellectual property or our ability to obtain patents. For
example, the America Invents Act of 2011 may affect the scope,
strength and enforceability of our patent rights in the United
States or the nature of proceedings which may be brought by us
related to our patent rights in the United States.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
If one or more products resulting from our drug candidates is
approved for sale by the FDA and we do not have adequate
intellectual property protection for those products, competitors
could duplicate them for approval and sale in the United States
without repeating the extensive testing required of us or our
partners to obtain FDA approval. Regardless of any patent
protection, under current law, an application for a generic version
of a new chemical entity cannot be approved until at least five
years after the FDA has approved the original product. When that
period expires, or if that period is altered, the FDA could approve
a generic version of our product regardless of our patent
protection. An applicant for a generic version of our product may
only be required to conduct a relatively inexpensive study to show
that its product is bioequivalent to our product, and may not have
to repeat the lengthy and expensive clinical trials that we or our
partners conducted to demonstrate that the product is safe and
effective. In the absence of adequate patent protection for our
products in other countries, competitors may similarly be able to
obtain regulatory approval in those countries of generic versions
of our products.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
We also rely on trade secrets to protect our technology,
particularly where we believe patent protection is not appropriate
or obtainable. However, trade secrets are often difficult to
protect, especially outside of the United States. While we endeavor
to use reasonable efforts to protect our trade secrets, our or our
partners’ employees, consultants, contractors or scientific
and other advisors may unintentionally or willfully disclose our
information to competitors. In addition, confidentiality
agreements, if any, executed by those individuals may not be
enforceable or provide meaningful protection for our trade secrets
or other proprietary information in the event of unauthorized use
or disclosure. Pursuing a claim that a third party had illegally
obtained and was using our trade secrets would be expensive and
time-consuming, and the outcome would be unpredictable. Even if we
are able to maintain our trade secrets as confidential, if our
competitors independently develop information equivalent or similar
to our trade secrets, our business could be harmed.</p>
<p style="font-size: 1px; margin-top: 12px; margin-bottom: 0px;">
 </p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">
If we are not able to defend the patent or trade secret protection
position of our technologies and drug candidates, then we will not
be able to exclude competitors from developing or marketing
competing drugs, and we may not generate enough revenue from
product sales to justify the cost of development of our drugs or to
achieve or maintain profitability.</p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt; margin-left: 2%;">
<b><i>If we are sued for infringing third party intellectual
property rights, it will be costly and time-consuming, and an
unfavorable outcome could have a significant adverse effect on our
business.</i></b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
Our ability to commercialize drugs depends on our ability to use,
manufacture and sell those drugs without infringing the patents or
other proprietary rights of third parties. Numerous U.S. and
foreign issued patents and pending patent applications owned by
third parties exist in the therapeutic areas in which we are
developing drug candidates and seeking new potential drug
candidates. In addition, because patent applications can take
several years to issue, there may be currently pending
applications, unknown to us, which could later result in issued
patents that our activities with our drug candidates could
infringe. There may also be existing patents, unknown to us, that
our activities with our drug candidates could infringe.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
Other future products of ours may be impacted by patents of
companies engaged in competitive programs with significantly
greater resources. Further development of these products could be
impacted by these patents and result in significant legal fees.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
If a third party claims that our actions infringe its patents or
other proprietary rights, we could face a number of issues that
could seriously harm our competitive position, including, but not
limited to:</p>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">infringement and other intellectual
property claims that, even if meritless, can be costly and
time-consuming to litigate, delay the regulatory approval process
and divert management’s attention from our core business
operations;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">substantial damages for past
infringement which we may have to pay if a court determines that
our drugs or technologies infringe a third party’s patent or
other proprietary rights;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">a court prohibiting us from selling
or licensing our drugs or technologies unless the holder licenses
the patent or other proprietary rights to us, which it is not
required to do; and</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">if a license is available from a
holder, we may have to pay substantial royalties or grant
cross-licenses to our patents or other proprietary rights.</td>
</tr>
</table>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
If any of these events occur, it could significantly harm our
business and negatively affect our stock price.</p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt; margin-left: 2%;">
<b><i>We may undertake infringement or other legal proceedings
against third parties, causing us to spend substantial resources on
litigation and exposing our own intellectual property portfolio to
challenge.</i></b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
Third parties may infringe our patents. To prevent infringement or
unauthorized use, we may need to file infringement suits, which are
expensive and time-consuming. In an infringement proceeding, a
court may decide that one or more of our patents is invalid,
unenforceable, or both. In this case, third parties may be able to
use our technology without paying licensing fees or royalties. Even
if the validity of our patents is upheld, a court may refuse to
stop the other party from using the technology at issue on the
ground that the other party’s activities are not covered by
our patents. Policing unauthorized use of our intellectual property
is difficult, and we may not be able to prevent misappropriation of
our proprietary rights, particularly in countries where the laws
may not protect such rights as fully as in the United States. In
addition, third parties may affirmatively challenge our rights to,
or the scope or validity of, our patent rights.</p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt; margin-left: 2%;">
<b><i>We may become involved in disputes with our strategic
partners over intellectual property ownership, and publications by
our research collaborators and clinical investigators could impair
our ability to obtain patent protection or protect our proprietary
information, either of which would have a significant impact on our
business.</i></b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
Inventions discovered under our current or future strategic
alliance agreements may become jointly owned by our strategic
partners and us in some cases, and the exclusive property of one of
us in other cases. Under some circumstances, it may be difficult to
determine who owns a particular invention or whether it is jointly
owned, and disputes could arise regarding ownership or use of those
inventions. These disputes could be costly and time-consuming, and
an unfavorable outcome could have a significant adverse effect on
our business if we were not able to protect or license rights to
these inventions. In addition, our research collaborators and
clinical investigators generally have contractual rights to publish
data arising from their work. Publications by our research
collaborators and clinical investigators relating to our research
and development programs, either with or without our consent, could
benefit our current or potential competitors and may impair our
ability to obtain patent protection or protect our proprietary
information, which could significantly harm our business.</p>
<p style="font-size: 1px; margin-top: 12px; margin-bottom: 0px;">
 </p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 2%;">
<b><i>We may be subject to claims that we or our employees have
wrongfully used or disclosed trade secrets of their former
employers.</i></b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
Many of our employees were previously employed at universities or
other biotechnology or pharmaceutical companies, including our
competitors or potential competitors. Although no claims against us
are currently pending, we may be subject to claims that these
employees or we have inadvertently or otherwise used or disclosed
trade secrets or other proprietary information of their former
employers. Litigation may be necessary to defend against these
claims. If we fail in defending these claims, in addition to paying
monetary damages, we may lose valuable intellectual property rights
or personnel. A loss of key research personnel or their work
product could hamper or prevent our ability to develop and
commercialize certain potential drugs, which could significantly
harm our business. Even if we are successful in defending against
these claims, litigation could result in substantial costs and
distract management.</p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt; margin-left: 2%;">
<b><i>Our competitors may develop drugs that are less expensive,
safer or more effective than ours, which may diminish or eliminate
the commercial success of any drugs that we may
commercialize.</i></b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
We compete with companies that have developed drugs or are
developing drug candidates for cardiovascular diseases, diseases
and conditions associated with muscle weakness or wasting and other
diseases for which our drug candidates may be useful treatments.
For example, if tirasemtiv is approved for marketing by the FDA or
other regulatory authorities for the treatment of ALS, it may then
compete with other potential new therapies for ALS that are
currently being developed by companies including, but not limited
to, Neuraltus Pharmaceuticals, Inc., Ionis Pharmaceuticals, Inc.,
(in collaboration with Biogen Inc.), AB Science, Mitsubishi Tanabe
Pharma Corporation and Treeway, Genentech, Inc., and BrainStorm
Cell Therapeutics.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
If <font style="white-space: nowrap;">CK-2127107</font> is approved
by the FDA or other regulatory authorities for the potential
treatment of SMA, potential competitors include, but are not
limited to, Roche (in collaboration with PTC Therapeutics and
Trophos SA), AveXis, Inc., and Ionis Pharmaceuticals, Inc., (in
collaboration with Biogen Inc.,. Drugs that could compete with
<font style="white-space: nowrap;">CK-2127107</font> could also
compete against tirasemtiv in ALS or other neuromuscular diseases,
should the appropriate clinical trials be conducted. If
<font style="white-space: nowrap;">CK-2127107</font> is approved by
the FDA for the potential treatment of <font style="white-space: nowrap;">non-neuromuscular</font> indications
associated with muscle weakness, potential competitors include, but
are not limited to, Regeneron Pharmaceuticals, Inc. (in
collaboration with Sanofi), Eli Lilly and Company, Acceleron
Pharma, Stealth Biotherapeutics, and Novartis (in collaboration
with Morphosys AG).</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
If omecamtiv mecarbil is approved for marketing by the FDA or other
regulatory authorities for the treatment of heart failure, it would
compete against other drugs used for the treatment of acute and
chronic heart failure. These include generic drugs, such as
milrinone, dobutamine or digoxin and branded drugs such as Natrecor
(nesiritide), Corlanor (ivabradine), and Entresto. Omecamtiv
mecarbil could also potentially compete against other novel drug
candidates and therapies in development, such as those being
developed by, but not limited to, Novartis; Bayer; Stealth
Biotherapeutics; and MyoKardia. In addition, there are a number of
medical devices both marketed and in development for the potential
treatment of heart failure.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
Our competitors may:</p>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">develop drug candidates and market
drugs that are less expensive or more effective than our future
drugs;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">commercialize competing drugs before
we or our partners can launch any drugs developed from our drug
candidates;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">hold or obtain proprietary rights
that could prevent us from commercializing our products;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">initiate or withstand substantial
price competition more successfully than we can;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">more successfully recruit skilled
scientific workers and management from the limited pool of
available talent;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">more effectively negotiate
third-party licenses and strategic alliances;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">take advantage of acquisition or
other opportunities more readily than we can;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">develop drug candidates and market
drugs that increase the levels of safety or efficacy that our drug
candidates will need to show in order to obtain regulatory
approval; or</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">introduce therapies or market drugs
that render the market opportunity for our potential drugs
obsolete.</td>
</tr>
</table>
<p style="font-size: 1px; margin-top: 12px; margin-bottom: 0px;">
 </p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">
We will compete for market share against large pharmaceutical and
biotechnology companies and smaller companies that are
collaborating with larger pharmaceutical companies, new companies,
academic institutions, government agencies and other public and
private research organizations. Many of these competitors, either
alone or together with their partners, may develop new drug
candidates that will compete with ours. Many of these competitors
have larger research and development programs or substantially
greater financial resources than we do. Our competitors may also
have significantly greater experience in:</p>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">developing drug candidates;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">undertaking preclinical testing and
clinical trials;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">building relationships with key
customers and opinion-leading physicians;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">obtaining and maintaining FDA and
other regulatory approvals of drug candidates;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">formulating and manufacturing drugs;
and</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">launching, marketing and selling
drugs.</td>
</tr>
</table>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
If our competitors market drugs that are less expensive, safer or
more efficacious than our potential drugs, or that reach the market
sooner than our potential drugs, we may not achieve commercial
success. In addition, the life sciences industry is characterized
by rapid technological change. If we fail to stay at the forefront
of technological change, we may be unable to compete effectively.
Our competitors may render our technologies obsolete by improving
existing technological approaches or developing new or different
approaches, potentially eliminating the advantages in our drug
discovery process that we believe we derive from our research
approach and proprietary technologies.</p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt; margin-left: 2%;">
<b><i>We have been granted orphan designations in the U.S. and in
the E.U. for tirasemtiv; however, there can be no guarantee that we
will receive orphan approval for tirasemtiv, nor that we will be
able to prevent third parties from developing and commercializing
products that are competitive to tirasemtiv.</i></b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
We have been granted orphan drug designation in the U.S. by the FDA
and orphan medicinal product designation by the European Medicines
Agency, in each case for tirasemtiv for the potential treatment of
ALS. In the U.S., upon approval from the FDA of an NDA, products
granted orphan drug approval are generally provided with seven
years of marketing exclusivity in the U.S., meaning the FDA will
generally not approve applications for other product candidates for
the same orphan indication that contain the same active ingredient.
Even if we are the first to obtain approval of an orphan product
and are granted exclusivity in the U.S., there are limited
circumstances under which a later competitor product may be
approved for the same indication during the seven-year period of
marketing exclusivity, such as if the later product is shown to be
clinically superior to our product or due to an inability to assure
a sufficient quantity of the orphan drug.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
Orphan medicinal product status in Europe Union can provide up to
10 years of marketing exclusivity, meaning that another application
for marketing authorization of a later similar medicinal product
for the same therapeutic indication will generally not be approved
in the European Union. Although we may have drug candidates that
may obtain orphan drug exclusivity in Europe, the orphan approval
and associated exclusivity period may be modified for several
reasons, including a significant change to the orphan medicinal
product designations or approval criteria after-market
authorization of the orphan product (e.g., product profitability
exceeds the criteria for orphan drug designation), problems with
the production or supply of the orphan drug or a competitor drug,
although similar, is safer, more effective or otherwise clinically
superior than the initial orphan drug.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
We are not guaranteed to maintain orphan status for tirasemtiv or
to receive orphan status for tirasemtiv for any other indication or
for any of our other drug candidates for any indication. If our
drug candidates that are granted orphan status were to lose their
status as orphan drugs or the marketing exclusivity provided for
them in the U.S. or the European Union, our business and results of
operations could be materially adversely affected. While orphan
status for any of our products, if granted or maintained, would
provide market exclusivity in the U.S. and the European Union for
the time periods specified above, we would not be able to exclude
other companies from manufacturing and/or selling products using
the same active ingredient for the same indication beyond the
exclusivity period applicable to our product on the basis of orphan
drug status. Moreover, we cannot guarantee that another company
will not receive approval before we do of an orphan drug
application in the U.S. or the European Union for a product
candidate that has the same active ingredient or is a similar
medicinal product for the same indication as any of our drug
candidates for which we plan to file for orphan designation and
status. If that were to happen, our orphan drug applications for
our drug candidate for that indication may not be approved until
the competing company’s period of exclusivity has expired in
the U.S. or the European Union, as applicable. Further, application
of the orphan drug regulations in the U.S. and Europe is uncertain,
and we cannot predict how the respective regulatory bodies will
interpret and apply the regulations to our or our
competitors’ products.</p>
<p style="font-size: 1px; margin-top: 12px; margin-bottom: 0px;">
 </p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 2%;">
<b><i>Our failure to attract and retain skilled personnel could
impair our drug development and commercialization
activities.</i></b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
Our business depends on the performance of our senior management
and key scientific and technical personnel. The loss of the
services of any member of our senior management or key scientific
or technical staff may significantly delay or prevent the
achievement of drug development and other business objectives by
diverting management’s attention to transition matters and
identifying suitable replacements. We also rely on consultants and
advisors to assist us in formulating our research and development
strategy. All of our consultants and advisors are either
self-employed or employed by other organizations, and they may have
conflicts of interest or other commitments, such as consulting or
advisory contracts with other organizations, that may affect their
ability to contribute to us. In addition, if and as our business
grows, we will need to recruit additional executive management and
scientific and technical personnel. There is intense competition
for skilled executives and employees with relevant scientific and
technical expertise, and this competition is likely to continue.
Our inability to attract and retain sufficient scientific,
technical and managerial personnel could limit or delay our product
development activities, which would adversely affect the
development of our drug candidates and commercialization of our
potential drugs and growth of our business.</p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt; margin-left: 2%;">
<b><i>Any future workforce and expense reductions may have an
adverse impact on our internal programs and our ability to hire and
retain skilled personnel.</i></b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
Our future success will depend in large part upon our ability to
attract and retain highly skilled personnel. In light of our
continued need for funding and cost control, we may be required to
implement future workforce and expense reductions, which could
further limit our research and development activities. For example,
in October 2011, we reduced our workforce by approximately 18% in
order to reduce expenses and to focus resources primarily on our
later-stage development programs for tirasemtiv and omecamtiv
mecarbil and certain other research and development programs also
directed to muscle biology. These headcount reductions and the cost
control measures we have implemented may negatively affect our
productivity and limit our research and development activities. We
may have difficulty retaining and attracting such personnel as a
result of a perceived risk of future workforce reductions. In
addition, the implementation of any additional workforce or expense
reduction programs may divert the efforts of our management team
and other key employees, which could adversely affect our
business.</p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt; margin-left: 2%;">
<b><i>We may expand our development and clinical research
capabilities and, as a result, we may encounter difficulties in
managing our growth, which could disrupt our
operations.</i></b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
We may have growth in our expenditures, the number of our employees
and the scope of our operations, in particular with respect to
those drug candidates that we elect to develop or commercialize
independently or together with a partner. To manage our anticipated
future growth, we must continue to implement and improve our
managerial, operational and financial systems, expand our
facilities and continue to recruit and train additional qualified
personnel. Due to our limited resources, we may not be able to
effectively manage the expansion of our operations or recruit and
train additional qualified personnel. The physical expansion of our
operations may lead to significant costs and may divert our
management and business development resources. Any inability to
manage growth could delay the execution of our business plans or
disrupt our operations.</p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt; margin-left: 2%;">
<b><i>We currently have no sales or marketing capabilities and, if
we are unable to enter into or maintain strategic alliances with
marketing partners or to develop our own sales and marketing
capabilities, we may not be successful in commercializing our
potential drugs.</i></b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
We currently have no sales, marketing or distribution capabilities.
We plan to commercialize drugs that can be effectively marketed and
sold in concentrated markets that do not require a large sales
force to be competitive. To achieve this goal, we will need to
establish our own specialized sales force and marketing
organization with technical expertise and supporting distribution
capabilities. Developing such an organization is expensive and
time-consuming and could delay a product launch. In addition, we
may not be able to develop this capacity efficiently,
cost-effectively or at all, which could make us unable to
commercialize our drugs. If we determine not to market our drugs on
our own, we will depend on strategic alliances with third parties,
such as Amgen and Astellas, which have established distribution
systems and direct sales forces to commercialize them. If we are
unable to enter into such arrangements on acceptable terms, we may
not be able to successfully commercialize these drugs. To the
extent that we are not successful in commercializing any drugs
ourselves or through a strategic alliance, our product revenues and
business will suffer and our stock price would decrease.</p>
<p style="font-size: 1px; margin-top: 12px; margin-bottom: 0px;">
 </p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 2%;">
<b><i>Our internal computer systems, or those of our CROs, CMOs, or
other contractors or consultants, may fail or suffer security
breaches, which could result in a material disruption of our drug
development programs.</i></b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
Despite the implementation of security measures, our internal
computer systems and those of our CROs, CMOs, and other contractors
and consultants are vulnerable to damage from computer viruses,
unauthorized access, natural disasters, terrorism, war and
telecommunication and electrical failures. While we have not
experienced any such system failure, accident or security breach to
date, if such an event were to occur and cause interruptions in our
operations, it could result in a material disruption of our drug
development programs. For example, the loss of clinical study data
from completed or ongoing clinical studies for any of our drug
candidates could result in delays in our regulatory approval
efforts and significantly increase our costs to recover or
reproduce the data. To the extent that any disruption or security
breach were to result in a loss of or damage to our data or
applications, or inappropriate disclosure of confidential or
proprietary information, we could incur liability and the further
development of our product candidates could be delayed.</p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt; margin-left: 2%;">
<b><i>We are obligated to develop and maintain proper and effective
internal control over financial reporting. In the future, we may
not complete our execution of our internal control over financial
reporting in a timely manner, or these internal controls may not be
determined to be effective, which may result in additional material
misstatements in our consolidated financial statements and may
adversely affect investor confidence in our company and, as a
result, the value of our common stock.</i></b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
We are required, pursuant to Section 404 of the Sarbanes-Oxley
Act, to furnish a report by management on, among other things, the
effectiveness of our internal control over financial reporting.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
Complying with Section 404 requires a rigorous compliance
program as well as adequate time and resources. We may not be able
to complete our internal control evaluation, testing and any
required remediation in a timely fashion. Additionally, if we
identify one or more material weaknesses in our internal control
over financial reporting, we will not be able to assert that our
internal controls are effective. For example, our management
concluded that our internal controls over financial reporting were
not effective as of September 30, 2016, because a material
weakness existed in our internal control over financial reporting
related to research and development expenses associated with the
review of clinical trial expenses incurred under our clinical
research organization trial agreements, including in part, our
review of information received from third party service providers
that is used in the operation of this control. Even though we
remediated this material weakness as of December 31, 2016, if
other material weaknesses are identified in the future or we are
not able to comply with the requirements of Section 404 in a
timely manner, our reported financial results could be materially
misstated, we would receive an adverse opinion regarding our
internal controls over financial reporting from our independent
registered public accounting firm, and we could be subject to
investigations or sanctions by regulatory authorities, which would
require additional financial and management resources, and the
value of our common stock could decline. In addition, because we
have concluded that our internal control over financial reporting
were not effective as of September 30, 2016, and to the extent
we identify future weaknesses or deficiencies, there could be
material misstatements in our consolidated financial statements and
we could fail to meet our financial reporting obligations. As a
result, our ability to obtain additional financing, or obtain
additional financing on favorable terms, could be materially and
adversely affected which, in turn, could materially and adversely
affect our business, our financial condition and the value of our
common stock. If we are unable to assert that our internal control
over financial reporting is effective in the future, or if our
independent registered public accounting firm is unable to express
an opinion or expresses an adverse opinion on the effectiveness of
our internal controls in the future, investor confidence in the
accuracy and completeness of our financial reports could be further
eroded, which would have a material adverse effect on the price of
our common stock.</p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt; margin-left: 2%;">
<b><i>Our reported financial results may be adversely affected by
changes in accounting principles generally accepted in the
U.S.</i></b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
We prepare our financial statements in conformity with accounting
principles generally accepted in the U.S. These accounting
principles are subject to interpretation by the Financial
Accounting Standards Board (“FASB”) and the Securities
and Exchange Commission. A change in these policies or
interpretations could have a significant effect on our reported
financial results, may retroactively affect previously reported
results, could cause unexpected financial reporting fluctuations,
and may require us to make costly changes to our operational
processes and accounting systems. In May 2014, the FASB issued ASU
<font style="white-space: nowrap;">2014-09,</font> Revenue from
Contracts with Customers which supersedes nearly all existing U.S.
