DELMAR PHARMACEUTICALS, INC. (NASDAQ:DMPI) Files An 8-K Entry into a Material Definitive Agreement

SEC Filings

DELMAR PHARMACEUTICALS, INC. (NASDAQ:DMPI) Files An 8-K Entry into a Material Definitive Agreement

ME Staff 8-k

September 21, 2017

DELMAR PHARMACEUTICALS, INC. (NASDAQ:DMPI) Files An 8-K Entry into a Material Definitive Agreement

Item 7.01

On September 20, 2017, DelMar Pharmaceuticals, Inc. (the
Company) entered into a Securities Purchase
Agreement (the Purchase Agreement) with certain
institutional investors for the sale by the Company of shares of
the Companys common stock, par value $0.001 per share (the
Common Stock) and warrants to purchase shares of
Common Stock, in a registered direct offering. The investors in
this offering have agreed to purchase, and the Company has agreed
to sell, an aggregate of 8,000,000 shares of the Common Stock and
warrants to purchase an aggregate of 8,000,000 shares of Common
Stock (the Warrants), at a purchase price of
$1.25 per share and related warrant. Subject to certain ownership
limitations, the Warrants will be exercisable commencing on the
issuance date at an exercise price equal to $1.25 per whole share
of Common Stock, subject to adjustments as provided under the
terms of the Warrants. The Warrants are exercisable for five
years from the date of issuance. The aggregate gross proceeds for
the sale of the shares of Common Stock and Warrants will be
approximately $10,000,000.The closing of the sales of the shares
of Common Stock and Warrants is expected to occur on or about
September 22, 2017 and is subject to customary closing
conditions.

H.C. Wainwright Co, LLC (the Placement Agent),
acted as the exclusive placement agent in connection with the
offering.

The net proceeds to the Company from the transaction, after
deducting the placement agents fees and expenses (not including
the Placement Agent Warrants, as defined below), and the Companys
estimated offering expenses, and excluding the proceeds, if any,
from the exercise of the Warrants, are expected to be
approximately $9.0 million. The Company intends to use the net
proceeds of this offering for its clinical trials and for general
corporate purposes, which may include working capital, capital
expenditures, research and development and other commercial
expenditures. In addition, the Company may use the net proceeds
from this offering for acquisitions or investments in businesses,
products or technologies that are complementary to its business.

The securities sold in the offering were offered and sold by the
Company to an effective shelf registration statement on FormS-3,
which was filed with the Securities and Exchange Commission (the
SEC) on September 13, 2016 and subsequently
declared effective on September 27, 2016 (File No.333-213601)
(the Registration Statement), and the base
prospectus dated as of September27, 2016 contained therein. The
Company will file a prospectus supplement with the SEC in
connection with the sale of the securities.

The representations, warranties and covenants contained in the
Purchase Agreement were made solely for the benefit of the
parties to the Purchase Agreement. In addition, such
representations, warranties and covenants (i)are intended as a
way of allocating the risk between the parties to the Purchase
Agreement and not as statements of fact, and (ii)may apply
standards of materiality in a way that is different from what may
be viewed as material by stockholders of, or other investors in,
the Company. Accordingly, the Purchase Agreement is included with
this filing only to provide investors with information regarding
the terms of transaction, and not to provide investors with any
other factual information regarding the Company. Stockholders
should not rely on the representations, warranties and covenants
or any descriptions thereof as characterizations of the actual
state of facts or condition of the Company or any of its
subsidiaries or affiliates. Moreover, information concerning the
subject matter of the representations and warranties may change
after the date of the Purchase Agreement, which subsequent
information may or may not be fully reflected in public
disclosures.

The Company also entered into an exclusive engagement letter (the
Engagement Letter) with the Placement Agent.The
engagement letter expires October 17, 2017.The Company has agreed
to pay the Placement Agent an aggregate fee equal to 7% of the
aggregate gross proceeds received by the Company from the sale of
the shares of Common Stock and Warrants in the transactions plus
a management fee equal to 1% of the gross proceeds from the
offering. In addition, the Company will also pay the Placement
Agent a $10,000 non-accountable expense allowance and reimburse
the Placement Agents legal expenses up to $70,000. to the
Engagement Letter, the Company also agreed to issue to the
Placement Agent, or its designees, warrants to purchase that
number of shares of Common Stock equal to 5% of the aggregate
number of shares of Common Stock placed in this offering (but not
with respect to any shares of common stock issuable upon exercise
of Warrants issued in this offering) at an exercise price of
$1.25 per share (the Placement Agent Warrants).
The Placement Agent Warrants are being issued in reliance on the
exemption from registration provided by Section 4(a)(2) of the
Securities Act of 1933, as amended (the Securities
Act) and will be restricted from transfer for 180 days
to FINRA Rule 5110(g), but are otherwise identical to the
Warrants offered to investors. The Engagement Letter provides for
a tail period through January 31, 2018 and right of first refusal
period for up to five months, indemnity and other customary
provisions for transactions of this nature.

The forms of the Purchase Agreement, the Warrant and the
Engagement Letter are filed as Exhibits 10.1, 4.1 and 10.2,
respectively, to this Current Report on Form 8-K. The foregoing
summaries of the terms of these documents are subject to, and
qualified in their entirety by, such documents, which are
incorporated herein by reference.

A copy of the opinion of Fennemore Craig, P.C. relating to the
legality of the securities offered by us is attached as Exhibit
5.1 hereto.

Results of Operations and Financial
Condition.

At June 30, 2017, the Company had cash on hand of approximately
$6.6 million (unaudited) and as of September 20, 2017, the
Company had cash on hand of approximately $4.3 million
(unaudited), not including the net proceeds from this offering.

On September 20, 2017, the Company issued a press release
announcing the offering. A copy of the press release is attached
hereto as Exhibit 99.1 and is incorporated herein by reference.
The information in this Current Report on Form 8-K under Item 7.01, including the information contained in Exhibit 99.1, is
being furnished to the Securities and Exchange Commission, and
shall not be deemed to be filed for the purposes of Section 18 of
the Securities Exchange Act of 1934 or otherwise subject to the
liabilities of that section, and shall not be deemed to be
incorporated by reference into any filing under the Securities
Act of 1933 or the Securities Exchange Act of 1934, except as
shall be expressly set forth by a specific reference in such
filing.

Reference is made to the disclosure set forth in Item 7.01 above
as to the Placement Agent Warrants. The Placement Agent Warrants
and the shares issuable upon exercise of the Placement Agent
Warrants will be issued in reliance on the exemption from
registration provided by Section4(a)(2)of the Securities Act as
transactions not involving a public offering and in reliance on
similar exemptions under applicable state laws.

Business Update

Background

DelMar Pharmaceuticals, Inc. (the Company) is a clinical stage
drug development company with a focus on the treatment of
cancer.Our mission is to benefit patients and create shareholder
value by developing and commercializing anti-cancer therapies for
patients whose tumors exhibit features that make them resistant
to, or unlikely to respond to, currently available therapies,
particularly for orphan cancer indications where patients have
failed, or are unlikely to respond to, modern therapy.

Our lead product candidate, VAL-083, is a first-in-class
DNA-targeting chemotherapeutic that demonstrated activity against
a range of tumor types on prior Phase 1 and Phase 2 clinical
trials sponsored by the US National Cancer Institute (NCI). Our
research suggests that VAL-083s mechanism of action is different
than other agents targeting DNA that are widely used in the
treatment of cancer such as temozolomide, nitrosoureas,
platinum-based drugs, topoisomerase inhibitors and PARP
inhibitors. NCI clinical research and data from our own clinical
trials suggest that VAL-083 may offer a superior safety profile
to these other agents.

We have recently initiated a pivotal randomized Phase 3 clinical
trial with VAL-083 for recurrent glioblastoma multiforme (GBM).
The trial, entitled VAL-083Phase 3 Study in
Temozolomide-Avastin
(bevacizumab) Recurrent GBM (STAR-3) is intended
to enroll approximately 180 patients at approximately 25 centers
in the United States. Patients in the trial will have GBM that
has recurred following surgery, chemo-radiation with
temozolomide, and bevacizumab (Avastin). The trial will compare
the overall survival of these patients following treatment with
VAL-083 versus standard-of-care chemotherapy. If successful, the
results of this trial will position us to file a new drug
application (NDA) for the approval of VAL-083 in the United
States for the treatment of recurrent GBM. Subject to the
availability of capital, we anticipate that the trial will take
approximately two years from first enrollment.

We have also initiated two open-label, bio-marker driven Phase 2
trials in MGMT-unmethylated GBM. MGMT is a DNA-repair enzyme that
is associated with resistance to temozolomide, the current
standard-of-care chemotherapy used in the treatment of GBM.
Approximately two out of three GBM patients have
MGMT-unmethylated tumors and exhibit a high expression of MGMT,
which is correlated with temozolomide treatment failure and poor
patient outcomes. Our research demonstrates that VAL-083s
anti-tumor activity is independent of MGMT expression. In these
studies, we are using MGMT as a biomarker to identify patients
for treatment with VAL-083. If successful, the result of these
trials will position VAL-083 for advancement to pivotal clinical
trials as a potential replacement for temozolomide in
MGMT-unmethylated GBM. Funding for both of these trials is
substantially supported through collaborations. We anticipate
presenting interim data from these trials at peer reviewed
scientific meetings during calendar 2018.

We have received notice of allowance from the FDA for a Phase
1/2, Open-Label, Multicenter, Study of VAL-083 in Patients with
Recurrent
Platinum
Resistant Ovarian
Cancer (REPROVe). Platinum-based chemotherapy is standard-of-care
in the treatment of ovarian cancer. Nearly all ovarian cancer
patients eventually become resistant to platinum (Pt) -based
chemotherapy leading to treatment failure and poor patient
outcomes. We have demonstrated that VAL-083 is active against
Pt-resistant ovarian cancer in vitro. The Phase 1
portion of the REPROVe trial will enroll approximately 24
patients with Pt-resistant ovarian cancer to evaluate the overall
response rate (ORR) following treatment with VAL-083. We plan to
request a meeting with the FDA following completion of the Phase
1 portion of the REPROVe trial. If successful, data from this
trial would lead to a confirmatory Phase 2 study of approximately
60 patients, which if successful, and subject to feedback from
FDA may position us to potentially file an application for
accelerated approval or to advance to a pivotal Phase 3 trial.
Subject to availability of capital, we anticipate completing the
Phase 1 portion of the VAL-083 REPROVe trial in approximately 18
months from the initiation of patient recruitment and we will
present updates on the progress of the trial at peer reviewed
scientific meetings.

In addition to our clinical development activities in the United
States, to our collaboration with Guangxi Wuzhou Pharmaceutical
Company, we have obtained certain exclusive commercial rights to
VAL-083 in China where it is approved as a chemotherapy for the
treatment of chronic myelogenous leukemia (CML) and lung cancer.
We have entered into a collaboration agreement with the only
manufacturer presently licensed by the China Food and Drug
Administration (CFDA) to produce the product for the China
market. This agreement potentially positions us to generate
future royalty revenue through product sales or royalties for its
approved indications in China while we seek global approval in
new indications.To date, we have received no revenue from this
collaboration.

We have filed a broad portfolio of patent applications to protect
our intellectual property. Our patent applications claim
compositions and methods of use of VAL-083 and related compounds,
synthetic methods, and quality controls for the manufacturing
process of VAL-083. We believe that our portfolio of intellectual
property rights provides a defensible market position for the
commercialization of VAL-083. In addition, VAL-083 has been
granted protection under the Orphan Drug Act by the FDA and the
European Medicines Agency (EMA) for the treatment of glioma,
including GBM. In 2016, the FDA also granted Orphan Drug
protection to VAL-083 for the treatment of medulloblastoma and
ovarian cancer.

Our drug discovery research focuses on identifying well-validated
preclinical, clinical and commercial-stage compounds and
establishing a scientific rationale for development in cancer
indications for patients whose tumors exhibit features that make
them resistant to, or unlikely to respond to, currently available
therapies. Through our relationship with Valent Technologies, LLC
(Valent), a company owned by Dr. Dennis Brown, our Chief
Scientific Officer, we are able to utilize Valents proprietary
ChemEstate bioinformatics tools to screen and identify potential
candidates. Promising candidates are further researched through
our network of consultants, academic centers, and contract
research organizations. This approach allows us to identify and
advance potential drug candidates without significant investment
in wet lab infrastructure. Based on this strategy, we acquired
the initial VAL-083 intellectual property and prototype drug
product from Valent and advanced into Phase 2 and 3 clinical
trials and have also identified additional drug candidates that
we may have the opportunity to license or acquire in the future.

Our corporate development strategy is to advance our lead
candidate into a Phase 3 registration-directed clinical trial and
then to consider licensing or acquiring additional product
candidates in order to establish a product pipeline and position
for long-term sustainability and growth of shareholder value. We
believe the experience of our clinical development team will
position us to efficiently develop drug candidates that we may
acquire, or license in the future.

We plan to seek marketing partnerships to supplement our own
commercialization efforts and potentially generate future royalty
revenue.

Recent Highlights

In April 2017, we completed a public offering of common stock
and warrants for gross proceeds of approximately $9.0
million. In addition, during the year ended June 30, 2017 we
received $545,026 in proceeds from the exercise of
warrants.We plan to use these funds to support the initiation
of the STAR-3 pivotal clinical trial of VAL-083 in refractory
GBM, and for general corporate and research purposes.

In July 2017, we initiated patient recruitment for the STAR-3
pivotal Phase 3 clinical trial of VAL-083 in refractory GBM
and hope to enroll our first patient in September or October
2017.

In September 2017, we initiated patient recruitment for an
open label Phase 1 – 2 clinical trial of VAL-083 in newly
diagnosed patients MGMT-unmethylated GBM, which is being
conducted with funding support through our collaboration with
Guangxi Wuzhou Pharmaceutical (Group) Co. Ltd. This trial
complements our ongoing open label Phase 2 clinical trial in
patients with MGMT-unmethylated GBM whose tumors have
recurred following treatment with temozolomide (bevacizumab
nave), which is being conducted in collaboration with the
University of Texas MD Anderson Cancer Center.

In September 2017, we received notice of allowance from the
FDA for our Phase 1-2 VAL-083 REPROVe clinical trial in
Pt-resistant ovarian cancer.

We presented promising research results supporting the
potential of VAL-083 in the treatment of a broad range of
cancers for patients whose tumors exhibit features making
them resistant or unlikely to currently available therapies.
For example:

We presented data supporting the effectiveness of VAL-083 in
the treatment of GBM at the Annual meetings of the American
Society for Clinical Oncology (ASCO), the American
Association of Cancer Research (AACR), the World Federation
of NeuroOncology Societies (WFNOS), the European Association
for NeuroOncology and the Society for NeuroOncology (SNO);

o	We presented data supporting the effectiveness of VAL-083 in the treatment of lung cancer at the AACR Annual Meeting, the 17^th World Congress on Lung Cancer and the AACR New Horizons in Cancer Research Conference;

We presented data supporting the activity of VAL-083 in
treatment-resistant medulloblastoma both as a single agent
and in combination with topoisomerase inhibitors at the SNO
Pediatric Oncology Symposium and at the AACR Advances in
Pediatric Research: From Mechanisms and Models to Treatment
and Survivorship Conference; and

o	We presented data supporting the effectiveness of VAL-083 against chemotherapy-resistant ovarian cancers at the 11^th Biennial Ovarian Cancer Research Symposium.

We continued to strengthen and expand our network of research
collaborations with leading academic institutions including
the announcement of a major sponsored research agreement with
Duke University to evaluate VAL-083 as a front-line treatment
for newly diagnosed patients with GBM.

We continued to strengthen our intellectual property
portfolio. DelMar now holds eight issued US patents and eight
issued patents outside of the US. We have fourteen patent
families in various stages of prosecution, and over 100
patent filings in total.

We strengthened our Board of Directors and corporate
governance with the addition of Saiid Zarrabian and the
appointment of Dr. Erich Mohr as independent chairman.

VAL-083

Our product candidate, VAL-083, is a first-in-class small
molecule chemotherapeutic, which means that the molecular
structure of VAL-083 is not an analogue or derivative of a
product approved, or in development for the treatment of cancer.
VAL-083 is a DNA-targeting agent that was originally discovered
in the 1960s. It was assessed in more than 40 NCI-sponsored Phase
1 and Phase 2 clinical trials as a treatment against various
cancers including lung, brain, cervical, ovarian tumors and
leukemia. Published preclinical and clinical data suggest that
VAL-083 may be active against a range of tumor types. VAL-083 is
approved as a cancer chemotherapeutic in China for the treatment
of CML and lung cancer. VAL-083 has not been approved for any
indications outside of China.

Our research demonstrates that the mechanism of action of VAL-083
is distinct from other DNA-targeting agents used in the treatment
of cancer. VAL-083 exhibits its anti-cancer activity by forming
DNA-cross links leading to DNA double strand breaks, cell-cycle
arrest and cancer cell death, DNA-targeting agents are among the
most widely used treatments for cancer. They exhibit anti-cancer
effects by binding to DNA and interfering with normal processes
within the cancer cell which prevents the cell from making the
proteins needed to grow and survive. We have presented research
at peer-reviewed scientific meetings demonstrating that VAL-083
is active in patient-derived tumor cell lines and cancer stem
cells that are resistant to other chemotherapies. These data,
combined with clinical activity demonstrated against various
cancers in prior NCI-sponsored clinical trials gives us
confidence that VAL-083 may offer an opportunity as a new
treatment option for patients whose tumors are resistant to
currently available chemotherapies.

We are currently studying VAL-083 in clinical trials for the
treatment of GBM, the most common and aggressive form of brain
cancer. We have also recently received notice of allowance from
the FDA for an IND to initiate clinical trials with VAL-083 in
the treatment of ovarian cancer. Upon obtaining regulatory
approval, we intend to commercialize VAL-083 for the treatment of
orphan cancer indications such as refractory GBM. We also plan to
seek collaborative development and commercialization partnerships
to accelerate and expand the development of VAL-083 in newly
diagnosed GBM and other non-orphan cancer indications.

The FDA Office of Orphan Products Development (OOPD) has granted
orphan drug designations to VAL-083 for the treatment of glioma,
ovarian cancer and medulloblastoma. VAL-083 has also been granted
an orphan drug designation for in the treatment of glioma in
Europe. Orphan diseases are defined in the United States under
the Rare Disease Act of 2002 as any disease or condition that
affects fewer than 200,000 persons in the United States. The
Orphan Drug Act of 1983 is a federal law that provides financial
and other incentives including a seven-year period of market
exclusivity in the United States to encourage the development of
new treatments for orphan diseases.

VAL-083 Mechanism of Action and the Opportunity in
the Treatment of Cancer

Chemotherapy forms the basis of treatment in nearly all cancers.
We believe that VAL-083 may be effective in treating cancer
patients whose tumors exhibit features that cause resistance to
currently available chemotherapy or that have failed, or become
resistant to, other chemotherapies.

Our research suggests that VAL-083 attacks cancer cells via a
unique mechanism of action which is distinct from other
chemotherapies used in the treatment of cancer. Our data indicate
that VAL-083 forms a crosslink at the N ^{position of guanine

on the DNA of cancer cells. Our data also indicate that this

crosslink forms rapidly and is not easily repaired by the cancer

cell resulting in cell-cycle arrest and lethal double-strand DNA

breaks in cancer cells. VAL-083 readily crosses the blood brain

barrier where it maintains a long half-life in comparison to the

plasma. Published preclinical and clinical research demonstrate

that VAL-083 is absorbed more readily in tumor cells versus

normal cells.}

^{Based on published research and our own data, the cytotoxic

functional groups and the mechanism of action of VAL-083 are

understood to be functionally different from alkylating agents

commonly used in the treatment of cancer. VAL-083 has previously

demonstrated activity in cell-lines that are resistant to other

types of chemotherapy. No evidence of cross-resistance has been

reported in published clinical studies.}

^{Our data also demonstrate that VAL-083s mechanism is

distinct from current standard-of-care chemotherapy and is able

to overcome drug resistance against a range of cancers in

vitro. For example, VAL-083 is active against

MGMT-unmethylated GBM cells which are resistant to treatment with

temozolomide and nitrosoureas. VAL-083 also retains a high level

of activity in p53 mutated non-small cell lung cancer (NSCLC),

ovarian cancer and medulloblastoma cell lines that are resistant

to platinum-based chemotherapy.}

^{Importantly, clinical activity against each of the tumors

mentioned above was established in prior NCI-sponsored Phase 2

clinical trials. We believe that these historical clinical data

and our own research support the development of VAL-083 as a

potential new treatment for multiple cancers.}

^{The main dose-limiting toxicity (DLT) related to the

administration of VAL-083 in previous NCI-sponsored clinical

studies and our own clinical trials is myelosuppression.

