CTI BIOPHARMA CORP.

CONDENSED ~~CONSOLIDATED~~ STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(unaudited)

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Revenues:
Product sales, net $ —
$ 914
$ 853
$ 3,112
License and contract revenue 1,705
3,519
23,831
45,157
Total revenues 1,705
4,433
24,684
48,269
Operating costs and expenses:

Cost of product sold 69
163
280
513
Research and development 7,601
17,716
25,768
55,259
Selling, general and administrative 5,802
15,218
24,452
36,101
Total operating costs and expenses 13,472
33,097
50,500
91,873
Loss from operations (11,767 ) (28,664 ) (25,816 ) (43,604 )
Non-operating income (expense):

Interest expense (457 ) (634 ) (1,479 ) (2,025 )
Amortization of debt discount and issuance costs (38 ) (38 ) (113 ) (177 )
Foreign exchange gain (loss) 161
(69 ) 775
(107 )
Other non-operating income (expense) 102
44
72
(479 )
Total non-operating expense, net (232 ) (697 ) (745 ) (2,788 )
Net loss before noncontrolling interest (11,999 ) (29,361 ) (26,561 ) (46,392 )
Noncontrolling interest 25
178
157
755
Net loss (11,974 ) (29,183 ) (26,404 ) (45,637 )
Deemed dividends on preferred stock —
—
(4,350 ) —
Net loss attributable to common shareholders $ (11,974 ) $ (29,183 ) $ (30,754 ) $ (45,637 )
Basic and diluted net loss per common share $ (0.28 ) $ (1.04 ) $ (0.90 ) $ (1.63 )
Shares used in calculation of basic and diluted net loss per common share 42,878
28,002
34,270
27,919


	Three Months Ended March 31,
		2023		2022

Net product sales		$	24,116	$	2,295


Operating costs and expenses:
Cost of sales		1,224		278
Research and development		10,211		8,048
Selling, general and administrative		21,913		18,046

Other operating expenses		—		11,023
Total operating costs and expenses		33,348		37,395
Loss from operations		(9,232)		(35,100)
Non-operating expenses:
Interest expense, net		(4,183)		(2,063)




Other non-operating expenses		(7)		(12)
Total non-operating expenses		(4,190)		(2,075)


Net loss		$	(13,422)	$	(37,175)



Basic and diluted net loss per common share		$	(0.10)	$	(0.37)


Shares used in calculation of basic and diluted net loss per common share		131,566		99,834

See accompanying notes.

CTI BIOPHARMA CORP.

CONDENSED ~~CONSOLIDATED~~ STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

(unaudited)

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Net loss before noncontrolling interest $ (11,999 ) $ (29,361 ) $ (26,561 ) $ (46,392 )
Other comprehensive income (loss):
Foreign currency translation adjustments (1,029 ) (426 ) (3,474 ) (976 )
Unrealized foreign exchange gain on intercompany balance 1,131
484
3,795
1,024
Other-than-temporary impairment on available-for-sale securities —
—
—
519
Net unrealized gain (loss) on available-for-sale securities 8
1
7
(7 )
Other comprehensive income 110
59
328
560
Comprehensive loss (11,889 ) (29,302 ) (26,233 ) (45,832 )
Comprehensive loss attributable to noncontrolling interest 25
178
157
755
Comprehensive loss attributable to CTI $ (11,864 ) $ (29,124 ) $ (26,076 ) $ (45,077 )


	Three Months Ended March 31,
		2023		2022
Net loss		$	(13,422)	$	(37,175)
Other comprehensive income:



Change in unrealized gain on marketable securities		24		—
Other comprehensive income		24		—
Comprehensive loss		$	(13,398)	$	(37,175)

See accompanying notes.

CTI BIOPHARMA CORP.

CONDENSED ~~CONSOLIDATED~~STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

(In thousands)

(unaudited)


							Additional		Accumulated Other				Total
	Preferred Stock			Common Stock			Paid-in		Comprehensive		Accumulated		Stockholders’
	Shares	Amount		Shares	Amount		Capital		Loss		Deficit		Deficit
Balance at January 1, 2023	4	$	—	130,747	$	131	$	2,501,234	$	(35)	$	(2,518,907)	$	(17,577)

Equity-based compensation	—	—		—	—		2,496		—		—		2,496
Exercise of stock options	—	—		1,133	1		3,131		—		—		3,132
Net loss	—	—		—	—		—		—		(13,422)		(13,422)
Other comprehensive income	—	—		—	—		—		24		—		24
Balance at March 31, 2023	4	$	—	131,880	$	132	$	2,506,861	$	(11)	$	(2,532,329)	$	(25,347)


							Additional		Accumulated Other				Total
	Preferred Stock			Common Stock			Paid-in		Comprehensive		Accumulated		Stockholders’
	Shares	Amount		Shares	Amount		Capital		Income (loss)		Deficit		Equity (Deficit)
Balance at January 1, 2022	17	$	—	99,764	$	100	$	2,429,582	$	—	$	(2,425,915)	$	3,767
Issuance of common stock, net (At-the-market equity facility)	—	—		794	1		3,750		—		—		3,751
Equity-based compensation	—	—		—	—		1,679		—		—		1,679
Exercise of stock options	—	—		60	—		61		—		—		61
Net loss	—	—		—	—		—		—		(37,175)		(37,175)

Balance at March 31, 2022	17	$	—	100,618	$	101	$	2,435,072	$	—	$	(2,463,090)	$	(27,917)

See accompanying notes.

CTI BIOPHARMA CORP.

CONDENSED STATEMENTS OF CASH FLOWS

(In thousands)

(unaudited)

Nine Months Ended September 30,
2017 2016
Operating activities
Net loss before noncontrolling interest $ (26,561 ) $ (46,392 )
Adjustments to reconcile net loss to net cash used in operating activities:

Baxalta milestone revenue —
(32,000 )
Share-based compensation expense 4,303
11,225
Depreciation and amortization 541
636
Provision for bad debt —
1,736
Other-than-temporary impairment on available-for-sale securities —
519
Noncash interest expense 113
177
Noncash rent benefit (390 ) (346 )
Other (22 ) 1
Changes in operating assets and liabilities:

Accounts receivable 231
(372 )
Receivables from collaborative arrangements 5,366
(3,024 )
Inventory 1,047
339
Prepaid expenses and other current assets 767
2,011
Other assets 79
324
Accounts payable (5,264 ) 3,341
Accrued expenses (9,976 ) 636
Deferred revenue 972
(923 )
Other liabilities —
1
Total adjustments (2,233 ) (15,719 )
Net cash used in operating activities (28,794 ) (62,111 )
Investing activities

Purchases of property and equipment —
(137 )
Other 11
—
Net cash provided by (used in) investing activities 11
(137 )
Financing activities
Repayment of Hercules debt (4,584 ) (3,578 )
Payment of tax withholding obligations related to stock compensation (62 ) (311 )
Proceeds from issuance of preferred stock, net of issuance costs 42,669
(314 )
Other (30 ) 21
Net cash provided by (used in) financing activities 37,993
(4,182 )

Effect of exchange rate changes on cash and cash equivalents (412 ) (157 )
Net increase (decrease) in cash and cash equivalents 8,798
(66,587 )
Cash and cash equivalents at beginning of period 44,002
128,182
Cash and cash equivalents at end of period $ 52,800
$ 61,595

Supplemental disclosure of cash flow information
Cash paid during the period for interest $ 1,523
$ 3,848
Cash paid during the period for taxes $ —
$ —

Supplemental disclosure of noncash financing activities
Conversion of preferred stock to common stock $ 41,578
$ —
Baxalta milestone advance - earned in lieu of repayment $ —
$ 32,000


	Three Months Ended March 31,
	2023		2022
Operating activities
Net loss	$	(13,422)	$	(37,175)
Adjustments to reconcile net loss to net cash used in operating activities:

Equity-based compensation	2,496		1,679
Imputed interest expense on royalty financing obligation	3,015		611
Depreciation and amortization	520		317









Other	(329)		(51)
Changes in operating assets and liabilities:
Accounts receivable, net	(7,570)		(2,426)

Inventories	(43)		(102)
Prepaid expenses and other assets	(189)		454

Accounts payable, accrued expenses and other liabilities	(15,576)		6,716




Net cash used in operating activities	(31,098)		(29,977)
Investing activities


Purchases of short-term investments	(14,745)		—
Proceeds from maturities of short-term investments	30,000		—

Net cash provided by investing activities	15,255		—
Financing activities


Gross proceeds from common stock sales under at-the-market equity facility	—		2,716
Cash paid for issuance costs (at-the-market equity facility)	—		(82)




Gross proceeds from DRI Royalty Financing Agreement	6,500		60,000
Cash paid for issuance costs (DRI Royalty Financing Agreement)	—		(1,262)




Proceeds from stock option exercises	3,132		61


Net cash provided by financing activities	9,632		61,433


Net (decrease) increase in cash and cash equivalents	(6,211)		31,456
Cash and cash equivalents at beginning of period	30,420		65,446
Cash and cash equivalents at end of period	$	24,209	$	96,902

Supplemental disclosure of cash flow information
Cash paid during the period for interest	$	1,856	$	1,250

See accompanying notes.

CTI BIOPHARMA CORP.

NOTES TO CONDENSED ~~CONSOLIDATED~~ FINANCIAL STATEMENTS

(unaudited)

1. Description of Business and Summary of Significant Accounting Policies

CTI BioPharma Corp., ~~together with its wholly-owned subsidiaries,~~ also referred to ~~collectively~~ in ~~this Quarterly Report on Form 10-Q~~these financial statements as “we,” “us,” “our,” the “Company” and “CTI,” is a commercial biopharmaceutical company focused on the acquisition, development and commercialization of novel targeted therapies ~~covering a spectrum of~~for blood-related cancers ~~that offer~~where there is a ~~unique benefit to patients and health care providers.~~significant unmet medical need. Our goal is to build a profitable company by generating income from products we develop and commercialize, either alone or with partners. We ~~are currently concentrating our efforts~~have one commercially approved product, VONJO® (pacritinib), which received Accelerated Approval on ~~treatments that target blood-related cancers where there is an unmet medical need. In particular, we are primarily focused on evaluating pacritinib~~February 28, 2022 from the U.S. Food and Drug Administration, or FDA, in the United States, for the treatment of adult patients with intermediate or high-risk primary or secondary (post-polycythemia vera or post-essential thrombocythemia) myelofibrosis with a platelet count below 50 x 109/L. We commercially launched VONJO in March 2022. We are conducting the Phase 3 PACIFICA study of VONJO in patients with myelofibrosis and the further development of PIXUVRI worldwide, for which our partners Les Laboratoires Servier and Institut de Recherches Internationales Servier, or collectively Servier, have commercialization rights outside the United States, or the U.S.severe thrombocytopenia as a post-marketing requirement.

We operate in a highly regulated and competitive environment. The manufacturing and marketing of pharmaceutical products requires approval from, and is subject to ongoing oversight by, the ~~Food and Drug Administration, or the~~ FDA, ~~in the U.S.,~~ the European Medicines Agency, or the EMA, in the ~~European Union, or the E.U.,~~EU, and comparable agencies in other countries. Obtaining approval for a new therapeutic product is never certain, may take many years and may involve the expenditure of substantial resources.

On May 10, 2023, CTI entered into an Agreement and Plan of Merger, or the Merger Agreement, with Swedish Orphan Biovitrum AB (publ), a Swedish public limited liability company, or Sobi, and Cleopatra Acquisition Corp., a Delaware corporation and a wholly owned, indirect subsidiary of Sobi, or the Purchaser. For additional information regarding the pending Merger, please see “Note 6. Subsequent Events”.

Basis of Presentation

The accompanying unaudited financial information as of and for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2023 and ~~2016~~2022 has been prepared in accordance with accounting principles generally accepted in the United States, or U.S. GAAP, for interim financial information and with the instructions to the Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, such financial information includes all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of our financial position at such ~~date~~dates and the operating results and cash flows for such periods. Operating results for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2023 are not necessarily indicative of the results that may be expected for the entire year or for any other subsequent interim period.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with ~~generally accepted accounting principles~~U.S. GAAP have been omitted pursuant to the rules of the U.S. Securities and Exchange Commission, or the SEC. These unaudited condensed financial statements and related notes should be read in conjunction with our audited financial statements for the year ended December 31, ~~2016~~2022 included in our Annual Report on Form 10-K filed with the SEC on March ~~2, 2017.~~6, 2023.

The condensed ~~consolidated~~ balance sheet at December 31, ~~2016~~2022 has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by ~~generally accepted accounting principles in the~~ U.S. GAAP for complete financial statements.

~~Principles~~

Use of ~~Consolidation~~Estimates

The preparation of financial statements in conformity with U.S. GAAP requires estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures in the condensed financial statements and accompanying notes. Estimates are used for, but not limited to, evaluation of going concern and classification of liabilities, net product sales, clinical accruals, intangible assets, interest expense on royalty financing obligation, income taxes, equity-based compensation and the collectability of receivables. Given the global economic climate, these estimates are becoming more challenging, and actual results could differ materially from those estimates. See Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates” in this Quarterly Report on Form 10-Q for further information.

Liquidity

The accompanying condensed consolidated financial statements include the accounts of CTI and its wholly-owned subsidiaries, which include Systems Medicine LLC and CTI Life Sciences Limited, or CTILS. We also retain ownership of our branch, CTI BioPharma Corp.– Sede Secondaria, or CTI (Europe); however, we ceased operations related to this branch in September 2009.

As of September 30, 2017, we also had an approximately 60% interest in our majority-owned subsidiary, Aequus Biopharma, Inc., or Aequus. The remaining interest in Aequus not held by CTI is reported as ~~noncontrolling interest~~ ~~in the condensed consolidated financial statements.~~

~~All intercompany transactions and balances are eliminated in consolidation.~~

~~Reverse Stock Split~~

On January 1, 2017, we effected a one-for-ten reverse stock split, or the Stock Split. All impacted amounts included in the condensed consolidated financial statements and notes thereto have been retroactively adjusted for the Stock Split. Unless

otherwise noted, impacted amounts include shares of common stock authorized and outstanding, share issuances and cancellations, shares underlying warrants and stock options, shares reserved, conversion prices of convertible securities, exercise prices of warrants and options, and loss per share. Additionally, the Stock Split impacted preferred stock authorized (but not outstanding because there were no shares of preferred stock outstanding as of the time of the Stock Split).

~~Liquidity~~

~~The accompanying condensed consolidated~~ financial statements have been prepared assuming that we will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business within

one year after the date the condensed ~~consolidated~~ financial statements are issued. ~~In accordance with Financial Accounting Standards Board, or the FASB, Accounting Standards Update No. 2014-15,~~ ~~Presentation of Financial Statements - Going Concern (Subtopic 205-40), our~~Our management evaluates whether there are conditions or events, considered in aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date that the condensed financial statements are issued.

While we have seen strong refill demand and expect revenues from VONJO to be one of our primary sources of liquidity, we may not be able to accurately predict the market acceptance or growth trajectory of VONJO’s revenues. We project operating expenses, when offset against our projected revenues, will ~~need to continue~~result in operating losses for the foreseeable future as we expect to conduct research, development, testing and regulatory compliance activities with respect to our compounds and ensure the procurement of manufacturing and drug supply services, the costs of which, together with projected general and administrative expenses, is expected to result in operating lossesother development pathways for the foreseeable future. In October 2016, we resumed primary responsibility for the development and commercialization of pacritinib as a result of the termination of the Pacritinib License Agreement with Baxalta and are no longer eligible to receive cost sharing or milestone payments for pacritinib's development.pacritinib. We have incurred a net operating loss every year since our ~~formation. As of September 30, 2017, we had an accumulated deficit of $2.2 billion,~~formation and we expect to continue to incur net losses for the foreseeable future.

As of March 31, 2023, we had an accumulated deficit of $2.5 billion. Our available cash, ~~and~~ cash equivalents and short-term investmentswere ~~$52.8~~$59.0 million as of ~~September 30, 2017.~~March 31, 2023. We ~~believe~~expect that our present financial resources, together with ~~payments projected~~expected cash receipts from net product sales of VONJO, will be sufficient to ~~be received under certain contractual agreements~~meet our obligations as they come due and ~~our ability to control costs, will only be sufficient~~ to fund our operations into the ~~third~~first quarter of ~~2018. This raises~~2024. Based on our evaluation completed pursuant to ASC 205-40 Presentation of Financial Statements-Going Concern, these factors raise substantial doubt about our ability to continue as a going ~~concern.~~concern within one year after the date that the condensed financial statements are issued.

~~Accordingly, we~~

We will ~~need~~require additional capital in order to ~~raise additional funds~~pursue our longer-term strategic objectives. We expect to ~~operate~~satisfy our ~~business. We may seek to raise such~~ capital needs through existing capital balances, revenues from VONJO, and a combination of public or private equity financings, partnerships, collaborations, joint ventures, disposition of assets, debt financings or restructurings, bank borrowings or other sources of financing. However, we have a limited number of authorized shares of common stock available for issuance and additional funding may not be available on favorable terms or at all. If additional funds are raised by issuing equity securities, substantial dilution to existing ~~shareholders~~stockholders may result. If we fail to obtain additional capital when needed, our ability to operate as a going concern will be harmed, and we may be required to delay, scale back or eliminate some or all of our research and development programs and commercialization efforts and/or reduce our selling, general and administrative expenses, be unable to attract and retain highly-qualified personnel, be unable to obtain and maintain contracts necessary to continue our operations ~~and~~ at affordable rates with competitive terms, be unable to or elect to refrain from making our contractually required payments when due (including debt payments) and/or ~~may~~ be forced to cease operations, liquidate our assets and possibly seek bankruptcy protection.

Our future capital requirements will depend on many factors, including: our ability to generate sales of VONJO; the cost of ongoing organization and maintenance of our commercial infrastructure and distribution capabilities; our ability to reach milestones triggering payments to be made or received under certain of our contractual arrangements; the cost of manufacturing VONJO; the cost of manufacturing clinical supplies of our product candidates or of establishing commercial supplies of any products that we may develop in the future; developments in and expenses associated with our research and development activities; our clinical development plans and any changes that we may initiate or that may be requested by the FDA or other regulators as we seek approval for products that we may develop in the future; acquisitions or collaborations with respect to compounds or other assets; competitive market developments; disruptions or other delays to our business and clinical trials resulting from ongoing worldwide current events; and other unplanned business developments.

In addition, our ability to comply with covenants under our Credit Agreement, or the Credit Agreement, with Drug Royalty III LP 2, or DRI, may be affected by events beyond our control, and we may not be able to meet those covenants. A breach of any of these covenants, including a material adverse change in our business, operations or condition (financial or otherwise), could result in an event of default under the Credit Agreement, which could cause all of the outstanding indebtedness under the facility to become immediately due and payable. The accompanying condensed ~~consolidated~~ financial statements do not include adjustments, if any, that may result from the outcome of this uncertainty.

~~Receivables from Collaborative Arrangements~~Cash, Cash Equivalents and Short-Term Investments

~~Our receivables from collaborative arrangements relate to amounts payable or reimbursable to us under the terms~~As of collaborative arrangements with our partners. The receivable balance as of September 30, 2017 primarily relates to a milestone receivable from Servier for the attainment of a regulatory milestone under the Restated Agreement (as defined below) and to Servier’s purchase of PIXUVRI drug product in July 2017. The receivable balance as of DecemberMarch 31, 2016 primarily relates to a milestone receivable from Servier for the attainment of a certain enrollment event in December 2016 in connection with our PIX306 study. When it is deemed probable that an amount is uncollectible, it is written off against the existing allowance. We had no allowance for doubtful accounts from collaborative arrangements as of September 30, 2017 or December 31, 2016.

~~Value Added Tax Receivable~~

Our European operations are subject to a value added tax, or VAT, which is usually applied to all goods and services purchased and sold throughout Europe. The VAT receivable was approximately $4.7 million and $4.4 million as of September 30, 20172023 and December 31, ~~2016, respectively,~~2022, our cash, cash equivalents and short-term investments consisted of cash, money market funds and corporate debt securities. Cash equivalents and short-term investments are recorded at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are based on a three-tier hierarchy that prioritizes the inputs used to measure fair value. There are three levels of inputs used to measure fair value, with Level 1 having the highest priority and Level 3 having the lowest:

•Level 1—Valuations based on unadjusted quoted prices for identical assets and liabilities in active markets.

•Level 2—Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

•Level 3—Valuations based on unobservable inputs that are supported by little or no market activity, reflecting our own assumptions. These valuations require significant judgment or estimation.

We measure the fair value of money market funds based on the closing price reported by the fund sponsor from an actively traded exchange. We value all other securities using broker quotes that utilize observable market inputs. We did not hold cash, cash equivalents and short-term investments categorized as Level 3 assets as of March 31, 2023 and December 31, 2022.

The following table summarizes, by major security type, our cash, cash equivalents and short-term investments that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy (in thousands):


	March 31, 2023				December 31, 2022
	Cost or Amortized Cost		Gross Unrealized Losses		Total Estimated Fair Value		Total Estimated Fair Value
Financial Assets
Cash	$	167	$	—	$	167	$	337
Level 1 securities:
Money market funds	24,042		—		24,042		30,083

Level 2 securities:

Corporate debt securities	34,813		(11)		34,802		49,519
Total cash, cash equivalents and short-term investments	$	59,022	$	(11)	$	59,011	$	79,939

Concentrations of Credit Risk and Uncertainties

Cash, cash equivalents, short-term investments and accounts receivable are financial instruments that potentially subject us to concentrations of credit risk. All of our accounts receivable relate to VONJO product sales. We have not experienced any significant credit losses on cash, cash equivalents, short-term investments or accounts receivable to date and do not require collateral on accounts receivable. To estimate credit losses for accounts receivable, we consider our historical experience and other currently available information, including customer financial condition, as well as current and forecasted economic conditions affecting our customers. We consider the risk of potential credit losses to be low based on our evaluation of the creditworthiness of our customers who are specialty distributors and specialty pharmacies.

We source our drug products for commercial operations and clinical trials from a concentrated group of third-party suppliers and contractors. If we are unable to obtain sufficient quantities of source materials, manufacture or distribute our products to customers from existing suppliers and service providers, or obtain the materials or services from other suppliers or manufacturers, certain sales and research and development activities may be delayed.

Accounts Receivable

Accounts receivable, net consist of amounts due from customers, net of customer allowances for prompt-pay discounts, chargebacks, rebates and product returns, as well as distribution service fees. Accounts receivable are stated at amortized cost less allowance for credit losses. Our standard credit terms range from 30 days to 66 days, and all arrangements are payable within one year of the transfer of control of the product; as such, we do not adjust our revenues for the effects of a significant financing component. We analyze past due accounts for collectability and periodically evaluate the creditworthiness of our customers. As of March 31, 2023, we determined that an allowance for credit losses was not required based on our review of customer accounts and individual circumstances.

Inventories

Prior to regulatory approval, we expense costs related to the production of inventories as research and development expenses in the period in which ~~$4.6~~they are incurred because product manufactured prior to regulatory approval may not be sold unless regulatory approval is obtained. Subsequent to regulatory approval, we capitalize costs incurred to manufacture our products as inventories when the related costs are expected to be recoverable through the commercialization of the product. VONJO inventory that is deployed for clinical, research or development purposes is charged to research and development expense.

As of March 31, 2023, inventories consist of active pharmaceutical ingredients and capitalized shipping, packaging and labeling costs incurred subsequent to FDA approval of VONJO. Inventories are recorded at the lower of cost and net realizable

value with the cost of inventories determined on a specific identification basis in a manner that approximates the first-in, first-out method. We perform an assessment of the recoverability of capitalized inventory during each reporting period and write down any excess and obsolete inventories to their net realizable value in the period in which the impairment is first identified.

Intangible Assets

Intangible assets as of March 31, 2023 consist of a capitalized milestone payment incurred upon FDA approval and commercialization of VONJO during the first quarter of 2022. Intangible assets are amortized on a straight-line basis over the patent life of the VONJO product compound, which was 11.9 years upon FDA approval, with a remaining amortization period of 10.8 years as of March 31, 2023. For the three months ended March 31, 2023 and 2022, we recognized $0.5 million and ~~$4.1~~$0.2 million of amortization expense, respectively, which was included in ~~other assets~~Cost of sales. The gross carrying amount and ~~$0.1~~accumulated amortization were $25.0 million and ~~$0.3~~$2.3 million, respectively, ~~was included in~~ ~~prepaid expenses and other current assets. The collection period~~as of VAT receivable for our European operations ranges from approximately three months to five years. For our Italian VAT receivable, the collection period is generally approximately three to five years. As of September 30, 2017, the VATMarch 31, 2023.

~~receivable related to operations in Italy was approximately $4.7 million.~~ We review ~~our VAT receivable balance~~ for impairment ~~whenever~~when events or ~~changes in~~ circumstances indicate that the carrying ~~amount might~~value of intangible assets may not be recoverable.

~~Inventory~~

We carry inventory at the lower of cost or net realizable value. The cost of finished goods and work in process is determined using the standard-cost method, which approximates actual cost based on a first-in, first-out method. Inventory includes the cost of materials, third-party contract manufacturing and overhead costs, quality control costs and shipping costs An impairment loss would be recognized when estimated undiscounted future cash flows expected to result from the ~~manufacturers to the final distribution warehouse associated with the distribution~~use of ~~PIXUVRI. Production costs for our other product candidates continue to be charged to research~~an asset and ~~development expense as incurred prior to regulatory approval or until our estimate for regulatory approval becomes probable. We review inventories on a quarterly basis for impairment and reserves~~its eventual disposition are ~~established when necessary. Estimates of excess inventory consider our~~less than its carrying amount. Such estimated undiscounted future cash flows are derived from projected sales of VONJO and other competitive factors. The amount of impairment is measured as the ~~product~~difference between the carrying amount and the ~~remaining shelf lives~~fair value of ~~product. In~~ the ~~event we identify excess, obsolete or unsalable inventory,~~impaired asset.

Credit Agreement

All amounts due under the ~~value is written down to~~Credit Agreement with DRI, which include a term loan in the ~~net realizable value. We had a reserve~~principal amount of ~~$1.3~~$50.0 million and ~~$1.5~~the end-of-facility lender fee of $1.0 million, ~~related to excess, obsolete or unsalable inventory~~have been recorded in current liabilities on the condensed balance sheets as of ~~September 30, 2017~~March 31, 2023 and December 31, ~~2016, respectively,~~2022 due to the considerations discussed in Liquidity above and the assessment that the events of default clause, which ~~was included in~~ ~~Inventory, net.~~ ~~Inventory, net~~includes a material adverse effect provision under the Credit Agreement, is not within our control. We have not been notified of an event of default by DRI as of ~~September 30, 2017~~the date of the filing of this Quarterly Report on Form 10-Q. In addition, the Credit Agreement contains a minimum liquidity covenant requiring us to maintain at least $10.0 million of unrestricted cash and cash equivalents, subject to certain exceptions. See Part II, Item 8, “Notes to Consolidated Financial Statements, Note 8. Debt Financing Arrangements” of our Annual Report on Form 10-K for the year ended December 31, 2022 for additional information regarding the Credit Agreement with DRI. Upon the closing of the pending acquisition by Sobi, the loan under the Credit Agreement will be repaid in full, unless otherwise directed by DRI, including the end-of-facility lender fee of $1.0 million and a prepayment charge of approximately $2.2 million.

Royalty Financing Obligation

In August 2021, we entered into a Purchase and Sale Agreement, or the Royalty Financing Agreement, with DRI. We evaluated the terms of the Royalty Financing Agreement and concluded that the features of the funding from DRI are similar to those of a debt instrument. Accordingly, the funding from DRI is ~~comprised~~recorded as Royalty financing obligation on our balance sheet. The Royalty Financing Agreement does not contain subjective acceleration clauses or provisions that would require repayment of ~~bulk active pharmaceutical ingredient~~funding; as such, the funding received under the Royalty Financing Agreement is classified in long-term liabilities. See Part I, Item 1, “Notes to Condensed Financial Statements, Note 5. Royalty Financing Agreement ” of this Quarterly Report on Form 10-Q for additional details.

Revenue Recognition

ASC 606 Revenue from Contracts with Customers applies to all contracts with customers, except for contracts that are within the scope of other authoritative literature. Under ASC 606, we recognize revenue when a customer obtains control of promised goods or services, in an amount that reflects the consideration which we expect to be ~~saleable~~entitled to ~~Servier~~in exchange for those goods or services.

To determine revenue recognition for arrangements that we determine are within the scope of ASC 606, we perform the following five steps: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) we satisfy a performance obligation. We apply the five-step model to arrangements that meet the definition of a contract under ASC 606, including when it is probable that we will collect the ~~terms~~consideration we are entitled to in exchange for goods or services we transfer to the customer. At contract inception, we assess the goods or services promised within each contract and determine those that are performance obligations, and assess whether each promised good or service is distinct. Prior to recognizing revenue, we make estimates of the ~~Restated Agreement and~~transaction price, including any variable consideration that is subject to ~~future emerging markets.~~

~~Revenue Recognition~~

~~We currently have conditional marketing authorization for PIXUVRI~~a constraint. Variable consideration is included in the ~~E.U. Revenue~~transaction price to the extent that it is

probable that there will not be a significant reversal in the amount of cumulative revenue recognized and when ~~there~~the uncertainty associated with the variable consideration is ~~persuasive evidence~~subsequently resolved. We recognize revenue for the amount of the ~~existence~~transaction price that is allocated to the respective performance obligation as the performance obligation is satisfied.

Net Product Sales

On February 28, 2022, the FDA granted Accelerated Approval of ~~an agreement, delivery has occurred, prices are fixed~~VONJO for the treatment of adult patients with intermediate or determinable, and collectability is assured. Where the revenue recognition criteria are not met, we defer the recognition of revenue by recording deferred revenue until such time that all criteria under the provision are met.

~~Product sales~~

high-risk primary or secondary (post-polycythemia vera or post-essential thrombocythemia) myelofibrosis with a platelet count below 50 x 109/L. We ~~sell PIXUVRI primarily through~~commercially launched VONJO in March 2022. We entered into a limited number of ~~wholesale distributors.~~ distribution arrangements with specialty distributors and specialty pharmacies in the United States to distribute VONJO. Our specialty pharmacy customers resell VONJO directly to patients while our specialty distributor customers resell VONJO to healthcare entities, who then resell to patients. Such specialty distributors and specialty pharmacies are referred to as our customers in the context of ASC 606.

We ~~generally record~~recognize revenue for product sales when our customers obtain control of the product, which generally occurs upon delivery. Upon receipt of the product by our customers, we recognize revenues net of variable consideration, which relates to allowances for customer credits, distribution service fees, product returns, chargebacks, rebates and co-payment assistance programs as discussed below. The reserves for these allowances are based on the ~~health care~~amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable (if the amount is payable to the customer) or a current liability (if the amount is payable to a party other than the customer). Taxes collected from the customer relating to product sales and remitted to governmental authorities are excluded from product sales.

Customer Credits and Distribution Service Fees: Our customers are offered prompt payment discounts. We expect our customers will pay timely enough to utilize prompt payment discounts and therefore we deduct the full amount of these discounts from total product sales when revenues are recognized. In addition, we pay a fee to our customers for their sales order management, data, and distribution services to us. Distribution service fees are also deducted from total product sales as they are incurred.

Returns: We offer our customers and other indirect purchasers a limited right of return for purchased units of VONJO for damaged, defective, in-dated or expired product beginning six months prior to the product’s expiration date and ending 12 months after the product’s expiration date. We estimate the amount of product returns initially based on data from similar products and other qualitative considerations, such as visibility into the inventory remaining in the distribution channel.

Chargebacks: Chargebacks result from our contractual commitments to provide our product to discount-eligible healthcare entities, group purchasing organizations, 340B eligible covered entities and federal government entities purchasing via the Federal Supply Schedule, at prices lower than the list prices charged to our customers. Our customers charge us back for the discount provided to the contracted entities. Our reserves for chargebacks consist of credits that we expect to issue for units that remain in the distribution channel inventory, which we expect will be sold to the contracted entities, as well as chargebacks that customers have claimed, but for which we have not yet issued a credit. We record reserves for chargebacks based on contractual terms in the same period that the related revenue is recognized.

Rebates: We are subject to discount and rebate obligations under government programs such as the Medicaid Drug Rebate Program, the Medicare Part D Coverage Gap Discounts Program and the 340B Drug Pricing Program, as well as under commercial contracts. Rebate amounts owed after the final dispensing of the product to a benefit plan participant are based upon contractual agreements or legal requirements with public sector benefit providers, such as Medicaid. The allowance for rebates is based on statutory or contractual discount rates and expected utilization. Our estimates for the expected utilization of rebates are based on data received from our customers and historical utilization rates observed subsequent to product launch.