GAAP revenue recognition guidance. The new standard will become
effective for us on January 1, 2018. Early application is
permitted to the original effective date of January 1, 2017.
Although we are continuing to assess all potential impacts of the
standard on our financial statements or disclosures, it could
change the way we account for certain of our revenue transactions,
including the timing of recognition of our license and
collaboration revenues. Adoption of the standard could have a
significant impact on our financial statements and may
retroactively affect the accounting treatment of transactions
completed before adoption. See “Note 1 – Recent
Accounting Pronouncements” for additional discussion of the
accounting changes.</p>
<p style="font-size: 1px; margin-top: 18px; margin-bottom: 0px;">
 </p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">
<b>Risks Related To Our Industry</b></p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 6pt; margin-bottom: 0pt; margin-left: 2%;">
<b><i>The regulatory approval process is expensive, time-consuming
and uncertain and may prevent our partners or us from obtaining
approvals to commercialize some or all of our drug
candidates.</i></b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
The research, testing, manufacturing, selling and marketing of
drugs are subject to extensive regulation by the FDA and other
regulatory authorities in the United States and other countries,
and regulations differ from country to country. Neither we nor our
partners are permitted to market our potential drugs in the United
States until we receive approval of a new drug application
(“NDA”) from the FDA. Neither we nor our partners have
received NDA or other marketing approval for any of our drug
candidates.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
Obtaining NDA approval is a lengthy, expensive and uncertain
process. In addition, failure to comply with FDA and other
applicable foreign and U.S. regulatory requirements may subject us
to administrative or judicially imposed sanctions. These include
warning letters, civil and criminal penalties, injunctions, product
seizure or detention, product recalls, total or partial suspension
of production, and refusal to approve pending NDAs or supplements
to approved NDAs.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
Regulatory approval of an NDA or NDA supplement is never
guaranteed, and the approval process typically takes several years
and is extremely expensive. The FDA and foreign regulatory agencies
also have substantial discretion in the drug approval process, and
the guidance and advice issued by such agencies is subject to
change at any time. Despite the time and efforts exerted, failure
can occur at any stage, and we may encounter problems that cause us
to abandon clinical trials or to repeat or perform additional
preclinical testing and clinical trials. The number and focus of
preclinical studies and clinical trials that will be required for
approval by the FDA and foreign regulatory agencies varies
depending on the drug candidate, the disease or condition that the
drug candidate is designed to address, and the regulations
applicable to any particular drug candidate. In addition, the FDA
may require that a proposed Risk Evaluation and Mitigation
Strategy, also known as a REMS, be submitted as part of an NDA if
the FDA determines that it is necessary to ensure that the benefits
of the drug outweigh its risks. The FDA and foreign regulatory
agencies can delay, limit or deny approval of a drug candidate for
many reasons, including, but not limited to:</p>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">they might determine that a drug
candidate is not safe or effective;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">they might not find the data from
nonclinical testing and clinical trials sufficient and could
request that additional trials be performed;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">they might not approve our, our
partner’s or the contract manufacturer’s processes or
facilities; or</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">they might change their approval
policies or adopt new regulations.</td>
</tr>
</table>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
Even if we receive regulatory approval to manufacture and sell a
drug in a particular regulatory jurisdiction, other
jurisdictions’ regulatory authorities may not approve that
drug for manufacture and sale. If we or our partners fail to
receive and maintain regulatory approval for the sale of any drugs
resulting from our drug candidates, it would significantly harm our
business and negatively affect our stock price.</p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt; margin-left: 2%;">
<b><i>If we or our partners receive regulatory approval for our
drug candidates, we or they will be subject to ongoing obligations
to and continued regulatory review by the FDA and foreign
regulatory agencies, and may be subject to additional
post-marketing obligations, all of which may result in significant
expense and limit commercialization of our potential
drugs.</i></b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
Any regulatory approvals that we or our partners receive for our
drug candidates may be subject to limitations on the indicated uses
for which the drug may be marketed or require potentially costly
post-marketing <font style="white-space: nowrap;">follow-up</font>
studies or compliance with a REMS. In addition, if the FDA or
foreign regulatory agencies approves any of our drug candidates,
the labeling, packaging, adverse event reporting, storage,
advertising, promotion and record-keeping for the drug will be
subject to extensive regulatory requirements. The subsequent
discovery of previously unknown problems with the drug, including
adverse events of unanticipated severity or frequency, or the
discovery that adverse events or toxicities observed in preclinical
research or clinical trials that were believed to be minor actually
constitute much more serious problems, may result in restrictions
on the marketing of the drug or withdrawal of the drug from the
market.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
The FDA and foreign regulatory agencies may change their policies
and additional government regulations may be enacted that could
prevent or delay regulatory approval of our drug candidates. We
cannot predict the likelihood, nature or extent of adverse
government regulation that may arise from future legislation or
administrative action, either in the United States or abroad. If we
are not able to maintain regulatory compliance, we might not be
permitted to market our drugs and our business would suffer.</p>
<p style="font-size: 1px; margin-top: 12px; margin-bottom: 0px;">
 </p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 2%;">
<b><i>If physicians and patients do not accept our drugs, we may be
unable to generate significant revenue, if any.</i></b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
Even if our drug candidates obtain regulatory approval, the
resulting drugs, if any, may not gain market acceptance among
physicians, healthcare payors, patients and the medical community.
Even if the clinical safety and efficacy of drugs developed from
our drug candidates are established for purposes of approval,
physicians may elect not to recommend these drugs for a variety of
reasons including, but not limited to:</p>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">introduction of competitive drugs to
the market;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">clinical safety and efficacy of
alternative drugs or treatments;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">cost-effectiveness;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">availability of coverage and
reimbursement from health maintenance organizations and other
third-party payors;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">convenience and ease of
administration;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">prevalence and severity of adverse
events;</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">other potential disadvantages
relative to alternative treatment methods; or</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">insufficient marketing and
distribution support.</td>
</tr>
</table>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
If our drugs fail to achieve market acceptance, we may not be able
to generate significant revenue and our business would suffer.</p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt; margin-left: 2%;">
<b><i>The coverage, reimbursement status and pricing of newly
approved drugs is uncertain and failure to obtain adequate coverage
and reimbursement could limit our ability to market any drugs we
may develop and decrease our ability to generate
revenue.</i></b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
Even if one or more of our drug candidates is approved for sale,
the commercial success of our drugs in both domestic and
international markets will be substantially dependent on whether
third-party coverage and reimbursement is available for our drugs
by the medical profession for use by their patients, which is
highly uncertain. Medicare, Medicaid, health maintenance
organizations and other third-party payors are increasingly
attempting to contain healthcare costs by limiting both coverage
and the level of reimbursement of new drugs. As a result, they may
not cover or provide adequate payment for our drugs. They may not
view our drugs as cost-effective and reimbursement may not be
available to consumers or may be insufficient to allow our drugs to
be marketed on a competitive basis. If we are unable to obtain
adequate coverage and reimbursement for our drugs, our ability to
generate revenue will be adversely affected. Likewise, current and
future legislative or regulatory efforts to control or reduce
healthcare costs or reform government healthcare programs could
result in lower prices or rejection of coverage and reimbursement
for our potential drugs. Changes in coverage and reimbursement
policies or healthcare cost containment initiatives that limit or
restrict reimbursement for any of our drug candidates that are
approved could cause our potential future revenues to decline. In
January 2017, Congress voted to adopt a budget resolution for
fiscal year 2017, or the Budget Resolution, that authorizes the
implementation of legislation that would repeal portions of
Affordable Care Act. The Budget Resolution is not a law; however,
it is widely viewed as the first step toward the passage of
legislation that would repeal certain aspects of Affordable Care
Act. Further, on January 20, 2017, President Trump signed an
Executive Order directing federal agencies with authorities and
responsibilities under Affordable Care Act to waive, defer, grant
exemptions from, or delay the implementation of any provision of
Affordable Care Act that would impose a fiscal or regulatory burden
on states, individuals, healthcare providers, health insurers, or
manufacturers of pharmaceuticals or medical devices. Congress also
could consider subsequent legislation to replace elements of
Affordable Care Act that are repealed.</p>
<p style="font-size: 1px; margin-top: 18px; margin-bottom: 0px;">
 </p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 2%;">
<b><i>We may be subject to costly product liability or other
liability claims and may not be able to obtain adequate
insurance.</i></b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
The use of our drug candidates in clinical trials may result in
adverse events. We cannot predict all the possible harms or adverse
events that may result from our clinical trials. We currently
maintain limited product liability insurance. We may not have
sufficient resources to pay for any liabilities resulting from a
personal injury or other claim excluded from, or beyond the limit
of, our insurance coverage. Our insurance does not cover third
parties’ negligence or malpractice, and our clinical
investigators and sites may have inadequate insurance or none at
all. In addition, in order to conduct clinical trials or otherwise
carry out our business, we may have to contractually assume
liabilities for which we may not be insured. If we are unable to
look to our own or a third party’s insurance to pay claims
against us, we may have to pay any arising costs and damages
ourselves, which may be substantial.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
In addition, if we commercially launch drugs based on our drug
candidates, we will face even greater exposure to product liability
claims. This risk exists even with respect to those drugs that are
approved for commercial sale by the FDA and foreign regulatory
agencies and manufactured in licensed and regulated facilities. We
intend to secure additional limited product liability insurance
coverage for drugs that we commercialize, but may not be able to
obtain such insurance on acceptable terms with adequate coverage,
or at reasonable costs. Even if we are ultimately successful in
product liability litigation, the litigation would consume
substantial amounts of our financial and managerial resources and
may create adverse publicity, all of which would impair our ability
to generate sales of the affected product and our other potential
drugs. Moreover, product recalls may be issued at our discretion or
at the direction of the FDA and foreign regulatory agencies, other
governmental agencies or other companies having regulatory control
for drug sales. Product recalls are generally expensive and often
have an adverse effect on the reputation of the drugs being
recalled and of the drug’s developer or manufacturer.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
We may be required to indemnify third parties against damages and
other liabilities arising out of our development, commercialization
and other business activities, which could be costly and
time-consuming and distract management. If third parties that have
agreed to indemnify us against damages and other liabilities
arising from their activities do not fulfill their obligations,
then we may be held responsible for those damages and other
liabilities.</p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt; margin-left: 2%;">
<b><i>Our relationships with customers, healthcare providers,
clinical trial sites and professionals and third-party payors will
be subject to applicable anti-kickback, fraud and abuse and other
laws and regulations, which could expose us to criminal sanctions,
civil penalties, contractual damages, reputational harm and
diminished profits and future earnings.</i></b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
Healthcare providers, physicians and third-party payors play a
primary role in the recommendation and prescription of any drug
candidates for which we may obtain marketing approval. Our
arrangements with customers, healthcare providers and professionals
and third-party payors may expose us to broadly applicable fraud
and abuse and other healthcare laws and regulations that may
constrain the business or financial arrangements and relationships
through which we develop, and may market, sell and distribute, our
products for which we obtain marketing approval. Restrictions under
applicable federal and state healthcare laws and regulations,
include, but are not limited to, the following:</p>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">The federal healthcare anti-kickback
statute prohibits, among other things, persons from knowingly and
willfully soliciting, offering, receiving or providing
remuneration, directly or indirectly, in cash or in kind, to induce
or reward either the referral of an individual for, or the
purchase, order or recommendation of, any good or service, for
which payment may be made under federally funded healthcare
programs such as Medicare and Medicaid. This statute has been
broadly interpreted to apply to manufacturer arrangements with
prescribers, purchasers and formulary managers, among others.
Several other countries, including the United Kingdom, have enacted
similar anti-kickback, fraud and abuse, and healthcare laws and
regulations.</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">The federal False Claims Act imposes
civil penalties, including civil whistleblower or qui tam actions,
against individuals or entities for knowingly presenting, or
causing to be presented, to the federal government, claims for
payment that are false or fraudulent or making a false statement to
avoid, decrease or conceal an obligation to pay money to the
federal government. The government and qui tam relators have
brought False Claims Act actions against pharmaceutical companies
on the theory that their practices have caused false claims to be
submitted to the government. There is also a separate false claims
provision imposing criminal penalties.</td>
</tr>
</table>
<p style="font-size: 1px; margin-top: 6px; margin-bottom: 0px;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">The federal Health Insurance
Portability and Accountability Act of 1996, or HIPAA, as amended by
the Health Information Technology for Economic and Clinical Health
Act, imposes criminal and civil liability for executing a scheme to
defraud any healthcare benefit program. HIPAA also imposes
obligations, including mandatory contractual terms, with respect to
safeguarding the privacy, security and transmission of individually
identifiable health information. HIPAA also imposes criminal
liability for knowingly and willfully falsifying, concealing or
covering up a material fact or making any materially false
statement in connection with the delivery of or payment for
healthcare benefits, items or services.</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">The federal Physician Payments
Sunshine Act requires manufacturers of drugs, devices, biologics
and medical supplies to report to the Department of Health and
Human Services information related to payments and other transfers
of value made to or at the request of covered recipients, such as
physicians and teaching hospitals, and physician ownership and
investment interests in such manufacturers. Payments made to
physicians and research institutions for clinical trials are
included within the ambit of this law.</td>
</tr>
</table>
<p style="font-size: 6pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">Analogous state laws and regulations,
such as state anti-kickback and false claims laws, may apply to
sales or marketing arrangements and claims involving healthcare
items or services reimbursed by <font style="white-space: nowrap;">non-governmental</font> third-party payors,
including private insurers, and some state laws require
pharmaceutical companies to comply with the pharmaceutical
industry’s voluntary compliance guidelines and the relevant
compliance guidance promulgated by the federal government in
addition to requiring drug manufacturers to report information
related to payments to physicians and other health care providers
or marketing expenditures.</td>
</tr>
</table>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 8pt; margin-bottom: 0pt;">
Efforts to ensure that our business arrangements with third parties
will comply with applicable healthcare laws and regulations will
involve substantial costs. It is possible that governmental
authorities will conclude that our business practices may not
comply with current or future statutes, regulations or case law
involving applicable fraud and abuse or other healthcare laws and
regulations. If our operations are found to be in violation of any
of these laws or any other governmental regulations that may apply
to us, we may be subject to significant civil, criminal and
administrative penalties, damages, fines, exclusion from government
funded healthcare programs, such as Medicare and Medicaid, and the
curtailment or restructuring of our operations. Exclusion,
suspension and debarment from government funded healthcare programs
would significantly impact our ability to commercialize, sell or
distribute any drug. If any of the physicians or other providers or
entities with whom we expect to do business are found to be not in
compliance with applicable laws, they may be subject to criminal,
civil or administrative sanctions, including exclusions from
government funded healthcare programs.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 8pt; margin-bottom: 0pt;">
In addition, health care providers in the United States, including
research institutions from which we or our partners obtain patient
information, are subject to privacy rules under HIPAA and state and
local privacy laws. In the European Union, these entities are
subject to the Directive <font style="white-space: nowrap;">95/46-EC</font> of the European Parliament
on the protection of individuals with regard to the processing of
personal data and individual European Union member states
implementing additional legislation. Other countries have similar
privacy legislation. We could face substantial penalties if we
knowingly receive individually identifiable health information from
a health care provider that has not satisfied the applicable
privacy laws. In addition, certain privacy laws and genetic testing
laws may apply directly to our operations and/or those of our
partners and may impose restrictions on the use and dissemination
of individuals’ health information and use of biological
samples.</p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 8pt; margin-bottom: 0pt; margin-left: 2%;">
<b><i>Responding to any claims relating to improper handling,
storage or disposal of the hazardous chemicals and radioactive and
biological materials we use in our business could be time-consuming
and costly.</i></b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 8pt; margin-bottom: 0pt;">
Our research and development processes involve the controlled use
of hazardous materials, including chemicals and radioactive and
biological materials. Our operations produce hazardous waste
products. We cannot eliminate the risk of accidental contamination
or discharge and any resultant injury from those materials.
Federal, state and local laws and regulations govern the use,
manufacture, storage, handling and disposal of hazardous materials.
We may be sued for any injury or contamination that results from
our or third parties’ use of these materials. Compliance with
environmental laws and regulations is expensive, and current or
future environmental regulations may impair our research,
development and production activities.</p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 8pt; margin-bottom: 0pt; margin-left: 2%;">
<b><i>Our facilities in California are located near an earthquake
fault, and an earthquake or other types of natural disasters,
catastrophic events or resource shortages could disrupt our
operations and adversely affect our results.</i></b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 8pt; margin-bottom: 0pt;">
All of our facilities and our important documents and records, such
as hard and electronic copies of our laboratory books and records
for our drug candidates and compounds and our electronic business
records, are located in our corporate headquarters at a single
location in South San Francisco, California near active earthquake
zones. If a natural disaster, such as an earthquake or flood, a
catastrophic event such as a disease pandemic or terrorist attack,
or a localized extended outage of critical utilities or
transportation systems occurs, we could experience a significant
business interruption. Our partners and other third parties on
which we rely may also be subject to business interruptions from
such events. In addition, California from time to time has
experienced shortages of water, electric power and natural gas.
Future shortages and conservation measures could disrupt our
operations and cause expense, thus adversely affecting our business
and financial results.</p>
<p style="font-size: 1px; margin-top: 18px; margin-bottom: 0px;">
 </p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">
<b>Risks Related To an Investment in Our Securities</b></p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 6pt; margin-bottom: 0pt; margin-left: 2%;">
<b><i>We expect that our stock price will fluctuate significantly,
and you may not be able to resell your shares at or at or above
your investment price.</i></b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
The stock market, particularly in recent years, has experienced
significant volatility, particularly with respect to
pharmaceutical, biotechnology and other life sciences company
stocks, which often does not relate to the operating performance of
the companies represented by the stock. Factors that could cause
volatility in the market price of our common stock include, but are
not limited to:</p>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">announcements concerning any of the
clinical trials for our drug candidates, such as tirasemtiv for the
potential treatment of ALS, <font style="white-space: nowrap;">CK-2127107</font> for the potential
treatment of SMA, COPD, ALS or other indications associated with
muscle weakness and omecamtiv mecarbil for the potential treatment
of heart failure (including, but not limited to, the timing of
initiation or completion of such trials and the results of such
trials, and delays or discontinuations of such trials, including
delays resulting from slower than expected or suspended patient
enrollment or discontinuations resulting from a failure to meet
<font style="white-space: nowrap;">pre-defined</font> clinical end
points);</td>
</tr>
</table>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">announcements concerning our
strategic alliance with Amgen or Astellas or future strategic
alliances;</td>
</tr>
</table>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">failure or delays in entering
additional drug candidates into clinical trials;</td>
</tr>
</table>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">failure or discontinuation of any of
our research programs;</td>
</tr>
</table>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">issuance of new or changed securities
analysts’ reports or recommendations;</td>
</tr>
</table>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">failure or delay in establishing new
strategic alliances, or the terms of those alliances;</td>
</tr>
</table>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">market conditions in the
pharmaceutical, biotechnology and other healthcare-related
sectors;</td>
</tr>
</table>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">actual or anticipated fluctuations in
our quarterly financial and operating results;</td>
</tr>
</table>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">developments or disputes concerning
our intellectual property or other proprietary rights;</td>
</tr>
</table>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">introduction of technological
innovations or new products by us or our competitors;</td>
</tr>
</table>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">issues in manufacturing, packaging,
labeling and distribution of our drug candidates or drugs;</td>
</tr>
</table>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">market acceptance of our drugs;</td>
</tr>
</table>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">third-party healthcare coverage and
reimbursement policies;</td>
</tr>
</table>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">FDA or other U.S. or foreign
regulatory actions affecting us or our industry;</td>
</tr>
</table>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">litigation or public concern about
the safety of our drug candidates or drugs;</td>
</tr>
</table>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">additions or departures of key
personnel;</td>
</tr>
</table>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">substantial sales of our common stock
by our existing stockholders, whether or not related to our
performance;</td>
</tr>
</table>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">automated trading activity by
algorithmic and high-frequency trading programs; and</td>
</tr>
</table>
<p style="font-size: 4pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="5%"> </td>
<td width="2%" align="left" valign="top">•</td>
<td width="1%" valign="top"> </td>
<td align="left" valign="top">volatility in the stock prices of
other companies in our industry or in the stock market
generally.</td>
</tr>
</table>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
These and other external factors may cause the market price and
demand for our common stock to fluctuate substantially, which may
limit or prevent investors from readily selling their shares of
common stock and may otherwise negatively affect the liquidity of
our common stock. In addition, when the market price of a stock has
been volatile, holders of that stock have instituted securities
class action litigation against the company that issued the stock.
