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0001434316 2013-10-03 2013-10-04 0001434316 fate:VerioTherapeuticsIncMember fate:PeriodOfMay2011Member 2014-01-01 2014-06-30 0001434316 fate:VerioTherapeuticsIncMember fate:PeriodOfMarch2014Member 2014-01-01 2014-06-30 0001434316 fate:VerioTherapeuticsIncMember fate:PeriodOfMarch2011Member 2014-01-01 2014-06-30 0001434316 fate:VerioTherapeuticsIncMember fate:PeriodOfJuly2013Member 2014-01-01 2014-06-30 0001434316 fate:VerioTherapeuticsIncMember fate:PeriodOfApril2012Member 2014-01-01 2014-06-30 0001434316 fate:VerioTherapeuticsIncMember fate:PeriodOfApril2010Member 2014-01-01 2014-06-30 0001434316 fate:VerioTherapeuticsIncMember 2014-01-01 2014-06-30 0001434316 2014-08-07 0001434316 2014-01-01 2014-06-30 xbrli:pure fate:item iso4217:USD iso4217:USD xbrli:shares xbrli:shares false --12-31 Q2 2014 2014-06-30 10-Q 0001434316 20562773 Yes Smaller Reporting Company FATE THERAPEUTICS INC <div> <div style="margin-left:0pt;margin-right:0pt;"> 2.Asset Acquisition of Verio Therapeutics Inc.   On April 7, 2010, the Company acquired Verio Therapeutics Inc. (“Verio”), a development stage company headquartered in Ottawa, Ontario to gain access to its exclusively licensed intellectual property.   In connection with the asset acquisition of Verio, the stockholders of Verio received 900,000 non-voting shares of Fate Canada (the “Exchangeable Shares”) that were initially exchangeable into 138,462 shares of the Company’s common stock and, subject to the validation of certain scientific data and the achievement of certain preclinical, clinical, commercial and financial milestones, were exchangeable for up to 884,605 shares of the Company’s common stock.   As a result of the Company’s IPO on October 4, 2013, 480,763 shares of the Company’s common stock were issued during the fourth quarter of 2013 pursuant to the redemption of the Exchangeable Shares. The total number of shares of the Company’s common stock issued upon the exchange of the Exchangeable Shares as a result of the IPO increased from 138,462 shares of the Company’s common stock to a total of 480,763 shares of the Company’s common stock based upon the achievement of certain contractual milestones.   During the six months ended June 30, 2014, based on the assessed achievement of certain preclinical milestones, 38,463 shares of the Company’s common stock were earned and issued resulting in a $0.4 million charge to research and development expense.   In addition to the 38,463 shares of the Company’s common stock earned and issued during the six months ended June 30, 2014, the Company may issue an additional 365,379 shares of the Company’s common stock based on the achievement of additional contractual milestones as follows: (i) 38,461 shares for the achievement of certain preclinical milestones, (ii) 211,538 shares for the achievement of certain clinical milestones and (iii) 115,380 shares for the achievement of certain commercialization milestones, such that the maximum aggregate number of shares of the Company’s common stock issuable in connection with the Verio acquisition is 884,605.   At the date of the achievement of a milestone, the fair value of the additional shares is charged to research and development expense and recorded in additional paid-in capital. Prior to the Company’s IPO, at the end of each reporting period, any changes in the fair value of Exchangeable Shares resulting from changes in the fair value of the underlying common stock of the Company were recorded as a component of other income (expense). As of the IPO date, the exchangeable share liability was reclassified into additional paid-in capital.   The changes in the number of shares of the Company’s common stock issuable upon the achievement of stock-based milestones and the initial fair value of the shares are summarized as follows (in thousands, except share and per share amounts):   <div style="width:100%"><table cellpadding="0" cellspacing="0" style="border-collapse:collapse;width: 86.00%;margin-left:36pt;"> <tr> <td valign="bottom" style="width:48.62%;padding:0pt;">   </td> <td valign="bottom" style="width:02.88%;padding:0pt;">   </td> <td valign="bottom" style="width:13.84%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> Common Stock </td> <td valign="bottom" style="width:02.88%;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.86%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> Fair Value Per Share of Underlying Common Stock </td> <td valign="bottom" style="width:02.88%;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.74%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> Initial Fair Value of Common Stock </td> <td valign="bottom" style="width:01.28%;padding:0pt;">   </td> </tr> <tr> <td valign="bottom" style="width:48.62%;padding:0pt;">   </td> <td valign="bottom" style="width:02.88%;padding:0pt;">   </td> <td valign="bottom" style="width:13.84%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:02.88%;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.86%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:02.88%;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.74%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.28%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:48.62%;background-color: #CCEEFF;padding:0pt;"> April 2010 </td> <td valign="bottom" style="width:02.88%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:13.84%;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>138,462  </td> <td valign="bottom" style="width:02.88%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:01.30%;background-color: #CCEEFF;padding:0pt;"> $ </td> <td valign="bottom" style="width:12.56%;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>1.69  </td> <td valign="bottom" style="width:02.88%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:01.30%;background-color: #CCEEFF;padding:0pt;"> $ </td> <td valign="bottom" style="width:12.44%;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>234  </td> <td valign="bottom" style="width:01.28%;background-color: #CCEEFF;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:48.62%;padding:0pt;"> March 2011 </td> <td valign="bottom" style="width:02.88%;padding:0pt;">   </td> <td valign="bottom" style="width:13.84%;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>92,308  </td> <td valign="bottom" style="width:02.88%;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.86%;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>1.69  </td> <td valign="bottom" style="width:02.88%;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.74%;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>156  </td> <td valign="bottom" style="width:01.28%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:48.62%;background-color: #CCEEFF;padding:0pt;"> May 2011 </td> <td valign="bottom" style="width:02.88%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:13.84%;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>115,380  </td> <td valign="bottom" style="width:02.88%;background-color: #CCEEFF;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.86%;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>1.69  </td> <td valign="bottom" style="width:02.88%;background-color: #CCEEFF;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.74%;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>195  </td> <td valign="bottom" style="width:01.28%;background-color: #CCEEFF;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:48.62%;padding:0pt;"> April 2012 </td> <td valign="bottom" style="width:02.88%;padding:0pt;">   </td> <td valign="bottom" style="width:13.84%;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>57,691  </td> <td valign="bottom" style="width:02.88%;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.86%;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>1.37  </td> <td valign="bottom" style="width:02.88%;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.74%;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>78  </td> <td valign="bottom" style="width:01.28%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:48.62%;background-color: #CCEEFF;padding:0pt;"> July 2013 </td> <td valign="bottom" style="width:02.88%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:13.84%;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>76,922  </td> <td valign="bottom" style="width:02.88%;background-color: #CCEEFF;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.86%;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>4.49  </td> <td valign="bottom" style="width:02.88%;background-color: #CCEEFF;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.74%;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>346  </td> <td valign="bottom" style="width:01.28%;background-color: #CCEEFF;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:48.62%;padding:0pt;"> March 2014 </td> <td valign="bottom" style="width:02.88%;padding:0pt;">   </td> <td valign="bottom" style="width:13.84%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>38,463  </td> <td valign="bottom" style="width:02.88%;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.86%;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>9.74  </td> <td valign="bottom" style="width:02.88%;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.74%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>375  </td> <td valign="bottom" style="width:01.28%;padding:0pt;">   </td> </tr> <tr> <td valign="bottom" style="width:48.62%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:02.88%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:13.84%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>519,226  </td> <td valign="bottom" style="width:02.88%;background-color: #CCEEFF;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.86%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:02.88%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:01.30%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;background-color: #CCEEFF;padding:0pt;"> $ </td> <td valign="bottom" style="width:12.44%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>1,384  </td> <td valign="bottom" style="width:01.28%;background-color: #CCEEFF;padding:0pt;">   </td> </tr> </table></div>   </div> </div> 365379 211538 115380 38461 1.69 1.37 4.49 1.69 9.74 1.69 1384000 234000 78000 346000 156000 375000 195000 36074 230000 480763 18000 4000 P12M P30M 38463 900000 900000 884605 1260000 1155000 400000 1260000 375000 <div> <div style="margin-left:0pt;margin-right:0pt;"> Initial Public Offering   On October 4, 2013, the Company completed its initial public offering (the “IPO”) whereby it sold 7,666,667 shares of common stock at a public offering price of $6.00 per share. Gross proceeds from the offering were $46.0 million. After giving effect to underwriting discounts, commissions and other cash costs related to the offering, net proceeds were $40.5 million. In addition, each of the following occurred in connection with the completion of the IPO on October 4, 2013:   <div style="width:100%"><table style="width:100%;" cellpadding="0" cellspacing="0"><tr><td style="width:36pt;"></td><td valign="top" align="left" style="width: 18.00pt; display: inline;"> · </td><td style="width:0pt;"></td><td align="left" valign="top"> the conversion of all outstanding shares of the Company’s convertible preferred stock into 7,229,590 shares of the Company’s common stock;</td></tr></table></div>   <div style="width:100%"><table style="width:100%;" cellpadding="0" cellspacing="0"><tr><td style="width:36pt;"></td><td valign="top" align="left" style="width: 18.00pt; display: inline;"> · </td><td style="width:0pt;"></td><td align="left" valign="top"> the conversion of the Company’s $22.1 million of outstanding principal and accrued interest on its convertible notes into 3,679,401 shares of common stock, the write-off of $0.3 million of unamortized debt discount and the related cash repayment of $1.7 million of outstanding principal and accrued interest on the convertible notes;</td></tr></table></div>   <div style="width:100%"><table style="width:100%;" cellpadding="0" cellspacing="0"><tr><td style="width:36pt;"></td><td valign="top" align="left" style="width: 18.00pt; display: inline;"> · </td><td style="width:0pt;"></td><td align="left" valign="top"> the issuance of 480,763 shares of the Company’s common stock pursuant to the redemption of an aggregate of 900,000 exchangeable shares of Fate Therapeutics (Canada) Inc. (“Fate Canada”), a subsidiary of the Company incorporated in Canada, resulting in a final fair value adjustment charge of $0.4 million on the exchangeable shares, and the resultant reclassification of the exchangeable share liability to additional paid-in capital;</td></tr></table></div>   <div style="width:100%"><table style="width:100%;" cellpadding="0" cellspacing="0"><tr><td style="width:36pt;"></td><td valign="top" align="left" style="width: 18.00pt; display: inline;"> · </td><td style="width:0pt;"></td><td align="left" valign="top"> the conversion of warrants to purchase 230,000 shares of convertible preferred stock into warrants to purchase 36,074 shares of the Company’s common stock, and the resultant reclassification of the warrant liability to additional paid-in capital; and</td></tr></table></div>   the filing of an amended and restated certificate of incorporation on October 3, 2013, authorizing 150,000,000 shares of common stock and 5,000,000 shares of undesignated preferred stock. </div> </div> 1750000 750000 -295000 40500000 2 P10D 94000 69000 <div> <div style="margin-left:0pt;margin-right:0pt;"> The changes in the number of shares of the Company’s common stock issuable upon the achievement of stock-based milestones and the initial fair value of the shares are summarized as follows (in thousands, except share and per share amounts):   <div style="width:100%"><table cellpadding="0" cellspacing="0" style="border-collapse:collapse;width: 86.00%;margin-left:36pt;"> <tr> <td valign="bottom" style="width:48.62%;padding:0pt;">   </td> <td valign="bottom" style="width:02.88%;padding:0pt;">   </td> <td valign="bottom" style="width:13.84%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> Common Stock </td> <td valign="bottom" style="width:02.88%;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.86%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> Fair Value Per Share of Underlying Common Stock </td> <td valign="bottom" style="width:02.88%;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.74%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> Initial Fair Value of Common Stock </td> <td valign="bottom" style="width:01.28%;padding:0pt;">   </td> </tr> <tr> <td valign="bottom" style="width:48.62%;padding:0pt;">   </td> <td valign="bottom" style="width:02.88%;padding:0pt;">   </td> <td valign="bottom" style="width:13.84%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:02.88%;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.86%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:02.88%;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.74%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.28%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:48.62%;background-color: #CCEEFF;padding:0pt;"> April 2010 </td> <td valign="bottom" style="width:02.88%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:13.84%;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>138,462  </td> <td valign="bottom" style="width:02.88%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:01.30%;background-color: #CCEEFF;padding:0pt;"> $ </td> <td valign="bottom" style="width:12.56%;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>1.69  </td> <td valign="bottom" style="width:02.88%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:01.30%;background-color: #CCEEFF;padding:0pt;"> $ </td> <td valign="bottom" style="width:12.44%;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>234  </td> <td valign="bottom" style="width:01.28%;background-color: #CCEEFF;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:48.62%;padding:0pt;"> March 2011 </td> <td valign="bottom" style="width:02.88%;padding:0pt;">   </td> <td valign="bottom" style="width:13.84%;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>92,308  </td> <td valign="bottom" style="width:02.88%;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.86%;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>1.69  </td> <td valign="bottom" style="width:02.88%;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.74%;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>156  </td> <td valign="bottom" style="width:01.28%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:48.62%;background-color: #CCEEFF;padding:0pt;"> May 2011 </td> <td valign="bottom" style="width:02.88%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:13.84%;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>115,380  </td> <td valign="bottom" style="width:02.88%;background-color: #CCEEFF;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.86%;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>1.69  </td> <td valign="bottom" style="width:02.88%;background-color: #CCEEFF;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.74%;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>195  </td> <td valign="bottom" style="width:01.28%;background-color: #CCEEFF;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:48.62%;padding:0pt;"> April 2012 </td> <td valign="bottom" style="width:02.88%;padding:0pt;">   </td> <td valign="bottom" style="width:13.84%;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>57,691  </td> <td valign="bottom" style="width:02.88%;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.86%;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>1.37  </td> <td valign="bottom" style="width:02.88%;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.74%;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>78  </td> <td valign="bottom" style="width:01.28%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:48.62%;background-color: #CCEEFF;padding:0pt;"> July 2013 </td> <td valign="bottom" style="width:02.88%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:13.84%;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>76,922  </td> <td valign="bottom" style="width:02.88%;background-color: #CCEEFF;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.86%;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>4.49  </td> <td valign="bottom" style="width:02.88%;background-color: #CCEEFF;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.74%;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>346  </td> <td valign="bottom" style="width:01.28%;background-color: #CCEEFF;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:48.62%;padding:0pt;"> March 2014 </td> <td valign="bottom" style="width:02.88%;padding:0pt;">   </td> <td valign="bottom" style="width:13.84%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>38,463  </td> <td valign="bottom" style="width:02.88%;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.86%;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>9.74  </td> <td valign="bottom" style="width:02.88%;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.74%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>375  </td> <td valign="bottom" style="width:01.28%;padding:0pt;">   </td> </tr> <tr> <td valign="bottom" style="width:48.62%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:02.88%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:13.84%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>519,226  </td> <td valign="bottom" style="width:02.88%;background-color: #CCEEFF;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.86%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:02.88%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:01.30%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;background-color: #CCEEFF;padding:0pt;"> $ </td> <td valign="bottom" style="width:12.44%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>1,384  </td> <td valign="bottom" style="width:01.28%;background-color: #CCEEFF;padding:0pt;">   </td> </tr> </table></div>   </div> </div> 700000 115922 111021 84344 80645 3679401 400000