Our accrual for these rebates consists of invoices received for claims from prior and current quarters that have not been paid or for which an invoice has not yet been received as well as estimates of claims for the current period's shipment to our customers, which include estimated future claims that will be made for product that has been recognized as revenue but which remains in distribution channel inventories at the end of the reporting period.

Co-payment Assistance: We offer co-payment assistance to patients who have commercial insurance and meet certain ~~distributors at which time title~~eligibility requirements. We accrue a liability for co-payment assistance based on actual program participation and ~~risk~~estimates of ~~loss pass. Product~~program redemption based on data provided by the third-party administrator.

Cost of Sales

Cost of sales includes the cost of manufacturing inventories that are related to product sales, including overhead costs, amortization expense for intangible assets, and third-party royalties payable on net product sales. In addition, shipping and handling costs for product shipments are recorded ~~net~~in cost of ~~distributor discounts, estimated government-mandated rebates, trade discounts,~~sales as incurred. Cost of sales may also include costs related to

excess or obsolete inventory adjustment charges, abnormal costs, unabsorbed manufacturing and ~~estimated product returns. Reserves are established~~overhead costs and manufacturing variances. For the three months ended March 31, 2023 and 2022, cost of sales primarily consisted of amortization expense for ~~these deductions~~intangible assets, shipping and actual amounts incurred are offset against the applicable reserves. We reflect these reserves as either a reduction in the related account receivable or as an accrued liability, depending on the nature of the sales deduction. These estimates are periodically reviewedhandling costs, and adjusted as necessary. As of April 2017, Servier has the exclusive and sublicensable (subject to certain conditions) royalty-bearing license with respect to the development and commercialization of PIXUVRI for use in pharmaceutical products, or Licensed Products, outside of the U.S. (and its territories and possessions). As a result, we no longer have product sales. See Note 5. Collaborative Arrangement for further details.

~~Collaboration Agreements~~

Milestone payments under collaboration agreements are generally aggregated into three categories for reporting purposes: (i) development milestones, (ii) regulatory milestones, and (iii) sales milestones. Development milestones are typically payable when a product candidate initiates or advances into different clinical trial phases. Regulatory milestones are typically payable upon submission for marketing approval with the FDA, or with the regulatory authorities of other countries, or on receipt of actual marketing approvals for the compound or for additional indications. Sales milestones are typically payable when annual sales reach certain levels.

At the inception of each agreement that includes milestone payments, we evaluate whether each milestone is substantive and at risk to both parties on the basis of the contingent nature of the milestone. This evaluation includes an assessment of whether (a) the consideration is commensurate with either (1) the entity's performance to achieve the milestone, or (2) the enhancement of the value of the delivered item(s) as a result of a specific outcome resulting from the entity's performance to achieve the milestone, (b) the consideration relates solely to past performance and (c) the consideration is reasonable relative tothird-party royalty costs. Substantially all of the deliverables and payment terms within the arrangement. We evaluate factors such as the scientific, regulatory, commercial and other risks that must be overcome to achieve the respective milestone, the levelmanufacturing costs of effort and investment required to achieve the respective milestone and whether the milestone consideration is reasonable relative to all deliverables and payment terms in the arrangement in making this assessment. Non-refundable development and regulatory milestones that are expected to be achieved as a result of our effortsVONJO product sold during the ~~period of substantial involvement are considered substantive and are recognized~~periods presented were previously expensed as ~~revenue upon the achievement of the milestone, assuming all other revenue recognition criteria are met.~~

~~We follow Accounting Standard Codification, or ASC, 605-25,~~ ~~Revenue Recognition – Multiple-Element Arrangements, and ASC 808,~~ ~~Collaborative Arrangements, if applicable, to determine the accounting of reimbursement arrangements under collaborative~~ research and development expenses.

Equity-Based Compensation Expense

Equity-based compensation expense is recognized over the requisite service periods on awards ultimately expected to vest. We apply estimated forfeiture rates at the time of grant and ~~commercialization agreements.~~

~~Cost~~make revisions, if necessary, in subsequent periods if actual forfeitures differ from those estimates. We recorded equity-based compensation expense of ~~Product Sold~~

Cost of product sold includes third-party manufacturing costs, shipping costs, contractual royalties and other costs of PIXUVRI product sold. Cost of product sold also includes allowances, if any, for excess inventory that may expire and become unsalable.

~~Foreign Currency Translation and Transaction Gains and Losses~~

~~We record foreign currency translation adjustments and transaction gains and losses in accordance with ASC 830,~~ ~~Foreign Currency Matters.~~ For our operations that have a functional currency other than the U.S. dollar, gains and losses resulting from the translation of the functional currency into U.S. dollars for financial statement presentation are not included in determining net loss, but are accumulated in the cumulative foreign currency translation adjustment account as a separate component of shareholders’ equity, except for intercompany transactions that are of a short-term nature with entities that are consolidated, combined or accounted for by the equity method in our condensed consolidated financial statements. We and our subsidiaries also have transactions in foreign currencies other than the functional currency. We record transaction gains and losses in our condensed consolidated statements of operations related to the recurring measurement and settlement of such transactions.

~~The intercompany balance due from CTILS is considered to be of a long-term nature. An unrealized foreign exchange gain of $1.1~~$2.5 million and ~~$0.5~~$1.7 million ~~was recorded in the cumulative foreign currency translation adjustment account~~ for the three months ended ~~September 30, 2017~~March 31, 2023 and ~~2016,~~2022, respectively. ~~An unrealized foreign exchange gain~~Substantially all of ~~$3.8 million~~equity-based compensation expense was related to option awards and ~~$1.0 million~~ was ~~recorded~~included in ~~the cumulative foreign currency translation adjustment account~~Selling, general and administrative expenses for the nine months ended September 30, 2017 and 2016, respectively. As of September 30, 2017, the intercompany balance due from CTILS was €26.6 million (or $31.5 million upon conversion from euros as of September 30, 2017). As of December 31, 2016, the intercompany balance due from CTILS was €29.7 million (or $31.2 million upon conversion from euros as of December 31, 2016).periods presented.

Net ~~Income (Loss)~~Loss per Share

Basic net ~~income (loss)~~loss per common share ~~or EPS,~~ is calculated based on ~~the~~ net ~~income (loss) attributable to common shareholders~~loss divided by the weighted average number of shares outstanding for the period. ~~Diluted EPS assumes~~The calculation of diluted net loss per common share excludes the potential conversion of all dilutive convertible securities, such as convertible ~~debt and convertible~~ preferred stock, using the if-converted method, and ~~assumes~~ the potential exercise or vesting of other dilutive securities, such as ~~options,~~stock awards and warrants, ~~and restricted stock,~~ using the treasury stock ~~method. In periods when we have a net loss, equity awards, warrants and convertible securities are excluded from our calculation of net loss per share~~method, as their inclusion would have an anti-dilutive effect.

~~Equity~~

Common shares underlying stock awards, warrants and convertible preferred stock aggregating ~~5.0~~58.3 million shares and ~~4.5~~74.3 million shares for the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2023 and 2022, respectively, were excluded from the calculation of diluted net loss per common share because they were anti-dilutive. Equity awards and warrants aggregating 2.8 million shares and 2.7 million shares for the three and nine months ended September 30, 2016, respectively, were excluded from the calculation of diluted net loss per common share because they were anti-dilutive.

~~Recently Adopted Accounting Standards~~

Milestone Payment

In ~~July 2015,~~October 2016, we entered into the ~~FASB issued new accounting guidance on simplifying the measurement of inventory~~Asset Return and Termination Agreement with Baxalta, pursuant to which, ~~requires that inventory within the scope of the guidance be measured at the lower of cost and net realizable value. Prior~~we were required to ~~the issuance of the standard, inventory was measured at the lower of cost~~make a milestone payment to Takeda Pharmaceutical Company Limited, or market (where market was defined as replacement cost, with a ceiling of net realizable value and floor of net realizable value less a normal profit margin). The accounting guidance is effective for annual reporting periods (including interim periods within those periods) beginning after December 15, 2016. The adoption of this standardTakeda, in the ~~first quarter~~amount of ~~2017 did not have a material impact on our condensed consolidated financial statements.~~

In August 2014, the FASB issued a new accounting standard which requires management to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern for each annual and interim reporting period and to provide related footnote disclosures in certain circumstances. The accounting standard is effective for annual reporting periods ending after December 15, 2016 and interim periods within annual periods beginning after December 15, 2016. The adoption of this standard in the fourth quarter of 2016 did not have a material impact on our condensed consolidated financial statements.

In March 2016, the FASB issued new accounting guidance for employee share-based payments accounting. The accounting standard primarily affects the accounting for forfeitures, minimum statutory tax withholding requirements, and income tax effects related to share-based payments at settlement (or expiration). The accounting guidance is effective for annual reporting periods beginning after December 15, 2016 (including interim periods within those periods). We have historically maintained a full valuation allowance against deferred tax assets. The adoption of this standard inapproximately $10.3 million, upon the first ~~quarter~~regulatory approval or any pricing and reimbursement approvals of ~~2017 did not have~~ a ~~material impact~~product containing pacritinib. See Part II, Item 8, “Notes to Financial Statements, Note 10. Collaboration, Licensing and Milestone Agreements - Baxalta” of our Annual Report on ~~our condensed consolidated financial statements,~~Form 10-K for the year ended December 31, 2022 for additional information. The milestone payment became payable upon FDA approval of VONJO on February 28, 2022 and ~~we will continue~~was included in Accrued expenses as of December 31, 2022. The milestone payment was subsequently made to ~~estimate expected forfeitures.~~Takeda in March 2023.

Recently Issued Accounting Standards

In ~~May 2014,~~March 2020, the Financial Accounting Standards Board, or FASB, issued accounting guidance to provide temporary optional expedients to ease the potential burden in accounting for reference rate reform. The guidance includes an optional expedient that simplifies accounting for contract modifications to loans receivable and debt, by prospectively adjusting the effective interest rate. In December 2022, the FASB issued ~~a new financial accounting standard which outlines a single comprehensive model for entities~~guidance to ~~use in accounting for revenue arising from contracts with customers and which supersedes current revenue recognition guidance. In March 2016,~~defer the FASB issued an amendment to clarify the implementation guidance around considerations of whether an entity is a principal or an agent, impacting whether an entity reports revenue on a gross or net basis. In April 2016, the FASB issued an amendment to clarify guidance on identifying performance obligations and the implementation guidance on licensing. In May 2016, the FASB issued amendments to certain aspectssunset of the ~~new revenue~~reference rate reform guidance ~~(including transition, collectability, noncash consideration and~~until December 31, 2024. In August 2021, we entered into the presentation of sales and other similar taxes) and provided certain practical expedients. The accounting standard is effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2017. Early adoption is permitted for annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. We are currently evaluating the impact of this accounting standard on our consolidated financial statements.

In January 2016, the FASB issued a new accounting standard on recognition and measurement of financial assets and financial liabilities. The accounting standard primarily affects the accounting for equity investments and financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. In addition, it includes a clarification relatedCredit Agreement, which has an interest rate referenced to the ~~valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. The accounting guidance is~~London Interbank Offered Rate, or LIBOR. We plan to elect the optional expedient for our credit facility by prospectively adjusting the effective ~~for annual reporting periods (including interim periods within those periods) beginning after December 15, 2017. Early adoption is permitted for~~interest rate if the ~~provision to record fair value changes for financial liabilities under~~cessation of the fair value option resulting from instrument-specific credit risk in other comprehensive income. The adoption of this standard is not expected to have a material impact on our consolidated financial statements.

In February 2016, the FASB issued new accounting guidance on accounting for leases which requires lessees to recognize virtually all of their leases (other than leases that meet the definition of a short-term lease) on the balance sheet. The accounting guidance is effective for annual reporting periods (including interim periods within those periods) beginning after December 15, 2018. Early adoption is permitted. We are currently evaluating the impact of this accounting standard on our consolidated financial statements.

In August 2016, the FASB issued an amendment to add or clarify guidance on the classification of certain cash receipts and payments in the statement of cash flows with the objective of reducing diversity in practice regarding eight types of cash flows. The accounting guidance is effective for annual reporting periods (including interim periods within those periods) beginning after December 15, 2017. Early adoption is permitted.LIBOR occurs. We do not expect the adoption of this ~~standard~~guidance to have a material impact on our ~~statements of cash flows.~~condensed financial statements.

~~In May 2017,~~

Although there were several other new accounting pronouncements issued or proposed by the FASB, issued an amendment to the scope of modification accounting for share-based payment arrangements which provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting under ASC 718. Specifically, an entity would not apply modification accounting if the fair value, vesting conditions, and classification of the awards are the same immediately before and after the modification. The accounting guidance is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted. Wewe do not ~~expect the adoption~~believe any of ~~this standard to~~these have had or will have a material impact on our ~~consolidated~~condensed financial statements.

~~Reclassifications~~

~~Certain prior year items have been reclassified to conform to current year presentation.~~

2. ~~Inventory~~Inventories

~~The components of PIXUVRI inventory~~ Inventories consisted of the following (in thousands):

September 30, 2017 December 31, 2016
Finished goods $ 395
$ 477
Work-in-process 1,554
2,558
Inventory, gross 1,949
3,035
Reserve for excess, obsolete or unsalable inventory (1,348 ) (1,510 )
Inventory, net $ 601
$ 1,525


	March 31, 2023		December 31, 2022
Raw materials	$	153	$	156
Work-in-process	537		496
Finished goods	87		81
Total inventories	$	777	$	733

3. ~~Leases~~Other Assets

~~Our deferred rent balance was $3.1 million as of September 30, 2017, of which $0.6 million was included in~~ ~~other current liabilities~~ ~~and $2.5 million was included in~~ ~~other liabilities. As of December 31, 2016, our deferred rent balance was $3.5 million, of which $0.5 million was included in~~ ~~other current liabilities~~ ~~and $3.0 million was included in~~ ~~other liabilities~~.

~~4. Preferred Stock~~

In June 2017, in an underwritten public offering, we issued 22,500 shares of Series N-3 Preferred Stock, for gross proceeds of $45.0 million before deducting underwriting commissions and discounts and other offering costs of approximately $2.3 million. BVF Partners L.P., or BVF, an existing shareholder of the Company, was one of our investors in this offering. See Note 9. Related Party Transactions for further details.

Each share of Series N-3 Preferred Stock is convertible at the option of the holder (subject to a limited exception) and is entitled to a liquidation preference equal to the initial stated value of $2,000 per share, plus any declared and unpaid dividends, and any other payments that may be due on such shares, before any distribution ofOther assets may be made to holders of capital stock ranking junior to the Series N-3 Preferred Stock. The Series N-3 Preferred Stock is not entitled to dividends except to share in any dividends actually paid on common stock or any ~~pari passu~~ or junior securities. The Series N-3 Preferred Stock has no voting rights, except as otherwise expressly provided in the articles of amendment to amended and restated articles of incorporation of CTI or as otherwise required by law.

In June 2017, 21,925 shares of Series N-3 Preferred Stock were converted into 14.6 million shares of common stock at a conversion price of $3.00 per share. For the nine months ended September 30, 2017, we recognized $4.4 million in ~~deemed dividends on preferred stock~~ ~~related to the beneficial conversion feature on our Series N-3 Preferred Stock. There were 575 shares of Series N-3 Preferred Stock outstanding as of September 30, 2017.~~

~~5. Collaborative Arrangement~~

In April 2017, we entered into an Amended and Restated Exclusive License and Collaboration Agreement (the “Restated Agreement”) with Servier, pursuant to which the Exclusive License and Collaboration Agreement (the “Original Agreement”), entered into in September 2014 with Servier, was amended and restated in its entirety.

Under the Restated Agreement, we granted Servier an exclusive and sublicensable (subject to certain conditions) royalty-bearing license with respect to the development and commercialization of PIXUVRI for use in pharmaceutical products, or Licensed Products, outside of the U.S. (and its territories and possessions).

In May 2017, we received a non-refundable, non-creditable upfront cash payment of €12.0 million under the terms of the Restated Agreement. This amount included a €2.0 million payment for a milestone relating to EMA approval of an additional third-party manufacturer of PIXUVRI, which was not included in the Original Agreement and was deemed achieved at the time of the Restated Agreement. Subject to the achievement of certain conditions, the Restated Agreement provides for additional milestone payments of up to €76.0 million: up to €36.0 million in potential regulatory milestone payments, and up to €40.0 million in potential sales-based milestone payments. We have determined that all the regulatory milestones, other than the €2.0 million milestone mentioned above, are substantive due to significant uncertainty involved in each milestone and will be recognized as revenue upon achievement of the respective milestones, assuming all other revenue recognition criteria are met. We have also determined that the sales-based milestone payments are contingent consideration and will be recognized as revenue in the period in which the respective revenue recognition criteria are met.

We are eligible to receive tiered royalty payments on net sales of products containing PIXUVRI, ranging from a low-double-digit percentage up to a percentage in the low twenties, subject to certain reductions of up to mid-double-digit

percentages under certain circumstances. Royalties are subject to expiration upon certain events, including upon expiration of exclusivity rights to products containing PIXUVRI in the respective country. We owe royalties on net sales of PIXUVRI products as well as other payments to certain third parties.

Under the Restated Agreement, with the exception of the conclusion of the PIX306 trial and certain other services, Servier will be responsible for development, commercialization and manufacturing activities within its territory. We have agreed to enter into a commercialization transition plan whereby we will transfer to Servier medical affairs and commercialization activities relating to the Licensed Products in Israel, Turkey, Germany, Austria, the United Kingdom, Denmark, Finland, Norway and Sweden, or collectively, the Transition Territory. Upon the implementation of the commercialization transition plan, we will terminate or assign certain distributor and wholesaler contracts to Servier in the Transition Territory. Each party will be responsible for the manufacture and supply of drug products and substances in their respective territories. We record reimbursements received from Servier for their portion of operating expenses we pay on their behalf as~~revenue and the full amount of costs as operating expenses in the statements of operations.~~

The Restated Agreement will expire on a country-by-country basis upon the expiration of the royalty terms in the countries in the Servier territory, at which time all licenses granted to Servier would become perpetual and royalty-free. Each party may terminate the Restated Agreement in the event of an uncured repudiatory breach of the other party’s obligations. Subject to applicable notification periods, Servier may terminate the Restated Agreement on a country-by-country basis upon 30 days’ written notice in the event of (i) certain safety or public health issues relating to the Licensed Product, (ii) suspension or withdrawal of marketing authorizations and (iii) without cause. In the event of a termination prior to the expiration date, rights granted to Servier will terminate, subject to certain exceptions.

~~Pursuant to accounting guidance under ASC 605-25~~ ~~Revenue Recognition - Multiple-Element Arrangements, we identified the following non-contingent deliverables with standalone value at the inception of the Restated Agreement:~~

~~a license with respect to the development and commercialization of PIXUVRI~~

~~development services~~

~~joint committee obligations~~

~~regulatory responsibilities~~

~~commercialization responsibilities~~

~~manufacturing and supply responsibilities~~

The license deliverable has standalone value because it is sublicensable and can be used for its intended purpose without the receipt of the remaining deliverables. The service deliverables have standalone value because these services are not proprietary in nature, and other vendors could provide the same services in order to derive value from the license. Further, there is no general right of return associated with these deliverables. As such, the deliverables meet the criteria for separation and qualify as separate units of accounting.

We determined that the value of the joint committee obligations and the regulatory, commercial, and manufacturing and supply responsibilities were insignificant. These deliverables have been combined with the development services and included as “Other services” in the table below.

We allocated the arrangement consideration of $12.8 million (€12.0 million converted into U.S. dollars using the currency exchange rate as of the date of the Restated Agreement) based on the percentage of the relative selling price of each unit of accounting as follows (in thousands):

License $ 11,487
Other services 1,348
Total upfront payment $ 12,835

We estimated the selling price of the license using the income approach that values the license by discounting direct cash flow expected to be generated over the remaining life of the license, net of cash flow adjustments related to working capital. The estimates and assumptions include, but are not limited to, estimated market opportunity, expected market share, and contractual royalty rates. We estimated the selling price of the development services deliverable, which includes personnel costs as well as third-party costs for applicable services and supplies, by discounting estimated expenditures for services to the date of the Restated Agreement. We concluded that a change in the key assumptions used to determine the best estimate of the selling price for the license deliverable would not have a significant effect on the allocation of the arrangement consideration.

During the nine months ended September 30, 2017, we recognized $11.5 million of consideration allocated to the license as revenue upon delivery of the license and the satisfaction of the remaining revenue recognition criteria. The $1.3 million consideration allocated to other services was recorded as deferred revenue. This amount, along with the unamortized deferred revenue balance from the Original Agreement of $0.6 million, is expected to be recognized as revenue through approximately 2019 based on a proportional performance method, by which revenue is recognized in proportion to the development costs incurred. During the three and nine months ended September 30, 2017, $0.2 million and $0.4 million, respectively, of other services consideration was recognized as revenue; the remaining $1.6 million is included in ~~deferred revenue~~ ~~in the condensed consolidated balance sheet as of September 30, 2017.~~

In September 2017, we attained a regulatory milestone under the Restated Agreement and recognized a €1.0 million milestone revenue (or $1.2 million using the currency exchange rate as of the date the milestone was achieved); the amount was recorded in ~~Receivables from Collaborative Arrangements~~ ~~as of September 30, 2017.~~

6. ~~Share-based Compensation Expense~~

~~The following table summarizes share-based compensation expense, which was allocated as follows (in thousands):~~

Three Months Ended
September 30,

Nine Months Ended
September 30,
2017 2016 2017 2016
Research and development $ 229
$ 466
$ 521
$ 1,887
Selling, general and administrative 1,126
4,602
3,782
9,338
Total share-based compensation expense $ 1,355
$ 5,068
$ 4,303
$ 11,225

~~We incurred share-based compensation expense due to the following types of awards (in thousands):~~

Three Months Ended
September 30,

Nine Months Ended
September 30,
2017 2016 2017 2016
Performance rights $ —
$ 7
$ —
$ 575
Restricted stock 232
454
848
3,645
Options 1,123
4,607
3,455
7,005
Total share-based compensation expense $ 1,355
$ 5,068
$ 4,303
$ 11,225

~~7. Other Comprehensive Loss~~

~~Total accumulated other comprehensive loss~~ consisted of the following (in thousands):


	March 31, 2023		December 31, 2022
Operating lease right-of-use assets	$	1,889	$	2,078
Prepaid manufacturing	855		855


Clinical trial deposits	370		370


Total other assets	$	3,114	$	3,303

4. Other Current Liabilities

Net Unrealized
Loss on
Available-For-
Sale Securities

Foreign
Currency
Translation
Adjustments

Unrealized
Foreign Exchange
Gain (Loss) on
Intercompany
Balance

Accumulated
Other
Comprehensive
Loss
December 31, 2016 $ (6 ) $ (2,902 ) $ (3,747 ) $ (6,655 )
Current period other comprehensive income (loss) 7
(3,474 ) 3,795
328
September 30, 2017 $ 1
$ (6,376 ) $ 48
$ (6,327 )

Other current liabilities consisted of the following (in thousands):


	March 31, 2023		December 31, 2022
Operating lease liabilities - current	$	811	$	781
End-of-facility lender fee (1)	1,000		1,000

Total other current liabilities	$	1,811	$	1,781

(1) The ~~value~~end-of-facility lender fee represents an amount payable to DRI upon repayment of ~~available-for-sale securities of $13,500 was included in~~ ~~Prepaid expenses and other current assets~~ ~~as of December 31, 2016. We had no available-for-sale securities as of September 30, 2017.~~our secured term loan under the Credit Agreement with DRI.

~~8. Legal Proceedings~~5. Royalty Financing Agreement

In ~~April 2009, December 2009 and June 2010,~~August 2021, we entered into the ~~Italian Tax Authority, or~~Royalty Financing Agreement, pursuant to which we sold to DRI the ~~ITA, issued notices~~right to receive certain royalty payments from us for a purchase price of ~~assessment~~up to ~~CTI (Europe)~~$85.0 million in cash. Under the Royalty Financing Agreement, DRI is entitled to receive tiered royalties based on ~~the ITA’s audit~~net product sales of CTI (Europe)’s VAT returns for the years 2003, 2005, 2006 and 2007, or, collectively, the VAT Assessments. The ITA audits concluded that CTI (Europe) did not collect and remit VAT on certain invoices issued to

non-Italian clients for services performed by CTI (Europe). We believe that the services invoiced were non-VAT taxable consultancy services and that the VAT returns are correct as originally filed. We are defending ourselves against the assessments both on procedural grounds and on the merits of the case although we can make no assurances regarding the ultimate outcome of these cases. Following is a summary of the status of the legal proceedings surrounding each respective VAT year return at issue:

~~2003~~. In June 2013, the Regional Tax Court issued decision no. 119/50/13 in regards to the 2003 VAT assessment, which accepted the appeal of the ITA and reversed the previous decision of the Provincial Tax Court. In January 2014, we appealed such decision to the Italian Supreme Court both on procedural grounds and on the merits of the case. In March 2014, we paid a deposit in respect of the 2013 VAT matter of €0.4 million (or $0.6 million upon conversion from euros as of the date of payment), following the ITA's request for such payment.

~~2005, 2006 and 2007. The ITA has appealed to the Italian Supreme Court the decisions of the respective appellate court which were favorable to CTI with respect to each of the 2005, 2006 and 2007 VAT returns.~~

The Italian Supreme Court held the first hearing for the 2005 VAT case on September 26, 2017, and we are waiting for the Supreme Court to issue its decision. No hearing has been fixed yet for the 2003 and consolidated 2006/2007 VAT cases.

If the final decision of the Italian Supreme Court is unfavorable to us, or if , in the interim, the ITA were to make a demand for payment and we were to be unsuccessful in suspending collection efforts, we may be requested to pay the ITA an amount up to €9.4 million, or approximately $11.1 million converted using the currency exchange rate as of September 30, 2017, plus collection fees, notification expenses and additional interest for the period lapsed between the date in which the assessments were issued and the date of effective payment. In January 2013, our then remaining deposit for the VAT Assessments was refunded to us.

~~Securities and Exchange Commission Subpoena~~

We previously disclosed that we received a subpoena from the SEC in January 2016. The SEC's subpoena requested, among other things; internal and external communications related to pacritinib Phase 3 trials, including communications with the independent data monitoring committee, or IDMC, for pacritinib's Phase 3 trials, our steering committee, our board of directors, our audit committee, representatives of Baxter and Baxalta, and the FDA, and other documents related to pacritinib.

We believe that the SEC is seeking to determine whether there have been possible violations of the antifraud and certain other provisions of the federal securities laws related to the Company's disclosures concerning, among other things, the clinical test results of pacritinib. The SEC Staff's letter sent with the subpoena stated that the investigation is a fact-finding inquiry, and the investigation and subpoena do not mean that the SEC has concluded that we or anyone else has violated any law. We are cooperating with this investigation, which is ongoing.

~~In re CTI BioPharma Corp. Securities Litigation~~

On February 10, 2016 and February 12, 2016, class action lawsuits entitled Ahrens v. CTI BioPharma Corp. et al., Case No. 1:16-cv-01044 and McGlothlin v. CTI BioPharma Corp. et al., Case No. C16-216, respectively, were filedVONJO in the United States ~~District Court for the Southern District~~in an amount equal to: (i) 9.60% of ~~New York and the United States District Court for the Western District~~annual net sales of Washington, respectively, on behalf of shareholders that purchased or acquired the Company’s securities pursuant to our September 24, 2015 public offering and/or shareholders who otherwise acquired our stock between March 4, 2014 and February 9, 2016, inclusive. The complaints assert claims against the Company and certain of our current and former directors and officers for violations of the federal securities laws under Sections 11 and 15 of the Securities Act of 1933, as amended, or the Securities Act, and Sections 10 and 20 of the Securities Exchange Act of 1934, as amended, or the Exchange Act, Plaintiffs’ Securities Act claims allege that the Company’s Registration Statement and Prospectus for the September 24, 2015 public offering contained materially false and misleading statements and failed to disclose certain material adverse facts about the Company’s business, operations and prospects, including with respect to the clinical trials and prospects for pacritinib. Plaintiffs’ Exchange Act claims allege that the Company’s public disclosures were knowingly or recklessly false and misleading or omitted material adverse facts, again with a primary focus on the clinical trials and prospects for pacritinib. On May 2, 2016, the Company filed a motion to transfer the Ahrens case to the United States District Court for the Western District of Washington. The motion was unopposed and granted by the court on May 19, 2016. On June 3, 2016, the parties filed a joint motion to consolidate the McGlothlin case with the Ahrens case in order to proceed as a single consolidated proceeding. On June 13, 2016, the court granted the motion to consolidate with the action being captioned In re CTI BioPharma Corp. Securities Litigation, Master File No. 2:16-cv-00216-RSL. On September 2, 2016, the court appointed Lead Plaintiffs and Lead Counsel. On September 28, 2016, the court entered a scheduling order, as revised by order entered December 8, 2016, setting November 8, 2016 as the deadline to file a consolidated class action complaint and deadlines for briefing defendants’ motion to

dismiss. Briefing concluded on February 22, 2017. The consolidated class action complaint asserts claims similar to those asserted in the initial complaints, although it no longer asserts claims relating to the September 24, 2015 public offering, but adds claims relating to the Company’s October 27, 2015 and December 4, 2015 public offerings. On July 26, 2017, we received a written offer for the global resolution and settlement of the consolidated action in exchange for cash payment of $20.0 million. The Company has insurance coverage related to this matter and such insurance is expected to cover $18.0 million of the claim. In August 2017, we agreed in principle to the terms of the settlementand submitted the terms and proposed class notice to the court for its preliminary approval. On October 24, 2017, the court granted preliminary approval and set a final approval hearing for February 1, 2018.

~~Wei v. James A. Bianco, et al.; England v. James A Bianco, et al; Nahar v. James A. Bianco, et al.; Hill v. James A. Bianco, et al.~~

On March 14, 2016, a Company shareholder filed the first of four similar derivative lawsuits on behalf of the Company seeking damages for alleged harm to the Company caused by certain current and former officers and directors. The first suit, Wei v. James A. Bianco, et al., 16-2-05818-3, was filed in King County Superior Court, Washington. A second suit, England v. James A. Bianco, et al., 16-2-14422-5, was filed in King County Superior Court, Washington, on June 16, 2016. Two additional derivative suits, Nahar v. James A. Bianco, et al., 2:16-cv-0756, and Hill v. James A. Bianco, et al., 2:16-cv-1250, were filedVONJO in the United States ~~District Court~~ for the Western District of Washington on May 24, 2016 and August 9, 2016, respectively. The four suits raise similar allegations and seek similar relief against certain current and former officers and directors, including James A. Bianco, Louis A. Bianco, Jack W. Singer, Bruce J. Seeley, John H. Bauer, Phillip M. Nudelman, Reed V. Tuckson, Karen Ignagni, Richard L. Love, Mary O. Mundinger and Frederick W. Telling. Consistent with the requirements of a derivative action, the Company is named in each suit as a nominal defendant against which no monetary relief is sought. The complaints generally allege claims of: (1) breach of fiduciary duty; (2) abuse of control; (3) gross mismanagement; (4) waste of corporate assets and (5) unjust enrichment (receiving compensation that was unjust in light of the alleged conduct). Each claim is based on the assertion that the Company made materially false and misleading statements and omitted material information from its disclosures about pacritinib and its safety. Plaintiffs in none of the suits made a pre-suit demand on the current board of directors of CTI, or Board, to investigate whether to pursue claims against officers or directors, instead claiming demand is excused because the named defendants lack independence, are not disinterested because they lack impartiality, received and want to continue to receive their compensation, have longstanding personal and business relationships, and cannot evaluate a demand since they are facing personal liability. Each of plaintiffs’ suits requested the court to award the Company the damages allegedly sustained as a result of the conduct and to direct the Company and the individual defendants to reform and improve the Company’s corporate governance to avoid future damages. On March 29, 2017 during mediation, the parties to the derivative suits reached an agreement in principle to settle all four suits subject to Board and court approvals. Subject to the terms and conditions in the settlement agreement and court approval, CTI has agreed to adopt certain corporate governance reforms relating to, among other things, the content of CTI-retained independent data monitoring committee charters; engagement if an independent expert or entity to conduct yearly audits of compliance with Good Clinical Practices; the creation of a risk compliance officer position; certain improvements to CTI’s Audit Committee, including the requirement that the Audit Committee review CTI’s periodic public reports to facilitate proper disclosure of risks and risk factors; establishment of an internal audit function that will monitor the Company’s adherence to its policies and procedures, including those related to identification and disclosure of drug candidate safety issues; continuing-education requirements for members of the Board; and improvements to CTI’s nominating committee, compensation committee, and clawback policy. CTI also agreed not to object to an attorneys’ fee application by plaintiffs’ counsel ofannual net sales up to ~~$0.8~~$125 million, ~~collectively, subject to the terms and conditions in the settlement agreement and court approval. There is no admission~~(ii) 4.50% of liability or any wrongdoing by any of the individual defendants or CTI. On September 25, 2017, the King County Superior Court entered an order substituting Kevin Hammond for former Lead Plaintiff Gang Wei and Maurio Eley for former Lead Plaintiff Michael England, and the two case captions were amended as reflected above. The parties filed settlement-approval papers on October 26, 2017.