If any of our stockholders brought a lawsuit against us, we could
incur substantial costs defending the lawsuit. Such a lawsuit could
also divert our management’s time and attention.</p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt; margin-left: 2%;">
<b><i>If the ownership of our common stock continues to be highly
concentrated, it may prevent you and other stockholders from
influencing significant corporate decisions and may result in
conflicts of interest that could cause our stock price to
decline.</i></b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
As of April 27, 2017, our executive officers, directors and
their affiliates beneficially owned or controlled approximately
10.6% of the outstanding shares of our common stock (after giving
effect to the exercise of all outstanding vested and unvested
options, restricted stock units and warrants). Accordingly, these
executive officers, directors and their affiliates, acting as a
group, will have substantial influence over the outcome of
corporate actions requiring stockholder approval, including the
election of directors, any merger, consolidation or sale of all or
substantially all of our assets or any other significant corporate
transactions. These stockholders may also delay or prevent a change
of control of us, even if such a change of control would benefit
our other stockholders. The significant concentration of stock
ownership may adversely affect the trading price of our common
stock due to investors’ perception that conflicts of interest
may exist or arise.</p>
<p style="font-size: 1px; margin-top: 12px; margin-bottom: 0px;">
 </p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 2%;">
<b><i>Volatility in the stock prices of other companies may
contribute to volatility in our stock price.</i></b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
The stock market in general, and the NASDAQ stock exchanges and the
market for technology companies in particular, have experienced
significant price and volume fluctuations that have often been
unrelated or disproportionate to the operating performance of those
companies. Further, there has been particular volatility in the
market prices of securities of early stage and clinical stage life
sciences companies. These broad market and industry factors may
seriously harm the market price of our common stock, regardless of
our operating performance. In the past, following periods of
volatility in the market price of a company’s securities,
securities class action litigation has often been instituted. A
securities class action suit against us could result in substantial
costs, potential liabilities and the diversion of
management’s attention and resources, and could harm our
reputation and business.</p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt; margin-left: 2%;">
<b><i>Our common stock is thinly traded and there may not be an
active, liquid trading market for our common stock.</i></b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
There is no guarantee that an active trading market for our common
stock will be maintained on NASDAQ, or that the volume of trading
will be sufficient to allow for timely trades. Investors may not be
able to sell their shares quickly or at the latest market price if
trading in our stock is not active or if trading volume is limited.
In addition, if trading volume in our common stock is limited,
trades of relatively small numbers of shares may have a
disproportionate effect on the market price of our common
stock.</p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt; margin-left: 2%;">
<b><i>Our stockholders will experience substantial additional
dilution if outstanding options or warrants are exercised for
common stock.</i></b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
As of April 27, 2017, there were 3,151,283 shares of common
stock issuable upon the exercise of warrants, having a weighted
average exercise price of $5.33 per share, and 5,898,812 shares of
common stock issuable upon the exercise of stock options
outstanding, having a weighted average exercise price of $8.80 per
share. The exercise of outstanding options or warrants for common
stock would be substantially dilutive to the outstanding shares of
common stock. Any dilution or potential dilution may cause our
stockholders to sell their shares, which would contribute to a
downward movement in the stock price of our common stock.</p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt; margin-left: 2%;">
<b><i>Ownership changes may limit our ability to use our net
operating losses and tax credits in the future.</i></b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
In general, under Section 382 of the Internal Revenue Code
(“Section 382”), a corporation that undergoes an
‘ownership change’ is subject to limitations on its
ability to utilize its <font style="white-space: nowrap;">pre-change</font> net operating losses and
tax credits to offset future taxable income. We have performed a
Section 382 analysis as of December 31, 2016 and do not
believe that we have experienced an ownership change since
2006. A portion of our existing net operating losses and tax
credits are subject to limitations arising from previous ownership
changes. Future changes in our stock ownership, some of which are
outside of our control, could result in an ownership change under
Section 382 and result in additional limitations. We
intend to continue to monitor public filings made by third parties
with the SEC to assess whether an ownership change under
Section 382 has occurred. Our ability to accurately assess any
such ownership change is limited by the timeliness and accuracy of
these public filings.</p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt; margin-left: 2%;">
<b><i>Evolving regulation of corporate governance and public
disclosure may result in additional expenses, use of resources and
continuing uncertainty.</i></b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 10pt; margin-bottom: 0pt;">
Changing laws, regulations and standards relating to corporate
governance and public disclosure, including the Sarbanes-Oxley Act
of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection
Act of 2010 and new SEC regulations and NASDAQ Stock Market LLC
rules create uncertainty for public companies. We regularly
evaluate and monitor developments with respect to new and proposed
laws, regulations and standards. We cannot accurately predict or
estimate the amount of the additional costs we may incur in
connection with complying with such laws, regulations and standards
or the timing of these costs. For example, compliance with the
internal control requirements of Section 404 of the
Sarbanes-Oxley Act has to date required us to commit significant
resources to document and test the adequacy of our internal control
over financial reporting. We can provide no assurance as to
conclusions of management or by our independent registered public
accounting firm with respect to the effectiveness of our internal
control over financial reporting in the future. In addition, the
SEC has adopted regulations that require us to file corporate
financial statement information in an interactive data format known
as XBRL. We may incur significant costs and need to invest
considerable resources to remain in compliance with these
regulations.</p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 10pt; margin-bottom: 0pt;">
These new or changed laws, regulations and standards are subject to
varying interpretations, in many cases due to their lack of
specificity, and, as a result, their application in practice may
evolve over time as new guidance is provided by regulatory and
governing bodies. This could result in continuing uncertainty
regarding compliance matters and higher costs necessitated by
ongoing revisions to disclosure and governance practices.</p>
<p style="font-size: 1px; margin-top: 10px; margin-bottom: 0px;">
 </p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">
We intend to maintain high standards of corporate governance and
public disclosure. As a result, we intend to invest the resources
necessary to comply with evolving laws, regulations and standards,
and this investment may result in increased general and
administrative expenses and a diversion of management time and
attention from revenue-generating activities to compliance
activities. If our efforts to comply with new or changed laws,
regulations and standards differ from the activities intended by
regulatory or governing bodies, due to ambiguities related to
practice or otherwise, regulatory authorities may initiate legal
proceedings against us, which could be costly and time-consuming,
and our reputation and business may be harmed.</p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 10pt; margin-bottom: 0pt; margin-left: 2%;">
<b><i>We have never paid dividends on our capital stock, and we do
not anticipate paying any cash dividends in the foreseeable
future.</i></b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 10pt; margin-bottom: 0pt;">
We have paid no cash dividends on any of our classes of capital
stock to date and we currently intend to retain our future
earnings, if any, to fund the development and growth of our
businesses. In addition, the terms of existing or any future debts
may preclude us from paying these dividends.</p>
<p style="font-size: 16pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="9%" align="left" valign="top"><b>ITEM 2.</b></td>
<td align="left" valign="top"><b>UNREGISTERED SALES OF EQUITY
SECURITIES AND USE OF PROCEEDS</b></td>
</tr>
</table>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 10pt; margin-bottom: 0pt;">
In February 2017, RPI has agreed to purchase 875,656 shares of our
common stock at an aggregate price of $10.0 million pursuant
to an executed Common Stock Purchase Agreement. The foregoing
securities were issued to an accredited investor in reliance upon
the exemption from the registration requirements of Section 4(a)(2)
of the Securities Act of 1933, as amended, including Rule 506
promulgated thereunder. We claimed such exemption on the basis that
(a) the purchaser represented that it intended to acquire the
securities for investment only and not with a view of the
distribution thereof and that it received adequate information
about us and (b) appropriate legends were affixed to the
securities in such transaction.</p>
<p style="font-size: 16pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="9%" align="left" valign="top"><b>ITEM 3.</b></td>
<td align="left" valign="top"><b>DEFAULTS UPON SENIOR
SECURITIES</b></td>
</tr>
</table>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 16pt; margin-bottom: 0pt;">
None.</p>
<p style="font-size: 16pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="9%" align="left" valign="top"><b>ITEM 4.</b></td>
<td align="left" valign="top"><b>MINE SAFETY DISCLOSURES</b></td>
</tr>
</table>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 16pt; margin-bottom: 0pt;">
None.</p>
<p style="font-size: 16pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="9%" align="left" valign="top"><b>ITEM 5.</b></td>
<td align="left" valign="top"><b>OTHER INFORMATION</b></td>
</tr>
</table>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 6pt; margin-bottom: 0pt;">
None.</p>
<p style="font-size: 18pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="9%" align="left" valign="top"><b>ITEM 6.</b></td>
<td align="left" valign="top"><b>EXHIBITS</b></td>
</tr>
</table>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 6pt; margin-bottom: 0pt;">
A list of exhibits filed with this Quarterly Report on Form
<font style="white-space: nowrap;">10-Q</font> or incorporated
herein by reference is found in the Index to Exhibits immediately
following the signature page of this report and is incorporated
into this Item 6 by reference.</p>
<p style="font-size: 1pt; margin-top: 12pt; margin-bottom: 0pt;">
 </p>
<p align="center" style="font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">
<b>SIGNATURES</b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;">
Pursuant to the requirements of the Securities Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.</p>
<p style="font-size: 12pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr>
<td width="47%"></td>
<td width="1%" valign="bottom"></td>
<td width="4%"></td>
<td valign="bottom"></td>
<td></td>
<td width="1%" valign="bottom"></td>
<td width="46%"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td valign="top">Dated: May 4, 2017</td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td valign="bottom">CYTOKINETICS, INCORPORATED</td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td valign="top"></td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td valign="bottom">(Registrant)</td>
</tr>
<tr style="font-size: 1pt;">
<td height="16"></td>
<td height="16" colspan="2"></td>
<td height="16" colspan="2"></td>
<td height="16" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td valign="top"></td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 1pt; border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1px; border-bottom-style: solid;">
/s/ Robert I. Blum</p>
</td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td valign="top"></td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td valign="bottom">Robert I. Blum</td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td valign="top"></td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td valign="bottom">President and Chief Executive Officer</td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td valign="top"></td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td valign="bottom">(Principal Executive Officer)</td>
</tr>
<tr style="font-size: 1pt;">
<td height="16"></td>
<td height="16" colspan="2"></td>
<td height="16" colspan="2"></td>
<td height="16" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td valign="top"></td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 1pt; border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1px; border-bottom-style: solid;">
/s/ Sharon A. Barbari</p>
</td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td valign="top"></td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td valign="bottom">Sharon A. Barbari</td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td valign="top"></td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td valign="bottom">Executive Vice President, Finance and</td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td valign="top"></td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td valign="bottom">Chief Financial Officer</td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td valign="top"></td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td valign="bottom">(Principal Financial Officer)</td>
</tr>
<tr style="font-size: 1pt;">
<td height="16"></td>
<td height="16" colspan="2"></td>
<td height="16" colspan="2"></td>
<td height="16" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td valign="top"></td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 1pt; border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1px; border-bottom-style: solid;">
/s/ Peter S. Roddy</p>
</td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td valign="top"></td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td valign="bottom">Peter S. Roddy</td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td valign="top"></td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">
Senior Vice President, Chief Accounting Officer</p>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 1pt;">
(Principal Accounting Officer)</p>
</td>
</tr>
</table>
<p style="font-size: 1pt; margin-top: 12pt; margin-bottom: 0pt;">
 </p>
<p align="center" style="font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">
<b>EXHIBIT INDEX</b></p>
<p style="font-size: 12pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" align="center" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr>
<td></td>
<td width="3%" valign="bottom"></td>
<td width="55%"></td>
<td width="2%" valign="bottom"></td>
<td></td>
<td width="2%" valign="bottom"></td>
<td></td>
<td width="2%" valign="bottom"></td>
<td></td>
<td width="2%" valign="bottom"></td>
<td></td>
<td width="2%" valign="bottom"></td>
<td></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 8pt; page-break-inside: avoid;">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td align="center" valign="bottom" style="border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;" colspan="7"><b>Incorporated by Reference</b></td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
</tr>
<tr style="font-family: Times New Roman; font-size: 8pt; page-break-inside: avoid;">
<td align="center" nowrap="nowrap" valign="bottom">
<p align="center" style="font-family: Times New Roman; font-size: 8pt; margin-top: 0pt; margin-bottom: 0pt;">
<b>Exhibit</b></p>
<p align="center" style="width: 25.3pt; font-family: Times New Roman; font-size: 8pt; margin-top: 0pt; margin-bottom: 1pt; border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;">
<b>No.</b></p>
</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="bottom">
<p align="center" style="width: 28.4pt; font-family: Times New Roman; font-size: 8pt; margin-top: 0pt; margin-bottom: 0pt; border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;">
<b>Exhibits</b></p>
</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="bottom">
<p align="center" style="width: 19.1pt; font-family: Times New Roman; font-size: 8pt; margin-top: 0pt; margin-bottom: 0pt; border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;">
<b>Form</b></p>
</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="bottom">
<p align="center" style="width: 26.65pt; font-family: Times New Roman; font-size: 8pt; margin-top: 0pt; margin-bottom: 0pt; border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;">
<b>File No.</b></p>
</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="bottom">
<p align="center" style="width: 37.95pt; font-family: Times New Roman; font-size: 8pt; margin-top: 0pt; margin-bottom: 0pt; border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;">
<b>Filing Date</b></p>
</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="bottom">
<p align="center" style="font-family: Times New Roman; font-size: 8pt; margin-top: 0pt; margin-bottom: 0pt;">
<b>Exh.</b></p>
<p align="center" style="width: 15.8pt; font-family: Times New Roman; font-size: 8pt; margin-top: 0pt; margin-bottom: 1pt; border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;">
<b>No.</b></p>
</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="bottom">
<p align="center" style="font-family: Times New Roman; font-size: 8pt; margin-top: 0pt; margin-bottom: 0pt;">
<b>Filed</b></p>
<p align="center" style="width: 31.95pt; font-family: Times New Roman; font-size: 8pt; margin-top: 0pt; margin-bottom: 1pt; border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;">
<b>Herewith</b></p>
</td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">    3.1</td>
<td valign="bottom">  </td>
<td valign="top">Amended and Restated Certificate of
Incorporation.</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">S-3</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">333-174869</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">
June 13, 2011</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">3.1</td>
<td valign="bottom">  </td>
<td valign="top"></td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">    3.2</td>
<td valign="bottom">  </td>
<td valign="top">Certificate of Amendment of Amended and Restated
Certificate of Incorporation.</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">10-Q</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">000-50633</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">
August 4, 2011</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">3.2</td>
<td valign="bottom">  </td>
<td valign="top"></td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">    3.3</td>
<td valign="bottom">  </td>
<td valign="top">Certificate of Amendment of Amended and Restated
Certificate of Incorporation</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">8-K</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">000-50633</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">June 25,
2013</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">5.1</td>
<td valign="bottom">  </td>
<td valign="top"></td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">    3.4</td>
<td valign="bottom">  </td>
<td valign="top">Certificate of Amendment of Amended and Restated
Certificate of Incorporation</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">8-K</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">000-50633</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">May 20,
2016</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">3.1</td>
<td valign="bottom">  </td>
<td valign="top"></td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">    3.5</td>
<td valign="bottom">  </td>
<td valign="top">Amended and Restated Bylaws.</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">S-1</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">333-112261</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">April 29,
2004</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">3.2</td>
<td valign="bottom">  </td>
<td valign="top"></td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">    4.1</td>
<td valign="bottom">  </td>
<td valign="top">Specimen Common Stock Certificate.</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">10-Q</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">000-50633</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">May 9,
2007</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">4.1</td>
<td valign="bottom">  </td>
<td valign="top"></td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">    4.2</td>
<td valign="bottom">  </td>
<td valign="top">Form of Warrant to Purchase Common Stock,
originally issued June 25, 2012</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">10-Q</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">000-50633</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">August 6,
2012</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">4.6</td>
<td valign="bottom">  </td>
<td valign="top"></td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">    4.3</td>
<td valign="bottom">  </td>
<td valign="top">Form of Common Stock Warrant Issued Pursuant to
that certain Loan and Security Agreement, dated as of
October 19, 2015, by and among the Company, Oxford Finance LLC
and Silicon Valley Bank</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">10-K</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">000-50633</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">March 3,
2016</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">4.6</td>
<td valign="bottom">  </td>
<td valign="top"></td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">  10.1+</td>
<td valign="bottom">  </td>
<td valign="top">Amended and Restated 2004 Equity Incentive
Plan</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">10-Q</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">000-50633</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">
August 5, 2015</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">10.2</td>
<td valign="bottom">  </td>
<td valign="top"></td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">  10.2+</td>
<td valign="bottom">  </td>
<td valign="top">2004 Employee Stock Purchase Plan</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">10-Q</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">000-50633</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">August 7,
2013</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">10.3</td>
<td valign="bottom">  </td>
<td valign="top"></td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">  10.3+</td>
<td valign="bottom">  </td>
<td valign="top">2015 Employee Stock Purchase Plan</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">10-Q</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">000-50633</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">August 5,
2015</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">10.42</td>
<td valign="bottom">  </td>
<td valign="top"></td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">  10.4</td>
<td valign="bottom">  </td>
<td valign="top"><font style="white-space: nowrap;"><font style="white-space: nowrap;">Build-to-Suit</font></font> Lease, dated
May 27, 1997, by and between Britannia Pointe Grand Limited
Partnership and Metaxen, LLC</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">S-1</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">333-112261</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">April 29,
2004</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">10.5</td>
<td valign="bottom">  </td>
<td valign="top"></td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">  10.5</td>
<td valign="bottom">  </td>
<td valign="top">First Amendment to Lease, dated April 13,
1998, by and between Britannia Pointe Grand Limited Partnership and
Metaxen, LLC</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">S-1</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">333-112261</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">
January 27, 2004</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">10.6</td>
<td valign="bottom">  </td>
<td valign="top"></td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">  10.6</td>
<td valign="bottom">  </td>
<td valign="top">Sublease Agreement, dated May 1, 1998, by and
between the Company and Metaxen, LLC</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">S-1</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">333-112261</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">January 27,
2004</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">10.7</td>
<td valign="bottom">  </td>
<td valign="top"></td>
</tr>
</table>
<p style="font-size: 1px; margin-top: 12px; margin-bottom: 0px;">
 </p>
<table width="100%" align="center" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr>
<td></td>
<td width="2%" valign="bottom"></td>
<td width="56%"></td>
<td width="2%" valign="bottom"></td>
<td></td>
<td width="2%" valign="bottom"></td>
<td></td>
<td width="2%" valign="bottom"></td>
<td></td>
<td width="2%" valign="bottom"></td>
<td></td>
<td width="2%" valign="bottom"></td>
<td></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 8pt; page-break-inside: avoid;">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td align="center" valign="bottom" style="border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;" colspan="7"><b>Incorporated by Reference</b></td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
</tr>
<tr style="font-family: Times New Roman; font-size: 8pt; page-break-inside: avoid;">
<td align="center" nowrap="nowrap" valign="bottom">
<p align="center" style="font-family: Times New Roman; font-size: 8pt; margin-top: 0pt; margin-bottom: 0pt;">
<b>Exhibit</b></p>
<p align="center" style="width: 25.3pt; font-family: Times New Roman; font-size: 8pt; margin-top: 0pt; margin-bottom: 1pt; border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;">
<b>No.</b></p>
</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="bottom">
<p align="center" style="width: 28.4pt; font-family: Times New Roman; font-size: 8pt; margin-top: 0pt; margin-bottom: 0pt; border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;">
<b>Exhibits</b></p>
</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="bottom">
<p align="center" style="width: 19.1pt; font-family: Times New Roman; font-size: 8pt; margin-top: 0pt; margin-bottom: 0pt; border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;">
<b>Form</b></p>
</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="bottom">
<p align="center" style="width: 26.65pt; font-family: Times New Roman; font-size: 8pt; margin-top: 0pt; margin-bottom: 0pt; border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;">
<b>File No.</b></p>
</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="bottom">
<p align="center" style="width: 37.95pt; font-family: Times New Roman; font-size: 8pt; margin-top: 0pt; margin-bottom: 0pt; border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;">
<b>Filing Date</b></p>
</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="bottom">
<p align="center" style="font-family: Times New Roman; font-size: 8pt; margin-top: 0pt; margin-bottom: 0pt;">
<b>Exh.</b></p>
<p align="center" style="width: 15.8pt; font-family: Times New Roman; font-size: 8pt; margin-top: 0pt; margin-bottom: 1pt; border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;">
<b>No.</b></p>
</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="bottom">
<p align="center" style="font-family: Times New Roman; font-size: 8pt; margin-top: 0pt; margin-bottom: 0pt;">
<b>Filed</b></p>
<p align="center" style="width: 31.95pt; font-family: Times New Roman; font-size: 8pt; margin-top: 0pt; margin-bottom: 1pt; border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;">
<b>Herewith</b></p>
</td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">  10.7</td>
<td valign="bottom">  </td>
<td valign="top">Sublease Agreement, dated March 1, 1999, by
and between Metaxen, LLC and Exelixis Pharmaceuticals, Inc.</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">S-1</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">333-112261</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">January 27,
2004</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">10.8</td>
<td valign="bottom">  </td>
<td valign="top"></td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">  10.8</td>
<td valign="bottom">  </td>
<td valign="top">Assignment and Assumption Agreement and Consent,
dated July 11, 1999, by and among Exelixis Pharmaceuticals,
Metaxen, LLC, Xenova Group PLC and Britannia Pointe Grande Limited
Partnership</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">S-1</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">333-112261</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">January 27,
2004</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">10.9</td>
<td valign="bottom">  </td>
<td valign="top"></td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">  10.9</td>
<td valign="bottom">  </td>
<td valign="top">Second Amendment to Lease, dated July 11,
1999, by and between Britannia Pointe Grand Limited Partnership and
Exelixis Pharmaceuticals, Inc.</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">S-1</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">333-112261</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">
January 27, 2004</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">10.10</td>
<td valign="bottom">  </td>
<td valign="top"></td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">  10.10</td>
<td valign="bottom">  </td>
<td valign="top">First Amendment to Sublease Agreement, dated
July 20, 1999, by and between the Company and Metaxen</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">S-1</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">333-112261</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">January 27,
2004</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">10.11</td>
<td valign="bottom">  </td>
<td valign="top"></td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">  10.11</td>
<td valign="bottom">  </td>
<td valign="top">Agreement and Consent, dated July 20, 1999,
by and among Exelixis Pharmaceuticals, Inc., the Company and
Britannia Pointe Grand Limited Partnership</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">S-1</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">333-112261</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">January 27,
2004</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">10.12</td>
<td valign="bottom">  </td>
<td valign="top"></td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">  10.12</td>
<td valign="bottom">  </td>
<td valign="top">Amendment to Agreement and Consent, dated
July 31, 2000, by and between the Company, Exelixis, Inc., and
Britannia Pointe Grande Limited Partnership</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">S-1</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">333-112261</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">January 27,
2004</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">10.13</td>
<td valign="bottom">  </td>
<td valign="top"></td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">  10.13</td>
<td valign="bottom">  </td>
<td valign="top">Assignment and Assumption of Lease, dated
