Research and Development Expenses

Research and development costs relate to compensation and benefits for research and development personnel, facility-related expenses, supplies, external services, costs to acquire technology licenses, expenses associated with preclinical and clinical development activities and other operating costs. Research and development expenses are charged to expense as incurred and relate to salaries, employee benefits, facility-related expenses, supplies, stock-based compensation related to employees andnon-employees involved in the Company’s research and development, external services, other operating costs and overhead related to our research and development departments, costs to acquire technology licenses and expenses associated with preclinical activities and our clinical trials.incurred. Payments made by the Company in advance for research and development services not yet provided and/or for materials not yet received are recorded as prepaid expenses.expenses and expensed when the service has been performed or when the goods have been received. Accrued liabilities are recorded related to those expenses for which vendors have not yet billed usthe Company with respect to services provided and/or materials that we haveit has received.

Preclinical

The Company contracts with third parties to perform various preclinical and clinical trialactivities on its behalf for the continued development of its product candidates. Accruals and expenses relate to third-party services, subject-related fees at the sites where our clinical trials are being conducted, laboratory costs, analysis costs, toxicology studies and investigator fees. Costs associated with these expenses are generally payable on the passage of time or when certain milestones are achieved. Expense is recorded during the period incurred or inbased on such estimates and assumptions as expected cost, passage of time, the period in which a milestone is achieved. In orderachievement of milestones and other information available to ensure that we have adequately provided for preclinicalus and clinical expenses during the proper period, we maintain an accrual to cover these expenses. These accruals are assessed on a quarterly basis and are based on such assumptions as expected total cost, the number of subjects and clinical trial sites and length of the study.basis. Actual results may differ from these estimates and could have a material impact on ourthe Company’s reported results. OurThe Company’s historical accrual estimates have not been materially different from ourits actual costs.

Stock-based Compensation

The Company follows the provisions of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, “Compensation — Stock Compensation” (“ASC 718”), which requires the measurement and recognition of compensation expense for all stock-based payment awards made to employees, officers andnon-employee directors, including stock options.awards. Stock compensation expense is based on the grant date fair value estimated in accordance with the provisions of ASC 718 and is recognized as an expense over the requisite service period.

For stock options granted as consideration for services rendered bynon-employees, the Company recognizes compensation expense in accordance with the requirements of FASB ASC Topic505-50, “Equity Based Payments toNon-Employees.”Non-employee option grants that do not vest immediately upon grant are recorded as an expense over the requisite service period of the underlying stock options. At the end of each financial reporting period prior to vesting, the value of these options, as calculated using the Black-Scholes option-pricing model, will bere-measured using the fair value of the Company’s common stock and thenon-cash compensation recognized during the period will be adjusted accordingly. Since the fair market value of options granted tonon-employees is subject to change in the future, the amount of the future compensation expense will include fair valuere-measurements until the stock options are fully vested.

Comprehensive Loss

The Company’s comprehensive loss is equal to its net loss for all periods presented.

Net Loss per Share

The Company accounts for and discloses net loss per share in accordance with the FASB ASC Topic 260, “Earnings per Share.Share.” Basic and diluted net loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding. Diluted earnings per share is computed by dividing the Company’s net earningsloss by the weighted average number of common shares outstanding and the impact of all dilutive potential common shares.

3. Liquidity and Going Concern

The Company has reported recurring losses from operations since inception and expects that the Company will continue to have negative cash flows from operations for the foreseeable future. Historically, the Company’s primary source of funding has been the sale of its securities. The Company’s ability to continue to fund its operation dependent on obtaining funding from third parties, such as proceeds from the issuance of debt, sale of equity, or strategic opportunities, in order to maintain our operations. This is dependent on a number of factors, including the market demand or liquidity of the Company’s common stock. There is no guarantee that debt, additional equity or other funding will be available to us on acceptable terms, or at all. If we fail to obtain additional funding when needed, we would be forced to scale back or terminate our operations or to seek to merge with or to be acquired by another company.

The Company believes that its existing cash and the funds available under its purchase agreements with Lincoln Park Capital Fund, LLC (“LPC”), should be sufficient to fund operations for at least the next 12 months.

4. Recent Accounting Pronouncements

In AugustFebruary 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-15,2016-02, “StatementLeases (Topic 842)” (“Topic 842”), which requires lessees to recognize a right of Cash Flowsuse asset and lease liability on the balance sheet for most leases that do not meet the definition of a short-term lease and to disclose key information about leasing arrangements. Leases will continue to be classified as either operating or financing. The Company adopted Topic 842 on January 1, 2019 using the modified retrospective approach and elected to apply the transition method that allows companies to continue applying guidance under the lease standard in effect at that time in the comparative period financial statements and recognize a cumulative-effect adjustment to the balance sheet on the date of adoption. The Company has also elected the package of practical expedients to not reassess its prior conclusions about lease identification, lease classification and indirect costs and to not separate lease and non-lease components.

Upon adoption of Topic 842 on January 1, 2019, the Company recorded a right of use asset of $28,000 and an operating lease liability of $28,000. Comparative periods have not been restated. For additional information regarding how the Company is accounting for leases under Topic 842, refer to Note 5.

In November 2018, the FASB issued ASU 2018-18, “Collaborative Arrangements (Topic 230) — Classification of Certain Cash Receipts and Cash Payments808)” (“Topic 808”),” which clarifies howthe interaction between Topic 808 and ASC Topic 606, “Revenue from Customers.” The update provides guidance on whether certain cash receiptstransactions between collaborative arrangement participants should be accounted for with revenue under ASC Topic 606 and payments are presented and classifiedprovide more comparability in the statementpresentation of cash flows.revenue for certain transactions between collaborative arrangement participants. This standard will be effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early adoption is permitted. The amendments in ASU2016-15 should be applied using a retrospective transition method to each period presented. The Company adopted ASU2016-15 in the first quarter of 2017 and the implementation of this standard had no impact on the Company’s financial statements.

