As filed with the Securities and Exchange Commission on June 10, 2013

Registration No. 333-188365

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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Amendment No. 2 to

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

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Heat Biologics, Inc.

(Exact name of Registrant as specified in its charter)

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100 Europa Drive

Chapel Hill, North Carolina 27517

(919) 240-7133

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

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Jeffrey Wolf

Chief Executive Officer and

Chairman of the Board of Directors

Heat Biologics, Inc.

100 Europa Drive

Chapel Hill, North Carolina 27517

(919) 240-7133

(Name, address, including zip code, and telephone number, including area code, of agent for service)

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Copies to:

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Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. þ

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If delivery of the prospectus is expected to be made pursuant to Rule 424, check the following box. ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

CALCULATION OF REGISTRATION FEE

(1)

Estimated solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457(o) of the Securities Act of 1933, as amended.

(2)

Pursuant to Rule 416, the securities being registered hereunder include such indeterminate number of additional securities as may be issued after the date hereof as a result of stock splits, stock dividends or similar transactions.

(3)

Includes shares of common stock the underwriters have the option to purchase to cover over-allotments, if any.

(4)

No fee pursuant to Rule 457(g) under the Securities Act of 1933, as amended.

(5)

Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(g) under the Securities Act of 1933, as amended. The representative’s warrants are exercisable at a per share exercise price equal to 125% of the public offering price per share. As estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(g) under the Securities Act of 1933, as amended, the proposed maximum aggregate offering price of the representative’s warrants is $1,237,500 which is equal to 125% of $990,000 (5% of $19,800,000).

(6)

Previously paid.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to Section 8(a), may determine.

The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities, nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

1,650,000 Shares

Common Stock

This is a firm commitment initial public offering of 1,650,000 shares of common stock by Heat Biologics, Inc. No public market currently exists for our shares. We anticipate that the initial public offering price per share of our shares of common stock will be between $10.00 and $12.00 per share.

We effected a 1-for-2.3 reverse stock split of our outstanding common stock on May 29, 2013. We have applied to list our common stock on the NASDAQ Capital Market under the symbol “HTBX.” No assurance can be given that our application will be approved.

We are an “emerging growth company” as that term is used in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) and, as such, may elect to comply with certain reduced public company reporting requirements for future filings.

Investing in our common stock involves risk. See “Risk Factors” beginning on page 9 of this prospectus for a discussion of information that should be considered in connection with an investment in our common stock.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

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We have granted a 45-day option to the underwriters to purchase up to 247,500 additional shares of common stock solely to cover over-allotments, if any.

The underwriters expect to deliver our shares to purchasers in the offering on or about           , 2013.

Sole Book-Running Manager

Aegis Capital Corp

Co-Manager

Cantor Fitzgerald & Co.

          , 2013

TABLE OF CONTENTS

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You should rely only on the information contained in this prospectus. Neither we nor the underwriters have authorized anyone to provide you with information different from that contained in this prospectus. We are offering to sell, and seeking offers to buy, shares of our common stock only in jurisdictions where offers and sales are permitted. The information in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of shares of our common stock.

Except where the context requires otherwise, in this prospectus the “Company,” “Heat Biologics,” “Heat,” “we,” “us” and “our” refer to Heat Biologics, Inc., a Delaware corporation formed in June 2008, and, where appropriate, its subsidiaries, Heat Biologics I, Inc., Heat Biologics III, Inc., Heat Biologics IV, Inc. and Heat Biologics GmbH. In June 2012, we divested our 92.5% interest in Heat Biologics II, Inc. The divestiture resulted in Heat Biologics II, Inc. being classified as discontinued operations in our consolidated financial statements for the years ended December 31, 2012 and 2011 and for the three months ended March 31, 2012 (unaudited), and for the period June 10, 2008 (inception) through March 31, 2013 (unaudited).

For investors outside the United States: Neither we nor any of the underwriters have taken any action that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of shares of common stock and the distribution of this prospectus outside of the United States.

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RISK FACTORS

Investors should carefully consider the risks described below before deciding whether to invest in our securities. If any of the following risks actually occurs, our business, financial condition or results of operations could be adversely affected. In such case, the trading price of our common stock could decline and you could lose all or part of your investment. Our actual results could differ materially from those anticipated in the forward-looking statements made throughout this prospectus as a result of different factors, including the risks we face described below.

Risks Relating to our Company

We have had limited operations to date.

We are a start-up entity and have had limited operations to date. As a start-up entity, we are subject to many of the risks common to such enterprises, including our ability to implement our business plan, market acceptance of our proposed business and products, under-capitalization, cash shortages, limitations with respect to personnel, financing and other resources, competition from better funded and experienced companies, and uncertainty of our ability to generate revenues. There is no assurance that our activities will be successful or will result in any revenues or profit, and the likelihood of our success must be considered in light of the stage of our development. Even if we generate revenue, there can be no assurance that we will be profitable. In addition, no assurance can be given that we will be able to consummate our business strategy and plans, as described herein, or that financial, technological, market, or other limitations may force us to modify, alter, significantly delay, or significantly impede the implementation of such plans. We have insufficient results for investors to use to identify historical trends or even to make quarter to quarter comparisons of our operating results. You should consider our prospects in light of the risk, expenses and difficulties we will encounter as an early stage company. Our revenue and income potential is unproven and our business model is continually evolving. We are subject to the risks inherent to the operation of a new business enterprise, and cannot assure you that we will be able to successfully address these risks.

We have a limited operating history upon which to evaluate our ability to commercialize our products.

We are a development-stage company and our success is dependent upon our ability to obtain regulatory approval for and commercialize our products and we have not demonstrated an ability to perform the functions necessary for the approval or successful commercialization of any product candidates. The successful commercialization of any product candidates will require us to perform a variety of functions, including:

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continuing to undertake pre-clinical development and initiate clinical trials;

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participating in regulatory approval processes;

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formulating and manufacturing products; and

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conducting sales and marketing activities.

While various members of our management and staff have significant experience in conducting cancer trials, the Company, to date, has not successfully initiated any clinical trials and has no experience conducting or enrolling patients in clinical trials. Our operations have been limited to organizing and staffing the Company, acquiring, developing and securing our proprietary technology and undertaking pre-clinical trials of our product candidates. These operations provide a limited basis for you to assess our ability to commercialize our product candidates and the advisability of investing in our securities.

We currently have no product revenues and may not generate revenue at any time in the near future, if at all.

We currently have no products for sale and we cannot guarantee that we will ever have any drug products approved for sale. We and our product candidates are subject to extensive regulation by the U.S. Food and Drug Administration, or FDA, and comparable regulatory authorities in other countries governing, among other things, research, testing, clinical trials, manufacturing, labeling, promotion, marketing, adverse event reporting and recordkeeping of our product candidates. Until, and unless, we receive approval from the FDA and other regulatory authorities for our product candidates, we cannot commercialize our product candidates and will not have product

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revenues. For the foreseeable future, we will have to fund all of our operations and capital expenditures from cash on hand, grants, and, potentially, future offerings. At the conclusion of this offering, we believe we will have cash on hand to fund our Phase 2 clinical trial for NSCLC, and our Phase 1/2 clinical trial for bladder cancer. However, changes may occur that would consume our available capital before that time, including changes in and progress of our development activities, acquisitions of additional candidates and changes in regulation. Moreover, pre-clinical studies and clinical trials may not start or be completed as we forecast and may not achieve the desired results.

We may continue to generate operating losses and experience negative cash flows and it is uncertain whether we will achieve profitability.

For the three months ended March 31, 2013 and March 31, 2012, we incurred a net loss attributable to Heat Biologics, Inc. and Subsidiaries of ($763,856) and ($441,684), respectively. For the years ended December 31, 2012 and December 31, 2011, we incurred a net loss of ($2,420,200) and ($2,104,884), respectively. We have also incurred an accumulated deficit since inception of ($6,699,138). We may continue to incur operating losses until such time, if ever, as we are able to achieve sufficient levels of revenue from operations. Our ability to achieve profitability will depend on the market acceptance of our product offerings and our capacity to develop, introduce and sell our products to our targeted markets. There can be no assurance that we will ever generate significant sales or achieve profitability. Accordingly, the extent of future losses and the time required to achieve profitability, if ever, cannot be predicted at this point.

Even if we succeed in developing and commercializing one or more product candidates, we expect to incur substantial losses for the foreseeable future and may never become profitable. We also expect to continue to incur significant operating and capital expenditures and anticipate that our expenses will increase substantially in the foreseeable future as we:

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continue to undertake pre-clinical development and initiate clinical trials for product candidates;

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seek regulatory approvals for product candidates;

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implement additional internal systems and infrastructure; and

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hire additional personnel.

We also expect to experience negative cash flows for the foreseeable future as we fund our operating losses and capital expenditures. As a result, we will need to generate significant revenues in order to achieve and maintain profitability. We may not be able to generate these revenues or achieve profitability in the future. Our failure to achieve or maintain profitability would likely negatively impact the value of our securities and could prevent us from continuing as a going concern.

If we default on our secured loans with Square 1 Bank, we would be forced to suspend all operations.

We have entered into loans with Square 1 Bank that are secured by substantially all of our assets, excluding our intellectual property. Our loan agreement with Square 1 Bank sets forth various affirmative and negative covenants that we must comply with, including covenants regarding financial reporting, limits on our cash burn, incurrence of indebtedness and liens and merger and acquisitions. If we fail to comply with these covenants or if we fail to make timely monthly payments under the secured loans when due, Square 1 Bank could declare our loans in default. Additionally, if we do not commercialize a product by the maturity date of the loan, we may be unable to repay the loans to Square 1 Bank. If we default on the loans, Square 1 Bank has the right to seize the collateral secured by the loans, which would result in our licenses reverting back to our licensor and would force us to suspend all operations. In order to comply with the covenants of the loans and to make timely payments to Square 1 Bank under the loans, we may need to raise additional capital, which might not be available to us on favorable terms or at all.

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Risks Relating to our Business

If we do not obtain the necessary regulatory approvals in the U.S. and/or other countries we will not be able to sell our product candidates.

We cannot assure you that we will receive the approvals necessary to commercialize any of our product candidates or any product candidates we acquire or develop in the future. We will need FDA approval to commercialize our product candidates in the U.S. and approvals from the FDA-equivalent regulatory authorities in foreign jurisdictions to commercialize our product candidates in those jurisdictions. In order to obtain FDA approval of any product candidate, we must submit to the FDA a Biologics License Application, or BLA, demonstrating that the product candidate is safe, pure and potent, or effective for its intended use. This demonstration requires significant research including pre-clinical studies, as well as clinical trials. Satisfaction of the FDA’s regulatory requirements typically takes many years, depends upon the type, complexity and novelty of the product candidate and requires substantial resources for research, development and testing. We cannot predict whether our clinical trials will demonstrate the safety and efficacy of our product candidates or if the results of any clinical trials will be sufficient to advance to the next phase of development or for approval from FDA. We also cannot predict whether our research and clinical approaches will result in drugs or therapeutics that the FDA considers safe and effective for the proposed indications. The FDA has substantial discretion in the drug approval process. The approval process may be delayed by changes in government regulation, future legislation or administrative action or changes in FDA policy that occur prior to or during our regulatory review. Delays in obtaining regulatory approvals may:

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prevent or delay commercialization of, and our ability to derive product revenues from, our product candidates; and

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diminish any competitive advantages that we may otherwise believe that we hold.

Even if we comply with all FDA requests, the FDA may ultimately reject one or more of our BLAs. We may never obtain regulatory clearance for any of our product candidates. Failure to obtain FDA approval of any of our product candidates will severely undermine our business by leaving us without a saleable product, and therefore without any source of revenues, until another product candidate can be developed. There is no guarantee that we will ever be able to develop or acquire another product candidate.

In addition, the FDA may require us to conduct additional pre-clinical and clinical testing or to perform post-marketing studies, as a condition to granting marketing approval of a product. Regulatory approval of oncology products often requires that patients in clinical trials be followed for long periods to assess their overall survival. The results generated after approval could result in loss of marketing approval, changes in product labeling, and/or new or increased concerns about the side effects or efficacy of a product. The FDA has significant post-market authority, including the explicit authority to require post-market studies and clinical trials, labeling changes based on new safety information, and compliance with FDA-approved risk evaluation and mitigation strategies. The FDA’s exercise of its authority has in some cases resulted, and in the future could result, in delays or increased costs during product development, clinical trials and regulatory review, increased costs to comply with additional post-approval regulatory requirements and potential restrictions on sales of approved products.

In foreign jurisdictions, we must also receive approval from the appropriate regulatory authorities before we can commercialize any vaccines. Foreign regulatory approval processes generally include all of the risks associated with the FDA approval procedures described above. We cannot assure you that we will receive the approvals necessary to commercialize our product candidate for sale outside the United States.

Our product candidates are in early stages of development.

Because our product candidates are in early stages of development they will require extensive pre-clinical and clinical testing. Only one product candidate is currently ready for Phase 2 clinical trials. We cannot predict with any certainty if or when we might submit a BLA for regulatory approval for any of our product candidates or whether any such BLA will be accepted for review by FDA, or whether any BLA will be approved upon review.

Even if our clinical trials are completed as planned, we cannot be certain that their results will support our proposed indications. Success in pre-clinical testing and early clinical trials does not ensure that later clinical trials will be successful, and we cannot be sure that the results of later clinical trials will replicate the results of prior clinical trials

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and pre-clinical testing. For example, the only clinical study conducted to date with one of our product candidates by the inventor of the technology that we license showed evidence of an immune response in late-stage NSCLC patients exposed to HS-110. However, our future HS-110 trials will use doses and dosing regimens which have previously been tested in only 0 to 3 subjects, and will be conducted in patients with less advanced disease who may have different responses. In addition, immune response is not an acceptable regulatory endpoint for approval, and no actual clinical or tumor responses were observed in that study. Moreover, the HS-110 Phase 1 trial involved a small sample size, was not blinded and was sponsored by an individual who has a significant financial interest in the success of the product candidate. The clinical trial process may fail to demonstrate that our product candidates are safe and effective for their proposed uses. This failure could cause us to abandon a product candidate and may delay development of other product candidates. Any delay in, or termination of, our clinical trials will delay and possibly preclude the filing of any BLAs with the FDA and, ultimately, our ability to commercialize our product candidates and generate product revenues.

Clinical trials are very expensive, time-consuming and difficult to design and implement.

As part of the regulatory process, we must conduct clinical trials for each product candidate to demonstrate safety and efficacy to the satisfaction of the FDA and other regulatory authorities. The number and design of the clinical trials that will be required varies depending upon product candidate, the condition being evaluated and the trial results themselves. Therefore, it is difficult to accurately estimate the cost of the clinical trials. Clinical trials are very expensive and difficult to design and implement, in part because they are subject to rigorous regulatory requirements. The clinical trial process is also time consuming. We estimate that clinical trials of our product candidates will take at least several years to complete. Furthermore, failure can occur at any stage of the trials, and we could encounter problems that cause us to abandon or repeat clinical trials. The commencement and completion of clinical trials may be delayed or prevented by several factors, including:

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unforeseen safety issues;

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failure to determine appropriate dosing;

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greater than anticipated cost of our clinical trials;

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failure to demonstrate effectiveness during clinical trials;

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slower than expected rates of patient recruitment or difficulty obtaining investigators;

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patient drop-out or discontinuation;

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inability to monitor patients adequately during or after treatment;

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third party contractors failing to comply with regulatory requirements or meet their contractual obligations to us in a timely manner;

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insufficient or inadequate supply or quality of product candidates or other necessary materials to conduct our trials;

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potential additional safety monitoring, or other conditions required by FDA or comparable foreign regulatory authorities regarding the scope or design of our clinical trials, or other studies requested by regulatory agencies;

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problems engaging IRBs to oversee trials or in obtaining and maintaining IRB approval of studies;

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imposition of clinical hold or suspension of our clinical trials by regulatory authorities; and

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inability or unwillingness of medical investigators to follow our clinical protocols.

In addition, we or the FDA may suspend or terminate our clinical trials at any time if it appears that we are exposing participants to unacceptable health risks or if the FDA finds deficiencies in our Investigational New Drug, or IND, submissions or the conduct of these trials. Therefore, we cannot predict with any certainty when, if ever, future clinical trials will commence or be completed. We intend to submit the protocol for our planned Phase 2 trial of HS-110 to FDA in 2H-2013.

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There is uncertainty as to market acceptance of our technology and product candidates.

Even if the FDA approves one or more of our product candidates, the products may not gain broad market acceptance among physicians, healthcare payers, patients, and the medical community. We have conducted our own research into the markets for our product candidates; however we cannot guarantee market acceptance of our product candidates, if approved, and have somewhat limited information on which to estimate our anticipated level of sales. Our product candidates, if approved will require patients, healthcare providers and doctors to adopt our technology. Our industry is susceptible to rapid technological developments and there can be no assurance that we will be able to match any new technological advances. If we are unable to match the technological changes in the needs of our customers the demand for our products will be reduced. Acceptance and use of any products we market will depend upon a number of factors including:

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perceptions by members of the health care community, including physicians, about the safety and effectiveness of our products;

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limitation on use or warnings required by FDA in our product labeling;

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cost-effectiveness of our products relative to competing products;

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convenience and ease of administration;

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potential advantages of alternative treatment methods;

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availability of reimbursement for our products from government or other healthcare payers; and

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effectiveness of marketing and distribution efforts by us and our licensees and distributors, if any.

Because we expect virtually all of our product revenues for the forseeable future to be generated from sales of our current product candidates, if approved, the failure of these therapeutics to find market acceptance would substantially harm our business and would adversely affect our revenue.

Our development program depends upon third-party researchers who are outside our control.

We are dependent upon independent investigators and collaborators, such as universities and medical institutions, to conduct our pre-clinical and clinical trials under agreements with us. These collaborators are not our employees and we cannot control the amount or timing of resources that they devote to our programs. These investigators may not assign as great a priority to our programs or pursue them as diligently as we would if we were undertaking such programs ourselves. If outside collaborators fail to devote sufficient time and resources to our development programs, or if their performance is substandard, the approval of our FDA applications, if any, and our introduction of new product candidates, if any, will be delayed if obtained at all. These collaborators may also have relationships with other commercial entities, some of whom may compete with us. If our collaborators assist our competitors at our expense, our competitive position would be harmed.