682000

980000

2039000

1948000

137337000

139173000

187000

82000

105000

112000

45000

67000

1295000

501000

794000

424000

195000

229000

35000

14000

55583000

43551000

54651000

42245000

138462

519226

138462

57691

76922

92308

38463

115380

884605

9087000

3399000

54036000

42012000

52300000

40300000

-5688000

-12024000

0.001

150000000

20434080

20561477

20434080

20561477

20000

21000

417000

208000

7229590

22100000

0.059

1750000

750000

U.S. Treasury note yield to maturity for a thirty-six (36) month term

10000000

20000000

10000000

5000000

400000

0.0694

0.0675

P42M

300000

53000

69000

135000

101000

302000

256000

<div> <div style="margin-left:0pt;margin-right:0pt;"> 5.Stockholders’ Equity   Stock option activity under all equity and stock option plans is summarized as follows:   <div style="width:100%"><table cellpadding="0" cellspacing="0" style="border-collapse:collapse;width: 86.00%;margin-left:36pt;"> <tr> <td valign="bottom" style="width:65.40%;padding:0pt;">   </td> <td valign="bottom" style="width:02.88%;padding:0pt;">   </td> <td valign="bottom" style="width:13.84%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> Number of Options </td> <td valign="bottom" style="width:03.48%;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:12.50%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> Weighted- Average Price </td> <td valign="bottom" style="width:01.90%;padding:0pt;">   </td> </tr> <tr> <td valign="bottom" style="width:65.40%;padding:0pt;">   </td> <td valign="bottom" style="width:02.88%;padding:0pt;">   </td> <td valign="bottom" style="width:13.84%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:03.48%;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:12.50%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.90%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:65.40%;background-color: #CCEEFF;padding:0pt;"> Balance at December 31, 2013 </td> <td valign="bottom" style="width:02.88%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:13.84%;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>1,726,991 </td> <td valign="bottom" style="width:03.48%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:01.30%;background-color: #CCEEFF;padding:0pt;"> $ </td> <td valign="bottom" style="width:11.20%;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>2.30 </td> <td valign="bottom" style="width:01.90%;background-color: #CCEEFF;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:65.40%;padding:0pt;"> Granted </td> <td valign="bottom" style="width:02.88%;padding:0pt;">   </td> <td valign="bottom" style="width:13.84%;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>833,808 </td> <td valign="bottom" style="width:03.48%;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:12.50%;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>6.73 </td> <td valign="bottom" style="width:01.90%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:65.40%;background-color: #CCEEFF;padding:0pt;"> Canceled </td> <td valign="bottom" style="width:02.88%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:13.84%;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(63,293 </td> <td valign="bottom" style="width:03.48%;background-color: #CCEEFF;"> ) </td> <td colspan="2" valign="bottom" style="width:12.50%;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>5.26 </td> <td valign="bottom" style="width:01.90%;background-color: #CCEEFF;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:65.40%;padding:0pt;"> Exercised </td> <td valign="bottom" style="width:02.88%;padding:0pt;">   </td> <td valign="bottom" style="width:13.84%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(88,934 </td> <td valign="bottom" style="width:03.48%;"> ) </td> <td colspan="2" valign="bottom" style="width:12.50%;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>1.67 </td> <td valign="bottom" style="width:01.90%;padding:0pt;">   </td> </tr> <tr> <td valign="bottom" style="width:65.40%;background-color: #CCEEFF;padding:0pt;"> Balance at June 30, 2014 </td> <td valign="bottom" style="width:02.88%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:13.84%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>2,408,572 </td> <td valign="bottom" style="width:03.48%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:01.30%;background-color: #CCEEFF;padding:0pt;"> $ </td> <td valign="bottom" style="width:11.20%;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>3.78 </td> <td valign="bottom" style="width:01.90%;background-color: #CCEEFF;padding:0pt;">   </td> </tr> </table></div>   The allocation of stock-based compensation for all options and restricted stock awards is as follows (in thousands):   <div style="width:100%"><table cellpadding="0" cellspacing="0" style="border-collapse:collapse;width: 86.00%;margin-left:36pt;"> <tr> <td valign="bottom" style="width:32.36%;padding:0pt;">   </td> <td valign="bottom" style="width:02.86%;padding:0pt;">   </td> <td colspan="5" valign="bottom" style="width:30.34%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> Three Months Ended June 30, </td> <td valign="bottom" style="width:02.86%;padding:0pt;">   </td> <td colspan="5" valign="bottom" style="width:30.48%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> Six Months Ended June 30, </td> <td valign="bottom" style="width:01.10%;padding:0pt;">   </td> </tr> <tr> <td valign="bottom" style="width:32.36%;padding:0pt;">   </td> <td valign="bottom" style="width:02.86%;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.72%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> 2014 </td> <td valign="bottom" style="width:02.86%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.76%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> 2013 </td> <td valign="bottom" style="width:02.86%;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.76%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> 2014 </td> <td valign="bottom" style="width:02.86%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.86%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> 2013 </td> <td valign="bottom" style="width:01.10%;padding:0pt;">   </td> </tr> <tr> <td valign="bottom" style="width:32.36%;padding:0pt;">   </td> <td valign="bottom" style="width:02.86%;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.72%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:02.86%;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.76%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:02.86%;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.76%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:02.86%;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.86%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.10%;padding:0pt;">   </td> </tr> <tr> <td valign="bottom" style="width:32.36%;background-color: #CCEEFF;padding:0pt;"> Research and development </td> <td valign="bottom" style="width:02.86%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:01.30%;background-color: #CCEEFF;padding:0pt;"> $ </td> <td valign="bottom" style="width:12.42%;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>229  </td> <td valign="bottom" style="width:02.86%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:01.30%;background-color: #CCEEFF;padding:0pt;"> $ </td> <td valign="bottom" style="width:12.46%;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>67  </td> <td valign="bottom" style="width:02.86%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:01.30%;background-color: #CCEEFF;padding:0pt;"> $ </td> <td valign="bottom" style="width:12.46%;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>794  </td> <td valign="bottom" style="width:02.86%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:01.30%;background-color: #CCEEFF;padding:0pt;"> $ </td> <td valign="bottom" style="width:12.56%;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>105  </td> <td valign="bottom" style="width:01.10%;background-color: #CCEEFF;padding:0pt;">   </td> </tr> <tr> <td valign="bottom" style="width:32.36%;padding:0pt;"> General and administrative </td> <td valign="bottom" style="width:02.86%;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.72%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>195  </td> <td valign="bottom" style="width:02.86%;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.76%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>45  </td> <td valign="bottom" style="width:02.86%;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.76%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>501  </td> <td valign="bottom" style="width:02.86%;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.86%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>82  </td> <td valign="bottom" style="width:01.10%;padding:0pt;">   </td> </tr> <tr> <td valign="bottom" style="width:32.36%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:02.86%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:01.30%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;background-color: #CCEEFF;padding:0pt;"> $ </td> <td valign="bottom" style="width:12.42%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>424  </td> <td valign="bottom" style="width:02.86%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:01.30%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;background-color: #CCEEFF;padding:0pt;"> $ </td> <td valign="bottom" style="width:12.46%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>112  </td> <td valign="bottom" style="width:02.86%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:01.30%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;background-color: #CCEEFF;padding:0pt;"> $ </td> <td valign="bottom" style="width:12.46%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>1,295  </td> <td valign="bottom" style="width:02.86%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:01.30%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;background-color: #CCEEFF;padding:0pt;"> $ </td> <td valign="bottom" style="width:12.56%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>187  </td> <td valign="bottom" style="width:01.10%;background-color: #CCEEFF;padding:0pt;">   </td> </tr> </table></div>   As of June 30, 2014, the outstanding options included 160,526 performance-based options for which the achievement of the performance-based vesting provisions was determined not to be probable. The aggregate grant date fair value of these unvested options at June 30, 2014 was $0.7 million.   As of June 30, 2014, the unrecognized compensation cost related to outstanding options (excluding those with performance-based conditions) was $5.0 million and is expected to be recognized as expense over approximately 2.9 years.   The weighted-average assumptions used in the Black-Scholes option pricing model to determine the fair value of the employee stock option grants were as follows:   <div style="width:100%"><table cellpadding="0" cellspacing="0" style="border-collapse:collapse;width: 83.00%;margin-left:54pt;"> <tr> <td valign="bottom" style="width:64.00%;padding:0pt;">   </td> <td valign="bottom" style="width:03.00%;padding:0pt;">   </td> <td colspan="3" valign="bottom" style="width:29.32%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> Six Months Ended June 30, </td> <td valign="bottom" style="width:03.68%;padding:0pt;">   </td> </tr> <tr> <td valign="bottom" style="width:64.00%;padding:0pt;">   </td> <td valign="bottom" style="width:03.00%;padding:0pt;">   </td> <td valign="bottom" style="width:14.40%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> 2014 </td> <td valign="bottom" style="width:03.00%;padding:0pt;">   </td> <td valign="bottom" style="width:11.92%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> 2013 </td> <td valign="bottom" style="width:03.68%;padding:0pt;">   </td> </tr> <tr> <td valign="bottom" style="width:64.00%;padding:0pt;">   </td> <td valign="bottom" style="width:03.00%;padding:0pt;">   </td> <td valign="bottom" style="width:14.40%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:03.00%;padding:0pt;">   </td> <td valign="bottom" style="width:11.92%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:03.68%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:64.00%;background-color: #CCEEFF;padding:0pt;"> Risk-free interest rate </td> <td valign="bottom" style="width:03.00%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:14.40%;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>1.9  </td> <td valign="bottom" style="width:03.00%;background-color: #CCEEFF;padding:0pt;"> % </td> <td valign="bottom" style="width:11.92%;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>1.1  </td> <td valign="bottom" style="width:03.68%;background-color: #CCEEFF;padding:0pt;"> % </td> </tr> <tr> <td valign="top" style="width:64.00%;padding:0pt;"> Expected volatility </td> <td valign="bottom" style="width:03.00%;padding:0pt;">   </td> <td valign="bottom" style="width:14.40%;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>94.5  </td> <td valign="bottom" style="width:03.00%;padding:0pt;"> % </td> <td valign="bottom" style="width:11.92%;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>89.8  </td> <td valign="bottom" style="width:03.68%;padding:0pt;"> % </td> </tr> <tr> <td valign="top" style="width:64.00%;background-color: #CCEEFF;padding:0pt;"> Expected term (in years) </td> <td valign="bottom" style="width:03.00%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:14.40%;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>6.0  </td> <td valign="bottom" style="width:03.00%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:11.92%;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>6.1  </td> <td valign="bottom" style="width:03.68%;background-color: #CCEEFF;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:64.00%;padding:0pt;"> Expected dividend yield </td> <td valign="bottom" style="width:03.00%;padding:0pt;">   </td> <td valign="bottom" style="width:14.40%;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>0.0  </td> <td valign="bottom" style="width:03.00%;padding:0pt;"> % </td> <td valign="bottom" style="width:11.92%;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>0.0  </td> <td valign="bottom" style="width:03.68%;padding:0pt;"> % </td> </tr> </table></div>   The weighted-average assumptions used in the Black-Scholes option pricing model to determine the fair value of the non-employee stock option grants were as follows:   <div style="width:100%"><table cellpadding="0" cellspacing="0" style="border-collapse:collapse;width: 83.00%;margin-left:54pt;"> <tr> <td valign="bottom" style="width:64.00%;padding:0pt;">   </td> <td valign="bottom" style="width:03.00%;padding:0pt;">   </td> <td colspan="3" valign="bottom" style="width:29.72%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> Six Months Ended June 30, </td> <td valign="bottom" style="width:03.28%;padding:0pt;">   </td> </tr> <tr> <td valign="bottom" style="width:64.00%;padding:0pt;">   </td> <td valign="bottom" style="width:03.00%;padding:0pt;">   </td> <td valign="bottom" style="width:14.40%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> 2014 </td> <td valign="bottom" style="width:03.00%;padding:0pt;">   </td> <td valign="bottom" style="width:12.32%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> 2013 </td> <td valign="bottom" style="width:03.28%;padding:0pt;">   </td> </tr> <tr> <td valign="bottom" style="width:64.00%;padding:0pt;">   </td> <td valign="bottom" style="width:03.00%;padding:0pt;">   </td> <td valign="bottom" style="width:14.40%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:03.00%;padding:0pt;">   </td> <td valign="bottom" style="width:12.32%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:03.28%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:64.00%;background-color: #CCEEFF;padding:0pt;"> Risk-free interest rate </td> <td valign="bottom" style="width:03.00%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:14.40%;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>2.2  </td> <td valign="bottom" style="width:03.00%;background-color: #CCEEFF;padding:0pt;"> % </td> <td valign="bottom" style="width:12.32%;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>1.5  </td> <td valign="bottom" style="width:03.28%;background-color: #CCEEFF;padding:0pt;"> % </td> </tr> <tr> <td valign="top" style="width:64.00%;padding:0pt;"> Expected volatility </td> <td valign="bottom" style="width:03.00%;padding:0pt;">   </td> <td valign="bottom" style="width:14.40%;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>94.3  </td> <td valign="bottom" style="width:03.00%;padding:0pt;"> % </td> <td valign="bottom" style="width:12.32%;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>90.0  </td> <td valign="bottom" style="width:03.28%;padding:0pt;"> % </td> </tr> <tr> <td valign="top" style="width:64.00%;background-color: #CCEEFF;padding:0pt;"> Remaining contractual term (in years) </td> <td valign="bottom" style="width:03.00%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:14.40%;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>6.6  </td> <td valign="bottom" style="width:03.00%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:12.32%;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>8.1  </td> <td valign="bottom" style="width:03.28%;background-color: #CCEEFF;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:64.00%;padding:0pt;"> Expected dividend yield </td> <td valign="bottom" style="width:03.00%;padding:0pt;">   </td> <td valign="bottom" style="width:14.40%;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>0.0  </td> <td valign="bottom" style="width:03.00%;padding:0pt;"> % </td> <td valign="bottom" style="width:12.32%;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>0.0  </td> <td valign="bottom" style="width:03.28%;padding:0pt;"> % </td> </tr> </table></div>   </div> </div>