In November 2016, the FASB issued ASU2016-18, “Statement of Cash Flows (Topic 230) — Restricted Cash,”which requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash and restricted cash equivalents. With this standard, amounts generally described as restricted cash or restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning of period and end of period total amounts shown on the statement of cash flows. This standard will be effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early adoption is permitted. The Company adopted ASU2016-18 in the first quarter of 2017, and the guidance has been retrospectively applied to all periods presented. The total of cash, cash equivalents and restricted cash is described in Note 3. The adoption of the guidance did not have an impact on the Company’s balance sheet or statement of operations.

In January 2017, the FASB issued ASU2017-01, “Business Combinations (Topic 805) — Clarifying the Definition of a Business,” which provides a screen to determine when an integrated set of assets and activities are not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This screen reduces the number of transactions that need to be further evaluated. This standard will be effective for annual reporting periods beginning after December 15, 2017,2019, including interim periods within that reporting period. The Company adopted ASU2017-01 effective January 1, 2017. The implementationdoes not expect the adoption of this standard did notTopic 808 to have ana material impact on the Company’sits financial statements as the acquisition of MirImmune Inc., (“MirImmune”), the Company’s transaction that this ASU would have affected, did not meet the definition of a business under either the prior guidance or the new guidance.statements.

In May 2017, the FASB issued ASU2017-09, “Compensation — Stock Compensation (Topic 718) — Scope of Modification Accounting,” which provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. This standard will be effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early adoption is permitted.

5. Leases

The Company adopted ASU2017-09Topic 842 on January 1, 2019 using the modified retrospective approach and elected to apply the transition method that allows companies to continue applying guidance under the lease standard in effect at that time in the second quarter of 2017,comparative period financial statements and recognize a cumulative-effect adjustment to the implementation of this standard had no impactbalance sheet on the Company’s financial statements.

5. MirImmune Inc. Acquisition

On January 6, 2017,date of adoption. The Company has also elected the Company entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”)package of practical expedients to not reassess its prior conclusions about lease identification, lease classification and completed its acquisitionindirect costs and to not separate lease and non-lease components. With the adoption of MirImmune. Subject to the terms of the Stock Purchase Agreement, RXi Merger Sub, LLC, a Delaware limited liability company and wholly-owned subsidiary of the Company (“RXi Merger Sub”), was merged with and into MirImmune, with RXi Merger Sub continuing as the surviving entity and changing its name to “MirImmune, LLC”. As a result of the merger, MirImmune, LLC remains and operates as a wholly-owned subsidiary of the Company. Pursuant to the Stock Purchase Agreement, the Company acquired all of the issued and outstanding shares of capital stock of MirImmune for an aggregate of 2,750,371 shares of common stock of the Company and an aggregate of 1,118,224 shares of Series C Convertible Preferred Stock of the Company (the “Series C Convertible Preferred Stock”). The shares of common stock and Series C Convertible Preferred Stock were subject to a holdback of 3% of the aggregate closing consideration for any purchase price adjustments. The shares subject to the holdback, adjusted for post-closing items, were released and issued on April 12, 2017.

Upon the closing of the acquisition, the notes receivable outstanding onTopic 842, the Company’s balance sheet asnow contains line items for right of December 31, 2016 were cancelled.use asset, current lease liability and noncurrent lease liability.

The Company assessed the acquisitiondetermined that it held an operating lease for its office and laboratory space as of MirImmune under FASB ASC Topic 805, “Business Combinations” (“ASC 805”). Under ASC 805,January 1, 2019. The Company held no other lease agreements. The Company leases 7,581 square feet of office and laboratory space for its corporate headquarters and primary research facility in Marlborough, Massachusetts. On January 1, 2019, the Company determinedrecorded a right of use asset and corresponding lease liability of $28,000.

On January 22, 2019, the Company amended the lease for its office and laboratory space to extend the term by five years, such that the acquired assetslease will expire on March 31, 2024. With the amendment, the Company also has the option to terminate the lease after two or three years by providing advance written notice. Due to the extension of the lease agreement, the Company increased the right of use asset and corresponding lease liability by $592,000.

Additionally, the lease agreements did not constitutecontain information to determine the rate implicit in the lease. The Company calculated its incremental borrowing rate based on what the Company would have to pay to borrow on a businesscollateralized basis over the lease term for an amount equal to the remaining lease payments. At September 30, 2019, the weighted average incremental borrowing rate and that the transaction would be accountedweighted average remaining lease term for as an asset acquisition. The assets and development programs acquired from MirImmune are at an early stage of development and will require a significant investment of time and capital if we are to be successful in developing them. There is no assurance that we will be successful in developing such assets, and a failure to successfully develop such assets could diminish our prospects. Under ASC 805, the assets acquired are considered to have no alternative future uses, as determining the future economic benefit of the acquired assets at the date of acquisition is highly uncertain. The fair value of the assets was determined using the quoted market price of the Company’s common stockoperating lease was 4.62% and 4.44 years, respectively.

As of September 30, 2019, the right of use asset and liability arising from the Company’s operating lease was $538,000 and $542,000, respectively. During the three months ended September 30, 2019, cash paid for the amounts included in the measurement of liabilities was $31,000 and the Company recorded operating lease expense of $33,000, which was included in operating expenses on January 6, 2017, the datestatement of the acquisition, and fully expensed asin-process research and development.

operations. During the nine months ended September 30, 2017,2019, cash paid for the aggregate fair valueamounts included in the measurement of the consideration given of $3,075,000liabilities was fully expensed asin-process research$90,000 and development expense. The aggregate fair value of the consideration also included transaction costs, liabilities assumed and cancellation of notes receivable.

The Company was restricted from converting any of the Series C Convertible Preferred Stock into common stock to the extent that such conversion was not approved by the Company’s stockholders in accordance with the stockholder approval requirements of NASDAQ Marketplace Rule 5635. On June 9, 2017, with the approval of the Company’s stockholders in accordance with the NASDAQ stockholder approval requirements, each share of the Series C Convertible Preferred Stock outstanding was automatically converted into one share of common stock, such that there were no shares of Series C Convertible Preferred Stock issued or outstanding at September 30, 2017. On November 7, 2017, the Company filed a Certificate Eliminating the Series C Convertible Preferred Stock from the Certificaterecorded operating lease expense of Incorporation of the Company with the Secretary of State of the State of Delaware. Please refer to Note 10$94,000.

Future lease payments for further discussion of the filing.