Myelosuppression is the decrease in cells responsible for

providing immunity, carrying oxygen, and those responsible for

normal blood clotting. Myelosuppression is a common side effect

of chemotherapy. There is no evidence of lung, liver or kidney

toxicity even with prolonged treatment by VAL-083. Commercial

data from the Chinese market where the drug has been approved for

more than 15 years supports the safety findings of the NCI

studies.}

^{Modern medicine allows for better management of

myelosuppressive side effects. We believe this offers the

potential opportunity to improve upon the drugs already

established efficacy profile by substantially increasing the dose

of VAL-083 that can be safely administered to cancer

patients.}

^{Gliomas and Glioblastoma Multiforme

(GBM)}

^{Worldwide, there are an estimated 240,000 new cases of brain

and central nervous system (CNS) tumors each year. Gliomas are a

type of CNS tumor that arises from glial cells in the brain or

spine. Glial cells are the cells surrounding nerves. Their

primary function is to provide support and protection for neurons

in the CNS.}

^{GBM is the most common and the most lethal form of glioma.

According to the World Health Organization, GBM occurs with an

incidence of 3.17 per 100,000 person-years. Approximately 18,000

new cases of GBM are expected to be diagnosed in the United

States and 26,000 in Europe during 2017.}

^{GBM progresses quickly and patients conditions deteriorate

rapidly progressing to death in less than two years for most

patients. Common symptoms include headaches, seizures, nausea,

weakness, paralysis and personality or cognitive changes such as

loss of speech or difficulty in thinking clearly. The median

survival in newly diagnosed patients with best available

treatments is less than 15 months.}

^{Standard treatment following diagnosis includes surgical

resection to remove as much of the tumor as possible (debulking)

followed by radiotherapy with concomitant and adjuvant

chemotherapy with Temodar (temozolomide TMZ). Nearly all patients

diagnosed with GBM will relapse following first-line treatment,

with a 1-year survival rate of approximately 25% following

failure of front-line therapy, and with an average 5-year

survival rate of less than 3%.}

^{Avastin (bevacizumab, an anti-VEGF antibody) is approved as

a single agent for patients with recurrent GBM following prior

therapy as an alternative to corticosteroids to relieve disease

symptoms in the US, Canada, Australia and Japan. Avastin carries

a black-box warning related to severe, sometimes fatal, side

effects such as gastrointestinal perforations, wound healing

complications and hemorrhage. There are no data demonstrating an

improvement in disease-related symptoms or increased survival in

refractory GBM with Avastin.}

^{TMZ and the nitrosoureas, including carmustine, lomustine,

and nimustine, are alkylating agents that readily cross the

blood-brain-barrier and are used in the treatment of CNS cancers,

including GBM. Alkylating agents are among the oldest type of

cancer chemotherapies in use today. Alkylating agents bind to DNA

to cause damage to cancer cells. Their anti-tumor mechanism is

via alkylation of DNA resulting in base-pair mismatch or

strand-mediated crosslinks between base pairs. The DNA damage

caused by alkylating agents mimics naturally occurring errors,

resulting in apoptosis and tumor cell death.}

^{The primary anti-cancer mechanism of TMZ and the

nitrosoureas is to attack the tumors DNA via alkylation of the

O^{-position of the DNA base residue, guanine. TMZ treatment

causes DNA damage mainly by methylation at the O^{-position of

guanine resulting in guanine-thymine base pair mismatches during

replication. Nitrosoureas mediate their cytotoxic effect by

methylation at the O^{-position of guanine which produces a

cross-link to cytosine residues resulting in double-strand DNA

breaks during mitosis.}}}}

^{A majority of GBM patients tumors are resistant to TMZ or

nitrosourea therapy due to high expression of a naturally

occurring enzyme called O^{-DNA methylguanine

methyl-transferase (MGMT) which repairs O^{-guanine lesions.

MGMT repair in turn inhibits the activity of TMZ and nitrosoureas

and allows a patients GBM tumor to continue to grow in spite of

treatment.}}}

^{Consistent with the importance of its repair activity, high

expression of MGMT is strongly correlated with poor patient

outcomes. Several clinical studies have established that MGMT is

an important prognostic biomarker of response to TMZ and patient

survival.}

^{Probability of GBM Patient Survival Correlated to

Expression of MGMT Enzyme}

^{(Unmethylated promoter = High MGMT Expression and

Significantly Shorter Survival)}

^{VAL-083 in GBM}

^{VAL-083 is first-in-class DNA targeting agent which readily

crosses the blood-brain-barrier. Data from prior NCI-sponsored

clinical trials with VAL-083 demonstrate activity against GBM and

other central nervous system tumors. In general, historical

NCI-sponsored trials demonstrate tumor regression in brain cancer

was achieved in 40% of patients treated and stabilization was

achieved in an additional 20% to 30% of brain tumor patients

following treatment with VAL-083.}

^{VAL-083 demonstrated statistically significant improvement

in the median survival of high grade glioma brain tumors,

including GBM when combined with radiation versus radiation alone

(p value = 0.05) with results similar, or superior to, other

chemotherapies approved for the treatment of GBM.}

^{A Summary of Published Data adapted from Separate

Sources Comparing the Efficacy of VAL-083}

^{and Other Therapies in the Treatment of

GBM}

Comparative Therapy
Chemotherapy	Radiation (XRT) Alone	Radiation Chemotherapy	Median Survival Benefit vs. XRT alone
VAL-083 *(Eagan 1979)*	8.4 months	16.8 months	8.4 months
Temozolomide (Temodar) (Stupp 2005)	12.1 months	14.6 months	2.5 months
Lomustine (CCNU) (Walker 1976)	11.8 months	13 months	1.2 months
Carmustine (BCNU) (Reagan 1976)	10 months	12.5 months	2.5 months
Semustine (ACNU) (Takakura 1986)	12 months	14 months	2.0 months

Our research demonstrates that VAL-083s unique cytotoxic
mechanism forms DNA cross-links at the N ^{position of guanine

and retains cytotoxic activity independent of MGMT expression

in vitro. This mechanism is distinct from that of

temozolomide and nitrosoureas, which are DNA-targeting agents

commonly used in the treatment of GBM. Of particular importance

is in the treatment of GBM resistance to temozolomide, or

nitrosoureas, due to activity of the repair enzyme MGMT, which

results in chemoresistance in many GBM patients.}

^{We have presented data demonstrating that VAL-083 is active

independent of MGMT resistance in laboratory studies. VAL-083 has

more potent activity against brain tumor cells in comparison to

TMZ and overcomes resistance associated with MGMT suggesting the

potential to surpass the current standard-of-care in the

treatment of GBM.}

^{A Summary of Our Data Demonstrating that VAL-083s

Anti-Tumor Mechanism is Distinct from, and can

Overcome, MGMT-Related Chemoresistance in the Treatment

of GBM}

^{In addition, historical NCI clinical trial data and our own

research support the activity of VAL-083 as a potentiator of

radiotherapy. Radiotherapy in combination with temozolomide is

the current standard of care in the treatment of GBM. Our

research demonstrates that temozolomide and radiotherapy are

ineffective against GBM cells exhibiting a high expression of

MGMT, whereas VAL-083 potentiates the tumor-killing effect of

radiation in these cells. Furthermore, the combination of VAL-083

and radiation has been demonstrated to be active against GBM

cancer stem cells (CSCs) in vitro. CSCs are often resistant to

chemotherapy and form the basis for tumor recurrence and

metastasis. GBM CSCs display strong resistance to TMZ, even where

MGMT expression is low. However, our data demonstrates that GBM

CSCs are susceptible to VAL-083 independent of MGMT

expression.}

^{We believe that VAL-083s more potent activity against brain

tumor cells in comparison to TMZ, the ability to overcome

MGMT-mediated resistance, and activity against GBM cancer stem

cells suggests the potential of VAL-083 to surpass the current

standard-of-care in the treatment of GBM.}

^{Based on our research demonstrating a novel anti-tumor

mechanism and the historical clinical data demonstrating activity

against GBM, we have initiated clinical trials in refractory GBM

and in MGMT-unmethylated GBM. Our clinical trials in the United

States are being conducted under an investigational new drug

(IND) application with the FDA. If successful, we believe data

from these trials will support a potential paradigm shift in the

treatment of GBM where VAL-083 could become the chemotherapy of

choice in the treatment of the majority of GBM patients.}

^{Clinical Trials of VAL-083 in Refractory

GBM}

^{Phase 3: VAL-083 STAR-3 GBM Trial}

^{We recently initiated VAL-083 STAR-3 GBM trial is an

adaptive, randomized, controlled pivotal Phase 3 clinical trial

in patients with refractory GBM. The trial is designed to assess

the efficacy and safety of VAL-083 versus salvage therapy in GBM

patients whose disease has progressed following prior treatment

with temozolomide and bevacizumab. There is currently no approved

standard-of-care therapy for these patients.}

^{A total of up to 180 eligible patients will be randomized at

approximately 25 centers in the United States to receive either

the investigational drug (VAL-083) or investigator’s choice

salvage therapy in a 2:1 fashion. Up to 120 eligible patients

will be randomized to receive intravenous VAL-083at 40 mg/m2 on

days 1, 2, and 3 of a 21-day treatment cycle, for up to 12 21-day

treatment cycles or until they fulfill one of the criteria for

study discontinuation.}

^{Up to 60 patients will be randomized to investigator’s

choice control, limited to temozolomide, lomustine, or

carboplatin, until they fulfill one of the criteria for study

discontinuation.}

^{The primary endpoint of the STAR-3 trial is overall

survival. The statistical design between the two arms of the

study is 90% power, and includes an interim analysis at 50% of

events for futility and superiority with OBrien-Fleming boundary

and non-binding, gamma (-5) futility boundary. We have based our

assumptions for outcomes for the STAR-3 control arm on published

literature. We are also undertaking a review of recent patient

data to validate our control arm assumptions. In the event that

this analysis suggests that a more conservative assumption is

required, we may consider revising the trial design to maintain

90% power for the primary endpoint.}

^{The study is estimated to complete in approximately two

years from initiation. A detailed description of the STAR-3 trial

can be found at clinicaltrials.gov, Identifier Number:

NCT03149575.}

^{Based on our current working capital, we do not have

sufficient funding to complete the STAR-3 trial. Until additional

funds are available, we plan to initiate the first 8-10 sites and

only enroll a subset of patients for whom our cash resources will

allow for completion of treatment and follow-up. We believe this

strategy will best allow us to maintain timelines for trial

completion, NDA submission and FDA approval while seeking further

funding through the capital markets, grant funding or strategic

partnerships.}

^{Phase 1 2 Clinical Trial Overview and Summary of

Results}

^{Forty-eight GBM patients were enrolled in our Phase 1/2

clinical trial at five centers: the Mayo Clinic in Rochester,

Minnesota; the Brain Tumor Center at University of California,

San Francisco; the Sarah Cannon Cancer Research Center in

Nashville, Tennessee, Denver, Colorado; and the SCRI affiliate

site at the Florida Cancer Specialist Research Institute in

Sarasota, Florida.}

^{The Phase 1/2 trial was an open-label, single arm

dose-escalation study designed to evaluate the safety,

tolerability, pharmacokinetics and anti-cancer activity of

VAL-083 in patients with refractory GBM. The trial enrolled GBM

patients whose disease has progressed following prior treatment

with temozolomide and bevacizumab, unless either or both were

contra-indicated.}

^{The overall goal of our Phase 1/2 clinical trial was to

determine a modernized dosing regimen for advancement into a

pivotal registration-directed Phase 3 clinical trial.}

^{Patients received VAL-083 on days 1,2 and 3 on a 21-day

treatment cycle. The Phase 1 portion of the study involved dose

escalation cohorts until a maximum tolerated dose (MTD) was

established at 40mg/m^{. A further 14-patient, Phase 2

expansion was then enrolled at the MTD to gather further safety

data at our chosen therapeutic dose and to further explore the

outcomes in this patient population.}}

^{In May 2016, we held an end of Phase 2 meeting with the FDA

where design of a Phase 3, registration-directed clinical program

for VAL-083 in refractory GBM was discussed. Based on the input

we received from the FDA, the agency confirmed that it would

consider the totality of data available, including data obtained

from DelMar’s other planned clinical trials in related GBM

populations, when assessing the New Drug Application (NDA). The

FDA also noted that DelMar can rely on prior NCI studies and

historical literature to support nonclinical data required for an

NDA filing and that DelMar will have the option to file under a

505(b)(2) strategy which allows a sponsor to rely on already

established safety and efficacy data in support of an NDA.}

^{We reported updated results of our Phase 1/2 clinical trial

at the 2016 ASCO annual meeting. In summary, these data are as

follows:}

^{Tumor Response and Outcomes}

^{GBM patients in our Phase 1/2 clinical trial were not

re-resected prior to treatment with VAL-083 and therefore had a

growing recurrent GBM tumor at the time of enrollment. Patients

were monitored for tumor response by MRI.}

^{Consistent with un-resected refractory GBM, median

progression free survival (PFS) was short at 1.2 months (range:

0.2 20.1 months). Five GBM patients treated with VAL-083 were

reported to have stable disease as their best response following

treatment; the remainder reported progressive disease.}

^{Disease progression is typical in a refractory GBM

population with non-resected tumors. However, we believe that

slowed progression may provide meaningful clinical benefit in

this patient population through prolonged overall survival and

improved quality of life. According to published literature, GBM

patients failing bevacizumab have a poor prognosis with expected

survival under five months.}

^{Ad-hoc subgroup analysis of the Phase 1 dose-escalation data

indicated a dose response trend. Increased survival was observed

following initiation of treatment in a high dose (30 and

40mg/m^{, n=9) sub-group vs. a low dose (5mg/m^{, n=6)

sub-group with median survival of 9 months vs. 4.4 months for the

high and low dose groups, respectively.}}}

^{Observed Survival Based on Phase 1 Sub-Group

Analysis}

^{An additional 14 patients were enrolled in an expansion

cohort at the MTD (40mg/m^{). Analysis of patients receiving

an assumed therapeutic dose of VAL-083 (20mg/m^{) demonstrated

median survival of 8.35 months following bevacizumab failure. At

the time of the analysis, more than half of patients receiving an

assumed therapeutic dose survived more than six months following

bevacizumab failure; more than 40% survived for nine months or

are currently alive and more than 20% have survived for twelve

months or more.}}}

^{ASCO 2016: VAL-083 compared to published

literature}

Reference	Post Avastin Salvage Therapy	Median Survival following Bevacizumab Failure
Shih (2016)	VAL-083	8.35 months
Rahman (2014)	nitrosourea	4.3 months
Mikkelson (2011)	TMZ irinotecan	4.5 months
Lu (2011)	dasatinib	2.6 months
Reardon (2011)	etoposide	4.7 months
Reardon (2011)	TMZ	2.9 months
Iwomoto (2009)	various	5.1 months

^{While recognizing these data are representative of a

relatively small, non-controlled Phase 1/2 clinical trial, we

believe these outcomes support the potential of VAL-083 to offer

meaningful clinical benefit to GBM patients who have failed

bevacizumab, compared to currently available therapy.}

^{Safety and Tolerability}

^{In the Phase 1 dose escalation regimen, no serious adverse

events (SAE) related to VAL-083 were encountered at doses up to

40 mg/m^/day.}

^{Increasing frequency of, and higher grade, hematologic

toxicities were observed at doses above 40 mg/m^{/day.

Consistent with the published literature, the observed dose

limiting toxicity for VAL-083 is primarily thrombocytopenia (low

platelets). Observed platelet nadir occurred at approximately day

18, and recovery was rapid and spontaneous following

treatment.}}

^{Based on Phase 1 observations, fourteen additional patients

were enrolled in a Phase 2 expansion cohort at 40mg/m^{, which

was established at the MTD. Consistent with Phase 1, the dose of

VAL-083 of 40 mg/m ^{on days 1, 2 and 3 of a 21-day cycle was

generally well tolerated in Phase 2. At this dose, one subject

previously treated with CCNU, a nitrosourea agent, reported

severe (Grade 4) thrombocytopenia. As a result of this

observation, the protocol inclusion criterion for platelet count

was increased from 100,000/L to 150,000/L for patients receiving

prior nitrosoureas within 12 weeks preceding enrollment. No other

dose limiting toxicities were observed in Phase

2.}}}

^{VAL-083 Safety Observations From Phase 1/2 Clinical

Trial}

Hematologic parameter and CTCAE grade	dose	30 mg/m²	40 mg/m²	45 mg/m²	50 mg/m²
n =
Anemia	G2	%	%	%	%
G3	%	–	%	–	%	–	%
G4	–	%	–	%	–	%	–	%
Leukopenia	G2	%	%	–	%	%
G3	%	–	%	–	%	%
G4	–	%	–	%	%	–	%
Neutropenia	G2	%	–	%	–	%	–	%
G3	–	%	–	%	–	%	%
G4	–	%	–	%	%	%
Thrombocytopenia	G2	%	%	–	%	%
G3	–	%	–	%	%	%
G4	–	%	%	%	%
DLT Observed	nil

Doses Achieved

We confirmed that we achieved doses of VAL-083 that are
substantially higher than were utilized in the original published
NCI-sponsored clinical trials. A summary in comparison to the
NCIs historical regimen is as follows:

Dosing Regimen

Study

Single Dose

Acute Regimen

(single cycle)

Comparative Cumulative Dose

(@ 35 days)

Dose Intensity

(dose per week)

NCI GBM

historical regimen

(Eagan etal)

daily x 5 q 5wks

(cycle = 35 days)

25 mg/m

x5 days =

125 mg/m

DelMar VAL-083 optimized regimen daily x 3 q 3wks (cycle = 21
days)

40 mg/m

x3 days =

120 mg/m

240 mg/m

Daily x 5 q 5wks refers to a dosing regimen of once per day
for five consecutive days every five weeks (35-day cycle); while
daily x 3 q 3wks refers to a dosing regimen of once per day for
three consecutive days every three weeks (21-day cycle).

Our optimized dosing regimen increases the amount of VAL-083
delivered to the CNS by 60% over historical regimens without
increased toxicity. Thus, the DelMar regimen achieves both a
higher maximum concentration and higher overall exposure, which
we believe may increase the likelihood of successful treatment
outcomes in glioblastoma and other brain tumors.

Pharmacokinetics

Pharmacokinetic (PK) analyses showed dose-dependent linear
systemic exposure with a short (1-2h) plasma terminal half-life;
average Cmax at 40 mg/m^{/day was 781 ng/mL (5.3M). The

observed PK profile is comparable to published literature. Prior

NCI-sponsored studies demonstrated that VAL-083 readily crosses

the blood brain barrier and has a long (20 hour) half-life in the

central nervous system (CNS).}

^{We believe that this PK profile is optimal for the treatment

of brain tumors: A long CNS half-life is expected to maximize

exposure of the drug in the brain increasing the likelihood of

successful treatment outcomes, while a short plasma half-life is

desirable to minimize systemic side effects.}

^{Observed pharmacokinetics from VAL-083 Phase 1

clinical trial dose vs. AUC}

^{Based on observed and previously published pharmacokinetics,

DelMar believes that therapeutic doses equal to, or above, 20

mg/m² daily on days 1, 2 and 3 of a 21-day cycle

should deliver sufficient levels of VAL-083 to brain tumors to

achieve a therapeutic benefit.}

MGMT IDH1

High expression of MGMT and wild-type form of the enzyme
isocitrate dehydrogenase (IDH1) have been previously shown to be
diagnostic markers that correlate with resistance to currently
available chemotherapies (e.g. temozolomide or nitrosourea) in
the treatment of GBM and poor patient outcomes. Measurement of
these biomarkers has become routine in clinical practice.

Notably, we have previously demonstrated that VAL-083s anti-tumor
mechanism is active independent from the MGMT status in
vitro. While the science behind their importance in the
disease pathway and their ultimate predictive value are still
being explored, we believe we will ultimately be able to use such
biomarkers in a prognostic fashion to select the patients most
likely to respond to treatment as we expand the clinical
development of VAL-083.

MGMT expression was characterized by PCR and/or ELISA for
nineteen GBM patients enrolled in our Phase 1/2 study. IDH1
status was reported in eleven patients; both MGMT and IDH1 status
were reported in four patients.

Biomarker	Observation in Phase 1 /2 clinical trial
High MGMT (n=19)	84%
IDH-WT (n=11)	90%

Notably, all patients whose samples were tested for both markers
were MGMT-unmethylated by PCR and wild-type IDH1, a phenotype
that is correlated with particularly poor prognosis.

Clinical Trials of VAL-083 in MGMT-unmethylated
GBM

MGMT methylation status has been previously shown to be a
diagnostic marker that correlates with patient outcomes and
survival in GBM. GBM patients whose tumors are characterized as
MGMT-unmethylated exhibit high expression of the DNA-repair
enzyme MGMT. High MGMT levels have correlated resistance to
currently available chemotherapies (e.g. temozolomide or
nitrosourea) and significantly reduced survival. The development
of new therapies for MGMT-unmethylated GBM is a significant unmet
medical need.