~~In connection with the securities litigation and four derivative lawsuits described above, after taking into account our existing insurance coverage, we recorded $2.2 million of settlement expense in~~ ~~Selling, general and administrative~~ ~~expenses in our condensed consolidated statement of operations for the nine months ended September 30, 2017.~~

~~In addition to the items discussed above, we are from time to time subject to legal proceedings and claims arising in the ordinary course of business.~~

9. ~~Related Party Transactions~~

~~Aequus~~

We have a majority ownership interest in Aequus. In May 2007, we entered into a license agreement with Aequus whereby Aequus gained rights to our Genetic Polymer™ technology. We also entered into an agreement to fund Aequus in exchange for a convertible promissory note.

In March 2017, we and Aequus entered into a License and Promissory Note Termination Agreement and a Note Cancellation Agreement, pursuant to which (i) all of the then-outstanding principal, plus all accrued and unpaid interest, approximately $13.7 million in total, was cancelled and terminated, (ii) our license agreement with Aequus was terminated, (iii) all obligations to Aequus were terminated with the exception of providing additional funding of up to $347,500 to Aequus, and (iv) Aequus agreed to pay us a) 20% of milestone and similar payments, up to a maximum amount of $20.0 million, and b) royalties, on a product-by-product and county-by country basis, of 5% ofannual net sales of ~~certain ACTH Products being developed by Aequus. The additional funding~~VONJO in the United States for annual net sales between $125 million and $175 million, and (iii) 0.50% of ~~$347,500 had been provided~~annual net sales of VONJO in ~~full as~~the United States for annual net sales between $175 million and $400 million. No royalty payments are payable on annual net sales of ~~September 30, 2017. Payments~~VONJO in the United States over $400 million. We are required to make payments of amounts owed to DRI each calendar quarter from ~~Aequus are due the later of (i) expiration of the last to expire valid patent claim that claims the ACTH Product, or (ii) ten years from~~and after the first commercial sale of the applicable ~~ACTH Product.~~ product in the United States until the patent expiry of the VONJO product compound.

In March 2022, DRI funded the upfront purchase price of $60.0 million following FDA approval of VONJO in February 2022 and in January 2023, we received $6.5 million in additional funding in connection with the achievement of a certain minimum VONJO sales threshold. DRI will be required to provide up to $18.5 million of additional funding if certain minimum VONJO sales thresholds are met by the end of the third quarter of 2023.

Under the Royalty Financing Agreement, we agreed to specified affirmative and negative covenants, including without limitation covenants regarding periodic reporting of information by us to DRI, obligations to use commercially reasonable efforts to commercialize VONJO in the United States and restrictions on our ability to incur certain indebtedness, which restrictions are eliminated after the earliest of: (a) the date on which the trailing twelve months’ of VONJO sales equals at least $200 million, (b) the date on which the Company’s market capitalization (determined on an as-converted basis) is at least $1.0 billion for 20 consecutive trading days or (c) DRI receiving royalty payments in an amount equal to 100% of their purchase price. The Royalty Financing Agreement also contains representations and warranties, other covenants, indemnification obligations, settlement clauses and other provisions customary for transactions of this nature. The Royalty Financing Agreement does not contain subjective acceleration clauses or provisions that would require repayment of funding.

We ~~have~~evaluated the ~~right to terminate~~terms of the ~~License and Promissory Note Termination~~Royalty Financing Agreement and ~~require Aequus to assign all ACTH Product related assets to us if Aequus does not file an Investigational New Drug Application for an ACTH Product with~~concluded that the ~~FDA by September 6, 2019.~~

~~BVF Partners, L.P.~~

In June 2017, as discussed in Note 4. Preferred Stock, we completed an underwritten public offering of 22,500 shares of our Series N-3 Preferred Stock, no par value per share. BVF, an existing shareholderfeatures of the ~~Company, purchased 6,750 shares~~funding from DRI are similar to those of a debt instrument. Accordingly, the funding from DRI is recorded as Royalty financing obligation on our Series N-3 Preferred Stock, of which 6,175 shares were converted into approximately 4.1 million shares of our common stock. As a result of this transaction, BVF beneficially owned approximately 20.00% of our outstanding common stock as of September 30, 2017. BVF beneficially owned 15.87% of our outstanding common stock as of December 31, 2016.condensed balance sheet. In connection with the ~~Series N-3 Preferred~~Royalty Financing Agreement, we recorded debt issuance costs of $1.8 million, of which $1.7 million remained unamortized as of March 31, 2023. The royalty financing obligation is amortized over the expected repayment term using an effective interest rate method that is calculated based on the rate that would enable the debt to be repaid in full over the patent life of the VONJO product compound, which was 11.8 years upon funding, with a remaining amortization period of 10.8 years as of March 31, 2023. The effective interest rate may vary during the term of the agreement depending on a number of factors, including the amount and timing of forecasted net product sales which affects the repayment timing and ultimate amount of repayment. As of March 31, 2023, the effective interest rate was 18.8%. We will evaluate the effective interest rate quarterly based on our current revenue forecasts utilizing the prospective method.

The activities related to the royalty financing obligation for the three months ended March 31, 2023 were as follows (in thousands):




Royalty financing obligation - beginning balance at January 1, 2023	$	61,134
Additional funding received from DRI upon achievement of a sales milestone	6,500
Accretion of imputed interest on the royalty financing obligation balance	3,015
Amortization of debt issuance costs	37

Less: Royalty payable to DRI (classified in accrued expenses)	(2,315)
Royalty financing obligation - ending balance at March 31, 2023	$	68,371

6. Subsequent Events

Agreement and Plan of Merger

Pursuant to the Merger Agreement, upon the terms and subject to the conditions thereof, Purchaser will commence a tender offer, or the Offer, to acquire all of the outstanding shares of CTI common stock, or the Shares, at an offer price of $9.10 per Share, net to the seller in cash, without interest, subject to any applicable withholding taxes, or the Offer Price.

The obligation of Purchaser to purchase Shares tendered in the Offer is subject to the satisfaction or waiver of the conditions set forth in Annex I to the Merger Agreement, including (i) that there shall have been validly tendered and not validly withdrawn that number of Shares that, when added to any Shares then owned by Sobi and its controlled affiliates, represent at least one Share more than half of the sum of (A) all Shares then outstanding as of the expiration of the Offer, and (B) all Shares that CTI may be required to issue upon the vesting (including vesting solely as a result of the consummation of the Offer), conversion, settlement or exercise of all then-outstanding warrants, options, benefit plans, obligations or securities convertible or exchangeable into Shares or other rights to acquire or be issued Shares (in each case other than outstanding shares of CTI preferred stock), regardless of the conversion or exercise price or other terms and conditions thereof, or the Minimum Condition; (ii) the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, or the HSR Act, and receipt of clearance, approval or consent under any other applicable antitrust law; and (iii) those other conditions set forth in Annex I to the Merger Agreement.

Following the consummation of the Offer and upon the terms and subject to the conditions of the Merger Agreement, Purchaser will merge with and into CTI, with CTI surviving as a wholly owned, indirect subsidiary of Sobi, or the Merger. In the Merger, each Share issued and outstanding immediately prior to the effective time, or the Effective Time, of the Merger (other than certain excluded Shares as described in the Merger Agreement) will automatically be converted into the right to receive the Offer Price.

In addition, immediately prior to the Effective Time, each unexpired and unexercised option to purchase Shares under any CTI stock plan, or a Company Stock ~~offering, we~~Option, whether or not vested, and that has an exercise price per Share that is less than the Offer Price, shall be cancelled and converted into the right to receive a payment in cash (without interest and less any applicable withholding taxes) equal to the product of (i) the total number of Shares subject to such Company Stock Option immediately prior to such cancellation and (ii) the excess, if any, of the Offer Price over the exercise price per Share subject to such Company Stock Option immediately prior to such cancellation. At the Effective Time, each Company Stock Option that is then outstanding and unexercised, whether or not vested, and that has an exercise price per Share that is equal to or greater than

the Offer Price shall be cancelled and the holder thereof shall not be entitled to any payment with respect to such cancelled Company Stock Option.

In addition, each share of CTI preferred stock that is issued and outstanding immediately prior to the Effective Time will be converted into the right to receive $91,000 per share (which is calculated in accordance with CTI’s certificate of designation applicable to such share of CTI preferred stock), without interest, subject to any applicable withholding taxes.

The Merger Agreement includes representations, warranties and covenants of the parties customary for a transaction of this nature. Among other things, until the earlier of the termination of the Merger Agreement or the Effective Time, CTI has agreed to operate its business in the ordinary course consistent with past practice and has agreed to certain other operating covenants, as set forth fully in the Merger Agreement. The Merger Agreement also prohibits CTI’s solicitation of proposals relating to alternative transactions and restricts CTI’s ability to furnish information to, or participate in any discussions or negotiations with, any third party with respect to any such transaction, subject to certain limited exceptions.

Either CTI or Sobi may terminate the Merger Agreement in certain circumstances, including if (i) the Offer is not completed by 11:59 p.m. Eastern Time on September 11, 2023, subject to automatic extension in the event that antitrust approval has not been obtained, or the Outside Date, (ii) a governmental authority of competent jurisdiction has issued a final, non-appealable judgment preventing the consummation of the Offer or the Merger or any applicable law by such a governmental authority makes consummation of the Offer or the Merger illegal, (iii) the Offer has expired without the acceptance of the Shares for payment or the purchase of Shares validly tendered pursuant to the Offer, in a circumstance in which all of the conditions to the Offer have been satisfied or waived (other than the Minimum Condition) following extension of the Offer pursuant to the Merger Agreement, or (vi) prior to the Offer Acceptance Time (as defined in the Merger Agreement) the other party breaches its representations, warranties or covenants in the Merger Agreement in a way that would cause certain conditions of the Offer not to be satisfied, subject to the right of the breaching party to cure the breach as set forth in the Merger Agreement. In addition, CTI may terminate the Merger Agreement, subject to compliance with specified process and notice requirements, in order to enter into an agreement with a third party who has made a “Superior Offer” (as defined in the Merger Agreement), and Sobi may terminate the Merger Agreement if (x) CTI’s board of directors has changed its recommendation in favor of the Offer and the Merger, failed to include its recommendation in the Schedule 14D-9, failed to publicly reaffirm its recommendation within five business days when requested by Sobi or has taken certain other specified actions described in the Merger Agreement (each a “Company Adverse Recommendation Change”) or (y) CTI has materially breached its obligations in respect of the non-solicitation provisions in the Merger Agreement.

In the event of a termination of the Merger Agreement under certain specified circumstances, including (i) termination by CTI to enter into an agreement providing for a Superior Offer (provided that CTI did not materially breach its non-solicitation obligations in any manner that results in such Superior Offer), (ii) termination by Sobi following a Company Adverse Recommendation Change, (iii) termination by Sobi due to the CTI board of directors’ failure to include its recommendation in the Schedule 14D-9, (iv) termination by Sobi because CTI has materially breached its obligations in respect of the non-solicitation provisions in the Merger Agreement, or (v) termination by either CTI or Sobi if the closing of the transactions contemplated by the Merger Agreement has not occurred by the Outside Date or termination by Sobi prior to the Offer Acceptance Time if CTI breaches its representations, warranties or covenants in the Merger Agreement in a way that would cause certain conditions of the Offer not to be satisfied (subject to CTI’s right to cure the breach as set forth in the Merger Agreement prior to such time of termination), and (A) a bona fide an “Acquisition Proposal” (as defined in the Merger Agreement) has been publicly disclosed after the date of the Merger Agreement and (B) within twelve months following such termination, CTI signs a definitive agreement for an Acquisition Proposal or consummates an Acquisition Proposal, in each case of the foregoing clauses (i)-(v), CTI is required to pay Sobi a termination fee equal to $59.0 million.

Tender and Support Agreement

Concurrently with the execution and delivery of the Merger Agreement, certain of CTI’s stockholders, or the Tendering Stockholders, entered into a ~~letter agreement~~Tender and Support Agreement, or the Support Agreement, with ~~BVF,~~Sobi and Purchaser, pursuant to which weeach Tendering Stockholder agreed, among other things, to ~~upon BVF’s election and~~tender his or its Shares subject to the Support Agreement pursuant to the Offer and, if necessary, vote his or its Shares (i) in favor of (A) the approval and adoption of the Merger Agreement and the transactions contemplated thereunder or any other transaction pursuant to which Sobi proposes to acquire CTI in which CTI’s stockholders would receive aggregate cash consideration per Share equal to or greater than the cash consideration to be received by such stockholders in the Offer and the Merger and, (B) in the event any vote or consent of CTI’s stockholders is required to adopt the Merger Agreement or the transactions contemplated thereby, any other matter necessary for consummation of the transactions contemplated by the Merger Agreement, and (ii) against any (A) action or agreement which is intended or would reasonably be expected to impede, delay, postpone, interfere with, nullify or prevent in any material respect the Offer or the Merger, (B) Acquisition Proposal or action in furtherance thereof, (C) amendment to CTI’s certificate of incorporation or bylaws, (D) material change to the capitalization of CTI, (E) change in a majority of CTI’s board ~~and committee approvals, exchange~~of directors or (F) action, proposal, transaction or agreement that would reasonably be expect to result in a breach of any covenant, representation or warranty or any other obligation of any Tendering Stockholder under the Support Agreement. In general, no Tendering Stockholders may propose, commit or agree to take any action inconsistent with any of the foregoing clauses (i) or (ii).

Each Tendering Stockholder also agrees that, except as provided in the Support Agreements, it will not (i) deposit (or permit the deposit of) any Shares or shares of ~~common stock purchased by BVF directly from us or underlying convertible~~CTI preferred stock ~~purchased by BVF directly from us, including~~subject to the Support Agreement (including shares of ~~common stock underlying the Series N-3 Preferred Stock, into shares of a convertible non-voting~~CTI preferred stock that are converted into Shares after the date of the Support Agreement) (collectively, the “Subject Shares) in a voting trust or grant any proxy or power of attorney or enter into any voting agreement or similar agreement with ~~substantially similar~~respect to any of the Subject Shares or otherwise enter into any contract with respect to any transfer or proposed transfer of such Subject Shares or any interest therein, or (ii) take or permit any other action that would in any way restrict, limit or interfere with the performance of such Tendering Stockholder’s obligations under the Support Agreement or otherwise make any representation or warranty of such Tendering Stockholder under the Support Agreement untrue or incorrect.

As of May 4, 2023, approximately 6.7% of the outstanding Shares are subject to the Support Agreement. The Support Agreement generally provides for termination upon the earlier of (i) the valid termination of the Merger Agreement, (ii) the effectiveness of the Merger at the Effective Time, (iii) the acquisition by Sobi of all the Subject Shares of the Tendering Stockholders, whether pursuant to the Offer, the Merger or otherwise, (iv) any amendment, change or waiver to the Merger Agreement that is effected without each Tendering Stockholder’s consent that changes the amount, form or timing (except with respect to extensions of the Offer in accordance with the terms asof the ~~Series N-3 Preferred Stock, including a conversion “blocker” initially set at 9.99%~~Merger Agreement) of ~~our common stock. Such right would terminate if at any time BVF’s beneficial ownership~~consideration payable to all of ~~our common stock falls below 5%. We will take commercially reasonable efforts to cooperate to effectuate such exchange, provided that such exchange does not adversely affect us~~CTI’s stockholders or (v) the mutual written agreement of Sobi and ~~complies with applicable federal and state securities laws.~~each Tendering Stockholder.

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Quarterly Report on Form 10-Q ~~may contain, in addition to historical information,~~contains “forward-looking statements” ~~within~~that involve risks and uncertainties. We make such forward-looking statements pursuant to the ~~meaning of Section 27A~~safe harbor provisions of the Private Securities Litigation Reform Act of ~~1933, as amended,~~1995 and ~~should be read in conjunction with the Condensed Consolidated Financial Statements and the related Notes included in Part I, Item 1~~other federal securities laws. All statements other than statements of ~~this Quarterly Report on Form 10-Q. When used~~historical fact in this Quarterly Report ~~on Form 10-Q,~~are forward-looking statements. In some cases, forward-looking statements can be identified by terms such as “anticipates,” “assume,” “believes,” “continue,” “could,” “estimates,” “expects,” “forecast,” “goal,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “target” or “will” or the negative ~~of those terms or other comparable terms are intended to identify such~~thereof, variations thereof and similar expressions. These forward-looking ~~statements. Such~~ statements include, but are not limited to, statements ~~concerning~~about:

•the proposed commencement of a tender offer by Purchaser to purchase all of the Shares and the subsequent Merger;

•the completion of the Merger in a timely manner or at all, including the satisfaction or waiver of various conditions to the consummation of the Offer and the Merger;

•events that could give rise to the termination of the Merger Agreement;

•our expectations regarding sufficiency of cash resources, cash expenditures, sources of cash flows and other projections, product manufacturing and sales, research and development expenses, selling, general and administrative expenses ~~financings~~ and additional ~~losses. These~~losses;

•our ability to obtain funding for our operations;

•the continued commercialization of VONJO® (pacritinib) as a treatment for adult myelofibrosis patients with severe thrombocytopenia;

•our ability to develop, commercialize and obtain regulatory approval of pacritinib for other development programs we may pursue in the future;

•the design of our clinical trials and their anticipated enrollment;

•the safety, effectiveness and potential benefits and indications of VONJO and any other product candidates we may develop in the future;

•the rate and degree of market acceptance and clinical utility of VONJO or any other product candidates we may develop in the future;

•the timing of and results from clinical trials and pre-clinical development activities, including those related to VONJO and any other product candidates we may develop in the future;

•our ability to advance product candidates, including VONJO and any other product candidates we may develop in the future, into, and the successful completion of, clinical trials;

•our ability to achieve profitability, including our ability to effectively implement cost reduction strategies and realize anticipated cost savings from those efforts;

•our expectations regarding federal, state and foreign regulatory requirements;

•our and our collaborators’ ability to obtain and maintain regulatory approvals, and the timing of such approvals, for VONJO or any other product candidates we may develop in the future;

•our ability to maintain and establish collaborations;

•our expectations regarding market risk, including interest rate changes and foreign currency fluctuations;

•our ability to protect our intellectual property and operate our business without infringing upon the intellectual property rights of others;

•the impact of government laws and regulations, including the Inflation Reduction Act of 2022;

•our ability to negotiate, integrate, and implement collaborations, acquisitions and other strategic transactions;

•our ability to engage and retain the employees required to advance our development activities and grow our business;

•developments relating to our competitors and our industry, including the success of competing therapies that are or become available;

•our expectations regarding business disruptions and related risks resulting from the ongoing worldwide coronavirus pandemic known as COVID-19; and

•other risks and uncertainties, including those listed under the heading Risk Factors and in other filings we periodically make with the U.S. Securities and Exchange Commission, or the SEC.

Such statements are based on ~~assumptions about many important factors~~management’s current expectations and information currently available to us to the extent that we have thus far had an opportunity to fully and carefully evaluate such information in light of all surrounding facts, circumstances, recommendations and analyses. Additionally, these statements are subject to ~~known and unknown~~ risks and uncertainties, which may cause actual results to differ materially from those set forth in the forward-looking statements. There can be no assurance that such expectations or any of the forward-looking statements will prove to be correct, and actual results could differ materially from those projected or assumed in the forward-looking statements. We urge you to carefully review the disclosures we make concerning risks and other factors that may affect our business and operating results and cause them to differ materially from our current expectations, including ~~but not limited to,~~ those discussed below and elsewhere in this Quarterly Report on Form 10-Q and those made under Part I, Item 1, “Business,” Part I, Item 1A, “Risk Factors,” Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and elsewhere in our Annual Report on Form 10-K for the fiscal year ~~ending~~ended December 31, ~~2016, or~~2022 and any risk factors contained in our subsequent Quarterly Reports on Form 10-Q that we file with the ~~2016 Form 10-K, particularly in “Factors Affecting Our Business, Financial Condition, Operating Results~~SEC.

In addition, statements that “we believe” and ~~Prospects,” that could cause actual results, levels~~similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of ~~activity, performance or achievements to differ significantly from those projected. Although~~the date of this report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that ~~expectations reflected in the forward-looking~~we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are ~~reasonable, we cannot guarantee future results, levels of activity, performance or achievements.~~ inherently uncertain and investors are cautioned not to unduly rely upon these statements.

We ~~will~~do not intend to update any of the forward-looking statements after the date of this Quarterly Report on Form 10-Q to conform these statements to actual results or changes in our expectations. Readers are cautioned not to place undue reliance on these forward-looking statements, which apply only as of the date of this Quarterly Report on Form 10-Q.

In this Quarterly Report on Form 10-Q, all references to “we,” “us,” “our,” the “Company” and “CTI” mean CTI BioPharma Corp., except where it is otherwise made clear.

OVERVIEW

We are a commercial biopharmaceutical company focused on the acquisition, development and commercialization of novel targeted therapies ~~covering a spectrum of~~for blood-related cancers ~~that offer~~where there is a ~~unique benefit to patients and health care providers.~~significant unmet medical need. Our goal is to build a profitable company by generating income from products we develop and commercialize, either alone or with partners. We ~~are currently concentrating our efforts on treatments that target blood-related cancers where there is an unmet medical need. In particular, we are primarily focused on evaluating pacritinib~~have one commercially approved product, VONJO® (pacritinib), which has received Accelerated Approval in the United States from the U.S. Food and Drug Administration, or the FDA, for the treatment of adult patients with intermediate or high-risk primary or secondary (post-polycythemia vera or post-essential thrombocythemia) myelofibrosis ~~and the further development of PIXUVRI worldwide, for which our partner, Servier, has commercialization rights outside the U.S.~~with a platelet count below 50 x 109/L.

~~PIXUVRI~~

PIXUVRI is a novel aza-anthracenedione with unique structural and physiochemical properties. In May 2012, the European Commission granted conditional marketing authorization in the E.U., for PIXUVRI as a monotherapy for the treatment of adult patients with multiply relapsed or refractory aggressive B-cell non-Hodgkin lymphoma, or NHL. PIXUVRI is the first approved treatment in the E.U. for patients with multiply relapsed or refractory aggressive B-cell NHL who have failed two or three prior lines of therapy. As part of our conditional marketing authorization in the E.U., we are required to conduct a post-authorization trial, which we refer to as PIX306, comparing PIXUVRI and rituximab with gemcitabine and rituximab in the setting of aggressive B-cell NHL. In August 2017, we announced the completion of enrollment in the trial. If positive, the results from this trial could support broader indications. Top-line results are event-driven and are expected in the first half of 2018. Although we do not have and are not currently pursuing regulatory approval of PIXUVRI in the U.S., we may reevaluate a possible submission strategy in the U.S. based on the data generated from the PIX306 study. Pursuant to our conditional marketing authorization in the E.U., and an extension granted in September 2016, we are required to submit the requisite clinical study report for PIX306 by December 2018.

In April 2017, we entered into an Amended and Restated Exclusive License and Collaboration Agreement, or the Restated Agreement, with Servier. Under the Restated Agreement, Servier will have rights to PIXUVRI in all markets except in the U.S. where we will retain the commercialization rights. Previously, Servier had rights to commercialize the drug globally except in Austria, Denmark, Finland, Germany, Israel, Norway, Sweden, Turkey, the United Kingdom, or the U.K., and the U.S. Servier paid us €12.0 million in May 2017 and purchased PIXUVRI drug product for an additional €0.9 million in July 2017. We are eligible to receive up to €76.0 million in additional sales and regulatory milestone payments as well as royalties on net product sales.

~~For additional information on our collaboration with Servier, please see the discussion in Part I, Item 2, “License Agreements and Milestone Activities - Servier.”~~

Pacritinib

~~Our lead development candidate, pacritinib,~~ is an ~~investigational~~ oral kinase inhibitor with ~~specificity for~~activity against wild type Janus Associated Kinase 2 (JAK2), mutant JAK2V617F form, IRAK1, ACVR1 (ALK2) and FLT3, ~~IRAK1~~which contribute to signaling of a number of cytokines and ~~CSF1R.~~growth factors that are important in myelofibrosis. At clinically relevant concentrations, pacritinib does not inhibit JAK1. The JAK family of enzymes is a central component in signal transduction pathways, which are critical to normal blood cell growth and development, as well as inflammatory cytokine expression and immune responses. Mutations in these kinases have been shown to be directly related to the development of a variety of blood-related cancers, including myeloproliferative neoplasms, leukemia and lymphoma. Myelofibrosis is often associated with dysregulated JAK2 signaling. In addition to myelofibrosis, the kinase profile of pacritinib suggests its potential therapeutic utility in conditions such as acute myeloid leukemia, or AML, myelodysplastic syndrome, or MDS, chronic myelomonocytic leukemia, or CMML, graft versus host disease, or GvHD, and chronic lymphocytic leukemia, or CLL, due to its inhibition of ~~c-fms,~~JAK2, IRAK1, ~~JAK2~~FLT3, ACVR1 (ALK2) and ~~FLT3.~~CSF1R. We believe pacritinib has the potential to be delivered as a single agent or in combination therapy regimens.

~~Pacritinib was evaluated in two Phase 3 clinical trials, known as the PERSIST program, for patients with myelofibrosis, with one trial in a broad set~~U.S. FDA Approval of patients without limitations on platelet counts, the PERSIST-1 trial, and the other in patients with low platelet counts, the PERSIST-2 trial. In August 2014, pacritinib was granted Fast Track designation by the Food and Drug Administration, orVONJO

On February 28, 2022, the FDA granted Accelerated Approval of VONJO for the treatment of ~~intermediate and high risk myelofibrosis including, but not limited to,~~adult patients with ~~disease-related thrombocytopenia (low~~intermediate or high-risk primary or secondary (post-polycythemia vera or post-essential thrombocythemia) myelofibrosis with a platelet ~~counts); patients experiencing treatment-emergent thrombocytopenia~~count below 50 x 109/L.This indication is approved under FDA Accelerated Approval based on ~~other JAK2 inhibitor therapy; or patients who are intolerant of or whose symptoms are not well controlled (sub-optimally managed) on other JAK2 therapy.~~

~~In May 2015, we announced~~ the final results from PERSIST-1, our Phase 3 trial evaluating the efficacy and safety of pacritinib compared to BAT (Best Available Therapy), excluding JAK2 inhibitors, which included a broad range of currently utilized treatments, in 327 patients with myelofibrosis regardless of the patients' platelet counts. The study included patients

~~with severe or life-threatening thrombocytopenia. Patients were randomized to receive 400 mg pacritinib once daily or BAT, excluding JAK2 inhibitors. The trial met its primary~~surrogate endpoint of spleen volume ~~reduction (SVR) (35 percent or greater from baseline to Week 24 by magnetic resonance imaging (MRI) or computerized tomography (CT)). The most common treatment-emergent adverse events (AEs), occurring~~reduction. Continued approval for this indication may be contingent upon verification and description of clinical benefit in ~~20 percent or more of patients treated~~a confirmatory trial. As agreed with ~~pacritinib within 24 weeks, of any grade, were gastrointestinal (generally manageable diarrhea and nausea) and anemia.~~

In February 2016, clinical studies under the investigational new drug (IND) for pacritinib were subject to a full clinical hold issued by the FDA. A full clinical hold is a suspension of the clinical work requested under the IND application. Under the full clinical hold, all patients currently on pacritinib were required to discontinue pacritinib immediately and no patients could be enrolled or start pacritinib as initial or crossover treatment. In its written notification, the FDA, ~~stated that~~ the ~~reasons for the full clinical hold were that it noted interim overall survival results from the PERSIST-2~~PACIFICA Phase 3 trial ~~showing~~will be completed as a ~~detrimental effect~~post-marketing requirement. On February 7, 2023, VONJO was granted seven years of orphan drug exclusive approval by the FDA for treatment of adults with intermediate or high-risk primary or secondary (post-polycythemia vera or post-essential thrombocythemia) myelofibrosis with a platelet count below 50 x109/L, pursuant to section 527 of the Federal Food, Drug, and Cosmetic Act, or FDCA (21 U.S.C. 360cc). The seven-year exclusive approval began on ~~survival consistent~~February 28, 2022.

PACIFICA Phase 3 Trial

As part of the Accelerated Approval of VONJO, we agreed with the ~~results from PERSIST-1.~~

FDA to amend the design of PACIFICA to have co-primary endpoints of Spleen Volume Reduction, or SVR, and modified Total Symptom Score, or TSS, with both endpoints being analyzed after the complete enrollment of the study. As a result of this amendment, we increased the study size to 399 patients to maintain appropriate powering for the endpoints. This change was implemented in a study amendment that was submitted on June 30, 2022. In ~~February 2016, prior~~addition to co-primary endpoints SVR and TSS, overall survival is a secondary endpoint. Enrollment in this trial is progressing despite the challenges of conducting clinical trials during the COVID-19 pandemic. Additionally, enrollment at sites in Russia, Ukraine and Belarus has been indefinitely paused in response to the ~~clinical hold, we completed patient enrollment~~conflict in the ~~PERSIST-2 Phase 3 clinical trial. Under~~region. As agreed with the ~~full clinical hold, all patients participating in~~FDA, following the ~~PERSIST-2 clinical trial discontinued pacritinib treatment.~~

~~In August 2016,~~Accelerated Approval of VONJO, we ~~announced~~plan to complete the ~~top-line results from PERSIST-2, our~~PACIFICA Phase 3 trial as a post-marketing requirement, with the expected completion of ~~pacritinib~~enrollment by the end of 2026. Meeting this timeline is dependent upon the addition of new clinical trial sites.

Operations

We have historically funded our operations through product sales, the sale of equity securities, debt financing, the sale of certain future royalties and funding received from our licensees and collaborators. We do not expect to achieve or sustain profitability for the treatment of patients with myelofibrosis whose platelet counts are less than or equal to 100,000 per microliter. Three hundred eleven (311) patients were enrolled in the study, which formed the basis for the safety analysis. Two hundred twenty-one (221) patientsforeseeable future. We had a ~~chance to reach Week 24 (the primary analysis time point) at the time the clinical hold was imposed and constituted the intent-to-treat analysis population utilized for the evaluation~~net loss of efficacy. Results demonstrated that the PERSIST-2 trial met one of the co-primary endpoints showing a statistically significant response rate in SVR in patients with myelofibrosis treated with pacritinib compared to BAT, including the approved JAK2 inhibitor ruxolitinib. The co-primary endpoint of reduction of Total Symptom Score (TSS) was not achieved but trended toward improvement in TSS. There was no significant difference in overall survival across treatment arms, censored at the time of clinical hold. The most common treatment-emergent AEs, occurring in 20 percent or more of patients treated with pacritinib within 24 weeks, of any grade, were gastrointestinal (generally manageable diarrhea, nausea and vomiting) and hematologic (anemia and thrombocytopenia) and were generally less frequent for twice-daily (BID) versus once-daily (QD) administration. Details of the trial were presented in a late-breaking oral session at the American Society of Hematology Annual Meeting in December 2016.

In January 2017, the FDA removed the full clinical hold following review of our complete response submission which included, among other items, final Clinical Study Reports for both PERSIST-1 and 2 trials and a dose-exploration clinical trial protocol that the FDA requested. At that time, we announced that we intend to conduct a new trial, PAC203, that plans to enroll up to approximately 105 patients with primary myelofibrosis who have failed prior ruxolitinib therapy to evaluate the dose response relationship for safety and efficacy (SVR at 12 and 24 weeks) of three dose regimens: 100 mg QD, 100 mg BID and 200 mg BID. The 200 mg BID dose regimen was used in PERSIST-2. In July 2017, the first patient was enrolled in this trial.