-7.41

-4.46

-0.64

-0.30

P2Y10M24D

5000000

10000

22000

2789000

1492000

4487000

2072000

792000

8000

721000

-356000

2400000

188000

88000

71000

28000

1000

13000

100000

55583000

43551000

4600000

3812000

1732000

746000

1706000

-856000

-71000

-424000

-7323000

-10744000

-9082000

-5534000

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6040000

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1900000

<div> <div style="margin-left:0pt;margin-right:0pt;"> 1.Organization and Summary of Significant Accounting Policies   Organization   Fate Therapeutics, Inc. (the “Company”) was incorporated in the state of Delaware on April 27, 2007 and has its principal operations in San Diego, California. The Company is a clinical-stage biopharmaceutical company engaged in the discovery and development of pharmacologic modulators of adult stem cells. Based on the Company’s understanding of key biological mechanisms that guide the fate of adult stem cells, the Company has built two platforms that optimize the activity and enhance the therapeutic potential of adult stem cells: its hematopoietic stem cell, or HSC, modulation platform and its muscle satellite stem cell, or Satellite Cell, modulation platform.   As of June 30, 2014, the Company has devoted substantially all of its efforts to product development, raising capital and building infrastructure and has not generated revenues from its planned principal operations.   Initial Public Offering   On October 4, 2013, the Company completed its initial public offering (the “IPO”) whereby it sold 7,666,667 shares of common stock at a public offering price of $6.00 per share. Gross proceeds from the offering were $46.0 million. After giving effect to underwriting discounts, commissions and other cash costs related to the offering, net proceeds were $40.5 million. In addition, each of the following occurred in connection with the completion of the IPO on October 4, 2013:   <div style="width:100%"><table style="width:100%;" cellpadding="0" cellspacing="0"><tr><td style="width:36pt;"></td><td valign="top" align="left" style="width: 18.00pt; display: inline;"> · </td><td style="width:0pt;"></td><td align="left" valign="top"> the conversion of all outstanding shares of the Company’s convertible preferred stock into 7,229,590 shares of the Company’s common stock;</td></tr></table></div>   <div style="width:100%"><table style="width:100%;" cellpadding="0" cellspacing="0"><tr><td style="width:36pt;"></td><td valign="top" align="left" style="width: 18.00pt; display: inline;"> · </td><td style="width:0pt;"></td><td align="left" valign="top"> the conversion of the Company’s $22.1 million of outstanding principal and accrued interest on its convertible notes into 3,679,401 shares of common stock, the write-off of $0.3 million of unamortized debt discount and the related cash repayment of $1.7 million of outstanding principal and accrued interest on the convertible notes;</td></tr></table></div>   <div style="width:100%"><table style="width:100%;" cellpadding="0" cellspacing="0"><tr><td style="width:36pt;"></td><td valign="top" align="left" style="width: 18.00pt; display: inline;"> · </td><td style="width:0pt;"></td><td align="left" valign="top"> the issuance of 480,763 shares of the Company’s common stock pursuant to the redemption of an aggregate of 900,000 exchangeable shares of Fate Therapeutics (Canada) Inc. (“Fate Canada”), a subsidiary of the Company incorporated in Canada, resulting in a final fair value adjustment charge of $0.4 million on the exchangeable shares, and the resultant reclassification of the exchangeable share liability to additional paid-in capital;</td></tr></table></div>   <div style="width:100%"><table style="width:100%;" cellpadding="0" cellspacing="0"><tr><td style="width:36pt;"></td><td valign="top" align="left" style="width: 18.00pt; display: inline;"> · </td><td style="width:0pt;"></td><td align="left" valign="top"> the conversion of warrants to purchase 230,000 shares of convertible preferred stock into warrants to purchase 36,074 shares of the Company’s common stock, and the resultant reclassification of the warrant liability to additional paid-in capital; and</td></tr></table></div>   <div style="width:100%"><table style="width:100%;" cellpadding="0" cellspacing="0"><tr><td style="width:36pt;"></td><td valign="top" align="left" style="width: 18.00pt; display: inline;"> · </td><td style="width:0pt;"></td><td align="left" valign="top"> the filing of an amended and restated certificate of incorporation on October 3, 2013, authorizing 150,000,000 shares of common stock and 5,000,000 shares of undesignated preferred stock.</td></tr></table></div>   Use of Estimates   The Company’s consolidated financial statements are prepared in accordance with United States generally accepted accounting principles (“GAAP”). The preparation of the Company’s consolidated financial statements requires it to make estimates and assumptions that impact the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in the Company’s consolidated financial statements and accompanying notes. The most significant estimates in the Company’s consolidated financial statements relate to the valuation of equity awards and accrued expenses. Although these estimates are based on the Company’s knowledge of current events and actions it may undertake in the future, actual results may ultimately materially differ from these estimates and assumptions.   Principles of Consolidation   The consolidated financial statements include the accounts of the Company and its subsidiaries, Fate Canada, Fate Therapeutics Ltd., incorporated in the United Kingdom, and Destin Therapeutics Inc., incorporated in Canada, which was dissolved in June 2014. To date, the aggregate operations of these subsidiaries have not been significant and all intercompany transactions and balances have been eliminated in consolidation.   Cash and Cash Equivalents   Cash and cash equivalents include cash in readily available checking and savings accounts, money market accounts and money market funds. The Company considers all highly liquid investments with an original maturity of three months or less from the date of purchase to be cash equivalents.   Unaudited Interim Financial Information   The accompanying interim condensed consolidated financial statements are unaudited. These unaudited interim condensed consolidated financial statements have been prepared in accordance with GAAP and following the requirements of the United States Securities and Exchange Commission (“SEC”) for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP can be condensed or omitted.  In management’s opinion, the unaudited interim financial statements have been prepared on the same basis as the audited financial statements and include all adjustments, which include only normal recurring adjustments, necessary for the fair presentation of the Company’s financial position and its results of operations and comprehensive loss and its cash flows for periods presented. These statements do not include all disclosures required by GAAP and should be read in conjunction with the Company’s financial statements and accompanying notes for the fiscal year ended December 31, 2013, contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 filed by the Company with the SEC on March 17, 2014. The results for the three and six months ended June 30, 2014 are not necessarily indicative of the results expected for the full fiscal year or any other interim period or any future year or period.   Revenue Recognition   The Company recognizes revenues when all four of the following criteria are met: (i) persuasive evidence that an agreement exists; (ii) delivery of the products and/or services has occurred; (iii) the selling price is fixed or determinable; and (iv) collectability is reasonably assured.   Revenue arrangements with multiple elements are analyzed to determine whether the elements can be divided into separate units of accounting or whether the elements must be accounted for as a single unit of accounting. The Company divides the elements into separate units of accounting and applies the applicable revenue recognition criteria to each of the elements, if the delivered elements have value to the customer on a stand-alone basis, if the arrangement includes a general right of return relative to the delivered elements, and if the delivery or performance of the undelivered elements is considered probable and substantially within the Company’s control.   For transactions entered into prior to 2011, revenue was allocated to each element based on its relative fair value when objective and reliable evidence of fair value existed for all elements in an arrangement. If an element was sold on a stand-alone basis, the fair value of the element was the price charged for the element. When the Company was unable to establish fair value for delivered elements or when fair value of undelivered elements had not been established, revenue was deferred until all elements were delivered or until fair value could be objectively determined for any undelivered elements.   Beginning in 2011, revenue is allocated to each element at the inception of the arrangement using the relative selling price method that is based on a three-tier hierarchy. The relative selling price method requires that the estimated selling price for each element be based on vendor-specific objective evidence (“VSOE”) of fair value, which represents the price charged for each element when it is sold separately or, for an element not yet being sold separately, the price established by management. When VSOE of fair value is not available, third-party evidence (“TPE”) of fair value is acceptable, or a best estimate of selling price is used if neither VSOE nor TPE is available. A best estimate of selling price should be consistent with the objective of determining the price at which the Company would transact if the element were sold regularly on a stand-alone basis and should also take into account market conditions and company-specific factors. The Company has not entered into or materially modified any multiple element arrangements subsequent to 2010.   Revenue arrangements with multiple elements may include license fees, research and development payments, milestone payments, other contingent payments, and royalties on any product sales derived from collaborations. The Company recognizes nonrefundable license fees with stand-alone value as revenue at the time that the Company has satisfied all performance obligations, and recognizes license fees without stand-alone value as revenue in combination with any undelivered performance obligations. The Company recognizes a research and development payment as revenue over the term of the collaboration agreement as contracted amounts are earned, or reimbursable costs are incurred, under the agreement, where contracted amounts are considered to be earned in relative proportion to the performance required under the applicable agreement. The Company recognizes a milestone payment, which is contingent upon the achievement of a milestone in its entirety, as revenue in the period in which the milestone is achieved only if the milestone meets all criteria to be considered substantive. These criteria include the following: (i) the consideration being earned should be commensurate with either the Company’s performance to achieve the milestone or the enhancement of the value of the item delivered as a result of a specific outcome resulting from the Company’s performance to achieve the milestone; (ii) the consideration being earned should relate solely to past performance; (iii) the consideration being earned should be reasonable relative to all deliverables and payment terms in the arrangement; and (iv) the milestone should be considered in its entirety and cannot be bifurcated into substantive and nonsubstantive components. Any amounts received pursuant to revenue arrangements with multiple elements prior to satisfying the Company’s revenue recognition criteria are recorded as deferred revenue on the Company’s consolidated balance sheets.   Revenue from government grants is recorded when reimbursable expenses are incurred under the grant in accordance with the terms of the grant award. The receivable for reimbursable amounts that have not been collected is reflected in prepaid and other current assets.   Stock-Based Compensation   Stock-based compensation expense represents the cost of the grant date fair value of employee stock option grants recognized over the requisite service period of the awards (usually the vesting period) on a straight-line basis, net of estimated forfeitures. For stock option grants for which vesting is subject to performance-based milestones, the expense is recorded over the remaining service period after the point when the achievement of the milestone is probable or the performance condition has been achieved. For stock option grants for which vesting is subject to both performance-based milestones and market conditions, expense is recorded over the derived service period after the point when the achievement of the performance-based milestone is probable or the performance condition has been achieved. The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model, with the exception of option grants for which vesting is subject to both performance-based milestones and market conditions, which are valued using a lattice based model.   The Company accounts for stock options and restricted stock awards to non-employees using the fair value approach. Stock options and restricted stock awards to non-employees are subject to periodic revaluation over their vesting terms. For stock option grants for which vesting is subject to performance-based milestones, the expense is recorded over the remaining service period after the point when the performance condition has been achieved.   Net Loss per Common Share   Basic net loss per common share is calculated by dividing the net loss by the weighted-average number of shares of common stock outstanding for the period, without consideration for common stock equivalents. Excluded from the weighted-average number of shares outstanding are shares which have been issued upon the early exercise of stock options and are subject to future vesting and unvested restricted stock totaling 80,645 shares and 111,021 shares for the three months ended June 30, 2014 and 2013, respectively, and 84,344 shares and 115,922 shares for the six months ended June 30, 2014 and 2013, respectively. Diluted net loss per share is calculated by dividing the net loss by the weighted-average number of common stock equivalents outstanding for the period determined using the treasury-stock method. Dilutive common stock equivalents for the periods presented include convertible preferred stock, warrants for the purchase of convertible preferred stock and common stock, exchangeable shares and common stock options outstanding under the Company’s stock option plan. For all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding due to the Company’s net loss position.   For the three and six months ended June 30, 2014, the Company realized a net loss of $6.1 million and $13.0 million, respectively. Shares of potentially dilutive securities totaled 2.4 million for the three and six months ended June 30, 2014, including options to purchase 2.4 million shares of common stock.   For the three and six months ended June 30, 2013, the Company realized a net loss of $5.5 million and $9.1 million, respectively. Shares of potentially dilutive securities totaled 9.2 million for each of the three and six months ended June 30, 2013.   Recent Accounting Pronouncements   In June 2014, The Financial Accounting Standards Board (or FASB), issued Accounting Standards Update Number 2014-10 (ASU 2014-10). ASU 2014-10 eliminated all incremental financial reporting requirements from U.S. GAAP for development stage entities, including inception-to-date information, the labeling of financial statements as those of a development stage entity, and the disclosure of a description of the development state activities in which the entity is engaged.  Effectively, ASU 2014-10 removed the definition of a development stage entity from the Master Glossary of the Accounting Standards Codification. For public business entities, this guidance is effective for annual reporting periods beginning after December 15, 2014, and interim periods therein. Early adoption of the guidance is permitted for any annual reporting period or interim period for which the entity’s financial statements have not yet been issued. Accordingly, the Company has elected the early adoption of ASU 2014-10 beginning with this Quarterly Report on Form 10-Q, and will no longer disclose inception-to-date information or incremental financial reporting requirements related to development stage entities.   In May 2014, the FASB issued ASU 2014-09, which creates a single, principle-based revenue recognition model that will supersede and replace nearly all existing U.S. GAAP revenue recognition guidance. Entities will recognize revenue in a manner that depicts the transfer of goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled to receive in exchange for those goods or services. The model provides that entities follow five steps: (i) identify the contract with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations, and (v) recognize revenue.  For public business entities, the guidance becomes effective for annual reporting periods beginning after December 15, 2016, and interim periods therein. The Company is currently evaluating the impact the adoption of this guidance will have on its Consolidated Financial Statements and future operating results. </div> </div>

25000

-1457000

-1265000

-70000

-27000

42000

17000

71000

424000

0.001

5000000

615000

233000

3000000

46000000

1000

144000

8800000

810000

1159000

42000

1700000

1000000

5598000

3067000

8490000

400000

3968000

122000

-86509000

-99556000

345000

82000

(i) persuasive evidence that an agreement exists; (ii) delivery of the products and/or services has occurred; (iii) the selling price is fixed or determinable; and (iv) collectability is reasonably assured.