Approximately two-thirds of newly diagnosed GBM patients have
tumors assessed as MGMT-unmethylated. This represents a potential
treatment population of approximately 12,000 patients in the
United States and 18,000 patients in Europe annually.

Notably, we have previously demonstrated that VAL-083s anti-tumor
mechanism is active independent from the MGMT status in
vitro. This suggests the potential of VAL-083 as a
replacement for currently available chemotherapies in
MGMT-unmethylated GBM.

Measurement of MGMT methylation status has become routine in
clinical practice. We can therefore utilize MGMT-methylation
status to identify newly diagnosed GBM patients who are least
likely to respond to temozolomide and instead treat them with
VAL-083.

We have initiated two Phase 2 clinical trials to explore the
potential of VAL-083 in the treatment of MGMT-unmethylated GBM.
Expenditures related to our ongoing clinical trials in
MGMT-unmethylated GBM are substantially supported through
collaborations, which allows us to implement these protocols with
minimal impact to our own working capital balance.

Phase 2 Trial in Newly Diagnosed MGMT-unmethylated
GBM

In September 2017, we initiated a single arm, biomarker driven
open-label Phase 2 study in newly diagnosed MGMT-unmethylated GBM
patients at Sun Yat-sen University Cancer Center in Guangzhou,
China. The trial is being conducted in the context of our 2012
collaboration agreement with Guangxi Wuzhou Pharmaceutical
(Group) Co. Ltd. Under the terms of this agreement, Guangxi
Wuzhou Pharmaceutical (Group) Co. Ltd. is responsible for funding
VAL-083 clinical trials that we conduct in China.

In this study, VAL-083 will be combined with radiotherapy as a
potential replacement for temozolomide in patients with high
expression of MGMT. The main goal of the trial will be to confirm
the safety of DelMars optimized dosing regimen in combination
with radiotherapy and to investigate outcomes of the combination
of VAL-083 and radiotherapy in MGMT-unmethylated GBM patients.

Up to 30 newly diagnosed MGMT-unmethylated GBM patients will be
enrolled in this trial. The primary efficacy endpoint is the
determination of tumor response in patients measured by
progression free survival. Assessments of safety and tolerability
will be used to support further clinical development of VAL-083
in combination with radiotherapy. Pharmacokinetic assessments of
VAL-083 in plasma and cerebral spinal fluid (CSF) will be used to
correlate drug exposure in the central nervous system with
patient outcomes.

Outcomes following treatment with VAL-083 will be compared to
MGMT-unmethylated patients in the RTOG0525 trial. We anticipate
obtaining safety data from the trial within nine months and
top-line outcomes data within 18 months.

Data from the trial will be used to establish a dosing regimen
and trial design for advanced registration-directed clinical
trials with VAL-083 in newly diagnosed MGMT-unmethylated GBM. If
successful, data from the trial will strongly position VAL-083 as
a potential replacement for current standard-of-care chemotherapy
in the treatment of GBM.

Phase 2 Study in Recurrent MGMT-unmethylated GBM in
Collaboration with University of Texas MD Anderson Cancer
Center

In January 2017, we initiated a biomarker driven, open-label
single-arm Phase 2 study in collaboration with the University of
Texas with MD Anderson Cancer Center. This trial will enroll up
to 48 MGMT-unmethylated GBM patients whose tumors have recurred
following treatment with temozolomide. These patients will not
have been treated with prior bevacizumab.

The primary endpoint of the trial is overall survival. Outcomes
following treatment with VAL-083 will be compared to the outcome
of MGMT-unmethylated patients who had been treated with lomustine
(CCNU) following temozolomide failure in the recently published
EORTC20601 trial.

Safety data from this trial will become part of the overall
safety dossier to support future filings with the FDA and other
regulatory agencies. A positive outcome will establish a strong
position for VAL-083 in the treatment of MGMT-unmethylated GBM.

We anticipate presenting interim data from this trial at peer
reviewed meetings during calendar 2018.

Ovarian Cancer

Ovarian cancer is the fifth most common cancer in women and is
the leading cause of death among women diagnosed with
gynecological malignancies. In 2016, approximately 22,300 women
in the US were diagnosed with ovarian cancer and 14,300 died from
their disease. If detected early, ovarian cancer can often be
cured with surgery. When detected early, up to 90% of patients
are likely to survive for 5 years.

Unfortunately, the initial symptoms of ovarian cancer such as
abdominal bloating, indigestion, pelvic pain or nausea are often
attributed to symptoms caused by less a serious situation.
Therefore, in most cases, ovarian cancer isnt diagnosed until it
has progressed to an advanced stage when it is no longer possible
to surgically remove all tumor tissue.

Without treatment, ovarian cancer spreads within the pelvic
region and metastasizes to distant sites such as the lungs,
liver, spleen and, rarely, the brain. When diagnosed at an
advanced stage the 5-year survival rate is less than 40%. Women
with ovarian cancer receive chemotherapy following surgery to
treat residual disease. Pt-based chemotherapy is the
standard-of-care in the treatment of advanced ovarian cancer.

Ovarian cancer patients whose tumors are sensitive to Pt-based
chemotherapy have the most favorable outcome. Recently, the
introduction of PARP inhibitors in the treatment of ovarian
cancer patients with Pt-sensitive disease demonstrated
significant improvements in overall survival.

Unfortunately, the development of resistance to Pt-based agents
is nearly inevitable, leading to disease recurrence and increased
mortality. Ultimately, most women with advanced ovarian cancer
develop recurrent disease with progressively shorter disease-free
intervals. Those whose tumors recur within 6 months of Pt-based
therapy are considered Pt-resistant/refractory and have a very
poor prognosis.

Currently, there are no high-efficacy therapeutic options for
Pt-resistant ovarian tumors, leaving these cancer patients with a
very poor prognosis. The response rate to second line therapy for
Pt-resistant ovarian cancer patients is in the 10-15% range and
overall survival is approximately 12-months. The development of
new chemotherapies and targeted agents to overcome Pt resistance
in ovarian cancer is a significant unmet medical need.

Treatment Resistance to Pt-based Chemotherapy in Ovarian
Cancer

Pt-based chemotherapy is employed in the treatment of nearly 50%
of all cancer patients and forms the mainstay as part of the
front-line treatment regimen against a range of solid tumors
including testicular, ovarian, cervical, bladder, colorectal,
head-and-neck, and lung cancer. Pt-based chemotherapy is used to
treat nearly all advanced-stage ovarian cancer patients.

Pt-based chemotherapies function by causing extensive damage to a
cancer cells DNA. When a cell is ready to divide, cellular
mechanisms assess potential DNA damage, and if severe damage is
identified, the cell will halt the division process and may even
be directed to self-destruct. Thus, chemotherapies that target
DNA are intended to be lethal to cancer cells, or at least
prevent them from dividing to inhibit a tumors growth.

Unfortunately, cancer cells are adept at overcoming DNA damage or
employing mechanisms to repair damaged DNA. These factors limit
the damage that DNA-damaging drugs can do or allow cancer cells
to become resistant to chemotherapy. One of the most common
obstacles to DNA-damaging chemotherapy is mutations to a gene
called p53. Cellular processes governed by the p53 gene are
critical in assessing DNA damage and determining if a cell should
cease from dividing or self-destruct. When p53 does not function
properly, cancer cells continue to divide despite the treatment
with DNA-damaging chemotherapy, making these drugs ineffective
and leading to treatment resistance. This occurs in nearly all
cases of the most difficult ovarian cancer to treat high grade
serous ovarian cancer (HGSOC) which accounts for up to 70% of
ovarian cancer cases and approximately 90% of ovarian cancer
deaths. P53 mutations are associated with resistance to Pt-based
chemotherapy, which leads to treatment failure and increased
mortality. Solving this problem is a major goal in the
development of new treatments for ovarian cancer.

VAL-083 in Ovarian Cancer

VAL-083 is a first-in-class, DNA-targeting agent that
demonstrated activity in prior NCI-sponsored clinical trials.
Activity against ovarian epithelial adenocarcinoma (OEA) and
squamous cell carcinoma of the cervix (SCC) was reported in
multiple studies. Importantly, NCI-researchers recommended
VAL-083 for further advanced studies in the treatment of ovarian
cancer.

We have presented data demonstrating that VAL-083s distinct
mechanism of action allows activity in tumors that are resistant
to other therapies. We have shown that cytotoxicity of VAL-083
against ovarian cancer is independent of sensitivity to cisplatin
or p53 status in vitro. We have demonstrated that
VAL-083 is active in Pt-resistant ovarian cells harboring a range
of p53-mutations. Similar results were observed comparing
activity of VAL-083, cisplatin and oxaliplatin in Pt-sensitive
and -resistant non-small cell lung cancer (NSCLC) cell lines.

Our research has demonstrated that VAL-083 not only overcomes Pt
resistance, but the combination of VAL-083 with Pt-based
chemotherapy displays synergy in multiple models in
vitro and in vivo. This further suggests a distinct
mechanism of action and potential use as part of a
VAL-083/Pt-combination therapy.

The combination of VAL-083 with either cisplatin
(A) or oxaliplatin (B) in the
human H460 (WT p53) NSCLC model demonstrated significant
superadditivity (p0.05) and/or synergism (CI1) for both
combinations. This cytotoxic effect of VAL-083 in combination
with either platinum drug was observed also in A549 (WT p53) and
H1975 (mutant p53) NSCLC cells, independently of p53 status (not
shown). Data, where applicable, are shown as mean SE; N=7.

While Pt-based chemotherapy is the standard treatment for ovarian
cancer, PARP inhibitors have recently provided a new treatment
option for a subset of patients with platinum-sensitive recurrent
ovarian cancer. VAL-083 also demonstrates synergistic activity
with the PARP inhibitor olaparib in vitro, suggesting
VAL-083 may have utility in the treatment of ovarian cancer in
combination with PARP inhibitors.

We believe that these data demonstrate the potential of VAL-083
to treat platinum-resistant ovarian cancers as a single-agent
against platinum-resistant tumors, combination with
platinum-based chemotherapeutic regimens or in combination with
PARP inhibitors.

In April 2016, the FDA granted orphan drug designation for the
use of VAL-083 in the treatment of ovarian cancer.

We plan to work with our advisors to develop a strategy to
advance VAL-083 into clinical trials for the treatment of ovarian
cancer, either as a single-agent or in combination with other
approved agents.

VAL-083 REPROVe Ovarian Cancer Trial

We have also recently received notice of allowance from the FDA
of our IND for a Phase 1/2, Open-Label, Multicenter, Study of
VAL-083 in Patients with Recurrent
Platinum
Resistant Ovarian
Cancer (REPROVe).

The Phase 1 portion of the trial will enroll approximately 24
patients with Pt-resistant ovarian cancer to evaluate the
response to treatment with VAL-083.

Ovarian cancer patients enrolled in the trial will have been
previously treated with at least two lines of Pt-based
chemotherapy and up to two other cytotoxic regimens, whose cancer
has recurred within 6 months of prior Pt-based chemotherapy.

The primary efficacy of the trial will be overall response rate
(ORR) based on Response Evaluation Criteria In Solid
Tumors(RECIST) criteria. RECIST is a
set of published rules that define when tumors incancerpatients
improve (respond), stay the same (stabilize), or worsen
(progress) during treatment.

We plan to request a meeting with FDA following completion of the
Phase 1 portion of the REPROVe trial. If successful, data from
this trial would lead to a confirmatory Phase 2 study of
approximately 60 patients, which if successful, and subject to
feedback from the FDA may position us to potentially file an
application for accelerated approval or to advance to a pivotal
Phase 3 trial.

We anticipate completing the Phase 1 portion of the trial in
approximately 18 months from the initiation of patient
recruitment and presenting updates on the progress of this trial
at peer reviewed meetings.

Based on our current working capital, we do not have sufficient
funding to initiate patient enrollment in the REPROVe trial. We
have identified sites and will complete certain contracting and
site-initiation activities, but will not initiate patient
enrollment until we can appropriately fund the treatment and
follow-up of patients enrolled in the trial. We believe this
strategy will best allow us to maintain timelines for trial
completion, NDA submission and FDA approval while seeking further
funding through the capital markets, grant funding or strategic
partnerships.

Other Indications for VAL-083

VAL-083 in Lung Cancer

Lung cancer is a leading cause of cancer death around the world
and effective treatment for lung cancer remains a significant
global unmet need despite advances in therapy. In general,
prognosis for lung cancer patients remains poor, with a 5-year
survival rate of less than 14% among males and less than 18%
among females in most countries.

Incidence of lung cancer in the United States is approximately 59
per 100,000 with the majority (52:100,000) being NSCLC. World
Health Organization projects that the incidence of lung cancer in
China is expected to exceed one million (1,000,000) new cases per
year by 2025. Globally, the market for lung cancer treatment may
exceed $24 billion by 2033 according to a report published by
Evaluate Pharma.

The activity of VAL-083 against solid tumors, including lung
cancer, has been established in both preclinical and human
clinical trials conducted by the NCI. VAL-083 is approved for the
treatment of lung cancer in China; however, sales of VAL-083 in
China have been limited by a lack of modern data, poor
distribution, and preference for targeted therapies such as
tyrosine kinase inhibitors (TKIs) in the modern era.

Non-small cell lung cancer (NSCLC) is the most common type of
lung cancer. There are three common forms of NSCLC:
adenocarcinomas are often found in an outer area of the lung;
squamous cell carcinomas are usually found in the center of the
lung next to an air tube (bronchus); and large cell carcinomas,
which can occur in any part of the lung and tend to grow and
spread faster than adenocarcinoma. NSCLC accounts for 85% of all
lung cancer cases in the United States and approximately 90% of
lung cancer cases diagnosed in China.

Recently approved immunotherapydrugs such as nivolumab (Opdivo)
and pembrolizumab (Keytruda) have shown benefit in a subset of
patients with recurrent NSCLC whose tumors exhibit immunogenic
targets such as PD-L1. Many NSCLC patients tumors do not express
immunotherapy targets at sufficient levels to trigger an
immunotherapy treatment response and the development of
resistance to immunotherapy has begun to emerge.

DelMar has developed new nonclinical data to support the utility
of VAL-083 in the modern treatment of lung cancer. We have
announced results of preclinical studies designed to evaluate the
activity of VAL-083 in models of drug-resistant NSCLC in
comparison to cisplatin. In an established murine xenograft model
of NSCLC, the activity of VAL-083 was compared to standard
platinum-based therapy with cisplatin against human NSCLC cell
lines A549 (TKI-sensitive) and H1975 (TKI-resistant). In the
study, VAL-083 demonstrated superior efficacy and safety in the
treatment of TKI-susceptible (A549) tumors and in TKI-resistant
(H1975) tumors.

Based on these data, we believe VAL-083s unique mechanism of
action could make it a valuable drug of choice in NSCLC patients
who are or become resistant to platinum-based chemotherapy and
TKI therapy. In addition, VAL-083 readily crosses the blood brain
barrier suggesting that it may be possible for VAL-083 to treat
patients whose lung cancer has spread to the brain.

We have developed a clinical trial protocol to explore the
activity of VAL-083 in recurrent lung cancer. If successful, we
believe data from this trial would support the potential to
establish global partnerships and collaborations with larger
pharmaceutical companies who have the resources and commercial
infrastructure to effectively develop and commercialize VAL-083
as a treatment for NSCLC on a worldwide basis.

It is our current intention to conduct this trial with leading
investigators in China under the terms of our collaboration with
Guangxi Wuzhou Pharmaceutical Group Co. Ltd. (Guangxi Wuzhou
Pharmaceuticals), which would allow us to enhance the potential
value of VAL-083 without significantly increasing our own planned
cash expenditures.

We have determined, in consultation with Guangxi Wuzhou
Pharmaceuticals, that initiation of a lung cancer trial should be
delayed until our planned China-based MGMT-unmethylated GBM trial
had received regulatory approval for initiation. In July 2017,
the Human Genetic Resources Administration of China (HGRAC)
approved the GBM trial, so it is now our intention to work with
Guangxi Wuzhou Pharmaceuticals to determine the appropriate
strategy and timing for initiation of VAL-083 in clinical trials
in lung cancer.

Central Nervous System Metastases of Solid Tumors

In June 2013, we split our Phase 1/2 clinical trial protocol into
two separate studies: one focusing solely on refractory GBM and
the other focusing on secondary brain cancers caused by other
tumors that have spread to the brain. The successful management
of systemic tumors by modern targeted therapies has led to
increased incidence of mortality due to CNS metastases of lung
cancer and other solid tumors.

Based on historical clinical activity and our own research, we
believe that VAL-083 may be suitable for the treatment of
patients with CNS metastases who currently have limited treatment
options. Subject to the availability of financial and operating
resources, we plan to develop a separate protocol for the
continued exploration of VAL-083 in patients with secondary brain
cancer caused by a solid tumor spreading to the brain.

Pediatric Brain Tumors

Tumorsof thebrainand spine make up approximately 20 percent of
all childhoodcancers and they are the second most common form of
childhoodcancerafter leukemia.

The activity of VAL-083 against childhood and adolescent brain
tumors has been established in both preclinical and human
clinical trials conducted by the NCI. We have presented data
indicating that VAL-083 offers potential therapeutic alternatives
for the treatment of pediatric brain tumors including SHH-p53
mutated medulloblastoma. In March 2016, the FDA granted orphan
drug designation for the use of VAL-083 in the treatment of
medulloblastoma. Subject to the availability of resources, we
intend to collaborate with leading academic researchers for the
continued exploration of VAL-083 as a potential treatment of
childhood brain tumors.

Additional Indications for VAL-083

In historical studies sponsored by the NCI in the United States,
VAL-083 exhibited clinical activity against a range of tumor
types including central nervous system tumors, solid tumors and
hematologic malignancies. We have established new nonclinical
data supporting the activity of VAL-083 in different types of
cancer that are resistant to modern targeted therapies and we
believe that the unique cytotoxic mechanism of VAL-083 may
provide benefit to patients in a range of indications. We intend
to continue to research these opportunities, and if appropriate,
expand our clinical development efforts to include additional
indications.

Other Product Opportunities

Through our relationship with Valent Technologies, LLC (Valent),
a company owned by Dr. Dennis Brown, our Chief Scientific
Officer, we have identified additional drug candidates that we
may have the opportunity to license or acquire in the future.

VAL-083 Target Markets

DNA-targeting agents such as alkylating agents or platinum-based
chemotherapy form the mainstay of chemotherapy treatments used in
the treatment of cancers. Global sales of platinum-based
chemotherapies reached nearly $2.5 billion in 2011 and declined
to $600 million following the expiry of key patents. Alkylating
agents such as temozolomide, bendamustine, nitrosoureas, and
cyclophosphamide generated more than $1.3 billion in sales in
2016 after reaching a peak of $1.7 billion in 2014 (evaluate
pharma).

Fig X: Peak sales of selected DNA-targeting Agents

Our lead product candidate, VAL-083, is a first-in-class DNA
targeting agent with a novel mechanism of action. VAL-083s
anti-cancer activity was established in a range of tumor types in
prior NCI-sponsored clinical trials. Based on this novel
mechanism, we have demonstrated that the anti-cancer activity is
maintained against tumor cells that are resistant to other
DNA-targeting agents. We believe this positions VAL-083 as a
potential chemotherapy-of-choice for patients whose tumors are
resistant to current standard-of-care chemotherapy in orphan and
major cancer indications.

Our ongoing research and development activities are focused on
indications where VAL-083 demonstrated promising activity in
prior NCI-sponsored trials and where our research suggests an
opportunity to address significant unmet medical needs due to the
failure of existing treatments.

VAL-083 target markets	2022 Estimated Global Sales
Glioblastoma multiforme (GBM)	$1.5B
Ovarian Cancer	$4.6 B
Non-small cell lung cancer (NSCLC)	$24.8 B
Source: Evaluate Pharma

Glioblastoma Multiforme

GBM is the most common and the most lethal form of glioma.
According to the World Health Organization, GBM occurs with an
incidence of 3.17 per 100,000 person-years. Approximately 18,000
new cases of GBM are expected to be diagnosed in the United
States and 26,000 in Europe during 2017.

Newly diagnosed patients suffering from GBM are initially treated
through invasive brain surgery, although disease progression
following surgical resection is nearly 100%. Temozolomide
(Temodar) in combination with radiation is the front-line therapy
for GBM following surgery. Global revenues of branded Temodar
reached $1.1 billion in 2009. Following patent expiry in 2013,
global revenue for generic temozolomide exceeded $400 million in
2014 even though most patients fail to gain long-term therapeutic
benefits. Approximately 60% of GBM patients treated with Temodar
experience tumor progression within one year.

Bevacizumab (Avastin) has been approved for the treatment of GBM
in patients failing Temodar. In clinical studies, only about 20%
of patients failing Temodar respond to Avastin therapy and no
improvement in median survival was reported. In spite of these
low efficacy results, Avastin revenues exceeded $600 million in
2014.