The original Marketing Authorization Application, or MAA, for pacritinib was submitted to the European Medicines Agency, or EMA, in February 2016 with an indication statement based on the PERSIST-1 trial data. In its initial assessment report, the Committee for Medicinal Products for Human Use (CHMP) determined that the original application was not approvable at that point in the review cycle because of major objections in the areas of efficacy, safety (hematological and cardiovascular toxicity) and the overall risk-benefit profile of pacritinib. Subsequent to the filing of the original MAA, data from the second phase 3 trial of pacritinib, PERSIST-2, were reported. These data suggest that pacritinib may show clinical benefit in myelofibrosis patients with thrombocytopenia.

Following discussions with the EMA about how PERSIST-2 data might address the major objections and how to integrate the data into the current application, we withdrew the original MAA, and submitted a new application for the treatment of patients with myelofibrosis who have thrombocytopenia (platelet counts less than 100,000 per microliter). The new MAA was validated by the EMA in July 2017. Validation confirms that the submission is complete and initiates the centralized review process by the CHMP. The CHMP review period is 210 days, excluding question or opinion response periods, after which the CHMP opinion is reviewed by the European Commission, which usually issues a final decision on E.U. authorization within three months. If authorized, pacritinib would be granted a marketing license valid in all 28 E.U. member states, Norway, Iceland and Liechtenstein.

~~Other Pipeline Candidates~~

Tosedostat, is a novel oral, once-daily aminopeptidase inhibitor that has demonstrated significant responses in patients with AML. It is currently being evaluated in randomized Phase 2 cooperative group-sponsored trials in elderly patients with AML. We anticipate data from these signal-finding trials may be used to determine further development directions.

~~Board of Directors and Management~~

In September 2017, we announced the promotion of David Kirske to Chief Financial Officer of the Company. Mr. Kirske joined the Company earlier in 2017 and served as the Principal Financial and Accounting Officer prior to being appointed Chief Financial Officer. Mr. Kirske leads CTI BioPharma’s finance, accounting and investor relations teams. Prior to his appointment, Mr. Kirske has been an independent chief financial officer (CFO) consultant since January 2013. As a consultant, he has provided financial management services to public and emerging growth private companies primarily in the biotechnology industry, as well as in the technology and manufacturing industries. Mr. Kirske's financial management experience includes overseeing finance, accounting, operations, and capitalization, in both debt and equity. Prior to his time as a consultant, Mr. Kirske served as Vice President and CFO of Helix BioMedix where he managed all financial and administrative activities. Previously, he was the Treasurer and Corporate Controller for F-5 Networks and Redhook Brewery where he managed both corporate and international entities, and was part of the management teams that led and executed each company’s successful initial public offerings. Earlier in his career, he held a controllership position at Cray Computer. Mr. Kirske holds a B.A. in Business Administration from the University of Puget Sound.

In September 2017, we announced the promotion of Bruce Seeley to Chief Operating Officer of the Company. Mr. Seeley joined the Company in 2015 and served as the Chief Commercial and Administrative Officer and Secretary prior to being appointed Chief Operating Officer. Mr. Seeley has more than 25 years of global commercial experience and a proven track record of successfully launching products in various markets and regulatory environments. Most recently, Mr. Seeley was Senior Vice President and General Manager of Diagnostics at NanoString Technologies Inc. overseeing the launch of the diagnostic product PROSIGNA® for early stage breast cancer. Previously, he was Executive Vice President of Commercial at Seattle Genetics where he built and led the commercial organization, including marketing, sales and managed markets, and successfully launched the Seattle Genetic's first product, ADCETRIS®, a targeted therapy for lymphoma. He also previously held key leadership positions in marketing at Genentech (now a member of the Roche Group), where he led the launch of HERCEPTIN® in adjuvant breast cancer. Earlier in his career he held various commercial roles at Aventis Pharmaceuticals Inc. (a part of Sanofi) and Bristol-Myers Squibb Co. Mr. Seeley received a B.A. In Sociology from the University of California at Los Angeles.

In July 2017, we announced that Laurent Fischer, M.D., was appointed to the Board, and in September 2017 he was appointed Chairman. Dr. Fischer was appointed Senior Vice President, Head of the Liver Therapeutic Area at Allergan following the acquisition of Tobira Therapeutics. Dr. Fischer currently serves as a Senior Advisor on the Frazier Healthcare Partners' Life Sciences team since March 2017. He was previously chairman and CEO of Jennerex, Inc., a company with a first-in-class oncolytic immunotherapy for liver cancer acquired by Sillajen. He was co-founder, president and CEO of Ocera Therapeutics and held senior positions at DuPont-Merck, DuPont Pharmaceuticals, and Hoffmann-La Roche in liver disease, virology and oncology. Dr. Fischer received his undergraduate degree from the University of Geneva and his medical degree from the Geneva Medical School, Switzerland.

~~Financial Summary~~

Our revenues are generated from a combination of PIXUVRI sales and collaboration and license agreements. Collaboration revenues reflect the earned amount of upfront payments and milestone payments under our product collaborations. Total revenues were $1.7 million and $4.4$13.4 million for the three months ended ~~September 30, 2017~~March 31, 2023, and ~~2016, respectively,~~an accumulated deficit of $2.5 billion as of March 31, 2023, primarily from expenses incurred in connection with our research programs and ~~$24.7~~from selling, general and administrative costs associated with our operations, partially offset by VONJO product sales.

We have incurred significant operating losses to date and expect to continue to incur significant expenses and operating losses for the foreseeable future. We anticipate that our expenses will increase as we:

•continue our commercialization efforts for VONJO;

•continue our research and clinical development of pacritinib;

•seek regulatory and marketing approvals for pacritinib if we successfully complete the remainder of its anticipated clinical development paths; and

•maintain, protect and expand our intellectual property portfolio.

Agreement and Plan of Merger

On May 10, 2023, we entered into the Merger Agreement. Pursuant to the Merger Agreement, upon the terms and subject to the conditions thereof, Purchaser will commence the Offer to acquire all of the outstanding Shares at the Offer Price. Following the consummation of the Offer and upon the terms and subject to the conditions of the Merger Agreement, Purchaser will merge with and into CTI, with CTI surviving as a wholly owned subsidiary of Sobi. In the Merger, each Share issued and outstanding immediately prior to the Effective Time of the Merger (other than certain excluded Shares as described in the Merger Agreement) will automatically be converted into the right to receive the Offer Price.

convertible or exchangeable into Shares or other rights to acquire or be issued Shares (in each case other than outstanding shares of our preferred stock), regardless of the conversion or exercise price or other terms and conditions thereof, or the Minimum Condition; (ii) the expiration or termination of the waiting period under the HSR Act and receipt of clearance, approval or consent under any other applicable antitrust law; and (iii) those other conditions set forth in Annex I to the Merger Agreement.

The Merger Agreement also includes customary termination provisions for both us and Sobi, and provides that, in connection with the termination of the Merger Agreement under specified circumstances, including termination by us to accept and enter into an agreement with respect to a Superior Proposal, we will pay Sobi a termination fee of $59.0 million.

For more information about the Merger, see Part I, Item 1, “Notes to Condensed Financial Statements, Note 6. Subsequent Events” of this Quarterly Report on Form 10-Q.

Factors Affecting Performance

Product Sales

Following FDA approval of VONJO on February 28, 2022, we commenced shipping of VONJO to a limited number of specialty distributor customers and specialty pharmacy customers in March 2022. Product sales are recognized upon delivery of our product to our customers and are recorded net of applicable deductions, including trade discounts, distribution service fees, product returns, chargebacks and discounts, rebates and other incentives such as co-pay assistance. Our realization of product sales will be dependent, in part, upon our continued commercialization efforts and the market acceptance of VONJO among physicians, patients, healthcare payers and the medical community.

Cost of Sales

Cost of sales for the three months ended March 31, 2023 and 2022 primarily consisted of shipping and distribution costs of VONJO, amortization expense for intangible assets and third-party royalty costs. Cost of sales includes only a portion of the costs related to the manufacture of VONJO and related materials, since, prior to FDA approval, these costs were expensed as research and development expenses. We expect to utilize zero cost inventory with respect to VONJO for an extended period of time.

Research and Development

We expect to commit significant time and resources to research and development activities relating to our current and any future product candidates. Pacritinib has received Accelerated Approval for the treatment of adult patients with intermediate or high-risk primary or secondary (post-polycythemia vera or post-essential thrombocythemia) myelofibrosis with a platelet count below 50 x 109/L and is being marketed as VONJO. However, a confirmatory study, PACIFICA, is ongoing and we expect to continue to devote resources to the completion of this study.

Selling, General and Administrative

Selling, general and administrative expenses consist primarily of personnel costs, including related equity-based compensation, expenses for outside consulting and professional services, allocated facilities costs and costs required to support the marketing and sales operations of our commercialized product. We anticipate that selling, general and administrative expenses associated with the commercialization of VONJO, primarily related to our sales force, marketing, market access and commercial capabilities, will approximate 2022 levels during 2023.

Impact of COVID-19

We continue to evaluate and manage the long-term impact of the COVID-19 pandemic on our operations and the conduct of our clinical trials, including considerations of the vulnerable nature of the patient population participating in our trials, reduced or halted activities at our clinical trial sites, an increase in fatalities or other adverse events due to medical problems related to the COVID-19 pandemic and the benefits of continued patient access to VONJO.

Financial Summary

Our net product sales reflect sales of VONJO, which was commercially launched in the United States in March 2022 following FDA approval on February 28, 2022. Net product sales were $24.1 million and ~~$48.3 million for the nine months ended September 30, 2017 and 2016, respectively. Loss from operations was $11.8 million and $28.7~~$2.3 million for the three months ended ~~September 30, 2017~~March 31, 2023 and ~~2016, respectively, and $25.8~~2022, respectively. Loss from operations was $9.2 million and ~~$43.6~~$35.1 million for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2023 and ~~2016,~~2022, respectively. Results of operations may vary substantially from year to year and from quarter

to quarter and, as a result, you should not rely on them as being indicative of our future performance.

As of ~~September 30, 2017,~~March 31, 2023, our cash, ~~and~~ cash equivalents and short-term investments were ~~$52.8~~$59.0 million.

RESULTS OF OPERATIONS

Three Months Ended March 31, 2023 and ~~nine months ended September 30, 2017 and 2016~~2022

~~Product sales, net.~~ Prior to April 2017 when Servier was granted an exclusive and sublicensable (subject to certain conditions) royalty-bearing license with respect to the development and commercialization of PIXUVRI for use in pharmaceutical products, or Licensed Products, outside of the U.S. (and its territories and possessions), we sold PIXUVRI primarily through a limited number of wholesale distributors. Servier is responsible for distribution of PIXUVRI in countries other than the U.S. (and its territories and possessions.) Net product sales. We ~~generally record~~began recognizing product sales ~~upon receipt~~in March 2022 following FDA approval of VONJO on February 28, 2022 and its subsequent commercial launch in the United States. Net product ~~by the health care provider or distributor at which time title~~sales were $24.1 million and ~~risk of loss pass.~~

~~Gross sales is defined as our contracted reimbursement price in each country. Gross sales from PIXUVRI were zero and $0.9~~$2.3 million for the three months ended ~~September 30, 2017~~March 31, 2023 and ~~2016, respectively,~~2022, respectively. We expect total net product sales will increase in 2023 over 2022 primarily due to expected growth in, and ~~$1.0 million~~the inclusion of a full year of, sales of VONJO in 2023.

The activities and ~~$3.2 million~~ending reserve balances for significant categories of allowances for VONJO (which constitute variable consideration that is deducted from gross product sales) during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2023 were as follows (in thousands):



	Chargebacks and rebates		Service fees, returns, co-pay assistance and other		Total
Balance, January 1, 2023	$	1,845	$	498	$	2,343
Provision related to current year sales	4,666		1,310		5,976
Adjustment for prior year sales	(370)		—		(370)
Payments / credits for current year sales	(2,755)		(527)		(3,282)
Payments / credits for prior year sales	(669)		(626)		(1,295)
Balance, March 31, 2023	$	2,717	$	655	$	3,372

Chargebacks and ~~2016, respectively. Product sales, net represents gross sales, net~~rebates are expected to be the most significant component of ~~provisions~~our total gross-to-net deductions. Future gross-to-net deductions will fluctuate based on the volume of purchases eligible for ~~distributor discounts, estimated~~ government-mandated discounts and rebates ~~trade discounts~~as well as changes in the discount percentage which is impacted by external factors. We anticipate that the overall gross-to-net deduction percentage will begin to stabilize during 2023.

Operating Costs and ~~estimated product returns. After these provisions, product sales, net from PIXUVRI were zero for~~Expenses

Cost of sales. During the three months ended ~~September 30, 2017~~March 31, 2023 and ~~$0.9~~2022, we recorded $1.2 million and $0.3 million of cost of sales, respectively, which primarily consisted of amortization expense for intangible assets, shipping and distribution costs as well as third-party royalty costs. The manufacturing costs for VONJO incurred prior to FDA approval on February 28, 2022 were not capitalized as inventory but were expensed as research and development costs since product manufactured prior to regulatory approval may not be sold unless regulatory approval is obtained. As such, cost of sales reflects only a portion of the costs related to the manufacture of VONJO and related materials.

The time period over which reduced-cost VONJO inventory is consumed will depend on a number of factors, including the amount of future sales, the ultimate use of this inventory in either commercial sales, clinical development or other research activities, and the ability to utilize inventory prior to its expiration date. At this time, we expect that cost of sales in relation to net product sales will progressively increase towards 2025 as VONJO product manufactured and expensed prior to capitalization is sold.

Research and development expenses.Research and development expenses were $10.2 million and $8.0 million for the three months ended ~~September 30, 2016. Product sales, net were $0.9 million~~March 31, 2023 and ~~$3.1 million for the nine months ended September 30, 2017 and 2016,~~2022, respectively.

The provision for product returns relates to a limited right of return or replacement that we offer to certain customers. Distributor discounts, returns and rebates were $0.1 million and $50,000 during the nine months ended September 30, 2017 and 2016, respectively, while no material amounts were recorded for the three months ended September 30, 2017 or 2016. During the periods presented, there were no other material payments and credits applied towards provision for discounts, rebates and other for current or prior period sales.

The decrease in product sales, net for the three and nine months ended September 30, 2017 from the respective periods in 2016 was primarily related to the Restated Agreement we entered into with Servier in April 2017 under which Servier assumed commercialization rights to PIXUVRI in all markets except in the U.S.

~~License and Contract Revenues~~

~~License and contract revenues are summarized as follows (in thousands):~~

Three Months Ended
September 30,

Nine Months Ended
September 30,
2017 2016 2017 2016
Servier Milestone and license revenue $ 1,178
$ —
$ 12,665
$ —
Development services revenue 355
51
822
572
Royalty revenue 172
72
344
148
Total Servier revenue 1,705
123
13,831
720

Teva Milestone revenue —
—
10,000
—
Total Teva revenue —
—
10,000
—

Baxalta Milestone and license revenue —
—
—
32,000
Development services revenue —
3,396
—
12,437
Total Baxalta revenue —
3,396
—
44,437

$ 1,705
$ 3,519
$ 23,831
$ 45,157

~~Servier~~

~~In April 2017, in connection with the execution of the Restated Agreement with Servier, we allocated and recorded $11.5 million and $1.3 million~~ of the upfront payment received to license revenue and deferred revenue, respectively. We expect to recognize this deferred revenue based on a proportional performance method through approximately 2019.

The Restated Agreement with Servier amended and restated in its entirety the Exclusive License and Collaboration Agreement (the “Original Agreement”) entered into in September 2014. The remaining deferred revenue balance as of the date of the Restated Agreement relating to the upfront payment under the Original Agreement was $0.6 million, which, along with the $1.3 million of deferred revenue allocated from the Restated Agreement as mentioned above, will be recognized as revenue based upon a proportional performance method.

We recognized deferred revenue related to development services allocated from the upfront payments we received in connection with the Original Agreement, as well as the Restated Agreement, of $0.2 million and $26,000 during the three months ended September 30, 2017 and 2016, respectively, and $0.4 million and $77,000 during the nine months ended September 30, 2017 and 2016, respectively. We recorded revenue of $0.1 million and $0.3 million during the three and nine months ended September 30, 2017, respectively, for thereimbursement of expenses related to commercialization transition under the Restated Agreement. The balance of deferred revenue related to the Restated Agreement (including the remaining portion of $0.6 million allocated from the Original Agreement) as of September 30, 2017 was $1.6 million.

In September 2017, we attained a regulatory milestone from Servier under the Restated Agreement and recognized a €1.0 million milestone revenue (or $1.2 million using the currency exchange rate as of the date the milestone was achieved), which amount was recorded in ~~Receivables from Collaborative Arrangements~~ ~~as of September 30, 2017.~~

In February 2016, we entered into an agreement with one of Servier's affiliates whereby we are to conduct a pharmacokinetic sub-study on behalf of Servier in conjunction with our ongoing clinical trial, PIX-306. In relation to this study, we recorded $9,000 and $26,000 of expense reimbursements as development services revenue during the three months ended September 30, 2017 and 2016, respectively, and $0.1 million and $0.5 million during the nine months ended September 30, 2017 and 2016, respectively. We expect to receive no such development services revenue in future periods as the pharmacokinetic sub-study was completed in September 2017.

Royalty revenue was $0.2 million and $0.1 million for the three months ended September 30, 2017 and 2016, respectively, and $0.3 million and $0.1 million for the nine months ended September 30, 2017 and 2016, respectively.

~~For additional information on our collaboration with Servier, see Part I, Item 2, “License Agreements and Milestone Activities - Servier”.~~

~~Teva~~

During the nine months ended September 30, 2017, we received a $10.0 million milestone payment from Teva upon the achievement of a worldwide net sales milestone of TRISENOX. There were no such revenues for the three months ended September 30, 2017 or during the comparative periods in 2016.

~~Baxalta~~

In October 2016, we resumed primary responsibility for the development and commercialization of pacritinib as a result of the termination of the Pacritinib License Agreement with Baxalta Incorporated and its affiliates, or Baxalta, which is now part of Shire plc. As such, we are no longer eligible to receive cost sharing or milestone payments for pacritinib’s development from Baxalta.

During the nine months ended September 30, 2016, we recorded milestone revenue of $32.0 million for achievement of the PERSIST-2 Milestone and the MAA Milestone under the Original Pacritinib License Agreement. We received a cash advance for these milestone payments in the second quarter of 2015; it was accounted for as long-term debt until the achievement of the associated milestones in the first quarter of 2016. No such milestone payments were received during the nine months ended September 30, 2017 due to the termination of the Pacritinib License Agreement as discussed above.

During the three and nine months ended September 30, 2016, we recorded $3.4 million and $12.4 million, respectively, of development services revenue, of which $2.8 million and $11.4 million, respectively, was related to the reimbursable development costs from Baxalta under the terms of the Pacritinib License Agreement and $0.6 million and $1.0 million, respectively, was related to the upfront payment we received in connection with the execution of the Pacritinib License Agreement in 2013. No such revenue was recorded during the same periods in 2017 due to the termination of the Pacritinib License Agreement as discussed above.

~~For additional information relating to the Pacritinib License Agreement, see Part I, Item 2, “License Agreements and Milestone Activities - Baxalta”.~~

~~Operating costs and expenses~~

~~Cost of product sold.~~ Cost of product sold is related to sales of PIXUVRI and includes royalty expenses payable under the agreement with University of Vermont and the Novartis Termination Agreement. Cost of product sold was $0.1 million and $0.2 million for the three months ended September 30, 2017 and 2016, respectively, and $0.3 million and $0.5 million for the nine months ended September 30, 2017 and 2016, respectively. Royalty expenses were $0.1 million for both of the three months ended September 30, 2017 and 2016, and $0.2 million for both of the nine months ended September 30, 2017 and 2016.The decrease in cost of product sold for both periods presented was primarily as a result of the Restated Agreement we entered into with Servier in April 2017 whereby Servier assumed responsibility for the manufacture and supply of drug products and substances in its respective territories. For additional information, see Part I, Item 2, License Agreements and Milestone Activities.

~~Research and development expenses~~.Our research and development expenses were related to our pacritinib program. The increase between periods was attributable to a $2.1 million increase in product development costs primarily related to clinical research organizations, a $0.6 million increase in additional staffing, personnel and other costs, partially offset by a $0.5 million decrease in professional services. We expect research and development expenses to increase in 2023 compared to 2022 as we continue to conduct additional studies required for ~~compounds under~~VONJO subsequent to its Accelerated Approval from the FDA.

Research and development ~~and preclinical development were as follows (in thousands):~~

Three Months Ended
September 30,

Nine Months Ended
September 30,
2017 2016 2017 2016
Compounds:
PIXUVRI $ 1,743
$ 2,644
$ 5,765
$ 9,215
Pacritinib 2,511
10,077
10,132
29,194
Opaxio 14
23
30
88
Tosedostat 19
226
208
1,431
Operating expenses 3,295
4,638
9,593
14,681
Research and preclinical development 19
108
40
650
Total research and development expenses $ 7,601
$ 17,716
$ 25,768
$ 55,259

~~Costs for our compounds~~expenses include external direct ~~expenses~~costs such as principal investigator fees, charges from ~~contract~~clinical research organizations, ~~or CROs,~~ and contract manufacturing fees incurred for preclinical, clinical, manufacturing and regulatory activities associated with preparing the compounds for submissions of NDAs or similar regulatory filings to the FDA, the EMA or other regulatory agencies outside the ~~U.S.~~United States and Europe, as well as upfront license fees for acquired technology. ~~Subsequent to receiving a positive opinion for conditional approval of PIXUVRI in the E.U. from the EMA’s CHMP,~~Indirect costs ~~associated with commercial batch production, quality control, stability testing, and certain other manufacturing~~include personnel costs, ~~of PIXUVRI were capitalized as inventory. Operating expenses include our personnel and~~ an allocation of ~~occupancy, depreciation~~overhead costs and ~~amortization expenses associated with developing these compounds. Research and preclinical~~other costs not directly charged to development ~~costs primarily include costs associated with~~

programs. Cumulative to-date external laboratory services associated with the compound under development by Aequus Biopharma, Inc. We are not able to capture the total cost of each compound because we do not allocate operating expenses to all of our compounds. External direct costs incurred by us ~~as of September 30, 2017~~through March 31, 2023 were ~~$126.2 million for PIXUVRI (excluding costs prior to our 2004 merger with Novuspharma S.p.A, formerly a public pharmaceutical company located in Italy), $125.2~~$247.1 million for pacritinib (excluding costs for pacritinib prior to our acquisition of certain assets from S*BIO Pte Ltd., or S*BIO, in May 2012 and $29.1 million of in-process research and development expenses associated with the acquisition of certain assets from S*BIO)~~, $228.0 million for Opaxio~~.

Selling, general and ~~$14.1 million for tosedostat (excluding costs for tosedostat prior to our co-development~~administrative expenses. Selling, general and ~~license agreement with Chroma Therapeutics Limited, or Chroma, in 2011 and~~administrative expenses were $21.9 million ~~of in-process research~~ and ~~development expenses associated with the acquisition of certain assets from Chroma).~~

~~Research and development expenses decreased to $7.6 million and $25.8~~$18.0 million for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2023 and 2022, respectively. Substantially all of the increase between periods was attributable to activities associated with the ongoing commercialization efforts of VONJO, which consisted of the following: a $1.6 million increase in additional staffing and personnel costs, a $1.1 million increase in professional services, a $0.3 million increase in travel expenses and a $0.9 million increase in other expenses, which included infrastructure and sales related service agreements. We expect selling, general and administrative expenses in 2023 to remain relatively consistent compared to $17.7 million and $55.3 million for the respective periods in 2016. The decrease was primarily attributed to a decrease in pacritinib development costs as a result of the completion of the Phase 3 clinical studies in 2017, a decrease in2022.

Other operating expenses. Other operating expenses for the ~~manufacture~~three months ended March 31, 2022 were attributable to a $10.3 million milestone expense relating to resolution of ~~pacritinib,~~ a ~~decrease~~contingency in ~~operating~~the Baxalta Asset Return and Termination Agreement upon FDA approval of VONJO in February 2022, as well as a $0.7 million expense relating to the 2003 Italian VAT assessment. There were no such expenses ~~primarily attributed~~for the three months ended March 31, 2023.

Non-Operating Expenses

Interest expense, net. Interest expense, net was as follows (in thousands):


	Three months ended March 31,
		2023		2022
Interest income		$	866	$	15
Interest expense		(1,856)		(1,316)
Imputed interest expense (royalty financing obligation)		(3,015)		(611)
Amortization of debt discount and issuance costs		(178)		(151)
Interest expense, net		$	(4,183)	$	(2,063)

Interest income was related to ~~personnel costs associated with a reduction in average headcount~~our cash equivalent securities and short-term investments. The changes between periods were primarily due to higher interest rates on cash equivalent securities and ~~a reduction~~an increase in ~~expenses~~short-term investment balances during the three months ended March 31, 2023 as compared to the same period in 2022.

Interest expense for the three months ended March 31, 2023 and 2022 was primarily related to the ~~PIX306 trial~~$50.0 million Credit Agreement we entered into with Drug Royalty III LP 2, or DRI, in August 2021. The increase between ~~periods.~~periods primarily resulted from the higher interest rates during the three months ended March 31, 2023 compared to the same period in the prior year.

~~Regulatory agencies, including~~Imputed interest expense (royalty financing obligation) for the ~~FDA~~three months ended March 31, 2023 and ~~EMA, regulate many aspects of a product candidate’s life cycle, including research and development and preclinical and clinical testing. We will need~~2022 was related to commit significant time and resources to develop our current and any future product candidates. Our product candidates pacritinib and tosedostat are currently in clinical development, and our product PIXUVRI, which is currently being commercialized in parts of Europe, is undergoing a post-authorization trial. Many drugs in human clinical trials fail to demonstratenon-cash interest expense recognized on the ~~desired safety and efficacy characteristics. We are unable to provide~~royalty financing obligation for the ~~nature, timing and estimated costs~~sale of the ~~efforts necessary~~right to ~~complete~~receive certain royalty payments from us under the ~~development of pacritinib~~Purchase and ~~tosedostat, and to complete the post-authorization PIX306 trial of PIXUVRI, because, among other reasons, we cannot~~

~~predict~~Sale Agreement with any certainty the pace of patient enrollment of our clinical trials, which is a function of many factors, including the availability and proximity of patients with the relevant condition and the availability of the compounds for use in the applicable trials. We rely on third parties to conduct clinical trials, which may result in delays or failure to complete trials if the third parties fail to perform or meet applicable standards. Even after a clinical trial is enrolled, preclinical and clinical data can be interpreted in different ways, which could delay, limit or preclude regulatory approval and advancement of this compound through the development process. We or regulatory authorities may suspend clinical trials at any time on the basis that the participants are being exposed to unacceptable health risks. For example, on February 8, 2016, the FDA placed a full clinical hold on pacritinib. Even if our drugs progress successfully through initial human testing in clinical trials, they may fail in later stages of development. A number of companies in the pharmaceutical industry, including us, have suffered significant setbacks in advanced clinical trials, even after reporting promising results in earlier trials. For these reasons, among others, we cannot estimate the date on which clinical development of our product candidates will be completed, if ever, or when we will generate material net cash inflows from PIXUVRI or be able to begin commercializing pacritinib or tosedostat to generate material net cash inflows. In order to generate revenue from these compounds, our product candidates need to be developed to a stage that will enable us to commercialize, sell or license related marketing rights to third parties.

We also enter into collaboration agreements for the development and commercialization of our product candidates. We cannot control the amount and timing of resources our collaborators devote to product candidates, which may also result in delays in the development or marketing of products. Because of these risks and uncertainties, we cannot accurately predict when or whether we will successfully complete the development of our product candidatesDRI, or the ~~ultimate product development cost.~~

Royalty Financing Agreement. The ~~risks and uncertainties associated with completing development~~amount of non-cash interest expense that we recognize in future periods will primarily depend on ~~schedule and the consequences~~our net sales of VONJO. See Part 1, Item 1, “Notes to ~~operations, financial position and liquidity if the project is not timely completed are discussed in more detail in our risk factors, which can be found in Part II, Item 1A, “Risk Factors”~~Condensed Financial Statements, Note 5. Royalty Financing Agreement ” of this Quarterly Report on Form ~~10-Q.~~10-Q for additional information.

~~Selling, general and administrative expenses~~. Selling, general and administrative expenses were $5.8 million and $24.5 million for the three and nine months ended September 30, 2017 compared to $15.2 million and $36.1 million for the respective periods in 2016. The decrease between the three-month periods ended September 30, 2017 and 2016 wasprimarily attributable to decreases of $6.8 million in personnel costs, $1.6 million in bad debt expense related to disputed invoices with our collaboration partner, $0.4 million in legal fees, $0.2 million in other professional services associated with PIXUVRI, $0.2 million in travel costs, $0.1 million in board fees and $0.1 million in consulting services. The decrease between the nine-month periods ended September 30, 2017 and 2016 wasprimarily attributable to decreases of $9.2 million in personnel costs, $0.8 million in travel costs, $0.2 million in professional fees for marketing initiatives related to our drug candidate, pacritinib, $0.4 million in pacritinib promotional costs previously shared with our collaboration partner, Baxalta, $0.2 million in other professional services associated with PIXUVRI, $0.3 million in legal fees, $0.3 million in occupancy costs and $0.2 million in administrative costs.

~~Non-operating income and expenses~~

~~Interest expense~~.Interest expense was $0.5 million and $0.6 million for the three months ended September 30, 2017 and 2016 respectively, and $1.5 million and $2.0 million for the nine months ended September 30, 2017 and 2016, respectively. Interest expense was primarily related to our senior secured term loan. The decrease between periods primarily relates to the lower loan principal balance outstanding in 2017 compared to 2016.

~~Amortization of debt discount and issuance costs~~.Amortization of debt discount and issuance costs of $38,000 for both of the three months ended September 30, 2017 and 2016 related to our senior secured term loan. Amortization of $0.1 million and $0.2 million for the nine months ended September 30, 2017 and 2016, respectively, related to our senior secured term loan in 2017 and to our senior secured term loan and the Baxalta milestone advances in 2016.

~~Foreign exchange gain (loss)~~.Foreign exchange gains for the three and nine months ended September 30, 2017 and foreign exchange losses for the three and nine months ended September 30, 2016 were due to fluctuations in foreign currency exchange rates, primarily related to operations in our European branches and subsidiaries denominated in foreign currencies.

~~Other non-operating income (expense)~~.~~Other non-operating expense of $0.5 million for the nine months ended September 30, 2016 primarily represents the other-than-temporary impairment recognized on our investment in equity securities.~~

~~Deemed dividends on preferred stock.~~ ~~Deemed dividends on preferred stock of $4.4 million for the nine months ended September 30, 2017 related to the issuance of our Series N-3 Preferred Stock in June 2017. (See Part I, Item 1, Note 4,~~

~~Preferred Stock~~ ~~in this Quarterly Report on Form 10-Q, which note is incorporated herein by reference.) There were no deemed dividends on preferred stock~~ for the three months ended ~~September 30, 2017 or~~March 31, 2023 and 2022 was related to the ~~comparative periods in 2016.~~Credit Agreement and Royalty Financing Agreement with DRI.

Other non-operating expenses. Other non-operating expenses for the three months ended March 31, 2023 and 2022 were related to foreign exchange loss.

LIQUIDITY AND CAPITAL RESOURCES

~~Overview~~Sources of Liquidity

~~Cash~~We have historically funded our operations from product sales, proceeds from the sales and ~~cash equivalents.~~ the issuance of equity securities, the incurrence of debt, the sale of certain future royalties and payments received pursuant to license and collaboration agreements. As of ~~September 30, 2017,~~March 31, 2023, we had ~~$52.8~~$59.0 million in cash, cash equivalents and short-term investments.

Product Sales. We commercially launched VONJO in March 2022 following the Accelerated Approval of VONJO by the FDA on February 28, 2022. We intend to rely on cash flows from product sales as our source of liquidity in the near future as we expand our commercialization efforts with respect to VONJO.

At-The-Market Equity Offering. In August 2022, we entered into the 2022 Sale Agreement with Jefferies, to sell shares of our common stock having aggregate sales proceeds of up to $100.0 million. For the year ended December 31, 2022, we sold 1.7 million shares of our common stock for proceeds of approximately $9.7 million, net of sales agent commission, under the 2022 Sale Agreement. We had no sales of our common stock under the 2022 Sale Agreement for the three months ended March 31, 2023.