September 28, 2000, by and between the Company and Exelixis,
Inc.</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">S-1</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">333-112261</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">January 27,
2004</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">10.14</td>
<td valign="bottom">  </td>
<td valign="top"></td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">  10.14</td>
<td valign="bottom">  </td>
<td valign="top">Sublease Agreement, dated September 28, 2000,
by and between the Company and Exelixis, Inc.</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">S-1</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">333-112261</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">January 27,
2004</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">10.15</td>
<td valign="bottom">  </td>
<td valign="top"></td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">  10.15*</td>
<td valign="bottom">  </td>
<td valign="top">Collaboration and Option Agreement, dated as of
December 29, 2006, by and between the Company and Amgen
Inc.</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">10-K</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">000-50633</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">March 12,
2007</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">10.63</td>
<td valign="bottom">  </td>
<td valign="top"></td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">  10.16</td>
<td valign="bottom">  </td>
<td valign="top">Form of Indemnification Agreement between the
Company and each of its directors and executive officers</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">10-Q</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">000-50633</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">August 5,
2008</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">10.1</td>
<td valign="bottom">  </td>
<td valign="top"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 8pt; page-break-inside: avoid;">
<td align="center" nowrap="nowrap" valign="bottom">
<p align="center" style="font-family: Times New Roman; font-size: 8pt; margin-top: 0pt; margin-bottom: 0pt;">
<b>Exhibit</b></p>
<p align="center" style="width: 25.3pt; font-family: Times New Roman; font-size: 8pt; margin-top: 0pt; margin-bottom: 1pt; border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;">
<b>No.</b></p>
</td>
<td valign="bottom"> </td>
<td align="center" nowrap="nowrap" valign="bottom">
<p align="center" style="width: 28.4pt; font-family: Times New Roman; font-size: 8pt; margin-top: 0pt; margin-bottom: 0pt; border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;">
<b>Exhibits</b></p>
</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="bottom">
<p align="center" style="width: 19.1pt; font-family: Times New Roman; font-size: 8pt; margin-top: 0pt; margin-bottom: 0pt; border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;">
<b>Form</b></p>
</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="bottom">
<p align="center" style="width: 26.65pt; font-family: Times New Roman; font-size: 8pt; margin-top: 0pt; margin-bottom: 0pt; border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;">
<b>File No.</b></p>
</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="bottom">
<p align="center" style="width: 37.95pt; font-family: Times New Roman; font-size: 8pt; margin-top: 0pt; margin-bottom: 0pt; border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;">
<b>Filing Date</b></p>
</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="bottom">
<p align="center" style="font-family: Times New Roman; font-size: 8pt; margin-top: 0pt; margin-bottom: 0pt;">
<b>Exh.</b></p>
<p align="center" style="width: 15.8pt; font-family: Times New Roman; font-size: 8pt; margin-top: 0pt; margin-bottom: 1pt; border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;">
<b>No.</b></p>
</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="bottom">
<p align="center" style="font-family: Times New Roman; font-size: 8pt; margin-top: 0pt; margin-bottom: 0pt;">
<b>Filed</b></p>
<p align="center" style="width: 31.95pt; font-family: Times New Roman; font-size: 8pt; margin-top: 0pt; margin-bottom: 1pt; border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;">
<b>Herewith</b></p>
</td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">  10.17*+</td>
<td valign="bottom"> </td>
<td valign="top">Scientific Advisory Board Consulting Agreement,
dated April 1, 2008, by and between the Company and James H.
Sabry</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">8-K</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">000-50633</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">April 2,
2008</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">10.66</td>
<td valign="bottom">  </td>
<td valign="top"></td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">  10.18+</td>
<td valign="bottom"> </td>
<td valign="top">Amended and Restated Executive Employment
Agreement, dated May 21, 2007, by and between the Company and
Robert Blum</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">10-Q</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">000-50633</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">
August 5, 2008</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">10.69</td>
<td valign="bottom">  </td>
<td valign="top"></td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">  10.19+</td>
<td valign="bottom"> </td>
<td valign="top">Form of Executive Employment Agreement between the
Company and its executive officers</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">10-Q</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">000-50633</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">August 5,
2008</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">10.68</td>
<td valign="bottom">  </td>
<td valign="top"></td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">  10.20*</td>
<td valign="bottom"> </td>
<td valign="top">Amendment No. 1, dated June 17, 2008, to
the Collaboration and Option Agreement by and between the Company
and Amgen Inc.</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">10-K</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">000-50633</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">
March 12, 2009</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">10.62</td>
<td valign="bottom">  </td>
<td valign="top"></td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">  10.21*</td>
<td valign="bottom"> </td>
<td valign="top">Amendment No. 2, dated September 30,
2008, to the Collaboration and Option Agreement by and between the
Company and Amgen Inc.</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">10-K</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">000-50633</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">March 12,
2009</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">10.63</td>
<td valign="bottom">  </td>
<td valign="top"></td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">  10.22*</td>
<td valign="bottom"> </td>
<td valign="top">Amendment No. 3, dated October 31, 2008,
to the Collaboration and Option Agreement by and between the
Company and Amgen Inc.</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">10-K</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">000-50633</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">March 12,
2009</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">10.65</td>
<td valign="bottom">  </td>
<td valign="top"></td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">  10.23*</td>
<td valign="bottom"> </td>
<td valign="top">Amendment No. 4, dated February 20,
2009, to the Collaboration and Option Agreement by and between the
Company and Amgen Inc.</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">10-K</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">000-50633</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">March 12,
2009</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">10.67</td>
<td valign="bottom">  </td>
<td valign="top"></td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">  10.24+</td>
<td valign="bottom"> </td>
<td valign="top">Form of Amendment No. 1 to Amended and
Restated Executive Employment Agreements</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">10-K</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">000-50633</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">March 12,
2009</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">10.68</td>
<td valign="bottom">  </td>
<td valign="top"></td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">  10.25</td>
<td valign="bottom"> </td>
<td valign="top">Third Amendment to Lease, dated December 10,
2010, by and between the Company and Britannia Pointe Grand Limited
Partnership</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">10-K</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">000-50633</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">March 11,
2011</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">10.65</td>
<td valign="bottom">  </td>
<td valign="top"></td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">  10.26*</td>
<td valign="bottom"> </td>
<td valign="top">Amendment No. 5, dated November 1, 2010,
to the Collaboration and Option Agreement by and between the
Company and Amgen Inc.</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">10-K</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">000-50633</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">March 11,
2011</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">10.66</td>
<td valign="bottom">  </td>
<td valign="top"></td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">  10.27*</td>
<td valign="bottom"> </td>
<td valign="top">Consulting Agreement between the Company and David
J. Morgans, dated November 1, 2011</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">10-K</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">000-50633</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">
March 13, 2012</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">10.42</td>
<td valign="bottom">  </td>
<td valign="top"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 8pt; page-break-inside: avoid;">
<td align="center" nowrap="nowrap" valign="bottom">
<p align="center" style="font-family: Times New Roman; font-size: 8pt; margin-top: 0pt; margin-bottom: 0pt;">
<b>Exhibit</b></p>
<p align="center" style="width: 25.3pt; font-family: Times New Roman; font-size: 8pt; margin-top: 0pt; margin-bottom: 1pt; border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;">
<b>No.</b></p>
</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="bottom">
<p align="center" style="width: 28.4pt; font-family: Times New Roman; font-size: 8pt; margin-top: 0pt; margin-bottom: 0pt; border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;">
<b>Exhibits</b></p>
</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="bottom">
<p align="center" style="width: 19.1pt; font-family: Times New Roman; font-size: 8pt; margin-top: 0pt; margin-bottom: 0pt; border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;">
<b>Form</b></p>
</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="bottom">
<p align="center" style="width: 26.65pt; font-family: Times New Roman; font-size: 8pt; margin-top: 0pt; margin-bottom: 0pt; border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;">
<b>File No.</b></p>
</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="bottom">
<p align="center" style="width: 37.95pt; font-family: Times New Roman; font-size: 8pt; margin-top: 0pt; margin-bottom: 0pt; border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;">
<b>Filing Date</b></p>
</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="bottom">
<p align="center" style="font-family: Times New Roman; font-size: 8pt; margin-top: 0pt; margin-bottom: 0pt;">
<b>Exh.</b></p>
<p align="center" style="width: 15.8pt; font-family: Times New Roman; font-size: 8pt; margin-top: 0pt; margin-bottom: 1pt; border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;">
<b>No.</b></p>
</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="bottom">
<p align="center" style="font-family: Times New Roman; font-size: 8pt; margin-top: 0pt; margin-bottom: 0pt;">
<b>Filed</b></p>
<p align="center" style="width: 31.95pt; font-family: Times New Roman; font-size: 8pt; margin-top: 0pt; margin-bottom: 1pt; border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;">
<b>Herewith</b></p>
</td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">  10.28*</td>
<td valign="bottom">  </td>
<td valign="top">Amendment No. 1, dated May 1, 2012, to
Consulting Agreement between the Company and David J. Morgans,
dated November 1, 2011</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">10-Q</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">000-50633</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">May 4,
2012</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">10.43</td>
<td valign="bottom">  </td>
<td valign="top"></td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">  10.29*</td>
<td valign="bottom">  </td>
<td valign="top">Amendment No. 2, dated October 30, 2012
to Consulting Agreement between the Company and David J. Morgans,
dated November 1, 2011</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">10-K</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">000-50633</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">March 15,
2013</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">10.44</td>
<td valign="bottom">  </td>
<td valign="top"></td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">  10.30+</td>
<td valign="bottom">  </td>
<td valign="top">2015 Compensation Information for the
Company’s Named Executive Officers</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">8-K</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">000-50633</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">March 2,
2015</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">10.1</td>
<td valign="bottom">  </td>
<td valign="top"></td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">  10.31+</td>
<td valign="bottom">  </td>
<td valign="top">Form of Option Agreement</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">10-K</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">000-50633</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">March 15,
2013</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">10.46</td>
<td valign="bottom">  </td>
<td valign="top"></td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">  10.32+</td>
<td valign="bottom">  </td>
<td valign="top">Form of Restricted Stock Unit Award Agreement</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">10-K</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">000-50633</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">March 15,
2013</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">10.47</td>
<td valign="bottom">  </td>
<td valign="top"></td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">  10.33</td>
<td valign="bottom">  </td>
<td valign="top">Common Stock Purchase Agreement dated
June 11, 2013, by and between the Company and Amgen Inc.</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">8-K</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">000-50633</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">June 12,
2013</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">10.48</td>
<td valign="bottom">  </td>
<td valign="top"></td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">  10.34*</td>
<td valign="bottom">  </td>
<td valign="top">Amendment No. 6, dated June 11, 2013, to
the Collaboration and Option Agreement by and between the Company
and Amgen Inc.</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">10-Q</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">000-50633</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">August 7,
2013</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">10.46</td>
<td valign="bottom">  </td>
<td valign="top"></td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">  10.35+</td>
<td valign="bottom">  </td>
<td valign="top">Form of Executive Employment Agreement between the
Company and its executive officers</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">10-K</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">000-50633</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">March 7,
2014</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">10.39</td>
<td valign="bottom">  </td>
<td valign="top"></td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">  10.36</td>
<td valign="bottom">  </td>
<td valign="top">Common Stock Purchase Agreement by and between the
Company and Astellas Pharma Inc. dated December 22, 2014</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">8-K</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">000-50633</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">
December 23, 2014</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">10.46</td>
<td valign="bottom">  </td>
<td valign="top"></td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">  10.37*</td>
<td valign="bottom">  </td>
<td valign="top">Amended and Restated License and Collaboration
Agreement, dated December 22, 2014, by and between the Company
and Astellas Pharma Inc.</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">10-K</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">000-50633</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">March 6,
2015</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">10.40</td>
<td valign="bottom">  </td>
<td valign="top"></td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">  10.38*</td>
<td valign="bottom">  </td>
<td valign="top">Amendment No. 7, dated March 19, 2015,
to the Collaboration and Option Agreement by and between the
Company and Amgen Inc.</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">10-Q</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">000-50633</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">May 4,
2015</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">10.41</td>
<td valign="bottom">  </td>
<td valign="top"></td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">  10.39</td>
<td valign="bottom">  </td>
<td valign="top">Controlled Equity Offering Sales Agreement, dated
as of September 4, 2015, by and between the Company and Cantor
Fitzgerald & Co.</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">8-K</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">000-50633</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">
September 4, 2015</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">10.43</td>
<td valign="bottom">  </td>
<td valign="top"></td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">  10.40*</td>
<td valign="bottom">  </td>
<td valign="top">Loan and Security Agreement, dated as of
October 19, 2015, by and among the Company, Oxford Finance LLC
and Silicon Valley Bank</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">10-K</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">000-50633</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">March 3,
2016</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">4.6</td>
<td valign="bottom">  </td>
<td valign="top"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 8pt; page-break-inside: avoid;">
<td align="center" nowrap="nowrap" valign="bottom">
<p align="center" style="font-family: Times New Roman; font-size: 8pt; margin-top: 0pt; margin-bottom: 0pt;">
<b>Exhibit</b></p>
<p align="center" style="width: 25.3pt; font-family: Times New Roman; font-size: 8pt; margin-top: 0pt; margin-bottom: 1pt; border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;">
<b>No.</b></p>
</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="bottom">
<p align="center" style="width: 28.4pt; font-family: Times New Roman; font-size: 8pt; margin-top: 0pt; margin-bottom: 0pt; border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;">
<b>Exhibits</b></p>
</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="bottom">
<p align="center" style="width: 19.1pt; font-family: Times New Roman; font-size: 8pt; margin-top: 0pt; margin-bottom: 0pt; border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;">
<b>Form</b></p>
</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="bottom">
<p align="center" style="width: 26.65pt; font-family: Times New Roman; font-size: 8pt; margin-top: 0pt; margin-bottom: 0pt; border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;">
<b>File No.</b></p>
</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="bottom">
<p align="center" style="width: 37.95pt; font-family: Times New Roman; font-size: 8pt; margin-top: 0pt; margin-bottom: 0pt; border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;">
<b>Filing Date</b></p>
</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="bottom">
<p align="center" style="font-family: Times New Roman; font-size: 8pt; margin-top: 0pt; margin-bottom: 0pt;">
<b>Exh.</b></p>
<p align="center" style="width: 15.8pt; font-family: Times New Roman; font-size: 8pt; margin-top: 0pt; margin-bottom: 1pt; border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;">
<b>No.</b></p>
</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="bottom">
<p align="center" style="font-family: Times New Roman; font-size: 8pt; margin-top: 0pt; margin-bottom: 0pt;">
<b>Filed</b></p>
<p align="center" style="width: 31.95pt; font-family: Times New Roman; font-size: 8pt; margin-top: 0pt; margin-bottom: 1pt; border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;">
<b>Herewith</b></p>
</td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">  10.41</td>
<td valign="bottom">  </td>
<td valign="top">Fourth Amendment to Build to Suit Lease, dated
March 1, 2016, by and between the Company and Britannia Pointe
Grand Limited Partnership</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">10-Q</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">000-50633</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">May 5,
2016</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">10.41</td>
<td valign="bottom">  </td>
<td valign="top"></td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">  10.42*</td>
<td valign="bottom">  </td>
<td valign="top">Amendment to the Amended and Restated License and
Collaboration Agreement between the Company and Astellas Pharma
Inc., dated July 27, 2016</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">10-Q/A</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">000-50633</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">
January 20, 2017</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">10.42</td>
<td valign="bottom">  </td>
<td valign="top"></td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">  10.43*</td>
<td valign="bottom">  </td>
<td valign="top">Letter of Agreement by and between the Company and
Amgen Inc. and Les Laboratoires Servier and Institut de Recherches
Internationales Servier, dated August 29, 2016</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">10-Q</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">000-50633</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">
November 3, 2016</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">10.43</td>
<td valign="bottom">  </td>
<td valign="top"></td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">  10.44**</td>
<td valign="bottom">  </td>
<td valign="top">Royalty Purchase Agreement by and between the
Company and RPI Finance Trust, dated February 1, 2017</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">10-K</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">000-50633</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">March 6,
2017</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">10.44</td>
<td valign="bottom">  </td>
<td valign="top"></td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">  10.45</td>
<td valign="bottom">  </td>
<td valign="top">Common Stock Purchase Agreement by and between the
Company and RPI Finance Trust, dated February 1, 2017</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">10-K</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top"><font style="white-space: nowrap;">000-50633</font></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">March 6,
2017</td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">10.45</td>
<td valign="bottom">  </td>
<td valign="top"></td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">  31.1</td>
<td valign="bottom">  </td>
<td valign="top">Certification of Principal Executive Officer
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002</td>
<td valign="bottom">  </td>
<td valign="top"></td>
<td valign="bottom">  </td>
<td valign="top"></td>
<td valign="bottom">  </td>
<td valign="top"></td>
<td valign="bottom">  </td>
<td valign="top"></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">X</td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">  31.2</td>
<td valign="bottom">  </td>
<td valign="top">Certification of Principal Financial Officer
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002</td>
<td valign="bottom">  </td>
<td valign="top"></td>
<td valign="bottom">  </td>
<td valign="top"></td>
<td valign="bottom">  </td>
<td valign="top"></td>
<td valign="bottom">  </td>
<td valign="top"></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">X</td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">  31.3</td>
<td valign="bottom">  </td>
<td valign="top">Certification of Principal Accounting Officer
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002</td>
<td valign="bottom">  </td>
<td valign="top"></td>
<td valign="bottom">  </td>
<td valign="top"></td>
<td valign="bottom">  </td>
<td valign="top"></td>
<td valign="bottom">  </td>
<td valign="top"></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">X</td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">  31.4</td>
<td valign="bottom">  </td>
<td valign="top">Certifications of the Principal Executive Officer,
Principal Financial Officer, and Principal Accounting Officer
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18
U.S.C. Section 1350) <sup style="font-size: 85%; vertical-align: top;">(1)</sup></td>
<td valign="bottom">  </td>
<td valign="top"></td>
<td valign="bottom">  </td>
<td valign="top"></td>
<td valign="bottom">  </td>
<td valign="top"></td>
<td valign="bottom">  </td>
<td valign="top"></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">X</td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">101.INS</td>
<td valign="bottom">  </td>
<td valign="top">XBRL Instance Document</td>
<td valign="bottom">  </td>
<td valign="top"></td>
<td valign="bottom">  </td>
<td valign="top"></td>
<td valign="bottom">  </td>
<td valign="top"></td>
<td valign="bottom">  </td>
<td valign="top"></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">X</td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">101.SCH</td>
<td valign="bottom">  </td>
<td valign="top">XBRL Taxonomy Extension Schema Document</td>
<td valign="bottom">  </td>
<td valign="top"></td>
<td valign="bottom">  </td>
<td valign="top"></td>
<td valign="bottom">  </td>
<td valign="top"></td>
<td valign="bottom">  </td>
<td valign="top"></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">X</td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">101.CAL</td>
<td valign="bottom">  </td>
<td valign="top">XBRL Taxonomy Extension Calculation Linkbase
Document</td>
<td valign="bottom">  </td>
<td valign="top"></td>
<td valign="bottom">  </td>
<td valign="top"></td>
<td valign="bottom">  </td>
<td valign="top"></td>
<td valign="bottom">  </td>
<td valign="top"></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">X</td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">101.DEF</td>
<td valign="bottom">  </td>
<td valign="top">XBRL Taxonomy Extension Definition Linkbase
Document</td>
<td valign="bottom">  </td>
<td valign="top"></td>
<td valign="bottom">  </td>
<td valign="top"></td>
<td valign="bottom">  </td>
<td valign="top"></td>
<td valign="bottom">  </td>
<td valign="top"></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">X</td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">101.LAB</td>
<td valign="bottom">  </td>
<td valign="top">XBRL Taxonomy Extension Label Linkbase
Document</td>
<td valign="bottom">  </td>
<td valign="top"></td>
<td valign="bottom">  </td>
<td valign="top"></td>
<td valign="bottom">  </td>
<td valign="top"></td>
<td valign="bottom">  </td>
<td valign="top"></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">X</td>
</tr>
<tr style="font-size: 1pt;">
<td height="8"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
<td height="8" colspan="2"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td nowrap="nowrap" valign="top">101.PRE</td>
<td valign="bottom">  </td>
<td valign="top">XBRL Taxonomy Extension Presentation Linkbase
Document</td>
<td valign="bottom">  </td>
<td valign="top"></td>
<td valign="bottom">  </td>
<td valign="top"></td>
<td valign="bottom">  </td>
<td valign="top"></td>
<td valign="bottom">  </td>
<td valign="top"></td>
<td valign="bottom">  </td>
<td align="center" nowrap="nowrap" valign="top">X</td>
</tr>
</table>
<p style="font-size: 12pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="4%" align="left" valign="top">*</td>
<td align="left" valign="top">Portions of this Exhibit are subject
to a confidential treatment order.</td>
</tr>
</table>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="4%" align="left" valign="top">**</td>
<td align="left" valign="top">Registrant has requested confidential
treatment for portions of this Exhibit.</td>
</tr>
</table>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="4%" align="left" valign="top">+</td>
<td align="left" valign="top">Management contract or compensatory
plan.</td>
</tr>
</table>
<table width="100%" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr style="page-break-inside: avoid;">
<td width="4%" align="left" valign="top">(1)</td>
<td align="left" valign="top">This certification accompanies the
Form <font style="white-space: nowrap;">10-Q</font> to which it
relates, is not deemed filed with the Securities and Exchange
Commission and is not to be incorporated by reference into any
filing of the Registrant under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended
(whether made before or after the date of the Form <font style="white-space: nowrap;">10-Q),</font> irrespective of any general
incorporation language contained in such filing.</td>
</tr>
</table>
</div>
-726000
27404000
-25867000
-25867000
885000
3052000
-112300000
-145000
132770000
1239000
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-INDENT: 4%">
Interest income was as follows (in thousands):</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="76%" align="center" border="0">
<tr>
<td width="79%"></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="6" align="center"><b>Three Months Ended</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>March 31,</b><br />
<b>2017</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>March 31,</b><br />
<b>2016</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Interest income</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">489</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">62</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
</table>
</div>
<div>
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 18pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
<b><i>Recent Accounting Pronouncements</i></b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
In August 2016, the FASB issued ASU <font style="WHITE-SPACE: nowrap">2016-15,</font> <i>‘Statement of cash
flows (Topic 230): Classification of certain cash receipts and cash
payments’. </i><font style="WHITE-SPACE: nowrap">ASU 2016-15</font> issued guidance to clarify how
certain cash receipts and payments should be presented in the
statement of cash flows. ASU <font style="WHITE-SPACE: nowrap">2016-15</font> is effective for annual and
interim reporting periods beginning after December 15, 2017
and early adoption is permitted. The Company does not expect the
adoption of this standard to have a material effect on its
financial statements or disclosures.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
In June 2016, the FASB issued ASU <font style="WHITE-SPACE: nowrap">2016-13,</font> <i>‘Financial
Instruments — Credit Losses — Measurement of Credit
Losses on Financial Instruments. </i><font style="WHITE-SPACE: nowrap">ASU 2016-13</font> changes the impairment model
for most financial assets and certain other instruments.