To date, in excess of $14,000,000 of funding has been awarded by the NIH to the primary inventor of the technology we license. We have little control over the direction of the NIH grant funds that have been received by the primary inventor of the technology we license and since payment is made to the inventor as opposed to us we do not recognize any revenue from such grant funds nor do they fund any expenses that we incur.

Although earmarked for further development of the technology that we license, any funds awarded to the primary inventor are used in his discretion and we have little control over his use of the funds.

We will rely exclusively on third parties to formulate and manufacture our product candidates.

We have no experience in the formulation, development or manufacturing of biologics and do not intend to establish our own manufacturing facilities. We lack the resources and expertise to formulate or manufacture our own product candidates. The investigational product for our planned Phase 1 and Phase 2 clinical trials are manufactured by our contractors under current good manufacturing practices, or cGMPs and we have entered into an agreement with another manufacturer for the manufacture and supply of investigational product for additional Phase 2 and any Phase 3 clinical trials and commercialization efforts We must also develop and validate a potency assay prior to

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submission of a license application. Such assays have proven difficult to develop for cell-based products and must be established prior to initiating any Phase 3 clinical trials. While we are currently utilizing gp96 ELISA as our potency assay, this is unlikely to be adequate for licensure, and as necessary, we will rely on contract manufacturers for further development and validation of a potency assay which will support our license application. If any of our current product candidates or any product candidates we may develop or acquire in the future receive FDA approval, we will rely on one or more third-party contractors for manufacturing. Our anticipated future reliance on a limited number of third-party manufacturers exposes us to the following risks:

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We may be unable to identify manufacturers on acceptable terms or at all because the number of potential manufacturers with appropriate expertise and facilities is limited.

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If we change manufacturers at any point during the development process or after approval, if any, we will need to demonstrate comparability between the products made by the old and new manufacturers. If we are unable to do so, we may need to conduct additional clinical trials with product manufactured by the new manufacturer. For example, the manufacturer of the clinical trial material we intend to use for any future Phase 3 trials of HS-110 and of our commercial product, if approved, is a different manufacturer from the manufacturer of the inventor’s completed Phase 1 trial of HS-110 and portions of our planned initial Phase 2 trial of HS-110. Accordingly, the third stage of our planned Phase 2 trial of HS-110 will evaluate the comparability of HS-110 produced by the two different manufacturers.

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If we change the manufacturer of a product subsequent to the approval of the product, we will need to obtain approval from the FDA of the change in manufacturer. Any such approval would require significant testing and expense, and the new manufacturer may be subject to a cGMP inspection prior to approval.

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Our third-party manufacturers might be unable to formulate and manufacture our product candidates in the volume and with the quality required to meet our clinical needs and commercial needs, if any.

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Our contract manufacturers may not perform as agreed or may not remain in the contract manufacturing business for the time required to supply our clinical trials or to successfully produce, store and distribute our product candidates.

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Drug manufacturers are subject to ongoing periodic unannounced inspection by the FDA, and corresponding state agencies to ensure compliance with cGMPs and other government regulations and corresponding foreign standards. We do not have control over third-party manufacturers’ compliance with these regulations and standards.

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If any third-party manufacturer makes improvements in the manufacturing process for our products, we may not own, or may have to share, the intellectual property rights to the innovation.

Our contract manufacturers may encounter difficulties in achieving quality control and quality assurance and may experience shortages in qualified personnel. Our contract manufacturers are subject to inspections by the FDA and comparable agencies in other jurisdictions to assess compliance with applicable regulatory requirements. Any failure to follow cGMP or other regulatory requirements or delay, interruption or other issues that arise in the manufacture, packaging, or storage of our products as a result of a failure of the facilities or operations of third parties to comply with regulatory requirements or pass any regulatory authority inspection could significantly impair our ability to develop and commercialize our products, including leading to significant delays in the availability of products for our clinical studies or the termination or hold on a clinical study, or the delay or prevention of a filing or approval of marketing applications for our product candidates. Significant noncompliance could also result in the imposition of sanctions, including fines, injunctions, civil penalties, failure of regulatory authorities to grant marketing approvals for our product candidates, delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of products, operating restrictions and criminal prosecutions, any of which could damage our reputation. If we or our contract manufacturers are not able to maintain regulatory compliance, we may not be permitted to market our products and/or may be subject to product recalls, seizures, injunctions, or criminal prosecution.

Each of these risks could delay our clinical trials, the approval, if any, of our product candidates by the FDA or the commercialization of our product candidates or result in higher costs or deprive us of potential product revenues.

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Even if we are able to obtain regulatory approval for our product candidates, we will continue to be subject to ongoing and extensive regulatory requirements, and our failure, or the failure of our contract manufacturers, to comply with these requirements could substantially harm our business.

If the FDA approves any of our product candidates, the labeling, manufacturing, packaging, adverse event reporting, storage, advertising, promotion and record-keeping for our products will be subject to ongoing FDA requirements and continued regulatory oversight and review. We may also be subject to additional FDA post-marketing obligations. If we are not able to maintain regulatory compliance, we may not be permitted to market our product candidates and/or may be subject to product recalls or seizures. The subsequent discovery of previously unknown problems with any marketed product, including adverse events of unanticipated severity or frequency, may result in restrictions on the marketing of the product, and could include withdrawal of the product from the market.

We have no experience selling, marketing or distributing products and have no internal capability to do so.

We currently have no sales, marketing or distribution capabilities. We do not anticipate having the resources in the foreseeable future to allocate to the sales and marketing of our proposed products, if approved. Our future success depends, in part, on our ability to enter into and maintain collaborative relationships for such capabilities, the collaborator’s strategic interest in the products under development and such collaborator’s ability to successfully market and sell any such products. We intend to pursue collaborative arrangements regarding the sales and marketing of our products, however, there can be no assurance that we will be able to establish or maintain such collaborative arrangements, or if able to do so, that our collaborators will have effective sales forces. To the extent that we decide not to, or are unable to, enter into collaborative arrangements with respect to the sales and marketing of our proposed products, significant capital expenditures, management resources and time will be required to establish and develop an in-house marketing and sales force with technical expertise. There can also be no assurance that we will be able to establish or maintain relationships with third party collaborators or develop in-house sales and distribution capabilities. To the extent that we depend on third parties for marketing and distribution, any revenues we receive will depend upon the efforts of such third parties, and there can be no assurance that such efforts will be successful. In addition, there can also be no assurance that we will be able to successfully market and sell our products in the United States or overseas on our own.

We may not be successful in establishing and maintaining strategic partnerships, which could adversely affect our ability to develop and commercialize products.

We may seek to enter into strategic partnerships in the future, including alliances with other biotechnology or pharmaceutical companies, to enhance and accelerate the development and commercialization of our products. We face significant competition in seeking appropriate strategic partners and the negotiation process is time-consuming and complex. Moreover, we may not be successful in our efforts to establish a strategic partnership or other alternative arrangements for any future product candidates and programs because our research and development pipeline may be insufficient, our product candidates and programs may be deemed to be at too early of a stage of development for collaborative effort and/or third parties may not view our product candidates and programs as having the requisite potential to demonstrate safety and efficacy or return on investment. Even if we are successful in our efforts to establish strategic partnerships, the terms that we agree upon may not be favorable to us and we may not be able to maintain such strategic partnerships if, for example, development or approval of a product candidate is delayed or sales of an approved product are disappointing.

If we ultimately determine that entering into strategic partnerships is in our best interest but either fail to enter into, are delayed in entering into or fail to maintain such strategic partnerships:

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the development of certain of our current or future product candidates may be terminated or delayed;

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our cash expenditures related to development of certain of our current or future product candidates may increase significantly and we may need to seek additional financing;

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we may be required to hire additional employees or otherwise develop expertise, such as sales and marketing expertise, for which we have not budgeted;

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we will bear all of the risk related to the development of any such product candidates;

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the competitiveness of any product candidate that is commercialized could be reduced;

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To the extent we elect to enter into licensing or collaboration agreements to partner our product candidates, our dependence on such relationships may adversely affect our business.

Our commercialization strategy for certain of our product candidates may depend on our ability to enter into agreements with collaborators to obtain assistance and funding for the development and potential commercialization of these product candidates. Supporting diligence activities conducted by potential collaborators and negotiating the financial and other terms of a collaboration agreement are long and complex processes with uncertain results. Even if we are successful in entering into one or more collaboration agreements, collaborations may involve greater uncertainty for us, as we have less control over certain aspects of our collaborative programs than we do over our proprietary development and commercialization programs. We may determine that continuing a collaboration under the terms provided is not in our best interest, and we may terminate the collaboration. Our collaborators could delay or terminate their agreements, and our product candidates subject to collaborative arrangements may never be successfully developed or commercialized.

Further, our future collaborators may develop alternative products or pursue alternative technologies either on their own or in collaboration with others, including our competitors, and the priorities or focus of our collaborators may shift such that our programs receive less attention or fewer resources than we would like, or they may be terminated altogether. Any such actions by our collaborators may adversely affect our business prospects and ability to earn revenues. In addition, we could have disputes with our future collaborators, such as the interpretation of terms in our agreements. Any such disagreements could lead to delays in the development or commercialization of any potential products or could result in time-consuming and expensive litigation or arbitration, which may not be resolved in our favor.

If we cannot compete successfully for market share against other drug companies, we may not achieve sufficient product revenues and our business will suffer.

The market for our product candidates is characterized by intense competition and rapid technological advances. If any of our product candidates receives FDA approval, it will compete with a number of existing and future drugs and therapies developed, manufactured and marketed by others. Existing or future competing products may provide greater therapeutic convenience or clinical or other benefits for a specific indication than our products, or may offer comparable performance at a lower cost. If our products fail to capture and maintain market share, we may not achieve sufficient product revenues and our business will suffer.

We will compete against fully integrated pharmaceutical companies and smaller companies that are collaborating with larger pharmaceutical companies, academic institutions, government agencies and other public and private research organizations. Many of these competitors have oncology compounds already approved or in development. In addition, many of these competitors, either alone or together with their collaborative partners, operate larger research and development programs or have substantially greater financial resources than we do, as well as significantly greater experience in:

·

developing drugs, biologics and other therapies;

·

undertaking pre-clinical testing and clinical trials;

·

obtaining FDA and other regulatory approvals of drugs, biologics and other therapies;

·

formulating and manufacturing drugs, biologics and other therapies; and

·

launching, marketing and selling drugs, biologics and other therapies.

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We have limited protection of our intellectual property.

We intend to rely on a combination of common law copyright, patent, trademark, and trade secret laws and measures to protect our proprietary information. We have obtained exclusive rights to license the technology for which patent protection has been obtained; however such protection does not prevent unauthorized use of such technology. Trademark and copyright protections may be limited, and enforcement could be too costly to be effective. It may also be possible for unauthorized third parties to copy aspects of, or otherwise obtain and use, our proprietary information without authorization, including, but not limited to, product design, software, customer and prospective customer lists, trade secrets, copyrights, patents and other proprietary rights and materials. Other parties can use and register confusingly similar business, product and service names, as well as domain names, which could divert customers, resulting in a material adverse effect on our business, operating results and financial condition.

If we fail to successfully enforce our intellectual property rights, our competitive position could suffer, which could harm our operating results. Competitors may challenge the validity or scope of our patents or future patents we may obtain. In addition, our licensed patents may not provide us a meaningful competitive advantage. We may be required to spend significant resources to monitor and police our licensed intellectual property rights. We may not be able to detect infringement and our competitive position may be harmed. In addition, competitors may design around our technology or develop competing technologies. Intellectual property rights may also be unavailable or limited in some foreign countries, which could make it easier for competitors to capture market share.

The technology we license, our products or our development efforts may be found to infringe third-party intellectual property rights.

Third parties may in the future assert claims or initiate litigation related to their patent, copyright, trademark and other intellectual property rights in technology that is important to us. The asserted claims and/or litigation could include claims against us, our licensors or our suppliers alleging infringement of intellectual property rights with respect to our products or components of those products. Regardless of the merit of the claims, they could be time consuming, result in costly litigation and diversion of technical and management personnel, or require us to develop a non-infringing technology or enter into license agreements. We have not undertaken an exhaustive search to discover any third party intellectual patent rights which might be infringed by commercialization of the product candidates described herein. Although we are not currently aware of any such third party intellectual patent rights, it is possible that such rights currently exist or might be obtained in the future. In the event that a third party controls such rights and we are unable to obtain a license to such rights on commercially reasonable terms, we may not be able to sell or continue to develop our products, and may be liable for damages for such infringement. We cannot assure you that licenses will be available on acceptable terms, if at all. Furthermore, because of the potential for significant damage awards, which are not necessarily predictable, it is not unusual to find even arguably unmeritorious claims resulting in large settlements. If any infringement or other intellectual property claim made against us by any third party is successful, or if we fail to develop non-infringing technology or license the proprietary rights on commercially reasonable terms and conditions, our business, operating results and financial condition could be materially adversely affected.

If our products, methods, processes and other technologies infringe the proprietary rights of other parties, we could incur substantial costs and we may have to:

·

obtain licenses, which may not be available on commercially reasonable terms, if at all;

·

abandon an infringing drug or therapy candidate;

·

redesign our products or processes to avoid infringement;

·

stop using the subject matter claimed in the patents held by others;

·

pay damages; or

·

defend litigation or administrative proceedings which may be costly whether we win or lose, and which could result in a substantial diversion of our financial and management resources.

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We rely on licenses to use various technologies that are material to our business and if the agreements were to be terminated or if other rights which may be necessary or we deem advisable for commercializing our intended products cannot be obtained, it would halt our ability to market our products and technology, as well as have an immediate material adverse effect on our business, operating results and financial condition.

We have licensing agreements with certain universities granting us the right to use certain critical intellectual property. The terms of the licensing agreements continues until the end of the life of the last patent to expire. If we breach the terms of these licensing agreements, including any failure to make minimum royalty payments required thereunder or failure to reach certain developmental milestones, using best efforts to introduce a licensed product in certain territories by 2020, the licensor has the right to terminate the license. If we were to lose or otherwise be unable to maintain these licenses on acceptable terms, or find that it is necessary or appropriate to secure new licenses from other third parties, it would halt our ability to market our products and technology, which would have an immediate material adverse effect on our business, operating results and financial condition.

We may be unable to generate sufficient revenues to meet the minimum royalties or developmental milestones required under our license agreements,

For the years ended December 31, 2013, 2014, 2015, 2016, 2017 and thereafter through December 31, 2022 our minimum royalty obligations under our licensing agreements, required to be paid with the passage of time, are $30,000, $30,000, $30,000, $30,000, $280,000 and $150,000, respectively. No assurance can be given that we will generate sufficient revenue or raise additional financing to make these minimum royalty payments. The license agreements also provide for certain developmental milestones. No assurance can be given that we will meet all of the required developmental milestones. Any failure to make the payments or reach the milestones required by the license agreements would permit the licensor to terminate the license. If we were to lose or otherwise be unable to maintain these licenses, it would halt our ability to market our products and technology, which would have an immediate material adverse effect on our business, operating results and financial condition.

Our ability to generate product revenues will be diminished if our therapies sell for inadequate prices or patients are unable to obtain adequate levels of reimbursement.

Our ability to commercialize our vaccines, alone or with collaborators, will depend in part on the extent to which reimbursement will be available from:

·

government and health administration authorities;

·

private health maintenance organizations and health insurers; and

·

other healthcare payers.

Significant uncertainty exists as to the reimbursement status of newly approved healthcare products. Healthcare payers, including Medicare, are challenging the prices charged for medical products and services. Cost control initiatives could decrease the price that we would receive for any products in the future, which would limit our revenue and profitability. Government and other healthcare payers increasingly attempt to contain healthcare costs by limiting both coverage and the level of reimbursement for drugs and therapeutics. We might need to conduct post-marketing studies in order to demonstrate the cost-effectiveness of any future products to such payers’ satisfaction. Such studies might require us to commit a significant amount of management time and financial and other resources. Our future products might not ultimately be considered cost-effective. Even if one of our product candidates is approved by the FDA, insurance coverage may not be available, and reimbursement levels may be inadequate, to cover such vaccines. If government and other healthcare payers do not provide adequate coverage and reimbursement levels for one of our products, once approved, market acceptance of such product could be reduced.

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Legislative and regulatory changes affecting the health care industry could adversely affect our business

Political, economic and regulatory influences are subjecting the health care industry to potential fundamental changes that could substantially affect our results of operations. U.S. and foreign governments, for example, continue to propose and pass legislation designed to reduce the cost of healthcare. In some foreign markets, the government controls the pricing and profitability of prescription pharmaceuticals. In the U.S., we expect that there will continue to be federal and state proposals to implement similar governmental controls. In addition, recent changes in the Medicare program and increasing emphasis on managed care in the United States will continue to put pressure on pharmaceutical product pricing. It is uncertain whether or when any legislative proposals will be adopted or what actions federal, state, or private payers for health care treatment and services may take in response to any health care reform proposal or legislation. We cannot predict the effect health care reforms may have on our business and we can offer no assurances that any of these reforms will not have a material adverse effect on our business. These actual and potential changes are causing the marketplace to put increased emphasis on the delivery of more cost-effective treatments. In addition, uncertainly remains regarding proposed significant reforms to the U.S. health care system.

We may not successfully effect our intended expansion.

Our success will depend upon the expansion of our operations and the effective management of our growth, which will place a significant strain on our management and on our administrative, operational and financial resources. To manage this growth, we must expand our facilities, augment our operational, financial and management systems and hire and train additional qualified personnel. If we are unable to manage our growth effectively, our business would be harmed.

We may be exposed to liability claims associated with the use of biological and hazardous materials and chemicals.