Credit Agreement. In August 2021, we entered into the Credit Agreement with DRI as lender and administrative agent, which provided for a loan in the principal amount of $50 million funded by DRI at closing. As of March 31, 2023, we had an outstanding principal balance under the Credit Agreement of $50.0 million. We are required to pay quarterly interest-only payments until August 25, 2026, or the maturity date, with the unpaid principal amount of the outstanding loan due and payable on the maturity date. The loan bears interest at a rate equal to 8.25% per annum, plus the greater of (i) 1.75% and (ii) the three-month LIBOR rate and requires a back-end fee of $1.0 million. These borrowings are secured by a first priority security interest on substantially all of our assets, subject to certain exceptions. In addition, the Credit Agreement contains a minimum liquidity covenant requiring us to maintain at least $10.0 million of unrestricted cash and cash ~~equivalents.~~equivalents, subject to certain exceptions. The Credit Agreement also requires us to comply with restrictive covenants, including those that limit our operating flexibility and ability to borrow additional funds. A failure to make a required payment or an uncured covenant breach could lead to an event of default, and in such case, all amounts then outstanding may become due and payable immediately. Upon the closing of the pending acquisition by Sobi, the loan under the Credit Agreement will be repaid in full, unless otherwise directed by DRI, including the back-end fee of $1.0 million and a prepayment charge of approximately $2.2 million.

Royalty Financing Agreement. In connection with the Credit Agreement discussed above, we and DRI entered into the Royalty Financing Agreement, pursuant to which we sold to DRI the right to receive certain royalty payments from us for a purchase price of up to $85.0 million in cash. In March 2022, DRI funded the upfront purchase price of $60.0 million following FDA approval of VONJO in February 2022. In January 2023, we received $6.5 million in additional funding in connection with the achievement of a certain minimum VONJO sales threshold. DRI will be required to provide up to $18.5 million of remaining contractual funding if certain minimum VONJO sales thresholds are met by the end of the third quarter of 2023. Under the Royalty Financing Agreement, DRI is entitled to receive tiered, sales-based royalties on net product sales of VONJO in the United States.

Historical Cash Flows

Net cash used in operating activities. Net cash used in operating activities ~~decreased~~increased to ~~$28.8~~$31.1 million during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2023 compared to ~~$62.1~~$30.0 million for the same period in ~~2016. This decrease~~2022. The increase was primarily due to ~~receipt of~~ a ~~$13.1~~$10.3 million ~~upfront payment from Servier in connection with the Restated Agreement in 2017, receipt of a $10.0 million sales~~ milestone payment ~~from Teva~~made to Takeda during the first quarter of 2023 that became payable in ~~2017,~~2022, royalty payments to DRI and ~~the collection of $7.8 million in receivables under the collaborative arrangement with Servier in 2017~~S*BIO as well as ~~decreases~~timing of payments for operating expenses, partially offset by an increase in ~~spending~~cash collection for ~~research and development and selling, general and administration expenses during the nine months ended September 30, 2017 compared to the same period in 2016.~~VONJO product sales.

Net cash provided by ~~(used in)~~ investing activities. Net cash provided by investing activities during the three months ended March 31, 2023 was related to the purchases and maturities of short-term investments. There was no net cash provided by or used in investing activities ~~of $0.1 million for~~during the ~~nine~~three months ended ~~September 30, 2016 was due to purchases of property and equipment. There was no such purchase for the same period in 2017.~~March 31, 2022.

Net cash provided by ~~(used in)~~ financing activities. Net cash provided by financing activities was ~~$38.0~~$9.6 million ~~for~~and $61.4 million during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2023 and ~~net~~2022, respectively. Net cash ~~used in financing activities was $4.2 million for the nine~~provided during three months ended ~~September 30, 2016. The increase~~March 31, 2023 was attributable to the additional funding received from DRI under the Royalty Financing Agreement in connection with the achievement of a certain minimum VONJO sales threshold, as well as proceeds from stock option exercises. Net cash provided during the three months ended March 31, 2022 was primarily ~~due~~attributable to net proceeds from the ~~Series N-3 preferred stock offering in June 2017.~~

~~In October 2016, we resumed primary responsibility for~~Royalty Financing Agreement and the ~~development and commercialization of pacritinib as a result~~utilization of the termination of the Pacritinib License Agreement. We currently have no commitments or arrangements for additional financing to fund the development and commercial launch of pacritinib, and we will need to seek additional funding. The development and commercialization of a major product candidate like pacritinib without a collaborative partner will require a substantial amount of our time and financial resources, and as a result, we will experience a decrease in our liquidity and a new demand on our capital resources. For additional information relating to the Pacritinib License Agreement, see Part I, Item 2, “License Agreements and Milestone Activities - Baxalta.”at-the-market equity facility.

Capital Resources

We have prepared our condensed ~~consolidated~~ financial statements assuming that we will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business. However, we believe that, as of the date of the filing of this Quarterly Report on Form 10-Q, our present financial resources, together with ~~payments projected~~expected cash receipts from net product sales of VONJO, will be sufficient to ~~be received under certain contractual agreements~~meet our obligations as they come due and ~~our ability to control costs, will only be sufficient~~ to fund our operations into the ~~third~~first quarter of ~~2018.~~2024. This raises substantial doubt about our ability to continue as a going ~~concern.~~concern and we will need to raise substantial additional capital in the near term in order to fund our operations through and beyond the first quarter of 2024 and to continue as a going concern thereafter. See “Part I, Item 1, Notes to Condensed Financial Statements, Note 1. Description of Business and Summary of Significant Accounting Policies - Liquidity” of this Quarterly Report on Form 10-Q for additional information on our assessment. Further, we have incurred net losses since inception and expect to generate losses for the foreseeable future, primarily due to research and development costs for PIXUVRI, pacritinib, and tosedostat. Because of our reacquisition of worldwide rights for pacritinib, we are no longer be eligible to receive cost sharing or milestone payments for pacritinib’s development from Baxalta, and losses related to research and development for pacritinib will increase.future. We have historically funded our operations through product sales, equity financings, borrowings, sale of certain future royalties and funds obtained under product collaborations, any or all of which may not be available to us in the future. As of ~~September 30, 2017,~~March 31, 2023, our available cash, ~~and~~ cash equivalents and short-term investments totaled ~~$52.8 million. We~~$59.0 million, and we had an outstanding principal balance of $50.0 million under our ~~senior secured term loan agreement of $15.0 million.~~Credit Agreement with DRI.

Financial resource forecasts are subject to change as a result of a variety of risks and uncertainties. Changes in our commercialization efforts, manufacturing, developments in and expenses associated with our clinical trials and the other factors identified under “Capital Requirements” below may consume capital resources earlier than planned. ~~Additionally, we may not receive the anticipated milestone payments or achieve projected net sales from PIXUVRI.~~ Due to these and other factors, the foregoing forecast for the period for which we will have sufficient resources to fund our operations may ~~fail.~~be inaccurate.

Capital Requirements

available for issuance and additional funding may not be available on favorable terms or at all. If additional funds are raised by issuing equity securities, substantial dilution to existing ~~shareholders~~stockholders may result. If we fail to obtain additional capital when needed, our ability to operate as a going concern will be harmed, and we may be required to delay, scale back or eliminate some or all of our research and development programs and commercialization efforts and/or reduce our selling, general and administrative expenses, be unable to attract and retain ~~highly qualified~~highly-qualified personnel, be unable to obtain and maintain contracts necessary to continue our operations ~~and~~ at affordable rates with competitive terms, be unable to or elect to refrain from making our contractually required payments when due (including debt payments) and/or ~~may~~ be forced to cease operations, liquidate our assets and possibly seek bankruptcy protection.

Our future capital requirements will depend on many factors, including:

• our ability to generate sales of VONJO; the cost of ongoing organization and maintenance of our commercial infrastructure and distribution capabilities; our ability to reach milestones triggering payments to be made or received under certain of our contractual arrangements; the cost of manufacturing VONJO; the cost of manufacturing clinical supplies of our product candidates or of establishing commercial supplies of any products that we may develop in the future; developments in and expenses associated with our research and development activities;

• our clinical development plans and any changes that we may initiate or that may be requested by the FDA or other regulators as we seek approval for products we may develop in the future; acquisitions ofor collaborations with respect to compounds or other assets;

•~~changes in manufacturing;~~

•~~ability to generate sales of PIXUVRI in the U.S.;~~

•~~regulatory approval developments;~~

•~~ability to execute appropriate collaborations for development and commercialization activities;~~

•~~ability to reach milestones triggering payments under certain of our contractual arrangements;~~

•~~litigation and other disputes;~~

•competitive market developments; disruptions or other delays to our business and

• clinical trials resulting from ongoing worldwide current events; and other unplanned business developments.

LICENSE AGREEMENTS AND MILESTONE ACTIVITIES

For information regarding our license agreements and milestone activities, please see Part I, Item 1, “Business – License Agreements” of ~~September 30, 2017, our contractual purchase obligations for which payments are due over the next 12 months, as disclosed in~~ our Annual Report on Form 10-K for the year ended December 31, ~~2016, decreased by approximately $8.7 million.~~2022.

~~LICENSE AGREEMENTS AND MILESTONE ACTIVITIES~~

~~Servier~~

In April 2017, we entered into the Restated Agreement with Servier, pursuant to which the Original Agreement with Servier, entered into in September 2014, was amended and restated in its entirety. Under the Original Agreement, we granted Servier an exclusive and sublicensable (subject to certain conditions) royalty-bearing license with respect to the development and commercialization of PIXUVRI for use in pharmaceutical products outside of Austria, Denmark, Finland, Germany, Israel, Norway, Sweden, Turkey, the U.K. and the U.S. Under the Original Agreement, we received an upfront payment in October 2014 of €14.0 million (or $17.8 million using the currency exchange rate as of the date we received the funds). In addition, we received a €1.5 million (or $1.7 million upon conversion from euros as of the date we received the funds) milestone payment relating to the attainment of reimbursement approval for PIXUVRI in Spain and a €7.5 million (or $8.0 million upon conversion from euros as of the date we achieved the milestone in December 2016) milestone payment relating to the occurrence of a certain enrollment event in the PIX306 study.

Under the Restated Agreement, we granted Servier an exclusive, sublicensable (subject to certain exceptions) license with respect to the development and commercialization of PIXUVRI for use in pharmaceutical products, or Licensed Products, outside of the U.S. (and its territories and possessions). In accordance with the Restated Agreement, we will transfer to Servier medical affairs and commercialization activities relating to the Licensed Products in Austria, Denmark, Finland, Germany, Israel, Norway, Sweden, Turkey and the U.K. (collectively, the "Transition Territory"). We are in the process of terminating or assigning certain distributor and wholesaler contracts to Servier in the Transition Territory, and expect the last contract to be terminated in 2018. Each party will be responsible for the manufacture and supply of drug products and substances in its respective territory.

We have obtained conditional marketing authorization in the E.U. to market PIXUVRI for the treatment of adult patients with relapsed or refractory aggressive non-Hodgkin B-cell lymphomas. Under the Restated Agreement, we will

transfer our European marketing authorization to Servier upon positive, statistically significant results in an ongoing post-authorization Phase III clinical trial, PIX306, unless Servier elects to terminate the Restatement Agreement within thirty (30) days after the positive results.

We received an upfront payment of €12.0 million from Servier, which included €2.0 million for a new milestone previously achieved, and Servier purchased PIXUVRI drug product for an additional €0.9 million in July 2017. Subject to the achievement of certain conditions, the Restated Agreement provides for additional milestone payments from Servier in the aggregate amount of up to €76.0 million, including up to €36.0 million in potential regulatory milestone payments and up to €40.0 million in potential sales milestone payments. In September 2017, we attained a regulatory milestone under the Restated Agreement and recorded a €1.0 million milestone revenue (or $1.2 million using the currency exchange rate as of the date the milestone was achieved), which was recorded in ~~Receivables from Collaborative Arrangements~~ ~~as of September 30, 2017.~~

We are eligible to receive tiered royalty payments ranging from a low-double digit percentage up to a percentage in the low-twenties based on net sales of the Licensed Products, subject to certain reductions of up to mid-double digit percentages under certain circumstances. We will no longer use a joint marketing plan with Servier, and marketing costs will no longer be shared equally; instead Servier will be solely responsible for marketing costs within Europe. Mutually agreed upon development costs other than PIX306 will continue to be shared equally with Servier, which represents no change to the development cost sharing.

The Restated Agreement also requires an amendment to the trademark license agreement entered into on June 8, 2015 between us and Servier to provide for Servier’s right to use of our trademark PIXUVRI in connection with Licensed Products worldwide, excluding the U.S. (and its territories and possessions). The amendment was executed in October 2017.

~~Baxalta~~

In November 2013, we entered into a Development, Commercialization and License Agreement, dated as of November 14, 2013, with Baxter International Inc., or Baxter, for the development and commercialization of pacritinib for use in oncology and potentially additional therapeutic areas, or the Original Pacritinib License Agreement. The Original Pacritinib License Agreement, the rights and obligations to which Baxter had assigned to Baxalta, was amended by the License Amendment, effective June 8, 2015. Under the Original Pacritinib License Agreement, as amended by the License Amendment, or the Pacritinib License Agreement, Baxalta had an exclusive, worldwide (subject to co-promotion rights discussed below), royalty-bearing, non-transferable license (which was sub-licensable under certain circumstances) relating to pacritinib. Licensed products under the Pacritinib License Agreement consisted of products in which pacritinib is an ingredient.

We received an upfront payment of $60.0 million under the Pacritinib License Agreement, which included a $30.0 million investment in our equity. The Pacritinib License Agreement also provided for us to receive potential additional payments of up to $302.0 million upon the successful achievement of certain development and commercialization milestones, comprised of $112.0 million of potential clinical, regulatory and commercial launch milestone payments, and potential additional sales milestone payments of up to $190.0 million. We have received milestone payments of $52.0 million pursuant to the Pacritinib License Agreement.

In June 2015, we entered into the License Amendment. Pursuant to the License Amendment, two potential milestone payments in the aggregate amount of $32.0 million from Baxalta to us were accelerated from the schedule contemplated by the Original Pacritinib License Agreement relating to the PERSIST-2 Milestone and the MAA Milestone. In the first quarter of 2016, we recorded $32.0 million in ~~license and contract revenue~~ ~~upon attainment of these milestones.~~

In October 2016, we regained worldwide rights for the development and commercialization of pacritinib following termination of the Pacritinib License Agreement with Baxalta. Pursuant to the termination, Baxalta paid us a one-time cash payment in the amount of approximately $10.3 million as reimbursement for certain expenses incurred by us or to be incurred. In exchange, we have agreed to provide a one-time payment to Baxalta, upon the first regulatory approval or any pricing and reimbursement approvals of a product containing pacritinib, in the amount of approximately $10.3 million which represents certain amounts paid by Baxalta for the benefit of the pacritinib program manufacturing efforts. We have also agreed not to transfer, license, sublicense or otherwise grant rights with respect to intellectual property of pacritinib unless the transferee/licensee/sublicensee agrees to be bound by the terms of the Asset Return and Termination Agreement with Baxalta.

~~University of Vermont~~

We entered into an agreement with the University of Vermont, or UVM, in March 1995, as amended, or the UVM Agreement, which grants us an exclusive sublicensable license for the rights to PIXUVRI. Pursuant to the UVM Agreement,

we acquired the rights to make, have made, sell and use PIXUVRI, and we are obligated to make royalty payments to UVM ranging from low single digits to mid-single digits as a percentage of net sales; such royalty expenses are included in ~~Cost of product sold~~ in our condensed consolidated financial statements. The higher royalty rate is payable for net sales in countries where specified UVM licensed patents exist, or where we have obtained orphan drug protection, until such UVM patents or such protection no longer exists. For a period of ten years after the first commercialization of PIXUVRI, the lower royalty rate is payable for net sales in such countries after expiration of the designated UVM patents or loss of orphan drug protection, and in all other countries without such specified UVM patents or orphan drug protection. Unless otherwise terminated, the term of the UVM Agreement continues for the life of the licensed patents in those countries in which a licensed patent exists, and continues for ten years after the first sale of PIXUVRI in those countries where no such patents exist. We may terminate the UVM Agreement, on a country-by-country basis or on a patent-by-patent basis, at any time upon advance written notice. UVM may terminate the UVM Agreement upon advance written notice in the event royalty payments are not made. In addition, either party may terminate the UVM Agreement in the event of an uncured material breach of the UVM Agreement by the other party or in the event of bankruptcy of the other party.

~~S*BIO~~

We acquired the compounds SB1518 (which is referred to as “pacritinib”) and SB1578, which inhibit JAK2 and FLT3, from S*BIO in May 2012. Under our agreement with S*BIO, we are required to make milestone payments to S*BIO up to an aggregate amount of $132.5 million if certain U.S., E.U. and Japanese regulatory approvals are obtained and if certain worldwide net sales thresholds are met in connection with any pharmaceutical product containing or comprising any compound that we acquired from S*BIO for use for specific diseases, infections or other conditions. At our election, we may pay up to 50% of any milestone payments to S*BIO through the issuance of shares of our common stock or shares of our preferred stock convertible into our common stock. In addition, S*BIO will be entitled to receive royalty payments from us at incremental rates in the low single-digits based on certain worldwide net sales thresholds on a product-by-product and country-by-country basis.

~~Vernalis~~

We entered into an amended and restated exclusive license agreement with Vernalis (R&D) Limited, or Vernalis, in October 2014, or the Vernalis License Agreement, for the exclusive worldwide right to use certain patents and other intellectual property rights to develop, market and commercialize tosedostat and certain other compounds. Under the Vernalis License Agreement, we have agreed to make tiered royalty payments of no more than a high single-digit percentage of net sales of products containing licensed compounds, with such obligation to continue on a country-by-country basis for the longer of ten years following commercial launch or the expiry of relevant patent claims.

The Vernalis License Agreement will terminate when the royalty obligations expire, although the parties have early termination rights under certain circumstances, including the following: (i) we have the right to terminate, with three months’ notice, upon the belief that the continued development of tosedostat or any of the other licensed compounds is not commercially viable; (ii) Vernalis has the right to terminate in the event of our uncured failure to pay sums due; and (iii) either party has the right to terminate in the event of the other party’s uncured material breach or insolvency.

~~Gynecologic Oncology Group~~

We entered into an agreement with the Gynecologic Oncology Group, now part of NRG Oncology, in March 2004, as amended, related to the GOG-0212 trial of Opaxio it is conducting in patients with ovarian cancer. Pursuant to the terms of such agreement, we paid an aggregate of $1.2 million in milestone payments during 2014 based on certain enrollment milestones achieved. In addition, we made a milestone payment of $0.5 million relating to the transfer of final datasets during the second quarter of 2017. The agreement was terminated in May 2017. No further development of Opaxio is planned.

~~PG-TXL~~

In November 1998, we entered into an agreement with PG-TXL, as amended in February 2006, or the PG-TXL Agreement, which granted us an exclusive worldwide license for the rights to Opaxio and to all potential uses of PG-TXL’s polymer technology. Pursuant to the PG-TXL Agreement, we acquired the rights to research, develop, manufacture, market and sell anti-cancer drugs developed using this polymer technology. Pursuant to the PG-TXL Agreement, we were obligated to make payments to PG-TXL upon the achievement of certain development and regulatory milestones of up to $14.4 million. The timing of the remaining milestone payments under the PG-TXL Agreement was based on trial commencements and completions for compounds protected by PG-TXL license rights, and regulatory and marketing approval of those compounds by the FDA and the EMA. Additionally, we were required to make royalty payments to PG-TXL based on net sales. Our royalty obligations ranged from low to mid-single digits as a percentage of net sales. In February 2017, we terminated our agreement

~~with PG-TXL and the exclusive worldwide license for rights to Opaxio and certain polymer technology under our agreement with PG-TXL.~~

~~Novartis~~

In January 2014, we entered into a Termination Agreement with Novartis, or the Novartis Termination Agreement, to reacquire the rights to PIXUVRI previously granted to Novartis under our agreement entered into in September 2006, as amended, or the Original Novartis Agreement. Pursuant to the Novartis Termination Agreement, the Original Novartis Agreement was terminated in its entirety, except for certain customary provisions, including those pertaining to confidentiality and indemnification, which survive termination.

Under the Novartis Termination Agreement, we agreed not to transfer, license, sublicense or otherwise grant rights with respect to intellectual property of PIXUVRI and Opaxio unless the recipient thereof agrees to be bound by the terms of the Novartis Termination Agreement. We also agreed to provide potential payments to Novartis, including a percentage ranging from the low double-digits to the mid-teens, of any consideration received by us or our affiliates in connection with any transfer, license, sublicense or other grant of rights with respect to intellectual property of PIXUVRI or Opaxio; provided that such payments will not exceed certain prescribed ceilings in the low single-digit millions. Novartis is entitled to receive potential payments of up to $16.6 million upon the successful achievement of certain sales milestones of PIXUVRI and Opaxio. We are also obligated to pay to Novartis tiered low single-digit percentage royalty payments for the first several hundred million dollars in annual net sales, and 10% royalty payments thereafter based on annual net sales of each of PIXUVRI and Opaxio, subject to reduction in the event generic drugs are introduced and sold by a third party, causing the sale of PIXUVRI to fall by a percentage in the high double digits. Royalty payments for PIXUVRI are subject to certain minimum floor percentages in the low single digits. The royalty expenses payable under the Novartis Termination Agreement are included in ~~Cost of product sold~~ ~~in our condensed consolidated financial statements.~~

~~Teva Pharmaceutical Industries Ltd.~~

In June 2005, we entered into an acquisition agreement with Cephalon, Inc., or Cephalon, pursuant to which we divested the compound, TRISENOX. Cephalon was subsequently acquired by Teva Pharmaceutical Industries Ltd., or Teva. Under this agreement, we have the right to receive up to $100 million in payments upon achievement by Teva of specified sales and development milestones related to TRISENOX. To date, we have received $40.0 million of such potential milestone payments as a result of having achieved certain sales milestones.

~~Other Agreements~~

~~We have several agreements with CROs, third-party manufacturers and distributors that have durations of greater than one year for the development and distribution of certain of our compounds.~~

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

~~We make certain judgments and use certain~~

The preparation of financial statements in conformity with U.S. GAAP requires estimates and assumptions ~~when applying accounting principles generally accepted in~~that affect the ~~U.S.~~reported amounts of assets and liabilities, revenues and expenses and related disclosures in the preparation of our condensed ~~consolidated~~ financial ~~statements. We evaluate~~statements and accompanying notes. Our critical accounting policies are those that significantly impact our ~~estimates~~financial condition and results of operations and require the most difficult, subjective or complex judgments, ~~on an on-going basis and base our estimates on historical experience and on assumptions that we believe~~often as a result of the need to be reasonable under the circumstances. Our experience and assumptions form the basis for our judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may vary materially from what we anticipate and different assumptions ormake estimates about the ~~future could change our reported results.~~effect of matters that are inherently uncertain. Because of this uncertainty, actual results may vary

from these estimates. For a discussion of our critical accounting estimates, please see Part II, Item 7, ~~"Management’s~~“Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations"~~Operations” of our ~~2016~~Annual Report on Form ~~10-K.~~10-K for the year ended December 31, 2022. There have been no material changes to our critical accounting policies and estimates discussed therein.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

~~Foreign Exchange Market Risk~~As a smaller reporting company, we are not required to provide the information requested by this item pursuant to Item 305(e) of Regulation S-K.

We are exposed to risks associated with the translation of euro-denominated financial results and accounts into U.S. dollars for financial reporting purposes. The carrying value of the assets and liabilities held in our European branches and subsidiaries will be affected by fluctuations in the value of the U.S. dollar as compared to the euro. In addition, certain of our contractual arrangements, such as the Restated Agreement with Servier, denote monetary amounts in foreign currencies, and

consequently, the ultimate financial impact to us from a U.S. dollar perspective is subject to significant uncertainty. Changes in the value of the U.S. dollar as compared to applicable foreign currencies (in particular, the euro) might have an adverse effect on our reported results of operations and financial condition. As the net positions of our unhedged foreign currency transactions fluctuate, our earnings might be negatively affected. As of September 30, 2017, we had a net asset balance, excluding intercompany payables and receivables, in our European branches and subsidiaries denominated in euros. If the euro were to weaken 20 percent against the dollar, our net asset balance would decrease by approximately $1.6 million as of this date.

~~Interest Rate Risk~~

Our senior secured term loan bears interest at variable rates. Based on the outstanding principal balance of $15.0 million under such loan as of September 30, 2017, a hypothetical increase of 1.0% in interest rates would result in additional interest expense of $0.1 million over the next twelve months. For a detailed discussion of our senior secured term loan, including a discussion of the applicable interest rate, refer to Part II, Item 8, "Financial Statements and Supplementary Data, Notes to Consolidated Financial Statements, Note 8. Long-term Debt" in our 2016 Form 10-K.

Item 4. Controls and Procedures

~~(a)~~ Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended, or the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in ~~U.S. Securities and Exchange Commission, or~~ SEC rules and forms, and that such information is accumulated and communicated to our management to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

Our management, under the supervision and with the participation of our President and Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon that evaluation, our President and Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures were effective.

~~(b)~~ Changes in Internal Control over Financial Reporting

There have been no changes to our internal control over financial reporting that occurred during the ~~third~~first fiscal quarter ended ~~September 30, 2017~~March 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

In April 2009, December 2009 and June 2010, the Italian Tax Authority, or the ITA, issued notices of assessment to CTI - Sede Secondaria, or CTI (Europe), based on the ITA’s audit of CTI (Europe)’s value added tax, or VAT, returns for the years 2003, 2005, 2006 and 2007. The ITA audits concluded that CTI (Europe) did not collect and remit VAT on certain invoices issued to non-Italian clients for services performed by CTI (Europe). The assessments, including interest and penalties, for the years 2003, 2005, 2006 and 2007 are €0.5 million, €5.5 million, €2.5 million and €0.8 million, respectively. We believe that the services invoiced were non-VAT taxable consultancy services and that the VAT returns are correct as originally filed. We are defending ourselves against the assessments both on procedural grounds and on the merits of the case, although we can make no assurances regarding the ultimate outcome of these cases. If the final decision of the Italian Supreme Court is unfavorable to us, or if, in the interim, the ITA were to make a demand for payment and we were to be unsuccessful in suspending collection efforts, we may be requested to pay the ITA an amount up to €9.4 million, or approximately $11.1 million converted using the currency exchange rate as of September 30, 2017, plus collection fees, notification expenses and additional interest for the period lapsed between the date in which the assessments were issued and the date of effective payment.None.

~~Following is a summary of the status of the legal proceedings surrounding each respective VAT year return at issue:~~

2003 VAT. In September 2011, the Provincial Tax Court issued decision no. 229/3/2011, which (i) fully accepted the merits of our appeal, (ii) declared that no penalties can be imposed against us, and (iii) found the ITA liable to pay us €10,000, as partial refund of the legal expenses we incurred for our appeal. In October 2012, the ITA appealed this decision. In June 2013, the Regional Tax Court issued decision no. 119/50/13, which accepted the appeal of the ITA and reversed the previous decision of the Provincial Tax Court. We believe that such decision has not carefully taken into account our arguments and the documentation we filed, and therefore appealed such decision in front of the Supreme Court both on procedural grounds and on the merits of the case in January 2014. In January 2014 the Company was provided a notice of payment with which the ITA requested the advance payment of €0.4 million of VAT, interest and penalties. We paid such amount in March 2014.

2005 VAT. In January 2011, the Provincial Tax Court issued decision No. 4/2010 which (i) partially accepted our appeal and declared that no penalties can be imposed against us, (ii) confirmed the right of the ITA to reassess the VAT (plus interest) in relation to the transactions identified in the 2005 notice of assessment and (iii) repealed the suspension of the notice of deposit payment. Both the ITA and the Company appealed to the higher court against the decision. In October 2012, the Regional Tax Court issued decision no. 127/31/2012, which (i) fully accepted the merits of our appeal and (ii) confirmed that no penalties can be imposed against us. In April 2013, the ITA appealed the decision to the Italian Supreme Court.

2006 VAT. In October 2011, the Provincial Tax Court issued decision no. 276/21/2011 (jointly with the 2007 VAT case) in which it (i) fully accepted the merits of our appeal, (ii) declared that no penalties can be imposed against us, and (iii) found that for the 2006 and 2007 VAT cases the ITA was liable to pay us €10,000 as partial refund of the legal expenses incurred for the appeal. In December 2011, the ITA appealed this decision to the Regional Tax Court. On April 16, 2013, the Regional Tax Court issued decision no. 57/35/13 (jointly with the 2007 VAT case) in which it fully rejected the merits of the ITA’s appeal, declared that no penalties can be imposed against us, and found the ITA liable to pay us €12,000, as partial refund of the legal expenses we incurred for this appeal. In November 2013, the ITA appealed the decision to the Supreme Court.

2007 VAT. In October 2011, the Provincial Tax Court issued decision no. 276/21/2011 (jointly with the 2006 VAT case described above) in which the Provincial Tax Court (i) fully accepted the merits of our appeal, (ii) declared that no penalties can be imposed against us, and (iii) found that for the 2006 and 2007 VAT cases the ITA was liable to pay us €10,000 as partial refund of the legal expenses incurred for the appeal. In December 2011, the ITA appealed this decision to the Regional Tax Court. On April 16, 2013, the Regional Tax Court issued decision no. 57/35/13 (jointly with the 2006 VAT case) in which it fully rejected the merits of the ITA’s appeal, declared that no penalties can be imposed against us, and found the ITA liable to pay us €12,000, as partial refund of the legal expenses we incurred for this appeal. In November 2013, the ITA appealed the decision to the Supreme Court.

~~Securities and Exchange Commission Subpoena~~

We previously disclosed that we had received a subpoena from the SEC in January 2016. We believe that the SEC is seeking to determine whether there have been possible violations of the antifraud and certain other provisions of the federal securities laws related to the Company's disclosures concerning, among other things, the clinical test results of pacritinib. The SEC Staff's letter sent with the subpoena stated that the investigation is a fact-finding inquiry, and the investigation and subpoena do not mean that the SEC has concluded that we or anyone else has violated any law. We are cooperating with this investigation, which is ongoing.

~~In re CTI BioPharma Corp. Securities Litigation~~

On February 10, 2016 and February 12, 2016, class action lawsuits entitled Ahrens v. CTI BioPharma Corp. et al., Case No. 1:16-cv-01044 and McGlothlin v. CTI BioPharma Corp. et al., Case No. C16-216, respectively, were filed in the United States District Court for the Southern District of New York and the United States District Court for the Western District of Washington, respectively, on behalf of shareholders that purchased or acquired the Company’s securities pursuant to our September 24, 2015 public offering and/or shareholders who otherwise acquired our stock between March 4, 2014 and February 9, 2016, inclusive. The complaints assert claims against the Company and certain of our current and former directors and officers for violations of the federal securities laws under Sections 11 and 15 of the Securities Act of 1933, as amended, or the Securities Act, and Sections 10 and 20 of the Securities Exchange Act of 1934, as amended, or the Exchange Act, Plaintiffs’ Securities Act claims allege that the Company’s Registration Statement and Prospectus for the September 24, 2015 public offering contained materially false and misleading statements and failed to disclose certain material adverse facts about the Company’s business, operations and prospects, including with respect to the clinical trials and prospects for pacritinib. Plaintiffs’ Exchange Act claims allege that the Company’s public disclosures were knowingly or recklessly false and misleading or omitted material adverse facts, again with a primary focus on the clinical trials and prospects for pacritinib. On May 2, 2016, the Company filed a motion to transfer the Ahrens case to the United States District Court for the Western District of Washington. The motion was unopposed and granted by the court on May 19, 2016. On June 3, 2016, the parties filed a joint motion to consolidate the McGlothlin case with the Ahrens case in order to proceed as a single consolidated proceeding. On June 13, 2016, the court granted the motion to consolidate with the action being captioned In re CTI BioPharma Corp. Securities Litigation, Master File No. 2:16-cv-00216-RSL. On September 2, 2016, the court appointed Lead Plaintiffs and Lead Counsel. On September 28, 2016, the court entered a scheduling order, as revised by order entered December 8, 2016, setting November 8, 2016 as the deadline to file a consolidated class action complaint and deadlines for briefing defendants’ motion to dismiss. Briefing concluded on February 22, 2017. The consolidated class action complaint asserts claims similar to those asserted in the initial complaints, although it no longer asserts claims relating to the September 24, 2015 public offering, but adds claims relating to the Company’s October 27, 2015 and December 4, 2015 public offerings. On July 26, 2017, we received a written offer for the global resolution and settlement of the consolidated action in exchange for cash payment of $20.0 million. The Company has insurance coverage related to this matter and such insurance is expected to cover $18.0 million of the claim. In August 2017, we agreed in principle to the terms of the settlement and submitted the terms and proposed class notice to the court for its preliminary approval. On October 24, 2017, the court granted preliminary approval and set a final approval hearing for February 1, 2018.