ASU <font style="WHITE-SPACE: nowrap">2016-13</font> is effective for annual and
interim reporting periods beginning after December 15, 2019.
The Company is in the process of evaluating the impact the adoption
of this standard would have on its financial statements and
disclosures.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
In March 2016, the FASB issued <i>ASU </i><i>No. </i><i>2016-09 </i><i>— </i><i>Improvements to
Employee Share-Based Payment Accounting</i> which simplifies various
aspects of accounting for share-based payments and presentation in
the financial statements. ASU 2016-09 is effective for annual and
interim reporting periods beginning after December 15, 2016
and early adoption is permitted. During the three months ended
March 31, 2017, the Company adopted ASU No. 2016-09 on a modified
retrospective approach. The guidance requires us, to recognize all
excess tax benefits and tax deficiencies as income tax expense or
benefit in the income statement and recognize previously
unrecognized excess tax benefits upon adoption as a
cumulative-effect adjustment in retained earnings, which eliminates
the need to track unrecognized excess tax benefits for both new and
existing awards. As of January 1, 2017, the Company recognized
excess tax benefit of $0.7 million as an increase to deferred tax
assets related to tax loss carryover. However, the entire amount
was offset by a full valuation allowance. Accordingly, no
cumulative-effect adjustment to retained earnings was recorded as
of March 31, 2017. The Company will maintain its current forfeiture
policy to estimate forfeitures expected to occur to determine
stock-based compensation expense. The adoption of this aspect
of the guidance did not have a material impact on our financial
statements.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 8pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
In February 2016, the FASB issued ASU <font style="WHITE-SPACE: nowrap">2016-02,</font> <i>Leases (Topic
842). </i><font style="WHITE-SPACE: nowrap">ASU 2016-02</font> requires management to
record <font style="WHITE-SPACE: nowrap"><font style="WHITE-SPACE: nowrap">right-to-use</font></font> asset and lease liability on
the statement of financial position for operating
leases<i>.</i> ASU <font style="WHITE-SPACE: nowrap">2016-02</font> is effective for annual and
interim reporting periods beginning on or after December 15,
2018 and the modified retrospective approach is required. The
Company is in the process of evaluating the impact the adoption of
this standard would have on its financial statements and
disclosures.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 8pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
In January 2016, the FASB issued ASU <font style="WHITE-SPACE: nowrap">2016-01,</font> <i>Financial instruments
(Subtopic <font style="WHITE-SPACE: nowrap">825-10).</font> </i><font style="WHITE-SPACE: nowrap">ASU 2016-01</font> requires management to measure
equity investments at fair value with changes in fair value
recognized in net income. ASU <font style="WHITE-SPACE: nowrap">2016-01</font> is effective for annual and
interim reporting periods beginning on or after December 15,
2017 and early adoption is not permitted. The Company does not
expect the adoption of ASU <font style="WHITE-SPACE: nowrap">2016-01</font> to have a material effect upon
its financial statements or disclosures.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 8pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
In May 2014, the FASB issued ASU <font style="WHITE-SPACE: nowrap">2014-09,</font> <i>Revenue from Contracts with
Customers (Topic 606)</i>, which requires an entity to recognize
the amount of revenue to which it expects to be entitled for the
transfer of promised goods or services to customers. The ASU will
replace most existing revenue recognition guidance in U.S. GAAP
when it becomes effective. In March 2016, the FASB amended the
principal-versus-agent implementation guidance and illustrations in
the new standard. In April 2016, the FASB amended the guidance on
identifying performance obligations and the implementation guidance
on licensing in the new standard. In May 2016, the FASB amended the
guidance on collectability, noncash consideration, presentation of
sales tax and transition in the new standard. In December 2016, the
FASB issued ASU <font style="WHITE-SPACE: nowrap">No. 2016-20,</font> T<i>echnical Corrections and
Improvements to Topic 606, Revenue from Contracts with
Customers</i>, which amends certain narrow aspects of the guidance
issued in ASU <font style="WHITE-SPACE: nowrap">2014-09. The</font> new standard will become
effective starting on January 1, 2018. Early application is
permitted to the original effective date of January 1, 2017.
The Company will adopt the standard on January 1, 2018. The
standard permits the use of either the modified retrospective
method or full retrospective approach for all periods presented.
While the Company is continuing to assess all potential impacts of
the standard, the Company believes the most significant accounting
impact will relate to the timing of the recognition of our license,
collaboration, and milestone revenues.</p>
</div>
</div>
-23251000
115734000
82000
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt">
<b>Note 8 — Long-Term Debt</b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
Long-term debt and unamortized debt discount balances are as
follows (in thousands):</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="76%" align="center" border="0">
<tr>
<td width="76%"></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>March 31,</b><br />
<b>2017</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>December 31</b><br />
<b>2016</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Notes payable, gross</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">30,000</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">30,000</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Less: Unamortized debt discount</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(422</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(472</td>
<td valign="bottom" nowrap="nowrap">) </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Accretion of final payment fee</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">442</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">353</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Carrying value of notes payable</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">30,020</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">29,881</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Less: Current portion of long-term debt</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(4,825</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(2,500</td>
<td valign="bottom" nowrap="nowrap">) </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Long-term debt</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">25,195</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">27,381</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
In October 2015, the Company entered into a loan and security
agreement (the “Loan Agreement”) with Oxford Finance
LLC (“Oxford”) as the collateral agent and a lender,
and Silicon Valley Bank (“SVB”) as a lender (Oxford and
SVB collectively the “Lenders”) to fund its working
capital and other general corporate needs. The Loan Agreement
provided for (1) term loans of up to $40.0 million in
aggregate, (2) warrants to purchase 65,189 shares of the
Company’s common stock at an exercise price of $6.90 per
share under the first term loan, and (3) additional warrants
to purchase shares of the Company’s common stock to be based
on the amount of the additional term loans and a price per
share determined on the day of funding in accordance with the Grant
Agreement, which is also the exercise price per share for the
warrants.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
The Company drew down $15.0 million in funds under the Loan
Agreement in October 2015 at the time of the first draw down, and
at that time, could at its sole discretion draw down an additional
$25.0 million under the Loan Agreement in two term loans,
provided certain specified conditions stipulated in the Loan
Agreement are met preceding those draws.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
During February 2016, the Company drew down an additional
$15.0 million in funds under the Loan Agreement and issued
warrants to purchase 68,285 shares of the Company’s common
stock at an exercise price of $6.59 per share under the second term
loan. As of March 31, 2017, there were 100,106 warrants
outstanding and exercisable and are classified under
stockholder’s equity. The Company is required to repay the
outstanding principal in 36 equal installments beginning October
2017 and is due in full in October 2020. The first and second term
loans bear interest at a rate of 7.5% per annum, respectively.
The remaining term loans, if drawn, will bear interest at a rate
fixed at the time of draw, equal to the greater of (i) 7.50%
and (ii) the sum of the three month U.S. LIBOR rate plus
7.31%. The Company is required to make a final payment fee of 4.00%
of the amounts of the Term Loans drawn payable on the earlier of
(i) the prepayment of the Term Loans or (ii) the Maturity
Date. The loan carries prepayment penalties of 3% and 2% for
prepayment within one and two years, respectively, of the loan
origination and 1% thereafter. The warrants issued in the Loan
Agreement became exercisable upon issuance and will remain
exercisable for five years from issuance or the closing of a merger
consolidation transaction in which the Company is not the surviving
entity.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 10pt; TEXT-INDENT: 4%">
In accordance with the accounting guidance, the Company allocated a
portion of the gross proceeds from each draw down under the Loan
Agreement to the underlying warrants, using the relative fair value
method. This resulted in the allocation of $0.6 million of the
draw down proceeds to the warrants, which was accounted for as debt
discount. Debt discount is being amortized over the term of the
debt, and recorded in interest expense in the statement of
operations. The fair value of the warrants was determined using the
Black-Scholes pricing model and are classified as equity.</p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 1px; MARGIN-TOP: 10px">
 </p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-INDENT: 4%">
The Loan Agreement contains customary representations and
warranties and customary affirmative and negative covenants
applicable to the Company and its subsidiaries, including, among
other things, restrictions on dispositions, changes in business,
management, ownership or business locations, mergers or
acquisitions, indebtedness, encumbrances, distributions,
investments, transactions with affiliates and subordinated debt.
The Agreement also includes customary events of default, including
but not limited to the nonpayment of principal or interest,
violations of covenants, material adverse changes, attachment,
levy, restraint on business, cross-defaults on material
indebtedness, bankruptcy, material judgments, misrepresentations,
subordinated debt, governmental approvals, lien priority and
delisting. Upon an event of default, the Lenders may, among other
things, accelerate the loans and foreclose on the collateral. The
Company’s obligations under the Loan Agreement are secured by
substantially all of the Company’s current and future assets,
other than its intellectual property.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 10pt; TEXT-INDENT: 4%">
The Company recorded interest expense related to the long-term debt
of $0.7 million and $0.6 million for the three months
ended March 31, 2017 and 2016, respectively. Included in
interest expense for this period was interest on principal,
amortization of the debt discount and debt issuance costs, and the
accretion of the final exit fee. For the three months ended
March 31, 2017 and 2016, the effective interest rate on the
amounts borrowed under the Loan Agreement, including the
amortization of the debt discount and issuance cost, and the
accretion of the final payment, was 9.3%.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 10pt; TEXT-INDENT: 4%">
Future minimum payments under the Loan Agreement, as of
March 31, 2017 are as follows (in thousands):</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="68%" align="center" border="0">
<tr>
<td width="88%"></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Remainder of 2017</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">4,205</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
2018</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">11,743</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
2019</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">10,982</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
2020</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">8,938</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Total minimum payments</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">35,868</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Less: Interest and final payment</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(5,868</td>
<td valign="bottom" nowrap="nowrap">) </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Notes payable, gross</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">30,000</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
</table>
</div>
69000
2915000
489000
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt">
<b>Note 5 — Cash Equivalents and Investments</b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 2%; MARGIN-TOP: 6pt">
<b><i>Cash Equivalents and Available for Sale
Investments</i></b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
The amortized cost and fair value of cash equivalents and available
for sale investments at March 31, 2017 and December 31,
2016 were as follows (in thousands):</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" align="center" border="0">
<tr>
<td width="61%"></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="18" align="center"><b>March 31, 2017</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Amortized</b><br />
<b>Cost</b></td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Unrealized</b><br />
<b>Gains</b></td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Unrealized</b><br />
<b>Losses</b></td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Fair</b><br />
<b>Value</b></td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Maturity</b><br />
<b>Dates</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Cash equivalents — Agency bonds and money market funds</p>
</td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">40,844</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom"> </td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom"> </td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">40,844</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Short-term investments — U.S. Treasury securities and Agency
bonds</p>
</td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">157,309</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">3</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(120</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">157,192</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">
4/2017 – 3/2018</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Long-term investments — Equity, U.S. Treasury securities and
Agency bonds</p>
</td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">50,513</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">179</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(70</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">50,622</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom"> </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
4/2018 – 8/2018</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" align="center" border="0">
<tr>
<td width="62%"></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="18" align="center"><b>December 31, 2016</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Amortized</b><br />
<b>Cost</b></td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Unrealized</b><br />
<b>Gains</b></td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Unrealized</b><br />
<b>Losses</b></td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Fair</b><br />
<b>Value</b></td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Maturity</b><br />
<b>Dates</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Cash equivalents — U. S. Treasury securities and money market
funds</p>
</td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">55,658</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom"> </td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom"> </td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">55,658</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Short-term investments — U.S. Treasury securities</p>
</td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">89,396</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">2</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(23</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">89,375</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom"> </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
1/2017 – 12/2017</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Long-term investments — Equity and U.S. Treasury
securities</p>
</td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">7,513</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">176</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(17</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">7,672</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">2/2018 – 3/2018</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
At March 31, 2017 there were no investments that had been in a
continuous unrealized loss position for 12 months or longer. The
Company collected the contractual cash flows on its
U.S. Treasury securities and Agency bonds that matured from
April 1, 2017 through April 27, 2017 and expects to be
able to collect all contractual cash flows on the remaining
maturities of its U.S. Treasury securities and Agency
bonds.</p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 1px; MARGIN-TOP: 12px">
 </p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-INDENT: 4%">
Interest income was as follows (in thousands):</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="76%" align="center" border="0">
<tr>
<td width="79%"></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="6" align="center"><b>Three Months Ended</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>March 31,</b><br />
<b>2017</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>March 31,</b><br />
<b>2016</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Interest income</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">489</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">62</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
</table>
</div>
0
-20944000
0
1388000
17355000
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt">
<b>Note 10 — Stockholders’ Equity</b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt">
<b><i>Accumulated Other Comprehensive Loss</i></b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
Comprehensive loss is comprised of net loss and other comprehensive
loss. Other comprehensive loss is comprised of unrealized holding
gains and losses on the Company’s <font style="WHITE-SPACE: nowrap"><font style="WHITE-SPACE: nowrap">available-for-sale</font></font> securities
that are excluded from net loss and reported separately in
stockholders’ equity.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
In the first three months of 2017 and 2016, the Company recorded
insignificant amounts of unrealized gains (losses) in <font style="WHITE-SPACE: nowrap"><font style="WHITE-SPACE: nowrap">available-for-sale</font></font> securities
in accumulated other comprehensive loss.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt">
<b><i>Warrants</i></b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
As of March 31, 2017, the Company had warrants outstanding to
purchase 3.8 million shares of the Company’s common
stock.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 10pt; TEXT-INDENT: 4%">
In June 2012, warrants were issued pursuant to the June 2012
underwriting agreements the Company entered into in connection with
two separate, concurrent offerings for our securities (the
“June 2012 Public Offerings”). In accordance with the
accounting guidance for valuing stock and warrants when stock is
issued in conjunction with other securities, and the stock and
other securities are to be accounted for as equity, the Company
allocated the gross purchase proceeds using the relative fair value
method. For accounting purposes, the June 2012 Public Offerings
were considered to be one transaction. The fair value of the common
stock issued in the June 2012 Public Offerings was calculated based
on the closing price of the stock on the commitment date as quoted
on The NASDAQ Global Market.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 10pt; TEXT-INDENT: 4%">
In October 2015, warrants to purchase 65,189 shares of the
Company’s common stock at an exercise price of $6.90 per
share were issued in accordance with the Loan Agreement. Refer to
Note 8 “Long-Term Debt”, for further details regarding
the Loan Agreement.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 10pt; TEXT-INDENT: 4%">
In February 2016, warrants to purchase 68,285 shares of the
Company’s common stock at an exercise price of $6.59 per
share were issued in accordance with the Loan Agreement. The
Company valued the warrants as of the date of issuance at $288,000
using the Black-Scholes option pricing model and the following
assumptions: a contractual term of five years, a risk-free interest
rate of 1.7%, volatility of 75%, and the fair value of the
Company’s common stock of $7.00.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 10pt; TEXT-INDENT: 4%">
In January 2017, the Company issued 16,126 shares of common stock
related to cashless exercises of warrants in accordance with the
Loan Agreement.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 10pt; TEXT-INDENT: 4%">
In March 2017, the Company issued 108,581 shares of common stock
related to cashless exercises of warrants in accordance with the
June 2012 public offerings. Also in March 2017, warrants to
purchase 184,119 shares of the Company’s common stock at an
exercise price of $5.28 per share were cash exercised in accordance
with the June 2012 public offerings.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 10pt; TEXT-INDENT: 4%">
Outstanding warrants as of March 31, 2017 were as follows:</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="84%" align="center" border="0">
<tr>
<td width="70%"></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Number</b><br />
<b>of Shares</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Exercise</b><br />
<b>Price</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Expiration</b><br />
<b>Date</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Issued 6/25/2012</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">3,730,007</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">5.28</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">06/25/17</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Issued 10/19/2015</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">48,892</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">6.90</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">10/19/20</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Issued 02/10/2016</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">51,214</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">6.59</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">02/10/21</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 1px; MARGIN-TOP: 16px">
 </p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">
<b><i>Committed Equity Offering</i></b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
On September 4, 2015, the Company entered into a Committed
Equity Offering (the “CE Offering”) that is an
<font style="WHITE-SPACE: nowrap"><font style="WHITE-SPACE: nowrap">at-the-market</font></font> issuance sales
agreement (the “Cantor Fitzgerald Agreement”) with
Cantor Fitzgerald & Co. (“Cantor Fitzgerald”),
pursuant to which the Company may issue and sell shares of common
stock having an aggregate offering price of up to
$40.0 million, from time to time through Cantor Fitzgerald as
its sales agent. The issuance and sale of these shares by the
Company under the Cantor Fitzgerald Agreement, if any, are subject
to the continued effectiveness of its registration statement on
Form <font style="WHITE-SPACE: nowrap">S-3,</font> which was
declared effective by the SEC on September 17, 2015.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 10pt; TEXT-INDENT: 4%">
Sales of the Company’s common stock, through the Cantor
Fitzgerald Agreement, will be made on The NASDAQ Global Market by
means of ordinary brokers’ transactions at market prices or
as otherwise agreed to by the Company and Cantor Fitzgerald.