<div> <div style="margin-left:0pt;margin-right:0pt;"> Revenue Recognition   The Company recognizes revenues when all four of the following criteria are met: (i) persuasive evidence that an agreement exists; (ii) delivery of the products and/or services has occurred; (iii) the selling price is fixed or determinable; and (iv) collectability is reasonably assured.   Revenue arrangements with multiple elements are analyzed to determine whether the elements can be divided into separate units of accounting or whether the elements must be accounted for as a single unit of accounting. The Company divides the elements into separate units of accounting and applies the applicable revenue recognition criteria to each of the elements, if the delivered elements have value to the customer on a stand-alone basis, if the arrangement includes a general right of return relative to the delivered elements, and if the delivery or performance of the undelivered elements is considered probable and substantially within the Company’s control.   For transactions entered into prior to 2011, revenue was allocated to each element based on its relative fair value when objective and reliable evidence of fair value existed for all elements in an arrangement. If an element was sold on a stand-alone basis, the fair value of the element was the price charged for the element. When the Company was unable to establish fair value for delivered elements or when fair value of undelivered elements had not been established, revenue was deferred until all elements were delivered or until fair value could be objectively determined for any undelivered elements.   Beginning in 2011, revenue is allocated to each element at the inception of the arrangement using the relative selling price method that is based on a three-tier hierarchy. The relative selling price method requires that the estimated selling price for each element be based on vendor-specific objective evidence (“VSOE”) of fair value, which represents the price charged for each element when it is sold separately or, for an element not yet being sold separately, the price established by management. When VSOE of fair value is not available, third-party evidence (“TPE”) of fair value is acceptable, or a best estimate of selling price is used if neither VSOE nor TPE is available. A best estimate of selling price should be consistent with the objective of determining the price at which the Company would transact if the element were sold regularly on a stand-alone basis and should also take into account market conditions and company-specific factors. The Company has not entered into or materially modified any multiple element arrangements subsequent to 2010.   Revenue arrangements with multiple elements may include license fees, research and development payments, milestone payments, other contingent payments, and royalties on any product sales derived from collaborations. The Company recognizes nonrefundable license fees with stand-alone value as revenue at the time that the Company has satisfied all performance obligations, and recognizes license fees without stand-alone value as revenue in combination with any undelivered performance obligations. The Company recognizes a research and development payment as revenue over the term of the collaboration agreement as contracted amounts are earned, or reimbursable costs are incurred, under the agreement, where contracted amounts are considered to be earned in relative proportion to the performance required under the applicable agreement. The Company recognizes a milestone payment, which is contingent upon the achievement of a milestone in its entirety, as revenue in the period in which the milestone is achieved only if the milestone meets all criteria to be considered substantive. These criteria include the following: (i) the consideration being earned should be commensurate with either the Company’s performance to achieve the milestone or the enhancement of the value of the item delivered as a result of a specific outcome resulting from the Company’s performance to achieve the milestone; (ii) the consideration being earned should relate solely to past performance; (iii) the consideration being earned should be reasonable relative to all deliverables and payment terms in the arrangement; and (iv) the milestone should be considered in its entirety and cannot be bifurcated into substantive and nonsubstantive components. Any amounts received pursuant to revenue arrangements with multiple elements prior to satisfying the Company’s revenue recognition criteria are recorded as deferred revenue on the Company’s consolidated balance sheets.   Revenue from government grants is recorded when reimbursable expenses are incurred under the grant in accordance with the terms of the grant award. The receivable for reimbursable amounts that have not been collected is reflected in prepaid and other current assets. </div> </div>

762000

290000

<div> <div style="margin-left:0pt;margin-right:0pt;"> Long-term debt and unamortized discount balances (excluding convertible debt) are as follows (in thousands):   <div style="width:100%"><table cellpadding="0" cellspacing="0" style="border-collapse:collapse;width: 86.00%;margin-left:36pt;"> <tr> <td valign="bottom" style="width:65.40%;padding:0pt;">   </td> <td valign="bottom" style="width:02.88%;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.86%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> June 30, 2014 </td> <td valign="bottom" style="width:02.88%;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.30%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> December 31, 2013 </td> <td valign="bottom" style="width:01.68%;padding:0pt;">   </td> </tr> <tr> <td valign="bottom" style="width:65.40%;padding:0pt;">   </td> <td valign="bottom" style="width:02.88%;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.86%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:02.88%;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.30%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.68%;padding:0pt;">   </td> </tr> <tr> <td valign="bottom" style="width:65.40%;background-color: #CCEEFF;padding:0pt;"> Long-term debt </td> <td valign="bottom" style="width:02.88%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:01.30%;background-color: #CCEEFF;padding:0pt;"> $ </td> <td valign="bottom" style="width:12.56%;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>750 </td> <td valign="bottom" style="width:02.88%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:01.30%;background-color: #CCEEFF;padding:0pt;"> $ </td> <td valign="bottom" style="width:12.00%;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>1,750 </td> <td valign="bottom" style="width:01.68%;background-color: #CCEEFF;padding:0pt;">   </td> </tr> <tr> <td valign="bottom" style="width:65.40%;padding:0pt;"> Less current portion of long-term debt </td> <td valign="bottom" style="width:02.88%;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.86%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(750 </td> <td valign="bottom" style="width:02.88%;"> ) </td> <td colspan="2" valign="bottom" style="width:13.30%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(1,750 </td> <td valign="bottom" style="width:01.68%;"> ) </td> </tr> <tr> <td valign="bottom" style="width:65.40%;background-color: #CCEEFF;padding:0pt;"> Long-term debt, net of current portion </td> <td valign="bottom" style="width:02.88%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:01.30%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;background-color: #CCEEFF;padding:0pt;"> $ </td> <td valign="bottom" style="width:12.56%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;background-color: #CCEEFF;padding:0pt;"> — </td> <td valign="bottom" style="width:02.88%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:01.30%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;background-color: #CCEEFF;padding:0pt;"> $ </td> <td valign="bottom" style="width:12.00%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;background-color: #CCEEFF;padding:0pt;"> — </td> <td valign="bottom" style="width:01.68%;background-color: #CCEEFF;padding:0pt;">   </td> </tr> <tr> <td valign="bottom" style="width:65.40%;padding:0pt;">   </td> <td valign="bottom" style="width:02.88%;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.86%;border-top:2pt double #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:02.88%;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.30%;border-top:2pt double #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.68%;padding:0pt;">   </td> </tr> <tr> <td valign="bottom" style="width:65.40%;background-color: #CCEEFF;padding:0pt;"> Current portion of long-term debt </td> <td valign="bottom" style="width:02.88%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:01.30%;background-color: #CCEEFF;padding:0pt;"> $ </td> <td valign="bottom" style="width:12.56%;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>750 </td> <td valign="bottom" style="width:02.88%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:01.30%;background-color: #CCEEFF;padding:0pt;"> $ </td> <td valign="bottom" style="width:12.00%;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>1,750 </td> <td valign="bottom" style="width:01.68%;background-color: #CCEEFF;padding:0pt;">   </td> </tr> <tr> <td valign="bottom" style="width:65.40%;padding:0pt;"> Current portion of debt discount </td> <td valign="bottom" style="width:02.88%;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.86%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(4 </td> <td valign="bottom" style="width:02.88%;"> ) </td> <td colspan="2" valign="bottom" style="width:13.30%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(18 </td> <td valign="bottom" style="width:01.68%;"> ) </td> </tr> <tr> <td valign="bottom" style="width:65.40%;background-color: #CCEEFF;padding:0pt;"> Current portion of long-term debt, net </td> <td valign="bottom" style="width:02.88%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:01.30%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;background-color: #CCEEFF;padding:0pt;"> $ </td> <td valign="bottom" style="width:12.56%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>746 </td> <td valign="bottom" style="width:02.88%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:01.30%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;background-color: #CCEEFF;padding:0pt;"> $ </td> <td valign="bottom" style="width:12.00%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>1,732 </td> <td valign="bottom" style="width:01.68%;background-color: #CCEEFF;padding:0pt;">   </td> </tr> </table></div>   </div> </div>