~~Wei v. James A. Bianco, et al.; England v. James A Bianco, et al; Nahar v. James A. Bianco, et al.; Hill v. James A. Bianco, et al.~~

relationships, and cannot evaluate a demand since they are facing personal liability. Each of plaintiffs’ suits requested the court to award the Company the damages allegedly sustained as a result of the conduct and to direct the Company and the individual defendants to reform and improve the Company’s corporate governance to avoid future damages. On March 29, 2017 during mediation, the parties to the derivative suits reached an agreement in principle to settle all four suits subject to Board and court approvals. Subject to the terms and conditions in the settlement agreement and court approval, CTI has agreed to adopt certain corporate governance reforms relating to, among other things, the content of CTI-retained independent data monitoring committee charters; engagement if an independent expert or entity to conduct yearly audits of compliance with Good Clinical Practices; the creation of a risk compliance officer position; certain improvements to CTI’s Audit Committee, including the requirement that the Audit Committee review CTI’s periodic public reports to facilitate proper disclosure of risks and risk factors; establishment of an internal audit function that will monitor the Company’s adherence to its policies and procedures, including those related to identification and disclosure of drug candidate safety issues; continuing-education requirements for members of the Board; and improvements to CTI’s nominating committee, compensation committee, and clawback policy. CTI also agreed not to object to an attorneys’ fee application by plaintiffs’ counsel of up to $0.8 million collectively, subject to the terms and conditions in the settlement agreement and court approval. There is no admission of liability or any wrongdoing by any of the individual defendants or CTI. On September 25, 2017, the King County Superior Court entered an order substituting Kevin Hammond for former Lead Plaintiff Gang Wei and Maurio Eley for former Lead Plaintiff Michael England, and the two case captions were amended as reflected above. The parties filed settlement-approval papers on October 26, 2017.

~~In addition to the items discussed above, we are from time to time subject to legal proceedings and claims arising in the ordinary course of business.~~

Item 1A. Risk Factors

~~This Quarterly~~Our business is subject to various risks, including those described in Part I, Item 1A, “Risk Factors” of our Annual Report on Form ~~10-Q~~10-K for the year ended December 31, 2022, as filed with the SEC on March 6, 2023.

This report contains forward-looking statements that involve risks and uncertainties. The occurrence of any of the risks described ~~below and elsewhere~~ in ~~this document, including the risk that~~ our ~~actual results may differ materially from those anticipated in these forward-looking statements,~~Annual Report on Form 10-K could materially adversely affect our business, financial condition, liquidity, operating results or prospects and the trading price of our securities. Additional risks and uncertainties that we do not presently know or that we currently deem immaterial may also harm our business, financial condition, liquidity, operating results and prospects and the trading price of our securities.

~~Factors Affecting Our Business, Financial Condition, Operating Results~~The following risk factors supplement should be read in conjunction with those contained in the risk factors disclosed in the “Risk Factors” section included in our Annual Report on Form 10-K for the year ended December 31, 2022.

The completion of the Offer and ~~Prospects~~the Merger are subject to certain conditions, including regulatory approvals as well as other uncertainties, and there can be no assurances as to whether and when they may be completed.

WeCompletion of the Merger is subject to various closing conditions, including, among other things, consummation of the Offer (as further detailed below), and the receipt of applicable regulatory approvals. Further, if the Merger has not been consummated on or before the Outside Date, then the Merger Agreement may be terminated by either party. There is no assurance that receipt of applicable regulatory approvals will ~~need~~occur, or that all of the other closing conditions will be satisfied (or waived, to ~~raise additional funds to operate our business, but additional funds may not~~the extent permitted by applicable law), or that the Merger will be ~~available~~completed on ~~acceptable~~the terms reflected in the Merger Agreement, within the expected timeframe or at all. ~~Any inability~~

The obligation of Purchaser to ~~raise required capital~~purchase Shares tendered in the Offer is subject to the satisfaction or waiver of the conditions set forth in Annex I to the Merger Agreement, including (i) that there shall have been validly tendered and not validly withdrawn that number of Shares that, when ~~needed could harm our liquidity, financial condition, business, operating results~~added to any Shares then owned by Sobi and ~~prospects.~~

~~We have substantial operating expenses associated with~~its controlled affiliates, represent at least one Share more than half of the ~~development~~sum of ~~our compounds and the commercialization of PIXUVRI, and we have significant contractual payment obligations. Our available cash and cash equivalents were $52.8 million~~(A) all Shares then outstanding as of ~~September 30, 2017. We believe~~the expiration of the Offer, and (B) all Shares that ~~our present financial resources, together with payments projected~~CTI may be required to ~~be received under certain of our contractual agreements and our ability to control costs, will only be sufficient to fund our operations into~~issue upon the third quarter of 2018. Cash forecasts and capital requirements are subject to change as a result of a variety of risks and uncertainties. Developments in and expenses associated with our clinical trials and other research and development activities, including the resumption of primary responsibilities for the development and commercialization of pacritinibvesting (including vesting solely as a result of the consummation of the Offer), conversion, settlement or exercise of all then-outstanding warrants, options, benefit plans, obligations or securities convertible or exchangeable into Shares or other rights to acquire or be issued Shares (in each case other than outstanding shares of CTI preferred stock), regardless of the conversion or exercise price or other terms and conditions thereof (the “Minimum Condition”); (ii) the expiration or termination of the ~~Pacritinib License Agreement~~waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”) and receipt of clearance, approval or consent under any other applicable antitrust law; and (iii) those other conditions set forth in ~~October 2016, acquisitions~~Annex I to the Merger Agreement.

The governmental authorities from which authorizations under the HSR Act are required have broad discretion in administering the governing laws and regulations, and may take into account various facts and circumstances in their consideration of ~~compounds~~the Merger, including other potential transactions in our industry or other ~~assets, our ability~~industries. These governmental authorities may initiate proceedings seeking to ~~generate projected sales~~prevent, or otherwise seek to prevent, the Merger. As a condition to authorization of PIXUVRI, any expansion of our sales and marketing organization for PIXUVRI, regulatory approval developments, our ability to consummate appropriate collaborations for development and commercialization activities, our ability to reach milestones triggering payments under applicable contractual arrangements, receive the ~~associated payments, litigation and other disputes, competitive market developments and other unplanned expenses~~Merger or ~~business developments may consume capital resources earlier than planned. Due to~~related transactions, these and other factors, any forecast for the period for which we will have sufficient resources to fund our operations, as well as any other operational or business projection we have disclosed, or may, from time to time, disclose, may fail.

As of September 30, 2017, we had an outstanding principal balance under our senior secured term loan agreement of $15.0 million. We are required to make monthly interest plus principal payments through December 1, 2018 in the approximate amount of $0.8 million per month, with the final principal payment of approximately $5.6 million on December 1, 2018. These borrowings are secured by a first priority security interest on substantially all of our personal property except our intellectual property and subject to certain other exceptions. In addition, the senior secured term loan agreement requires us to comply with restrictive covenants, including those that limit our operating flexibility and ability to borrow additional funds. A failure to make a required loan payment or an uncured covenant breach could lead to an event of default, and in such case, all amounts then outstanding may become due and payable immediately.

~~We will need to raise additional funds to operate our business. We~~governmental authorities also may seek to ~~raise~~impose requirements, limitations or costs, require divestitures or place restrictions on the conduct of the combined company’s business after completion of the Merger.

We can provide no assurance that all required approvals will be obtained or that all closing conditions will otherwise be satisfied (or waived, if applicable) in a timely manner or at all, and, if all required consents and approvals are obtained and all closing conditions are timely satisfied (or waived, if applicable), we can provide no assurance as to the terms, conditions and timing of such ~~capital through~~consents and approvals or the timing of the completion of the Merger. Many of the conditions to completion of the Merger are not within either our or Sobi’s control, and neither company can predict when or if these conditions will be satisfied (or waived, if applicable). Any delay in completing the Merger could cause us not to realize some or all of the benefits that we expect to achieve if the Merger is successfully completed within its expected timeframe.

Failure to complete the Merger could negatively impact our stock price and future business and financial results.

If the Merger is not completed for any reason, we will remain an independent public or private equity financings, partnerships, collaborations, joint ventures, disposition of assets, debt financings or restructurings, bank borrowings or other sources of financing. However, our ability to do so iscompany. Our ongoing business may be materially and adversely affected and we would be subject to a number of risks, ~~uncertainties, constraints~~including the following:

•we may experience negative reactions from the financial markets, including negative impacts on trading prices of our common stock, and ~~consequences,~~from our customers, suppliers, regulators and employees;

•we may be required to pay Sobi a termination fee of $59.0 million if the Merger Agreement is terminated under specified circumstances, including ~~but not limited~~(i) termination by CTI to enter into an agreement providing for a Superior Proposal, (ii) termination by Sobi following a Company Adverse Recommendation Change, (iii) termination by Sobi due to the ~~following:~~CTI board of directors’ failure to include its recommendation in the Schedule 14D-9, (iv) termination by Sobi because CTI has violated or breached in any material respect the non-solicitation provision, or (v) termination because (A) after the date of the Merger Agreement an Acquisition Proposal has either been made to CTI or been publicly made directly to CTI’s stockholders; (B)(1) the Outside Date has occurred, (2) the Offer has expired without the acceptance of the Shares for payment or the purchase of Shares validly tendered, or (3) CTI has breached and not cured any representation, warranty or covenant such that a condition to the Offer is not capable of being satisfied; and (C) within twelve months following (B)(1), (2) or (3), CTI or any of its subsidiaries signs a definitive agreement for an Acquisition Proposal or consummates an Acquisition Proposal;and

•matters relating to the Merger (including integration planning) will require substantial commitments of time and resources by our ~~ability~~management and the expenditure of significant funds, which would otherwise have been devoted to ~~raise capital through~~day-to-day operations and other opportunities that may have been beneficial to us as an independent company.

Even if successfully completed, there are certain risks to our shareholders from the ~~issuance~~consummation of the Offer and the Merger, including: the amount of cash to be paid per share of our common stock under the Merger Agreement is fixed and will not be adjusted for changes in our business, assets, liabilities, prospects, outlook, financial condition or operating results or in the event of any change in the market price of, analyst estimates of, or projections relating to, our common stock; receipt of the all-cash per share consideration in an amount equal to the Offer Price is taxable to shareholders that are treated as U.S. holders for U.S. federal income tax purposes; and if the Merger is completed, our shareholders will forego the opportunity to realize the potential long-term value of the successful execution of our current strategy as an independent company.

While the Merger is pending, we are subject to business uncertainties and contractual restrictions that could materially adversely affect our operating results, financial position and/or cash flows or result in a loss of employees, customers, or suppliers.

The Merger Agreement includes restrictions on the conduct of our business until the earlier of the completion of the Merger or termination of the Merger Agreement. For example, unless we obtain Sobi’s prior written consent (which consent shall not be unreasonably withheld, conditioned or delayed), we may not, subject to certain exceptions and aggregate limitations, incur additional indebtedness, issue additional shares of our common stock, repurchase our common stock, pay dividends, acquire assets, securities or ~~convertible securities is restricted by~~property, dispose of businesses or assets, enter into, terminate or amend material contracts or make certain additional capital expenditures. We may find that these and other contractual restrictions in the limited number of our residual authorized shares, the potential difficulty of obtaining shareholder approval to increase authorized shares and the restrictive covenants under our senior secured term loan agreement;

~~issuance of equity-based securities will dilute the proportionate ownership of existing shareholders;~~

Merger Agreement delay or prevent us from responding, or limit our ability to ~~obtain further funds from any potential loan arrangements is limited by~~respond, effectively to competitive pressures, industry developments and future business opportunities that may arise during such period, even if our ~~existing senior secured term loan agreement;~~

~~certain financing arrangements may require us to relinquish rights to various assets and/or impose more restrictive terms than any of our existing or past arrangements; and~~

wemanagement believes they may be ~~required~~advisable. The pendency of the Merger may also divert management’s attention and our resources from ongoing business and operations.

Our employees, customers, and suppliers may experience uncertainties about the effects of the Merger. It is possible that some customers, suppliers and other parties with whom we have a business relationship may delay or defer certain business decisions or might decide to ~~meet additional regulatory requirements,~~seek to terminate, change or renegotiate their relationship with us as a result of the pending Merger. Similarly, current and weprospective employees may ~~be subject to certain contractual limitations,~~experience uncertainty about their future roles with us following completion of the Merger, which may ~~increase our costs and harm~~materially adversely affect our ability to ~~obtain funding.~~attract and retain key employees. If any of these effects were to occur, it could materially and adversely impact our operating results, financial position and/or cash flows and/or our stock price.

~~For these~~Lawsuits may be filed against us and/or Sobi challenging the transactions contemplated by the Merger Agreement. An adverse ruling in any such lawsuit may delay or prevent the proposed Merger from being completed.

Lawsuits arising out of or relating to the Merger Agreement and/or the proposed Merger may be filed in the future. One of the conditions to completion of the Merger is the absence of any injunction or other order being in effect that prohibits completion of the Merger. Accordingly, if a plaintiff is successful in obtaining an injunction, then such order may prevent the proposed Merger from being completed, or from being completed within the expected timeframe. In addition, if the Merger is not consummated for any reason, litigation could be filed related to the failure to consummate the Merger.

Regardless of the outcome of any litigation related to the Merger (or the failure of its consummation), such litigation may be time-consuming and expensive, may distract our management from running the day-to-day operations of our business, and

may result in negative publicity or an unfavorable impression of us, any of which could adversely affect the price of our common stock, impair our ability to recruit or retain employees, damage our relationships with our customers, suppliers, and other ~~reasons, additional funding~~business partners, or otherwise materially harm our operations and financial performance.

If the Merger is not consummated, we may ~~not be available on favorable terms or at all. If we fail~~need to ~~obtain~~raise additional capital ~~when needed,~~to continue our operations and execute our operating plans.

If the Merger is not consummated, we may ~~be required~~need to raise additional capital or we may need to delay, scale back or eliminate some planned operations or ~~all of our research and development programs,~~ reduce ~~our selling, general and administrative~~ expenses ~~be unable~~ to attract and retain highly qualified personnel, refrain from making our contractually required payments when due (including debt payments) and/or be forced to cease operations, liquidate our assets and possibly seek bankruptcy protection. Any of these consequences could harm our business, financial condition, operating results and prospects.

~~Our audit report for the year ended December 31, 2016 contains an explanatory paragraph on our consolidated financial statements, and we may in the future, receive additional such reports.~~

Our independent registered public accounting firm included an explanatory paragraph in its reports on our consolidated financial statements for the year ended December 31, 2016 regarding their substantial doubt as to our ability to continue as a

going concern. We believe that our present financial resources, together with payments projected to be received under certain contractual agreements and our ability to control costs, will only be sufficient to fund our operations into the third quarter of 2018, which does raise substantial doubt about our ability to continue as a going concern. The inclusion ofremain a going concern, ~~explanatory paragraph in~~any of which would have a significant negative impact on our ~~audit report for the year ended December 31, 2016~~prospects and ~~for future years may negatively impact~~financial condition, as well as the trading price of our common ~~stock and make it more difficult, time consuming or expensive to obtain necessary financing, and we cannot guarantee that we will not receive such an explanatory paragraph in the future.~~

~~We expect to continue to incur net losses, and we may never achieve profitability.~~

We were incorporated in 1991 and have incurred a net operating loss every year since our formation. As of September 30, 2017, we had an accumulated deficit of $2.2 billion, and we expect to continue to incur net losses. As part of our business plan, we will need to continue to conduct research, development, testing and regulatory compliance activities with respect to our compounds and ensure the procurement of manufacturing and drug supply services, the costs of which, together with projected general and administrative expenses, is expected to result in operating losses for the foreseeable future.stock. There can be no ~~assurances~~assurance that we ~~will ever achieve profitability.~~

~~In order~~can raise capital when needed or on terms favorable to ~~develop~~us and ~~commercialize pacritinib, we will need to raise additional financing or seek a new collaboration partner for pacritinib.~~

~~We have resumed primary responsibility for~~our stockholders. Macroeconomic conditions and heightened global uncertainties may adversely affect general commercial activity and the ~~development~~U.S. and commercialization of pacritinib as a result of the termination of the Pacritinib License Agreement in October 2016, and we are no longer eligible to receive cost sharing or milestone payments for pacritinib’s development from Baxalta. Because obtaining regulatory approval requires substantial time, effortglobal economies and financial ~~resources, the termination of this collaborative partnership could negatively impact~~markets, which increases uncertainty around our ability to ~~successfully develop~~access the capital markets when needed and commercialize pacrtinib. We currently have no commitments or arrangements for any additional financing to fund the development and commercial launch of pacritinib, and we will need to seek additional funding, which may not be available or may not be available on ~~favorable~~acceptable terms. ~~We could also seek another collaborative partnership for the development and commercialization of pacritinib, which may not be available on reasonable terms or at all.~~

~~If our development and commercialization collaborations are not successful, or~~Moreover, if we are unable to obtain additional funds on a timely basis, there will be an increased risk of insolvency and up to a total loss of investment by our stockholders.

The Merger Agreement contains provisions that limit our ability to pursue alternatives to the proposed transaction, may discourage certain other companies from making a favorable alternative transaction proposal and, in specified circumstances, could require us to pay the other party a termination fee.

Under the Merger Agreement, we are subject to certain restrictions on our ability to solicit alternative business combination proposals from third parties, engage in discussion or negotiations with respect to such proposals or provide information in connection with such proposals, subject to certain customary exceptions. We may terminate the Merger Agreement and enter into ~~additional collaborations,~~an agreement providing for a superior proposal only if specified conditions have been satisfied, and such a termination would result in us being required to pay Sobi a termination fee equal to $59.0 million. If the Merger Agreement is terminated and we determine to seek another business combination, we may not be able to ~~effectively develop and/~~negotiate a transaction with another party on terms comparable to, or ~~commercialize our compounds, which~~better than, the terms of the proposed transaction. While we believe these provisions and agreements are reasonable and customary and are not preclusive of other offers, these provisions could discourage a third party that may have an interest in acquiring all or a ~~material adverse effect on our business.~~significant part of us from considering or proposing such acquisition, even if such third party were prepared to pay consideration with a higher value than the merger consideration. These provisions might also result in a potential third party acquirer proposing to pay a lower price than it might otherwise have proposed to pay because of the added expense of the termination fee that may become payable in certain circumstances.

~~Our business is heavily dependent on the success of our development~~We and ~~commercialization collaborations. In particular, under the Restated Agreement with Servier, we rely heavily on Servier to collaborate with us to develop~~Sobi will incur substantial transaction fees and commercialize PIXUVRI. As a result of our dependence on our relationship with Servier, the success or commercial viability of PIXUVRI is, to a certain extent, beyond our control. We are subject to a number of specific risks associated with our dependence on our collaborative relationship with Servier, including the following: possible disagreements as to the timing, nature and extent of development plans for the respective compound, including clinical trials or regulatory approval strategy; changes in their respective personnel who are key to the collaboration efforts; any changes in their respective business strategies adverse to our interests, whethercosts in connection with ~~a change~~the proposed transaction.

We and Sobi expect to incur several non-recurring transaction-related costs associated with completing the proposed transaction and achieving desired benefits of ~~control or otherwise; possible disagreements regarding ownership of proprietary rights;~~ the ~~ability~~proposed transaction. These fees and costs will be substantial. Non-recurring transaction costs include, but are not limited to, ~~meet our~~fees paid to legal, financial and other contractual obligations under the respective agreements; and the possibility that Servier could elect to terminate their agreement with us pursuant to “at-will” termination clauses or breach their agreement with us. Furthermore, the contingent financial returns under our collaboration with Servier dependsaccounting advisors, retention, severance, change in large part on the achievement of development and commercialization milestones and the ability to generate applicable product sales to trigger royalty payments. Therefore, our success, and any associated future financial returns to us and our investors, will depend in large part on the performance of Servier. If our existing collaborations fail, or if we do not successfully enter into additional collaborations when needed, we may be unable to further develop and commercialize the applicable compounds, generate revenues to sustain or grow our business or achieve profitability, which would harm our business, financial condition, operating results and prospects.

The regulatory approval process for pacritinib has been subject to delay and uncertainty associated with clinical holds placed on pacritinib clinical trials in February 2016 and the withdrawal of the original MAA in Europe. While the full clinical hold on pacritinib trials has been removed and a new MAA has been validated by the EMA, our dose-exploration trial for pacritinib and further clinical trials for pacritinib could be subject to further delay or we could be prevented from further studying pacritinib or seeking its commercialization.

On February 8, 2016, the FDA notified us that a full clinical hold had been placed on pacritinib and we subsequently withdrew our NDA for pacritinib until we determine next steps. A full clinical hold is a suspension of the clinical work requested under an investigational new drug application. Under the full clinical hold, all patients currently on pacritinib were required to discontinue pacritinib, and we are not permitted to enroll any new patients or start pacritinib as initial or crossover treatment. In its written notification, the FDA noted interim overall survival results from PERSIST-2 showing a detrimental effect on survival consistent with the results from PERSIST-1, and that deaths in PERSIST-2 in pacritinib-treated patients include intracranial hemorrhage, cardiac failure and cardiac arrest. On January 3, 2017, the full clinical hold was removed. Our complete response submission included, among other items, final Clinical Study Reports for both PERSIST-1 and 2 trials and the dose-exploration clinical trial protocol requested by the FDA. In July 2017, we enrolled the first patient in the PAC203 trial. We plan to enroll up to approximately 105 patients in our PAC203 trial with primary myelofibrosis who have failed prior ruxolitinib therapy to evaluate the dose response relationship for safety and efficacy (spleen volume reduction at 12 or 24 weeks) of three dose regimens: 100 mg once-daily, 100 mg twice-daily (BID) and 200 mg BID. The 200 mg BID dose regimen was used in PERSIST-2. The results of PAC203 may not address all of the FDA’s concerns regarding appropriate safe and efficacious dosage for pacritinib, and the FDA may again request additional information or require us to pursue new clinical safety trials with changes to, among other things, protocol, study design or sample size.

Further, in the EMA’s initial assessment report regarding our original MAA, the CHMP determined that the current application was not approvable because of major objections in the areas of efficacy, safety (hematological and cardiovascular toxicity) and the overall risk-benefit profile of pacritinib. Subsequent to the filing of the original MAA, data from the second phase 3 trial of pacritinib, PERSIST-2, were reported. These data suggest that pacritinib may show clinical benefit in patients who have failed or are intolerant to ruxolinitib therapy, a population for which there is no approved therapy. Following

discussions with the EMA about how PERSIST-2 data might address the major objections and how to integrate the data into the current application, we withdrew our original MAA, and we submitted a new MAA that seeks to address the major objections by including data from PERSIST-2. ~~The new application is~~ ~~for the treatment of patients with myelofibrosis who have thrombocytopenia (platelet counts less than 100,000 per microliter). The new MAA was validated by the EMA in July 2017.~~

The submission of new marketing applications, complying with any additional requests for information from the FDA or EMA or making any changes to protocol, study design, or sample size may be time-consuming, expensive and delay or prevent our ability to continue to study pacritinib. If we are unable to address any further recommendations, requests, or objections in a manner satisfactory to the FDA or EMA, as applicable, in a timely manner, or at all, we could be delayed or prevented from seeking commercialization of pacritinib. Delays in the commercialization of pacritinib would prevent us from receiving future milestone or royalty payments, and otherwise significantly harm our business.

Compounds that appear promising in research and development may fail to reach later stages of development for a number of reasons, including, among others, that clinical trials may take longer to complete than expected or may not be completed at all, and top-line or preliminary clinical trial data reports may ultimately differ from actual results once existing data are more fully evaluated.

~~Successful development of anti-cancer~~control and other ~~pharmaceutical products is highly uncertain,~~integration-related costs, filing fees and obtaining regulatory approval to market drugs to treat cancer is expensive, difficult and speculative. Compounds that appear promising in research and development may fail to reach later stages of development for several reasons, including, but not limited to:

~~delay or failure in obtaining necessary U.S. and international regulatory approvals, or the imposition of a partial or full regulatory hold on a clinical trial;~~

~~difficulties in formulating a compound, scaling the manufacturing process, timely attaining process validation for particular drug products and obtaining manufacturing approval;~~

~~pricing or reimbursement issues or other factors that may make the product uneconomical to commercialize;~~

production problems, such as the inability to obtain raw materials or supplies satisfying acceptable standards for the manufacture of our products, equipment obsolescence, malfunctions or failures, product quality/contamination problems or changes in regulations requiring manufacturing modifications;

~~inefficient cost structure of a compound compared to alternative treatments;~~

~~obstacles resulting from proprietary rights held by others with respect to a compound, such as patent rights;~~

lower than anticipated rates of patient enrollment as a result of factors, such as the number of patients with the relevant conditions, the proximity of patients to clinical testing centers, eligibility criteria for tests and competition with other clinical testing programs;

preclinical or clinical testing requiring significantly more time than expected, resources or expertise than originally expected and inadequate financing, which could cause clinical trials to be delayed or terminated;

~~failure of clinical testing to show potential products to be safe and efficacious, and failure to demonstrate desired safety and efficacy characteristics in human clinical trials;~~

suspension of a clinical trial at any time by us, an applicable collaboration partner or a regulatory authority on the basis that the participants are being exposed to unacceptable health risks or for other reasons;

~~delays in reaching or failing to reach agreement on acceptable terms with prospective CROs, and trial sites; and~~

~~failure of third parties, such as CROs, academic institutions, collaborators, cooperative groups and/or investigator sponsors, to conduct, oversee and monitor clinical trials and results.~~

In addition, from time to time we report top-line data for clinical trials. Such data are based on a preliminary analysis of then-available efficacy and safety data, and such findings and conclusions are subject to change following a more comprehensive review of the data related to the particular study or trial. Top-line or preliminary data are based on important

assumptions, estimations, calculations and information then available to us to the extent we have had, at the time of such reporting, an opportunity to fully and carefully evaluate such information in light of all surrounding facts, circumstances, recommendations and analyses. As a result, top-line results may differ from future results, or different conclusions or considerations may qualify such results once existing data have been more fully evaluated. In addition, third parties, including regulatory agencies, may not accept or agree with our assumptions, estimations, calculations or analyses or may interpret or weigh the importance of data differently, which could impact the value of the particular program, the approvability or commercialization of the particular compound and our business in general.

If the development of our compounds is delayed or fails, or if top-line or preliminary clinical trial data reported differ from actual results, our development costs may increase and the ability to commercialize our compounds may be harmed, which could harm our business, financial condition, operating results or prospects.

~~We or our collaboration partners may not obtain or maintain the regulatory approvals required to develop or commercialize some or all of our compounds.~~

We are subject to rigorous and extensive regulation by the FDA in the U.S. and by comparable agencies in other jurisdictions, including the EMA in the E.U. Some of our other product candidates are currently in research or development and, other than conditional marketing authorization for PIXUVRI in the E.U., we have not received marketing approval for our compounds. Our products may not be marketed in the U.S. until they have been approved by the FDA and may not be marketed in other jurisdictions until they have received approval from the appropriate foreign regulatory agencies. Each product candidate requires significant research, development and preclinical testing and extensive clinical investigation before submission of any regulatory application for marketing approval. Obtaining regulatory approval requires substantial time, effort and financial resources, and we may not be able to obtain approval of any of our products on a timely basis, or at all. For instance, on February 8, 2016, the FDA placed pacritinib on full clinical hold and the clinical hold was not removed until January 3, 2017. The number, size, design and focus of preclinical and clinical trials that will be required for approval by the FDA, the EMA or any other foreign regulatory agency varies depending on the compound, the disease or condition that the compound is designed to address and the regulations applicable to any particular compound. Preclinical and clinical data can be interpreted in different ways, which could delay, limit or preclude regulatory approval. The FDA, the EMA and other foreign regulatory agencies can delay, limit or deny approval of a compound for many reasons, including, but not limited to:

~~a compound may not be shown to be safe or effective;~~

~~the clinical and other benefits of a compound may not outweigh its safety risks;~~

~~clinical trial results may be negative or inconclusive, or adverse medical events may occur during a clinical trial;~~

~~the results of clinical trials may not meet the level of statistical significance required by regulatory agencies for approval;~~

~~such regulatory agencies may interpret data from pre-clinical and clinical trials in different ways than we do;~~

such regulatory agencies may not approve the manufacturing process of a compound or determine that a third party contract manufacturers manufactures a compound in accordance with current good manufacturing practices, or cGMPs;

~~a compound may fail to comply with regulatory requirements; or~~

~~such regulatory agencies might change their approval policies or adopt new regulations.~~

~~If our compounds are not approved at all or quickly enough to provide net revenues to defray our operating expenses, our business, financial condition, operating results and prospects could be harmed.~~

In the event that we seek and the FDA does not grant accelerated approval or priority review for a drug candidate, we would experience a longer time to commercialization in the U.S., if commercialized at all, our development costs may increase and our competitive position may be harmed.

We were seeking accelerated approval and requested Priority Review of our NDA for pacritinib. However, on February 8, 2016, the FDA notified us that a full clinical hold had been placed on pacritinib and we subsequently withdrew our NDA for pacritinib. On January 3, 2017, the full clinical hold was removed. In July 2017, we enrolled the first patient in a new trial,

PAC203, and we plan to enroll up to approximately 105 patients with primary myelofibrosis who have failed prior ruxolitinib therapy to evaluate the dose response relationship for safety and efficacy (spleen volume reduction at 12 and 24 weeks) of three dose regimens: 100 mg once-daily, 100 mg twice-daily (BID) and 200 mg BID. The 200 mg BID dose regimen was used in PERSIST-2.

We may in the future decide to seek accelerated approval pathway for our compounds. The FDA may grant accelerated approval to a product designed to treat a serious or life-threatening condition that provides meaningful therapeutic benefit over available therapies upon a determination that the product has an effect on a surrogate endpoint or intermediate clinical endpoint that is reasonably likely to predict clinical benefit. A surrogate endpoint under an accelerated approval pathway may be used in cases in which the advantage of a new drug over available therapy may not be a direct therapeutic advantage, but is a clinically important improvement from a patient and public health perspective.printing costs. There can be no assurance that the ~~FDA~~integration process will ~~agree that any endpoint we suggest with respect to any of our drug candidates is an appropriate surrogate endpoint. Furthermore, there can be no assurance that any application will be accepted~~deliver all or that approval will be granted. Even if a product candidate is granted accelerated approval, such accelerated approval is contingent on the sponsor’s agreement to conduct one or more post-approval confirmatory trials. Such confirmatory trial(s) must be completed with due diligence and, in some cases, the FDA may require that the trial(s) be designed and/or initiated prior to approval. Moreover, the FDA may withdraw approval of a product candidate or indication approved under the accelerated approval pathway for a variety of reasons, including if the trial(s) required to verify the predicted clinical benefit of a product candidate fail to verify such benefit or do not demonstrate sufficient clinical benefit to justify the risks associated with the drug, or if the sponsor fails to conduct any required post-approval trial(s) with due diligence.

In the event of priority review, the FDA has a goal to (but is not required to) take action on an application within a total of eight months (rather than a goal of twelve months for a standard review). The FDA grants priority review only if it determines that a product treats a serious condition and, if approved, would provide a significant improvement in safety or effectiveness when compared to a standard application. The FDA has broad discretion whether to grant priority review, and, while the FDA has granted priority review to other oncology product candidates, our drug candidates may not receive similar designation. Moreover, receiving priority review from the FDA does not guarantee completion of review or approval within the targeted eight-month cycle or thereafter.