Under the terms of the Stock Purchase Agreement, if certain development or commercial milestones are achieved within two years, the Company will be required to either (i) issue a number of shares of common stock (the “Milestone Shares”) equal to the sum of 2,519,091 shares of common stock, plus an additional number of shares of common stock equal to 13% of the common stock issued upon exercise of any warrants issued under the Company’s underwritten public offering in December 2016, but only to the extent that such warrants have been exercised prior to the milestone being achieved or (ii) pay the equivalent value of the Milestone Shares in cash. The Company received shareholder approval in accordance with Rule 5635 of the NASDAQ Marketplace Rules at its 2017 Annual Meeting of Stockholders to issue any shares in satisfaction of the achievement of the milestones.

The Company assessed the Milestone Shares under FASB ASC Topic 480, “Distinguishing Liabilities from Equity” (“ASC 480”). The Company determined that liability accounting would be required for the Milestone Shares under ASC 480. The Company will record a liability related to the Milestone Shares if and when the milestones are achieved and the consideration becomes payable. At that time, the Company will record the cost of the Milestone Shares asin-process research and development expense. No milestones have been metnon-cancellable operating leases as of September 30, 2017.

6. Fair Value Measurements

The Company follows the provisions of FASB ASC Topic 820, “Fair Value Measurements and Disclosures,”for the Company’s financial assets and liabilities that arere-measured and reported at fair value at each reporting period and arere-measured and reported at fair value at least annually using a fair value hierarchy that is broken down into three levels. Level inputs are defined as follows:

Level 1 — quoted prices in active markets for identical assets or liabilities.

Level 2 — other significant observable inputs for the assets or liabilities through corroboration with market data at the measurement date.

Level 3 — significant unobservable inputs that reflect management’s best estimate of what market participants would use to price the assets or liabilities at the measurement date.

The warrant issued to the Company by Thera Neuropharma, Inc. (“Thera”) is categorized as Level 3 hierarchy. The estimated fair value inputs utilizing the asset-based approach for the warrant issued to the Company by Thera include the stage of enterprise development, terms of existing contractual arrangements of the entity’s equity securities, the achievement of milestones and other unobservable inputs.

Financial assets measured at fair value on a recurring basis are summarized2019 were as follows, in thousands:

A reconciliation of the beginning and ending Level 3 assets for the nine months ended September 30, 2017 is as follows (in thousands):

Fair Value of Financial Instruments

The carrying amounts reported in the balance sheet for cash equivalents, restricted cash and accounts payable approximate their fair values due to their short-term nature.

7.6. Stockholders’ Equity

Series B Convertible Preferred Stock— The Company’s remaining shares of Series B Convertible Preferred Stock (“Series B Convertible Preferred Stock”) outstanding at December 31, 2016 were fully converted into 6,374,444 shares of common stock of the Company during the first quarter of 2017, such that there are no shares of Series B Convertible Preferred Stock issued or outstanding at September 30, 2017. On November 7, 2017, the Company filed a Certificate Eliminating the Series B Convertible Preferred Stock from the Certificate of Incorporation of the Company with the Secretary of State of the State of Delaware. Please refer to Note 10 for further discussion of the filing.

Series C Convertible Preferred Stock— In connection with the Stock Purchase Agreement, on January 5, 2017, the Company filed a Certificate of Designation of Preferences, Rights and Limitations of Series C Convertible Preferred Stock (the “Series C Convertible Preferred Stock Certificate of Designation”) with the Secretary of State of the State of Delaware. The Series C Convertible Preferred Stock Certificate of Designation provides for the issuance of up to 1,800,000 shares of Series C Convertible Preferred Stock. The Series C Convertible Preferred Stock have no voting rights, with certain exceptions as described in the Series C Convertible Preferred Stock Certificate of Designations, and shall receive dividends on anas-converted basis at the same time and in the same form as any dividends paid out on shares of the Company’s common stock. Other than as set forth in the previous sentence, no other dividends shall be paid on the Series C Convertible Preferred Stock. The Company has never paid dividends on its common stock and presently has no intention of paying dividends.

Upon its issuance, the Series C Convertible Preferred Stock was assessed under ASC 480. The Company determined that the Series C Convertible Preferred Stock was not within the scope of ASC 480 and therefore, the Series C Convertible Preferred Stock was not considered a liability. The Series C Convertible Preferred Stock was recorded in permanent equity on the Company’s balance sheet.

The Series C Convertible Preferred Stock was then assessed under FASB ASC 815, “Derivatives and Hedging” (“ASC 815”). The Company believes that the Series C Convertible Preferred Stock is an equity host for the purposes of assessing the embedded conversion option for potential bifurcation. The Company concluded that the conversion option feature is clearly and closely related to the preferred stock host. As such, the conversion feature did not require bifurcation under ASC 815.

Pursuant to the Stock Purchase Agreement, the Company acquired all of the issued and outstanding shares of capital stock of MirImmune for an aggregate of 2,750,371 shares of common stock of the Company and an aggregate of 1,118,224 shares of Series C Convertible Preferred Stock. The Company was restricted from converting any of the Series C Convertible Preferred Stock into common stock to the extent that such conversion was not approved by the Company’s stockholders in accordance with the stockholder approval requirements of NASDAQ Marketplace Rule 5635. On June 9, 2017, with the approval of the Company’s stockholders in accordance with the NASDAQ stockholder approval requirements, each share of the Series C Convertible Preferred Stock outstanding was automatically converted into one share of common stock, such that there were no shares of Series C Convertible Preferred Stock issued or outstanding at September 30, 2017. Please refer to Notes 5 and 10 for further details on the shares issued in connection with the acquisition of MirImmune.

Lincoln Park Capital Fund, LLC –—On August 8, 2017, the Company entered into a purchase agreement (the “2017 Purchase Agreement”) and a registration rights agreement with LPC, pursuant to which the Company

has the right to sell to LPC up to $15,000,000 in shares of the Company’s common stock, subject to certain limitations and conditions set forth in the 2017 Purchase Agreement.

No shares of common stock were sold to LPC under the 2017 Purchase Agreement during the three or nine months ended September 30, 2019. During the three months ended September 30, 2018, the Company sold 15,000 shares of common stock to LPC under the 2017 Purchase Agreement for net proceeds of $21,000. During the nine months ended September 30, 2018, the Company sold 435,000 shares of common stock to LPC under the 2017 Purchase Agreement for net proceeds of $1,312,000.