<div> <div style="margin-left:0pt;margin-right:0pt;"> The allocation of stock-based compensation for all options and restricted stock awards is as follows (in thousands):   <div style="width:100%"><table cellpadding="0" cellspacing="0" style="border-collapse:collapse;width: 86.00%;margin-left:36pt;"> <tr> <td valign="bottom" style="width:32.36%;padding:0pt;">   </td> <td valign="bottom" style="width:02.86%;padding:0pt;">   </td> <td colspan="5" valign="bottom" style="width:30.34%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> Three Months Ended June 30, </td> <td valign="bottom" style="width:02.86%;padding:0pt;">   </td> <td colspan="5" valign="bottom" style="width:30.48%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> Six Months Ended June 30, </td> <td valign="bottom" style="width:01.10%;padding:0pt;">   </td> </tr> <tr> <td valign="bottom" style="width:32.36%;padding:0pt;">   </td> <td valign="bottom" style="width:02.86%;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.72%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> 2014 </td> <td valign="bottom" style="width:02.86%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.76%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> 2013 </td> <td valign="bottom" style="width:02.86%;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.76%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> 2014 </td> <td valign="bottom" style="width:02.86%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.86%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> 2013 </td> <td valign="bottom" style="width:01.10%;padding:0pt;">   </td> </tr> <tr> <td valign="bottom" style="width:32.36%;padding:0pt;">   </td> <td valign="bottom" style="width:02.86%;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.72%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:02.86%;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.76%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:02.86%;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.76%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:02.86%;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.86%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.10%;padding:0pt;">   </td> </tr> <tr> <td valign="bottom" style="width:32.36%;background-color: #CCEEFF;padding:0pt;"> Research and development </td> <td valign="bottom" style="width:02.86%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:01.30%;background-color: #CCEEFF;padding:0pt;"> $ </td> <td valign="bottom" style="width:12.42%;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>229  </td> <td valign="bottom" style="width:02.86%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:01.30%;background-color: #CCEEFF;padding:0pt;"> $ </td> <td valign="bottom" style="width:12.46%;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>67  </td> <td valign="bottom" style="width:02.86%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:01.30%;background-color: #CCEEFF;padding:0pt;"> $ </td> <td valign="bottom" style="width:12.46%;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>794  </td> <td valign="bottom" style="width:02.86%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:01.30%;background-color: #CCEEFF;padding:0pt;"> $ </td> <td valign="bottom" style="width:12.56%;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>105  </td> <td valign="bottom" style="width:01.10%;background-color: #CCEEFF;padding:0pt;">   </td> </tr> <tr> <td valign="bottom" style="width:32.36%;padding:0pt;"> General and administrative </td> <td valign="bottom" style="width:02.86%;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.72%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>195  </td> <td valign="bottom" style="width:02.86%;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.76%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>45  </td> <td valign="bottom" style="width:02.86%;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.76%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>501  </td> <td valign="bottom" style="width:02.86%;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:13.86%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>82  </td> <td valign="bottom" style="width:01.10%;padding:0pt;">   </td> </tr> <tr> <td valign="bottom" style="width:32.36%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:02.86%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:01.30%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;background-color: #CCEEFF;padding:0pt;"> $ </td> <td valign="bottom" style="width:12.42%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>424  </td> <td valign="bottom" style="width:02.86%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:01.30%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;background-color: #CCEEFF;padding:0pt;"> $ </td> <td valign="bottom" style="width:12.46%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>112  </td> <td valign="bottom" style="width:02.86%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:01.30%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;background-color: #CCEEFF;padding:0pt;"> $ </td> <td valign="bottom" style="width:12.46%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>1,295  </td> <td valign="bottom" style="width:02.86%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:01.30%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;background-color: #CCEEFF;padding:0pt;"> $ </td> <td valign="bottom" style="width:12.56%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>187  </td> <td valign="bottom" style="width:01.10%;background-color: #CCEEFF;padding:0pt;">   </td> </tr> </table></div>   </div> </div>

<div> <div style="margin-left:0pt;margin-right:0pt;">   <div style="width:100%"><table cellpadding="0" cellspacing="0" style="border-collapse:collapse;width: 83.00%;margin-left:54pt;"> <tr> <td valign="bottom" style="width:64.00%;padding:0pt;">   </td> <td valign="bottom" style="width:03.00%;padding:0pt;">   </td> <td colspan="3" valign="bottom" style="width:29.72%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> Six Months Ended June 30, </td> <td valign="bottom" style="width:03.28%;padding:0pt;">   </td> </tr> <tr> <td valign="bottom" style="width:64.00%;padding:0pt;">   </td> <td valign="bottom" style="width:03.00%;padding:0pt;">   </td> <td valign="bottom" style="width:14.40%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> 2014 </td> <td valign="bottom" style="width:03.00%;padding:0pt;">   </td> <td valign="bottom" style="width:12.32%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> 2013 </td> <td valign="bottom" style="width:03.28%;padding:0pt;">   </td> </tr> <tr> <td valign="bottom" style="width:64.00%;padding:0pt;">   </td> <td valign="bottom" style="width:03.00%;padding:0pt;">   </td> <td valign="bottom" style="width:14.40%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:03.00%;padding:0pt;">   </td> <td valign="bottom" style="width:12.32%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:03.28%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:64.00%;background-color: #CCEEFF;padding:0pt;"> Risk-free interest rate </td> <td valign="bottom" style="width:03.00%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:14.40%;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>2.2  </td> <td valign="bottom" style="width:03.00%;background-color: #CCEEFF;padding:0pt;"> % </td> <td valign="bottom" style="width:12.32%;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>1.5  </td> <td valign="bottom" style="width:03.28%;background-color: #CCEEFF;padding:0pt;"> % </td> </tr> <tr> <td valign="top" style="width:64.00%;padding:0pt;"> Expected volatility </td> <td valign="bottom" style="width:03.00%;padding:0pt;">   </td> <td valign="bottom" style="width:14.40%;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>94.3  </td> <td valign="bottom" style="width:03.00%;padding:0pt;"> % </td> <td valign="bottom" style="width:12.32%;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>90.0  </td> <td valign="bottom" style="width:03.28%;padding:0pt;"> % </td> </tr> <tr> <td valign="top" style="width:64.00%;background-color: #CCEEFF;padding:0pt;"> Remaining contractual term (in years) </td> <td valign="bottom" style="width:03.00%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:14.40%;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>6.6  </td> <td valign="bottom" style="width:03.00%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:12.32%;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>8.1  </td> <td valign="bottom" style="width:03.28%;background-color: #CCEEFF;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:64.00%;padding:0pt;"> Expected dividend yield </td> <td valign="bottom" style="width:03.00%;padding:0pt;">   </td> <td valign="bottom" style="width:14.40%;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>0.0  </td> <td valign="bottom" style="width:03.00%;padding:0pt;"> % </td> <td valign="bottom" style="width:12.32%;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>0.0  </td> <td valign="bottom" style="width:03.28%;padding:0pt;"> % </td> </tr> </table></div>   </div> </div>