Subject to the terms and conditions of the Cantor Fitzgerald
Agreement, Cantor Fitzgerald will use commercially reasonable
efforts to sell the Company’s common stock from time to time,
based upon our instructions (including any price, time or size
limits or other customary parameters or conditions we may impose).
The Company is not obligated to make any sales of common stock
under the Cantor Fitzgerald Agreement. The offering of shares of
common stock pursuant to the Cantor Fitzgerald Agreement will
terminate upon the earlier of (1) the sale of all common stock
subject to the Cantor Fitzgerald Agreement or (2) termination
of the Cantor Fitzgerald Agreement. The Cantor Fitzgerald Agreement
may be terminated by Cantor Fitzgerald at any time upon ten
days’ notice to the Company or may be terminated by the
Company at any time upon five day’ s notice to Cantor
Fitzgerald, or by Cantor Fitzgerald at any time in certain
circumstances, including the occurrence of a material adverse
change in the Company’s business. The Company will pay Cantor
Fitzgerald a commission rate equal to 3.0% of the gross proceeds of
the sales price per share of any common stock sold through Cantor
Fitzgerald under the Cantor Fitzgerald Agreement. The Company has
also provided Cantor Fitzgerald with customary indemnification and
contribution rights. As of March 31, 2017, 2,246,750 shares
have been issued through Cantor Fitzgerald under the Cantor
Fitzgerald Agreement for total net proceeds of approximately
$26.3 million. For the three months ended March 31, 2017,
1,438,557 shares have been issued for total net proceeds of
approximately $17.4 million.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt">
<b><i>Equity Incentive Plan</i></b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
Total employee stock-based compensation expenses were
$1.9 million and $1.6 million for the three months ended
March 31, 2017 and 2016, respectively.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 4%; MARGIN-TOP: 18pt">
<b><i>Stock Options</i></b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
Activity under the 2004 Equity Incentive Plan, for the three months
ended March 31, 2017, was as follows:</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="84%" align="center" border="0">
<tr>
<td width="60%"></td>
<td valign="bottom" width="7%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="7%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="7%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Shares</b><br />
<b>Available for</b><br />
<b>Grant of</b><br />
<b>Options</b><br />
<b>or Awards</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Stock Options</b><br />
<b>Outstanding</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Weighted</b><br />
<b>Average Exercise</b><br />
<b>Price per Share of</b><br />
<b>Stock Options</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Balance at December 31, 2016</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">1,588,300</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">5,192,813</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">9.27</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Options granted</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(874,774</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">874,774</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">10.66</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Options exercised</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(18,997</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">6.83</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Options forfeited/expired</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">143,616</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(143,616</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">37.29</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Restricted stock units granted</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(269,000</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Restricted stock units forfeited</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">342,500</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Balance at March 31, 2017</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">930,642</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">5,904,974</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">8.80</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 1px; MARGIN-TOP: 18px">
 </p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 4%; MARGIN-TOP: 0pt">
<b><i>Restricted Stock Units</i></b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
Restricted stock unit activity for the three months ended
March 31, 2017 was as follows:</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="76%" align="center" border="0">
<tr>
<td width="70%"></td>
<td valign="bottom" width="9%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="9%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Number of</b><br />
<b>Shares</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Weighted</b><br />
<b>Average Award</b><br />
<b>Date Fair Value per</b><br />
<b>Share</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Restricted stock units outstanding at December 31, 2016</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">64,502</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">7.19</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Restricted stock units granted</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">269,000</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">10.60</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Restricted stock units released</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(43,500</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">6.67</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Restricted stock units forfeited</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Unvested restricted stock units outstanding at
March 31, 2017</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">290,002</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">10.43</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 4%; MARGIN-TOP: 18pt">
<b><i>Restricted Stock Units that Contain Performance
Conditions</i></b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
Performance stock unit activity was as follows:</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="76%" align="center" border="0">
<tr>
<td width="73%"></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Number of</b><br />
<b>Shares</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Weighted</b><br />
<b>Average Award</b><br />
<b>Date Fair Value</b><br />
<b>per Share</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Performance stock units outstanding at December 31, 2016</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">685,000</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">7.00</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Restricted stock units granted</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Restricted stock units released</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(171,250</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">7.00</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Restricted stock units forfeited</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(342,500</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">7.00</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Performance stock units outstanding at March 31, 2017</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">171,250</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">7.00</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
</table>
</div>
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 16pt">
<b><i>Use of Estimates</i></b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States
requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those
estimates.</p>
</div>
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 10pt; TEXT-INDENT: 4%">
Outstanding warrants as of March 31, 2017 were as follows:</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="84%" align="center" border="0">
<tr>
<td width="70%"></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Number</b><br />
<b>of Shares</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Exercise</b><br />
<b>Price</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Expiration</b><br />
<b>Date</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Issued 6/25/2012</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">3,730,007</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">5.28</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">06/25/17</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Issued 10/19/2015</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">48,892</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">6.90</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">10/19/20</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Issued 02/10/2016</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">51,214</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">6.59</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">02/10/21</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
</table>
</div>
874774
<div>
<p style="font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">
<b>Note 7 — Balance Sheet Components</b></p>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 6pt; margin-bottom: 0pt;">
Accrued liabilities were as follows (in thousands):</p>
<p style="font-size: 12pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="76%" align="center" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr>
<td width="76%"></td>
<td width="6%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td width="6%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 8pt; page-break-inside: avoid;">
<td valign="bottom" rowspan="2"> </td>
<td valign="bottom">  </td>
<td align="center" valign="bottom" style="border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;" rowspan="2" colspan="2"><b>March 31,</b><br />
<b>2017</b></td>
<td valign="bottom" rowspan="2"> </td>
<td valign="bottom">  </td>
<td align="center" valign="bottom" style="border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;" rowspan="2" colspan="2"><b>December 31,</b><br />
<b>2016</b></td>
<td valign="bottom" rowspan="2"> </td>
</tr>
<tr style="font-family: Times New Roman; font-size: 8pt; page-break-inside: avoid;">
<td valign="bottom">  </td>
<td valign="bottom">  </td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;" bgcolor="#CCEEFF">
<td valign="top">
<p style="text-indent: -1em; font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 1em;">
Accrued liabilities:</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td valign="top">
<p style="text-indent: -1em; font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 3em;">
Clinical and preclinical costs</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">12,202</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">10,092</td>
<td nowrap="nowrap" valign="bottom"> </td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;" bgcolor="#CCEEFF">
<td valign="top">
<p style="text-indent: -1em; font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 3em;">
Other payroll related</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td align="right" valign="bottom">2,174</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td align="right" valign="bottom">1,888</td>
<td nowrap="nowrap" valign="bottom"> </td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td valign="top">
<p style="text-indent: -1em; font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 3em;">
Bonus</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td align="right" valign="bottom">1,156</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td align="right" valign="bottom">3,800</td>
<td nowrap="nowrap" valign="bottom"> </td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;" bgcolor="#CCEEFF">
<td valign="top">
<p style="text-indent: -1em; font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 3em;">
Other accrued expenses</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td align="right" valign="bottom">1,971</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td align="right" valign="bottom">1,595</td>
<td nowrap="nowrap" valign="bottom"> </td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td valign="top">
<p style="text-indent: -1em; font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 3em;">
Leasehold improvements</p>
</td>
<td valign="bottom">  </td>
<td nowrap="nowrap" valign="bottom"> </td>
<td align="right" nowrap="nowrap" valign="bottom">
—  </td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td align="right" valign="bottom">672</td>
<td nowrap="nowrap" valign="bottom"> </td>
</tr>
<tr style="font-size: 1px;">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 1px; border-top-style: solid;">
 </p>
</td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 1px; border-top-style: solid;">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 1px; border-top-style: solid;">
 </p>
</td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 1px; border-top-style: solid;">
 </p>
</td>
<td> </td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;" bgcolor="#CCEEFF">
<td valign="top">
<p style="text-indent: -1em; font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 1em;">
Total accrued liabilities</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">17,503</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">18,047</td>
<td nowrap="nowrap" valign="bottom"> </td>
</tr>
<tr style="font-size: 1px;">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td> </td>
</tr>
</table>
</div>
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 8pt; TEXT-INDENT: 4%">
The following instruments were excluded from the computation of
diluted net income (loss) per share because their effect would have
been antidilutive (in thousands):</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 8pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="76%" align="center" border="0">
<tr>
<td width="78%"></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="6" align="center"><b>Three Months Ended</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>March 31,</b><br />
<b>2017</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>March 31,</b><br />
<b>2016</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Options to purchase common stock</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">5,905</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">5,869</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Warrants to purchase common stock</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">3,830</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">5,710</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Restricted and Performance stock units</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">461</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">758</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Shares issuable related to the ESPP</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">59</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">40</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Total shares</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">10,255</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">12,377</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
</table>
</div>
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
The following is the calculation of basic and diluted net loss per
share (in thousands, except per share data):</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 8pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="76%" align="center" border="0">
<tr>
<td width="78%"></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="6" align="center"><b>Three Months Ended</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>March 31,</b><br />
<b>2017</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>March 31,</b><br />
<b>2016</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Net loss</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(25,867</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(12,455</td>
<td valign="bottom" nowrap="nowrap">) </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Weighted-average shares used in computing net loss per share
— basic and diluted</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">41,578</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">39,592</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Net loss per share — basic and diluted</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(0.62</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(0.31</td>
<td valign="bottom" nowrap="nowrap">) </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
</table>
</div>
10.66
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
The amortized cost and fair value of cash equivalents and available
for sale investments at March 31, 2017 and December 31,
2016 were as follows (in thousands):</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" align="center" border="0">
<tr>
<td width="61%"></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="18" align="center"><b>March 31, 2017</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Amortized</b><br />
<b>Cost</b></td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Unrealized</b><br />
<b>Gains</b></td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Unrealized</b><br />
<b>Losses</b></td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Fair</b><br />
<b>Value</b></td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Maturity</b><br />
<b>Dates</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Cash equivalents — Agency bonds and money market funds</p>
</td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">40,844</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom"> </td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom"> </td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">40,844</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Short-term investments — U.S. Treasury securities and Agency
bonds</p>
</td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">157,309</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">3</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(120</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">157,192</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">
4/2017 – 3/2018</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Long-term investments — Equity, U.S. Treasury securities and
Agency bonds</p>
</td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">50,513</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">179</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(70</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">50,622</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom"> </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
4/2018 – 8/2018</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" align="center" border="0">
<tr>
<td width="62%"></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="18" align="center"><b>December 31, 2016</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Amortized</b><br />
<b>Cost</b></td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Unrealized</b><br />
<b>Gains</b></td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Unrealized</b><br />
<b>Losses</b></td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Fair</b><br />
<b>Value</b></td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Maturity</b><br />
<b>Dates</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Cash equivalents — U. S. Treasury securities and money market
funds</p>
</td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">55,658</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom"> </td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom"> </td>
<td valign="bottom" nowrap="nowrap">$</td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">55,658</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Short-term investments — U.S. Treasury securities</p>
</td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">89,396</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">2</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(23</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">89,375</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom"> </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
1/2017 – 12/2017</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Long-term investments — Equity and U.S. Treasury
securities</p>
</td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">7,513</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">176</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(17</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">7,672</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">2/2018 – 3/2018</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
</table>
</div>
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 10pt; TEXT-INDENT: 4%">
Future minimum payments under the Loan Agreement, as of
March 31, 2017 are as follows (in thousands):</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="68%" align="center" border="0">
<tr>
<td width="88%"></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Remainder of 2017</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">4,205</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
2018</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">11,743</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
2019</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">10,982</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
2020</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">8,938</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Total minimum payments</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">35,868</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Less: Interest and final payment</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(5,868</td>
<td valign="bottom" nowrap="nowrap">) </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Notes payable, gross</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">30,000</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
</table>
</div>
143616
6.83
CYTK
1438557
19289000
<div>
<p style="text-indent: 4%; font-family: Times New Roman; font-size: 10pt; margin-top: 6pt; margin-bottom: 0pt;">
Accrued liabilities were as follows (in thousands):</p>
<p style="font-size: 12pt; margin-top: 0pt; margin-bottom: 0pt;">
 </p>
<table width="76%" align="center" style="font-family: Times New Roman; font-size: 10pt; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0">
<tr>
<td width="76%"></td>
<td width="6%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
<td width="6%" valign="bottom"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 8pt; page-break-inside: avoid;">
<td valign="bottom" rowspan="2"> </td>
<td valign="bottom">  </td>
<td align="center" valign="bottom" style="border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;" rowspan="2" colspan="2"><b>March 31,</b><br />
<b>2017</b></td>
<td valign="bottom" rowspan="2"> </td>
<td valign="bottom">  </td>
<td align="center" valign="bottom" style="border-bottom-color: rgb(0, 0, 0); border-bottom-width: 1pt; border-bottom-style: solid;" rowspan="2" colspan="2"><b>December 31,</b><br />
<b>2016</b></td>
<td valign="bottom" rowspan="2"> </td>
</tr>
<tr style="font-family: Times New Roman; font-size: 8pt; page-break-inside: avoid;">
<td valign="bottom">  </td>
<td valign="bottom">  </td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;" bgcolor="#CCEEFF">
<td valign="top">
<p style="text-indent: -1em; font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 1em;">
Accrued liabilities:</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td valign="top">
<p style="text-indent: -1em; font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 3em;">
Clinical and preclinical costs</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">12,202</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">10,092</td>
<td nowrap="nowrap" valign="bottom"> </td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;" bgcolor="#CCEEFF">
<td valign="top">
<p style="text-indent: -1em; font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 3em;">
Other payroll related</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td align="right" valign="bottom">2,174</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td align="right" valign="bottom">1,888</td>
<td nowrap="nowrap" valign="bottom"> </td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td valign="top">
<p style="text-indent: -1em; font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 3em;">
Bonus</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td align="right" valign="bottom">1,156</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td align="right" valign="bottom">3,800</td>
<td nowrap="nowrap" valign="bottom"> </td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;" bgcolor="#CCEEFF">
<td valign="top">
<p style="text-indent: -1em; font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 3em;">
Other accrued expenses</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td align="right" valign="bottom">1,971</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td align="right" valign="bottom">1,595</td>
<td nowrap="nowrap" valign="bottom"> </td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;">
<td valign="top">
<p style="text-indent: -1em; font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 3em;">
Leasehold improvements</p>
</td>
<td valign="bottom">  </td>
<td nowrap="nowrap" valign="bottom"> </td>
<td align="right" nowrap="nowrap" valign="bottom">
—  </td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td align="right" valign="bottom">672</td>
<td nowrap="nowrap" valign="bottom"> </td>
</tr>
<tr style="font-size: 1px;">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 1px; border-top-style: solid;">
 </p>
</td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 1px; border-top-style: solid;">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 1px; border-top-style: solid;">
 </p>
</td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 1px; border-top-style: solid;">
 </p>
</td>
<td> </td>
</tr>
<tr style="font-family: Times New Roman; font-size: 10pt; page-break-inside: avoid;" bgcolor="#CCEEFF">
<td valign="top">
<p style="text-indent: -1em; font-family: Times New Roman; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 1em;">
Total accrued liabilities</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">17,503</td>
<td nowrap="nowrap" valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td align="right" valign="bottom">18,047</td>
<td nowrap="nowrap" valign="bottom"> </td>
</tr>
<tr style="font-size: 1px;">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td valign="bottom">
<p style="margin-top: 0pt; margin-bottom: 0pt; border-top-color: rgb(0, 0, 0); border-top-width: 3px; border-top-style: double;">
 </p>
</td>
<td> </td>
</tr>
</table>
</div>
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
Activity under the 2004 Equity Incentive Plan, for the three months
ended March 31, 2017, was as follows:</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="84%" align="center" border="0">
<tr>
<td width="60%"></td>
<td valign="bottom" width="7%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="7%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="7%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Shares</b><br />
<b>Available for</b><br />
<b>Grant of</b><br />
<b>Options</b><br />
<b>or Awards</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Stock Options</b><br />
<b>Outstanding</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Weighted</b><br />
<b>Average Exercise</b><br />
<b>Price per Share of</b><br />
<b>Stock Options</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Balance at December 31, 2016</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">1,588,300</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">5,192,813</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">9.27</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Options granted</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(874,774</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">874,774</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">10.66</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Options exercised</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(18,997</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">6.83</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Options forfeited/expired</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">143,616</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(143,616</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">37.29</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Restricted stock units granted</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(269,000</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Restricted stock units forfeited</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">342,500</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Balance at March 31, 2017</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">930,642</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">5,904,974</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">8.80</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
</table>
</div>
874774
1922000
41578000
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
Supplemental cash flow data was as follows (in thousands):</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="76%" align="center" border="0">
<tr>
<td width="78%"></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="6" align="center"><b>Three Months Ended</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>March 31,</b><br />
<b>2017</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>March 31,</b><br />
<b>2016</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Cash paid for interest</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">592</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">382</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Cash paid for taxes</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">69</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">1</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Significant <font style="WHITE-SPACE: nowrap">non-cash</font>
investing and financing activities:</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Debt discount netted against proceeds from long term debt, recorded
in equity</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">288</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Interest paid on the long-term debt, at inception</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">63</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Purchases of property and equipment through accounts payable</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">387</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">229</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Purchases of property and equipment through accrued liabilities</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">728</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">11</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
</table>
</div>
<div>
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 18pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
<b>Note 4 — Related Parties and Related Party
Transactions</b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
<b><i>Research and Development Arrangements</i></b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
<i>Amgen Inc. (“Amgen”)</i></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
Revenue from Amgen was as follows (in thousands):</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WORD-SPACING: 0px; BORDER-COLLAPSE: collapse; TEXT-TRANSFORM: none; ORPHANS: 2; WIDOWS: 2; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px" cellspacing="0" cellpadding="0" width="76%" align="center" border="0">
<tr>
<td width="79%"></td>
<td valign="bottom" width="7%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="7%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: "Times New Roman"; break-inside: avoid">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="6" align="center"><b>Three Months Ended</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: "Times New Roman"; break-inside: avoid">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>March 31,</b><br />
<b>2017</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>March 31,</b><br />
<b>2016</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; break-inside: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Research and development revenues from related parties</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; break-inside: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Reimbursement of internal costs</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">891</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">617</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; break-inside: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
<font style="WHITE-SPACE: nowrap">Co-invest</font> option payment</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(1,250</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; break-inside: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; MARGIN-LEFT: 5em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Total revenues from Amgen</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(359</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">617</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 1px; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 12px; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
 </p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
In December 2006, the Company entered into a collaboration and
option agreement with Amgen to discover, develop and commercialize
novel small molecule therapeutics, including omecamtiv mecarbil,
that activate cardiac muscle contractility for potential
applications in the treatment of heart failure (the “Original
Amgen Agreement”). The agreement granted Amgen an option to
obtain an exclusive license worldwide, except Japan, to develop and
commercialize omecamtiv mecarbil and other drug candidates arising
from the collaboration. In May 2009, Amgen exercised its option. As
a result, Amgen became responsible for the development and
commercialization of omecamtiv mecarbil and related compounds at
its expense worldwide (excluding Japan), subject to the
Company’s development and commercialization participation
rights. Amgen reimburses the Company for certain research and
development activities it performs under the collaboration. In June
2013, Cytokinetics and Amgen executed an amendment to the Amgen
Agreement to include Japan, resulting in a worldwide collaboration
(collectively with the Original Amgen Agreement, the “Amgen
Agreement”).</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
The Amgen Agreement also provides for the Company to receive
increased royalties by <font style="WHITE-SPACE: nowrap">co-funding</font> Phase 3 development costs of
omecamtiv mecarbil and other drug candidates under the
collaboration. The Amgen Agreement also provides that if the
Company elects to <font style="WHITE-SPACE: nowrap">co-fund</font>such costs at the
$40.0 million level, it  would be entitled
to <font style="WHITE-SPACE: nowrap">co-promote</font> the <font style="WHITE-SPACE: nowrap">co-funded</font> drug in North America and
participate in agreed commercialization activities in institutional
care settings, at Amgen’s expense.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
In July 2013, Amgen announced that it had granted an option to
commercialize omecamtiv mecarbil in Europe to Servier, with the
Company’s consent, pursuant to an Option, License and
Collaboration Agreement (the “Servier Agreement”).</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
In August 2016, the Company entered into a Letter Agreement with
Amgen and Servier (the “Letter Agreement”), which
(i) expands the territory of the sublicense to Servier to
include specified countries in the Commonwealth of Independent
States (“CIS”) and (ii) provides that, if
Amgen’s rights under the Amgen Agreement, as amended, are
terminated with respect to the territory of such sublicense, the
sublicensed rights previously granted by Amgen to Servier under the
Servier Agreement will remain in effect and become a direct license
or sublicense of such rights by the Company to Servier, on
substantially the same terms as set forth in the Servier Agreement,
including but not limited to Servier’s payment of its share
of agreed development costs and future milestone and royalty
payments to the Company. The Letter Agreement does not otherwise
modify the Company’s rights and obligations under the Amgen
Agreement, as amended, or create any additional financial
obligations of the Company, unless we otherwise agree in
writing.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 10pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
In September 2016, Amgen and Servier announced Servier’s
decision to exercise its option to commercialize omecamtiv mecarbil
in Europe as well as the CIS, including Russia. The option and
related commercialization sublicense to Servier is subject to the
terms and conditions of the Amgen Agreement. Amgen remains
responsible for the performance of its obligations under the Amgen
Agreement relating to Europe and the CIS, including the payment of
milestones and royalties relating to the development and
commercialization of omecamtiv mecarbil in Europe and the CIS.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 10pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
In December 2016, the Company recognized $26.7 million in
development milestone payments related to the start of <font style="WHITE-SPACE: nowrap">GALACTIC-HF,</font> the Phase 3 cardiovascular
outcomes clinical trial of omecamtiv mecarbil which is being
conducted by Amgen in collaboration with Cytokinetics as the
Company has no remaining deliverables under the Amgen
Agreement.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 10pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
In December 2016, the Company provided notice of its exercise of
its option under the Amgen Agreement to <font style="WHITE-SPACE: nowrap">co-invest</font> in the Phase 3 development
program of omecamtiv mecarbil at the level of $10.0 million in
exchange for an incremental royalty from Amgen of up to 1% on
increasing worldwide sales of omecamtiv mecarbil outside Japan. In
February 2017, the Company provided notice to Amgen of its further
exercise of its <font style="WHITE-SPACE: nowrap">co-invest</font> option in the additional
amount of $30.0 million (i.e. to fully <font style="WHITE-SPACE: nowrap">co-invest</font> $40.0 million) in the Phase 3
development program of omecamtiv mecarbil in exchange for a total
incremental royalty from Amgen of up to 4% on increasing worldwide
sales of omecamtiv mecarbil outside Japan.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 10pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
The <font style="WHITE-SPACE: nowrap">co-invest</font> payment of $40.0 million
is due to Amgen in eight quarterly installments and is contingent
on Amgen continuing the Phase 3 development program of omecamtiv
mecarbil. For the three months ended March 31, 2017, the
Company recorded a payment of $1.3 million as a reduction in
collaboration revenue, related to the option to <font style="WHITE-SPACE: nowrap">co-invest</font> in the Phase 3 development
program of omecamtiv mecarbil, as it concluded the benefit to be
received in exchange for the <font style="WHITE-SPACE: nowrap">co-invest</font> payment to Amgen, was not
sufficiently separable from Amgen Agreement.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 10pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
Amgen and the Company are continuing the research program in 2017.