The market for refractory (Avastin-failed) GBM is limited to
those jurisdictions where Avastin is approved for the treatment
of GBM. The United States, Canada, Australia, Japan and
Switzerland represent the major markets where Avastin is used in
the treatment of GBM. Based on our estimates, we believe that
VAL-083 could generate sales for the treatment of refractory GBM
in the $100s of millions annually.

The market for MGMT-unmethylated GBM represents approximately
two-thirds of all GBM patients worldwide. Based on our estimates,
we believe that sales of VAL-083 for the treatment of
MGMT-unmethylated GBM could exceed $1 billion annually.

Ovarian Cancer

According to Evaluate Pharma, the annual market for ovarian
cancer therapies is projected to exceed $4.6 billion in 2022. The
American Cancer Society estimates that approximately 22,000 women
will receive a new diagnosis of ovarian cancer and approximately
14,000 women will die from ovarian cancer in the United States
each year. Ovarian cancer ranks fifth in cancer deaths among
women, accounting for more deaths than any other cancer of the
female reproductive system.

The potential of VAL-083 in the treatment of ovarian cancer has
been established in prior NCI-sponsored clinical trials and by
our recent research. The FDA has granted orphan drug status to
VAL-083 as a potential treatment for ovarian cancer and we have
recently received notice of allowance for our IND to initiate a
Phase 1-2 clinical trial to investigate the safety and
effectiveness of VAL-083 in patients with recurrent platinum
resistant ovarian cancer (VAL-083 REPROVe trial).

Ovarian cancers are commonly treated with a platinum-based
chemotherapy regimen. Initial tumor response rates are relatively
high. However, the development of resistance to Pt-based
chemotherapy in ovarian cancer patients is nearly inevitable. Our
research suggests that VAL-083 may offer a potential treatment
option for ovarian cancer patients who are resistant to
platinum-based chemotherapy and as a potential combination
therapy with other agents. We believe the profile of VAL-083
offers the potential to capture meaningful market share in the
multi-billion ovarian cancer market.

Lung Cancer

According to Evaluate Pharma, the annual market for lung cancer
therapies is projected to reach nearly $25 billion in 2022. Lung
cancer is the most common cancer in the world with 1.8 million
cases in 2012, representing 13% of all cancers according to a
report published by the World Cancer Research Fund
International.Lung cancer has a higher mortality rate than the
next top three cancers combined and it is responsible for 1.6
million deaths annually, representing 19% of all cancer
deaths.NSCLC represents approximately 90% of newly diagnosed lung
cancers.

The potential of VAL-083 in the treatment of NSLSC has been
established in both human clinical trials conducted by the NCI
and by the drugs commercial approval in China. We believe the
profile of VAL-083 offers the potential to capture meaningful
market share in the multi-billion NSCLC market.

VAL-083 Manufacturing

VAL-083 is a small-molecule chemotherapeutic. Chemical synthesis
of the active pharmaceutical ingredient (API) was initially
established by the NCI. We have made improvements to this process
and have obtained patents on these improvements. The current
manufacturing process involves fewer than five synthetic steps.

VAL-083 drug product is a lyophilized (freeze-dried) formulation
that is reconstituted for intravenous injection. We anticipate
that overall cost of goods for an eventual commercial product
will be similar to other injectable, small-molecule
pharmaceuticals.

For our Phase 3 clinical trial, we have engaged third-party
contract manufacturers with the capabilities to establish the
processes, procedures and quality systems necessary to meet U.S.,
Canadian, E.U. and other international manufacturing requirements
in accordance with Good Manufacturing Practice (cGMP)
regulations.

Supply of VAL-083 for our clinical trials to date has been
provided through a collaboration with Guangxi Wuzhou
Pharmaceutical (Group) Co. Ltd. Guangxi Wuzhou Pharma as a
manufacturer has established a commercial-scale manufacturing
process based on the North American process originally developed
for the NCI that has been licensed by the Chinese FDA (CFDA) for
commercial supply of VAL-083 in China. DelMar has developed and
patented certain intellectual property related to quality
controls that are used in the release of VAL-083 for our clinical
trials in the United States. This intellectual property is also
required for product release under CFDA guidelines and we have
granted access to our intellectual property for this purpose.

Research Development Collaborations

Guangxi Wuzhou Pharmaceutical Company

to a memorandum of understanding and collaboration agreement,
dated October 25, 2012, we have established a strategic
collaboration with Guangxi Wuzhou Pharmaceutical Company (Guangxi
Wuzhou Pharmaceuticals), a subsidiary of publicly traded Guangxi
Wuzhou Zhongheng Group Co., Ltd. (SHG: 600252) (the Guangxi
Agreement). VAL-083 is approved for the treatment of chronic
myelogenous leukemia (CML) and lung cancer in China and Guangxi
Wuzhou Pharmaceuticals is the only manufacturer licensed by the
CFDA to produce the product for the China market. Through the
Guangxi Agreement, we have been provided with exclusive access to
drug product at the production price for our VAL-083 clinical
trials in the United States and we have also secured certain
commercial rights in China.

to the Guangxi Agreement, we granted to Guangxi Wuzhou
Pharmaceuticals a royalty-free license to certain of our
intellectual property, as it relates to quality control and drug
production methods for VAL-083, and we agreed that Guangxi Wuzhou
Pharmaceuticals will be our exclusive supplier of VAL-083 for
clinical trials and commercial sales, subject to Guangxi Wuzhou
Pharmaceuticals obtaining and maintaining cGMP certification by
the FDA, EMA or other applicable regulatory agencies, and Guangxi
Wuzhou Pharmaceuticals being able to meet volumes ordered by us.
In accordance with this agreement, we have contracted with
established third-party suppliers for our Phase 3 clinical
trials. We will continue to work with Guangxi Wuzhou
Pharmaceuticals to achieve FDA compliance in order to potentially
have them as our future supplier for global sales of VAL-083.

This Guangxi Agreement also provides us with certain exclusive
commercial rights related to drug supply. Specifically, the
Guangxi Agreement establishes an exclusive supply relationship
between us and Guangxi Wuzhou Pharmaceuticals for the Chinese
market and all markets outside China. Guangxi Wuzhou
Pharmaceuticals agreed that it may not sell VAL-083 for markets
outside of China to any other purchaser other than us, provided
that, during the first three years following regulatory clearance
for marketing of VAL-083 in a particular country or region, we
meet proposed sales volumes set by Guangxi Wuzhou Pharmaceuticals
for the country or region. In addition, Guangxi Wuzhou
Pharmaceuticals granted us a pre-emptive right in China (subject
to our acceptance of proposed sales volume and prices) to
purchase VAL-083 produced by Guangxi Wuzhou Pharmaceuticals.

Our collaboration with Guangxi Wuzhou Pharmaceuticals positions
us with the potential to generate future revenue through product
sales or royalties for its approved indications in China while we
seek global approval in new indications.

Under the terms of the Guangxi Agreement, Guangxi Wuzhou
Pharmaceuticals will provide funding support for clinical trials
conducted in China and we are responsible for development and
commercialization. We anticipate establishing sales channels in
China through a third-party marketing partner in collaboration
with Guangxi Wuzhou Pharmaceuticals in order to obtain sales or
royalty revenue from China.

The term of the Guangxi Agreement (except as it relates to the
exclusive rights in the China market) is indefinite, subject to
termination upon written agreement of all parties, or if either
party breaches any material term and fails to remedy such breach
within 30 days of receipt of notice of the breach, or if any
action to be taken thereunder is not agreed to by both parties,
provided that such matter is referred to the chief executive
officer of both parties, and they are unable to resolve such
matter within 90 days. No payments have been made to date under
the Guangxi Agreement.

Accurexa Collaboration

We have entered into a collaboration agreement with Accurexa,
Inc. (Accurexa). Accurexa is a biotechnology company focused on
developing novel neurological therapies to be directly delivered
to specific regions of the brain. Under the terms of the
agreement, we and Accurexa will undertake collaborative research
activities for the purpose of evaluating formulations of VAL-083
and one or more of temozolomide and BCNU for local delivery.
Under the terms of the agreement, we will supply VAL-083 and
Accurexa will conduct experiments related to the development and
validation of a novel formulation for the combined local delivery
of VAL-083 and temozolomide. We have been granted an exclusive
right to license or acquire any product candidates and related
intellectual property that results from research conducted under
the agreement for further development and commercialization on an
exclusive worldwide basis, or other terms that may be agreed upon
between the parties. The initial financial commitment by us is
not significant.

Duke University Collaboration

In April 2017, we entered into a three-year collaboration with
Duke University to evaluate VAL-083 as a front-line treatment for
newly diagnosed patients with GBM. Under the terms of the
collaboration, we will fund a series of preclinical studies to be
conducted by Duke Universitys Glioblastoma Drug Discovery Group
to identify molecular characteristics of GBM tumors that are more
likely to respond to VAL-083, and not the standard of care,
temozolomide, as a front-line treatment or through combination
therapies.

Patents and Proprietary Rights

Our success will depend in part on our ability to protect our
existing product candidate and the products we acquire or license
by obtaining and maintaining a strong proprietary position. To
develop and maintain our position, we intend to continue relying
upon patent protection, orphan drug status, Hatch-Waxman
exclusivity, trade secrets, know-how, continuing technological
innovations and licensing opportunities.

We have filed patent applications claiming the use of, and
improvements related to VAL-083. Our patent filings also include
proposed treatment regimens, improvements to the manufacturing
process, formulation and composition of the active pharmaceutical
ingredient, and finished dosage forms of VAL-083. We are
prosecuting our patent applications in the United States and
other jurisdictions which we deem important for the potential
commercial success of VAL-083.

Our patents and patent applications can be summarized in fourteen
series as follows:

Series I is generally directed to synthesis of VAL-083.

Patent or Patent Application No.	Title	Expiry
United States Patent No. 8,563,758	Method Of Synthesis Of Substituted Hexitols Such As Dianhydrogalactitol
United States Patent No. 8,921,585	Method Of Synthesis Of Substituted Hexitols Such As Dianhydrogalactitol
United States Patent No. 9,085,544	Method Of Synthesis Of Substituted Hexitols Such As Dianhydrogalactitol
United States Patent No. 9,630,938	Method Of Synthesis Of Substituted Hexitols Such As Dianhydrogalactitol
PCT Patent Application Serial No. PCT/US2011/048032	Method Of Synthesis Of Substituted Hexitols Such As Dianhydrogalactitol. National phase applications pending in various countries.
PCT Patent Application Serial No. PCT/US2011/048032	Method Of Synthesis Of Substituted Hexitols Such As Dianhydrogalactitol: Patents granted in the following countries: Australia, China, Israel, Japan, Mexico, Singapore.

Series II is generally directed to use of VAL-083 to treat a
range of diseases and conditions, including but not limited
to malignancies.

Patent or Patent Application No.	Title	Expiry
United States Patent No. 9,066,918	Compositions And Methods To Improve The Therapeutic Benefit Of Suboptimally Administered Chemical Compounds Including Substituted Hexitols Such As Dianhydrogalactitol And Diacetyldianhydrogalactitol
United States Patent Application Serial No. 14/753,911	Compositions And Methods To Improve The Therapeutic Benefit Of Suboptimally Administered Chemical Compounds Including Substituted Hexitols Such As Dianhydrogalactitol And Diacetyldianhydrogalactitol
PCT Patent Application Serial No. PCT/US2011/048031	Compositions And Methods To Improve The Therapeutic Benefit Of Suboptimally Administered Chemical Compounds Including Substituted Hexitols Such As Dianhydrogalactitol And Diacetyldianhydrogalactitol. National phase applications pending in various countries.

Series III is generally directed to analytical methods for
VAL-083.

Patent or Patent Application No.	Title	Expiry
United States Patent No. 9,759,698	Improved Analytical Methods For Analyzing And Determining Impurities In Dianhydrogalactitol
United States Patent Application Serial No. 14/380,924	Improved Analytical Methods For Analyzing And Determining Impurities In Dianhydrogalactitol
United States Patent No. 9,029,164	Improved Analytical Methods For Analyzing And Determining Impurities In Dianhydrogalactitol
PCT Patent Application Serial No. PCT/IB2013/000793	Improved Analytical Methods For Analyzing And Determining Impurities In Dianhydrogalactitol. National phase applications pending in various countries.
PCT Patent Application Serial No. PCT/IB2013/000793	Improved Analytical Methods For Analyzing And Determining Impurities In Dianhydrogalactitol granted in Australia
Patent or Patent Application No.	Title	Expiry
PCT Patent Application Serial No. PCT/US2014/066087	Improved Analytical Methods For Analyzing And Determining Impurities In Dianhydrogalactitol.

Series IV is generally directed to the use of VAL-083 to
treat GBM or medulloblastoma.

Patent or Patent Application No.	Title	Expiry
United States Patent Application Serial No. 14/373,552	Use Of Substituted Hexitols Including Dianhydrogalactitol And Analogs To Treat Neoplastic Disease And Cancer Stem Cells Including Glioblastoma Multiforme And Medulloblastoma
United States Patent No. 9,687,466	Use Of Substituted Hexitols Including Dianhydrogalactitol And Analogs To Treat Neoplastic Disease And Cancer Stem Cells Including Glioblastoma Multiforme And Medulloblastoma
United States Patent Application Serial No. 15/617,756	Use Of Substituted Hexitols Including Dianhydrogalactitol And Analogs To Treat Neoplastic Disease And Cancer Stem Cells Including Glioblastoma Multiforme And Medulloblastoma
PCT Patent Application Serial No. PCT/US2013/022505	Use Of Substituted Hexitols Including Dianhydrogalactitol And Analogs To Treat Neoplastic Disease And Cancer Stem Cells Including Glioblastoma Multiforme And Medulloblastoma. National phase applications pending in various countries.

Series V is generally directed to the veterinary use of
VAL-083.

Patent or Patent Application No.	Title	Expiry
United States Patent Application Serial No. 14/400,271	Veterinary Use Of Dianhydrogalactitol, Diacetyldianhydrogalactitol, And Dibromodulcitol To Treat Malignancies

Series VI is generally directed to the use of VAL-083 to
treat tyrosine-kinase-inhibitor-resistant malignancies.

Patent or Patent Application No.	Title	Expiry
United States Patent Application Serial No. 14/409,909	Methods For Treating Tyrosine-Kinase-Inhibitor-Resistant Malignancies In Patients With Genetic Polymorphisms Or Ahi1 Dysregulations Or Mutations Employing Dianhydrogalactitol, Diacetyldianhydrogalactitol, Dibromodulcitol, Or Analogs Or Derivatives Thereof
PCT Patent Application Serial No. PCT/US2013/047320	Methods For Treating Tyrosine-Kinase-Inhibitor-Resistant Malignancies In Patients With Genetic Polymorphisms Or Ahi1 Dysregulations Or Mutations Employing Dianhydrogalactitol, Diacetyldianhydrogalactitol, Dibromodulcitol, Or Analogs Or Derivatives Thereof. National phase applications pending in various countries.

Series VII is generally directed to the use of VAL-083 to
treat recurrent malignant glioma and progressive secondary
brain tumor.

Patent or Patent Application No.	Title	Expiry
United States Patent Application Serial No. 14/682,226	Use Of Dianhydrogalactitol And Analogs And Derivatives Thereof To Treat Recurrent Malignant Glioma Or Progressive Secondary Brain Tumor
PCT Application Serial No. PCT/US2014/040461	Use Of Dianhydrogalactitol And Analogs And Derivatives Thereof To Treat Recurrent Malignant Glioma Or Progressive Secondary Brain Tumor. National phase applications pending in various countries.

Series VIII is generally directed to the use of VAL-083 to
treat non-small-cell lung cancer.

Patent or Patent Application No.	Title	Expiry
United States Patent Application Serial No. 14/710,240	Use of Dianhydrogalactitol and Analogs or Derivatives Thereof in Combination With Platinum-Containing Antineoplastic Agents to Treat Non Small-Cell Carcinoma of the Lung and Brain Metastases
PCT Patent Application Serial No. PCT/US2015/024462	Use of Dianhydrogalactitol and Analogs or Derivatives Thereof to Treat Non-Small Cell Carcinoma of the Lung and Ovarian Cancer. National phase applications pending in various countries.
PCT Patent Application Serial No. PCT/US2016/032120	Combination of Analogs or Derivatives of Dianhydrogalactitol with Platinum-Containing Antineoplastic Agents to Treat Cancer.

Series IX is generally directed to the use of VAL-083 and
radiation to treat NSCLC and GBM.

Patent or Patent Application No.	Title	Expiry
United States Patent Application Serial No. 15/525,933	Dianhydrogalactitol Together with Radiation to Treat Non-Small-Cell Carcinoma of the Lung and Glioblastoma Multiforme.
PCT Patent Application Serial No. PCT/US2015/059814	Dianhydrogalactitol Together with Radiation to Treat Non-Small-Cell Carcinoma of the Lung and Glioblastoma Multiforme

Series X is generally directed to the use of VAL-083 in NSCLC
and ovarian carcinoma by induction of DNA damage and stalling
of cell cycle:

Patent or Patent Application No.	Title	Expiry
PCT Patent Application Serial No. PCT/IB2016/001436	Use of Dianhydrogalactitol or Derivatives and Analogs Thereof for Treatment of Non-Small-Cell Lung Carcinoma, Glioblastoma, and Ovarian Carcinoma by Induction of DNA Damage and Stalling of Cell Cycle.

Series XI is generally directed to the use of VAL-083 in the
treatment of pediatric CNS malignancies:

Patent or Patent Application No.	Title	Expiry
United States Patent Application Serial No. 15/624,200	Use of Dianhydrogalactitol or Derivatives and Analogs Thereof for Treatment of Pediatric Central Nervous System Malignancies.
PCT Patent Application Serial No. PCT/US2016/058661	Use of Dianhydrogalactitol or Derivatives and Analogs Thereof for Treatment of Pediatric Central Nervous System Malignancies.

Series XII is generally directed to the analysis and
resolution of VAL-083 preparations:

Patent or Patent Application No.	Title	Expiry
PCT Patent Application Serial No. PCT/US2016/063362	Methods for analysis and Resolution of Preparations of Dianhydrogalactitol and Derivatives and Analogs Thereof.

Series XIII-XIV Provisional U.S. patent applications

Patent or Patent Application No.	Title	Expiry
Two provisional U.S. patent applications have been filed

One of the inventors listed in our Series IX applications is an
employee of the University of California, San Francisco. If a
patent issues from a patent application in this series with a
claim that the University of California employee conceived of, in
whole or in part, then the Regents of the University of
California will share ownership of any such patent with us. Our
research agreements with the University of California address
this issue by providing the Company with an exclusive option, for
a limited period of time, to negotiate a royalty-bearing
exclusive license for commercialization of the invention covered
by that patent.

In addition to patent protection, we may also seek orphan drug
status whenever it is available. If a product which has an orphan
drug designation subsequently receives the first regulatory
approval for the indication for which it has such designation,
the product is entitled to orphan exclusivity, meaning that the
applicable regulatory authority may not approve any other
applications to market the same drug for the same indication,
except in very limited circumstances, for a period of seven years
in the U.S. and Canada, and 10 years in the E.U. Orphan drug
designation does not prevent competitors from developing or
marketing different drugs for the same indication or the same
drug for a different clinical indication.

In February 2012, the FDA granted orphan drug status to VAL-083
for the treatment of glioma. In January 2013, the EMA also
granted orphan drug protection to VAL-083 for the treatment of
glioma. In the spring of 2016, the FDA Office of Orphan Products
Development granted orphan drug designations to VAL-083 for the
treatment of ovarian cancer and medulloblastoma.

In addition to our patents and orphan drug protection, we intend
to rely on the Hatch-Waxman Amendments for five years of data
exclusivity for VAL-083.Under the Hatch-Waxman Amendments, newly
approved drugs and indications benefit from a statutory period of
non-patent marketing exclusivity. These amendments provide
five-year data exclusivity to the first applicant to gain
approval of an NDA for a new chemical entity, meaning that the
FDA has not previously approved any other new drug containing the
same active ingredient. The Hatch-Waxman Amendments prohibit the
submission of an abbreviated new drug application, also known as
an ANDA or generic drug application, during the five-year
exclusive period if no patent is listed. If there is a patent
listed and the ANDA applicant certifies that the NDA holders
listed patent for the product is invalid or will not be
infringed, the ANDA can be submitted four years after NDA
approval. Protection under the Hatch-Waxman Amendments will not
prevent the filing or approval of another full NDA; however, the
applicant would be required to conduct its own pre-clinical
studies and adequate and well-controlled clinical trials to
demonstrate safety and effectiveness. The Hatch-Waxman Amendments
also provide three years of data exclusivity for the approval of
NDAs with new clinical trials for previously approved drugs and
supplemental NDAs, for example, for new indications, dosages or
strengths of an existing drug, if new clinical investigations
were conducted by or on behalf of the sponsor and were essential
to the approval of the application. This three-year exclusivity
covers only the new changes associated with the supplemental NDA
and does not prohibit the FDA from approving ANDAs for drugs
containing the original active ingredient.