Our research and development activities may involve the controlled use of biological and hazardous materials and chemicals. Although we believe that our safety procedures for using, storing, handling and disposing of these materials comply with federal, state and local laws and regulations, we cannot completely eliminate the risk of accidental injury or contamination from these materials. In the event of such an accident, we could be held liable for any resulting damages and any liability could materially adversely affect our business, financial condition and results of operations. In addition, the federal, state and local laws and regulations governing the use, manufacture, storage, handling and disposal of hazardous or radioactive materials and waste products may require us to incur substantial compliance costs that could materially adversely affect our business, financial condition and results of operations.

We rely on key executive officers and scientific and medical advisors, and their knowledge of our business and technical expertise would be difficult to replace.

We are highly dependent on our principal scientific, regulatory and medical advisors and our chief executive officer. Other than a $2,000,000 insurance policy on the life of Jeffrey Wolf, we do not have “key person” life insurance policies for any of our officers or advisors. The loss of the technical knowledge and management and industry expertise of any of our key personnel could result in delays in product development, loss of customers and sales and diversion of management resources, which could adversely affect our operating results.

If we are unable to hire additional qualified personnel, our ability to grow our business may be harmed.

We will need to hire additional qualified personnel with expertise in pre-clinical and clinical research, government regulation, formulation and manufacturing, sales and marketing and accounting and financing. In particular, over the next 12 months, we expect to hire up to 10 new employees. We compete for qualified individuals with numerous biopharmaceutical companies, universities and other research institutions. Competition for such individuals is intense, and we cannot be certain that our search for such personnel will be successful. Attracting and retaining qualified personnel will be critical to our success.

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Certain of our officers may have a conflict of interest.

Some of our officers are currently working for the Company on a part-time basis. Several of the part-time employees also work at other jobs and have discretion to decide what time they devote to our activities, which may result in a lack of availability when needed due to responsibilities at other jobs. We expect that some of these officers may join the Company on a full-time basis at the completion of this offering, but there can be no assurance given that any or all of our officers will be so employed.

We may incur substantial liabilities and may be required to limit commercialization of our products in response to product liability lawsuits.

The testing and marketing of drug and biological product candidates entail an inherent risk of product liability. Product liability claims might be brought against us by consumers, health care providers or others selling or otherwise coming into contact with our products. Clinical trial liability claims may be filed against us for damages suffered by clinical trial subjects or their families. If we cannot successfully defend ourselves against product liability claims, we may incur substantial liabilities or be required to limit commercialization of our products which could impact our ability to continue as a going concern. Our inability to obtain sufficient product liability insurance at an acceptable cost to protect against potential product liability claims could prevent or inhibit the commercialization of pharmaceutical products we develop, alone or with collaborators. In addition, regardless of merit or eventual outcome, product liability claims may result in:

·

decreased demand for any approved product candidates;

·

impairment of our business reputation;

·

withdrawal of clinical trial participants;

·

costs of related litigation;

·

distraction of management’s attention;

·

substantial monetary awards to patients or other claimants;

·

loss of revenues; and

·

the inability to successfully commercialize any approved drug candidates.

International expansion of our business exposes us to business, regulatory, political, operational, financial and economic risks associated with doing business outside of the United States.

Our business strategy incorporates international expansion, including establishing and maintaining clinician marketing and education capabilities outside of the United States and expanding our relationships with distributors and manufacturers. Doing business internationally involves a number of risks, including:

·

multiple, conflicting and changing laws and regulations such as tax laws, export and import restrictions, employment laws, regulatory requirements and other governmental approvals, permits and licenses;

·

failure by us or our distributors to obtain regulatory approvals for the sale or use of our product candidates in various countries;

·

difficulties in managing foreign operations;

·

complexities associated with managing multiple payor-reimbursement regimes or self-pay systems;

·

limits on our ability to penetrate international markets if our product candidates cannot be processed by a manufacturer appropriately qualified in such markets;

·

financial risks, such as longer payment cycles, difficulty enforcing contracts and collecting accounts receivable and exposure to foreign currency exchange rate fluctuations;

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·

reduced protection for intellectual property rights;

·

natural disasters, political and economic instability, including wars, terrorism and political unrest, outbreak of disease, boycotts, curtailment of trade and other business restrictions; and

·

failure to comply with the Foreign Corrupt Practices Act, including its books and records provisions and its anti-bribery provisions, by maintaining accurate information and control over sales and distributors’ activities.

Any of these risks, if encountered, could significantly harm our future international expansion and operations and, consequently, have a material adverse effect on our financial condition, results of operations and cash flows.

We may acquire other businesses or form joint ventures or make investments in other companies or technologies that could harm our operating results, dilute our stockholders’ ownership, increase our debt or cause us to incur significant expense.

As part of our business strategy, we may pursue acquisitions of businesses and assets. We also may pursue strategic alliances and joint ventures that leverage our core technology and industry experience to expand our offerings or distribution. We have no experience with acquiring other companies and limited experience with forming strategic alliances and joint ventures. We may not be able to find suitable partners or acquisition candidates, and we may not be able to complete such transactions on favorable terms, if at all. If we make any acquisitions, we may not be able to integrate these acquisitions successfully into our existing business, and we could assume unknown or contingent liabilities. Any future acquisitions also could result in significant write-offs or the incurrence of debt and contingent liabilities, any of which could have a material adverse effect on our financial condition, results of operations and cash flows. Integration of an acquired company also may disrupt ongoing operations and require management resources that would otherwise focus on developing our existing business. We may experience losses related to investments in other companies, which could have a material negative effect on our results of operations. We may not identify or complete these transactions in a timely manner, on a cost-effective basis, or at all, and we may not realize the anticipated benefits of any acquisition, technology license, strategic alliance or joint venture.

To finance any acquisitions or joint ventures, we may choose to issue shares of our common stock as consideration, which would dilute the ownership of our stockholders. If the price of our common stock is low or volatile, we may not be able to acquire other companies or fund a joint venture project using our stock as consideration. Alternatively, it may be necessary for us to raise additional funds for acquisitions through public or private financings. Additional funds may not be available on terms that are favorable to us, or at all.

Declining general economic or business conditions may have a negative impact on our business.

Continuing concerns over United States health care reform legislation and energy costs, geopolitical issues, the availability and cost of credit and government stimulus programs in the United States and other countries have contributed to increased volatility and diminished expectations for the global economy. These factors, combined with low business and consumer confidence and high unemployment, precipitated an economic slowdown and recession. If the economic climate does not improve or continues to deteriorate, our business, as well as the financial condition of our suppliers and our third-party payors, could be adversely affected, resulting in a negative impact on our business, financial condition and results of operations.

The U.S. government may have “march-in rights” to certain of our intellectual property.

Because federal grant monies were used in support of the research and development activities that resulted in certain of our issued pending U.S. patent applications, the federal government retains what are referred to as “march-in rights” to patents that are granted on these applications.

In particular, the National Institutes of Health, which administered grant monies to the primary inventor of the technology we license, technically retain the right to require us, under certain specific circumstances, to grant the U.S. government either a nonexclusive, partially exclusive or exclusive license to the patented invention in any field of use, upon terms that are reasonable for a particular situation. Circumstances that trigger march-in rights include, for example, failure to take, within a reasonable time, effective steps to achieve practical application of the invention in a field of use, failure to satisfy the health and safety needs of the public and failure to meet requirements of public use specified by federal regulations. The National Institutes of Health can elect to exercise these march-in rights on their own initiative or at the request of a third-party.

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Risks Related to this Offering

Upon the sale of the shares offered in this prospectus, our Preferred Stock will convert into shares of common stock.

Holders of our Preferred Stock have several rights that our common shareholders do not have such as preference on payment of dividends and liquidation distributions, the right to elect a certain number of directors, the right to adjustment in the event that securities are issued at a price per share less than that paid by the holders of the Preferred Stock. Our Third Amended and Restated Certificate of Incorporation provides that our Preferred Stock automatically converts to common stock upon the earlier of: (i) a closing of a firm commitment underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, resulting in at least $15,000,000 of net proceeds to us; (ii) with respect to the Series 1 Preferred Stock, written consent or agreement of at least two-thirds of the then outstanding shares of Series 1 Preferred Stock; (iii) with respect to the Series A Preferred Stock, written consent or agreement of at least two-thirds of the then outstanding shares of Series A Preferred Stock (which must include the lead investor if it meets certain criteria); (iv) with respect to the Series B-1 Preferred Stock, written consent or agreement of at least two-thirds of the then outstanding shares of Series B-1 Preferred Stock; and (v) with respect to the Series B-2 Preferred Stock, written consent or agreement of at least two-thirds of the then outstanding shares of Series B-2 Preferred Stock. Upon the conversion of the Preferred Stock the holders of common stock will experience additional dilution.

Certain of our officers and directors have sufficient voting power to make corporate governance decisions that could have a significant effect on us and the other stockholders.

Our officers and directors together will control approximately 41.3% of our outstanding common stock on a fully diluted basis after consummation of this offering assuming the issuance of all 1,650,000 shares of common stock offered in this offering. Mr. Wolf alone through his direct and indirect holdings will control approximately 25.3% of our outstanding common stock on a fully diluted basis after consummation of this offering assuming the issuance of all 1,650,000 shares of common stock offered in this offering. As a result, Mr. Wolf, alone will be able to exert a significant degree of influence over our management and affairs and over matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions. In addition, this concentration of ownership may delay or prevent a change in our control and might affect the market price of our common stock, even when a change in control may be in the best interest of all stockholders. Furthermore, the interests of this concentration of ownership may not always coincide with our interests or the interests of other stockholders. Accordingly, these stockholders could cause us to enter into transactions or agreements that we would not otherwise consider.

The possible issuance of common stock subject to options and warrants may dilute the interest of stockholders.

In 2009, we adopted a 2009 Stock Option and Restricted Stock Plan under which we may grant awards to purchase 869,565 shares of our common stock, of which, 662,543 options were outstanding as of May 21, 2013. In addition, as of May 21, 2013, we have 53,159 shares issuable upon exercise of warrants granted to third parties in connection with prior private placements of our equity securities and debt. To the extent that outstanding stock options and warrants are exercised, or additional securities are issued, dilution to the interests of our stockholders may occur. Moreover, the terms upon which we will be able to obtain additional equity capital may be adversely affected since the holders of the outstanding options can be expected to exercise them at a time when we would, in all likelihood, be able to obtain any needed capital on terms more favorable to us than those provided in such outstanding options.

We have additional securities available for issuance, which, if issued, could adversely affect the rights of the holders of our common stock.

Our Third Amended and Restated Certificate of Incorporation authorizes the issuance of 50,000,000 shares of our common stock and 10,000,000 shares of Preferred Stock. The common stock and preferred stock, as well as the awards available for issuance under the 2009 Stock Option and Restricted Stock Plan, can be issued by our board of directors, without stockholder approval. Any future issuances of such stock would further dilute the percentage ownership of us held by holders of Preferred Stock and common stock. The classes of Preferred Stock that are currently outstanding, which will convert to common stock upon consummation of this offering, rank ahead of our common stock in terms of dividends, liquidation rights and voting rights and could adversely affect the voting power and the rights of our holders of common stock. In addition, the issuance of Preferred Stock may be used as an “anti-takeover” device without further action on the part of our stockholders, and may adversely affect the holders of the common stock.

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We have never paid dividends and have no plans to pay dividends in the future.

Holders of shares of our common stock are entitled to receive such dividends as may be declared by our board of directors. To date, we have paid no cash dividends on our shares of our preferred or common stock and we do not expect to pay cash dividends in the foreseeable future. We intend to retain future earnings, if any, to provide funds for operations of our business. Therefore, any return investors in our preferred or common stock may have will be in the form of appreciation, if any, in the market value of their shares of common stock. See “Dividend Policy.”

Shareholders purchasing shares in this offering will experience immediate and substantial dilution, causing their investment to immediately be worth less than their purchase price.

If you purchase common stock in this offering, you will experience an immediate and substantial dilution in the projected book value of the common stock from the price you pay in this offering.

After consummation of this offering and assuming the consummation of this offering and conversion of all of the outstanding Preferred Stock exclusive of the over-allotment option, you will have an immediate dilution of $7.40 per common share and an immediate increase in net tangible book value to our present shareholders from $0.74 to $3.60 per share will occur.

We are an “emerging growth company,” and any decision on our part to comply with certain reduced disclosure requirements applicable to emerging growth companies could make our common stock less attractive to investors.

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act enacted in April 2012, and, for as long as we continue to be an emerging growth company, we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, not being required to comply with any new requirements adopted by the Public Company Accounting Oversight Board, or the PCAOB, requiring mandatory audit firm rotation or a supplement to the auditor's report in which the auditor would be required to provide additional information about the audit and the financial statements of the issuer, not being required to comply with any new audit rules adopted by the PCAOB after April 5, 2012 unless the SEC determines otherwise, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We could remain an emerging growth company until the earliest of: (i) the last day of the fiscal year in which we have total annual gross revenues of $1 billion or more; (ii) the last day of our fiscal year following the fifth anniversary of the date of our first sale of common equity securities pursuant to an effective registration statement; (iii) the date on which we have issued more than $1 billion in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer. We cannot predict if investors will find our common stock less attractive if we choose to rely on these exemptions. If some investors find our common stock less attractive as a result of any choices to reduce future disclosure, there may be a less active trading market for our common stock and our stock price may be more volatile. Further, as a result of these scaled regulatory requirements, our disclosure may be more limited than that of other public companies and you may not have the same protections afforded to shareholders of such companies.

Under Section 107(b) of the Jumpstart Our Business Startups Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.

As a result of our becoming a public company, we will become subject to additional reporting and corporate governance requirements that will require additional management time, resources and expense.

In connection with this filing, we will become obligated to file with the U.S. Securities and Exchange Commission annual and quarterly information and other reports that are specified in the U.S. Securities Exchange Act of 1934, as amended, or the Exchange Act. We will also become subject to other reporting and corporate governance requirements under the Sarbanes-Oxley Act of 2002, as amended, and the rules and regulations promulgated thereunder, all of which will impose significant compliance and reporting obligations upon us and require us to incur additional expense in order to fulfill such obligations.

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We have identified material weaknesses in our internal controls, and we cannot provide assurances that these weaknesses will be effectively remediated or that additional material weaknesses will not occur in the future. If our internal control over financial reporting or our disclosure controls and procedures are not effective, we may not be able to accurately report our financial results, prevent fraud, or file our periodic reports in a timely manner, which may cause investors to lose confidence in our reported financial information and may lead to a decline in our stock price.

Our management is responsible for establishing and maintaining adequate internal control over our financial reporting, as defined in Rule 13a-15(f) under the Exchange Act. We have historically operated as a private company and the number and qualifications of our finance and accounting staff have not been consistent with those of a public company. We have identified material weaknesses in our internal controls with respect to our financial statement closing process of our consolidated financial statements for the years ended December 31, 2012 and 2011. Our management discovered certain conditions that we deemed to be material weaknesses and significant deficiencies in our internal controls, as follows:

·

A lack of accounting and finance resources as well as effective oversight by those in charge of governance resulted in insufficient controls over timely financial statement preparation and review as well as the preparation and review around accounting for certain complex transactions.

·

The design of monitoring controls used to assess the design and operating effectiveness of our internal controls is inadequate. We also do not have an adequate internal process to report deficiencies in internal control to management on a timely basis.

We have begun to take actions that we believe will substantially remediate the material weaknesses identified. In response to the identification of our material weaknesses, we: (i) have retained a part-time Chief Financial Officer to segregate the duties of Chief Executive Officer and Chief Financial Officer; (ii) are in the process of establishing a review process for key aspects of our financial reporting process, including the accounting for complex transactions; and (iii) will seek to establish better operating controls and involve our board of directors in our internal controls process, which will involve establishing formal procedures to communicate deficiencies in internal controls on a timely basis, and encourage our board of directors to more actively participate in guiding management as it relates to internal controls matters. However, we cannot assure you that our internal control over financial reporting, as modified, will enable us to identify or avoid material weaknesses in the future. Regardless, following the completion of this offering we will be required to expend time and resources to further improve our internal controls over financial reporting, including by expanding our finance and accounting staff.

Future sales of our common stock by our existing shareholders could cause our stock price to decline.

The Company will have a significant number of restricted shares that will become eligible for sale shortly after this registration statement is declared effective. We currently have 1,861,869 shares of our common stock outstanding, 1,975,628 shares of Series A and Series 1 Preferred Stock outstanding that converts to 860,017 shares of common stock, 1,891,419 shares of Series B-1 Preferred Stock outstanding that together with accrued dividends converts to 828,889 shares of common stock and an additional 32,879 shares of common stock that will be issued to investors of our Series B-1 Preferred Stock upon consummation of this offering (assuming an initial public offering of $11.00 per share, which is the midpoint of the range set forth on the cover page of this prospectus), all of which will be restricted securities. All of the 1,650,000 shares sold in this offering will be eligible for sale immediately upon effectiveness of this registration statement. All of the remaining shares will be eligible for sale in the public market upon expiration of lock-up agreements 180 days after the date, of this prospectus, subject, in certain circumstances to the volume, manner of sale and other limitations under Rule 144 or 701 promulgated under the Securities Act. It is conceivable that following the holding period, many shareholders may wish to sell some or all of their shares. If our shareholders sell substantial amounts of our common stock in the public market at the same time, the market price of our common stock could decrease significantly due to an imbalance in the supply and demand of our common stock. Even if they do not actually sell the stock, the perception in the public market that our shareholders might sell significant shares of our common stock could also depress the market price of our common stock.

A decline in the price of shares of our common stock might impede our ability to raise capital through the issuance of additional shares of our common stock or other equity securities, and may cause you to lose part or all of your investment in our shares of common stock.

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Our common stock may be thinly traded, so you may be unable to sell at or near ask prices or at all if you need to sell your shares to raise money or otherwise desire to liquidate your shares.

