2015 Asset Purchase and Financing Agreement

In November 2015, the Company entered into an Asset Purchase Agreement (the “APA”) with PJSC Pharmsynthez (“Pharmsynthez”) and AS Kevelt (“Kevelt”), a wholly owned subsidiary of Pharmsynthez, providing for the transfer to the Company of certain intellectual property rights with respect to XBIO-101 in exchange for, among other conditions, approximately 3.4 million shares of the Company’s common stock. The APA also provided for up to $10.0 million in financing proceeds beginning with the issuance of a minimum of a $3.5 million 10% Senior Secured Collateralized Convertible Promissory Note (the “Initial APA Note”) and the issuance of certain warrants covering up to half the amount of the Initial APA Note. Of the approximate 3.4 million total shares exchanged, 0.3 million were issued in December 2015 to two individuals associated with Pharmsynthez and Kevelt and inventors of a provisional patent transferred in connection with the APA.

On April 29, 2016, the Company closed on the APA with an effective date of April 27, 2016, acquiring certain intellectual property rights with respect to the immunomodulator product XBIO-101 held by Kevelt and grant of the worldwide right to develop, market and license XBIO-101 for certain uses, excluding CIS countries. The fair value of the asset acquired was $39.5 million, which included Company common stock issued of $38.6 million and warrants with a fair value of $0.9 million.

In connection with the closing of the APA, Pharmsynthez converted all the then outstanding convertible notes in the principal amount of $6.5 million, which included the Initial APA Note of $3.5 million as well as $3.0 million of notes issued by the Company in July 2015 (plus accrued interest of approximately $0.3 million). The conversion rate as set forth in the notes was $4.95 per share. As such, the Company issued to Pharmsynthez approximately 1.4 million shares of its common stock in connection with conversion of the convertible notes which, together with the approximate 3.0 million shares of common stock issued in connection with the closing of the APA, resulted in an aggregate of 4.4 million new shares of common stock being issued to Pharmsynthez.