We also rely on trade secret protection for our confidential and
proprietary information. We believe that the substantial costs
and resources required to develop technological innovations, such
as the manufacturing processes associated with VAL-083, will help
us to protect the competitive advantage of our product candidate.

The protection of intellectual property rights in China (where
our clinical product candidate, VAL-083, is manufactured to a
collaboration agreement with the only manufacturer presently
licensed by the CFDA to produce the product for the China market,
and where VAL-03 is approved for the treatment of CML and lung
cancer) is relatively weak compared to the United States, which
may negatively affect our ability to generate revenue from
VAL-083 in China.

Our policy is to require our employees, consultants, outside
scientific collaborators, sponsored researchers and other
advisors to execute confidentiality agreements upon the
commencement of employment or consulting relationships with us.
These agreements provide that all confidential information
developed or made known to the individual during the course of
the individuals relationship with us is to be kept confidential
and not disclosed to third parties except in specific
circumstances. In the case of employees and consultants, the
agreements provide that all inventions conceived by the
individual shall be our exclusive property.

Government Regulation and Product Approval

Regulation by governmental authorities in the U.S. and other
countries is a significant factor, affecting the cost and time of
our research and product development activities, and will be a
significant factor in the manufacture and marketing of any
approved products. Our product candidates will require regulatory
approval by governmental agencies prior to commercialization. In
particular, our products are subject to rigorous preclinical and
clinical testing and other approval requirements by the FDA and
similar regulatory authorities in other countries. Various
statutes and regulations also govern or influence the
manufacturing, safety, reporting, labeling, transport and
storage, record keeping and marketing of our products. The
lengthy process of seeking these approvals, and the subsequent
compliance with applicable statutes and regulations, require the
expenditure of substantial resources. Any failure by us to
obtain, or any delay in obtaining, the necessary regulatory
approvals could harm our business.

The regulatory requirements relating to the testing,
manufacturing and marketing of our products may change from time
to time and this may impact our ability to conduct clinical
trials and the ability of independent investigators to conduct
their own research with support from us.

The clinical development, manufacturing and marketing of our
products are subject to regulation by various authorities in the
U.S., the E.U. and other countries, including, in the U.S., the
FDA, in Canada, Health Canada, and, in the E.U., the EMA. The
Federal Food, Drug, and Cosmetic Act, the Public Health Service
Act in the U.S. and numerous directives, regulations, local laws
and guidelines in Canada and the E.U. govern the testing,
manufacture, safety, efficacy, labeling, storage, record keeping,
approval, advertising and promotion of our products. Product
development and approval within these regulatory frameworks takes
a number of years and involves the expenditure of substantial
resources.

Regulatory approval will be required in all the major markets in
which we seek to develop our products. At a minimum, approval
requires the generation and evaluation of data relating to the
quality, safety, and efficacy of an investigational product for
its proposed use. The specific types of data required and the
regulations relating to this data will differ depending on the
territory, the drug involved, the proposed indication and the
stage of development.

In general, new chemical entities are tested in animals until
adequate evidence of safety is established to support the
proposed clinical study protocol designs. Clinical trials for new
products are typically conducted in three sequential phases that
may overlap. In Phase 1, the initial introduction of the
pharmaceutical into either healthy human volunteers or patients
with the disease (20 to 50 subjects), the emphasis is on testing
for safety (adverse effects), dosage tolerance, metabolism,
distribution, excretion and clinical pharmacology. Phase 2
involves studies in a limited patient population (50 to 200
patients) to determine the initial efficacy of the pharmaceutical
for specific targeted indications, to determine dosage tolerance
and optimal dosage and to identify possible adverse side effects
and safety risks. Once a compound shows preliminary evidence of
some effectiveness and is found to have an acceptable safety
profile in Phase 2 evaluations, Phase 3 trials are undertaken to
more fully evaluate clinical outcomes in a larger patient
population in adequate and well-controlled studies designed to
yield statistically sufficient clinical data to demonstrate
efficacy and safety.

In the U.S., specific preclinical data, manufacturing and
chemical data, as described above, need to be submitted to the
FDA as part of an IND application, which, unless the FDA objects,
will become effective 30 days following receipt by the FDA. Phase
1 studies in human volunteers may commence only after the
application becomes effective. Prior regulatory approval for
human healthy volunteer studies is also required in member states
of the E.U. Currently, in each member state of the E.U.,
following successful completion of Phase 1 studies, data are
submitted in summarized format to the applicable regulatory
authority in the member state in respect of applications for the
conduct of later Phase 2 studies. The regulatory authorities in
the E.U. typically have between one and three months in which to
raise any objections to the proposed study, and they often have
the right to extend this review period at their discretion. In
the U.S., following completion of Phase 1 studies, further
submissions to regulatory authorities are necessary in relation
to Phase 2 and III studies to update the existing IND.
Authorities may require additional data before allowing the
studies to commence and could demand that the studies be
discontinued at any time if there are significant safety issues.
In addition to the regulatory review, studies involving human
subjects must be approved by an independent body. The exact
composition and responsibilities of this body will differ from
country to country. In the U.S., for example, each study will be
conducted under the auspices of an independent institutional
review board (IRB) at each institution at which the study is
conducted. The IRB considers among other things, the design of
the study, ethical factors, the privacy of protected health
information as defined under the Health Insurance Portability and
Accountability Act, the safety of the human subjects and the
possible liability risk for the institution. Equivalent rules to
protect subjects rights and welfare apply in each member state of
the E.U. where one or more independent ethics committees, which
typically operate similarly to an IRB, will review the ethics of
conducting the proposed research. Other regulatory authorities
around the rest of the world have slightly differing requirements
involving both the execution of clinical trials and the
import/export of pharmaceutical products. It is our
responsibility to ensure we conduct our business in accordance
with the regulations of each relevant territory.

In order to gain marketing approval, we must submit a dossier to
the relevant authority for review, which is known in the U.S. as
a new drug application (NDA) and in the E.U. as a marketing
authorization application (MAA). The format is usually specific
and laid out by each authority, although in general it will
include information on the quality of the chemistry,
manufacturing and pharmaceutical aspects of the product as well
as the nonclinical and clinical data. Once the submitted NDA is
accepted for filing by the FDA, it undertakes the review process
that takes 10 months, unless an expedited priority review is
granted which takes six months to complete. Approval can take
several months to several years, if multiple 10-month review
cycles are needed before final approval is obtained, if at all.

The approval process can be affected by a number of factors. The
NDA may be approvable requiring additional preclinical,
manufacturing data or clinical trials which may be requested at
the end of the 10-month NDA review cycle, thereby delaying
approval until additional data are submitted and may involve
substantial unbudgeted costs.

In addition to obtaining approval for each product, in many cases
each drug manufacturing facility must be approved. The regulatory
authorities usually will conduct an inspection of relevant
manufacturing facilities, and review manufacturing procedures,
operating systems and personnel qualifications. Further
inspections may occur over the life of the product. An inspection
of the clinical investigation sites by a competent authority may
be required as part of the regulatory approval procedure. As a
condition of marketing approval, the regulatory agency may
require post-marketing surveillance to monitor for adverse
effects or other additional studies as deemed appropriate. After
approval for the initial indication, further clinical studies may
be necessary to gain approval for any additional indications. The
terms of any approval, including labeling content, may be more
restrictive than expected and could affect the marketability of a
product.

The FDA offers a number of regulatory mechanisms that provide
expedited or accelerated approval procedures for selected drugs
in the indications on which we are focusing our efforts. These
include accelerated approval under Subpart H of the agencys NDA
approval regulations, fast track drug development procedures and
priority review. At this time, we have not determined whether any
of these approval procedures will apply to our current drug
candidate.

By leveraging existing preclinical and clinical safety and
efficacy data, we seek to build upon an existing knowledge and
data to accelerate our research. In addition, through our focus
on end-stage population which has no current treatment options,
regulatory approval for commercialization may sometimes be
achieved in an accelerated manner. Accelerated approval by the
FDA in this category may be granted on objective response rates
and duration of responses rather than demonstration of survival
benefit. As a result, trials of drugs to treat end-stage
refractory cancer indications have historically involved fewer
patients and generally have been faster to complete than trials
of drugs for other indications. We are aware that the FDA and
other similar agencies are regularly reviewing the use of
objective endpoints for commercial approval and that policy
changes may impact the size of trials required for approval,
timelines and expenditures significantly.

The U.S., E.U. and other jurisdictions may grant orphan drug
designation to drugs intended to treat a rare disease or
condition, which, in the U.S., is generally a disease or
condition that affects no more than 200,000 individuals. In the
E.U., orphan drug designation can be granted if: the disease is
life threatening or chronically debilitating and affects no more
than 50 in 100,000 persons in the E.U.; without incentive, it is
unlikely that the drug would generate sufficient return to
justify the necessary investment; and no satisfactory method of
treatment for the condition exists or, if it does, the new drug
will provide a significant benefit to those affected by the
condition. If a product that has an orphan drug designation
subsequently receives the first regulatory approval for the
indication for which it has such designation, the product is
entitled to orphan exclusivity, meaning that the applicable
regulatory authority may not approve any other applications to
market the same drug for the same indication, except in very
limited circumstances, for a period of seven years in the U.S.
and 10 years in the E.U. Orphan drug designation does not prevent
competitors from developing or marketing different drugs for the
same indication or the same drug for different indications.
Orphan drug designation must be requested before submitting an
NDA or MAA. After orphan drug designation is granted, the
identity of the therapeutic agent and its potential orphan use
are publicly disclosed. Orphan drug designation does not convey
an advantage in, or shorten the duration of, the review and
approval process. However, this designation provides an exemption
from marketing and authorization fees charged to NDA sponsors
under the Prescription Drug User Fee Act (PDUFA Fees).

We are also subject to numerous environmental and safety laws and
regulations, including those governing the use and disposal of
hazardous materials. The cost of compliance with and any
violation of these regulations could have a material adverse
effect on our business and results of operations. Although we
believe that our safety procedures for handling and disposing of
these materials comply with the standards prescribed by state and
federal regulations, accidental contamination or injury from
these materials may occur. Compliance with laws and regulations
relating to the protection of the environment has not had a
material effect on our capital expenditures or our competitive
position. However, we are not able to predict the extent of
government regulation, and the cost and effect thereof on our
competitive position, which might result from any legislative or
administrative action pertaining to environmental or safety
matters.

Competition

The development and commercialization of new drugs is highly
competitive and we may face competition from established
pharmaceutical and biotechnology companies, as well as from
academic institutions, government agencies and private and public
research institutions worldwide.

Various products currently are marketed for the treatment of the
cancers that we may target with VAL-083 or future product
candidates and a number of companies are developing new
treatments. Companies also developing products for GBM include
but are not limited to Celgene Corp., Celldex Therapeutics,
Northwest Biotherapeutics, Inc., Immunocellular Therapeutics
Ltd., and many major pharmaceutical companies. Our success will
be based in part on our ability to build and actively manage a
portfolio of drugs that addresses unmet medical needs and create
value in patient therapy.

Many of our competitors have significantly greater financial
resources and expertise in research and development,
manufacturing, preclinical testing, conducting clinical trials,
obtaining regulatory approvals and marketing approved products
than we do. Smaller or early-stage companies may also prove to be
significant competitors, particularly through collaborative
arrangements with large and established companies. Our commercial
opportunity will be reduced or eliminated if our competitors
develop and commercialize products that are safer, more
effective, have fewer side effects or are less expensive than
products that we may develop. These third parties compete with us
in recruiting and retaining qualified scientific and management
personnel, establishing clinical trial sites and patient
registration for clinical trials, as well as in acquiring
technologies and technology licenses complementary to our
programs or advantageous to our business.

We expect that our ability to compete effectively will depend
upon our ability to:

successfully and rapidly complete adequate and
well-controlled clinical trials that demonstrate
statistically significant safety and efficacy and to obtain
all requisite regulatory approvals in a cost-effective
manner;

maintain a proprietary position for our manufacturing
processes and other technology;

produce our products in accordance with United States FDA and
international regulatory guidelines;

attract and retain key personnel; and

build or access an adequate sales and marketing
infrastructure for any approved products.

Failure to do one or more of these activities could have an
adverse effect on our business, financial condition or results of
operations.

Corporate History

The Company is a Nevada corporation formed on June 24, 2009 under
the name Berry Only Inc. On January 25, 2013, the Company entered
into and closed an exchange agreement (the Exchange Agreement),
with Del Mar Pharmaceuticals (BC) Ltd. (DelMar (BC)), 0959454
B.C. Ltd. (Callco), and 0959456 B.C. Ltd. (Exchangeco) and the
security holders of DelMar (BC). Upon completion of the Exchange
Agreement, DelMar (BC) became a wholly-owned subsidiary of the
Company.

DelMar Pharmaceuticals, Inc. is the parent company of DelMar
(BC), a British Columbia, Canada corporation incorporated on
April 6, 2010, which is a clinical stage company with a focus on
the development of drugs for the treatment of cancer. The Company
is also the parent company to Callco and Exchangeco which are
British Columbia, Canada corporations. Callco and Exchangeco were
formed to facilitate the Reverse Acquisition.

On May 20, 2016, the Company effected a 1-for-4 reverse split of
its common stock. All share amounts in this report give effect to
the reverse split unless otherwise indicated.

Research and Development

During the year ended June 30, 2017 and 2016, we recognized
$5,003,640 (unaudited) and $3,360,878, respectively in research
and development expenses.

Employees

We have four full-time employees and retain the services of
approximately 15 persons on an independent contractor/consultant
and contract-employment basis. As such, we currently operate in a
virtual corporate structure in order to minimize fixed personnel
costs. Over time, we plan to establish a base of full time
employees and corporate infrastructure.

Risk Factors

Risks Related to Our Business

We expect our independently audited June 30, 2017
consolidated financial statements contain going concern
disclosure.

We expect our audited financial statements for the fiscal year
ended June 30, 2017 will include an explanatory paragraph
regarding our going concern risk. The consolidated financial
statements have been prepared on a going concern basis which
assumes that the Company will continue its operations for the
foreseeable future and contemplates the realization of assets and
the settlement of liabilities in the normal course of business.
We expect to report a net loss for the year ended June 30, 2017.

The Company is in the development stage and has not generated any
revenues to date. The Company does not have the prospect of
achieving revenues until such time that its product candidate is
commercialized, or partnered, which may not ever occur. In the
near future, the Company will require additional funding to
maintain its research and development projects and for general
operations. These circumstances indicate the existence of a
material uncertainty that may cast substantial doubt as to the
ability of the Company to meet its obligations as they come due.

Consequently, management is pursuing various financing
alternatives to fund the Companys operations so it can continue
as a going concern. Management plans to secure the necessary
financing through the issue of new equity and/or the entering
into of strategic partnership arrangements. Nevertheless, there
is no assurance that these initiatives will be successful.

The financial statements do not give effect to any adjustments to
the amounts and classification of assets and liabilities that may
be necessary should the Company be unable to continue as a going
concern. Such adjustments could be material.

We have a limited operating history and a history of
operating losses, and expect to incur significant additional
operating losses.

For the three and nine months ended March 31, 2017, the Company
reported net losses of $1,868,460 and $5,480,772 respectively,
and negative cash flow from operations of $4,056,858. We had an
accumulated deficit of $38,401,763 as of March 31, 2017. As of
March 31, 2017, the Company had cash on hand of $2,100,406 and a
working capital balance of $1,297,239. We are an early stage
company and there is limited historical financial information
upon which to base an evaluation of our performance. Our
prospects must be considered in light of the uncertainties,
risks, expenses, and difficulties frequently encountered by
companies in their early stages of operations. We expect to incur
substantial additional net expenses over the next several years
as our research, development and commercial activities increase.
The amount of future losses and when, if ever, we will achieve
profitability are uncertain. Our ability to generate revenue and
achieve profitability will depend on, among other things,
successful completion of the preclinical and clinical development
of our product candidate; obtaining necessary regulatory
approvals from the FDA and international regulatory agencies;
successful manufacturing, sales and marketing arrangements; and
raising sufficient funds to finance our activities. If we are
unsuccessful at some or all of these undertakings, our business,
prospects and results of operations may be materially adversely
affected.

We will need to raise additional capital, which may
cause dilution to our stockholders, restrict our operations or
require us to relinquish rights to technologies or product
candidates.

Until such time, if ever, as we can generate substantial product
revenues, we expect to finance our cash needs through a
combination of public or private equity offerings, debt
financings and/or license and development agreements with
collaboration partners. We do not have any committed external
source of funds. To the extent that we raise additional capital
through the sale of equity or convertible debt securities,
then-existing stockholders interests may be materially diluted,
and the terms of such securities could include liquidation or
other preferences that adversely their rights as common
stockholders. Debt financing and preferred equity financing, if
available, may involve agreements that include restrictive
covenants that limit our ability to take specified actions, such
as incurring additional debt, making capital expenditures or
declaring dividends. In addition, debt financing would result in
fixed payment obligations.

If we raise funds through collaborations, strategic partnerships
or marketing, distribution or licensing arrangements with third
parties, we may have to relinquish valuable rights to our
technologies, future revenue streams, research programs or
product candidates or grant licenses on terms that may not be
favorable to us. If we are unable to raise additional funds
through equity or debt financings when needed, we may be required
to delay, limit, reduce or terminate our product development or
future commercialization efforts or grant rights to develop and
market product candidates that we would otherwise prefer to
develop and market ourselves.

Our inability to obtain additional financing could
adversely affect our ability to meet our obligations under our
planned clinical trials and could negatively impact the timing of
our clinical results.

Our ability to meet our obligations and continue the research and
development of our product candidate is dependent on our ability
to continue to raise adequate financing. We may not be successful
in obtaining such additional financing in the amount required at
any time, or for any period, or, if available, that it can be
obtained on terms satisfactory to us. In the event that we are
unable to obtain such additional financing, we may be unable to
meet our obligations under our planned clinical trials and we may
have to tailor our drug candidate development programs based on
the amount of funding we raise which could negatively impact the
timing of our clinical results.

If we are unable to effectively implement or maintain
a system of internal control over financial reporting, we may not
be able to accurately or timely report our financial results and
our stock price could be adversely affected.

Section404 of the Sarbanes-Oxley Act of 2002 and related
regulations require us to evaluate the effectiveness of our
internal control over financial reporting as of the end of each
fiscal year, and to include a management report assessing the
effectiveness of our internal control over financial reporting in
our Annual Report on Form 10-K for that fiscal year. Management
determined that as of June 30, 2017, our disclosure controls and
procedures and internal control over financial reporting were not
effective due to material weaknesses in our internal control over
financial reporting related to our limited number of employees in
our accounting department and inadequate segregation of duties
over authorization, review and recording of transactions, as well
as the financial reporting of such transactions. Any failure to
implement new or improved controls necessary to remedy the
material weaknesses described above, or difficulties encountered
in the implementation or operation of these controls, could harm
our operations, decrease the reliability of our financial
reporting, and cause us to fail to meet our financial reporting
obligations, which could adversely affect our business and reduce
our stock price.

We are an early-stage company and may never achieve
commercialization of our candidate products or
profitability.

We are at an early stage of development and commercialization of
our technologies and product candidate. We have not yet begun to
market any products and, accordingly, have not begun or generate
revenues from the commercialization of our product. Our product
will require significant additional clinical testing and
investment prior to commercialization. A commitment of
substantial resources by ourselves and, potentially, our partners
to conduct time-consuming research and clinical trials will be
required if we are to complete the development of our product
candidate. There can be no assurance that our product candidate
will meet applicable regulatory standards, obtain required
regulatory approvals, be capable of being produced in commercial
quantities at reasonable costs or be successfully marketed. Our
product candidate is not expected to be commercially available
for several years, if at all.

We are currently focused on the development of a
single product candidate.

Our product development efforts are currently focused on a single
product, VAL-083, for which we are researching multiple
indications. If VAL-083 fails to achieve clinical endpoints or
exhibits unanticipated toxicity or if a superior product is
developed by a competitor, our prospects for obtaining regulatory
approval and commercialization may be negatively impacted. In the
long-term, we hope to establish a pipeline of product candidates,
and we have identified additional product candidates that we may
be able to acquire or license in the future. However, at this
time we do not have any formal agreements granting us any rights
to such additional product candidates.

Even if we are able to commercialize any product
candidate that we develop, the product may become subject to
unfavorable pricing regulations, third-party payor reimbursement
practices or healthcare reform initiatives that could harm our
business.

The commercial success of our current or future product
candidates will depend substantially, both domestically and
abroad, on the extent to which the costs of our product candidate
will be paid by health maintenance, managed care, pharmacy
benefit and similar healthcare management organizations, or
reimbursed by government health administration authorities (such
as Medicare and Medicaid), private health coverage insurers and
other third-party payors. If reimbursement is not available, or
is available only to limited levels, we may not be able to
successfully commercialize our products. Even if coverage is
provided, the approved reimbursement amount may not be high
enough to allow us to establish and maintain pricing sufficient
to realize a meaningful return on our investment.