Prior to this offering, you could not buy or sell our common stock publicly. We cannot predict the extent to which investors’ interests will lead to an active trading market for our common stock or whether the market price of our common stock will be volatile following this offering. If an active trading market does not develop, investors may have difficulty selling any of our common stock that they buy. There may be limited market activity in our stock and we are likely to be too small to attract the interest of many brokerage firms and analysts. We cannot give you any assurance that a public trading market for our common stock will develop or be sustained. The market price of our common stock could be subject to wide fluctuations in response to quarterly variations in our revenues and operating expenses, announcements of new products or services by us, significant sales of our common stock, including “short” sales, the operating and stock price performance of other companies that investors may deem comparable to us, and news reports relating to trends in our markets or general economic conditions.

The offering price of the shares may not be indicative of the value of our assets or the price at which shares can be resold.

The offering price of the common stock may not be an indication of our actual value. Prior to this offering, there has been no public market for our securities. The offering price of $11.00 per share was determined based upon negotiations between the underwriters and us. Factors considered in determining such price in addition to prevailing market conditions include an assessment of our future prospects, an increase in value of our stock due to becoming a public company and prior valuations of certain minority interests prepared for us. Such price does not have any relationship to any established criteria of value, such as book value or earnings per share. Such price is not indicative of the current market value of our assets. No assurance can be given that the shares can be resold at the public offering price.

Our need for future financing may result in the issuance of additional securities which will cause investors to experience dilution.

Our cash requirements may vary from those now planned depending upon numerous factors, including the result of future research and development activities. We believe that the proceeds derived from the sale of the shares in this offering will provide us with sufficient working capital to fund our Phase 2 clinical trial for Non-Small Cell Lung Cancer and our Phase 1 clinical trial for bladder cancer. Thereafter, we expect to require additional funds in the future to conduct additional clinical trials even if the maximum amount is raised in this offering. There are no other commitments by any person for future financing other than a loan from Square 1 Bank for an amount up to $3,000,000; however in order to continue to borrow under the loan there are several conditions which must be met and there can be no assurance that we will meet such conditions or be able to borrow the entire $3,000,000. There can be no assurance given that we will meet these closing conditions. Through May 21, 2013, we have outstanding $725,000 under our loan from Square 1 Bank. Our securities may be offered to other investors at a price lower than the price per share offered to the investors in the offering, or upon terms which may be deemed more favorable than offered hereunder. In addition, the issuance of securities in this offering as well as any future financing using our securities may dilute an investor's equity ownership. Moreover, we may issue derivative securities, including options and/or warrants, from time to time, to procure qualified personnel or for other business reasons. The issuance of any such derivative securities, which is at the discretion of our board of directors, may further dilute the equity ownership of our stockholders, including the investors in this offering. No assurance can be given as to our ability to procure additional financing, if required, and on terms deemed favorable to us. To the extent additional capital is required and cannot be raised successfully, we may then have to limit our then current operations and/or may have to curtail certain, if not all, of our business objectives and plans.

We have adopted certain measures that may have anti-takeover effects which may make an acquisition of our Company by another company more difficult.

We have adopted, and may in the future adopt, certain measures that may have the effect of delaying, deferring or preventing a takeover or other change in control of our Company that a holder of our common stock might not consider in its best interest. Our certificate of incorporation and bylaws contain provisions which may have anti-takeover effects. These include: (a) requiring that certain shareholder groups elect a certain number of directors for so long as certain shares of preferred stock remain outstanding; (b) requiring that for so long as any shares of Preferred Stock remain outstanding a majority of each of the Series B Preferred shareholders, Series A Preferred shareholders, the Series 1 Preferred shareholders and the common shareholders approve certain actions including: (i) amendments to our bylaws or certificate of incorporation, unless in connection with a Qualified Public Offering; (ii) creation of additional classes of stock or increases in the authorized shares of an existing class of stock unless they rank junior to the Series A Preferred Stock with respect to the distribution of assets on liquidation and the

25

payment of dividends, reclassification stock or redemption of stock, unless in connection with a Qualified Public Offering; (iii) action to reclassify, alter or amend existing securities that are junior to or pari passu with the Series A Preferred if such action would render such security senior to or pari passu with the Series A Preferred Stock in respect of the distribution of assets upon liquidation or payment of a dividend other than with respect to a firm commitment underwritten public offering with net proceeds to us of at least $15,000,000, unless in connection with a Qualified Public Offering; (iv) purchase or redeem or otherwise declare or pay a dividend, unless in connection with a Qualified Public Offering; (v) action to liquidate or sell all or; (vi) substantially all of our assets; (c) requiring that for so long as a majority of the originally issued shares of Series B Preferred Stock remain outstanding and until we receive $20,000,000 through financing, grant or a licensing or joint venture agreement a majority of Series B Preferred shareholders must give prior approval of certain actions including: (i) operation of any business other than our business as carried out on the date the Series B-1 Preferred Stock was originally issued; (ii) making of a loan to any entity or subsidiary other than an 80% owned subsidiary, (iii) disposition or acquisition of an interest in a business (except to the extent that prior approval of the board of directors is received including the director nominated by the Series B Preferred Stockholders); (iv) entering into a joint venture or making an investment in excess of $5,000,000 (except to the extent that prior approval of the board of directors is received including the director nominated by the Series B Preferred Stockholders); (v) making or committing to make an expenditure of $5,000,000 or more (except to the extent that prior approval of the board of directors is received including the director nominated by the Series B Preferred Stockholders); (vi) making a loan of in excess of $5,000 (except to the extent that prior approval of the board of directors is received including the director nominated by the Series B Preferred Stockholders); (vii) issuing debt in excess of $5,000,000 other than under existing agreements (except to the extent that prior approval of the board of directors is received including the director nominated by the Series B Preferred Stockholders); and (viii) an annual budget. These measures and those described above may have the effect of delaying, deferring or preventing a takeover or other change in control of the Company that a holder of our common stock might consider in its best interest.

In addition, we are subject to the provisions of Section 203 of the General Corporation Law of the State of Delaware, which prohibits a Delaware corporation from engaging in any business combination, including mergers and asset sales, with an interested stockholder (generally, a 15% or greater stockholder) for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner. The operation of Section 203 may have anti-takeover effects, which could delay, defer or prevent a takeover attempt that a holder of our common stock might consider in its best interest.

Our management will have broad discretion over the use of the proceeds we receive in this offering, and may not apply the proceeds in ways that increase the value of your investment.

If the underwriters exercise their option to purchase additional shares in this offering in full, we estimate that net proceeds of the sale of the common stock that we are offering will be approximately $18.7 million. Our management will have broad discretion to use the net proceeds from this offering, and you will be relying on the judgment of our management regarding the application of these proceeds. Although we intend to use a portion of the net proceeds from this offering for research, development and commercialization of our products and payment of outstanding indebtedness, because of the number and variability of factors that will determine our use of the net proceeds from this offering, we cannot specify with certainty the particular use of the net proceeds that we will receive from this offering, and we cannot assure you that we will use the proceeds in a manner that will increase the value of your investment or of which you would approve. Moreover, you will not have the opportunity to influence our decision on how to use the proceeds from this offering. We may use the proceeds for corporate purposes that do not immediately enhance our prospects for the future or increase the value of your investment. See the Section entitled “Use of Proceeds.”

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements, including statements regarding the progress and timing of our product development, the goals of our development activities, estimates of the potential markets for our product candidates, estimates of the capacity of manufacturing and other facilities to support our products, our expected future revenues, operations and expenditures and projected cash needs. The forward-looking statements are contained principally in the sections entitled “Prospectus Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business.” These statements relate to future events of our financial performance and involve known and unknown risks, uncertainties and other factors that could cause our actual results, levels of activity, performance or achievement to differ materially from those expressed or implied by these forward-looking statements. Those risks and uncertainties include, among others:

·

our ability to implement our business plan;

·

our ability to raise additional capital to meet our liquidity needs;

·

our ability to generate product revenues;

·

our ability to achieve profitability;

·

our ability to comply with our loan covenants;

·

our ability to satisfy U.S. (including FDA) and international regulatory requirements;

·

our ability to obtain market acceptance of our technology and products;

·

our ability to compete in the market;

·

our ability to advance our clinical trials;

·

our ability to fund, design and implement clinical trials;

·

our ability to maintain our present customer base and retain new customers;

·

our ability to demonstrate that our product candidates are safe for human use and effective for indicated uses;

·

our ability to gain acceptance of physicians and patients for use of our products;

·

our dependency on third-party researchers and manufacturers and licensors;

·

our ability to establish and maintain strategic partnerships, including for the distribution of products;

·

our ability to attract and retain a sufficient qualified personnel;

·

our ability our ability to obtain or maintain patents or other appropriate protection for the intellectual property;

·

our dependency on the intellectual property licensed to us or possessed by third parties;

·

our ability to adequately support future growth; and

·

potential product liability or intellectual property infringement claims.

Forward-looking statements include all statements that are not historical facts. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “could,” “would,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “projects,” “predicts,” “potential,” or the negative of those terms, and similar expressions and comparable terminology intended to identify forward-looking statements. These statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements. These forward-looking statements represent our estimates and assumptions only as of the date of this prospectus and, except as required by law, we undertake no obligation to update or review publicly any forward-looking statements, whether as a result of new information, future events or otherwise after the date of this prospectus. You should read this prospectus and the documents referenced in this prospectus and filed as exhibits to the registration statement, of which this prospectus is a part, completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.

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USE OF PROCEEDS

We estimate that we will receive net proceeds of approximately $16.2 million from the sale of shares of common stock offered in this offering, or approximately $18.7 million if the underwriters exercise their over-allotment option in full, based on an assumed initial public offering price of $11.00 per share (the midpoint of the price range set forth on the cover page of this prospectus) and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

Each $1.00 increase (decrease) in the assumed initial public offering price of $11.00 per share (the midpoint of the price range set forth on the cover page of this prospectus) would increase (decrease) the net proceeds to us from this offering, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us, by approximately $1,518,000 assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same. We may also increase or decrease the number of shares we are offering. An increase (decrease) of 330,000 in the number of shares we are offering would increase (decrease) the net proceeds to us from this offering, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us, by approximately $3.3 million, assuming the initial public offering price per share stays the same. An increase of 330,000 in the number of shares we are offering, together with a $1.00 increase in the assumed initial public offering price per share, would increase the net proceeds to us from this offering, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us, by approximately $5.2 million. A decrease of 330,000 in the number of shares we are offering, together with a $1.00 decrease in the assumed initial public offering price per share, would decrease the net proceeds to us from this offering, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us, by approximately $4.6 million. The foregoing assumes no exercise of the underwriters’ over-allotment option. We do not expect that a change in the offering price per share or the number of shares by these amounts would have a material effect on our intended uses of the net proceeds from this offering, although it may impact the amount of time prior to which we may need to seek additional capital.

We intend to use the net proceeds from this offering as follows:

·

approximately $8,350,000 to complete our Phase 2 clinical trials for HS-110 against non-small lung cancer and the submission of related materials to the FDA or an equivalent amount as grant matching funds to fund an expanded clinical trial. We plan to initiate a 125 patient Phase 2 trial on patients with advanced non-small cell lung cancer. Our Phase 2 study has been designed as a maintenance therapy study in patients with Stage III/IV NSCLC who have completed a 1^st line regimen consisting of a platinum doublet, crizotinib or erlotinib and achieved at least stable disease. We plan to use up to approximately $8.35 million from the net proceeds of this offering to finance this trial. We have applied for grant funding to enable us to expand the size and scope of this clinical trial and if the grant funding is received, will use up the $8.35 million of the net proceeds from this offering as “matching funds” as required by the granting organization to expand the size and scope of our trial. There can be no assurance that the grant funding will be received. If sufficient grant funding is not received by the commencement of the trial to fund the trial, we will use the net proceeds of this offering to provide the needed funding for a 125 patient Phase 2 trial;

·

approximately $1,000,000 for initiation and completion of Phase 1/2 clinical trials of HS-410 against bladder cancer. We plan to file an IND for use of HS-410 to prevent the recurrence of bladder cancer. This initial IND will include a 93 patient, Phase 1/2 trial to examine safety, tolerability, immune response and preliminary clinical activity of HS-410 in patients with high risk, superficial bladder cancer who have completed surgical resection and 6 weekly intravesical bacillus Calmet-Guerin (BCG) immunotherapy installations. We plan to use approximately $1 million from the net proceeds of this offering to enhance the scope of this trial as currently designed and funded;

·

approximately $100,000 to enhance the scope of and pay regulatory fees for our HS-110 lung cancer investigator-sponsored trial to test the use of HS-110 as a combination therapy against lung cancer. Our HS-110 lung cancer trial is an investigator-sponsored trial to test the use of HS-110 as a combination therapy against lung cancer. While the trial is fully-funded by the Marcus Foundation, we plan to use approximately $100,000 to enhance to scope of this trial and prepare appropriate regulatory filings;

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·

approximately $1,500,000 to fund one to two additional Phase 1 clinical trials on additional cancer indications. We are creating and have created ImPACT-based drugs against additional cancers and plan to use approximately $1.5 million from the net proceeds of this offering to fund one to two additional Phase 1 clinical trials on additional cancer indications;

·

$300,000 to repay the portion of the loan from Square 1 Bank that is due and payable in the next eighteen months. We plan to use approximately $300,000 of the net proceeds of this offering to repay the portion of the loans from Square 1 Bank that is due and payable in the next eighteen months. One loan from Square 1 Bank is payable on September 7, 2013 in 36 monthly installments of principal and interest and accrues interest monthly at an interest rate of 3% plus prime or 6% per annum whichever is greater. The other loan is payable on August 7, 2013 and August 7, 2014 for 5% of the outstanding principal and accrued interest each and then the remaining principal and accrued interest is due December 14, 2014 and accrues interest at 4.25%. Finally, the last loan is payable as interest only until January 9, 2014 when the entire principal balance is due and it accrues interest monthly at an annual rate of 0.75% plus prime or 4% per annum, whichever is greater. As of May 21, 2013, we had outstanding $725,000 under the Square 1 Bank loans; and

·

the remaining net proceeds will be used for general corporate purposes, including ongoing operations, vendor payables and expansion of the business, further research and development, potential regulatory submissions and hiring additional sales and marketing personnel to support increased sales and marketing activities.

The expected use of the net proceeds from this offering represents our current intentions based on our present plans and business conditions. As of the date of this prospectus, we cannot specify with certainty all of the particular uses for the net proceeds to be received from this offering. The amounts and timing of our actual expenditures will depend on numerous factors including the progress in, and costs of, our clinical trials and other preclinical development programs and the amount of funding, if any, received from grants. Accordingly, our management will have broad discretion in the application of the net proceeds, and investors will be relying on the judgment of management regarding the application of the net proceeds from the offering. We may find it necessary or advisable to reallocate the net proceeds of this offering; however any such reallocation would be substantially limited to the categories set forth above as we do not intend to use the net proceeds for other purposes. Pending such uses set forth above, we plan to invest the net proceeds in government securities and other short-term investment grade, marketable securities.

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DIVIDEND POLICY

We have never declared or paid any cash dividends on our capital stock and we do not currently intend to pay any cash dividends on our common stock in the foreseeable future. We expect to retain all available funds and future earnings, if any, to fund the development and growth of our business. Any future determination to pay dividends, if any, on our common stock will be at the discretion of our board of directors and will depend on, among other factors, our results of operations, financial condition, capital requirements and contractual restrictions.

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CAPITALIZATION

The following table sets forth our cash and cash equivalents as well as capitalization as of March 31, 2013:

·

on an actual basis;

·

on a pro forma basis as of March 31, 2013, to reflect the automatic conversion upon the closing of this offering of all outstanding shares of Preferred Stock including accrued dividends into 1,688,906 shares of common stock and to reflect the issuance of an additional 32,879 shares of common stock to the investors of our Series B-1 Preferred Stock, having a value of $361,668 assuming an initial public offering price of $11.00 per share, which is the midpoint of the range set forth in the cover page of this prospectus, and which will occur automatically upon completion of this offering;

·

on a pro forma as-adjusted basis to (i) give effect to the sale of 1,650,000 shares of the common stock we are offering at an assumed initial public offering price of $11.00 per share, which is the midpoint of the estimated price range shown on the cover page of this prospectus, after deducting underwriting discounts and commissions and estimated offering expenses payable by us and (ii) the use of $300,000 in proceeds to repay the portion of the loan from Square 1 Bank that is due and payable within the next 18 months. The pro forma as-adjusted column assumes no exercise by the underwriters of their over-allotment option.

The information below is illustrative only and our capitalization following the completion of this offering will be adjusted based on the actual initial public price. You should read this table together with the sections entitled “Use of Proceeds” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as well as our financial statements and the related notes, which appear elsewhere in this prospectus.

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———————

(1)

A $1.00 increase (decrease) in the assumed initial public offering price of $11.00 per share of our common stock, the midpoint of the estimated price range set forth on the cover page of this prospectus, in this offering would increase (decrease) each of cash, total stockholders’ deficit and total capitalization by $1,518,000 assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

The number of shares of common stock to be outstanding after the offering is based on the number of shares outstanding as of March 31, 2013, and excludes:

·

662,543 shares of our common stock issuable upon the exercise of stock options as of May 21, 2013, with a weighted average exercise price of $1.60 per share;

·

53,159 additional shares of our common stock issuable upon the exercise of outstanding warrants as of May 21, 2013, at a weighted average exercise price of $2.16 per share;

·

84,314 additional shares of our common stock reserved for future issuance under our equity incentive plans as of May 21, 2013;

·

up to 247,500 additional shares of common stock issuable upon exercise of the underwriters’ over-allotment option; and

·

82,500 shares of our common stock issuable upon exercise of the warrants granted to Aegis Capital Corp. upon completion of this offering.