<div> <div style="margin-left:0pt;margin-right:0pt;">   <div style="width:100%"><table cellpadding="0" cellspacing="0" style="border-collapse:collapse;width: 83.00%;margin-left:54pt;"> <tr> <td valign="bottom" style="width:64.00%;padding:0pt;">   </td> <td valign="bottom" style="width:03.00%;padding:0pt;">   </td> <td colspan="3" valign="bottom" style="width:29.32%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> Six Months Ended June 30, </td> <td valign="bottom" style="width:03.68%;padding:0pt;">   </td> </tr> <tr> <td valign="bottom" style="width:64.00%;padding:0pt;">   </td> <td valign="bottom" style="width:03.00%;padding:0pt;">   </td> <td valign="bottom" style="width:14.40%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> 2014 </td> <td valign="bottom" style="width:03.00%;padding:0pt;">   </td> <td valign="bottom" style="width:11.92%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> 2013 </td> <td valign="bottom" style="width:03.68%;padding:0pt;">   </td> </tr> <tr> <td valign="bottom" style="width:64.00%;padding:0pt;">   </td> <td valign="bottom" style="width:03.00%;padding:0pt;">   </td> <td valign="bottom" style="width:14.40%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:03.00%;padding:0pt;">   </td> <td valign="bottom" style="width:11.92%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:03.68%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:64.00%;background-color: #CCEEFF;padding:0pt;"> Risk-free interest rate </td> <td valign="bottom" style="width:03.00%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:14.40%;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>1.9  </td> <td valign="bottom" style="width:03.00%;background-color: #CCEEFF;padding:0pt;"> % </td> <td valign="bottom" style="width:11.92%;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>1.1  </td> <td valign="bottom" style="width:03.68%;background-color: #CCEEFF;padding:0pt;"> % </td> </tr> <tr> <td valign="top" style="width:64.00%;padding:0pt;"> Expected volatility </td> <td valign="bottom" style="width:03.00%;padding:0pt;">   </td> <td valign="bottom" style="width:14.40%;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>94.5  </td> <td valign="bottom" style="width:03.00%;padding:0pt;"> % </td> <td valign="bottom" style="width:11.92%;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>89.8  </td> <td valign="bottom" style="width:03.68%;padding:0pt;"> % </td> </tr> <tr> <td valign="top" style="width:64.00%;background-color: #CCEEFF;padding:0pt;"> Expected term (in years) </td> <td valign="bottom" style="width:03.00%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:14.40%;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>6.0  </td> <td valign="bottom" style="width:03.00%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:11.92%;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>6.1  </td> <td valign="bottom" style="width:03.68%;background-color: #CCEEFF;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:64.00%;padding:0pt;"> Expected dividend yield </td> <td valign="bottom" style="width:03.00%;padding:0pt;">   </td> <td valign="bottom" style="width:14.40%;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>0.0  </td> <td valign="bottom" style="width:03.00%;padding:0pt;"> % </td> <td valign="bottom" style="width:11.92%;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>0.0  </td> <td valign="bottom" style="width:03.68%;padding:0pt;"> % </td> </tr> </table></div>   </div> </div>

<div> <div style="margin-left:0pt;margin-right:0pt;">   <div style="width:100%"><table cellpadding="0" cellspacing="0" style="border-collapse:collapse;width: 86.00%;margin-left:36pt;"> <tr> <td valign="bottom" style="width:65.40%;padding:0pt;">   </td> <td valign="bottom" style="width:02.88%;padding:0pt;">   </td> <td valign="bottom" style="width:13.84%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> Number of Options </td> <td valign="bottom" style="width:03.48%;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:12.50%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> Weighted- Average Price </td> <td valign="bottom" style="width:01.90%;padding:0pt;">   </td> </tr> <tr> <td valign="bottom" style="width:65.40%;padding:0pt;">   </td> <td valign="bottom" style="width:02.88%;padding:0pt;">   </td> <td valign="bottom" style="width:13.84%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:03.48%;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:12.50%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.90%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:65.40%;background-color: #CCEEFF;padding:0pt;"> Balance at December 31, 2013 </td> <td valign="bottom" style="width:02.88%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:13.84%;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>1,726,991 </td> <td valign="bottom" style="width:03.48%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:01.30%;background-color: #CCEEFF;padding:0pt;"> $ </td> <td valign="bottom" style="width:11.20%;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>2.30 </td> <td valign="bottom" style="width:01.90%;background-color: #CCEEFF;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:65.40%;padding:0pt;"> Granted </td> <td valign="bottom" style="width:02.88%;padding:0pt;">   </td> <td valign="bottom" style="width:13.84%;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>833,808 </td> <td valign="bottom" style="width:03.48%;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:12.50%;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>6.73 </td> <td valign="bottom" style="width:01.90%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:65.40%;background-color: #CCEEFF;padding:0pt;"> Canceled </td> <td valign="bottom" style="width:02.88%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:13.84%;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(63,293 </td> <td valign="bottom" style="width:03.48%;background-color: #CCEEFF;"> ) </td> <td colspan="2" valign="bottom" style="width:12.50%;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>5.26 </td> <td valign="bottom" style="width:01.90%;background-color: #CCEEFF;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:65.40%;padding:0pt;"> Exercised </td> <td valign="bottom" style="width:02.88%;padding:0pt;">   </td> <td valign="bottom" style="width:13.84%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(88,934 </td> <td valign="bottom" style="width:03.48%;"> ) </td> <td colspan="2" valign="bottom" style="width:12.50%;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>1.67 </td> <td valign="bottom" style="width:01.90%;padding:0pt;">   </td> </tr> <tr> <td valign="bottom" style="width:65.40%;background-color: #CCEEFF;padding:0pt;"> Balance at June 30, 2014 </td> <td valign="bottom" style="width:02.88%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:13.84%;border-top:1pt solid #000000 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>2,408,572 </td> <td valign="bottom" style="width:03.48%;background-color: #CCEEFF;padding:0pt;">   </td> <td valign="bottom" style="width:01.30%;background-color: #CCEEFF;padding:0pt;"> $ </td> <td valign="bottom" style="width:11.20%;background-color: #CCEEFF;;font-family:Times New Roman;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>3.78 </td> <td valign="bottom" style="width:01.90%;background-color: #CCEEFF;padding:0pt;">   </td> </tr> </table></div>   </div> </div>

187000

1295000

0.000

P6Y1M6D

P6Y

0.900

0.898

0.943

0.945

0.015

0.011

0.022

0.019

63293

833808

1726991

2408572

160526

2.30

3.78

P8Y1M6D

P6Y7M6D

1.67

5.26

6.73

6.00

50848000

39638000

7666667

88934

119000

18000

<div> <div style="margin-left:0pt;margin-right:0pt;"> 6.Subsequent Events   On July 30, 2014, the Company entered into an Amended and Restated Loan and Security Agreement (the “Restated LSA”) with Silicon Valley Bank (the “Bank”). The Restated LSA amends and restates the Loan and Security Agreement, dated as of January 5, 2009, as amended, by and between the Company and the Bank (the “Loan Agreement”). Pursuant to the Restated LSA, the Bank agreed to make loans to the Company in an aggregate principal amount of up to $20.0 million, comprised of (i) a $10.0 million term loan, funded at the closing (the “Term A Loan”) and (ii) subject to the achievement of a specified clinical milestone relating to the Company’s Phase 2 clinical trial of ProHema, additional term loans totaling up to $10.0 million in the aggregate, which are available from July 30, 2014 to December 31, 2014 (each, a “Term B Loan”), the first of which shall be at least $5.0 million.   <a name="mrllPB6"></a>The Term A Loan matures on January 1, 2018, and the Term B Loans mature on the first day of the 42nd month after the month in which each Term B Loan funds. The Term A Loan bears interest at a fixed annual rate of 6.94% and the Term B Loans will bear interest at a fixed annual rate, to be determined on the funding date, equal to the greater of (i) 6.75% or (ii) the sum of (a) U.S. Treasury note yield to maturity for a thirty-six (36) month term, plus (b) five hundred ninety (590) basis points. Interest is payable in cash on a monthly basis beginning the first day of each month following the month in which the funding date of each loan occurs. The Company is required to make monthly payments of interest only during the first twelve months following the funding date of each loan, and thereafter is required to repay the principal and accrued interest under each loan in thirty equal monthly installments based on a thirty-month amortization schedule.   A portion of the proceeds from the Term A Loan were used to repay loans outstanding under the Loan Agreement and to pay for transaction fees related to the Restated LSA, including a commitment fee of $400,000 paid by the Company to the Bank, and the remainder will be used for working capital purposes, including the advancement of the Company’s research programs. Net proceeds from the Term A Loan, after repayment of loans outstanding under the Loan Agreement and transaction fees, were $8.8 million.   As part of the financing, upon the Company’s election to access the first Term B Loan, the Company will issue to the Bank and one or more of its affiliates warrants to purchase up to an aggregate of $400,000 in shares of the Company’s common stock (the “Warrants”), subject to adjustment, at an exercise price equal to the average price per share over the preceding ten (10) trading days prior to the funding date of the first Term B Loan. </div> </div>

9200000

2400000

1226451

1239524

20407632

20467782