There is significant uncertainty related to third-party payor
coverage and reimbursement of newly approved drugs. Marketing
approvals, pricing and reimbursement for new drug products vary
widely from country to country. Some countries require approval
of the sale price of a drug before it can be marketed. In many
countries, the pricing review period begins after marketing or
product licensing approval is granted. In some non-U.S. markets,
prescription pharmaceutical pricing remains subject to continuing
governmental control even after initial approval is granted. As a
result, we might obtain marketing approval for a product in a
particular country, but then be subject to price regulations that
delay commercial launch of the product, possibly for lengthy time
periods, which may negatively impact the revenues we are able to
generate from the sale of the product in that country. Adverse
pricing limitations may hinder our ability to recoup our
investment in one or more product candidates, even if our product
candidates obtain marketing approval.

Our ability to commercialize VAL-083 or any other product
candidates will depend in part on the extent to which coverage
and reimbursement for these products and related treatments will
be available from government health administration authorities,
private health insurers and other organizations. Government
authorities and third-party payors, such as private health
insurers and health maintenance organizations, decide which
medications they will cover and establish reimbursement levels.
The healthcare industry is acutely focused on cost containment,
both in the United States and elsewhere. Government authorities
and third-party payors have attempted to control costs by
limiting coverage and the amount of reimbursement for particular
medications, which could affect our ability to sell our product
candidate profitably. These payors may not view our products, if
any, as cost-effective, and coverage and reimbursement may not be
available to our customers, or may not be sufficient to allow our
products, if any, to be marketed on a competitive basis.
Cost-control initiatives could cause us to decrease the price we
might establish for products, which could result in lower than
anticipated product revenues. If the prices for our products, if
any, decrease or if governmental and other third-party payors do
not provide adequate coverage or reimbursement, our prospects for
revenue and profitability will suffer.

There may also be delays in obtaining coverage and reimbursement
for newly approved drugs, and coverage may be more limited than
the indications for which the drug is approved by the FDA or
comparable non-U.S. regulatory authorities. Moreover, eligibility
for reimbursement does not imply that any drug will be paid for
in all cases or at a rate that covers our costs, including
research, development, manufacture, sale and distribution.
Reimbursement rates may vary, by way of example, according to the
use of the drug and the clinical setting in which it is used.
Reimbursement rates may also be based on reimbursement levels
already set for lower cost drugs or may be incorporated into
existing payments for other services.

In addition, increasingly, third-party payors are requiring
higher levels of evidence of the benefits and clinical outcomes
of new technologies and are challenging the prices charged. We
cannot be sure that coverage will be available for any product
candidate that we, or they, commercialize and, if available, that
the reimbursement rates will be adequate. Further, the net
reimbursement for drug products may be subject to additional
reductions if there are changes to laws that presently restrict
imports of drugs from countries where they may be sold at lower
prices than in the United States. An inability to promptly obtain
coverage and adequate payment rates from both government-funded
and private payors for any our product candidates for which we
obtain marketing approval could have a material adverse effect on
our operating results, our ability to raise capital needed to
commercialize products and our overall financial condition.

We are dependent on obtaining certain patents and
protecting our proprietary rights.

Our success will depend, in part, on our ability to obtain
patents, maintain trade secret protection and operate without
infringing on the proprietary rights of third parties or having
third parties circumvent our rights. We have filed and are
actively pursuing patent applications for our products. The
patent positions of biotechnology, biopharmaceutical and
pharmaceutical companies can be highly uncertain and involve
complex legal and factual questions. Thus, there can be no
assurance that any of our patent applications will result in the
issuance of patents, that we will develop additional proprietary
products that are patentable, that any patents issued to us or
those that already have been issued will provide us with any
competitive advantages or will not be challenged by any third
parties, that the patents of others will not impede our ability
to do business or that third parties will not be able to
circumvent our patents. Furthermore, there can be no assurance
that others will not independently develop similar products,
duplicate any of our products not under patent protection, or, if
patents are issued to us, design around the patented products we
developed or will develop.

We may be required to obtain licenses from third parties to avoid
infringing patents or other proprietary rights. No assurance can
be given that any licenses required under any such patents or
proprietary rights would be made available, if at all, on terms
we find acceptable. If we do not obtain such licenses, we could
encounter delays in the introduction of products or could find
that the development, manufacture or sale of products requiring
such licenses could be prohibited.

A number of pharmaceutical, biopharmaceutical and biotechnology
companies and research and academic institutions have developed
technologies, filed patent applications or received patents on
various technologies that may be related to or affect our
business. Some of these technologies, applications or patents may
conflict with our technologies or patent applications. Such
conflict could limit the scope of the patents, if any, that we
may be able to obtain or result in the denial of our patent
applications. In addition, if patents that cover our activities
are issued to other companies, there can be no assurance that we
would be able to obtain licenses to these patents at a reasonable
cost or be able to develop or obtain alternative technology. If
we do not obtain such licenses, we could encounter delays in the
introduction of products, or could find that the development,
manufacture or sale of products requiring such licenses could be
prohibited. In addition, we could incur substantial costs in
defending ourselves in suits brought against us on patents it
might infringe or in filing suits against others to have such
patents declared invalid.

Patent applications in the U.S. are maintained in secrecy and not
published if either: i) the application is a provisional
application or, ii) the application is filed and we request no
publication, and certify that the invention disclosed has not and
will not be the subject of a published foreign application.
Otherwise, U.S. applications or foreign counterparts, if any,
publish 18 months after the priority application has been filed.
Since publication of discoveries in the scientific or patent
literature often lag behind actual discoveries, we cannot be
certain that we or any licensor were the first creator of
inventions covered by pending patent applications or that we or
such licensor was the first to file patent applications for such
inventions. Moreover, we might have to participate in
interference proceedings declared by the U.S. Patent and
Trademark Office to determine priority of invention, which could
result in substantial cost to us, even if the eventual outcome
were favorable to us. There can be no assurance that our patents,
if issued, would be held valid or enforceable by a court or that
a competitors technology or product would be found to infringe
such patents.

Moreover, we may be subject to third-party preissuance
submissions of prior art to the USPTO, or become involved in
opposition, derivation, reexamination, inter partes
review, post-grant review or interference proceedings challenging
our patent rights or the patent rights of others. An adverse
determination in any such submission, proceeding or litigation
could reduce the scope of, or invalidate, our patent rights,
allow third parties to commercialize our technology or products
and compete directly with us, without payment to us, or result in
our inability to manufacture or commercialize products without
infringing third-party patent rights.

Even if our patent applications issue as patents, they may not
issue in a form that will provide us with any meaningful
protection, prevent competitors from competing with us, or
otherwise provide us with any competitive advantage. Our
competitors may be able to circumvent our patents by developing
similar or alternative technologies or products in a
non-infringing manner.

The issuance of a patent is not conclusive as to its
inventorship, scope, validity or enforceability, and our patents
may be challenged in courts or patent offices in the United
States and abroad. Such challenges may result in loss of
exclusivity or freedom to operate, or in patent claims being
narrowed, invalidated or held unenforceable, in whole or in part,
which could limit our ability to stop others from using or
commercializing similar or identical technology and products, or
limit the duration of the patent protection of our technology and
products. Given the amount of time required for the development,
testing and regulatory review of new product candidates, patents
protecting such candidates might expire before or shortly after
such candidates are commercialized. As a result, our owned and
licensed patent portfolio may not provide us with sufficient
rights to exclude others from commercializing products similar or
identical to ours.

In addition, the protection of intellectual property rights in
China (where our clinical product candidate, VAL-083, is
manufactured to a collaboration agreement with the only
manufacturer presently licensed by the China Food and Drug
Administration to produce the product for the China market, and
where VAL-083 is approved for the treatment of CML and lung
cancer) is relatively weak compared to the United States, which
may negatively affect our ability to generate royalty revenue
from sales of VAL-083 in China.

Much of our know-how and technology may not be patentable. To
protect our rights, we require employees, consultants, advisors
and collaborators to enter into confidentiality agreements. There
can be no assurance, however, that these agreements will provide
meaningful protection for our trade secrets, know-how or other
proprietary information in the event of any unauthorized use or
disclosure. Further, our business may be adversely affected by
competitors who independently develop competing technologies,
especially if we obtain no, or only narrow, patent protection.

Recent patent reform legislation could increase the
uncertainties and costs surrounding the prosecution of our patent
applications and the enforcement or defense of our issued
patents.

On September 16, 2011, the Leahy-Smith America Invents Act, or
the Leahy-Smith Act, was signed into law. The Leahy-Smith Act
includes a number of significant changes to United States patent
law. The Leahy-Smith Act includes provisions that affect the way
patent applications are prosecuted and affect patent litigation.
The United States Patent and Trademark Office, or PTO, recently
developed new regulations and procedures to govern administration
of the Leahy-Smith Act. However, many of the substantive changes
to patent law associated with the Leahy-Smith Act, and in
particular, the first to file provisions, only became effective
on March 16, 2013. Accordingly, it is not clear what, if any,
impact the Leahy-Smith Act will have on the operation of our
business. However, the Leahy-Smith Act and its implementation
could increase the uncertainties and costs surrounding the
prosecution of our patent applications and the enforcement or
defense of our issued patents, all of which could have a material
adverse effect on our business and financial condition.

We may be unable to protect our patents and
proprietary rights.

Our future success will depend to a significant extent on our
ability to:

obtain and keep patent protection for our products and
technologies on an international basis;

enforce our patents to prevent others from using our
inventions;

maintain and prevent others from using our trade secrets; and

operate and commercialize products without infringing on the
patents or proprietary rights of others.

We can provide no assurance that our patent rights will afford
any competitive advantages and these rights may be challenged or
circumvented by third parties. Further, patents may not be issued
on any of our pending patent applications in the U.S. or abroad.
Because of the extensive time required for development, testing
and regulatory review of a product candidate, it is possible that
before a product candidate can be commercialized, any related
patent may expire, or remain in existence for only a short period
following commercialization, reducing or eliminating any
advantage of the patent.

If we sue others for infringing our patents, a court may
determine that such patents are invalid or unenforceable. Even if
the validity of our patent rights is upheld by a court, a court
may not prevent the alleged infringement of our patent rights on
the grounds that such activity is not covered by our patent
claims.

In addition, third parties may sue us for infringing their
patents. In the event of a successful claim of infringement
against us, we may be required to:

defend litigation or administrative proceedings;

pay substantial damages;

stop using our technologies and methods;

stop certain research and development efforts;

develop non-infringing products or methods; and

obtain one or more licenses from third parties.

If required, we can provide no assurance that we will be able to
obtain such licenses on acceptable terms, or at all. If we are
sued for infringement, we could encounter substantial delays in
development, manufacture and commercialization of our product
candidates. Any litigation, whether to enforce our patent rights
or to defend against allegations that we infringe third-party
rights, will be costly, time consuming, and may distract
management from other important tasks.

As is commonplace in the biotechnology and pharmaceutical
industry, we employ individuals who were previously employed at
other biotechnology or pharmaceutical companies, including our
competitors or potential competitors. To the extent our employees
are involved in research areas which are similar to those areas
in which they were involved at their former employers, we may be
subject to claims that such employees and/or we have
inadvertently or otherwise used or disclosed the alleged trade
secrets or other proprietary information of the former employers.
Litigation may be necessary to defend against such claims, which
could result in substantial costs and be a distraction to
management and which may have a material adverse effect on us,
even if we are successful in defending such claims.

We are subject to various government
regulations.

The manufacture and sale of human therapeutic and diagnostic
products in the U.S., Canada and foreign jurisdictions are
governed by a variety of statutes and regulations. These laws
require approval of manufacturing facilities, controlled research
and testing of products and government review and approval of a
submission containing manufacturing, preclinical and clinical
data in order to obtain marketing approval based on establishing
the safety and efficacy of the product for each use sought,
including adherence to current cGMP during production and
storage, and control of marketing activities, including
advertising and labeling.

VAL-083 and any other products may develop will require
significant development, preclinical and clinical testing and
investment of substantial funds prior to its commercialization.
The process of obtaining required approvals can be costly and
time-consuming, and there can be no assurance that we will
successfully develop any future products that will prove to be
safe and effective in clinical trials or receive applicable
regulatory approvals. Markets other than the U.S. and Canada have
similar restrictions. Potential investors and shareholders should
be aware of the risks, problems, delays, expenses and
difficulties which we may encounter in view of the extensive
regulatory environment which controls our business.

We may request priority review for our product
candidate in the future. The FDA may not grant priority review
for our product candidate. Moreover, even if the FDA designated
such product for priority review, that designation may not lead
to a faster regulatory review or approval process and, in any
event, would not assure FDA approval.

We may be eligible for priority review designation for our
product candidate if the FDA determines such product candidate
offers major advances in treatment or provides a treatment where
no adequate therapy exists. A priority review designation means
that the goal for the FDA to review an application is six months,
rather than the standard review period of ten months. The FDA has
broad discretion with respect to whether or not to grant priority
review status to a product candidate, so even if we believe a
particular product candidate is eligible for such designation or
status, the FDA may decide not to grant it. Thus, while the FDA
has granted priority review to other oncology disease products,
our product candidate, should we determine to seek priority
review, may not receive similar designation. Moreover, even if
our product candidate is designated for priority review, such a
designation does not necessarily mean a faster regulatory review
process or necessarily confer any advantage with respect to
approval compared to conventional FDA procedures. Receiving
priority review from the FDA does not guarantee approval within
an accelerated timeline or thereafter.

We believe we may in some instances be able to secure
approval from the FDA or comparable non-U.S. regulatory
authorities to use accelerated development pathways. If we are
unable to obtain such approval, we may be required to conduct
additional preclinical studies or clinical trials beyond those
that we contemplate, which could increase the expense of
obtaining, and delay the receipt of, necessary marketing
approvals.

We anticipate that we may seek an accelerated approval pathway
for our product candidate. Under the accelerated approval
provisions in the Federal Food, Drug, and Cosmetic Act, or FDCA,
and the FDAs implementing regulations, 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. The FDA considers a clinical benefit to be a positive
therapeutic effect that is clinically meaningful in the context
of a given disease, such as irreversible morbidity or mortality.
For the purposes of accelerated approval, a surrogate endpoint is
a marker, such as a laboratory measurement, radiographic image,
physical sign, or other measure that is thought to predict
clinical benefit, but is not itself a measure of clinical
benefit. An intermediate clinical endpoint is a clinical endpoint
that can be measured earlier than an effect on irreversible
morbidity or mortality that is reasonably likely to predict an
effect on irreversible morbidity or mortality or other clinical
benefit. The 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. If
granted, accelerated approval is usually contingent on the
sponsors agreement to conduct, in a diligent manner, additional
post-approval confirmatory studies to verify and describe the
drugs clinical benefit. If such post-approval studies fail to
confirm the drugs clinical benefit, the FDA may withdraw its
approval of the drug.

Prior to seeking such accelerated approval, we will seek feedback
from the FDA and will otherwise evaluate our ability to seek and
receive such accelerated approval. There can also be no assurance
that after our evaluation of the feedback and other factors we
will decide to pursue or submit a New Drug Application (NDA), for
accelerated approval or any other form of expedited development,
review or approval. Similarly, there can be no assurance that
after subsequent FDA feedback that we will continue to pursue or
apply for accelerated approval or any other form of expedited
development, review or approval, even if we initially decide to
do so. Furthermore, if we decide to submit an application for
accelerated approval or under another expedited regulatory
designation (e.g., breakthrough therapy designation), there can
be no assurance that such submission or application will be
accepted or that any expedited development, review or approval
will be granted on a timely basis, or at all. The FDA or other
non-U.S. authorities could also require us to conduct further
studies prior to considering our application or granting approval
of any type. A failure to obtain accelerated approval or any
other form of expedited development, review or approval for any
of our product candidates that we determine to seek accelerated
approval for would result in a longer time period to
commercialization of such product candidate, could increase the
cost of development of such product candidate and could harm our
competitive position in the marketplace.

We have conducted, and may in the future conduct,
clinical trials for certain of our product candidate at sites
outside the United States, and the FDA may not accept data from
trials conducted in such locations.

We have conducted and may in the future choose to conduct one or
more of our clinical trials outside the United States. Although
the FDA may accept data from clinical trials conducted outside
the United States, acceptance of this data is subject to certain
conditions imposed by the FDA. For example, the clinical trial
must be well designed and conducted and performed by qualified
investigators in accordance with ethical principles. The trial
population must also adequately represent the U.S. population,
and the data must be applicable to the U.S. population and U.S.
medical practice in ways that the FDA deems clinically
meaningful. Generally, the patient population for any clinical
trials conducted outside of the United States must be
representative of the population for whom we intend to seek
approval in the United States. In addition, while these clinical
trials are subject to the applicable local laws, FDA acceptance
of the data will be dependent upon its determination that the
trials also complied with all applicable U.S. laws and
regulations. There can be no assurance that the FDA will accept
data from trials conducted outside of the United States. If the
FDA does not accept the data from any of our clinical trials that
we determine to conduct outside the United States, it would
likely result in the need for additional trials, which would be
costly and time-consuming and delay or permanently halt our
development of the product candidate.

In addition, the conduct of clinical trials outside the United
States could have a significant impact on us. Risks inherent in
conducting international clinical trials include:

foreign regulatory requirements that could restrict or limit
our ability to conduct our clinical trials;

administrative burdens of conducting clinical trials under
multiple foreign regulatory schema;

foreign exchange fluctuations; and

diminished protection of intellectual property in some
countries.

If clinical our trials fail to demonstrate safety and
efficacy to the satisfaction of the FDA and comparable non-U.S.
regulators, we may incur additional costs or experience delays in
completing, or ultimately be unable to complete, the development
and commercialization of our product candidate.

We are not permitted to commercialize, market, promote or sell
any product candidate in the United States without obtaining
marketing approval from the FDA. Comparable non-U.S. regulatory
authorities, such as the EMA, impose similar restrictions. We may
never receive such approvals. We must complete extensive
preclinical development and clinical trials to demonstrate the
safety and efficacy of our product candidate in humans before we
will be able to obtain these approvals.

Clinical testing is expensive, difficult to design and implement,
can take many years to complete and is inherently uncertain as to
outcome. We have not previously submitted an NDA to the FDA or
similar drug approval filings to comparable non-U.S. regulatory
authorities for any product candidate.

Any inability to successfully complete preclinical and clinical
development could result in additional costs to us and impair our
ability to generate revenues from product sales, regulatory and
commercialization milestones and royalties. In addition, if (1)
we are required to conduct additional clinical trials or other
testing of our product candidate beyond the trials and testing
that we contemplate, (2) we are unable to successfully complete
clinical trials of our product candidate or other testing, (3)
the results of these trials or tests are unfavorable, uncertain
or are only modestly favorable, or (4) there are unacceptable
safety concerns associated with our product candidate, we, in
addition to incurring additional costs, may:

be delayed in obtaining marketing approval for our product
candidates;

not obtain marketing approval at all;

obtain approval for indications or patient populations that
are not as broad as we intended or desired;

obtain approval with labeling that includes significant use
or distribution restrictions or significant safety warnings,
including boxed warnings;

be subject to additional post-marketing testing or other
requirements; or

be required to remove the product from the market after
obtaining marketing approval.

If we experience any of a number of possible
unforeseen events in connection with clinical trials of our
product candidate, potential marketing approval or
commercialization of our product candidate could be delayed or
prevented.