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DILUTION

If you invest in our common stock in this offering, your ownership interest will be diluted to the extent of the difference between the initial public offering price per share of our common stock in this offering and our pro forma as adjusted net tangible book value per share immediately after this offering. We calculate net tangible book value per share by dividing our net tangible book value, which is tangible assets less total liabilities less debt discounts related to debt to be paid or converted as a result of this offering, by the number of outstanding shares of our common stock. Prior to considering the effects of the proceeds of this offering, but giving effect to the automatic conversion of our outstanding shares of Series A, Series 1 and Series B Preferred Stock into 1,688,906 shares of our common stock upon completion of this offering and the issuance of an additional 32,879 shares of common stock to the investors of our Series B-1 Preferred Stock, having a value of $361,668 assuming an initial public offering price of $11.00 per share, which is the midpoint of the range set forth in the cover page of this prospectus, and which will occur automatically upon completion of this offering, our pro forma net tangible book value (deficit) as of March 31, 2013 was approximately $2,643,992 million, or approximately $0.74 per share. Upon completion of this offering, our pro forma as adjusted net tangible book value as of March 31, 2013 will be approximately $18,841,992 million or approximately $3.60 per share. This represents an immediate increase in pro forma net tangible book value of $2.86 per share to our existing stockholders and an immediate dilution of $7.40 per share to new investors purchasing our common stock in this offering. The following table illustrates the per share dilution:

Each $1.00 increase in the assumed initial public offering price of $11.00 per share, the midpoint of the range set forth on the cover page of this prospectus, would increase our pro forma as adjusted net tangible book value by approximately $1.518 million, the pro forma as adjusted net tangible book value per share by approximately $0.29 per share and the dilution to investors purchasing shares of our common stock in this offering by approximately $0.67 per share, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us.

Each $1.00 decrease in the assumed initial public offering price of $11.00 per share, the midpoint of the range set forth on the cover page of this prospectus, would decrease our pro forma as adjusted net tangible book value by approximately $1.518 million, the pro forma as adjusted net tangible book value per share by approximately $0.29 per share and the dilution to investors purchasing shares of our common stock in this offering by approximately $0.67 per share, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us.

The information above assumes that the underwriters do not exercise their over-allotment option. If the underwriters exercise their over-allotment option in full, the pro forma as adjusted net tangible book value will increase to $3.89 per share, representing an immediate increase in pro forma as adjusted net tangible book value to existing stockholders of $3.89 per share and an immediate dilution of $7.11 per share to new investors. If any shares are issued upon exercise of outstanding options or warrants, new investors will experience further dilution.

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The following table summarizes, on a pro forma as adjusted basis as of March 31, 2013, the differences between the number of shares of common stock purchased from us, the total consideration and the average price per share paid by existing stockholders and by investors participating in this offering, after deducting estimated underwriting discounts and commissions and estimated offering expenses, at an assumed initial public offering price of $11.00 per share, the midpoint of the estimated price range shown on the cover page of this prospectus.

The number of shares purchased from us by existing stockholders is based on 3,583,654 shares of our common stock outstanding as of March 31, 2013 after giving effect to the automatic conversion of all of our outstanding shares of Series A Preferred Stock, Series 1 Preferred Stock and Series B Preferred Stock into common stock upon the completion of this offering and the issuance of an additional 32,879 shares of common stock to the investors of our Series B-1 Preferred Stock, having a value of $361,668 assuming an initial public offering price of $11.00 per share, which is the midpoint of the range set forth in the cover page of this prospectus, and which will occur automatically upon completion. This number excludes:

·

662,543 shares of our common stock issuable upon the exercise of stock options as of May 21, 2013, with a weighted average exercise price of $1.60 per share

·

53,159 additional shares of our common stock issuable upon the exercise of outstanding warrants as of May 21, 2013, at a weighted average exercise price of $2.16 per share;

·

84,314 additional shares of our common stock reserved for future issuance under our equity incentive plans as of May 21, 2013; and

·

82,500 shares of our common stock issuable upon exercise of the warrants granted to Aegis Capital Corp. upon completion of this offering.

If the underwriters exercise their option to purchase additional shares from us in full, the number of shares held by new investors will increase to 1,897,500, or 35% of the total number of shares of common stock outstanding after this offering and the shares held by existing stockholders will be 3,583,654 but the percentage of shares held by existing stockholders will decrease to 65% of the total shares outstanding.

To the extent that the underwriters’ over-allotment option is exercised or any warrants or options are exercised, there will be further dilution to new investors.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with our audited annual consolidated financial statements and the related notes that appear elsewhere in this prospectus. This discussion contains forward-looking statements reflecting our current expectations that involve risks and uncertainties. Actual results may differ materially from those discussed in these forward-looking statements due to a number of factors, including those set forth in the section entitled “Risk Factors”, “Special Note Regarding Forward-Looking Statements” and elsewhere in this prospectus.

Overview 

We are a development stage biopharmaceutical company engaged in the development of novel allogeneic, “off-the-shelf” cellular therapeutic vaccines to combat a wide range of cancers and infectious diseases. Our proprietary ImPACT™ cancer therapy is being designed to deliver live, genetically-modified, irradiated human cells which are “reprogrammed” to “pump out” a broad spectrum of cancer-associated antigens together with a potent immune adjuvant called “gp96” to educate and activate a cancer patient’s immune system to recognize and kill cancerous cells. The secreted antigen-adjuvant complexes are designed to generate an anti-cancer immune response in patients by mobilizing and activating killer T cells that target multiple cancer antigens, thus harnessing a patient’s own immune system to fight cancer. Based on results from a Phase 1 clinical trial in non-small cell lung cancer patients (NSCLC) conducted by the primary inventor of the technology that we license, in which 18 patients were vaccinated and 15 patients completed the first of three planned courses of therapy and were evaluated, we believe there is clinical evidence that the “off-the-shelf” therapeutic vaccine candidate HS-110 is capable of generating anti-cancer immune responses. Specifically, the trial observed a response in 11 of 15 patients. These findings were consistent with those of multiple pre-clinical published studies. HS-110 showed no overt toxicity.

As an “off-the-shelf” therapeutic vaccine, ImPACT uses a common master cell line to mass-produce a single vaccine product applicable to all patients for each particular cancer type, and thus, we believe, providing a traditional biopharmaceutical approach to deliver pan-antigen immunotherapy with logistical, manufacturing and cost of goods benefits compared to autologous patient-specific approaches.

We have submitted an IND to initiate a Phase 2 clinical trial in non-small cell lung cancer (NSCLC) with our therapeutic vaccine candidate HS-110, which is derived from a genetically-modified human lung cancer cell line.

We are also developing ImPACT therapeutic vaccines for bladder cancer, breast cancer and ovarian cancer. We plan to initiate a Phase 1/2 clinical trial for bladder cancer in mid 2013 with HS-410, a genetically-modified bladder cancer cell line. To date, in excess of $14,000,000 of funding has been awarded to the primary inventor of the technology that we license by the National Institutes of Health (NIH) and through other research and clinical grant in order to fund development of the technology that we license. We have little control over the direction of the NIH grant funds that have been received by the primary inventor of the technology we license and since payment is made to the inventor as opposed to us we do not recognize any revenue from such grant funds nor do they fund any expenses that we incur. Although earmarked for further development of the technology that we license, any funds awarded to the primary inventor are used in his discretion and we have little control over his use of the funds. Our strategy is to continue to apply for grants that will enable us to leverage our core technology platform. Our primary inventor also applies for academic grants to enhance the core technology platform. Grant funds received by our primary inventor are not utilized by us. Rather, these funds support our primary inventor's academic interests and may benefit us to the extent that these grants enable him to enhance the technology platform or generate additional data to support our programs. Currently, our primary inventor's academic grants are supporting the HS-110 NSCLC combination study as well as the HIV study. Our Phase 2 NSCLC study and our Phase 1/2 bladder cancer study are supported by us.

The actual amount of funds we will need to complete our 93-patient, Phase 1/2 trial of HS-410 is estimated to be $3.5 million of which $1,000,000 will be derived from the net proceeds of this offering and is subject to many factors, some of which are beyond our control. These factors include, but are not limited to, the following:

·

the progress and cost of our research and development activities;

·

the number and scope of our research and development programs;

35

·

the progress and cost of our preclinical and clinical development activities;

·

our ability to maintain current research and development licensing arrangements and to establish new research and development and licensing arrangements;

·

our ability to achieve our milestones under licensing arrangements;

·

the costs involved in prosecuting and enforcing patent claims and other intellectual property rights; and

·

the costs and timing of regulatory approvals.

Recent Developments

In March 2013, we sold an aggregate of 1,891,419 shares of our Series B-1 Preferred Stock for gross proceeds of $5,050,090 in our Series B Preferred Stock private placement offering. All shares of Series B Preferred Stock automatically convert into shares of our common stock upon the consummation of a Qualified Public Offering. In addition, upon consummation of a Qualified Public Offering, the investors will be issued an aggregate of 32,879 shares of common stock (assuming an initial public offering price of $11.00 per share, which is the midpoint of the range set forth on the cover page of this prospectus), and our obligation to issue, and the investors’ obligation to purchase, Series B-2 Preferred Stock and warrants upon fulfillment of the conditions specified in our Stock Purchase Agreement with the investors will be terminated.

Critical Accounting Policies

Revenue Recognition

We recognize government grants when there is reasonable assurance that they will comply with the conditions attached to the grants and that the grants will be received. The grants are recognized using an income approach and grant revenue is recognized as the related expenses are incurred.

Stock Based Compensation

We account for stock-based compensation arrangements with employees and non-employee directors using a fair value method which requires the recognition of compensation expense for costs related to all stock-based payments, including stock options. The fair value method requires us to estimate the fair value of stock-based payment awards on the date of grant using an option pricing model. Stock-based compensation costs are based on the fair value of the underlying option calculated using the Black Scholes option-pricing model on the date of grant for stock options and recognized as expense on a straight-line basis over the requisite service period, which is the vesting period. Determining the appropriate fair value model and related assumptions requires judgment, including estimating stock price volatility, forfeiture rates and expected term. The expected volatility rates are estimated based on the actual volatility of comparable public companies over the expected term. The expected term for the years ended December 31, 2012 and 2011 represents the average time that options are expected to be outstanding based on the mid-point between the vesting date and the end of the contractual term of the award. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. We have not paid dividends and do not anticipate paying a cash dividend in the foreseeable future and, accordingly, uses an expected dividend yield of zero. The risk-free interest rate is based on the rate of U.S. Treasury securities with maturities consistent with the estimated expected term of the awards. The measurement of nonemployee share-based compensation is subject to periodic adjustments as the underlying equity instruments vest and is recognized as an expense over the period over which services are received.

The fair value of the common stock underlying our stock options was determined at each grant date by our board of directors and supported by periodic independent third-party valuations. Our board of directors intended all options to be exercisable at a price per share not less than the per share fair value price of our common stock underlying those options on the date of grant. The valuations of our common stock were determined in accordance with the guidelines outlined in the American Institute of Certified Public Accountants Aid, Valuation of Privately-Held Company Equity Securities Issued as Compensation. For grants of stock awards made on dates for which there was no valuation performed by a valuation specialist, our board of directors determined the fair value of our common stock on the date of grant based upon the immediately preceding valuation and other pertinent information (such as significant changes in our activities) available at the time of grant.

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We have granted stock options during the period from January 1, 2011 through May 21, 2013 as summarized below:

Four valuations were performed by independent valuation specialists on March 31, 2011, March 31, 2012, December 31, 2012 and March 31, 2013.

To determine the fair value of the common stock, we considered three enterprise value allocation methods consistent with the American Institute of Certified Public Accountants Practice Aid, “Valuation of Privately-Held Company Equity Securities Issued as Compensation.” These methods are: (i) current-value method; (ii) the option pricing method; and (iii) the probability-weighted expected return method. Under the option pricing method, the common stock has value only if the funds available for distribution to stockholders exceed the value of the liquidation preference at the time of a liquidity event. The option-pricing method uses the Black-Scholes option model to price the call options. After considering several factors and circumstances, we utilized the option pricing backsolve method. The option pricing backsolve method treats common stock and Preferred Stock as call options on the enterprise/equity value, with exercise prices based on the liquidation preference of the Preferred Stock.

In order to estimate the fair value of the equity as of March 31, 2011, we did an option pricing backsolve method based on the recently issued convertible note. In May 2010 and September 2010, we completed the issuance of convertible promissory notes with an unrelated party which was considered to be at “arms-length.” We estimated the implied equity value to be approximately $3.4 million as of March 31, 2011. After consideration of specific facts and circumstances, the board of directors and management assumed a 3.5 years to a liquidity event. The anticipated timing and probability of a liquidity event was based on then-current plans and estimates of our board of directors and management regarding a liquidity event. Furthermore, volatility was estimated based on 3.5-year historical volatility of peer companies. To derive the value of the common stock, the proceeds to the common stockholders were calculated based on the preferences and priorities of the preferred and common stock, including the participation features of certain series of the preferred shares. A discount in the amount of 40% for lack of marketability was applied to reflect the risk arising from the inability to readily sell the shares. The discount for lack of marketability was based on our size, pre-profit stage, attraction to outside investors, and expectation of liquidity. After applying the 40% discount for lack marketability, we concluded the fair value of our common stock on a minority, non-marketable basis to be $0.64 per share.

To determine the fair value of our common stock as of March 31, 2012, we considered two scenarios based on the specific facts and our circumstances as of March 31, 2012. As of March 31, 2012, we had specific needs of cash in order to continue operations. As such, we were planning a series B round of financing. Based on the specific facts and circumstances, the first scenario assumes we will raise the Series B round of financing (“Going Concern”) and the second scenario assumes the Company will liquidate in the next three months (“Liquidation Scenario”).

Under the first scenario, the fair value of the common stock was determined by applying the option pricing backsolve method. A 5-year to liquidity was assumed by management and the board of directors based on the anticipated timing and probability of a liquidity event. Volatility was assumed based on historical volatility of peer companies. In order to estimate the implied equity value, we assumed terms and conditions based on the Series B round of financing. An option pricing backsolve method was applied to determine the value of the equity based on

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the anticipated Series B round of financing, which was expected to occur during the latter half of 2012 with an unrelated investor. Under the second scenario, the fair value of the common stock was determined by applying the current method given the immediate liquidity event. Our management and our board of directors (the “Board”) assumed that we will liquidate in the next three months. Given the facts and circumstances, we assumed that there would be no proceeds available for distribution to the common stockholders, indicating the fair value of the common stock to be zero. After considering both scenarios, a weighted average of the current value approach and the OPM was calculated to estimate the fair value of the common stock as of March 31, 2012. A discount in the amount of 40% for lack of marketability was applied to reflect the risk arising from the inability to readily sell the shares. The discount for lack of marketability was based on our size, pre-profit stage, attraction to outside investors, and expectation of liquidity. After applying the 40% discount for lack marketability present in the common stock, we concluded the fair value of our common stock on a minority, non-marketable basis to be $0.76 per share.

To determine the fair value of the common stock as of December 31, 2012, we utilized the probability-weighted return method (“PWERM”) to allocate the total equity value to the various securities, including Preferred Stock warrants. The PWERM model reflected our continued development, including the anticipation of the closing of Series B-1 convertible Preferred Stock financing. In addition, the model took into account the additional funding we received from our loan agreement that was entered into with Square 1 Bank in August 2012, the progression of our HS-110 program for non-small cell lung cancer and our HS-410 program for bladder cancer and notification that we were being considered as a candidate for potential grant funding for our non-small cell lung cancer program since the previous valuation dated March 31, 2012. The revision of our HS-110 clinical trial protocol, to remove a combination therapy from our clinical protocol, enhanced the universe of potential patients for our lung cancer drug and the potential market for the drug, resulting in a material increase in investor interest in our company. At that time, we also retained a nationally recognized bladder cancer oncologist to assist in designing our clinical trials and progressing our development plans, resulting in an enhancement of our oncology capabilities and diversification of our development activities, which also assisted our attractiveness as a financing candidate. The PWERM is a scenario-based analysis that estimates the value per share based on the probability-weighted present value of expected future investment returns, considering each of four future scenarios: an immediate IPO, a delayed IPO, a sale or merger, or liquidation. The equity is allocated pro rata among the total common shares on as-converted basis. The value per share under each scenario was then probability weighted and the resulting weighted values were summed to determine the fair value per share for each class. Our calculated discounts for the lack of marketability through the use of the Black-Scholes-Option Pricing Model, and applied an implied discount for marketability of 20.5% for the immediate IPO scenario, 29% for the delayed IPO scenario, and 61.7% for the sale or merger scenario. The expected outcomes were weighted based on a probability of forty percent (40%) for the liquidation scenario, with a lower probability for an IPO scenario of twenty-five percent (25%) and a probability of thirty-five percent (35%) for the sale or merger scenario. The fair values of the equity determined using the IPO and non-IPO scenarios were weighted according to our estimate of the probability of each scenario. Based on the PWERM model, the Board of Directors determined the fair value of our common stock at December 31, 2012 to be $2.23.

To determine the fair value of the common stock as of March 31, 2013, we utilized a combination of factors including, the probability-weighted return method (“PWERM”) to allocate the total equity value to the various securities, including Preferred Stock warrants. The PWERM model reflected our continued development, including the anticipation of the closing of Series B-1 convertible Preferred Stock financing. The other significant factors were the consummation of our Series B Preferred Stock private placement and our progress towards completion of the initial public offering process. We assessed that a near-term initial public offering was increasingly likely based upon discussions with our investment bankers and improving market conditions. We entered into a letter of intent with our underwriter in February 2013 and filed our amended registration statement on Form S-1 in February 2013. In December 2012, the state of the initial public offering market was uncertain with few biotechnology companies completing initial public offerings during the year ended December 31, 2012; however, beginning in 2013, initial public offerings for biotechnology companies appeared far more promising. Our consummation of our $5,000,000 Series B Preferred Stock private placement strengthened our balance sheet, resulting in the elimination of the going concern opinion in our 2012 audit opinion that had appeared in its 2011 audit opinion and had discouraged some investors at that time, and further increasing the likelihood of a successful initial public offering. In addition, we became eligible for an additional $1,000,000 in debt financing from Square 1 Bank due to the consummation of the Series B financing. The consummation of our Series B Preferred Stock private placement enabled us to initiate development of our HS-110 protocol synopsis, complete process development to enable manufacturing of HS-410 clinical-grade materials for anticipated clinical trials and engage oncology experts to work with us to progress our development efforts. In addition, our lead investigator began preparations for a grant funded clinical trial and our lead scientist published positive findings in the Journal of Immunology. The PWERM is a scenario-based analysis that estimates the value per share based on the probability-weighted present value of expected future investment

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returns, considering each of three future scenarios: an IPO, a sale or merger, or liquidation. The equity is allocated pro rata among the total common shares on as-converted basis. The value per share under each scenario was then probability weighted and the resulting weighted values were summed to determine the fair value per share for each class. Our calculated discounts for the lack of marketability through the use of the Black-Scholes-Option Pricing Model, and applied an implied discount for marketability of 15.4% for the IPO scenario, and 40% for the sale or merger scenario. The expected outcomes were weighted based on a probability of twenty percent (20%) for the liquidation scenario, with a higher probability for an IPO scenario of fifty percent 50.0% and a probability of thirty percent (30.0%) for the sale or merger scenario. The fair values of the equity determined using the IPO and non-IPO scenarios were weighted according to our estimate of the probability of each scenario. Based on the PWERM model, the Board of Directors determined the fair value of our common stock at March 31, 2013 to be $8.81.