On August 7, 2019, the Company entered into a purchase agreement (the “2019 Purchase Agreement”) and a registration rights agreement with LPC, pursuant to which the Company has the right to sell to LPC up to $10,000,000 in shares of the Company’s common stock, subject to certain limitations and conditions set forth in the 2019 Purchase Agreement. As a commitment fee for entering into the 20172019 Purchase Agreement, the Company issued 500,000 shares of the Company’s common stock to LPC 450,000 shares of Company common stock (the “Commitment Shares”). The Commitment Shares hadat a value per share of $0.58 and were$0.3767, which was recorded as a cost of capital. The Company intendsNo shares of common stock were sold to useLPC under the net proceeds from the 20172019 Purchase Agreement for working capital and general corporate purposes. There have been no purchases underduring the 2017 Purchase Agreement as ofthree or nine months ended September 30, 2017.2019.

Warrants —The following table summarizes the Company’s outstanding equity-classified warrants at September 30, 2017:2019:

During

There were no warrants exercised during the second quarter of 2017, outstanding warrants for the purchase of 462 shares of the Company’s common stock with an exercise price of $39.00 expired.

No warrants were exercised duringthree months ended September 30, 2019. During the nine months ended September 30, 20172019, the Company received proceeds of $60,000 from the exercise of Pre-Funded Warrants for a total of 6,004,286 shares of common stock. There were no warrant exercises during the three or 2016.nine months ended September 30, 2018.

7. Net Loss per Share

The following table sets forth the potential common shares excluded from the calculation of net loss per share because their inclusion would be anti-dilutive:

8. Stock-based Compensation

Stock Options

The Company uses the Black-Scholes option-pricing model to determine the fair value of all its option grants. For valuing options granted during the three and nine months ended September 30, 20172019 and 2016,2018, the following assumptions were used:

There were no options granted during the three months ended September 30, 2019. The weighted average fair value of options granted during the three months ended September 30, 2017 and 20162018 was $0.49 and $2.27, respectively.$1.72. The weighted average fair value of options granted during the nine months ended September 30, 20172019 and 20162018 was $0.49$0.30 and $2.15,$1.75, respectively.

The risk-free interest rate used for each grant wasis based upon the yield onzero-coupon U.S. Treasury securities with a term similar to the expected life of the related option. The Company’s expected stock price volatility assumption is based upon the volatility of a composition of comparable companies.Company’s own implied volatility. The expected life assumption for employeeoption grants wasis based upon the simplified method provided for under ASC 718, and the expected life assumption fornon-employees was based upon the contractual term of the option.718. The dividend yield assumption of zero is based upon the fact that the Company has never paid cash dividends and presently has no intention of paying cash dividends.

The following table summarizes the activity of the Company’s stock option planoptions for the nine months ended September 30, 2017:2019:

Stock-based compensation expense related to stock options for the three months ended September 30, 2019 and 2018 was $16,000 and $17,000, respectively. Stock-based compensation expense related to stock options for the nine months ended September 30, 2019 and 2018 was $53,000 and $95,000, respectively.

Restricted Stock Units

Restricted stock units (“RSUs”) are issued under the Company’s 2012 Long Term Incentive Plan (the “Plan”) or as inducement grants granted outside of the Plan to new employees. RSUs are generally subject to graded vesting and the satisfaction of service requirements, similar to our stock options. Upon vesting, each outstanding RSU will be exchanged for one share of the Company’s common stock. RSU recipients may elect to net share settle upon vesting, in which case the Company pays the employee’s income taxes due upon vesting and withholds a number of shares of equal value. The fair value of the RSUs awarded are based on the Company’s closing stock price at the grant date and are expensed over the requisite service period.

The following table summarizes the activity of the Company’s RSUs for the nine months ended September 30, 2019:

Stock-based compensation expense related to RSUs for the three months ended September 30, 2019 and 2018 was $31,000 and $22,000, respectively. Stock-based compensation expense related to RSUs for the nine months ended September 30, 2019 and 2018 was $110,000 and $22,000, respectively.

Restricted Stock

On August 31, 2018, and through subsequent amendments on December 19, 2018 and February 14, 2019, Geert Cauwenbergh, Dr. Med. Sc., the Company’s former Chief Executive Officer, elected the right to receive, in lieu of cash, for the period from September 15, 2018 to February 28, 2019, up to 50% of his base salary and cash bonuses, if any, (collectively, the “Compensation”) payable in the form of unvested, restricted shares of the Company’s common stock. Such restricted shares were received in the form of a series of grants made on each Company payroll date in lieu of cash payment of the Compensation. All shares issued in lieu of Compensation vested in full on June 1, 2019.

The fair value of the restricted stock was based on the Company’s closing stock price on the date of grant and was expensed over the vesting period. During the nine months ended September 30, 2019, the Company granted 243,032 shares of restricted stock in lieu of Compensation to Dr. Cauwenbergh and recorded $106,000 in stock-based compensation expense related to the restricted stock. There were no restricted stock issuances under this election or related stock-based compensation expense during the three months ended September 30, 2019.

During the three and nine months ended September 30, 2018, the Company granted 73,587 shares of restricted stock in lieu of Compensation to Dr. Cauwenbergh. There was no stock-based compensation expense recorded to related to the restricted stock during the same period.

Compensation Expense Related to Equity Awards

The following table sets forth total stock-based compensation expense for the three and nine months ended September 30, 20172019 and 2016 as follows,2018, in thousands:

Stock-based compensation expense for the nine months ended September 30, 2017 includes $22,000, recorded in research and development expense, related to stock option modifications in connection with the retirement of the Company’s former Chief Development Officer.