~~A failure to obtain accelerated approval or priority review would result in a longer time to commercialization~~substantially all of the ~~applicable compound~~benefits of the proposed transaction in the ~~U.S., if commercialized at all, could increase~~near term, the ~~cost of development and could harm our competitive position in the marketplace.~~

~~Even if our compounds are successful in clinical trials and receive regulatory approvals, we or our collaboration partners may not be able to successfully commercialize them.~~

The development and ongoing clinical trials for our compounds may not be successful and, even if they are, the resulting products may never be successfully developed into commercial products. Even if we are successful in our clinical trials and in obtaining other regulatory approvals, the respective products may not reach or remain in the market for a number of reasons including:

~~they may be found ineffective or cause harmful side effects;~~

~~they may be difficult to manufacture on a scale necessary for commercialization;~~

they may experience excessive product loss due to contamination, equipment failure, inadequate transportation or storage, improper installation or operation of equipment, vendor or operator error, inconsistency in yields or variability in product characteristics;

~~they may be uneconomical to produce;~~

~~political and legislative changes emerging after the recent election of the President of the United States may make the commercialization of our product candidates more difficult;~~

~~we may fail to obtain reimbursement approvals or pricing that is cost effective for patients as compared to other available forms of treatment or that covers the cost of production and other expenses;~~

~~they may not compete effectively with existing or future alternatives;~~

~~we may be unable to develop commercial operations and to sell marketing rights;~~

~~they may fail to achieve market acceptance; or~~

~~we may be precluded from commercialization of a product due to proprietary rights of third parties.~~

In particular, with respect to the commercialization of PIXUVRI, we will be heavily dependent on our collaboration partner, Servier. The failure of Servier (or any other applicable collaboration partner) to fulfill its commercialization obligations with respect to a compound, or the occurrence of any of the events in the list above, could adversely affect the commercialization of our products. Additionally, uncertainty and speculation regarding the possible repeal of all or a portion of the Patient Protection and Affordable Care Act has emerged after the recent election of the President of the United States. Members of the Trump administration, including the President, have made statements suggesting the administration plans to seek repeal of all or portions of the Affordable Care Act, and have stated that they will ask Congress to replace the current legislation with new legislation. The uncertainty this causes for the healthcare industry could also adversely affect the commercialization of our products. If we fail to commercialize products or if our future products do not achieve significant market acceptance, we will not likely generate significant revenues or become profitable.

The pharmaceutical business is subject to increasing government price controls and other restrictions on pricing, reimbursement and access to drugs, which could adversely affect our future revenues and profitability.

To the extent our products are developed, commercialized and successfully introduced to market, they may not be considered cost-effective and third-party or government reimbursement might not be available or sufficient. Globally, governmental and other third-party payors are becoming increasingly aggressive in attempting to contain health care costs by strictly controlling, directly or indirectly, pricing and reimbursement and, in some cases, limiting or denying coverage altogether on the basis of a variety of justifications, and we expect pressures on pricing and reimbursement from both governments and private payors inside and outside the U.S. to continue. In the U.S., we are subject to substantial pricing, reimbursement and access pressures from state Medicaid programs, private insurance programs and pharmacy benefit managers, and implementation of U.S. health care reform legislation is increasing these pricing pressures. The Patient Protection and Affordable Care Act instituted comprehensive health care reform, which includes provisions that, among other things, reduce and/or limit Medicare reimbursement, require all individuals to have health insurance (with limited exceptions) and impose new and/or increased taxes. In addition, members of the Trump administration, including the President, have made public statements criticizing pricing practices within the pharmaceutical industry, indicating that they may seek to increase pricing pressures on the pharmaceutical industry.

In almost all European markets, pricing and choice of prescription pharmaceuticals are subject to governmental control. Therefore, the price of our products and their reimbursement in Europe is and will be determined by national regulatory authorities. Reimbursement decisions from one or more of the European markets may impact reimbursement decisions in other European markets. A variety of factors are considered in making reimbursement decisions, including whether there is sufficient evidence to show that treatment with the product is more effective than current treatments, that the product represents good value for money for the health service it provides and that treatment with the product works at least as well as currently available treatments. The continuing efforts of government and insurance companies, health maintenance organizations and other payors of health care costs to contain or reduce costs of health care may affect our future revenues and profitability or those of our potential customers, suppliers and collaborative partners, as well as the availability of capital.

~~We may never be able to generate significant product revenues from the sale of PIXUVRI.~~

We anticipate that, for at least the next several years, our ability to generate revenues and become profitable will depend, in part, on our ability and that of our collaborator, Servier, to successfully commercialize our only currently marketed product, PIXUVRI. PIXUVRI is not approved for marketing in the U.S., is presently available only in a limited number of countries and is reimbursed in even fewer countries.

In addition, the successful commercialization of PIXUVRI depends heavily on the ability to obtain and maintain favorable reimbursement rates for users of PIXUVRI, as well as on various additional factors, including, without limitation, the ability to:

~~obtain an annual renewal of our conditional marketing authorization for PIXUVRI;~~

~~increase demand for and sales of PIXUVRI and obtain greater acceptance of PIXUVRI by physicians and patients;~~

~~establish and maintain agreements with wholesalers and distributors on reasonable terms;~~

maintain, and where necessary, enter into additional, commercial manufacturing arrangements with third parties, cost-effectively manufacture necessary quantities and secure distribution, managerial and other capabilities; and

~~further develop and maintain a commercial organization to market PIXUVRI.~~

~~If we are unable to successfully commercialize PIXUVRI as planned, our business, financial condition, operating results and prospects could be harmed.~~

Post-approval or authorization regulatory reviews and obligations often result in significant expense and marketing limitations, and any failure to satisfy such ongoing obligations, including, in particular, our post-authorization commitment trial for PIXUVRI, could negatively affect our business, financial condition, operating results or prospects.

Even if a product receives regulatory approval or authorization, as applicable, we are and will continue to be subject to numerous regulations and statutes regulating the manner of obtaining reimbursement for and selling the product, including limitations on the indicated uses for which a product may be marketed. Approved or authorized products, including PIXUVRI, are subject to extensive manufacturing, labeling, packaging, adverse event reporting, storage, advertising, promotion and record-keeping regulations. These requirements include submissions of safety and other post-marketing information and reports. In addition, such products are subject to ongoing maintenance of product registration and continued compliance with cGMPs, good clinical practices, or GCPs, and good laboratory practices, or GLPs. Further, distribution of products must be conducted in accordance with good distribution practices, or GDPs. The distribution process and facilities of our third-party distributors are subject to, and our wholesale distribution authorization by the UK Medicines and Healthcare Products Regulatory Agency subjects us to, continuing regulation by applicable regulatory authorities with respect to the distribution and storage of products. Regulatory authorities may also impose new restrictions on continued product marketing or may require the withdrawal of a product from the market if adverse events of unanticipated severity or frequency are discovered following approval. In addition, regulatory agencies may impose post-approval/post-authorization clinical trials, such as our ongoing PIX306 trial of PIXUVRI required by the EMA. We cannot predict the outcome of PIX306 or whether we will be able to complete the associated requirements in a timely manner. If we are unable to submit the requisite PIX306 clinical study report by the due date in December 2018 and are unable to obtain an extension of such deadline, or if we are otherwise unable to satisfy all applicable requirements, our conditional marketing authorization for PIXUVRI may be revoked.

Any other failure to comply with applicable regulations could result in warning or untitled letters, product recalls, interruption of manufacturing and commercial supply processes, withdrawal or seizure of products, suspension of an applicable wholesale distribution authorization and/or distribution of products, operating restrictions, injunctions, suspension of licenses, revocation of the applicable product’s approval or authorization, other administrative or judicial sanctions (including civil penalties and/or criminal prosecution) and/or unanticipated related expenditure to resolve shortcomings, which could negatively affect our business, financial condition, operating results or prospects.

We may not be able to maintain our listings on The NASDAQ Capital Market and the Mercato Telematico Azionario, or MTA, in Italy, or trading on these exchanges may otherwise be halted or suspended, which may make it more difficult for investors to sell shares of our common stock and consequently may negatively impact the price of our common stock.

We regained compliance in January 2017 with the minimum $1.00 bid price requirement by effecting a 1-for-10 reverse stock split on January 1, 2017, after receiving notice of non-compliance from NASDAQ in March 2016.

We have in the past and may in the future fail to comply with the NASDAQ Stock Market LLC, or NASDAQ. If our common stock ceases to be listed for trading on The NASDAQ Capital Market for failure to comply with the minimum $1.00 per share closing bid price requirement or for any other reason, it may harm our stock price, increase the volatility of our stock price, decrease the level of trading activity and make it more difficult for investors to buy or sell shares of our common stock. Our failure to maintain a listing on The NASDAQ Capital Market may constitute an event of default under our senior securedlong term loan and any future indebtedness, which would accelerate the maturity date of such debt or trigger other obligations. In addition, certain institutional investors that are not permitted to own securities of non-listed companies may be required to sell their shares adversely affecting the market price of our common stock. If we are not listed on The NASDAQ Capital Market or if our public float falls below $75 million, we will be limited in our ability to file new shelf registration statements on SEC Form S-3 and/or to fully use one or more registration statements on SEC Form S-3. We have relied significantly on shelf registration statements on SEC Form S-3 for most of our financings in recent years, so any such limitations may harm our ability to raise the capital we need. Delisting from The NASDAQ Capital Market could also affect our ability to maintain our listing or trading on the MTA in Italy. Trading in our common stock has been halted or suspended on both The NASDAQ

Capital Market and MTA in the past and may also be halted or suspended in the future due to market or trading conditions at the discretion of The NASDAQ Stock Market, CONSOB or the Borsa Italiana (which ensures the development of the managed markets in Italy). Any halt or suspension in the trading in our common stock may negatively impact the market price of our common stock.

We may be unable to obtain a quorum for meetings of our shareholders or obtain requisite shareholder approval and, consequently, be unable to take certain corporate actions, including financing activities.

Failure to meet the requisite quorum or obtain requisite shareholder approval can prevent us from raising capital through equity financing or otherwise taking certain actions that may be in our best interest and that of our shareholders. We have experienced such difficulties in the past.

We are required under the NASDAQ Marketplace Rules to obtain shareholder approval for any issuance of additional equity securities that would comprise more than 20% of the total shares of our common stock outstanding before the issuance of such securities sold at a discount to the greater of book or market value in an offering that is not deemed to be a “public offering” by the NASDAQ Marketplace Rules, as well as under certain other circumstances. We have in the past and may in the future issue additional equity securities that would comprise more than 20% of the total shares of our common stock outstanding in order to fund our operations. However, we might not be successful in obtaining the required shareholder approval for any future issuance that requires shareholder approval pursuant to applicable rules and regulations, particularly in light of difficulties we have had in the past in obtaining a quorum and obtaining the requisite vote. If we are unable to obtain financing or our financing options are limited due to shareholder approval difficulties, such failure may harm our ability to continue operations.

Additionally, a portion of our common shares are held by Italian institutions and, under Italian laws and regulations, it is difficult to communicate with the beneficial holders of those shares to obtain votes. In recent years, certain depository banks in Italy holding shares of our common stock have facilitated book-entry transfers of their share positions at Monte Titoli, S.p.A., the Italian central clearing agency, to their U.S. correspondent bank, who would then transfer the shares to an account of the Italian bank at a U.S. broker-dealer that is an affiliate of that bank. Certain of the banks we contacted to facilitate these arrangements agreed to make the share transfers pursuant to these arrangements as of the record date of the shareholder meeting, subject to the relevant beneficial owner being given notice before such record date and taking no action to direct the voting of such shares. Obtaining a quorum and necessary shareholder approvals at shareholder meetings may depend in part upon the willingness of the Italian depository banks to continue participating in the custody transfer arrangements, and we cannot be assured that those banks that have participated in the past will continue to do so in the future.

As a result of the foregoing or for other reasons, we may be unable to obtain a quorum at annual or special meetings of shareholders. Even if we are able to obtain a quorum at our shareholder meetings, we may not obtain enough votes to approve matters to be resolved upon at those meetings. Any failure to obtain a quorum or the requisite vote on a proposal in question could harm us.

We are subject to Italian regulatory requirements, which limit our ability to issue additional shares of our common stock, could result in administrative and other challenges and additional expenses and/or could limit our ability to undertake other business initiatives.

Because our common stock is traded on the MTA in Italy, we are required to also comply with the rules and regulations of the Commissione Nazionale per le Società e la Borsa, or CONSOB, and the Borsa Italiana S.p.A., or Borsa Italiana, which regulate companies listed on Italy’s public markets. Compliance with these regulations and responding to periodic information requests from Borsa Italiana and CONSOB requires us to devote additional time and resources to regulatory compliance matters and to incur additional expenses of engaging additional outside counsel, accountants and other professional advisors. Actual or alleged failure to comply with Italian regulators can also subject us to regulatory investigations and fines or other sanctions from time to time.

Additionally, compliance with Italian regulatory requirements may restrict additional issuances of our common stock or other business initiatives. Under Italian law, in order to have newly issued shares listed on the Italian Stock Exchange, we must publish a registration document, securities note and summary (which jointly compose a listing prospectus) that have to be approved by CONSOB prior to issuing common stock that is equal to or exceeds, in any twelve-month period, 20% of the number of shares of our common stock outstanding at the beginning of that period, subject to certain exceptions. If we are unable to obtain and maintain a registration document, securities note or summary for the listing of the newly issued shares and to cover general financing efforts under Italian law, we may be required to raise money using alternative forms of securities. In the past, we have issued convertible preferred stock in numerous prior offerings because the common stock

resulting from the conversion of such securities, subject to the provisions of European Directive No. 71/2003, was not subject to limitations based on a percentage in respect of the total number of shares. However, the European Union Parliament and the European Council recently published regulation, which became effective in July 2017, that set the limitation to 20% of the number of shares and significantly limited the scope of the exception to the listing prospectus requirement in relation to the stock resulting from the conversion or exchange of securities. This new regulation proposal may limit our ability to issue convertible securities or impose additional costs on future issuances.

Any of such regulatory requirements of CONSOB and the Borsa Italiana could result in administrative and other challenges and additional expenses, limit our ability to undertake other business initiatives and negatively affect our business, financial condition, operating results and prospects.

~~We will incur a variety of costs for, and may never realize the anticipated benefits of, acquisitions, collaborations or other strategic transactions.~~

We evaluate and undertake acquisitions, collaborations and other strategic transactions from time to time. The process of negotiating these transactions, as well as integrating any acquisitions and implementing any strategic alliances, may result in operating difficulties and expenditures. In addition, these transactions may require significant management attention that would otherwise be available for ongoing development of our business, whether or not any such transaction is ever consummated. These undertakings could also result in potentially dilutive issuances of equity securities, the incurrence of debt, contingent liabilities and/or amortization expenses related to intangible assets, and we may never realize the anticipated benefits. In addition, following the consummation of a transaction, our results of operations and the market price of our common stock may be affected by factors different from those that affected our results of operations and the market price of our common stock prior to such acquisition. Any of the foregoing consequences resulting from transactions of the type described above could harm our business, financial condition, operating results or prospects.

~~We may be subject to fines, penalties, injunctions and other sanctions if we are deemed to be promoting the use of our products for non-FDA-approved, or off-label, uses.~~

Our business and future growth depend on the development, ultimate sale and use of products that are subject to FDA, EMA and or other regulatory agencies regulation, clearance and approval. Under the U.S. Federal Food, Drug, and Cosmetic Act and other laws, we are prohibited from promoting our products for off-label uses. This means that in the U.S., we may not make claims about the safety or effectiveness of our products and may not proactively discuss or provide information on the use of our products, except as allowed by the FDA.

Government investigations concerning the promotion of off-label uses and related issues are typically expensive, disruptive and burdensome, generate negative publicity and may result in fines or payments of settlement awards. If our promotional activities are found to be in violation of applicable law or if we agree to a settlement in connection with an enforcement action, we would likely face significant fines and penalties and would likely be required to substantially change our sales, promotion, grant and educational activities.

A failure to comply with the numerous laws and regulations that govern our business, including those related to cross-border conduct, health care fraud and abuse, anti-corruption and false claims and the protection of health information, could result in substantial penalties and prosecution.

We are subject to risks associated with doing business outside of the U.S., which exposes us to complex foreign and U.S. regulations. For example, we are subject to regulations imposed by the Foreign Corrupt Practices Act, or the FCPA, the Bribery Act 2010 and other anti-corruption laws. These laws generally prohibit U.S. companies and their intermediaries from offering, promising, authorizing or making improper payments to foreign government officials for the purpose of obtaining or retaining business. The SEC and U.S. Department of Justice have increased their enforcement activities with respect to the FCPA. Internal control policies and procedures and employee training and compliance programs that we have implemented to deter prohibited practices may not be effective in prohibiting our employees, contractors or agents from violating or circumventing our policies and the law.

In addition, we are subject to various state and federal fraud and abuse laws, including, without limitation, the federal Anti-Kickback Statute and federal False Claims Act. There are similar laws in other countries. These laws may impact, among other things, the sales, marketing and education programs for our products. The federal Anti-Kickback Statute prohibits persons from knowingly and willingly soliciting, offering, receiving or providing remuneration, directly or indirectly, in exchange for or to induce either the referral of an individual, or the furnishing or arranging for a good or service, for which payment may be made under a federal health care program. The federal False Claims Act prohibits persons from knowingly filing, or causing to

be filed, a false claim to, or the knowing use of false statements to obtain payment from the federal government. Suits filed under the False Claims Act can be brought by any individual on behalf of the government and such individuals, commonly known as “whistleblowers,” may share in any amounts paid by the entity to the government in fines or settlement. Many states have also adopted laws similar to the federal Anti-Kickback Statute and False Claims Act.

We may also be subject to the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act and their respective implementing regulations, or HIPAA, which established uniform standards for certain “covered entities” (health care providers, health plans and health care clearinghouses) governing the conduct of certain electronic health care transactions and protecting the security and privacy of protected health information. Among other things, HIPAA’s privacy and security standards are directly applicable to “business associates” - independent contractors or agents of covered entities that create, receive, maintain or transmit protected health information in connection with providing a service for or on behalf of a covered entity. In addition to possible civil and criminal penalties for violations, state attorneys general are authorized to file civil actions for damages or injunctions in federal courts to enforce HIPAA and seek attorney’s fees and costs associated with pursuing federal civil actions. In addition, state laws govern the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.

We are unable to predict whether we could be subject to actions under any of the foregoing or similar laws and regulations, or the impact of such actions. If we were to be found to be in violation of applicable laws or regulations, we may be subject to penalties, including civil and criminal penalties, damages, fines, exclusion from government health care reimbursement programs and the curtailment or restructuring of our operations, all of which could have a material adverse effect on our business and results of operations.

We are dependent on third-party service providers for a number of critical operational activities including, in particular, for the manufacture, testing and distribution of our compounds and associated supply chain operations, as well as for clinical trial activities. Any failure or delay in these undertakings by third parties could harm our business.

Our business is dependent on the performance by third parties of their responsibilities under contractual relationships. In particular, we rely heavily on third parties for the manufacture and testing of our compounds. We do not have internal analytical laboratory or manufacturing facilities to allow the testing or production of compounds in compliance with GLP and cGMP. As a result, we rely on third parties to supply us in a timely manner with manufactured products/product candidates. We may not be able to adequately manage and oversee the manufacturers we choose, they may not perform as agreed or they may terminate their agreements with us. In particular, we depend on third-party manufacturers to conduct their operations in compliance with GLP and cGMP or similar standards imposed by the U.S. and/or applicable foreign regulatory authorities, including the FDA and EMA. Any of these regulatory authorities may take action against a contract manufacturer who violates GLP and cGMP. Failure of our manufacturers to comply with FDA, EMA or other applicable regulations may cause us to curtail or stop the manufacture of such products until we obtain regulatory compliance.

We may not be able to obtain sufficient quantities of our compounds if we are unable to secure manufacturers when needed, or if our designated manufacturers do not have the capacity or otherwise fail to manufacture compounds according to our schedule and specifications or fail to comply with cGMP regulations. In particular, in connection with the transition of the manufacturing of PIXUVRI and pacritinib drug supply to successor vendors, respectively, we could face logistical, scaling or other challenges that may adversely affect supply. Furthermore, in order to ultimately obtain and maintain applicable regulatory approvals, any manufacturers we utilize are required to consistently produce the respective compounds in commercial quantities and of specified quality or execute fill-finish services on a repeated basis and document their ability to do so, which is referred to as process validation. In order to obtain and maintain regulatory approval of a compound, the applicable regulatory authority must consider the result of the applicable process validation to be satisfactory and must otherwise approve of the manufacturing process. Even if our compound manufacturing processes obtain regulatory approval and sufficient supply is available to complete clinical trials necessary for regulatory approval, there are no guarantees we will be able to supply the quantities necessary to effect a commercial launch of the applicable drug, or once launched, to satisfy ongoing demand. Any compound shortage could also impair our ability to deliver contractually required supply quantities to applicable collaborators, as well as to complete any additional planned clinical trials.

We also rely on third-party service providers for certain warehousing, transportation, sales, order processing, distribution and cash collection services. With regard to the distribution of our compounds, we depend on third-party distributors to act in accordance with GDP, and the distribution process and facilities are subject to continuing regulation by applicable regulatory authorities with respect to the distribution and storage of products.

In addition, we depend on medical institutions and CROs (together with their respective agents) to conduct clinical trials and associated activities in compliance with GCP and in accordance with our timelines, expectations and requirements. To the extent any such third parties are delayed in achieving or fail to meet our clinical trial enrollment expectations, fail to conduct our trials in accordance with GCP or study protocol or otherwise take actions outside of our control or without our consent, our business may be harmed. Furthermore, we conduct clinical trials in foreign countries, subjecting us to additional risks and challenges, including, in particular, as a result of the engagement of foreign medical institutions and foreign CROs, who may be less experienced with regard to regulatory matters applicable to us and may have different standards of medical care.

With regard to certain of the foregoing clinical trial operations and stages in the manufacturing and distribution chain of our compounds, we rely on single vendors. In particular, our current business structure contemplates, at least in the foreseeable future, use of a single commercial supplier for PIXUVRI drug substance. In addition, in the event pacritinib is approved, we are initially preparing to have only one commercial supplier for pacritinib. We may in the future seek to qualify an additional manufacturer of pacritinib, but the process for qualifying a manufacturer can be lengthy and may not occur on a timely basis or at all. The ~~use~~costs described above and any unanticipated costs and expenses, many of ~~single vendors for core operational activities, such as clinical trial operations, manufacturing and distribution, and~~which will be borne by Sobi or us even if the resulting lack of diversification, expose us to the risk of a material interruption in service related to these single, outside vendors. As a result, our exposure to this concentration risk could harm our business.

Although we monitor the compliance of our third-party service providers performing the aforementioned services, we cannot be certain that such service providers will consistently comply with applicable regulatory requirements or that they will otherwise timely satisfy their obligations to us. Any such failure and/or any failure by us to monitor their services and to plan for and manage our short and long term requirements underlying such services could result in shortage of the compound, delays in or cessation of clinical trials, failure to obtain or revocation of product approvals or authorizations, product recalls, withdrawal or seizure of products, suspension of an applicable wholesale distribution authorization and/or distribution of products, operating restrictions, injunctions, suspension of licenses, other administrative or judicial sanctions (including civil penalties and/or criminal prosecution) and/or unanticipated related expenditures to resolve shortcomings. Such consequencesproposed transaction is not completed, could have ~~a significant impact~~an adverse effect on ~~our business, financial condition, operating results~~Sobi’s or ~~prospects.~~

~~If we are unable to recruit, retain, integrate and motivate senior management, other key personnel and directors, or if such persons are unable to perform effectively, our business could suffer.~~

Our future success depends, in part, on our ability to continue to attract and retain senior management, other key personnel and directors to enable the execution of our business plan and to identify and pursue new opportunities. Additionally, our productivity and the quality of our operations are dependent on our ability to integrate and train our new personnel quickly and effectively. In February 2017, we announced the appointment of Adam Craig, M.D., Ph.D., as President and Chief Executive Officer effective March 2017, and also in September 2017, we announced the appointment of Bruce J. Seeley as Executive Vice President, Chief Operating Officer and David H. Kirske as Chief Financial Officer. Leadership transitions and management changes can be difficult to manage and may create uncertainty or disruption to our business or increase the likelihood of turnover in our other officers and employees. We may not be able to effectively manage our transition to a new president and chief executive officer.

Directors and management of publicly traded corporations are increasingly concerned with the extent of their personal exposure to lawsuits and shareholder claims, as well as governmental, creditor and other claims that may be made against them. Due to these and other reasons, such persons are also becoming increasingly concerned with the availability of directors and officers liability insurance to pay on a timely basis the costs incurred in defending such claims. We currently carry directors and officers liability insurance. However, directors and officers liability insurance is expensive and can be difficult to obtain. If we are unable to continue to provide directors and officers sufficient liability insurance at affordable rates or at all, or if directors and officers perceive our ability to do so in the future to be limited, it may become increasingly more difficult to attract and retain management and qualified directors to serve on our Board of Directors.

The loss of the services of senior management, other key personnel or directors and/or the inability to timely attract or integrate such persons could significantly delay or prevent the achievement of our development and strategic objectives and may adversely affect our business, financial condition and operating results.

~~We face direct and intense competition from our competitors in the biotechnology and pharmaceutical industries, and we may not compete successfully against them.~~

Competition in the oncology market is intense and is accentuated by the rapid pace of technological and product development. We anticipate that we will face increased competition in the future as new companies enter the market. Our

competitors in the U.S. and elsewhere are numerous and include, among others, major multinational pharmaceutical companies, specialized biotechnology companies and universities and other research institutions. Specifically:

In Europe, PIXUVRI faces competition from existing treatments for adults with multiply relapsed or refractory aggressive B-cell NHL. For example, patients are currently being treated with ibrutinib, idelalisib, lenolidimide, bendamustine, oxaliplatin and gemcitabine, although these particular agents do not have regulatory approval in Europe for the foregoing indication. If we were to pursue bringing PIXUVRI to market in the U.S. (which is not currently part of our near-term plan), PIXUVRI would face similar competition.

~~If we are successful in bringing pacritinib to market, pacritinib will face competition from the currently approved JAK1/JAK2 inhibitor, Jakafi®.~~

~~If we are successful in bringing tosedostat to market, we will face competition from currently marketed products, such as cytarabine, Dacogen®, Vidaza®, Clolar®, Revlimid® and Thalomid®.~~

~~In addition to the specific competitive factors discussed above, new anti-cancer drugs that may be under development or developed and marketed in the future could compete with our various compounds.~~

Many of our competitors, particularly multinational pharmaceutical companies, either alone or together with their collaborators, have substantially greater financial and technical resources and substantially larger development and marketing teams than us, as well as significantly greater experience than we do in developing, commercializing, manufacturing, marketing and selling products. As a result, products of our competitors might come to market sooner or might prove to be more effective, less expensive, have fewer side effects or be easier to administer than ours. In any such case, sales of PIXUVRI or any potential future product would likely suffer and we might never recoup the significant investments we have made and will continue to make to develop and market these compounds.

~~If any of our license agreements for intellectual property underlying our compounds are terminated, we may lose the right to develop or market that product.~~

We have acquired or licensed intellectual property from third parties, including patent applications and patents relating to intellectual property for PIXUVRI, pacritinib and tosedostat. Some of our product development programs depend on our ability to maintain rights under these arrangements. Each licensor has the power to terminate its agreement with us if we fail to meet our obligations under these licenses. We may not be able to meet our obligations under these licenses. If we default under any license agreement, we may lose our right to market and sell any products based on the licensed technology and may be forced to cease operations, liquidate our assets and possibly seek bankruptcy protection. Bankruptcy may result in the termination of agreements pursuant to which we license certain intellectual property rights.

~~If we are unable to in-license or acquire additional product candidates, our future product portfolio and potential profitability could be harmed.~~

One component of our business strategy is the in-licensing and acquisition of drug compounds developed by other pharmaceutical and biotechnology companies or academic research laboratories. PIXUVRI, pacritinib and tosedostat have all been in-licensed or acquired from third parties. Competition for new promising compounds and commercial products can be intense. If we are not able to identify future in-licensing or acquisition opportunities and enter into arrangements on acceptable terms, our future product portfolio and potential profitability could be harmed.

We hold rights under numerous patents that we have acquired or licensed or that protect inventions originating from our research and development, and the expiration of any of these patents may allow our competitors to copy the inventions that are currently protected.

We dedicate significant resources to protecting our intellectual property, which is important to our business. We have filed numerous patent applications in the U.S. and various other countries seeking protection of inventions originating from our research and development, and we have also obtained rights to various patents and patent applications under licenses with third parties and through acquisitions. Patents have been issued on many of these applications. We have pending patent applications or issued patents in the U.S. and foreign countries directed to PIXUVRI, pacritinib, tosedostat and other product candidates. However, the lives of these patents are limited. Patents for the individual products extend for varying periods according to the date of the patent filing or grant and the legal term of patents in the various countries where patent protection is obtained.

Our U.S. and European composition of matter patents for pacritinib expire as follows: US patents expire in 2029 (compound) / 2030 (salt); EU patents expire in 2026 (compound) / 2029 (salt). Pacritinib has orphan drug designation for myelofibrosis in the U.S. and the E.U.

~~Our U.S. and various foreign tosedostat-directed patents expire from 2017 through 2018. Tosedostat has orphan drug designation for acute myeloid leukemia in the U.S. and the E.U.~~

Each patent may be eligible for future patent term restoration of up to five years under certain circumstances. Also, regulatory exclusivity tied to the protection of clinical data may be complementary to patent protection. During a period of regulatory exclusivity, competitors generally may not use the original applicant’s data as the basis for a generic application. In the U.S., the data protection generally runs for five years from first marketing approval of a new chemical entity, extended to seven years for an orphan drug indication.

In the absence of a patent, we would, to the extent possible, need to rely on unpatented technology, know-how and confidential information. Ultimately, the lack or expiration at any given time of a patent to protect our compounds may allow our competitors to copy the underlying inventions and better compete with us.

~~If we fail to adequately protect our intellectual property, our competitive position and the potential for long-term success could be harmed.~~

Development and protection of our intellectual property are critical to our business. If we do not adequately protect our intellectual property, competitors may be able to practice our technologies. Our success depends in part on our ability to:

~~obtain and maintain patent protection for our products or processes both in the U.S. and other countries;~~

~~protect trade secrets; and~~

~~prevent others from infringing on our proprietary rights.~~

The patent position of pharmaceutical and biotechnology firms, including ours, generally is highly uncertain and involves complex legal and factual questions. The U.S. Patent and Trademark Office has not established a consistent policy regarding the breadth of claims that it will allow in biotechnology patents. If it allows broad claims, the number and cost of patent interference proceedings in the U.S. and the risk of infringement litigation may increase. If it allows narrow claims, the risk of infringement may decrease, but the value of our rights under our patents, licenses and patent applications may also decrease. Patent applications in which we have rights may never issue as patents, and the claims of any issued patents may not afford meaningful protection for our technologies or products. In addition, patents issued to us or our licensors may be challenged and subsequently narrowed, invalidated or circumvented. Litigation, interference proceedings or other governmental proceedings that we may become involved in with respect to our proprietary technologies or the proprietary technology of others could result in substantial cost to us.

We also rely upon trade secrets, proprietary know-how and continuing technological innovation to remain competitive. Third parties may independently develop such know-how or otherwise obtain access to our technology. While we require our employees, consultants and corporate partners with access to proprietary information to enter into confidentiality agreements, these agreements may not be honored.

~~Patent litigation is widespread in the biotechnology industry, and any patent litigation could harm our business.~~

Costly litigation might be necessary to protect a patent position or to determine the scope and validity of third-party proprietary rights, and we may not have the required resources to pursue any such litigation or to protect our patent rights. Any adverse outcome in litigation with respect to the infringement or validity of any patents owned by third parties could subject us to significant liabilities to third parties, require disputed rights to be licensed from third parties or require us to cease using a product or technology. With respect to our in-licensed patents, if we attempt to initiate a patent infringement suit against an alleged infringer, it is possible that our applicable licensor will not participate in or assist us with the suit and as a result we may not be able to effectively enforce the applicable patents against the alleged infringers.

We may be unable to obtain or protect our intellectual property rights and we may be liable for infringing upon the intellectual property rights of others, which may cause us to engage in costly litigation and, if unsuccessful, could cause us to pay substantial damages and prohibit us from selling our products.

At times, we may monitor patent filings for patents that might be relevant to some of our products and product candidates in an effort to guide the design and development of our products to avoid infringement, but may not have conducted an exhaustive search. We may not be able to successfully challenge the validity of third-party patents and could be required to pay substantial damages, possibly including treble damages, for past infringement and attorneys’ fees if it is ultimately determined that our products infringe such patents. Further, we may be prohibited from selling our products before we obtain a license, which, if available at all, may require us to pay substantial royalties.