In late May 2013, in consultation with the underwriters, we determined the anticipated initial public offering price range to be $10.00 to $12.00 per share. We believe that the difference between the fair value of our common stock for March 31, 2013 and the midpoint of the initial public offering price range of $11.00 per share is the result of several factors. The midpoint of the initial public offering price range of $11.00 per share assumed that the initial public offering has occurred and a public market for the common stock has been created, and therefore excludes any marketability or liquidity discount for our common stock, which was taken into account in the March 31, 2013 valuation. In addition, there were differences in valuation methodologies, assumptions and inputs used by the underwriters in their valuation analysis discussed with us compared to the valuation methodologies, assumptions and inputs used by the valuations considered by our board of directors. The underwriters considered a broader range of companies with higher valuations than the comparable companies considered in the valuations reviewed by the board. The underwriters also assessed the state of the capital markets which they felt were favorable. The addition of Cantor Fitzgerald & Co. as a co-manager for the initial public offering further strengthened the likelihood of the consummation of an initial public offering. The consideration of our enhanced technology portfolio, including the entering into of an options agreement with the University of Miami in April 2013, expansion of our senior management team, including retention of a part time Chief Financial Officer in May 2013, and progression of our clinical drug development plan all contributed to the increase in the fair market value of our common stock.

On April 7, 2011, we granted stock options to purchase a total of 12,610 and 108,696 shares at an exercise price of $0.64 and $0.71, respectively. We determined that the fair value of the common stock on the date of grant was $0.64 per share. To assess the reasonableness of our fair value on this date, we considered:

·

the independent valuation report of March 31, 2011 that indicated a valuation price of $0.64 per share; and

·

that there were no material changes in factors impacting the common stock per share value from March 31, 2011 to April 7, 2011.

On April 12, 2011, we granted stock options to purchase a total of 141,852 shares at an exercise price of $0.64. We determined that the fair value of the common stock on the date of grant was $0.64 per share. To assess the reasonableness of our fair value on this date, we considered:

·

the independent valuation report of March 31, 2011 that indicated a valuation price of $0.64 per share; and

·

that there were no material changes in factors impacting the common stock per share value from March 31, 2011 to April 12, 2011.

On October 25, 2011, we granted stock options to purchase a total of 49,133 shares at an exercise price of $0.64. We determined that the fair value of the common stock on the date of grant was $0.64 per share. To assess the reasonableness of our fair value on this date, we considered:

·

the independent valuation report of March 31, 2011 that indicated a valuation price of $0.64 per share; and

·

that there were no material changes in factors impacting the common stock per share value from March 31, 2011 to October 25, 2011.

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On November 22, 2011, we granted stock options to purchase a total of 21,740 shares at an exercise price of $0.64. We determined that the fair value of the common stock on the date of grant was $0.64 per share. To assess the reasonableness of our fair value on this date, we considered:

·

the independent valuation report of March 31, 2011 that indicated a valuation price of $0.64 per share; and

·

that there were no material changes in factors impacting the common stock per share value from March 31, 2011 to November 22, 2011.

On April 25, 2012, we granted stock options to purchase a total of 100,261 shares at an exercise price of $0.76. We determined that the fair value of the common stock on the date of grant was $0.76 per share. To assess the reasonableness of our fair value on this date, we considered:

·

the independent valuation report of March 31, 2012 that indicated a valuation price of $0.76 per share; and

·

that there were no material changes in factors impacting the common stock per share value from March 31, 2012 to April 25, 2012.

On May 30, 2012, we granted stock options to purchase a total of 1,305 shares at an exercise price of $0.76. We determined that the fair value of the common stock on the date of grant was $0.76 per share. To assess the reasonableness of our fair value on this date, we considered:

·

the independent valuation report of March 31, 2012 that indicated a valuation price of $0.76 per share; and

·

that there were no material changes in factors impacting the common stock per share value from March 31, 2012 to May 30, 2012.

On November 8, 2012, we granted stock options to purchase a total of 77,176 shares at an exercise price of $0.76. We determined that the fair value of the common stock on the date of grant was $2.23 per share. To assess the reasonableness of our fair value on this date, we considered:

·

the independent valuation report of December 31, 2012 that indicated a valuation price of $2.23 per share.

·

that there were no material changes in factors impacting the common stock per share value from November 8, 2012 to December 31, 2012.

On April 29, 2013, we granted stock options to purchase a total of 34,132 shares at an exercise price of $8.81. We determined that the fair value of the common stock on the date of grant was $8.81 per share. To assess the reasonableness of our fair value on this date, we considered:

·

the independent valuation report of March 31, 2013 that indicated a valuation price of $8.81 per share; and

·

that there were no material changes in factors impacting the common stock per share value from March 31, 2013 to April 29, 2013.

On May 15, 2013, we granted stock options to purchase a total of 38,364 shares at an exercise price of $8.81. We determined that the fair value of the common stock on the date of grant was $8.81 per share. To assess the reasonableness of our fair value on this date, we considered:

·

the independent valuation report of March 31, 2013 that indicated a valuation price of $8.81 per share; and

·

that there were no material changes in factors impacting the common stock per share value from March 31, 2013 to May 15, 2013.

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Aggregate Intrinsic Value of Equity Awards

Based upon an assumed public offering price of $11.00 per share, the midpoint of the range reflected on the cover page of this prospectus, the aggregate intrinsic value of outstanding vested and unvested stock options as of March 31, 2013 (unaudited) was $4.7 million and $1.4 million, respectively.

Preferred Stock Warrant Liability

We have accounted for our freestanding warrants to purchase our Series A Preferred Stock as liabilities at fair value on the accompanying consolidated balance sheets. Prior hereto the warrants could only be settled in shares of Series A Preferred Stock. The warrants have been subject to re-measurement at each balance sheet date, and the change in fair value, if any, is recognized as other income (expense). At the time of the offering the warrants will have the right to purchase common stock so we will not continue to adjust the liability for changes in fair value.

Significant assumptions used in the valuation of the warrants were as follows:

Material Weaknesses in our Internal Control over Financial Reporting.

Our management is responsible for establishing and maintaining adequate internal control over our financial reporting, as defined in Rule 13a-15(f) under the Exchange Act.

We have historically operated as a private company and the number and qualifications of our finance and accounting staff have not been consistent with those of a public company. We have identified material weaknesses in our internal controls with respect to our financial statement closing process of our consolidated financial statements for the years ended December 31, 2012 and 2011. Our management discovered certain conditions that we deemed to be material weaknesses in our internal controls, as follows:

·

A lack of accounting and finance resources as well as effective oversight by those in charge of governance resulted in insufficient controls over timely financial statement preparation and review as well as the preparation and review around accounting for certain complex transactions.

·

The design of monitoring controls used to assess the design and operating effectiveness of our internal controls is inadequate. We also do not have an adequate internal process to report deficiencies in internal control to management on a timely basis.

We have begun to take actions that we believe will substantially remediate the material weaknesses identified. In response to the identification of our material weaknesses, we (i) have retained a part-time Chief Financial Officer to segregate the duties of Chief Executive Officer and Chief Financial Officer; (ii) are in the process of establishing a review process for key aspects of our financial reporting process, including the accounting for complex transactions; and (iii) will seek to establish better operating controls and involve our board of directors in our internal controls process, which will involve establishing formal procedures to communicate deficiencies in internal controls on a timely basis, and encourage our board of directors to more actively participate in guiding management as it relates to internal controls matters. However, we cannot assure you that our internal control over financial reporting, as modified, will enable us to identify or avoid material weaknesses in the future. Regardless, following the completion of this offering we will be required to expend time and resources to further improve our internal controls over financial reporting, including by expanding our finance and accounting staff.

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Results of Operations

For the Three Months Ended March 31, 2013 and 2012

Revenues

We had no revenue for the three months ended March 31, 2013 and March 31, 2012. Historically our revenue has been entirely comprised of grant awards, of which we received none in the three months ended March 31, 2013 and March 31, 2012. We plan to continue our efforts to secure future grant funding to subsidize our ongoing research and developments costs.

Operating Expenses

Operating expenses are primarily comprised of research and development expenses and general and administrative expenses. For the three months ended March 31, 2013, research and development expenses represented approximately 57% of operating expenses, clinical trials and regulatory represented approximately 8% of operating expenses, and general and administrative expenses represented approximately 35% of operating expenses. For the three months ended March 31, 2012, research and development expenses represented approximately 38% of operating expenses, clinical trials and research represented approximately 11% of operating expenses, and general and administrative expenses represented approximately 51% of operating expenses. For the three months ended March 31, 2013, total operating expenses increased 74% to $770,482 from $443,629 for the three months ended March 31, 2012. Research and development expenses increased approximately 158% to $440,289 for the three months ended March 31, 2013 from $171,865 for the three months ended March 31, 2012. For the three months ended March 31, 2013, approximately $199,500 of the increase in research and development expenses were attributable to manufacturing costs related to our Phase 2 lung cancer trial for a total expense for the project of approximately $268,000 for the period as compared to approximately $24,315 incurred for the first quarter of 2012. From inception, we have incurred approximately $625,750 and $108,146 in costs for our lung cancer and bladder cancer projects, respectively. Approximately $18,250 was attributable to three new research projects with a university to further study the use of our ImPACT therapy for new oncology and infectious disease indications. The balance of the variance in such expenses were not attributable solely to any one project but were attributable to research relevant to all of our projects. Clinical trials and regulatory expenses increased approximately 33% to $62,057 for the three months ended March 31, 2013, from $46,807 for the three months ended March 31, 2012, due to the engagement of an outside consultant to assist in the monitoring of our clinical trials. General and administrative expenses increased approximately 19% to $268,136 for the three months ended March 31, 2013, from $226,057 for the three months ended March 31, 2012. Approximately $27,600 was attributable to the retention of a Director of Finance as well as an increase in risk management costs of $6,720. Additionally, a new loan was negotiated for short term financing requirements that increased our banking fees by approximately $7,975.

Non-Operating Expenses 

Non-Operating Expenses are primarily comprised of interest expense. The interest expense for periods ended March 31. 2013 and March 31, 2012 was $28,342 and $1,759 respectively, an increase of $26,583. This increase was due to interest on proceeds drawn against a note payable not executed until August of 2012.

Net Loss

Our net loss after deducting the non-controlling interest increased 73% to $763,856 for the three months ended March 31, 2013 from $441,684 for the three months ended March 31, 2012 for the reasons cited above.

For Years Ended December 31, 2012 and 2011

Revenues 

Total revenue for the twelve months ended December 31, 2012, decreased approximately 98% to $3,110 as compared to $187,787 for the twelve months ended December 31, 2011. For both periods our revenue was entirely comprised of grant awards. In October 2010, we were awarded a grant from the Internal Revenue Service of $244,479 for the reimbursement of qualified investments in a therapeutic discovery project under section 48 of the Internal Revenue Service Code. The grant proceeds were paid in two installments of which $162,435 was paid in 2011 and was included in revenue for the twelve months ended December 31, 2011. We plan to continue our efforts to secure future grant funding to subsidize our ongoing research and developments costs.

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Operating Expenses

Operating expenses are primarily comprised of research and development expenses and general and administrative expenses. For the twelve months ended December 31, 2012, research and development expenses represented approximately 38% of operating expenses, clinical trials and regulatory represented approximately 11% of operating expenses, and general and administrative expenses represented approximately 51% of operating expenses. For the twelve months ended December 31, 2011, research and development expenses represented approximately 56% of operating expenses, clinical trials and research represented approximately 11% of operating expenses, and general and administrative expenses represented approximately 33% of operating expenses. For the twelve months ended December 31, 2012, total operating expenses increased 5.5% to $2,345,787 from $2,222,587 for the twelve months ended December 31, 2011. Research and development expenses decreased approximately 28% to $902,938 for the twelve months ended December 31, 2012 from $1,246,587 for the twelve months ended December 31, 2011. This decline was due to expenses of approximately $162,000 for a large research project and approximately $146,000 for past patent expenses to the University of Miami which were incurred during 2011. For the twelve months ended December 31, 2012, approximately $357,744 and $108,147 of the research and development expenses were attributable solely to research related to our lung cancer and bladder cancer projects, respectively, and the balance of such expenses were not attributable solely to any one project but were attributable to research relevant to all of our projects. Comparatively, for the twelve months ended December 31, 2011 there were no such research expenditures that benefited any one project specifically. Also, research and development manufacturing costs decreased by approximately $101,000 as manufacturing was being phased into the clinical and regulatory phase. Clinical trials and regulatory expenses decreased approximately .08% to $253,189 for the twelve months ended December 31, 2012, from $255,210 for the twelve months ended December 31, 2011, which is consistent between the two periods. General and administrative expenses increased approximately 65% to $1,189,660 for the twelve months ended December 31, 2012, from $720,790 for the twelve months ended December 31, 2011, primarily as a result of our decision to retain a full-time CEO in the second quarter of 2011 which resulted in additional expense of $200,450. Additionally, we incurred additional expenses of $72,723 for a contracted and full-time accounting staff. Finally, during the twelve months ended December 31, 2012 we incurred additional insurance expenses of $13,348 associated with enhanced risk management such as Directors and Officers Insurance and additional liability coverage, additional rent expense and administrative expenses of $31,641 due primarily to the execution of a new lease, additional stock compensation expense of approximately $138,350, additional financing costs of approximately $38,000, and additional audit fees of approximately $24,000. The additional unspecified increase in the general and administrative expense was attributable to our expansion.

Non-Operating Expenses 

Non-Operating Expenses was primarily comprised of interest expense from our convertible notes and the 2012 write off of the debt discount associated with debt paid off during the period which increased to $101,086 for the year ended December 31, 2012 from $63,173 for the year ended December 31, 2011.

Net Loss

Our net loss after deducting the non-controlling interest increased 15% to $2,420,200 for the year ended December 31, 2012 from $2,104,884 for the year ended December 31, 2011. Although research and development costs declined by 28% due to decreased patent expenditures, the maturation of the company required additional staffing. A Vice President of Clinical and Regulatory was hired to manage our clinical trials as well as a full time Director of Finance. Additionally, the salary of the CEO was increased as stipulated in his employment agreement.

Liquidity and Capital Resources

We have financed our operations since inception primarily through proceeds from equity financings and debt financings, primarily involving private sales of our common stock and other debt and equity securities, and to a lesser extent from the proceeds from grant awards and commitments from banks and vendors.

In March 2013, we closed the first tranche of our Series B Preferred Stock private placement offering in which we sold an aggregate of 1,891,419 shares of our Series B-1 Preferred Stock for gross proceeds of $5,050,090.

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Our cash and cash equivalents totaled $4,889,723 as of March 31, 2013, an increase of $4,837,795 from March 31, 2012. The primary source of cash during the quarter ended March 31, 2013 was the issuance in March of 1,891,419 shares of our Series B-1 Preferred Stock for gross proceeds of $5,050,090. Our cash and cash equivalents totaled $5,030 as of December 31, 2012, a decrease of $93,616 from December 31, 2011. During the year ended December 31, 2012, the primary sources of cash were issuances of stock and the draw downs on Square 1’s promissory notes. In 2012, $725,000 was drawn on the Square 1 promissory notes and the outstanding principal balance at December 31, 2012 was $725,000. As of May 1, 2013, the Company has outstanding $725,000 on the promissory notes, with $2,275,000 available for future use. The Tranche A Loan principal balance is $500,000, the interest rate is currently at 6%, and the maturity date is August 7, 2016. The Term Loan B principal balance is $225,000, the interest rate is 4.25%, and the maturity date is December 14, 2014. The primary use of cash during the year ended December 31, 2011 was for working capital requirements.

Since inception we have raised $2,623,709 from the issuance of convertible notes to investors, of which notes in the principal amount of $2,273,709 were issued to one investor, Brightline Ventures III, LLC, the managing member of which is Mr. Smith, a member of our Board. As of December 31, 2010, we had notes outstanding to three investors in the aggregate principal amount of $1,176,000. The notes accrued interest at a rate of 3% per annum and were scheduled to mature 18 months after issuance. In 2011, we raised an additional $1,447,709 from the issuance of notes to three investors, one of which was Brightline Ventures III, LLC. The notes accrued interest at a rate of 3% per annum and were scheduled to mature 18 months after issuance. All of the notes were converted into shares of Series A Preferred Stock in September 2011.