Under the Amgen Agreement, the Company is entitled to receive
reimbursements of internal costs of certain full-time employee
equivalents, as well as potential additional milestone payments
related to the research activities.</p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 1px; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 10px; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
 </p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
The Company has recognized research and development revenue from
Amgen for reimbursements of internal costs of certain full-time
employee equivalents, supporting a collaborative research program
directed to the discovery of next-generation cardiac sarcomere
activator compounds, and other costs related to that research
program. These reimbursements were recorded as research and
development revenues from related parties. During the three months
ended March 31, 2017 and 2016, the Company recorded research
and development revenue from Amgen of $0.9 million and
$0.6 million, respectively, under the Amgen Agreement. Related
party accounts receivables due from Amgen as of March 31, 2017
and December 31, 2016 were $0.9 million and zero,
respectively.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 10pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
Under the Amgen Agreement, the Company is eligible to receive over
$300.0 million in additional development milestone payments
which are based on various clinical milestones, including the
initiation of certain clinical studies, the submission of a drug
candidate to certain regulatory authorities for marketing approval
and the receipt of such approvals. Additionally, the Company is
eligible to receive up to $300.0 million in commercial
milestone payments provided certain sales targets are met. Due to
the nature of drug development, including the inherent risk of
development and approval of drug candidates by regulatory
authorities, it is not possible to estimate if and when these
milestone payments would become due. The achievement of each of
these milestones is dependent solely upon the results of
Amgen’s development and commercialization activities.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 14pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
<b><i>Astellas Pharma Inc. (“Astellas”)</i></b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
Research and development revenue from Astellas was as follows (in
thousands):</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WORD-SPACING: 0px; BORDER-COLLAPSE: collapse; TEXT-TRANSFORM: none; ORPHANS: 2; WIDOWS: 2; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px" cellspacing="0" cellpadding="0" width="76%" align="center" border="0">
<tr>
<td width="78%"></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: "Times New Roman"; break-inside: avoid">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="6" align="center"><b>Three Months Ended</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: "Times New Roman"; break-inside: avoid">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>March 31,</b><br />
<b>2017</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>March 31,</b><br />
<b>2016</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; break-inside: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
License revenues from related parties</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">1,446</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">3,974</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; break-inside: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Research and development revenues with related parties:</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; break-inside: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Reimbursement of internal costs</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">1,899</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">2,239</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; break-inside: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Reimbursement of other costs</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">826</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">1,440</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; break-inside: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; MARGIN-LEFT: 5em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Total research and development revenue with related parties from
Astellas</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">2,725</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">3,679</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; break-inside: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; MARGIN-LEFT: 5em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Total Revenue from Astellas</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">4,171</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">7,653</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
At March 31, 2017 and December 31, 2016, the Company had
$26.0 million and $23.1 million, respectively, of
deferred revenue related to Astellas, reflecting the unrecognized
portion of the license revenue, option fee and payment of expenses.
There were no accounts receivable due from Astellas at
March 31, 2017 and December 31, 2016.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 14pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
<i>Original Astellas Agreement <font style="WHITE-SPACE: nowrap">(Non-neuromuscular</font> license)</i></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
In June 2013, the Company entered into a license and collaboration
agreement with Astellas (the “Original Astellas
Agreement”). The primary objective of the collaboration with
Astellas is to advance novel therapies for diseases and medical
conditions associated with muscle weakness. Under the Original
Astellas Agreement, the Company granted Astellas an exclusive
license to <font style="WHITE-SPACE: nowrap">co-develop</font> and jointly
commercialize <font style="WHITE-SPACE: nowrap">CK-2127107,</font> a fast skeletal troponin
activator, for potential application in <font style="WHITE-SPACE: nowrap">non-neuromuscular</font> indications worldwide.
Cytokinetics retained an option to conduct early-stage development
for certain agreed indications at its initial expense, subject to
reimbursement if development continues under the collaboration.
Cytokinetics also retained an option to <font style="WHITE-SPACE: nowrap">co-promote</font> collaboration products in the
United States and Canada. Astellas will reimburse Cytokinetics for
certain expenses associated with its <font style="WHITE-SPACE: nowrap">co-promotion</font> activities.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 14pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
<i>2014 Astellas Agreement (Expansion to include neuromuscular
indications)</i></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
In December 2014, the Company entered into an amended and restated
license and collaboration agreement with Astellas (the “2014
Astellas Agreement”). This agreement superseded the Original
Astellas Agreement. The 2014 Astellas Agreement expanded the
objective of the collaboration of advancing novel therapies for
diseases and medical conditions associated with muscle weakness to
include spinal muscular atrophy (“SMA”) and potentially
other neuromuscular indications for <font style="WHITE-SPACE: nowrap">CK-2127107</font> and other fast skeletal
troponin activators, in addition to the<font style="WHITE-SPACE: nowrap">non-neuromuscular</font> indications provided for in
the Original Astellas Agreement.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
Under the 2014 Astellas Agreement, the Company received
a <font style="WHITE-SPACE: nowrap">non-refundable</font> upfront license fee of
$30.0 million in January 2015. Concurrently, the Company
received $15.0 million as a milestone payment relating to
Astellas’ decision to advance <font style="WHITE-SPACE: nowrap">CK-2127107</font> into Phase 2 clinical
development. Under the 2014 Astellas Agreement, the Company is
conducting a Phase 2 clinical trial of <font style="WHITE-SPACE: nowrap">CK-2127107</font> in patients with SMA.</p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 1px; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 12px; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
 </p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
The Company determined that the license and the research and
development services relating to the 2014 Astellas Agreement are a
single unit of accounting as the license was determined to not have
stand-alone value. Accordingly, the Company is recognizing this
revenue over the research term of the 2014 Astellas Agreement using
the proportional performance model. During the three months ended
March 31, 2017 and 2016, the Company recorded
$0.5 million and $4.0 million, respectively, in license
revenue based on the proportional performance model under the 2014
Astellas Agreement. As of March 31, 2017, $6.7 million
license revenue remains deferred under the 2014 Astellas
Agreement.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
Pursuant to the 2014 Astellas Agreement, the Company recognized
research and development revenue from Astellas for reimbursements
of internal costs of certain full-time employee equivalents,
supporting collaborative research and development programs, and of
other costs related to those programs. The Company was eligible to
potentially receive over $20.0 million in reimbursement of
sponsored research and development activities during the two years
of the collaboration following the execution of the 2014 Astellas
Agreement. During the three months ended March 31, 2017 and
2016, the Company recorded research and development revenue from
Astellas of $2.0 million and $3.7 million, respectively,
under the 2014 Astellas Agreement.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
In conjunction with the 2014 Astellas Agreement, the Company also
entered into a common stock purchase agreement which provided for
the sale of 2,040,816 shares of its common stock to Astellas at a
price per share of $4.90 and an aggregate purchase price of
$10.0 million which was received in December 2014. Pursuant to
this agreement, Astellas agreed to certain trading and other
restrictions with respect to the Company’s common stock. The
Company determined the fair value of the stock issued to Astellas
to be $9.1 million. The excess of cash received over fair
value of $0.9 million was deferred along with the license and
research and development services. Allocated consideration will be
recognized as revenue for the single unit of accounting above, as
services are performed following the proportional performance model
over the research term of the 2014 Astellas Agreement. Following
the common stock purchase, Astellas was determined to be a related
party. As such, all revenue earned following the common stock
purchase is classified as related party revenue.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 16pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
<i>2016 Astellas Amendment (Inclusion of ALS as an Added Indication
and Option on Tirasemtiv)</i></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
In 2016, the Company and Astellas further amended the collaboration
agreement to expand our collaboration to include the development
of <font style="WHITE-SPACE: nowrap">CK-2127107</font> for the potential treatment of
ALS (“2016 Astellas Amendment”), as well as the
possible development in ALS of other fast skeletal regulatory
activators previously licensed by the Company to Astellas
(“ALS License”). The 2016 Astellas Amendment became
effective in September 2016 (collectively with the 2014 Astellas
Agreement, the “Current Astellas Agreement”).</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 10pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
Under the 2016 Astellas Amendment, the Company granted Astellas an
option for a license to tirasemtiv (“Option on
Tirasemtiv”). If Astellas exercises its Option on Tirasemtiv,
Astellas will receive exclusive worldwide commercialization rights
outside of the Company’s commercialization territory of North
America, Europe and other select countries. Tirasemtiv is the
Company’s fast skeletal troponin activator being evaluated in
the ongoing Phase 3 clinical trial, <font style="WHITE-SPACE: nowrap">VITALITY-ALS,</font> in people living with
amyotrophic lateral sclerosis (“ALS”).</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 10pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
Finally, the 2016 Astellas Amendment extends the existing joint
research program focused on the discovery of additional
next-generation skeletal muscle activators through 2017, including
sponsored research at Cytokinetics.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 16pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
<i>Astellas’ Option on Tirasemtiv</i></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
In connection with the execution of the 2016 Astellas Amendment,
the Company received a $15.0 million <font style="WHITE-SPACE: nowrap">non-refundable</font> option fee for the grant of
the Option on Tirasemtiv in October 2016. Prior to Astellas’
exercise of the option, the Company will continue the development
of tirasemtiv, including <font style="WHITE-SPACE: nowrap">VITALITY-ALS,</font> at its own expense to support
regulatory approval in the U.S., EU and certain other jurisdictions
and will retain the final decision making authority on the
development of tirasemtiv. If Astellas exercises the option, the
Company will grant Astellas an exclusive license to develop and
commercialize tirasemtiv outside the Company’s own
commercialization territory of North America, Europe and other
select countries (“License on Tirasemtiv”) under a
tirasemtiv License and Collaboration Agreement (“Tirasemtiv
License Agreement”). Each party would be primarily
responsible for the further development of tirasemtiv in its
territory and have the exclusive right to commercialize tirasemtiv
in its territory.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 10pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
If Astellas exercises its option for a global collaboration for the
development and commercialization of tirasemtiv, the Company will
receive an option exercise payment ranging from $25.0 million
(if exercise occurs following receipt of data from <font style="WHITE-SPACE: nowrap">VITALITY-ALS)</font> to $80.0 million (if
exercise occurs following receipt of FDA approval) and a milestone
payment of $30.0 million from Astellas associated with the
Company’s initiation of the open-label extension trial for
tirasemtiv <font style="WHITE-SPACE: nowrap">(VIGOR-ALS).</font> The Company will be
responsible for the development costs of tirasemtiv during the
option period, but if Astellas exercises the option after the
defined review period following receipt of data from <font style="WHITE-SPACE: nowrap">VITALITY-ALS,</font> Astellas will at the time of
option exercise reimburse the Company for a share of any additional
costs incurred after such review period.</p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 1px; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 10px; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
 </p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
If Astellas exercises the option for tirasemtiv, the parties will
share the future development costs of tirasemtiv in North America,
Europe and certain other countries (with Cytokinetics bearing 75%
of such shared costs and Astellas bearing 25% of such costs), and
Astellas will be solely responsible for the development costs of
tirasemtiv specific to its commercialization territory. Contingent
upon the successful development of tirasemtiv, the Company may
receive milestone payments up to $100.0 million for the
initial indication and up to $50.0 million for each subsequent
indication. If tirasemtiv is commercialized, Astellas will pay the
Company royalties (at rates ranging from the <font style="WHITE-SPACE: nowrap">mid-teens</font> to twenty percent) on sales of
tirasemtiv in Astellas’ territory, and the Company will pay
Astellas royalties (at rates up to the <font style="WHITE-SPACE: nowrap">mid-teens)</font> on sales of tirasemtiv in the
Company’s territory, in each case subject to various possible
adjustments.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 10pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
The Company concluded that the option to obtain the License on
Tirasemtiv is a substantive option, and is therefore not considered
a deliverable at the execution of the 2016 Astellas Amendment. The
Company determined that the Tirasemtiv License Agreement is
contingent upon the exercise of the Option on Tirasemtiv, and is
therefore not effective during the periods presented, since the
option has not been exercised as of the latest balance sheet date.
In addition, the Company did evaluate the consideration set to be
received for the License on Tirasemtiv in relation to the fair
value of the License on Tirasemtiv, and determined that it was not
being provided at a significant incremental discount.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 10pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
The Company further determined that the Option Fee of
$15.0 million was deemed to be a prepayment towards the
License on Tirasemtiv, and therefore deferred revenue recognition
either until the option is exercised, or until the option expires
unexercised. If the Option on Tirasemtiv expires unexercised, the
$15.0 million received would be added to the 2016 Astellas
Amendment consideration, to be allocated to the units of
accounting. The Option on Tirasemtiv expires, if not exercised by
Astellas, following the receipt of the approval letter for
tirasemtiv from the FDA.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 10pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
Prior to Astellas’ exercise of the option, the Company will
continue the development of tirasemtiv, including <font style="WHITE-SPACE: nowrap">VITALITY-ALS,</font> at its own expense to support
regulatory approval in the U.S., EU and certain other
jurisdictions, and the Company has complete discretion to continue
to conduct clinical trials, and will retain the final decision
making authority on the development of tirasemtiv. Therefore, the
Company concluded that there was no obligation related to any
development services during the option period.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 14pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
<i>Addition of ALS as an Added Indication <font style="WHITE-SPACE: nowrap">(CK-2127107</font> and other fast skeletal
activators)</i></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
In connection with the execution of the 2016 Astellas Amendment,
the Company received a <font style="WHITE-SPACE: nowrap">non-refundable</font> upfront amendment fee of
$35.0 million. In addition, the Company received an
accelerated $15.0 million milestone payment that would have
been payable upon the initiation of the first Phase 2 clinical
trial of <font style="WHITE-SPACE: nowrap">CK-2127107</font> as the lead compound in ALS,
as if such milestone had been achieved upon the execution of the
2016 Astellas Amendment.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 8pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
The Company and Astellas are collaborating to develop CK-2127107 in
ALS. Astellas is primarily responsible for the development of
CK-2127107 in ALS, but the Company will conduct the Phase 2
clinical trial of CK-2127107 in ALS and will share in the
operational responsibility for later clinical trials. Subject to
specified guiding principles, decision making will be by consensus,
subject to escalation and, if necessary, Astellas’ final
decision making authority on the development (including regulatory
affairs), manufacturing, medical affairs and commercialization of
CK-2127107 and other fast skeletal regulatory activators in ALS.