Moreover, third parties may challenge the patents that have been issued or licensed to us. We do not believe that PIXUVRI, pacritinib or any of the other compounds we are currently developing infringe upon the rights of any third parties nor are they materially infringed upon by third parties; however, there can be no assurance that our technology will not be found in the future to infringe upon the rights of others or be infringed upon by others. In such a case, others may assert infringement claims against us, and should we be found to infringe upon their patents, or otherwise impermissibly utilize their

intellectual property, we might be forced to pay damages, potentially including treble damages, if we are found to have willfully infringed on such parties’ patent rights. In addition to any damages we might have to pay, we may be required to obtain licenses from the holders of this intellectual property, enter into royalty agreements or redesign our compounds so as not to utilize this intellectual property, each of which may prove to be uneconomical or otherwise impossible. Conversely, we may not always be able to successfully pursue our claims against others that infringe upon our technology and the technology exclusively licensed from any third parties. Thus, the proprietary nature of our technology or technology licensed by us may not provide adequate protection against competitors.

Even if infringement claims against us are without merit, or if we challenge the validity of issued patents, lawsuits take significant time, may, even if resolved in our favor, be expensive and divert management attention from other business concerns. Uncertainties resulting from the initiation and continuation of any litigation could limit our ability to continue our operations.

~~The illegal distribution and sale by third parties of counterfeit versions of a product or stolen product could have a negative impact on our reputation and business.~~

Third parties might illegally distribute and sell counterfeit or unfit versions of a product that do not meet our rigorous manufacturing and testing standards. A patient who receives a counterfeit or unfit product may be at risk for a number of dangerous health consequences. Our reputation and business could suffer harm as a result of counterfeit or unfit product sold under our brand name. In addition, thefts of inventory at warehouses, plants or while in-transit, which are not properly stored and which are sold through unauthorized channels, could adversely impact patient safety, our reputation and our business.

~~We may owe additional amounts for VATrelated to our operations in Europe.~~

Our European operations are subject to the VAT which is usually applied to all goods and services purchased and sold throughout Europe. The VAT receivable was $4.7 million and $4.4 million as of September 30, 2017 and December 31, 2016, respectively. On April 14, 2009, December 21, 2009 and June 25, 2010, the ITA issued notices of assessment to CTI (Europe) based on the ITA’s audit of CTI (Europe)’s VAT returns for the years 2003, 2005, 2006 and 2007. The ITA audits concluded that CTI (Europe) did not collect and remit VAT on certain invoices issued to non-Italian clients for services performed by CTI (Europe). The assessments, including interest and penalties, for the years 2003, 2005, 2006 and 2007 are €0.5 million, €5.5 million, €2.5 million and €0.8 million, respectively. While we are defending ourselves against the assessments both on procedural grounds and on the merits of the case, there can be no assurances that we will be successful in such defense. Further information pertaining to these cases can be found in Part II, Item 1, "Legal Proceedings," and is incorporated by reference herein. If the final decision of the Italian Supreme Court is unfavorable to us, or if, in the interim, the ITA were to make a demand for payment and we were to be unsuccessful in suspending collection efforts, we may be requested to pay to the ITA an amount up to €9.4 million (or approximately $11.1 million upon conversion from euros as of September 30, 2017) plus collection fees, notification expenses and additional interest for the period lapsed between the date in which the assessments were issued and the date of effective payment.

~~We are currently subject to certain regulatory and legal proceedings, and may in the future be subject to additional proceedings and/or allegations of wrong-doing, which could harm~~ our financial condition and operating results.

~~We are currently,~~Our directors and ~~may~~executive officers have interests in the ~~future~~proposed transaction that may be ~~subject~~different from, or in addition to, regulatory matters and legal claims, including possible securities, derivative, consumer protection and other types of proceedings pursued by individuals, entities or regulatory bodies. As described in Part II, Item 1, "Legal Proceedings," we are currently engaged in certain pending legal proceedings, including the ~~purported class action lawsuits filed against us and certain~~interests of our ~~current and former~~stockholders generally.

Our directors and executive officers ~~in February 2016~~

~~and the four derivative lawsuits filed against us in March, May, June and August 2016. In addition, we are~~have interests in the process of supplying documents in response to a subpoena from the SEC in connection with an investigation into potential federal securities law violations as described in Part II, Item 1, "Legal Proceedings." Litigation is subject to inherent uncertainties, and we have had and may in the future have unfavorable rulings and settlements. Adverse outcomes may result in significant monetary damages or injunctive relief against us. It is possibleproposed transaction that our financial condition and operating results could be harmed in any period in which the effect of an unfavorable final outcome becomes probable and reasonably estimable. If an unfavorable ruling were to occur in any of the legal proceedings we are or may be subject to, our business, financial condition, operating results and prospects could be harmed. The ultimate outcome of litigation and other claims is subject to inherent uncertainties, and our view of these matters may changedifferent from, or in ~~the future.~~

~~We cannot predict with certainty the eventual outcome of pending litigation. In~~ addition negative publicity resulting from any allegations of wrong-doing could harm our business, regardless of whether the allegations are valid or whether there is a finding of liability. Furthermore, we may have to incur substantial time and expense in connection with such lawsuits and

~~management’s attention and resources could be diverted from operating our business as we respond~~ to, the ~~litigation. Our insurance is subject to high deductibles~~interests of our stockholders generally. The interests of our directors and ~~there is no guarantee that the insurance will cover any specific claim that we currently face or may face~~executive officers include, among others, severance rights, vesting protections for equity awards in ~~the future, or that it will be adequate to cover all potential liabilities and damages. In~~ the event of ~~negative publicity resulting from allegations~~termination of ~~wrong-doing and/or an adverse outcome under any currently pending or future lawsuit, our business could be materially harmed.~~

If we fail to maintain effective internal controls over financial reporting, we may not be able to accurately report our financial results, which could adversely effect on investor confidence, our business and the trading prices of our securities.

~~If we fail to maintain the adequacy of our internal controls, we may be unable to provide financial information~~employment in a timely and reliable manner within the time periods required for our financial reporting under SEC rules and regulations. Internal controls over financial reporting may not prevent or detect misstatements or omissions in our financial statements because of their inherent limitations, including the possibility of human error, the circumvention or overriding of controls or fraud. We have recently implemented a reduction in force, and expect changes to occur in our internal controls over financial reporting. The changes could relate to different employees performing internal control activities than those who have previously performed those activities or revisions to our actual control activities as we evaluate the appropriate internal control structure after our workforce reduction. A changing internal control environment increases the risk that our system of internal controls is not designed effectively or that internal control activities will not occur as designed. In addition, our management is conducting an internal investigation regarding certain expense reimbursements. We are currently seeking to recover certain amounts that we determined were not reimbursable to an executive under the policy applicable to the executive management team. We are in the process of completing our investigation, and may seek reimbursement of additional amounts. The outcome of the investigation could result in the identification of significant deficiencies or material weaknesses in the design or operation of our internal controls over financial reporting or the identification of deficiencies in our expense reimbursement procedures. The occurrence of or failure to remediate a significant deficiency material weakness may adversely affect our reputation and business and the market price of shares of our common stock.

~~Our net operating losses may not be available to reduce future income tax liability.~~

We have substantial tax loss carryforwards for U.S. federal income tax purposes, but our ability to use such carryforwards to offset future income or tax liability is limited under section 382 of the Internal Revenue Code of 1986, as amended, as a result of prior changes in the stock ownership of the Company. Moreover, future changes in the ownership of our stock, including those resulting from issuance of shares of our common stock upon exercise of outstanding warrants, may further limit our ability to use our net operating losses.

~~Due to the fact that we have European branches and subsidiaries conducting operations, together~~connection with ~~the fact that we are party to certain contractual arrangements denoting monetary amounts in foreign currencies, we are subject to risk regarding currency exchange rate fluctuations.~~

We are exposed to risks associated with the translation of euro-denominated financial results and accounts into U.S. dollars for financial reporting purposes. The carrying value of the assets and liabilities, as well as the reported amounts of revenues and expenses, in our European branches and subsidiaries will be affected by fluctuations in the value of the U.S. dollar as compared to the euro. Any expansion of our commercial operations in Europe (including with regard to sales of PIXUVRI) may increase our exposure to fluctuations in foreign currency exchange rates. In addition, certain of our contractual arrangements, such as the Restated Agreement with Servier, denote monetary amounts in foreign currencies, and consequently, the ultimate financial impact to us from a U.S. dollar perspective is subject to significant uncertainty. Furthermore, the

referendum in the United Kingdom in June 2016, in which the majority of voters voted in favor of an exit from the European Union has resulted in increased volatility in the global financial markets and caused severe volatility in global currency exchange rate fluctuations that resulted in the strengthening of the U.S. dollar against the euro. Changes in the value of the U.S. dollar as compared to foreign currencies (in particular, the euro) might have an adverse effect on our reported operating results and financial condition.

~~We may be unable to obtain the raw materials necessary to produce a particular product or product candidate.~~

We may not be able to purchase the materials necessary to produce a particular product or product candidate in adequate volume and quality. If any raw material required to produce a product or product candidate is insufficient in quantity or quality, if a supplier fails to deliver in a timely fashion or at all or if these relationships terminate, we may not be able to qualify and obtain a sufficient supply from alternate sources on acceptable terms, or at all.

Because there is a risk of product liability associated with our compounds, we face potential difficulties in obtaining insurance, and if product liability lawsuits were to be successfully brought against us, our business may be harmed.

Our business exposes us to potential product liability risks inherent in the testing, manufacturing, marketing and sale of human pharmaceutical products. In particular, as a result of the commercialization of PIXUVRI, our risk with respect to potential product liability has increased. If our insurance covering a compound is not maintained on acceptable terms or at all, we might not have adequate coverage against potential liabilities. Our inability to obtain sufficient insurance coverage at an acceptable cost or otherwise to protect against potential product liability claims could prevent or limit the commercialization of any products we develop. A successful product liability claim could also exceed our insurance coverage and could harm our financial condition and operating results.

~~We may be subject to claims relating to improper handling, storage or disposal of hazardous materials.~~

Our research and development activities involve the controlled use of hazardous materials, chemicals and various radioactive compounds. We are subject to federal, state and local laws and regulations, both internationally and domestically, governing the use, manufacture, storage, handlings, treatment, transportation and disposal of such materials and certain waste products and employee safety and health matters. Although we believe that our safety procedures for handling and disposing of such materials comply with applicable law and regulations, the risk of accidental contamination or injury from these materials cannot be eliminated completely. In the event of such an accident, we could be held liable for any damages that result and any such liability not covered by insurance could exceed our resources. Compliance with environmental, safety and health laws and regulations may be expensive, and current or future environmental regulations may impair our research, development or production efforts.

~~We depend on sophisticated information technology systems to operate our business and a cyber-attack or other breach of these systems could have a material adverse effect on our business.~~

We rely on information technology systems to process, transmit and store electronic information in our day-to-day operations. The size and complexity of our information technology systems makes them vulnerable to a cyber-attack, malicious intrusion, breakdown, destruction, loss of data privacy or other significant disruption. Any such successful attacks could result in the theft of intellectual property or other misappropriation of assets, or otherwise compromise our confidential or proprietary information and disrupt our operations. Cyber-attacks are becoming more sophisticated and frequent. We have invested in our systems and the protection of our data to reduce the risk of an intrusion or interruption, and we monitor our systems on an ongoing basis for any current or potential threats. There can be no assurance that these measures and efforts will prevent future interruptions or breakdowns. If we fail to maintain or protect our information technology systems and data integrity effectively or fail to anticipate, plan for or manage significant disruptions to these systems, we could have difficulty preventing, detecting and controlling fraud, have disputes with customers, physicians and other health care professionals, have regulatory sanctions or penalties imposed, have increases in operating expenses, incur expenses or lose revenues or suffer other adverse consequences, any of which could have a material adverse effect on our business, results of operations, financial condition, prospects and cash flows.

~~Risks Related to the Securities Markets~~

~~Shares of our common stock are subordinate to existing and any future indebtedness and to any preferred stock we may issue.~~

Shares of our common stock rank junior to our existing indebtedness, including under our senior secured term loan agreement and any future indebtedness we may incur, as well as to all creditor claims and other non-equity claims against us and our assets available to satisfy claims on us, including claims in a bankruptcy or similar proceeding. Our senior secured term loan agreement restricts, and any future indebtedness and preferred stock may restrict, payment of dividends on our common stock. Shares of our common stock will also rank junior to any shares of our preferred stock that we may issue in the future.

Additionally, unlike indebtedness, where principal and interest customarily are payable on specified due dates, in the case of our common stock, (i) dividends are payable only when and if declared by our Board of Directors or a duly authorized committee of our Board of Directors and (ii) as a corporation, we are restricted to making dividend payments and redemption payments out of legally available assets. We have never paid a dividend on our common stock and have no current intention to pay dividends in the future. Furthermore, our common stock places no restrictions on our business or operations or on our ability to incur indebtedness or engage in any transactions, subject only to the voting rights available to our shareholders generally.

The market price of shares of our common stock is extremely volatile, which may affect our ability to raise capital in the future and may subject the value of your investment in our securities to sudden decreases.

The market price for securities of biopharmaceutical and biotechnology companies, including ours, historically has been highly volatile, and the market from time to time has experienced significant price and volume fluctuations that are unrelated to the operating performance of such companies. For example, during the 12-month period ended October 30, 2017, our stock price ranged from a low of $2.70 to a high of $6.48. Fluctuations in the market price or liquidity of our common stock may harm the value of your investment in our common stock. Factors that may have an impact, which, depending on the circumstances, could be significant, on the market price and marketability of our securities include:

~~announcements by us or others of results of clinical trials and regulatory actions, such as the imposition of a clinical trial hold;~~

~~announcements by us or others of serious adverse events that have occurred during administration of our products to patients;~~

~~announcements by us or others relating to our ongoing development and commercialization activities;~~

~~halting or suspension of trading in our common stock on The NASDAQ Capital Market or on the MTA;~~

~~announcements of technological innovations or new commercial therapeutic products by us, our collaborative partners or our present or potential competitors;~~

~~our issuance of debt or equity securities, which we expect to pursue to generate additional funds to operate our business, or any perception from time to time that we will issue such securities;~~

~~our quarterly operating results;~~

~~liquidity, cash position or financing needs;~~

~~developments or disputes concerning patent or other proprietary rights;~~

~~developments in relationships with collaborative partners;~~

~~acquisitions or divestitures;~~

~~our ability to realize the anticipated benefits of our compounds;~~

~~litigation and government proceedings;~~

~~adverse legislation, including changes in governmental regulation;~~

~~third party reimbursement policies;~~

~~changes in securities analysts’ recommendations;~~

~~short selling of our securities;~~

~~changes in health care policies and practices;~~

~~a failure to achieve previously announced goals and objectives as or when projected; and~~

~~general economic and market conditions.~~

Anti-takeover provisions in our charter documents, in our shareholder rights agreement, or rights plan, under Washington law and in other applicable instruments could make removal of incumbent management or an acquisition of us, which may be beneficial to our shareholders, more difficult.

Provisions of our articles of incorporation and bylaws may have the effect of deterring or delaying attempts by our shareholders to remove or replace management, to commence proxy contests or to effect changes in control. These provisions include:

~~elimination of cumulative voting in the election of directors;~~

~~procedures for advance notification of shareholder nominations and proposals;~~

~~the ability of our Board of Directors to amend our bylaws without shareholder approval; and~~

the ability of our Board of Directors to issue shares of preferred stock without shareholder approval upon the terms and conditions and with the rights, privileges and preferences as our Board of Directors may determine.

Pursuant to our rights plan, an acquisition of 20% or more of our common stock by a person or group, subject to certain exceptions, could result in the exercisability of the preferred stock purchase right accompanying each share of our common stock (except those held by a 20% shareholder, which become null and void), thereby entitling the holder to receive upon exercise, in lieu of a number of units of preferred stock, that number of shares of our common stock having a market value of two times the exercise price of the right. The existence of our rights plan could have the effect of delaying, deterring or preventing a third party from making an acquisition proposal for us and may inhibit a change in control, ~~that some, or a majority,~~rights to continuing indemnification and directors’ and officers’ liability insurance. Our board of directors was aware of and carefully considered the interests of our ~~shareholders might believe to be~~respective directors and officers, among other matters, in ~~their best interest or that could give our shareholders~~evaluating the ~~opportunity to realize a premium over~~terms and structure, and overseeing the ~~then-prevailing market prices for their shares.~~

~~In addition, as a Washington corporation, we are subject to Washington’s anti-takeover statute, which imposes restrictions on some~~negotiation of the proposed transaction, in approving the Merger Agreement, the Merger and the other transactions ~~between a corporation~~contemplated thereby, and ~~certain significant shareholders. Other existing provisions applicable to us that could have an anti-takeover effect include our executive employment agreements and certain provisions~~the recommendation of our ~~outstanding equity-based compensatory awards~~board of directors that ~~allow for acceleration of vesting in~~our stockholders adopt the ~~event of a change in control.~~Merger Agreement.

~~The foregoing provisions, alone or together, could have the effect of deterring or delaying changes in incumbent management, proxy contests or changes in control.~~

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

~~Stock Repurchases in the Third Quarter~~

~~The following table sets forth information with respect to purchases of our common stock during the three months ended September 30, 2017:~~None.

Period
Total Number
of Shares
Purchased (1)

Average
Price Paid
per Share

Total Number
of Shares
Purchased as
Part of Publicly
Announced
Plans or
Programs

Maximum
Number of
Shares that
May Yet Be
Purchased
Under the
Plans or
Programs
July 1 - July 31, 2017 326
$ 3.41
—
—
August 1 - August 31, 2017 231
3.33
—
—
September 1 - September 30, 2017 498
3.29
—
—
Total 1,055
$ 3.33
—
—

~~_________________________~~


~~(1)~~	~~Represents purchases of shares in connection with satisfying tax withholding obligations on the vesting of restricted stock awards to employees granted under our Equity Incentive Plans.~~

Item 3. Defaults ~~Upon~~upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

~~None.~~On May 9, 2023, CTI’s board of directors approved an amendment to the CTI’s Amended and Restated Bylaws, dated as of April 13, 2020, or the Bylaws, to add a new Article XIII, Section 13.1 forum selection provision, or the Forum Selection Amendment.

The Forum Selection Amendment provides that, unless CTI consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of CTI; (ii) any action asserting a claim of breach of a duty (including any fiduciary duty) owed by any current or former director, officer, stockholder, employee or agent of CTI to CTI or its stockholders, (iii) any action asserting a claim against CTI or any of its current or former directors, officers, stockholders, employees or agents arising out of or relating to any provision of the General Corporation Law of the State of Delaware, the CTI’s certificate of incorporation or the Bylaws (each, as in effect from time to time), or (iv) any action asserting a claim against CTI or any of its current or former directors, officers, stockholders, employees or agents governed by the internal affairs doctrine of the State of Delaware. In the event that the Court of Chancery of the State of Delaware lacks subject matter jurisdiction over any such action or proceeding, the Forum Selection Amendment provides that sole and exclusive forum for such action or proceeding will be another state or federal court located within the State of Delaware, in each such case, unless the Court of Chancery (or such other state or federal court located within the State of Delaware, as applicable) has dismissed a prior action by the same plaintiff asserting the same claims because such court lacked personal jurisdiction over an indispensable party named as a defendant therein.

This summary is qualified in its entirety by reference to the Forum Selection Amendment, which is filed as Exhibit 3.1 hereto and incorporated by reference herein.

Item 6. Exhibits



~~Exhibit~~ ~~Number~~	~~Exhibit Description~~	~~Location~~

~~3.1~~	~~Amended and Restated Articles of Incorporation.~~	~~Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, filed on March 23, 2015.~~

~~3.2~~	~~Articles of Amendment to Amended and Restated Articles of Incorporation, dated October 29, 2015 (Series N Preferred Stock).~~	~~Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, filed on October 30, 2015.~~

~~3.3~~	~~Articles of Amendment to Amended and Restated Articles of Incorporation, dated October 29, 2015 (Series N-1 Preferred Stock).~~	~~Incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K, filed on October 30, 2015.~~

~~3.4~~	~~Articles of Amendment to Amended and Restated Articles of Incorporation, dated December 8, 2015 (Series N-2 Preferred Stock).~~	~~Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, filed on December 9, 2015.~~

~~3.5~~	~~Articles of Amendment to Amended and Restated Articles of Incorporation, dated April 29, 2016.~~	~~Incorporated by reference to Exhibit 3.5 to the Registrant’s Quarterly Report on Form 10-Q, filed on May 10, 2016.~~

~~3.6~~	~~Amendment to Amended and Restated Articles of Incorporation of CTI BioPharma Corp.~~	~~Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, filed on December 21, 2016.~~

~~3.7~~	~~Amended and Restated Bylaws.~~	~~Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, filed on December 3, 2015.~~

~~3.8~~	~~Articles of Amendment to Amended and Restated Articles of Incorporation, dated May 16, 2017.~~	~~Incorporated by reference to Exhibit 3.8 to the Registrant's Quarterly Report on Form 10-Q, filed on August 4, 2017.~~

~~3.9~~	~~Articles of Amendment to Amended and Restated Articles of Incorporation of CTI BioPharma Corp. (Series N-3 Preferred Stock).~~	~~Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, filed on June 9, 2017.~~

~~4.1~~	~~Shareholder Rights Agreement, dated December 28, 2009, between the Registrant and Computershare Trust Company, N.A.~~	~~Incorporated by reference to Exhibit 4.1 to the Registrant’s Registration Statement on Form 8-A, filed on December 28, 2009.~~

~~4.2~~	~~First Amendment to Shareholder Rights Agreement, dated as of August 31, 2012, between the Registrant and Computershare Trust Company, N.A., as Rights Agent.~~	~~Incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed on September 4, 2012.~~

~~4.3~~	~~Second Amendment to Shareholder Rights Agreement, dated as of December 6, 2012, between the Registrant and Computershare Trust Company, N.A., as Rights Agent.~~	~~Incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed on December 7, 2012.~~

~~4.4~~	~~Third Amendment to Shareholder Rights Agreement, dated as of December 1, 2015, between the Registrant and Computershare Trust Company, N.A., as Rights Agent.~~	~~Incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed on December 1, 2015.~~

~~4.5~~	~~Fourth Amendment to Shareholder Rights Agreement, dated as of September 22, 2017, between the Registrant and Computershare Trust Company, N.A., as Rights Agent.~~	~~Incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed on September 26, 2017.~~

Incorporated by Reference

Exhibit Number

Exhibit Description

Form

File No.

Exhibit Number

Filing Date

3.1

Amended and Restated Bylaws of CTI BioPharma Corp.

8-K

000-28386

3.1

May 10, 2023

10.1*

Amendment No. 2 to Employment Agreement by and between Adam R. Craig and CTI BioPharma Corp.

Filed herewith.

10.2*

Amendment No. 2 to Severance Agreement by and between James Fong and CTI BioPharma Corp.

Filed herewith.

31.1

Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Filed herewith.

31.2

Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Filed herewith.

32(1)

Certification of Principal Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Furnished herewith.

101

The following financial statements from the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, formatted in Inline XBRL: (i) Condensed Balance Sheets, (ii) Condensed Statements of Operations, (iii) Condensed Statements of Comprehensive Loss, (iv) Condensed Statements of Changes in Stockholders' Deficit, (v) Condensed Statements of Cash Flows and (vi) Notes to Condensed Financial Statements, tagged as blocks of text and including detailed tags.

104

Cover page interactive data file (formatted in Inline XBRL and contained in Exhibit 101).



~~Exhibit~~ ~~Number~~	~~Exhibit Description~~	~~Location~~

~~4.6~~	~~Specimen Common Stock Certificate.~~	~~Incorporated by reference to Exhibit 4.3 to the Registrant’s Registration Statement on Form S-3 (File No. 333-200452), filed on November 21, 2014.~~

~~4.7~~	~~Form of Common Stock Purchase Warrant, dated December 13, 2011.~~	~~Incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K, filed on December 14, 2011.~~

~~4.8~~	~~Warrant Agreement, dated June 9, 2015, by and between Registrant and Hercules Technology Growth Capital, Inc.~~	~~Incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed on June 10, 2015.~~

10.1*	~~Separation and Release Agreement, by and between the Registrant and Matthew Plunkett, dated August 22, 2017.~~	~~Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed on August 22, 2017.~~

10.2*	~~Severance Agreement, by and between the Registrant and David Kirske, dated September 25, 2017.~~	~~Incorporated by reference to Exhibit~~ ~~10.1 to the Registrant’s Current Report on Form 8-K, filed on September 26, 2017.~~

~~10.3~~	Fifth Amendment to Loan and Security Agreement, dated August 4, 2017, by and among Hercules Technology Growth Capital, Inc. (and certain of its affiliates), CTI BioPharma Corp. and Systems Medicine LLC.	~~Filed herewith.~~

~~31.1~~	~~Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~	~~Filed herewith.~~

~~31.2~~	~~Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~	~~Filed herewith.~~

32	~~Certification of Principal Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~	~~Furnished herewith.~~

~~101. INS~~	~~XBRL Instance~~	~~Filed herewith.~~

~~101. SCH~~	~~XBRL Taxonomy Extension Schema~~	~~Filed herewith.~~

~~101. CAL~~	~~XBRL Taxonomy Extension Calculation~~	~~Filed herewith.~~

~~101. DEF~~	~~XBRL Taxonomy Extension Definition~~	~~Filed herewith.~~

~~101. LAB~~	~~XBRL Taxonomy Extension Labels~~	~~Filed herewith.~~

~~101. PRE~~	~~XBRL Taxonomy Extension Presentation~~	~~Filed herewith.~~

~~† Portions of this exhibit have been omitted pursuant to a request for confidential treatment.~~

* Indicates a management contract or compensatory plan or arrangement.

(1) The certifications on Exhibit 32 hereto are deemed not “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that Section. Such certifications will not be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized:

CTI BIOPHARMA CORP.

(Registrant)

Dated: May 15, 2023

By:

/s/ Adam R. Craig

Adam R. Craig

President, Chief Executive Officer and Interim Chief Medical Officer

Dated: May 15, 2023

By:

/s/ David H. Kirske

David H. Kirske

Chief Financial Officer

~~CTI BIOPHARMA CORP.~~

~~(Registrant)~~

~~Dated: November 6, 2017~~

~~By:~~

~~/s/ Adam R. Craig~~

~~Adam R. Craig~~

~~President and Chief Executive Officer~~

~~Dated: November 6, 2017~~

~~By:~~

~~/s/ David H. Kirske~~

~~David H. Kirske~~

~~Chief Financial Officer~~



~~Washington~~Delaware						91-1533912
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

3101 Western Avenue ~~Suite 800~~
~~Seattle, Washington~~Suite 800						~~98121~~
Seattle
Washington						98121
(Address of principal executive offices)						(Zip Code)


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	CTIC	The Nasdaq Stock Market LLC



Class						Outstanding at ~~October 30, 2017~~May 4, 2023
Common Stock, no par value $0.001 per share						~~42,970,377~~131,880,176


			PAGE
PART I - FINANCIAL INFORMATION

ITEM 1: Financial Statements (unaudited)			4

Condensed Balance Sheets			4

Condensed Statements of Operations			5

Condensed Statements of Comprehensive Loss			6

Condensed Statements of Changes in Stockholders’ Deficit			7

		~~PAGE~~
~~PART I - FINANCIAL INFORMATION~~

~~ITEM 1: Financial Statements~~	4

Condensed ~~Consolidated Balance Sheets at September 30, 2017 (unaudited) and December 31, 2016~~	4

~~Condensed Consolidated Statements of Operations – Three and Nine Months Ended September 30, 2017 and 2016 (unaudited)~~	5

~~Condensed Consolidated Statements of Comprehensive Loss – Three and Nine Months Ended September 30, 2017 and 2016 (unaudited)~~	6

~~Condensed Consolidated~~ Statements of Cash Flows ~~– Nine Months Ended September 30, 2017 and 2016 (unaudited)~~		78

Notes to Condensed ~~Consolidated~~ Financial Statements ~~(unaudited)~~			89

ITEM 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations			1819

ITEM 3: Quantitative and Qualitative Disclosures about Market Risk			3027

ITEM 4: Controls and Procedures			3127

PART II - OTHER INFORMATION

ITEM 1: Legal Proceedings			3228

ITEM 1A: Risk Factors			3428

ITEM 2: Unregistered Sales of Equity Securities and Use of Proceeds			5230

ITEM 3: Defaults ~~Upon~~upon Senior Securities			5330

ITEM 4: Mine Safety Disclosures			5331

ITEM 5: Other Information			5331

ITEM 6: Exhibits			5432

Signatures			5633



	September 30, 2017			December 31, 2016
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	52,800		$	44,002
Accounts receivable	180			378
Receivables from collaborative arrangements	2,490			7,778
Inventory, net	601			1,525
Prepaid expenses and other current assets	1,429			2,141
Total current assets	57,500			55,824
Property and equipment, net	2,534			3,023
Other assets	5,498			4,996
Total assets	$	65,532		$	63,843

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	2,020		$	7,227
Accrued expenses	14,971			24,765
Current portion of deferred revenue	872			103
Current portion of long-term debt	7,766			7,949
Other current liabilities	573			602
Total current liabilities	26,202			40,646
Deferred revenue, less current portion	716			514
Long-term debt, less current portion	7,023			11,311
Other liabilities	3,179			3,615
Total liabilities	37,120			56,086
Commitments and contingencies
Shareholders' equity:
Preferred stock, no par value:
Authorized shares - 33,333
Series N-3 Preferred Stock, $2,000 stated value per share, 22,500 shares designated, 575 and 0 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively	1,090			—
Common stock, no par value:
Authorized shares - 81,500,000 and 41,500,000 at September 30, 2017 and December 31, 2016, respectively
Issued and outstanding shares - 42,977,176 and 28,228,602 at September 30, 2017 and December 31, 2016, respectively	2,220,448			2,170,300
Accumulated other comprehensive loss	(6,327		)	(6,655		)
Accumulated deficit	(2,181,080		)	(2,150,326		)
Total CTI shareholders' equity	34,131			13,319
Noncontrolling interest	(5,719		)	(5,562		)
Total shareholders' equity	28,412			7,757
Total liabilities and shareholders' equity	$	65,532		$	63,843



ý☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



¨☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Revenues:
Product sales, net	$	—		$	914		$	853		$	3,112
License and contract revenue	1,705			3,519			23,831			45,157
Total revenues	1,705			4,433			24,684			48,269
Operating costs and expenses:
Cost of product sold	69			163			280			513
Research and development	7,601			17,716			25,768			55,259
Selling, general and administrative	5,802			15,218			24,452			36,101
Total operating costs and expenses	13,472			33,097			50,500			91,873
Loss from operations	(11,767		)	(28,664		)	(25,816		)	(43,604		)
Non-operating income (expense):
Interest expense	(457		)	(634		)	(1,479		)	(2,025		)
Amortization of debt discount and issuance costs	(38		)	(38		)	(113		)	(177		)
Foreign exchange gain (loss)	161			(69		)	775			(107		)
Other non-operating income (expense)	102			44			72			(479		)
Total non-operating expense, net	(232		)	(697		)	(745		)	(2,788		)
Net loss before noncontrolling interest	(11,999		)	(29,361		)	(26,561		)	(46,392		)
Noncontrolling interest	25			178			157			755
Net loss	(11,974		)	(29,183		)	(26,404		)	(45,637		)
Deemed dividends on preferred stock	—			—			(4,350		)	—
Net loss attributable to common shareholders	$	(11,974	)	$	(29,183	)	$	(30,754	)	$	(45,637	)
Basic and diluted net loss per common share	$	(0.28	)	$	(1.04	)	$	(0.90	)	$	(1.63	)
Shares used in calculation of basic and diluted net loss per common share	42,878			28,002			34,270			27,919



License	$	11,487
Other services	1,348
Total upfront payment	$	12,835



	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Research and development	$	229	$	466	$	521	$	1,887
Selling, general and administrative	1,126		4,602		3,782		9,338
Total share-based compensation expense	$	1,355	$	5,068	$	4,303	$	11,225



	Net Unrealized Loss on Available-For- Sale Securities			Foreign Currency Translation Adjustments			Unrealized Foreign Exchange Gain (Loss) on Intercompany Balance			Accumulated Other Comprehensive Loss
December 31, 2016	$	(6	)	$	(2,902	)	$	(3,747	)	$	(6,655	)
Current period other comprehensive income (loss)	7			(3,474		)	3,795			328
September 30, 2017	$	1		$	(6,376	)	$	48		$	(6,327	)



Period	Total Number of Shares Purchased (1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
July 1 - July 31, 2017	326	$	3.41	—	—
August 1 - August 31, 2017	231	3.33		—	—
September 1 - September 30, 2017	498	3.29		—	—
Total	1,055	$	3.33	—	—