Our continued operations will primarily depend on our ability to raise additional capital from various sources, including equity and debt financings, as well as grants and bank financings. On October 20, 2011, we entered into an agreement with a vendor that allowed us to make up to $950,000 of payments for invoiced services rendered by such vendor through the issuance of a convertible note. In May 2013, the note with the vendor was extinguished and the vendor extended the due date of all payables owed, including amounts previously due under the Note, until the earlier of July 15, 2013 or this offering or any other financing in which we receive gross proceeds of $2,500,000. If the closing of such financing does not occur prior to July 15, 2013 then one half of the payables owed as of July 15, 2013 shall be due July 15 2013 and the balance shall remain payable until such a financing is consummated. On December 14, 2011, we entered into a promissory note with the North Carolina Biotechnology Center pursuant to which we could borrow up to $250,000. The note accrued interest at a rate of 4.25% per annum. The principal was payable in annual installments in the amount of five percent (5%) of the outstanding principal as of the date of such payment, commencing on the anniversary date of the related loan agreement and continuing annually on the same day of each calendar period thereafter until December 13, 2014. In August 2012, we repaid all amounts outstanding under the note from the proceeds of the Square 1 Bank loan described below. In connection with the loan from North Carolina Biotechnology Center, we issued the North Carolina Biotechnology Center a warrant exercisable for 12,940 shares of our common stock at an exercise price of $4.83 per share, which warrant expires on December 13, 2021. In August 2012, we entered into a secured loan with Square 1 Bank, the proceeds of which were used in part to pay off the loan from North Carolina Biotechnology Center. The loan and security agreement that we entered with Square 1 Bank in connection with the secured loan (the “Square 1 Agreement”) provides that Square 1 Bank will provide us with a term loan in the aggregate principal amount not to exceed $1,000,000 to be used for working capital and capital expenditures (the “Tranche A Loan”). The Tranche A Loan will be available to us until August 7, 2013. The Tranche A Loan is payable on August 7, 2013 in 36 monthly installments of principal and accrued interest. The Tranche A Loan matures on August 7, 2016. If we receive a grant that provides aggregate funds with a value of $16,000,000, the maximum aggregate of the Tranche A Loan and the Tranche B Loan amount increases to $2,775,000. Both the Tranche A Loan and the Tranche B Loan accrue interest monthly at an interest rate of 3% plus prime or 6% per annum whichever is greater. The Square 1 Agreement, as amended, also provides that if we receive at least $4,500,000 from the sale of our equity to investors after February 15, 2013 but on or before March 31, 2013 (such date we receive such funds being referred to as the “Trigger Date”), we can borrow an additional term loan in the aggregate principal amount not to exceed $1,000,000 to be used for working capital and capital expenditures (the “Tranche B Loan”). Due to the closing of the Series B-1 Preferred Stock private placement in March 2013, we will be able to borrow an additional $1,000,000 under such loan. The Tranche B Loan is payable as interest-only prior to the twelve month anniversary of the Trigger Date month after until August 7, 2013 and thereafter is payable in equal monthly installments of principal plus accrued interest until August 7, 2016. The Tranche B Loan matures on August 7, 2016. Square 1 Bank also made one term loan in the amount of $225,000, which was used to repay our debt to North Carolina Biotechnology Center (the “Term B Loan”). The Term B Loan matures December 14, 2014 and requires payments on the one and two year anniversary of the date of issuance equal to five percent of the principal amount of the loan plus accrued interest, with the balance of the loan being paid on maturity. The Term B Loan accrues interest monthly at an interest rate of 4.25% per annum. Once repaid the loans may not be re-borrowed. The loans are secured by a lien on substantially all of our assets, including our stock in our subsidiaries

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but excluding our intellectual property. Finally, Square 1 Bank also made one Non-Formula Advance (the “Non-Formula Advance”) in the aggregate principal amount of $200,000 which is payable as interest-only on the 5^th calendar day of each month through January 9, 2014 when the entire principal amount is due. As of May 1, 2013, we had outstanding $725,000 under the Square 1 Bank loans. In connection with the loan, we issued Square 1 Bank a warrant, as amended, exercisable for 17,500 shares of our common stock which after adjustment for our 1-for-2.3 stock split will be convertible into 7,609 shares of common stock. The warrant is exercisable for ten years at a price of $4.83, which price is subject to adjustment for certain transactions including certain dilutive transactions. The warrant holder is entitled to piggyback registration rights with respect to the underlying shares.

The loan and security agreement with Square 1 Bank sets forth various affirmative and negative covenants that the Company must comply with, including covenants regarding financial reporting, and “cash maintenance” burn” requirements, incurrence of indebtedness and mergers and acquisitions. We plan to use approximately $300,000 of the proceeds of this offering to repay the portion of the loans from Square 1 Bank due over the 12 months beginning September 2013. We currently have: (i) $500,000 outstanding under the Tranche A Loan and under the terms of the loan we are required to pay the principal balance plus accrued interest in 36 monthly installments beginning September 7, 2013 and ending August 7, 2016 and (ii) $225,000 outstanding under the Term Loan B, and under the terms of the loan we are required to make payments of 5% of the outstanding principal balance plus accrued interest each on August 2013 and 2014, with the remaining principal balance, plus all accrued interest, due December 14, 2014. In 2013, we borrowed $200,000 under the Non-Formula Advance from Square 1 Bank which was repaid in full in 2013 and $200,000 cannot be reborrowed.

In April 2010, we were awarded a grant award from the National Institute of Health in the amount of $300,000, of which $248,648 was paid to us in 2011. In October 2010, we were awarded a grant from the Internal Revenue Service of $244,479, of which $162,435 was paid in 2011.

Current and Future Financing Needs

We have incurred an accumulated deficit of approximately $6,699,138 as of March 31, 2013. We have incurred negative cash flows from operations since we started our business. We have spent, and expect to continue to spend, substantial amounts in connection with implementing our business strategy, including our planned product development efforts, our clinical trials, and our research and discovery efforts.

The actual amount of funds we will need to complete our 125 patient Phase 2 trial on patients with advanced non-small cell lung cancer and a 93 patient, Phase 1/2 trial of HS-410, in bladder cancer which is estimated to be $9,350,000, is subject to many factors, some of which are beyond our control. These factors include, but are not limited to, the following:

·

the progress and cost of our research and development activities;

·

the number and scope of our research and development programs;

·

the progress and cost of our preclinical and clinical development activities;

·

our ability to maintain current research and development licensing arrangements and to establish new research and development and licensing arrangements;

·

our ability to achieve our milestones under licensing arrangements;

·

the costs involved in prosecuting and enforcing patent claims and other intellectual property rights; and

·

the costs and timing of regulatory approvals.

We have based our estimate on assumptions that may prove to be wrong. We continue to require additional funds to fully implement our planned research and development and may need to obtain these funds sooner or in greater amounts than we currently anticipate. Potential sources of financing include corporate partnerships or public or private sales of our shares or debt and other sources. We may seek to access the public or private equity markets when conditions are favorable due to our long-term capital requirements. We do not have any committed sources of financing at this time other than as described previously and there can be no assurance given that any additional funding will be available when we need it on terms that will be acceptable to us, or at all. If we raise funds by selling additional shares of common stock or other securities convertible into common stock, the ownership interest of our

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existing stockholders will be diluted. If we are not able to obtain financing when needed, we may be unable to carry out our business plan. As a result, we may have to significantly limit our operations and, as a result, our business, financial condition and results of operations would be materially harmed.

License and Contractual Obligations

Below is a table of our contractual obligations for the years 2013 through 2017 and thereafter through December 31, 2022 (in thousands):

————————

(1)

Represents minimum royalty payment commitments under our license agreements that are required to be paid with the passage of time.

(2)

In November 2011, we entered into a thirteen month lease agreement for office space commencing February 1, 2012 for a monthly rent of $3,870. The lease term may be extended for an additional 24 months on substantially the same terms. On December 19, 2012, we entered into a lease modification agreement which extended the lease term until July 31, 2013 and the monthly rent increased to $4,046. Future minimum lease payments are as set forth above.

Below is a table of our contractual payments under the Company’s notes payable and convertible notes payable agreements for the years 2013 through 2016 as of May 21, 2013 (in thousands):

————————

*

In May 2013, the convertible note payable was extinguished and the vendor extended the due date of all payables owed, including amounts previously due under the note, until the earlier of July 15, 2013 or this offering or any other financing in which we receive gross proceeds of $2,500,000. If the closing of such financing does not occur prior to July 15, 2013 then one half of the payables owed as of July 15, 2013 shall be due July 15 2013 and the balance shall remain payable until such a financing is consummated.

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BUSINESS

Overview

We are a development stage biopharmaceutical company engaged in the development of novel allogeneic, “off-the-shelf” cellular therapeutic vaccines to combat a wide range of cancers and infectious diseases. Our proprietary ImPACT™ Immune Pan Antigen Cytotoxic Therapy is being designed to deliver live, genetically-modified, irradiated human cells which are reprogrammed to “pump out” a broad spectrum of cancer-associated antigens together with a potent immune adjuvant called “gp96” to educate and activate a cancer patient’s immune system to recognize and kill cancerous cells. We intend for our ImPACT cells to secrete an antigen-adjuvant complex that generates anti-cancer immune responses in patients by mobilizing and activating cytotoxic “killer” T cells that target multiple cancer antigens, thus harnessing a patient’s own immune system to fight cancer.

Unlike autologous or “personalized” therapeutic vaccine approaches which require extraction and processing of cancer or blood from each individual patient, our ImPACT therapeutic vaccine uses a master cell line containing a host of known and unknown tumor associated antigens to mass-produce a single vaccine product applicable to all patients with a particular cancer type. We believe our off-the-shelf, allogeneic immunotherapy offers logistical, manufacturing and cost of goods benefits compared to autologous patient-specific approaches.

Our most advanced product candidates are HS-110 and HS-410.

HS-110

We have submitted an IND to initiate a Phase 2 clinical trial in non-small cell lung cancer (NSCLC) patients with our therapeutic vaccine candidate HS-110, which is derived from a human lung cancer cell line. HS-110 is a biologic product which consists of a lung cancer cell line that has been genetically modified using our ImPACT technology platform to secrete a wide range of lung cancer associated antigens bound to a gp96 adjuvant and is designed to activate a T-cell mediated pan-antigen immune response against the patient’s cancer. The inventor of the ImPACT technology that we license recently reported results from a Phase 1 open-label, single center clinical trial of HS-110 in patients with advanced NSCLC. We believe the results provide clinical evidence that HS-110 is capable of generating anti-cancer immune responses. Eighteen patients were vaccinated, and 15 of the 18 vaccinated patients completed the first course of three planned courses of therapy. Two patients completed all three planned courses of therapy.

HS-110 showed no overt toxicity. There were no serious adverse events (SAEs) that were considered by the trial investigator to be treatment-related. Most of the adverse events (AEs) were reported as mild or moderate (grade 1 or 2) with the most frequent being skin induration and rash that were transitory and usually resolved in 1 to 2 weeks. HS-110 provides evidence of a CD8-CTL IFN- γ immune response in patients with advanced NSCLC. In 11 of the 15 patients (73%) that completed the first course of therapy with HS-110, there was a twofold or greater increase in CD8 cells secreting interferon gamma (CD8-CTL IFN- γ). These patients also exhibited an estimated median survival of 16.5 months (95% CI:7.1-20.0). In contrast, 4 patients were immune non-responders and survived 2.1, 2.3, 6.7, and 6.7 months, or a median survival of 4.5 months, which is consistent with the expected survival times in this patient population. The protocol required that we look for such responses, but, as is typical in immunotherapy, no partial or complete tumor responses were observed. The median one-year overall survival rate of patients in the study was 44% (95% CI:21.6-65.1), comparing favorably to a 5.5% rate based on published data from a 43-patient advanced lung cancer population. One of the late-stage lung cancer patients is surviving over four years since starting the therapy and another patient is surviving over three years since starting the therapy. These findings were consistent with multiple pre-clinical published studies on ImPACT therapy.

HS-410

We intend to submit an IND to initiate a Phase 1/2 bladder cancer trial with HS-410, which is derived from a human bladder cancer cell line. HS-410 is a biologic product which consists of a bladder cancer cell line which has been genetically modified using our ImPACT technology platform to secrete a wide range of bladder cancer antigens bound to a gp96 adjuvant and is designed to activate a T-cell mediated pan-antigen immune response against the patient’s bladder cancer. Following FDA clearance, we intend to initiate a 93 patient, Phase 1/2 trial to examine safety, tolerability, immune response and preliminary clinical activity of HS-410 in patients with high risk, superficial bladder cancer who have completed surgical resection and 6 weekly intravesical bacillus Calmet-Guerin (BCG) immunotherapy installations. We anticipate including approximately 8-10 clinical sites with an enrollment period of 12-18 months. Patient enrollment is expected to begin in Q3-2013.

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Additional Indications

We are also developing ImPACT therapeutic vaccines for breast cancer and ovarian cancer. The inventor of the ImPACT technology intends to initiate a second grant-funded, investigator-sponsored Phase 1/2 clinical trial of our ImPACT therapy in conjunction with other therapies against NSCLC in the second quarter of 2013. To date, in excess of $14,000,000 of funding has been awarded to the primary inventor of the technology we license by the National Institutes of Health (NIH) and through other research and clinical grants, which has been used to further develop our ImPACT technology platform that we license. We have little control over the direction of the NIH grant funds that have been received by the primary inventor of the technology we license and since payment is made to the inventors as opposed to us we do not recognize any revenue from such grant funds nor do they fund any expenses that we incur. Although earmarked for further development of the technology that we license, any funds awarded to the primary inventor are used in his discretion and we have little control over his use of the funds. The NIH is also currently fully funding the primary inventor’s study of an HS-HIV product candidate in non-human primates with a therapeutic and prophylactic vaccine for the treatment and prevention of HIV utilizing the ImPACT approach.

The table below summarizes our current product candidates and their stages of development:

The table below summarizes the primary inventor’s clinical development of the ImPACT technology:

ImPACT Therapy—Novel Pan-Antigen Immune Activation

Our ImPACT therapy is a novel technology platform designed to educate and stimulate the immune system to combat specific disease targets, such as cancer cells. ImPACT utilizes live attenuated, human-derived, genetically-modified cells to generate an array of tumor associated antigens and secrete an essential immunostimulatory protein called “gp96-Ig”. The secreted proteins are designed to generate an immune response against cancer cells by mobilizing and activating a patient’s own killer T cells to target a broad array of different tumor antigens with the goal of eliminating cancer cells. In contrast with other vaccine technologies that target only one antigen, ImPACT’s pan-antigen approach which may enable the body to induce and maintain an immune response against a broad array of tumor-specific proteins, by potentially providing a more robust and sustained immune response and limiting cancer cells’ ability to evade the immune system. We believe the clinical and pre-clinical results suggest that ImPACT generates anti-tumor immune responses capable of targeting and destroying tumors. We believe our novel, off-the-shelf, live cell therapy has the potential to be used to not only combat a wide range of cancers, but also against various infectious diseases, such as hepatitis C, malaria and HIV, for which non-human primate studies, which we believe are encouraging, have been completed. We have leveraged our existing infrastructure by developing additional product candidates in areas where we can use our proprietary technology. Our success will

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depend on the clinical and regulatory success of our product candidates and our ability to retain, on commercially reasonable terms, financial and managerial resources, which are currently limited. To date, we have not received regulatory approval for any of our product candidates or derived any revenues from their sales. Moreover, there can be no assurance that we will ever receive regulatory approval for any of our product candidates or derive any revenues from their sales. We should have sufficient capital from the offering to operate the company for 24-30 months.

Our ImPACT Therapy Product Candidates

We plan to submit our Phase 2 clinical trial protocol for HS-110, our lead drug candidate, against non-small cell lung cancer (NSCLC) to FDA and initiate the trial in 2H-2013. Our Phase 2 trial will expand upon the Phase 1 results obtained by the primary inventor as described below.

We also plan to initiate a Phase 1/2 clinical trial against bladder cancer in mid-2013 using our HS-410 drug candidate. We plan to utilize this vaccine to delay or prevent the recurrence of bladder cancer in post-resected bladder cancer patients.

We are also anticipating initiating clinical trials using our ImPACT-based product candidates against a number of other diseases, including ovarian cancer and breast cancer.

Our Product Candidates and Clinical Development Programs

Our development program involves testing our ImPACT-based product candidates against a number of disease targets, including non-small cell lung cancer, breast cancer, ovarian cancer, bladder cancer and HIV. We are planning to enter a Phase 2 clinical trial with our first therapeutic vaccine, HS-110, for non-small cell lung cancer (NSCLC) in 2H-2013. We are also planning to initiate a Phase 1/2 clinical trial of HS-410 for bladder cancer in mid-2013. In addition, we may also initiate Phase 1 clinical trials for breast and/or ovarian cancer in 2014, dependent upon the receipt of additional non-dilutive grants and/or product financings. The primary inventor of the technology that we license is conducting a study in non-human primates with a therapeutic and prophylactic vaccine for the treatment and prevention of HIV. This ongoing study is fully funded by the NIH.

Strengths and Competitive Advantages

·

We believe our ImPACT technology combines broad antigen targeting of known and unknown tumor associated antigens complexed with a potent immune adjuvant. We believe ImPACT has been shown to activate the immune system against a wide variety of antigens by eliciting a significant cytotoxic T cell immune response as measured by extensive pre-clinical and initial clinical immunological testing. The activated immune response generated by our ImPACT Therapy may be useful in treating a wide range of cancers and infectious diseases.

·

We have submitted an IND and intend to initiate a Phase 2 clinical trial in NSCLC patients with our therapeutic vaccine candidate HS-110, which is derived from a genetically-modified human lung cancer cell line. We expect to initiate a Phase 1/2 clinical trial for bladder cancer with our second product candidate, HS-410, in 2H-2013.

·

The National Institute of Health (NIH) and other organizations have provided funding to the primary inventor of the technology that we license for both his pre-clinical and clinical studies.

·

Our proprietary ImPACT technology platform is being applied to develop multiple therapeutic vaccines against a wide range of cancers and infectious diseases. Generating positive results and gaining FDA approval for multiple therapies would lower our dependence on any one drug in order to generate returns.

·

We believe our therapeutic vaccines are easier and less expensive to manufacture than autologous vaccines because our therapeutic vaccines do not require the harvesting of blood and/or tumor tissue from each patient in order to manufacture a course of treatment. We believe this is highly advantageous because it can bring the logistics, manufacturing, cost and distribution of our therapeutic vaccines within the purview of traditional biopharmaceutical product channels and dramatically expand our pool of corporate partners.

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·

We believe that we may be able to rapidly develop new allogeneic vaccines for different types of cancers and other diseases as our technology can readily be applied to many different forms of cancer.