We may experience numerous unforeseen events during, or as a
result of, clinical trials that could delay or prevent marketing
approval of our product candidate, including:

clinical trials of our product candidate may produce
unfavorable or inconclusive results;

we may decide, or regulators may require us, to conduct
additional clinical trials or abandon product development
programs;

the number of patients required for clinical trials of our
product candidate may be larger than we anticipate, patient
enrollment in these clinical trials may be slower than we
anticipate or participants may drop out of these clinical
trials at a higher rate than we anticipate;

data safety monitoring committees may recommend suspension,
termination or a clinical hold for various reasons, including
concerns about patient safety;

regulators or IRBs may suspend or terminate the trial or
impose a clinical hold for various reasons, including
noncompliance with regulatory requirements or concerns about
patient safety;

patients with serious, life-threatening diseases included in
our clinical trials may die or suffer other adverse medical
events for reasons that may not be related to our product
candidate;

participating patients may be subject to unacceptable health
risks;

patients may not complete clinical trials due to safety
issues, side effects, or other reasons;

changes in regulatory requirements and guidance may occur,
which require us to amend clinical trial protocols to reflect
these changes;

our third-party contractors, including those manufacturing
our product candidate or components or ingredients thereof or
conducting clinical trials on our behalf, may fail to comply
with regulatory requirements or meet their contractual
obligations to us in a timely manner or at all;

regulators or institutional review boards, or IRBs may not
authorize us or our investigators to commence a clinical
trial or conduct a clinical trial at a prospective trial
site;

we may experience delays in reaching or fail to reach
agreement on acceptable clinical trial contracts or clinical
trial protocols with prospective trial sites;

patients who enroll in a clinical trial may misrepresent
their eligibility to do so or may otherwise not comply with
the clinical trial protocol, resulting in the need to drop
the patients from the clinical trial, increase the needed
enrollment size for the clinical trial or extend the clinical
trials duration;

we may have to suspend or terminate clinical trials of our
product candidate for various reasons, including a finding
that the participants are being exposed to unacceptable
health risks, undesirable side effects or other unexpected
characteristics of a product candidate;

regulators or IRBs may require that we or our investigators
suspend or terminate clinical research for various reasons,
including noncompliance with regulatory requirements or their
respective standards of conduct, a finding that the
participants are being exposed to unacceptable health risks,
undesirable side effects or other unexpected characteristics
of the product candidate or findings of undesirable effects
caused by a chemically or mechanistically similar drug or
drug candidate;

the FDA or comparable non-U.S. regulatory authorities may
disagree with our clinical trial design or our interpretation
of data from preclinical studies and clinical trials;

the FDA or comparable non-U.S. regulatory authorities may
fail to approve or subsequently find fault with the
manufacturing processes or facilities of third-party
manufacturers with which we enter into agreements for
clinical and commercial supplies;

the supply or quality of raw materials or manufactured
product candidate or other materials necessary to conduct
clinical trials of our product candidate may be insufficient,
inadequate, delayed, or not available at an acceptable cost,
or we may experience interruptions in supply; and

the approval policies or regulations of the FDA or comparable
non-U.S. regulatory authorities may significantly change in a
manner rendering our clinical data insufficient to obtain
marketing approval.

Product development costs for us will increase if we experience
delays in testing or pursuing marketing approvals and we may be
required to obtain additional funds to complete clinical trials
and prepare for possible commercialization of our product
candidate. We do not know whether any preclinical tests or
clinical trials will begin as planned, will need to be
restructured or will be completed on schedule, or at all.
Significant preclinical or clinical trial delays also could
shorten any periods during which we may have the exclusive right
to commercialize our product candidate or allow our competitors
to bring products to market before we do and impair our ability
to successfully commercialize our product candidate and may harm
our business and results of operations. In addition, many of the
factors that cause, or lead to, clinical trial delays may
ultimately lead to the denial of marketing approval of our
product candidate.

If we experience delays or difficulties in the
enrollment of patients in clinical trials, we may not achieve our
clinical development on our anticipated timeline, or at all, and
our receipt of necessary regulatory approvals could be delayed or
prevented.

We may not be able to initiate or continue clinical trials for
VAL-083 or any other product candidate if we are unable to locate
and enroll a sufficient number of eligible patients to
participate in clinical trials. Patient enrollment is a
significant factor in the timing of clinical trials, and is
affected by many factors, including:

the size and nature of the patient population;

the severity of the disease under investigation;

the proximity of patients to clinical sites;

the eligibility criteria for the trial;

the design of the clinical trial;

efforts to facilitate timely enrollment;

competing clinical trials; and

clinicians and patients perceptions as to the potential
advantages and risks of the drug being studied in relation to
other available therapies, including any new drugs that may
be approved for the indications we are investigating.

Our inability to enroll a sufficient number of patients for our
clinical trials could result in significant delays or may require
us to abandon one or more clinical trials altogether. Enrollment
delays in our clinical trials may result in increased development
costs for our product candidate, delay or halt the development of
and approval processes for our product candidate and jeopardize
our ability to achieve our clinical development timeline and
goals, including the dates by which we will commence, complete
and receive results from clinical trials. Enrollment delays may
also delay or jeopardize our ability to commence sales and
generate revenues from our product candidate. Any of the
foregoing could cause the value of the Company to decline and
limit our ability to obtain additional financing, if needed.

Positive results in previous clinical trials of
VAL-083 may not be replicated in future clinical trials, which
could result in development delays or a failure to obtain
marketing approval.

Positive results in previous clinical studies of VAL-083 may not
be predictive of similar results in future clinical trials. Also,
interim results during a clinical trial do not necessarily
predict final results. A number of companies in the
pharmaceutical and biotechnology industries have suffered
significant setbacks in late-stage clinical trials even after
achieving promising results in early-stage development.
Accordingly, the results from the completed preclinical studies
and clinical trials for VAL-083 may not be predictive of the
results we may obtain in later stage trials. Our clinical trials
may produce negative or inconclusive results, and we may decide,
or regulators may require us, to conduct additional clinical
trials. Moreover, clinical data are often susceptible to varying
interpretations and analyses, and many companies that believed
their product candidates performed satisfactorily in preclinical
studies and clinical trials have nonetheless failed to obtain FDA
or EMA, or other regulatory agency, approval for their products.

FDA approval of VAL-083 or future product candidates
may be denied.

There can be no assurance that the FDA will ultimately approve
our NDA. The FDA may deny approval of VAL-083 for many reasons,
including:

we may be unable to demonstrate to the satisfaction of the
FDA that our products are safe and effective for its intended
uses;

the FDA may disagree with our interpretation of data from the
clinical trials;

we may be unable to demonstrate that any clinical or other
benefits our products outweigh any safety or other perceived
risks; or

we may not be able to successfully address any other issues
raised by the FDA.

If VAL-083 fails to receive FDA approval, our business and
prospects will be materially adversely impacted.

We expect to rely on orphan drug status to develop
and commercialize our product candidate, but our orphan drug
designations may not confer marketing exclusivity or other
expected commercial benefits as anticipated.

Market exclusivity afforded by orphan drug designation is
generally offered as an incentive to drug developers to invest in
developing and commercializing products for unique diseases that
impact a limited number of patients. The FDA may grant orphan
drug designation to drugs intended to treat a rare disease or
condition, which is generally a disease or condition that affects
fewer than 200,000 individuals in the United States.
Qualification to maintain orphan drug status is generally
monitored by the regulatory authorities during the orphan drug
exclusivity period, currently seven years from the date of
approval in the United States.

We have been granted orphan drug designation in the United States
for GBM, ovarian cancer, and medulloblastoma, and in Europe for
GBM. We expect to rely on orphan drug exclusivity for our product
candidate. It is possible that the incidence and prevalence
numbers for GBM could change. Should the incidence and prevalence
of GBM patients materially increase, it is possible that the
orphan drug designation, and related market exclusivity, in the
United States could be lost. Further, while we have been granted
this orphan designation, the FDA can still approve different
drugs for use in treating the same indication or disease, which
would create a more competitive market for us and our revenues
will be diminished.

Further, it is possible that another company also holding orphan
drug designation for the same product candidate will receive
marketing approval for the same indication before we do. If that
were to happen, our applications for that indication may not be
approved until the competing companys period of exclusivity
expires. Even if we are the first to obtain marketing
authorization for an orphan drug indication, there are
circumstances under which a competing product may be approved for
the same indication during the seven-year period of marketing
exclusivity, such as if the later product is shown to be
clinically superior to the orphan product, or if the later
product is deemed a different product than ours. Further, the
seven-year marketing exclusivity would not prevent competitors
from obtaining approval of the same product candidate as ours for
indications other than those in which we have been granted orphan
drug designation, or for the use of other types of products in
the same indications as our orphan product.

If the market opportunities for our product candidate
are smaller than we believe they are, our revenues may be
adversely affected and our business may suffer. Because the
target patient populations of our product candidate are small, we
must be able to successfully identify patients and capture a
significant market share to achieve and maintain
profitability.

We focus our research and product development on treatments for
orphan cancer indications. Our projections of both the number of
people who have failed other therapies or have limited medical
options, are based on estimates. These estimates may prove to be
incorrect and new studies may change the estimated incidence or
prevalence. The number of patients in the United States, Europe
and elsewhere may turn out to be lower than expected or may not
be otherwise amenable to treatment with our products, or new
patients may become increasingly difficult to identify or gain
access to, all of which would adversely affect our results of
operations and our business. Additionally, because our target
patient populations are small, we will be required to capture a
significant market share to achieve and maintain profitability.

We may be required to suspend or discontinue clinical
trials due to unexpected side effects or other safety risks that
could preclude approval of our products.

Our clinical trials may be suspended at any time for a number of
reasons. For example, we may voluntarily suspend or terminate our
clinical trials if at any time we believe that they present an
unacceptable risk to the clinical trial patients. In addition,
the FDA or other regulatory agencies may order the temporary or
permanent discontinuation of our clinical trials at any time if
they believe that the clinical trials are not being conducted in
accordance with applicable regulatory requirements or that they
present an unacceptable safety risk to the clinical trial
patients.

Administering any product candidate to humans may produce
undesirable side effects. These side effects could interrupt,
delay or halt clinical trials of our product candidates and could
result in the FDA or other regulatory authorities denying further
development or approval of our product candidates for any or all
targeted indications. Ultimately, some or all of our product
candidates may prove to be unsafe for human use. Moreover, we
could be subject to significant liability if any volunteer or
patient suffers, or appears to suffer, adverse health effects or
even death as a result of participating in our clinical trials.

We may not receive regulatory approvals for our
product candidate or there may be a delay in obtaining such
approvals.

Our product and our ongoing development activities are subject to
regulation by regulatory authorities in the countries in which we
or our collaborators and distributors wish to test, manufacture
or market our products. For instance, the FDA will regulate the
product in the U.S. and equivalent authorities, such as the EMA,
will regulate in Europe. Regulatory approval by these authorities
will be subject to the evaluation of data relating to the
quality, efficacy and safety of the product for its proposed use,
and there can be no assurance that the regulatory authorities
will find our data sufficient to support product approval of
VAL-083 or any future product candidates.

The time required to obtain regulatory approval varies between
countries. In the U.S., for products without Fast Track status,
it can take up to eighteen (18) months after submission of an
application for product approval to receive the FDA’s decision.
Even with Fast Track status, FDA review and decision can take up
to twelve (12) months. At present, we do not have Fast Track
status for VAL-083.

Different regulators may impose their own requirements and may
refuse to grant, or may require additional data before granting,
an approval, notwithstanding that regulatory approval may have
been granted by other regulators. Regulatory approval may be
delayed, limited or denied for a number of reasons, including
insufficient clinical data, the product not meeting safety or
efficacy requirements or any relevant manufacturing processes or
facilities not meeting applicable requirements as well as case
load at the regulatory agency at the time.

We may fail to comply with regulatory
requirements.

Our success will be dependent upon our ability, and our
collaborative partners abilities, to maintain compliance with
regulatory requirements, including cGMP, and safety reporting
obligations. The failure to comply with applicable regulatory
requirements can result in, among other things, fines,
injunctions, civil penalties, total or partial suspension of
regulatory approvals, refusal to approve pending applications,
recalls or seizures of products, operating and production
restrictions and criminal prosecutions.

Even if our product candidate receives marketing
approval, it may fail to achieve the degree of market acceptance
by physicians, patients, third-party payors and others in the
medical community necessary for commercial success and the market
opportunity for the product candidate may be smaller than we
estimate.

We have never commercialized a product. Even if VAL-083 or any
other product candidate is approved by the appropriate regulatory
authorities for marketing and sale, it may nonetheless fail to
gain sufficient market acceptance by physicians, patients,
third-party payors and others in the medical community. For
example, physicians are often reluctant to switch their patients
from existing therapies even when new and potentially more
effective or convenient treatments enter the market. Further,
patients often acclimate to the therapy that they are currently
taking and do not want to switch unless their physicians
recommend switching products or they are required to switch
therapies due to lack of reimbursement for existing therapies.

Efforts to educate the medical community and third-party payors
on the benefits of our product candidate may require significant
resources and may not be successful. If our product candidate is
approved but does not achieve an adequate level of market
acceptance, we may not generate significant revenues and we may
not become profitable. The degree of market acceptance of VAL-083
or any other product candidate, if approved for commercial sale,
will depend on a number of factors, including:

the efficacy and safety of the product;

the potential advantages of the product compared to
alternative treatments;

the prevalence and severity of any side effects;

the clinical indications for which the product is approved;

whether the product is designated under physician treatment
guidelines as a first-line therapy or as a second- or
third-line therapy;

limitations or warnings, including distribution or use
restrictions, contained in the products approved labeling;

our ability to offer the product for sale at competitive
prices;

our ability to establish and maintain pricing sufficient to
realize a meaningful return on our investment;

the products convenience and ease of administration compared
to alternative treatments;

the willingness of the target patient population to try, and
of physicians to prescribe, the product;

the strength of sales, marketing and distribution support;

the approval of other new products for the same indications;

changes in the standard of care for the targeted indications
for the product;

the timing of market introduction of our approved products as
well as competitive products and other therapies;

availability and amount of reimbursement from government
payors, managed care plans and other third-party payors;

adverse publicity about the product or favorable publicity
about competitive products; and

potential product liability claims.

The potential market opportunities for our product candidate are
difficult to estimate precisely. Our estimates of the potential
market opportunities are predicated on many assumptions,
including industry knowledge and publications, third-party
research reports and other surveys. While we believe that our
internal assumptions are reasonable, these assumptions involve
the exercise of significant judgment on the part of our
management, are inherently uncertain and the reasonableness of
these assumptions has not been assessed by an independent source.
If any of the assumptions proves to be inaccurate, the actual
markets for our product candidate could be smaller than our
estimates of the potential market opportunities.

If our product candidate receives marketing approval
and we, or others, later discover that the drug is less effective
than previously believed or causes undesirable side effects that
were not previously identified, our ability to market the drug
could be compromised.

Clinical trials of our product candidate are conducted in
carefully defined subsets of patients who have agreed to enter
into clinical trials. Consequently, it is possible that our
clinical trials may indicate an apparent positive effect of a
product candidate that is greater than the actual positive
effect, if any, or alternatively fail to identify undesirable
side effects. If, following approval of our product candidate,
we, or others, discover that the drug is less effective than
previously believed or causes undesirable side effects that were
not previously identified, any of the following adverse events
could occur:

regulatory authorities may withdraw their approval of the
drug or seize the drug;

we may be required to recall the drug or change the way the
drug is administered;

additional restrictions may be imposed on the marketing of,
or the manufacturing processes for, the particular drug;

we may be subject to fines, injunctions or the imposition of
civil or criminal penalties;

regulatory authorities may require the addition of labeling
statements, such as a black box warning or a
contraindication;

we may be required to create a Medication Guide outlining the
risks of the previously unidentified side effects for
distribution to patients;

we could be sued and held liable for harm caused to patients;

the drug may become less competitive; and

our reputation may suffer.

Any of these events could have a material and adverse effect on
our operations and business and could adversely impact our stock
price.

Any product candidate for which we obtain marketing
approval, along with the manufacturing processes, qualification
testing, post-approval clinical data, labeling and promotional
activities for such product, will be subject to continual and
additional requirements of the FDA and other regulatory
authorities.

These requirements include submissions of safety and other
post-marketing information, reports, registration and listing
requirements, good manufacturing practices, or GMP requirements
relating to quality control, quality assurance and corresponding
maintenance of records and documents, and recordkeeping. Even if
marketing approval of our product candidate is granted, the
approval may be subject to limitations on the indicated uses for
which the product may be marketed or to conditions of approval,
or contain requirements for costly post-marketing testing and
surveillance to monitor the safety or efficacy of the product.
The FDA closely regulates the post-approval marketing and
promotion of pharmaceutical products to ensure such products are
marketed only for the approved indications and in accordance with
the provisions of the approved labeling.

In addition, later discovery of previously unknown problems with
our products, manufacturing processes, or failure to comply with
regulatory requirements, may lead to various adverse results,
including:

restrictions on such products, manufacturers or manufacturing
processes;

restrictions on the labeling or marketing of a product;

restrictions on product distribution or use;

requirements to conduct post-marketing clinical trials;

requirements to institute a risk evaluation mitigation
strategy, or REMS, to monitor safety of the product
post-approval;

warning letters issued by the FDA or other regulatory
authorities;

withdrawal of the products from the market;

refusal to approve pending applications or supplements to
approved applications that we submit;

recall of products, fines, restitution or disgorgement of
profits or revenue;

suspension, revocation or withdrawal of marketing approvals;

refusal to permit the import or export of our products; and

injunctions or the imposition of civil or criminal penalties.

If we are unable to establish sales, marketing and
distribution capabilities or enter into acceptable sales,
marketing and distribution arrangements with third parties, we
may not be successful in commercializing any product candidates
that we develop, if and when those product candidates are
approved.

We do not have a sales, marketing or distribution infrastructure
and have limited experience in the sale, marketing or
distribution of pharmaceutical products. To achieve commercial
success for any approved product, we must either develop a sales
and marketing organization, outsource these functions to third
parties, or license our product candidates to others. If
approved, we may seek to license VAL-083 to a large
pharmaceutical company with greater resources and experience than
us. We may not be able license the VAL-083 on reasonable terms,
if at all. The development of sales, marketing and distribution
capabilities will require substantial resources, will be
time-consuming and could delay any product launch. We expect that
we will commence the development of these capabilities prior to
receiving approval of our product candidate. If the commercial
launch of a product candidate for which we recruit a sales force
and establish marketing and distribution capabilities is delayed
or does not occur for any reason, we could have prematurely or
unnecessarily incurred these commercialization costs. Such a
delay may be costly, and our investment could be lost if we
cannot retain or reposition our sales and marketing personnel. In
addition, we may not be able to hire or retain a sales force in
the United States that is sufficient in size or has adequate
expertise in the medical markets that we plan to target. If we
are unable to establish or retain a sales force and marketing and
distribution capabilities, our operating results may be adversely
affected. If a potential partner has development or
commercialization expertise that we believe is particularly
relevant to our product candidate, then we may seek to
collaborate with that potential partner even if we believe we
could otherwise develop and commercialize the product
independently.

We expect to seek one or more strategic partners for
commercialization of our product candidate outside the United
States. As a result of entering into arrangements with third
parties to perform sales, marketing and distribution services,
our product revenues or the profitability of these product
revenues may be lower, perhaps substantially lower, than if we
were to directly market and sell products in those markets.
Furthermore, we may be unsuccessful in entering into the
necessary arrangements with third parties or may be unable to do
so on terms that are favorable to us. In addition, we may have
little or no control over such third parties, and any of them may
fail to devote the necessary resources and attention to sell and
market our products effectively.

If we do not establish sales and marketing capabilities, either
on our own or in collaboration with third parties, we will not be
successful in commercializing our product candidate.

We face substantial competition from other
pharmaceutical and biotechnology companies and our operating
results may suffer if we fail to compete
effectively.

The development and commercialization of new drug products is
highly competitive. We expect that we will face significant
competition from major pharmaceutical companies, specialty
pharmaceutical companies and biotechnology companies worldwide
with respect to VAL-083 and any other product candidates that we
may seek to develop or commercialize in the future. Specifically,
due to the large unmet medical need, global demographics and
relatively attractive reimbursement dynamics, the oncology market
is fiercely competitive and there are a number of large
pharmaceutical and biotechnology companies that currently market
and sell products or are pursuing the development of product
candidates for the treatment of cancer. Our competitors may
succeed in developing, acquiring or licensing technologies and
drug products that are more effective, have fewer or more
tolerable side effects or are less costly than any product
candidates that we are currently developing or that we may
develop, which could render our product candidates obsolete and
noncompetitive.

All of the top ten global pharmaceutical companies and most of
the mid-size pharmaceutical companies have a strong research and
development and commercial presence in oncology. Smaller
companies also focus on oncology, including companies such as
ARIAD Pharmaceuticals, Inc., Agios Pharmaceuticals, Inc., BIND
Therapeutics, Inc., Clovis Oncology, Inc., Endocyte, Inc.,
Epizyme, Inc., ImmunoGen, Inc., Incyte Corporation, Infinity
Pharmaceuticals, Inc., MacroGenics, Inc., Merrimack
Pharmaceuticals, Inc., OncoMed Pharmaceuticals, Inc., Onconova
Therapeutics, Inc., Pharmacyclics, Inc., Puma Biotechnology,
Inc., Seattle Genetics, Inc. and TESARO, Inc.

Several companies are marketing and developing oncology
immunotherapy products. Companies with approved marketed oncology
products for GBM are Merck (Temodar) and Genentech (Avastin).
Companies with oncology immunotherapy product candidates in
clinical development include Northwest Biotherapeutics (DCVax-L),
Celldex Therapeutics (Rindopepimut (CDX-110)) and ImmunoCellular
Therapeutics (ICT-107).

Our commercial opportunity could be reduced or eliminated if our
competitors develop and commercialize products that are safer,
more effective, have fewer or less severe side effects, are more
convenient or are less expensive than any products that we may
develop. Our competitors also may obtain FDA or other marketing
approval for their products before we are able to obtain approval
for ours, which could result in our competitors establishing a
strong market position before we are able to enter the market.