9. Net Loss per Share

The following table sets forth the potential common shares excluded from the calculation of net loss per common share because their inclusion would be anti-dilutive:

10. Subsequent Events

On November 7, 2017,

Subsequent to the balance sheet date, the Company filed a Certificate Eliminating the Series B Convertible Preferred Stockreceived proceeds of $7,500 from the Certificateexercise of IncorporationPre-Funded Warrants for a total of the Company and a Certificate Eliminating the Series C Convertible Preferred Stock from the Certificate of Incorporation of the Company (together, the “Certificates of Elimination”) with the Secretary of State of the State of Delaware, in order to eliminate from the Certificate of Incorporation all matters set forth in the Certificate of Incorporation, including the related certificates of designation, relating to the previously issued Series B Convertible Preferred Stock and Series C Convertible Preferred Stock. As a result, the 8,100750,000 shares of unissued Series B Convertible Preferred Stock and 1,800,000 shares of unissued Series C Convertible Preferred Stock were returned to the status of authorized but unissued shares of preferred stock of the Company, without designation as to series or preferences or rights. The foregoing summary of the Certificates of Elimination is qualified in its entirety by reference to the full text of the Certificates of Elimination, which are attached hereto as Exhibits 3.1 and 3.2 to this Quarterly Report on Form10-Q and incorporated herein by reference.common stock.

In this document, “we,” “our,” “ours,” “us,” “RXi”“Phio” and the “Company” refers to RXiPhio Pharmaceuticals CorporationCorp. and our subsidiary, MirImmune, LLC and the ongoing business operations of RXiPhio Pharmaceuticals CorporationCorp. and MirImmune, LLC, whether conducted through RXiPhio Pharmaceuticals CorporationCorp. or MirImmune, LLC.

This management’s discussion and analysis of financial condition as of September 30, 20172019 and results of operations for the three and nine months ended September 30, 20172019 and 20162018 should be read in conjunction with the financial statements included in our Annual Report onForm 10-K for the year ended December 31, 20162018, which was filed with the SECSecurities and Exchange Commission (the “SEC”) on March 30, 2017.27, 2019.

This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as “intends,” “believes,” “anticipates,” “indicates,” “plans,” “expects,” “suggests,” “may,” “should,” “potential,” “designed to,” “will” and similar references. Suchreferences, although not all forward-looking statements include, but are not limited to, statements about: our ability to successfully developRXI-109, Samcyprone™ and our other product candidates (collectively, “our

product candidates”); the future success of our clinical trials with our product candidates; the timing for the commencement and completion of clinical trials; the future success of our strategic partnerships; and our ability to implement cost-saving measures.contain these words. Forward-looking statements are neither historical facts nor assurances of future performance. These statements are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on anystatements as a result of these forward-looking statements. Importanta number of important factors, that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others: the risk that our clinical trials with our product candidates may not be successful in evaluating the safety and tolerability of these candidates or providing evidence of increased surgical scar reduction compared to placebo or clearance of common warts; the successful and timely completion of clinical trials; uncertainties regarding the regulatory process; the availability of funds and resources to pursue our research and development projects, including our clinical trials with our product candidates; general economic conditions; and those identified in our Annual Report on Form10-K for the year ended December 31, 20162018 under the heading “Risk Factors” and in other filings the Company periodically makes with the Securities and Exchange Commission.SEC. Therefore, you should not rely on any of these forward-looking statements. Forward-looking statements contained in this Quarterly Report on Form10-Q speak as of the date hereof and the Company does not undertake to update any of these forward-looking statements to reflect a change in its views or events or circumstances that occur after the date of this report.

Overview

RXi

Phio Pharmaceuticals Corporation (“RXi,” “we,” “our” or the “Company”)Corp. is a clinical-stagebiotechnology company developing innovativethe next generation of immuno-oncology therapeutics based on our proprietary self-delivering RNAi(sd-rxRNA^® (“INTASYL™”) therapeutic platform. The Company's efforts are focused on silencing tumor-induced suppression of the immune system through our proprietary INTASYL™ platform with utility in immune cells and/or the tumor micro-environment.Our goal is to develop powerful INTASYL™ therapeutic compounds that can weaponize immune effector cells to overcome tumor immune escape, thereby providing patients a powerful new treatment option that goes beyond current treatment modalities.

Our development efforts are based on our broadly patented INTASYL™ technology platform. Our INTASYL™ compounds do not require a delivery vehicle to penetrate into tissues and Samcyprone™ which address significant unmet medical needs. We have a pipeline of discovery, preclinicalcells and clinical product candidates in the areas of dermatology, ophthalmology and cell-based cancer immunotherapy. The Company’s clinical development programs includeRXI-109, ansd-rxRNA for the treatment of dermal and ocular scarring, and Samcyprone™, a topical immunomodulator, for the treatment of warts. The Company’s pipeline, coupled with our extensive patent portfolio, provides for product development and business development opportunities across a broad spectrum of therapeutic areas.

RNAi therapies are designed to “silence,”“silence” or down-regulate, the expression of a specific gene that may bewhich is over-expressed in cancer. We believe that our INTASYL™ platform uniquely positions the Company in the field of immuno-oncology because of this and the following reasons:

The self-delivering nature of our compounds makesINTASYL™ideally suited for use with adoptive cell transfer (“ACT”) treatments and direct therapeutic use. ACT consists of the infusion of immune cells with antitumor properties. These cells can be derived from unmodified (i.e. naturally occurring) immune cells, immune cells isolated from resected tumors, or genetically engineered immune cells recognizing tumor neoantigens/neoepitopes cells.

Currently, ACT therapies for the treatment of solid tumors face several hurdles. Multiple inhibitory mechanisms restrain immune cells used in ACT from effectively eradicating tumors, including immune checkpoints, reduced cell fitness and cell persistence. Furthermore, the immunosuppressive tumor micro-environment (the “TME”) can pose a disease condition.formidable barrier to immune cell infiltration and function.

Phio has developed a product platform based on ourINTASYL™technology that allows easy, precise, rapid, and selective non-genetically modified programming of ACT cells (ex-vivo, during manufacturing) and of the TME (in vivo, by local application), resulting in improved cell-based immunotherapy.

Adoptive Cell Transfer

In ACT, immune cells are isolated from patients, donors or retrieved from allogeneic immune cell banks. The Company’s first RNAi clinical product candidate,RXI-109, isimmune cells are then expanded and modified before being returned and used to treat the same patient. We believe our INTASYL™ compounds are ideally suited to be used in combination with ACT, in order to make these immune cells more effective.