The Company and Astellas will share equally the costs of
developing <font style="WHITE-SPACE: nowrap">CK-2127107</font> in ALS for potential
registration and marketing authorization in the U.S. and Europe,
provided that (i) Astellas has agreed to solely fund Phase 2
development costs of <font style="WHITE-SPACE: nowrap">CK-2127107</font> in ALS subject to a right to
recoup the Company’s share of such costs plus a 100% premium
by reducing future milestone and royalty payments to the Company
and (ii) the Company may defer (but not eliminate) a portion
of its <font style="WHITE-SPACE: nowrap">co-funding</font> obligation for development
activities after Phase 2 for up to 18 months, subject to certain
conditions. The Company has the right to <font style="WHITE-SPACE: nowrap">co-fund</font> its share of such Phase 2
development costs on a current basis, in which case there would not
be a premium due to Astellas. Cytokinetics will also receive
approximately $41.0 million in additional sponsored research
and development funding through 2018 which includes Astellas’
funding of Cytokinetics’ conduct of the Phase 2 clinical
development of <font style="WHITE-SPACE: nowrap">CK-2127107</font> in ALS (approximately $35.8
million) as well as the continuing research collaboration
(approximately $5.2 million).</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 8pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
The Company determined that the deliverables under the 2016
Astellas Amendment included (1) the ALS License, <font style="WHITE-SPACE: nowrap">(2) CK-2127107</font> development services in ALS
through Phase 2 activities (“ALS Development
Services”), and (3) research services added
(“Additional Research Services”). Deliverables that do
not provide standalone value have been combined with other
deliverables to form a unit of accounting that collectively has
standalone value, with revenue being recognized on the combined
unit of accounting, rather than the individual deliverables. There
are no rights of return provisions for the delivered items in the
Current Astellas Agreement.</p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 1px; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 8px; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
 </p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
The Company considered the 2016 Astellas Amendment to be a
modification of the 2014 Astellas Agreement. The remaining
deliverables under the 2014 Astellas Agreement were: (1) the
SMA license; (2) Research Services in connection with the
Research Plan (through 2016); and (3) SMA Development Services
in connection with the Development Plan. The Company evaluated the
components and consideration of the 2016 Astellas Amendment against
other Phase 2 collaboration arrangements, and determined that the
new 2016 deliverables had standalone value and are delivered at
fair value. Therefore no reallocation of consideration to the 2014
deliverables was performed.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 8pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
The Company concluded that there are two units of accounting; the
ALS License, and the Additional Research Services and ALS
Development Services (“Research and ALS Development
Services”). The Company also determined that the ALS License
has standalone value since (1) Astellas received a worldwide
license for ALS, to perform further research in the field of ALS,
to develop and use <font style="WHITE-SPACE: nowrap">CK-2127107</font> to make, have make, sell or
otherwise commercialize <font style="WHITE-SPACE: nowrap">CK-2127107</font> in ALS; (2) Astellas has
the right to sublicense the rights to <font style="WHITE-SPACE: nowrap">CK-2127107</font> in ALS to a third party; and
(3) Astellas has the technical capabilities to advance further
development on <font style="WHITE-SPACE: nowrap">CK-2127107</font> in ALS, without the continued
involvement of the Company.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 8pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
Arrangement Consideration under the 2016 Astellas Amendment related
to <font style="WHITE-SPACE: nowrap">CK-2127107</font> and research is comprised of
the following (in millions):</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 8pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WORD-SPACING: 0px; BORDER-COLLAPSE: collapse; TEXT-TRANSFORM: none; ORPHANS: 2; WIDOWS: 2; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px" cellspacing="0" cellpadding="0" width="68%" align="center" border="0">
<tr>
<td width="84%"></td>
<td valign="bottom" width="12%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: "Times New Roman"; break-inside: avoid">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Arrangement</b><br />
<b>Consideration</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; break-inside: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Amendment Fee</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">35.0</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; break-inside: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Accelerated milestone payment</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">15.0</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; break-inside: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Total Upfront Consideration</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">50.0</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; break-inside: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Additional Research Services</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">5.1</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; break-inside: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
ALS Development Services</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">39.1</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; break-inside: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Total Committed Consideration</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">44.2</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; break-inside: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Total Consideration</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">94.2</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
The Company allocated the $50.0 million in upfront
consideration along with the $44.2 million in then committed
research and development consideration, among the two units of
accounting, on a relative fair value basis, using the best
estimated selling price (“BESP”). The BESP of the ALS
License was determined using a discounted cash flow, risk adjusted
for probability of success; while the BESP of the research and
development services were determined using estimated research and
development cost, included in the research and development programs
approved by Astellas. Based on this allocation of consideration,
the Company stands to recognize $74.9 million in license
revenue and $19.3 million in research and development revenue,
under the 2016 Astellas Amendment. Since the upfront consideration
of $50.0 million is less than the allocated consideration of
the ALS License, the Company recognized $50.0 million in
license revenue on the effective date of the 2016 Astellas
Amendment, in September 2016, and records the remaining
$24.9 million as an allocation from research and development
services, when those services are performed.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
Allocation of arrangement consideration, and revenue recognition
(in millions):</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WORD-SPACING: 0px; BORDER-COLLAPSE: collapse; TEXT-TRANSFORM: none; ORPHANS: 2; WIDOWS: 2; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px" cellspacing="0" cellpadding="0" width="84%" align="center" border="0">
<tr>
<td width="64%"></td>
<td valign="bottom" width="9%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="9%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="9%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: "Times New Roman"; break-inside: avoid">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Allocated</b><br />
<b>Consideration</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Upfront</b><br />
<b>Revenue</b><br />
<b>Recognition</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Revenue</b><br />
<b>Recognition</b><br />
<b>over</b><br />
<b>Performance</b><br />
<b>Period</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; break-inside: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Units of Accounting:</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; break-inside: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
ALS License</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">74.9</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">50.0</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">24.9</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; break-inside: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Research and ALS Development Services</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">19.3</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">19.3</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; break-inside: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Total consideration</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">94.2</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">50.0</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">44.2</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
During the three months ended March 31, 2017 and 2016, the
Company recorded $0.9 million and zero, respectively in
license revenue under the 2016 Astellas Amendment.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
The Company will recognize the research and development services
using the proportional performance model over the initial
development term, through the completion of the ALS Development
Services. Pursuant to the 2016 Astellas Amendment, the Company
receives payment for research and development revenue from Astellas
for reimbursements of internal costs of certain full-time employee
equivalents, supporting collaborative research and development
programs, and of other costs related to those programs.</p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 1px; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 12px; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
 </p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
During the three months ended March 31, 2017 and 2016, the
Company recorded $0.7 million and zero, respectively in
research and development revenue from Astellas, under the 2016
Astellas Amendment.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
The Company believes that each of the milestones related to
research under the Current Astellas Agreement is substantive and
can only be achieved with the Company’s past and current
performance and each milestone will result in additional payments
to the Company. The Company is eligible to receive up to
$2.0 million in research milestone payments under the
collaboration for each future potential drug candidate.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
The achievement of each of the late stage development milestones
and the commercialization milestones are dependent solely upon the
results of Astellas’ development activities and therefore
these milestones were not deemed to be substantive.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
Under the Current Astellas Agreement, additional research and early
and late state development milestone payments which are based on
various research and clinical milestones, including the initiation
of certain clinical studies, the submission for approval of a drug
candidate to certain regulatory authorities for marketing approval
and the commercial launch of collaboration products could total
over $600.0 million, including up to $95.0 million
relating to <font style="WHITE-SPACE: nowrap">CK-2127107</font> in <font style="WHITE-SPACE: nowrap">non-neuromuscular</font> indications, and over
$100.0 million related to <font style="WHITE-SPACE: nowrap">CK-2127107</font> in each of SMA, ALS and other
neuromuscular indications. Additionally, $200.0 million in
commercial milestones could be received under the Current Astellas
Agreement provided certain sales targets are met. Due to the nature
of drug development, including the inherent risk of development and
approval of drug candidates by regulatory authorities, it is not
possible to estimate if and when these milestone payments could
become due.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
In the event Astellas commercializes any collaboration products,
the Company will receive royalties on sales of such collaboration
products, including royalties ranging from the high single digits
to the high teens on sales of products containing CK-2127107.
Cytokinetics can <font style="WHITE-SPACE: nowrap">co-fund</font> certain development costs
for <font style="WHITE-SPACE: nowrap">CK-2127107</font> and other compounds in
exchange for increased milestone payments and royalties; such
royalties may increase under certain scenarios to exceed twenty
percent. Under the Current Astellas Agreement, Cytokinetics retains
an option to <font style="WHITE-SPACE: nowrap">co-promote</font> collaboration products
containing fast skeletal troponin activators for neuromuscular
indications in the U.S., Canada and Europe, in addition to its
option to <font style="WHITE-SPACE: nowrap">co-promote</font> other collaboration products
in the U.S. and Canada as provided for in the Original Astellas
Agreement. Astellas will reimburse Cytokinetics for certain
expenses associated with its <font style="WHITE-SPACE: nowrap">co-promotion</font> activities.</p>
</div>
</div>
37.29
-198000
728000
1446000
2018
P3Y
0
P12M
0.50
387000
2366000
143616
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
Long-term debt and unamortized debt discount balances are as
follows (in thousands):</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="76%" align="center" border="0">
<tr>
<td width="76%"></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>March 31,</b><br />
<b>2017</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>December 31</b><br />
<b>2016</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Notes payable, gross</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">30,000</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">30,000</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Less: Unamortized debt discount</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(422</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(472</td>
<td valign="bottom" nowrap="nowrap">) </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Accretion of final payment fee</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">442</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">353</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Carrying value of notes payable</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">30,020</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">29,881</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Less: Current portion of long-term debt</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(4,825</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(2,500</td>
<td valign="bottom" nowrap="nowrap">) </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Long-term debt</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">25,195</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">27,381</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
</table>
</div>
341000
139000
2307000
90621000
7560000
100000000
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt">
<b><i>Non-Cash Interest Expense on Liabilities Related to Sale of
Future Royalties</i></b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
The Company accounted for Liabilities related to sale of future
royalties as a debt financing for accounting purposes, to be
amortized under the effective interest rate method over the life of
the related royalty stream when the Company has a significant
continuing involvement in the generation of royalty streams.</p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 1px; MARGIN-TOP: 12px">
 </p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-INDENT: 4%">
Liabilities related to sale of future royalties and the debt
amortization are based on the Company’s current estimates of
future royalties expected to be paid over the life of the
arrangement. The Company will periodically assess the expected
royalty payments using a combination of internal projections and
forecasts from external sources. To the extent the Company’s
future estimates of future royalty payments are greater or less
than its previous estimates or the estimated timing of such
payments is materially different than its previous estimates, the
Company will adjust the liabilities related to sale of future
royalties and prospectively recognize related non-cash interest
expense.</p>
</div>
<div>
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 18pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
<b>Note 9 - Liabilities Related to Sale of Future Royalties</b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
In February 2017, the Company entered into a Royalty Purchase
Agreement (the “Royalty Agreement”) with RPI Finance
Trust (“RPI”), an entity related to Royalty Pharma.
Under the Royalty Agreement, The Company sold a portion of the
Company’s right to receive royalties on potential net sales
of omecamtiv mecarbil (and potentially other compounds with the
same mechanism of action) under the Company’s agreements with
Amgen to RPI for a payment of $90.0 million (the “Royalty
Monetization”). The Royalty Monetization is non-refundable,
even if omecamtiv mecarbil is never commercialized. The Company
accounts for the Royalty Monetization as a liability reported as
Liabilities related to sale of future royalties, primarily because
the Company has significant continuing involvement in generating
the royalty stream under the Amgen Agreement, including the
Company’s option to co-invest in the Phase 3 development
program of omecamtiv mecarbil.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
Also in February 2017, pursuant to a concurrently-executed Common
Stock Purchase Agreement with RPI, the Company issued 875,656
shares of its common stock to RPI for $10.0 million (the “RPI
Common Stock”).</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
The Company concluded that there are two units of accounting for
the Royalty Monetization and the RPI Common Stock: (1) the
liability related to sale of future royalties and (2) the RPI
Common Stock. The Company allocated the $90 million from the
Royalty Monetization and the $10 million from the RPI Common Stock
among the two units of accounting on a relative fair value basis.
The Company determined the fair value for the liability related to
sale of future royalties at the time of the Royalty Monetization to
be $96.7 million, with an effective annual non-cash interest rate
of 17%. The Company determined the fair value of the RPI Common
Stock at March 31, 2017 to be $8.1 million, based on the closing
stock price at the transaction date and adjusted for the trading
restrictions.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
The Company allocated the transaction consideration on a relative
fair value basis to the liability and the common stock, as follows
(in millions):</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WORD-SPACING: 0px; BORDER-COLLAPSE: collapse; TEXT-TRANSFORM: none; ORPHANS: 2; WIDOWS: 2; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px" cellspacing="0" cellpadding="0" width="68%" align="center" border="0">
<tr>
<td width="84%"></td>
<td valign="bottom" width="11%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: "Times New Roman"; break-inside: avoid">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Allocated<br />
Consideration</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; break-inside: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Units of Accounting:</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; break-inside: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Liability related to sale of future royalties</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">92.3</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; break-inside: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Common stock</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">7.7</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; break-inside: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Total consideration</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">100.0</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 1px; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 12px; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
 </p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
The Company allocated $1.8 million of transaction costs incurred in
connection with the Royalty Monetization and the RPI Common Stock
to the liability and common stock in proportion to the allocation
of proceeds to those components. The transaction costs allocated to
the liability will be amortized to non-cash interest expense over
the estimated term of the Royalty Agreement.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 10pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
The following table shows the activity within liabilities related
to sale of future royalties during the three months ended
March 31, 2017 (in thousands):</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WORD-SPACING: 0px; BORDER-COLLAPSE: collapse; TEXT-TRANSFORM: none; ORPHANS: 2; WIDOWS: 2; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px" cellspacing="0" cellpadding="0" width="68%" align="center" border="0">
<tr>
<td width="87%"></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; break-inside: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Liability related to sale of future royalties at February 1,
2017</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right"> 92,300</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; break-inside: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Non-cash interest expense recognized</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">2,295</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; break-inside: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Liability related to sale of future royalties at March 31, 2017</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">94,595</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; break-inside: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Less: Unamortized transaction costs</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(1,667</td>
<td valign="bottom" nowrap="nowrap">) </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; break-inside: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Carrying value of liability related to sale of future royalties at
March 31, 2017</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">92,928</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
</table>
<br class="Apple-interchange-newline" /></div>
</div>
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 10pt; TEXT-INDENT: 4%">
The following table shows the activity within liabilities related
to sale of future royalties during the three months ended
March 31, 2017 (in thousands):</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="68%" align="center" border="0">
<tr>
<td width="87%"></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Liability related to sale of future royalties at February 1,
2017</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right"> 92,300</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Non-cash interest expense recognized</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">2,295</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Liability related to sale of future royalties at March 31, 2017</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">94,595</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Less: Unamortized transaction costs</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(1,667</td>
<td valign="bottom" nowrap="nowrap">) </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Carrying value of liability related to sale of future royalties at
March 31, 2017</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">92,928</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
</table>
</div>
1800000
5905000
3830000
59000
461000
7.00
0
342500
0
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
Performance stock unit activity was as follows:</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="76%" align="center" border="0">
<tr>
<td width="73%"></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Number of</b><br />
<b>Shares</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Weighted</b><br />
<b>Average Award</b><br />
<b>Date Fair Value</b><br />
<b>per Share</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Performance stock units outstanding at December 31, 2016</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">685,000</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">7.00</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Restricted stock units granted</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Restricted stock units released</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(171,250</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">7.00</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Restricted stock units forfeited</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(342,500</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">7.00</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Performance stock units outstanding at March 31, 2017</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">171,250</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">7.00</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
</table>
</div>
171250
7.00
0
10.60
342500
269000
0
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
Restricted stock unit activity for the three months ended
March 31, 2017 was as follows:</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="76%" align="center" border="0">
<tr>
<td width="70%"></td>
<td valign="bottom" width="9%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="9%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Number of</b><br />
<b>Shares</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Weighted</b><br />
<b>Average Award</b><br />
<b>Date Fair Value per</b><br />
<b>Share</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Restricted stock units outstanding at December 31, 2016</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">64,502</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">7.19</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Restricted stock units granted</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">269,000</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">10.60</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Restricted stock units released</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(43,500</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">6.67</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Restricted stock units forfeited</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Unvested restricted stock units outstanding at
March 31, 2017</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">290,002</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">10.43</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
</table>
</div>
0
43500
6.67
0
0
2017-04-30
2018-03-31
2017-04-01
2017-04-27
2018-04-30
2018-08-31
2017-06-25
2020-10-19
2021-02-10
1300000
300000000
2000000
The Company is required to repay the outstanding principal in 36 equal installments beginning October 2017 and is due in full in October 2020.
36 equal installments beginning October 2017 and is due in full in October 2020.
700000
The remaining term loans, if drawn, will bear interest at a rate fixed at the time of draw, equal to the greater of (i) 7.50% and (ii) the sum of the three month U.S. LIBOR rate plus 7.31%.
The warrants issued in the Loan Agreement became exercisable upon issuance and will remain exercisable for five years from issuance or the closing of a merger consolidation transaction in which the Company is not the surviving entity.
P5Y
2020-10
0.030
500000
74900000
24900000
50000000
19300000
19300000
0
92300000
7700000
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
The Company allocated the transaction consideration on a relative
fair value basis to the liability and the common stock, as follows
(in millions):</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="68%" align="center" border="0">
<tr>
<td width="84%"></td>
<td valign="bottom" width="11%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Allocated<br />
Consideration</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Units of Accounting:</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Liability related to sale of future royalties</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">92.3</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Common stock</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">7.7</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Total consideration</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">100.0</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
</table>
</div>
90000000
10000000
8100000
-2295000
1667000
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 10pt; TEXT-INDENT: 4%">
As of March 31, 2017, future minimum payments due to Amgen
were as follows (in thousands):</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="68%" align="center" border="0">
<tr>
<td width="88%"></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Remainder of 2017</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">18,750</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
2018</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">18,750</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Total</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">37,500</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
</table>
</div>
-359000
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
Revenue from Amgen was as follows (in thousands):</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="76%" align="center" border="0">
<tr>
<td width="79%"></td>
<td valign="bottom" width="7%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="7%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="6" align="center"><b>Three Months Ended</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>March 31,</b><br />
<b>2017</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>March 31,</b><br />
<b>2016</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Research and development revenues from related parties</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Reimbursement of internal costs</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">891</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">617</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
<font style="WHITE-SPACE: nowrap">Co-invest</font> option
payment</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(1,250</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 5em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Total revenues from Amgen</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">(359</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">617</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
</table>
</div>
300000000
891000
900000
40000000
1250000
40000000
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
Allocation of arrangement consideration, and revenue recognition
(in millions):</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="84%" align="center" border="0">
<tr>
<td width="64%"></td>
<td valign="bottom" width="9%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="9%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="9%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Allocated</b><br />
<b>Consideration</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Upfront</b><br />
<b>Revenue</b><br />
<b>Recognition</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Revenue</b><br />
<b>Recognition</b><br />
<b>over</b><br />
<b>Performance</b><br />
<b>Period</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Units of Accounting:</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
ALS License</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">74.9</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">50.0</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">24.9</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Research and ALS Development Services</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">19.3</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom" nowrap="nowrap" align="right">
—  </td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">19.3</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Total consideration</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">94.2</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">50.0</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">44.2</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
</table>
</div>
4171000
<div>
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
Research and development revenue from Astellas was as follows (in
thousands):</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; WORD-SPACING: 0px; BORDER-COLLAPSE: collapse; TEXT-TRANSFORM: none; ORPHANS: 2; WIDOWS: 2; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px" cellspacing="0" cellpadding="0" width="76%" align="center" border="0">
<tr>
<td width="78%"></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: "Times New Roman"; break-inside: avoid">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="6" align="center"><b>Three Months Ended</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: "Times New Roman"; break-inside: avoid">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>March 31,</b><br />
<b>2017</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>March 31,</b><br />
<b>2016</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; break-inside: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
License revenues from related parties</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">1,446</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">3,974</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; break-inside: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Research and development revenues with related parties:</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; break-inside: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Reimbursement of internal costs</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">1,899</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">2,239</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; break-inside: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Reimbursement of other costs</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">826</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">1,440</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; break-inside: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; MARGIN-LEFT: 5em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Total research and development revenue with related parties from
Astellas</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">2,725</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">3,679</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; break-inside: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman"; MARGIN-LEFT: 5em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Total Revenue from Astellas</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">4,171</td>
<td valign="bottom" nowrap="nowrap"> </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">7,653</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
</table>
<br class="Apple-interchange-newline" /></div>
</div>
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 8pt; TEXT-INDENT: 4%">
Arrangement Consideration under the 2016 Astellas Amendment related
to <font style="WHITE-SPACE: nowrap">CK-2127107</font> and research
is comprised of the following (in millions):</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 8pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="68%" align="center" border="0">
<tr>
<td width="84%"></td>
<td valign="bottom" width="12%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1pt solid" valign="bottom" colspan="2" align="center"><b>Arrangement</b><br />
<b>Consideration</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Amendment Fee</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">35.0</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Accelerated milestone payment</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">15.0</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Total Upfront Consideration</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">50.0</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Additional Research Services</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">5.1</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
ALS Development Services</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">39.1</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Total Committed Consideration</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">44.2</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 1px solid; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; PAGE-BREAK-INSIDE: avoid" bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; MARGIN-TOP: 0pt; TEXT-INDENT: -1em">
Total Consideration</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">94.2</td>
<td valign="bottom" nowrap="nowrap"> </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td valign="bottom">
<p style="MARGIN-BOTTOM: 0pt; BORDER-TOP: rgb(0,0,0) 3px double; MARGIN-TOP: 0pt">
 </p>
</td>
<td> </td>
</tr>
</table>
</div>
1446000
1899000
2725000
826000
94200000
44200000
50000000
2000000
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900000
18997
12377000
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6841000
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62000
30405000
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63000
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13534000
1611000
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3974000
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40000
758000
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4000000
617000
617000
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7653000
3974000
2239000
3679000
1440000
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0001061983
cytk:OxfordAndSiliconValleyBankMembercytk:LoanAndSecurityAgreementMember
2015-10-31
0001061983
cytk:LoanAndSecurityAgreementMember
2015-10-31
0001061983
cytk:FirstTermLoanMembercytk:OxfordAndSiliconValleyBankMembercytk:LoanAndSecurityAgreementMember
2015-10-31
0001061983
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2015-10-31
0001061983
cytk:TermLoanMaturityOnMarchTwoThousandSeventeenMembercytk:OxfordAndSiliconValleyBankMembercytk:LoanAndSecurityAgreementMember
2015-10-31
pure
iso4217:USD
shares
shares
iso4217:USD
cytk:Installment
cytk:Installments