·

Our therapies do not require an additional adjuvant. Some vaccines require the addition of another drug, called an adjuvant, to enhance their effectiveness. Adjuvants typically cause irritation at the injection site. HS-110, one of our product candidates, is itself an adjuvant, so we do not have to use additional adjuvants to generate and maintain an activated immune response, thereby limiting any injection site reaction to that caused by our own therapies.

·

We believe our business model is capital efficient as we continue to leverage academic and institutional resources in order to develop new products and to begin to move these products into and through clinical trials.

Strategy

Our objective is to become a leading biopharmaceutical company specializing in the development and commercialization of allogeneic, off-the-shelf therapeutic vaccines. We are focused on discovering, developing and applying our core platform ImPACT technology towards a number of disease indications. The key elements of our strategy are:

·

Develop and obtain regulatory approval for our ImPACT-based products. We plan to initiate a Phase 2 clinical trial in NSCLC in 2H-2013 and intend to conduct a Phase 1/2 clinical trial in bladder cancer in mid-2013. Additionally, we plan to initiate clinical trials against breast and ovarian cancer in 2014, pursuant to receiving additional non-dilutive grants and/or product financings. After NSCLC, bladder, breast and ovarian cancers, we plan to initiate additional clinical trials against other disease targets utilizing our ImPACT technology platform.

·

Maximize commercial opportunity for our ImPACT technology. Our product candidates target large markets with significant unmet medical needs. For each of our product candidates, we seek to retain all manufacturing, marketing and distribution rights which should give us the ability to maximize the economic potential of any future U.S. or international corporate partnerships. We believe that we should be well positioned to successfully commercialize our product candidates independently or through U.S. and international corporate partnerships.

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Further expand our broad patent portfolio. We have made a significant investment in the development of our patent portfolio to protect our technologies and programs, and we intend to continue to do so. We have obtained exclusive rights to five different patent families directed to therapeutic compositions and methods related to our vaccine platform and preclinical development programs for cancer. These families comprise five PCT applications, six issued patents, two allowed or accepted patent applications, and thirty-seven pending patent applications. These patents and applications cover the United States, Europe, and Japan as well as several other countries having commercially significant markets.

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Manage our business with efficiency and discipline. We believe we have efficiently utilized our capital and human resources to develop and acquire our product candidates and programs, and create a broad intellectual property portfolio. We operate cross-functionally and are led by an experienced management team with backgrounds in developing and commercializing product candidates. We use project management techniques to assist us in making disciplined strategic program decisions and to attempt to limit the risk profile of our product pipeline.

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Obtain additional grant funding. To more fully develop our ImPACT technology platform and its application to a variety of human diseases, we plan to continue to seek and access external sources of grant funding on our own behalf and in conjunction with our academic partners to support the development of our pipeline programs. While we intend to work with our academic partners to secure additional grant funding, these partners have no obligation to work with us to secure such funding. We also intend to continue to evaluate opportunities and, as appropriate, acquire or license technologies that meet our business objectives.

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·

Continue to both leverage and fortify our intellectual property portfolio. We believe that we have a strong intellectual property position relating to the development and commercialization of our ImPACT technology platform. We plan to continue to leverage this portfolio to create value. In addition to fortifying our existing intellectual property position, we intend to file new patent applications, in-license new intellectual property and take other steps to strengthen, leverage, and expand our intellectual property position.

Disease Targets and Markets

The Oncology Market

The American Cancer Society estimates that 1.66 million people in the U.S. will be diagnosed with cancer in 2013. The lifetime probability of being diagnosed with an invasive cancer is 45% for men and 38% for women. It is projected that 580,350 Americans will die from cancer in 2013.

Despite continuous advances made in the field of cancer research every year, there remains a significant unmet medical need as the overall five-year survival rate for cancer patients diagnosed between 2001 and 2007 is an average of 67%. According to the Center of Disease Control, in 2011, cancer was the second leading cause of mortality in the U.S. (23.2%) behind heart disease (24.1%). The American Cancer Society estimates that one in four deaths in the U.S. is due to cancer.

The main treatments for cancer are surgery, radiotherapy and chemotherapy. There are often, however, significant debilitating effects resulting from these treatments or lingering morbidity associated with these approaches to treatment of cancer. Our goal is to develop compounds that can lengthen survival times and improve the quality of life of cancer patients and survivors.

Although there are a large number of patients, treatment and management of cancer is performed by a relatively concentrated pool of medical professionals. We plan to reach this prescriber base using a relatively small commercial infrastructure that we intend to develop in the future by either hiring internally, partnering or contracting with one or more third-party entities with an established sales force. These development plans are dependent on our raising additional capital, the success of HS-110, HS-310, HS-410 and HS-510 and any technologies we might develop in the future and successful negotiation of commercial relationships, none of which we have completed to date. We believe, however, assuming the efficacy and safety of HS-110 and any other technology we might acquire, that our experienced management team will raise the capital and establish the commercial relationships necessary for success.

Limitations of Current Cancer Therapies

We believe current cancer treatment alternatives suffer from a number of limitations that impair their effectiveness in improving patient survival and overall quality of life including:

·

Toxicity. Chemotherapeutic agents are highly toxic to the human body and very often cause a variety of significant and debilitating side effects, including, but not limited to, nausea and vomiting, bleeding, anemia and mucositis. Some targeted therapeutics have fewer systemic toxicities, but still typically have off-target effects such as gastrointestinal inflammation, severe skin reactions and breathing difficulties. These side effects limit a patient's ability to tolerate treatment and as such can deprive the patient of the potential benefit of additional treatments or treatment combinations that might otherwise destroy or prevent the growth of cancer cells. Once they become aware of the limited efficacy, limited increased survival and potentially significant toxicity of existing treatment alternatives, many patients diagnosed with terminal cancer choose to limit or forego therapy in order to avoid further compromising their quality of life. Patients with advanced stage cancer also often cannot tolerate cancer therapy, and certain therapies can hasten death as the patient's health further deteriorates from the therapy applied.

·

Mechanism of action. While many current therapeutic approaches can be effective against specific targeted cells, the efficacy of these therapies in treating cancer over the long term generally is limited by the abundance and diversity of the cancer and tumor cells, which are believed to enable the targeted cells to adapt and become resistant to the current therapeutic approach over time.

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·

Short-term approach. Other than tumor removal in a surgical procedure, curing the cancer is often not the intent or a potential outcome of many current cancer therapies. Rather, increased survival time is the primary focus of many currently marketed and development-stage cancer therapeutics. In this regard, many cancer therapies show only a modest impact on the overall survival of the patients and only affect the length of time that passes after treatment begins and before the patient’s disease worsens or the patient dies.

·

Immune system suppression. A weakened immune system not only inhibits the body's natural ability to fight cancer, but also causes patients to become more susceptible to infections and other diseases. Current approaches to cancer treatment generally involve introduction of an agent, such as a chemical, an antibody or radiation, which causes cell apoptosis (programmed cell death) or inhibits the proliferation of all cells, including immune cells, which has the unintended consequence of indirectly suppressing the immune system.

Immunotherapy Overview

Our ImPACT technology is a form of immunotherapy. Immunotherapy involves administration of a therapeutic agent that enlists or boosts a subject’s immune system in order to fight disease.

Commonly recognized successful examples of immunotherapy include prophylactic vaccines, such as, childhood immunizations against infectious diseases such as measles, mumps, and rubella. In these cases, usually weakened (attenuated) or inactivated viruses are injected into the body to educate certain immune system cells to recognize and remember small pieces of viral or bacterial proteins (antigens). If and when an individual is subsequently exposed to this same pathogen, the immune system will recognize these antigens immediately and mount a potent immune response to neutralize and eliminate the pathogenic threat.

Therapeutic vaccines, such as ImPACT-based product candidates, operate in a fashion similar to prophylactic vaccines except that therapeutic vaccines are administered after a particular disease is already present. In each case, the human immune system is educated and harnessed to recognize and fight the disease of interest. Cancer can be considered a failure of the immune system to effectively recognize and eliminate inappropriately dividing and multiplying (malignant) cells. Under ordinary circumstances the human immune system continuously monitors and eliminates inappropriately dividing cells. However, for reasons that are not entirely understood, under cancerous conditions the immune system fails to recognize malignant cells and such cells are permitted to inappropriately multiply, grow and metastasize to form tumors which eventually become life threatening. Our therapeutic vaccines are designed to assist the immune system in identifying and eliminating malignant cells. Our approach involves the introduction of cellular antigens that are characteristic of malignant cells with the goal of generating an immune response against the particular form of cancer. In our approach, in addition to introducing a number of cancer-specific antigens, we also introduce a protein known as gp96 which stimulates and primes the immune system to further recognize cancer antigens and generates a potent and broad pan-antigen immune response against cancerous cells.

Immunotherapy Approaches

Immunotherapy is designed to stimulate and enhance the body’s natural mechanism for killing cancer cells and virus-infected cells. Generally, immunotherapeutic approaches to treat disease can be separated into two distinct classes, passive and active, based on their mechanism of action.

Passive Immunotherapy: Passive immunotherapies generally consist of monoclonal antibodies directed at a single disease-specific enzyme or protein on the surface of the targeted cells with the goal of either killing the targeted cells or preventing them from dividing. Rather than stimulate or otherwise use the body’s immune system to initiate the attack on the disease, the attack is made by the therapy which is produced ex vivo, or outside of the body. These therapies also are not usually personalized for the patient.

Active Immunotherapy: Active immunotherapies generally consist of therapies intended to trigger or stimulate the body’s own immune system to fight disease. Active immunotherapies have no direct therapeutic action but rather contain antigens specifically designed to activate the patient’s own immune system to find and kill the targeted cells that carry the same antigen. Active immunotherapies depend on the patient’s immune system to seek out and destroy targeted cells or tumors. Most active immunotherapies utilize off-the-shelf antigens, known as “defined” antigens, rather than individualized, patient specific antigens, and are often paired with adjuvants, which are agents that generally activate the immune system cells to increase immune response.

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Shortcomings of Immunotherapies: Both passive and active immunotherapy approaches have shortcomings, which include:

·

Most active immunotherapies use normal, non-mutated, self-antigens which are typically poor at stimulating immune responses, even from healthy immune systems. In fact, the human immune system generally does not generate immune responses against self-antigens. Most passive and active immunotherapies also target one or only a few antigens, which increases the probability that infected cells will escape detection by the immune system and immunotherapy.

·

Most active immunotherapies employ defined antigens that are not effective against multiple types of cancer.

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Most immunotherapies produce toxic effects resulting in damage to healthy tissues if the target antigen is absorbed by normal cells in addition to the targeted cancer or virus-infected cells.

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Many patients may not be able to mount effective immune responses with immunotherapy due to tumor or virus induced immunosuppression of accessory cells such as CD4+ helper T cells, which are necessary for the immunotherapies to be effective but may be functionally impaired by the patient’s disease.

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It can be difficult to commercialize immunotherapies based on cells derived from individual patients in a cost-effective manner as a result of the added complexity, limited patient material for production of multiple doses, and the need to store and ship the individual doses.

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Immunotherapies that rely on defined, off-the-shelf antigens or a single targeted antigen may have limited effectiveness because even within the same type of cancer, the genetic makeup and distinct antigens of a tumor can vary significantly from patient to patient.

These shortcomings were highlighted by the findings of a study recently published in Nature Medicine (Finak and Park (2008), Stromal gene expression predicts clinical outcome in breast cancer, Nature Medicine, 14, 518 – 527) where the whole genomes of 50 patients’ breast cancer tumors were sequenced alongside matching DNA from the same patients’ healthy cells to identify the genetic alterations present in the cancerous cells. The study found that the genomic pattern of each of the tumors varied significantly. Of the approximately 1,700 gene mutations found in total, most were specific and unique to the individual patients’ cancerous tumors, and that only three of the genetic mutations occurred in 10% or more of the patients.

Although many of the immunotherapies currently in clinical development have shown promising results, we do not believe that any of them utilizes a technology that employs the patient’s own cancer or virus-infected cells to create a fully personalized immunotherapy that is directly targeted to the patient’s unique genetic disease.

Our Solution: ImPACT Therapy

We believe our ImPACT Therapy has a number of advantages over existing therapies. These advantages, elaborated below, may enable us to develop commercial products that extend the survival of, and improve the quality of life for, cancer patients:

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It is designed to fight cancer by activating the immune system against a wide variety of cancer antigens.

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It is intended to continually secrete a wide variety of cancer-associated antigens, thus initiating a broad and sustained pan-antigen cytotoxic T cell attack against the targeted cancer. We believe this broad-based attack increases the probability of destroying the targeted cancer.

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It is designed to stimulate a natural immune response against specific cancer cells. We believe this may limit serious adverse events related to treatment.

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We believe that the novel mechanism of action, good tolerability and favorable safety profile will enable our ImPACT product candidates to have potential benefits across multiple disease stages and tumor types and in combination with other therapies. We believe our ImPACT technology can be targeted to additional specific tumor types by modifying cells from the cancer type of interest.

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Our ImPACT Therapy represents a first-in-class adjuvant that functions as both an immune activator and an antigen-delivery vehicle. ImPACT is the only adjuvant technology platform currently known to us in clinical development that is specific to CD8+ cytotoxic T cell immune response, which is especially important for developing therapeutics in oncology as well as a number of other infectious disease indications.

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We believe many patients who are too ill to tolerate chemotherapy due to the associated toxicities may be able to benefit from our ImPACT product candidates.

ImPACT TECHNOLOGY PLATFORM

ImPACT Background

Our ImPACT technology represents an allogenic or “off-the-shelf” method to deliver cancer antigens accompanied by heat shock proteins, or HSPs, to illicit an immune response. HSPs are used as a signaling mechanism by the immune system to identify mutated proteins (“antigens”), including those from tumor cells. Although always present within certain cells, HSPs are normally only released when cells die by necrosis or unnatural cell death (rather than apoptosis or natural programmed cell death) and upon release are recognized by the host’s immune system. When a cell dies an unnatural death through a process called “necrosis”, such as when it is infected and killed by a flu virus or other pathogen, the cell releases it contents into circulation setting off a molecular warning to the immune system thereby generating a rapid and potent immune response. Because HSPs very rarely leave cells, the immune system has evolved to recognize HSPs that have been released from dying cells as the sentries of a molecular alarm system. Upon detection of HSPs, the immune system then directs an immune response against any foreign (pathogenic) proteins bound to the HSP at the time the cell that released it died.

HSP’s have several functions including:

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Protecting tissues from pathogens by activating the immune system.

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Acting as a chaperone to:

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Facilitate proper protein folding within the endoplasmic reticulum.

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Enable proper function of toll-like receptors and the innate immune system.

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Carry irreparable proteins to intracellular garbage disposals to be degraded into peptides (short chains of amino acids – protein fragments).

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Loading peptides onto another class of proteins known as MHC I molecules. MHC I molecules move to the cellular surface where they are monitored by the immune system.

HSP gp96 is one of the most abundantly expressed proteins in the human body and is expressed by all cells. It is normally retained within cells in a compartment called the endoplasmic reticulum (ER), where it facilitates the folding of newly synthesized proteins so that they may perform their various tasks properly. Gp96 is particularly important in the process of detecting antigens as it is present in all cell types, it is able to recognize all antigens. It also induces the immune system to activate CD8+ (“killer”) T cells which then seek out and destroy the cells that are marked by antigens. Gp96 is normally only contained inside the ER of cells, however when a cell dies an abnormal death through necrosis it breaks open and releases gp96 into the surrounding tissue microenvironment. ImPACT works by modifying the chemical structure of gp96 so that a cell can continuously release it into the extracellular space accompanied by the unique peptide that it is folding at the time without causing necrosis. This allows the immune system to seek out and destroy cells characterized with antigens before the body would otherwise have detected them.

ImPACT Technology Overview

A limitation of utilizing gp96 as a cancer immunotherapy is that it is normally retained within cells by a small region called a “KDEL sequence” that acts like a “leash”, preventing gp96 from leaving the ER. Therefore, in order to utilize gp96 as a therapeutic, gp96 must either be purified from individual cells or engineered to be secreted from cells.

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To overcome this limitation, a team of scientists led by Eckhard Podack, MD, Ph.D., the Chairman of our Scientific Advisory Board and the inventor of our technology, deleted this KDEL sequence and replaced it with another sequence that causes the new fusion protein, called gp96-Ig, to be released from cells continuously. Multiple tumor cell lines were then made to express gp96-Ig, and as expected, secreted it continuously into the extracellular space in a complex with tumor proteins. Dr. Podack demonstrated in the laboratory that gp96-Ig vaccination effectively cross-presented tumor specific antigens to immune cells, led to expansion of Cytotoxic T Lymphocytes (CTL) and the subsequent rejection of injected tumor cells. Importantly, these studies demonstrated that the secreted protein gp96-Ig maintained the critical characteristics of the native gp96 protein required to generate anti-tumor immune responses. Thus, in vitro proof-of-principle was established that the innovation, gp96-Ig, not only retained the desired properties of the native gp96 protein, but enhanced those functions and led to tumor-killing immune responses.

Our ImPACT technology platform:

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Effectively cross-presents tumor antigens and leads to cytotoxic killer T cell activation

Published studies in mice showed that killer T cell activation was approximately 10 million times greater with ImPACT secreted gp96-Ig than with a corresponding gp96 protein injection. The modified cell secretes gp96 in a sustained release for several days after injection. This creates a sustained immune response. Additionally, the immune response killed tumor cells, releasing additional gp96 and creating a continuous response loop that supports persistent activation of killer T cells. These data suggest that gp96-chaperoned peptides may represent the most efficient, robust pathway for presenting a cell’s antigens to the immune system and activating killer T cell.

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Binds and presents all potential tumor antigens to the immune system simultaneously

A single type of tumor (or virus) might have multiple strains derived from numerous tumor cells. These different strains have different antigens, all of which are capable of initiating an immune response. By creating a vaccine from a native tumor-cell line, we believe that ImPACT’s technology can develop a therapy that shares many common features with patients’ tumors of the same origin. We believe this “blanket” approach will provide each patient with a higher likelihood of a positive response to the therapy.

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Features killer T cell activation that is independent of CD4+ T cell help