ACT includes a self-delivering RNAi compound(sd-rxRNA)number of different types of immunotherapy treatments. These treatments use immune cells, that commenced human clinical trialsare grown in 2012.RXI-109 is designeda lab to reducelarge numbers, followed by administering them to the body to fight the cancer cells. Sometimes, immune cells that naturally recognize a tumor are used, while other times immune cells are modified or “engineered” to make them recognize and kill the cancer cells. There are several types of ACT, including: a.) non-engineered cell therapy in which immune cells are grown from the patient’s tumor or blood, such as tumor infiltrating lymphocytes (“TILs”), or from donor blood or tissue such as natural killer (“NK”) cells, dendritic cells (“DC”) and macrophages, and b.) engineered immune cells that are genetically modified to recognize specific tumor proteins and to remain in an activated state (such as TCRs, CAR T-cells, or CAR-NK cells).

Our approach to immunotherapy builds on well-established methodologies of ACT and involves the treatment of immune cells with ourINTASYL™compounds while they are grown in the lab and before administering them to the patient. Because ourINTASYL™compounds do not require a delivery vehicle to penetrate into the cells, we are able to enhance the function of these cells (for example, by inhibiting the expression of connective tissue growth factor (“CTGF”), a critical regulator of several biological pathways involved in fibrosis, including scar formation in the skin and eye.immune checkpoint genes) by merely adding ourRXI-109INTASYL™ is currently being evaluated in a Phase 2 clinical trial, Study 1402, to prevent or reduce dermal scarring following scar revision surgery of an existing hypertrophic scar and a Phase 1/2 clinical trial, Study 1501, to evaluate the safety and clinical activity ofRXI-109 to prevent the progression of retinal scarring in subjects with wetage-related macular degeneration (“AMD”).

Study 1402, the Company’s Phase 2 clinical trial in hypertrophic scars, commenced in July 2014. In October 2015, we reported that preliminary data from Study 1402 demonstrated that scars at revision sites were judged to be better at three months after a treatment regimen with five mg/cm intradermal administration ofRXI-109 than scars at untreated revision sites in those same subjects. Based in part on this new information, two more cohorts (Cohorts 3 and 4) were added to Study 1402 in November 2015. For these two cohorts, the number of doses was increased to either eight or nine doses ofRXI-109 over asix-month period to better cover the extended wound healing/scarring profile of hypertrophic scars. Enrollment of subjects into these two new cohorts completed ahead of schedulecompounds during the third quarter of 2016.

In December 2016,expansion process and without the Company announced that preliminary data from the first two cohorts from Study 1402 at nine months confirmed the positive differentiation by a blinded panel of observers from untreated surgery incisions in hypertrophic scars from the previously presented dataneed for a subset of subjects treated with five mg/cm ofRXI-109 at three months. In addition, this data extends this observation to all time points, including the post-treatmentfollow-up period through nine months post-surgery.RXI-109 was safe and well tolerated. Additionally, as expected, the limited three-month data available from Cohort 3 appeared to align with that of the first two cohorts asgenetic engineering. After enhancing these subjects all had the same dosing schedule through the third month. A completeread-out of the whole study, including all four cohorts withfollow-up until nine months post-surgery, is expected by the end of 2017.

Study 1501, the Company’s Phase 1/2 clinical trial in retinal scars, commenced in November 2015, and is a multi-dose, dose escalation study conducted in subjects with AMD with evidence of subretinal fibrosis. Each subject receives four doses ofRXI-109 by intraocular injection at one month intervals for a total dosing period of three months. The safety and tolerability ofRXI-109, as well as the potential for clinical activity, is evaluated over the course of the study using numerous assessments to monitor the health of the retina and to assess visual acuity. To date, there have been no safety issues that have precluded continuation of dosing. Study 1501 has been completely enrolled, dosing in the third cohort at the highest planned dose level is completed and patient follow-up is ongoing. The Company expects to complete subject participation in the study by the end of 2017 and to sharetop-line data in early 2018.

Samcyprone™cells ex vivo, the Company’s second clinical candidate, is a proprietary topical formulation of the small molecule diphenylcyclopropenone (“DPCP”), an immunomodulator that works by initiating aT-cell response. The use of Samcyprone™ allows sensitization using much lower concentrations of DPCP thanthey are used with existing compounded DPCP solutions, avoiding hyper-sensitization to subsequent challenge doses. Samcyprone™ is currently being evaluated in a Phase 2a clinical trial, Study 1502, for the clearance of common warts.

Study 1502 was initiated in December 2015. Study 1502 includes a sensitization phase in which a spot on the subject’s upper arm and one or more warts are treated with Samcyprone™. After being sensitized in this way, the subjects enter into the treatment phase where up to four warts are treated on a once weekly basis for ten weeks with aten-fold lower concentration of Samcyprone™ than in the sensitization phase. During the trial, the warts are scored, photographed and measured to monitor the level of clearance.

In December 2016, the Company announced the results from a preliminary review of sensitization and wart clearance data from a subset of subjects that have completed theten-week treatment phase of Study 1502. Results showed that greater than 90% of the subjects demonstrated a sensitization response, a prerequisite to be able to develop a therapeutic response. Additionally, more than 60% of the subjects respondedreturned to the treatment by exhibiting either complete or greater than 50% clearance of all treated warts with up to ten weekly treatments. Samcyprone^™ treatment has been generally safe and well tolerated and has had drug-related adverse events relating to local reactions, which are typically expectedpatient for this type of treatment due to the sensitization and challenge responses in the skin. The Company added a second cohort, which was fully enrolled in September 2017, to Study 1502 to explore the opportunity to reduce the sensitization dose level, which will be more convenient to physicians and subjects. Early read-outs of the study are anticipated by the end of 2017.treatment.

In addition to our clinical programs, we continue to advance our preclinical and discovery programs with oursd-rxRNA technology.RXI-231, our leadsd-rxRNA compound targeting tyrosinase (“TYR”), is in cosmetic development as a cosmetic ingredient that may improve the appearance of uneven skin tone and pigmentation. Cosmetics are compounds that affect the appearance of the skin and make no preventative or therapeutic claims. These compounds may be developed more rapidly than therapeutics, therefore the path to market may be much shorter and less expensive. Efficacy and toxicity testing in cell culture and skin equivalents forRXI-231 has been successfully completed and human testing ofRXI-231 commenced in June 2017 with a U.S. clinical testing site. The Company has completed irritation and sensitization studies withRXI-231, the first two of three studies planned. Early results from the irritation and sensitization studies demonstrated thatRXI-231 is not a skin irritant, and it does not cause allergic contact dermatitis. The third study investigates the potential ofRXI-231 to improve the appearance of skin pigmentation induced by UV exposure and is ongoing. Full reports from these studies are expected before the end of 2017.