Many of our existing and potential future competitors have
significantly greater financial resources and expertise in
research and development, manufacturing, preclinical testing,
conducting clinical trials, obtaining marketing approvals and
marketing approved products than we do. Mergers and acquisitions
in the pharmaceutical and biotechnology industries may result in
even more resources being concentrated among a smaller number of
our competitors. Smaller or early stage companies may also prove
to be significant competitors, particularly through collaborative
arrangements with large and established companies. These
competitors also compete with us in recruiting and retaining
qualified scientific and management personnel and establishing
clinical trial sites and patient registration for clinical
trials, as well as in acquiring technologies complementary to, or
necessary for, our programs.

If we are unable to or delayed in obtaining state
regulatory licenses for the distribution of our product, we would
not be able to sell our product candidate.

The majority of states require manufacturer and/or wholesaler
licenses for the sale and distribution of drugs into that state.
The application process is complicated, time consuming and
requires dedicated personnel or a third-party to oversee and
manage. If we are delayed in obtaining these state licenses, or
denied the licenses, even with FDA approval, we would not be able
to sell or ship product into that state which would adversely
affect our sales and revenues.

We rely on key personnel and, if we are unable to
retain or motivate key personnel or hire qualified personnel, we
may not be able to grow effectively.

We are dependent on certain members of our management, scientific
and drug development staff and consultants, the loss of services
of one or more of whom could materially adversely affect us.

We currently have four full-time employees, and retain the
services of approximately 15 persons on an independent
contractor/consultant and contract-employment basis. Our ability
to manage growth effectively will require us to continue to
implement and improve our management systems and to recruit and
train new employees. Although we have done so in the past and
expect to do so in the future, there can be no assurance that we
will be able to successfully attract and retain skilled and
experienced personnel.

Our success depends in large part upon our ability to attract and
retain highly qualified personnel. We compete in our hiring
efforts with other pharmaceutical and biotechnology companies, as
well as universities and nonprofit research organizations, and we
may have to pay higher salaries to attract and retain personnel,
which would be very costly.

We may be subject to foreign exchange
fluctuation.

Our functional and reporting currency is the United States
dollar. We maintain bank accounts in United States and Canadian
dollars. A portion of our expenditures are in foreign currencies,
most notably in Canadian dollars, and therefore we are subject to
foreign currency fluctuations, which may, from time to time,
impact our financial position and results. We may enter into
hedging arrangements under specific circumstances, typically
through the use of forward or futures currency contracts, to
minimize the impact of increases in the value of the Canadian
dollar. In order to minimize our exposure to foreign exchange
fluctuations we may hold sufficient Canadian dollars to cover our
expected Canadian dollar expenditures.

Product liability lawsuits against us could divert
our resources, cause us to incur substantial liabilities and
limit commercialization of any products that we may
develop.

We face an inherent risk of product liability claims as a result
of the clinical testing of our product candidate despite
obtaining appropriate informed consents from our clinical trial
participants. We will face an even greater risk if we
commercially sell any product that we may develop. For example,
we may be sued if any product we develop allegedly causes injury
or is found to be otherwise unsuitable during clinical testing,
manufacturing, marketing or sale. Any such product liability
claims may include allegations of defects in manufacturing,
defects in design, a failure to warn of dangers inherent in the
product, negligence, strict liability or a breach of warranties.
Claims could also be asserted under state consumer protection
acts. If we cannot successfully defend ourselves against product
liability claims, we may incur substantial liabilities or be
required to limit commercialization of our product candidate.
Regardless of the merits or eventual outcome, liability claims
may result in:

decreased demand for our product candidate or products that
we may develop;

injury to our reputation and significant negative media
attention;

withdrawal of clinical trial participants;

significant costs to defend resulting litigation;

substantial monetary awards to trial participants or
patients;

loss of revenue;

reduced resources of our management to pursue our business
strategy; and

the inability to commercialize any products that we may
develop.

Although we maintain general liability insurance, this insurance
may not fully cover potential liabilities that we may incur. The
cost of any product liability litigation or other proceeding,
even if resolved in our favor, could be substantial. We will need
to increase our insurance coverage if and when we begin selling
any product candidate that receives marketing approval. In
addition, insurance coverage is becoming increasingly expensive.
If we are unable to obtain or maintain sufficient insurance
coverage at an acceptable cost or to otherwise protect against
potential product liability claims, it could prevent or inhibit
the development and commercial production and sale of our product
candidate, which could adversely affect our business, financial
condition, results of operations and prospects.

Risks Related to Our Dependence on Third Parties

We rely on third parties to conduct clinical trials
for our product candidate. Any failure by a third-party to meet
its obligations with respect to the clinical development of our
product candidate may delay or impair our ability to obtain
regulatory approval for our product candidate.

We rely on academic institutions and private oncology centers to
conduct our clinical trial. Our reliance on third parties to
conduct clinical trials could, depending on the actions of such
third parties, jeopardize the validity of the clinical data
generated and adversely affect our ability to obtain marketing
approval from the FDA or other applicable regulatory authorities.

Such clinical trial arrangements provide us with information
rights with respect to the clinical data, including access to and
the ability to use and reference the data, including for our own
regulatory filings, resulting from the clinical trials. If
investigators or institutions breach their obligations with
respect to the clinical trials of our product candidate, or if
the data proves to be inadequate, then our ability to design and
conduct any future clinical trials may be adversely affected.

We rely, and expect to continue to rely, on third
parties to conduct our clinical trials, and those third parties
may not perform satisfactorily, including failing to meet
deadlines for the completion of such trials.

We currently rely on third-party clinical research organizations,
or CROs, to conduct our clinical trials. We expect to continue to
rely on third parties, such as CROs, clinical data management
organizations, medical institutions and clinical investigators,
to conduct our clinical trials. Our agreements with these third
parties generally allow the third-party to terminate the
agreement at any time. If we are required to enter into
alternative arrangements because of any such termination the
introduction of our product candidates to market could be
delayed.

Our reliance on these third parties for research and development
activities will reduce our control over these activities but will
not relieve us of our responsibilities. For example, we design
our clinical trials and will remain responsible for ensuring that
each of our clinical trials is conducted in accordance with the
general investigational plan and protocols for the trial.
Moreover, the FDA requires us to comply with standards, commonly
referred to as good clinical practices, or GCPs, for conducting,
recording and reporting the results of clinical trials to assure
that data and reported results are credible and accurate and that
the rights, integrity and confidentiality of trial participants
are protected. Our reliance on third parties that we do not
control does not relieve us of these responsibilities and
requirements. We also are required to register ongoing clinical
trials and post the results of completed clinical trials on a
government-sponsored database, ClinicalTrials.gov, within
specified timeframes. Failure to do so can result in fines,
adverse publicity and civil and criminal sanctions.

Furthermore, these third parties may also have relationships with
other entities, some of which may be our competitors. If these
third parties do not successfully carry out their contractual
duties, meet expected deadlines or conduct our clinical trials in
accordance with regulatory requirements or our stated protocols,
we will not be able to obtain, or may be delayed in obtaining,
marketing approvals for our product candidates and will not be
able to, or may be delayed in our efforts to, successfully
commercialize our product candidates.

We also expect to rely on other third parties to store and
distribute drug supplies for our clinical trials. Any performance
failure on the part of our distributors could delay clinical
development or marketing approval of our product candidate or
commercialization of our products, producing additional losses
and depriving us of potential product revenue.

We may seek to enter into collaborations with third
parties for the development and commercialization of our product
candidate. If we fail to enter into such collaborations, or such
collaborations are not successful, we may not be able to
capitalize on the market potential of our product
candidate.

We may seek third-party collaborators for development and
commercialization of our product candidate. Our likely
collaborators for any marketing, distribution, development,
licensing or broader collaboration arrangements include large and
mid-size pharmaceutical companies, regional and national
pharmaceutical companies, non-profit organizations, government
agencies, and biotechnology companies. We are currently party to
a limited number of such arrangements and have limited control
over the amount and timing of resources that our collaborators
dedicate to the development or commercialization of our product
candidate. Our ability to generate revenues from these
arrangements will depend on our collaborators abilities to
successfully perform the functions assigned to them in these
arrangements.

Collaborations involving our product candidate currently pose,
and will continue to pose, the following risks to us:

collaborators have significant discretion in determining the
efforts and resources that they will apply to these
collaborations;

collaborators may not pursue development and
commercialization of our product candidate or may elect not
to continue or renew development or commercialization
programs based on preclinical or clinical trial results,
changes in the collaborators strategic focus or available
funding, or external factors such as an acquisition that
diverts resources or creates competing priorities;

collaborators may delay clinical trials, provide insufficient
funding for a clinical trial program, stop a clinical trial
or abandon a product candidate, repeat or conduct new
clinical trials or require a new formulation of a product
candidate for clinical testing;

collaborators could independently develop, or develop with
third parties, products that compete directly or indirectly
with our product candidate if the collaborators believe that
competitive products are more likely to be successfully
developed or can be commercialized under terms that are more
economically attractive than ours;

collaborators with marketing and distribution rights to one
or more products may not commit sufficient resources to the
marketing and distribution of such product or products;

collaborators may not properly maintain or defend our
intellectual property rights or may use our proprietary
information in such a way as to invite litigation that could
jeopardize or invalidate our intellectual property or
proprietary information or expose us to potential litigation;

collaborators may infringe the intellectual property rights
of third parties, which may expose us to litigation and
potential liability;

disputes may arise between the collaborators and us that
result in the delay or termination of the research,
development or commercialization of our product candidate or
that result in costly litigation or arbitration that diverts
management attention and resources; and

collaborations may be terminated and, if terminated, may
result in a need for additional capital to pursue further
development or commercialization of the applicable product
candidates.

Collaboration agreements may not lead to development or
commercialization of our product candidate in the most efficient
manner or at all. If a collaborator of ours were to be involved
in a business combination, the continued pursuit and emphasis on
our product development or commercialization program could be
delayed, diminished or terminated.

If we are not able to establish collaborations, we
may have to alter our development and commercialization
plans.

Our drug development programs and the potential commercialization
of our product candidate will require substantial additional cash
to fund expenses. We may decide to collaborate with
pharmaceutical and biotechnology companies for the development
and potential commercialization of our product candidate.

We face significant competition in seeking appropriate
collaborators. Whether we reach a definitive agreement for a
collaboration will depend, among other things, upon our
assessment of the collaborators resources and expertise, the
terms and conditions of the proposed collaboration and the
proposed collaborators evaluation of a number of factors. Those
factors may include the design or results of preclinical studies
or clinical trials, the likelihood of approval by the FDA or
similar regulatory authorities outside the United States, the
potential market for the subject product candidate, the costs and
complexities of manufacturing and delivering such product
candidate to patients, the potential of competing products, the
existence of uncertainty with respect to our ownership of
technology, which can exist if there is a challenge to such
ownership without regard to the merits of the challenge and
industry and market conditions generally. The collaborator may
also consider alternative product candidates or technologies for
similar indications that may be available to collaborate on and
whether such a collaboration could be more attractive than the
one with us for our product candidate. We may also be restricted
under future license agreements from entering into agreements on
certain terms with potential collaborators. Collaborations are
complex and time-consuming to negotiate and document. In
addition, there have been a significant number of recent business
combinations among large pharmaceutical companies that have
resulted in a reduced number of potential future collaborators.

We may not be able to negotiate collaborations on a timely basis,
on acceptable terms, or at all. If we are unable to do so, we may
have to curtail the development of our product candidate, reduce
or delay its development program, delay its potential
commercialization or reduce the scope of any sales or marketing
activities, or increase our expenditures and undertake
development or commercialization activities at our own expense.
If we elect to increase our expenditures to fund development or
commercialization activities on our own, we may need to obtain
additional capital, which may not be available to us on
acceptable terms or at all. If we do not have sufficient funds,
we may not be able to further develop our product candidate or
bring it to market and generate product revenue.

We currently manufacture our clinical supplies at a
single location. Any disruption at this facility could adversely
affect our business and results of operations.

We have engaged a single manufacturer to produce active
pharmaceutical ingredient and drug product for our STAR-3 Phase 3
clinical trial. In addition, we rely on our manufacturing
partner, Guangxi Wuzhou Pharmaceuticals (Group) Co. Ltd., for the
manufacture of clinical supply of VAL-083 for our preclinical and
Phase 2 clinical studies. If our manufacturers facility were
damaged or destroyed, or otherwise subject to disruption, it
would require substantial lead-time to replace our clinical
supply. In such event, we would be forced to rely entirely on
other third-party contract manufacturers for an indefinite period
of time. We have established a relationship with a back-up
manufacturer, which has produced quantities of the active
pharmaceutical ingredient contained in VAL-083. However, at this
time no drug product has been manufactured by a third-party
back-up manufacturer. Any disruptions or delays by our
third-party manufacturers or Guangxi Wuzhou Pharmaceuticals or
their failure to meet regulatory compliance could impair our
ability to develop VAL-083, which would adversely affect our
business and results of operations.

We rely on these third-party manufacturers to provide drug
product supply for our Phase 3 clinical trial. There is no
assurance that such a supplier will be able to meet our needs
from a technical, timing, or cost-effective manner. Our failure
to enter into appropriate agreements with such a third-party
manufacturer would delay the initiation of our pivotal Phase 3
clinical trial.

We may become subject to liabilities related to risks
inherent in working with hazardous materials.

Our discovery and development processes involve the controlled
use of hazardous and radioactive materials. We are subject to
federal, provincial and local laws and regulations governing the
use, manufacture, storage, handling and disposal of such
materials and certain waste products. Although we believe that
our safety procedures for handling and disposing of such
materials comply with the standards prescribed by such laws and
regulations, the risk of accidental contamination or injury from
these materials cannot be completely eliminated. In the event of
such an accident, we could be held liable for any damages that
result and any such liability could exceed our resources. We are
not specifically insured with respect to this liability. Although
we believe that we are in compliance in all material respects
with applicable environmental laws and regulations and currently
do not expect to make material capital expenditures for
environmental control facilities in the near-term, there can be
no assurance that we will not be required to incur significant
costs to comply with environmental laws and regulations in the
future, or that our operations, business or assets will not be
materially adversely affected by current or future environmental
laws or regulations.

Risks Related to Our Common Stock

The market price of our common stock is, and is
likely to continue to be, highly volatile and subject to wide
fluctuations.

The market price of our common stock is highly volatile and could
be subject to wide fluctuations in response to a number of
factors that are beyond our control, including:

variations in our quarterly operating results;

announcements that our revenue or income are below analysts
expectations;

general economic slowdowns;

sales of large blocks of our common stock; and

announcements by us or our competitors of significant
contracts, acquisitions, strategic partnerships, joint
ventures or capital commitments.

Because we became public by means of a reverse
acquisition, we may not be able to attract, or maintain, the
attention of brokerage firms.

Because we became public through a reverse acquisition,
securities analysts of brokerage firms may not provide or
continue to provide coverage of us since there is little
incentive to brokerage firms to recommend the purchase of our
common stock. No assurance can be given that brokerage firms will
want to conduct any follow-on offerings on behalf of the Company
in the future.

Voting power of our shareholders is highly
concentrated by insiders.

Our officers, directors, and 5% shareholders control, either
directly or indirectly, a substantial portion of our voting
securities. Therefore, our management may significantly affect
the outcome of all corporate actions and decisions for an
indefinite period of time including election of directors,
amendment of charter documents and approval of mergers and other
significant corporate transactions.

We do not intend to pay dividends on our common stock
for the foreseeable future.

We have paid no dividends on our common stock to date and we do
not anticipate paying any dividends to holders of our common
stock in the foreseeable future. While our future dividend policy
will be based on the operating results and capital needs of the
business, we currently anticipate that any earnings will be
retained to finance our future expansion and for the
implementation of our business plan. Investors should take note
of the fact that a lack of a dividend can further affect the
market value of our common stock, and could significantly affect
the value of any investment in the Company.

Our articles of incorporation allow for our board to
create new series of preferred stock without further approval by
our stockholders, which could adversely affect the rights of the
holders of our common stock.

Our Board of Directors has the authority to fix and determine the
relative rights and preferences of preferred stock. Our Board of
Directors has the authority to issue up to 5,000,000 shares of
our preferred stock (of which 1 share has been designated Special
Voting Preferred Stock and is issued and outstanding, 278,530
shares have been designated Series A Preferred Stock and are
issued and outstanding, and 1,000,000 shares have been designated
as Series B Preferred Stock, of which 881,113 shares are issued
and outstanding) without further stockholder approval. As a
result, our Board of Directors could authorize the issuance of
additional series of preferred stock that would grant to holders
the preferred right to our assets upon liquidation, the right to
receive dividend payments before dividends are distributed to the
holders of common stock and the right to the redemption of the
shares, together with a premium, prior to the redemption of our
common stock. In addition, our Board of Directors could authorize
the issuance of a series of preferred stock that has greater
voting power than our common stock or that is convertible into
our common stock, which could decrease the relative voting power
of our common stock or result in dilution to our existing
stockholders. Although we have no present intention to issue any
additional shares of preferred stock or to create any additional
series of preferred stock, we may issue such shares in the
future.

Our issuance of common stock upon exercise of
warrants or options, exchange of Exchangeable Shares, or
conversion of Series B Preferred Stock may depress the price of
our common stock.

As of September 19, 2017, the Company has 13,551,872 shares of
common stock issued and outstanding, 957,761 shares of common
stock issuable upon exchange of the Exchangeable Shares of
Exchangeco (which entitle the holder to require Exchangeco to
redeem (or, at the option of the Company or Callco, to have the
Company or Callco purchase) the Exchangeable Shares, and upon
such redemption or purchase to receive an equal number of shares
of common stock of the Company) (the Exchangeable Shares are
recognized on an as-exchanged for common stock basis for
financial statement purposes), outstanding warrants to purchase
6,628,906 shares of common stock, outstanding Series B
convertible preferred shares that are convertible into 2,202,792
shares of common stock, and outstanding options to purchase
1,300,850 shares of common stock. All Exchangeable Shares,
warrants, and options are convertible or exercisable into one
share of common stock. Each share of Series B preferred stock is
convertible into 2.5 shares of common stock. The issuance of
shares of common stock upon exercise of outstanding warrants or
options or exchange of Exchangeable Shares could result in
substantial dilution to our stockholders, which may have a
negative effect on the price of our common stock.

Forward-Looking Statements

Certain of the foregoing statements are forward-looking
statements that involve a number of risks and uncertainties,
including statements relating to expectations regarding the
completion of the Offering. Such forward-looking statements are
within the meaning of that term in Section27A of the Securities
Act of 1933 and Section21E of the Securities Exchange Act of
1934. Reference is made to the Companys filings under the
Securities Exchange Act for additional factors that could cause
actual results to differ materially, including the Risk Factors
described in the Form 10-K for the fiscal year ended June 30,
2016. The Company undertakes no obligation to publicly update or
revise any forward-looking statements, whether as a result of new
information, future events, or otherwise. Readers are cautioned
that any such forward-looking statements are not guarantees of
future performance and involve risks and uncertainties, and that
actual results may differ materially from those indicated in the
forward-looking statements as a result of various factors.
Readers are cautioned not to place undue reliance on these
forward-looking statements.

Item 7.01

Financial Statements and Exhibits.

(d) Exhibits

4.1	Form of Warrant
5.1	Opinion of Fennemore Craig, P.C
10.1	Form ofPurchase Agreement, dated as of September 20, 2017 among DelMar Pharmaceuticals, Inc. and the purchasers thereunder
10.2	Engagement Letter, dated September 17, 2017 between DelMar Pharmaceuticals, Inc. and H.C. Wainwright Co., LLC.
23.1	Consent of Fennemore Craig, P.C (included in Exhibit 5.1)
99.1	Press release of DelMar Pharmaceuticals, Inc. issued September 20, 2017

DelMar Pharmaceuticals, Inc. Exhibit
EX-4.1 2 f8k0917ex4-1_delmarpharma.htm FORM OF WARRANT Exhibit 4.1 PURSUANT TO THE TERMS OF SECTION 2(a) OF THIS WARRANT,…
To view the full exhibit click here

About DELMAR PHARMACEUTICALS, INC. (NASDAQ:DMPI)

DelMar Pharmaceuticals, Inc. is a clinical-stage drug development company. The Company focuses on the treatment of cancer. The Company is engaged in conducting clinical trials in the United States with its product candidate, VAL-083, as a treatment for glioblastoma multiforme (GBM), a form of brain cancer. VAL-083 is being evaluated in a Phase II clinical trial for the treatment of refractory GBM. In addition to its clinical development activities in the United States, the Company has obtained certain commercial rights to VAL-083 in China where it is approved as a chemotherapy for the treatment of chronic myelogenous leukemia (CML) and lung cancer. Its drug discovery research focuses on identifying validated clinical and commercial-stage compounds, and establishing a scientific rationale for development in orphan drug indications. VAL-083 is an alkylating agent, which crosses the blood-brain-barrier (BBB).

DELMAR PHARMACEUTICALS, INC. (NASDAQ:DMPI) Files An 8-K Entry into a Material Definitive Agreement

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