On January 6, 2017, the Company entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) by and among the Company, RXi Merger Sub, LLC, a Delaware limited liability company and wholly owned subsidiary of the Company (“RXi Merger Sub”), MirImmune Inc. (“MirImmune”), the stockholders of MirImmune set forth on the signature pages thereto (each a “Seller” and collectively, the “Sellers”), and Alexey Wolfson, Ph.D., in his capacity as the Sellers’ Representative. Pursuant to the Stock Purchase Agreement, the Company acquired from the Sellers all of the issued and outstanding shares of capital stock of MirImmune for an aggregate of 2,750,371 shares of common stock of the Company and an aggregate of 1,118,224 shares of Series C Convertible Preferred Stock of the Company (the “Series C Convertible Preferred Stock”). On June 9, 2017, with the approval of the Company’s stockholders in accordance with the stockholder approval requirements of Nasdaq Marketplace Rule 5635, each share of Series C Convertible Preferred Stock outstanding was automatically converted into one share of common stock, such that no shares of Series C Convertible Preferred Stock remained issued or outstanding. On November 7, 2017, the Company filed a Certificate Eliminating the Series C Convertible Preferred Stock from the Certificate of Incorporation of the Company with the Secretary of State of the State of Delaware. Please refer to Part II, Item 5 of this quarterly report on Form 10-Q for further discussion of the filing.

In connection with and promptly following the closing of the Stock Purchase Agreement, MirImmune was merged with and into RXi Merger Sub (the “Merger”), with RXi Merger Sub continuing as the surviving entity and changing its name to “MirImmune, LLC”. As a result of the Merger, MirImmune, LLC remains and operates as a wholly-owned subsidiary of the Company.

Building on the work completed by MirImmune prior to its acquisition by the Company, our cell-based cancer immunotherapy program withsd-rxRNA includes lead compounds forWe have a number of immune checkpoint targets that provide long lasting immune checkpoint silencing, individuallycollaborations with leading academic centers and in combination, in adoptively transferred cells. An improved efficacy upon the silencing of checkpoints has been demonstrated in various types of adoptively transferred cells relevant in cancer immunotherapy, such as CART-cells and tumor infiltrating lymphocytes (TILs). The Company’s ongoing discovery programscorporate institutions. Corporate collaborators include, but are not limited to, Iovance Biotherapeutics, Inc., Glycostem Therapeutics BV and Carisma Therapeutics, Inc. Data developed in-house and with our collaborators has shown that PH-762, our lead pipeline compound, can elicit PD-1 checkpoint blockade by silencing PD-1 receptor expression resulting in enhanced T cell activation and tumor cytotoxicity. We have also shown that PH-804, our second pipeline compound, can silence the evaluationexpression ofsd-rxRNA TIGIT in NK cells and T cells, overcoming their exhaustion and thereby becoming “weaponized.”

Recent data shown by the Company and two of its collaborators, Iovance Biotherapeutics, Inc. and the Karolinska Institutet, at the 2019 Society for Immunotherapy of Cancer annual meeting further supports the application of INTASYL™ technology in immunotherapy of cancer. PH-762, our most advanced program, has shown to silence the expression of checkpoint molecule PD-1 in target human T cells in a potent and durable manner suitable for both ACT and intratumoral injection, and increases function of patient derived TILs for ACT. The application of INTASYL™ compounds to impactnovel immuno-oncology targets was shown by the differentiationsilencing of various immune effector cells. The CompanyBRD4 by a BRD4 targeting INTASYL™ compound in human T cells during expansion for ACT, which has also initiatedthe potential to confer superior anti-tumor activity.

We expect to enter the clinic with PH-762 in vivo evaluations of multiple checkpoint inhibitingsd-rxRNA compoundsco-transfected in CART-cells in mouse modelsACT therapy for solid tumors, such as in melanoma, in the first half of 2020.

Tumor Micro-Environment

We are exploring the use of ourINTASYL™ compoundsdirectly towards TME targets, including using PH-762 and PH-804 in such applications. We are also working on other relevant compounds for TME targets. One of those is PH-790, an INTASYL™ compound targeting PD-L1, a protein found on tumor cells telling the T cells to leave them alone and not attack it. Impacting the tumor cells and/or the TME through a direct use ofINTASYL™, locally administered directly into the tumor, could potentially become an important form of (neo)adjuvant therapy. We believe that this will also show that our contributions with data from these studies expected by the end of 2017.

ourINTASYL™compounds in immuno-oncology are not limited to use with a cell therapy platform. Additionally, the Company recently selected twohas shown in a clinical setting that itssd-rxRNAINTASYL™compounds are safe and well-tolerated following local administration.

Our collaborative research agreement with Gustave Roussy, a leading comprehensive cancer center in France, concentrates on determining the feasibility of ourINTASYL™ platform to target the TME via intra-tumoral injection. Our completed in-vivo study with Gustave Roussy demonstrated that anINTASYL™compound delivered via intra-tumoral injection showed silencing of gene expression with ourINTASYL™compounds from its immunotherapy pipelinewith greater than 90% reduction of the target gene expression in a mouse model of melanoma.

The Company expects to move PH-762 or PH-790 for preclinical development. For oncology treatments based on adoptive cell transfer (ACT), compoundsRXI-762 andRXI-804 suppressintratumoral injection into the expression of immune checkpoint proteinsPD-1 and TIGIT, respectively, which can result in an improved efficacy to the targeted tumors. This decision triggered the selection of a manufacturing facility to initiate production of cGMP grade material, initially for RXI-762. This also supports movingRXI-762 into clinical development as early as 2018 as partstage in the second half of an ACT therapy.2020.

On August 8, 2017, the Company entered into a purchase agreement (the “2017 Purchase Agreement”) with Lincoln Park Capital Fund, LLC (“LPC”), pursuant to which the Company has the right to sell to LPC up to $15,000,000 in shares of the Company’s common stock, subject to certain limitations and conditions set forth therein, over the30-month term of the 2017 Purchase Agreement.

Since inception, we have incurred significant losses. Substantially all of our losses to date have resulted from research and development expenses in connection with our clinical and research programs and from general and administrative costs. At September 30, 2017, we had an accumulated deficit of $76.5 million. We expect to continue to incur significant losses for the foreseeable future, particularly as we advance our development programs forRXI-109 and Samcyprone™ and expand our program in cell-based cancer immunotherapy.

Critical Accounting Policies and Estimates

There

The discussion and analysis of our financial condition and results of operations is based upon our financial statements, which have been prepared in accordance withGAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates and base our estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions and could have a material impact on our reported results. Other than our accounting policy for leases in connection with the adoption of Topic 842 on January 1, 2019, as described below, there have been no significant changes to our critical accounting policies since the beginning of this fiscal year. Our critical accounting policies are described in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of our Annual Report on Form10-K for the year ended December 31, 2016,2018, which we filed with the SEC on March 30, 2017.27, 2019.

Leases

The Company follows the provisions of the FASB ASC 842. At the inception of a contract, the Company determines whether the contract is or contains a lease based on all relevant facts and circumstances. For contracts that contain a lease, the Company identifies the lease and non-lease components, determines the consideration in the contract and recognizes the classification of the lease as operating or financing. At the commencement date of the lease, the Company recognizes a liability to make lease payments and an asset representing the right to use the underlying asset during the lease term. The Company has elected not to recognize leases with a term less than one year on the balance sheet.

Lease liabilities and the corresponding right of use assets are recorded based on the present value of lease payments to be made over the lease term. The discount rate used to calculate the present value is the rate implicit in the lease, or if not readily determinable, the Company’s incremental borrowing rate. The Company’s incremental borrowing rate is the rate of interest that we would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. Certain adjustments to the right of use asset may be required for items such as initial direct costs or incentives received. Lease payments on operating leases are recognized on a straight-line basis over the expected term of the lease. Lease payments on financing leases are recognized using the effective interest method.

Results of Operations

The following data summarizes the results of our operations for the periods indicated, in thousands:

Comparison of the Three and Nine Months Ended September 30, 20172019 and 20162018

Net Revenues

To date, we have primarily generated revenues through government grants.

The following table summarizes our total net revenues, for the periods indicated, in thousands:

The Company did not have net revenues

Revenues for the nine months ended September 30, 2019 and three and nine months ended September 30, 2017 and the three months ended September 30, 2016.

Net revenues were approximately $19,000 for the nine months ended September 30, 2016, which2018 related to the Company’s exclusive license agreements with Thera Neuropharma, Inc. and MirImmune, prior to its acquisitionwork performed by the Company.

Operating Expenses

The following table summarizes our total operating expenses, for the periods indicated, in thousands:

Research and Development Expenses

Research and development expenses consist of compensation-related costs for our employees dedicated to research and development activities, fees related to our Scientific Advisory Board members, expenses related to our ongoing research and development efforts primarily related to our clinical trials, drug manufacturing, outside contract services, licensing and patent fees and laboratory supplies and services for our research programs.

Research and development expenses were $1,490,000relate to compensation and benefits for research and development personnel, facility-related expenses, supplies, external services, costs to acquire technology licenses, expenses associated with preclinical and clinical development activities and other operating costs.

Research and development expenses for the three months ended September 30, 2017,2019 increased 24% as compared with $1,464,000the three months ended September 30, 2018, primarily due to an increase in consulting and outside professional service fees in support of preclinical research for the Company’s immuno-oncology programs.

Research and development expenses for the nine months ended September 30, 2019 decreased 3% as compared with the nine months ended September 30, 2018, primarily due to decreases in clinical-trial related expenses with the completion of the Company’s legacy clinical trials and payroll-related expenses from a decrease in headcount as compared to the prior year period offset by increases in consulting and outside professional service fees in support of preclinical research for the Company’s immuno-oncology programs.

General and Administrative Expenses

General and administrative expenses relate to compensation and benefits for general and administrative personnel, facility-related expenses, professional fees for legal, audit, tax and consulting services, as well as other general corporate expenses.

General and administrative expenses for the three months ended September 30, 2016. The increase of $26,000, or 2%, was due to an increase of $71,000 in research and development expenses2019 increased 51% as compared with the three months ended September 30, 2018, primarily driven by subject fees for the second cohortan increase in the Samcyprone™ Phase 2 clinical trialpayroll-related expenses and preclinical work in the Company’s new immunotherapy program that was integrated into the Company with the acquisition of MirImmune in the first quarter of 2017, offset by a decrease of $45,000 in stock-based compensation expense.legal fees.

Research

General and developmentadministrative expenses were $4,166,000 for the nine months ended September 30, 2017,2019 increased 28% as compared with $4,108,000 for the nine months ended September 30, 2016. The increase of $58,000, or 1%, was2018, primarily due to anincreases in professional fees for legal related expenses and recruiting fees to support employee hiring activities and increase of $190,000 in research and development expenses primarily driven by work in the Company’s new immunotherapy program that commenced in the first quarter of 2017, offset by a decrease of $132,000 in stock-based compensation expense.

AcquiredIn-process Research and Development Expense

In January 2017, the Company acquired all of the issued and outstanding capital stock of MirImmune, a privately-held biotechnology company that was engaged in the development of cancer immunotherapies, in exchange for securities of the Company. The value of the consideration given, including transaction costs, liabilities assumed and cancellation of notes receivable, was recorded asin-process research and development expense.

Acquiredin-process research and development expense related to the acquisition of MirImmune was $3,075,000 for the nine months ended September 30, 2017. The Company did not have acquired in-process research and development expense for the three and nine months ended September 30, 2016 and the three months ended September 30, 2017.

General and Administrative Expenses

General and administrative expenses consist primarily of compensation-related costs for our employees dedicatedrestricted stock issued to general and administrative activities, legal fees, audit and tax fees, consulting fees, professional service fees and general corporate expenses.