Mast Therapeutics, Inc. (NYSEMKT:MSTX) Files An 8-K Entry into a Material Definitive Agreement

Item 1.01 Entry into a Material Definitive Agreement.

On January 21, 2017, in connection with the grants of restricted
stock units (RSUs) described below, officers and directors of
Mast Therapeutics, Inc. (Mast or the Company), who previously
entered into the Lock-Up Agreement, dated January 6, 2017 (the
Lock-Up Agreement), entered into Amendment No. 1 to Lock-Up
Agreement, dated January 21, 2017 (the Lock-Up Amendment). The
description of the Lock-Up Amendment in Item 5.02 of this Current
Report on Form 8-K is incorporated in this Item 1.01 by
reference. The description does not purport to be complete and is
qualified in its entirety by reference to the form of Lock-up
Amendment, which is filed as Exhibit 10.1 to this Current Report,
and incorporated herein by reference. A copy of the Lock-Up
Agreement was previously filed as an exhibit to the Companys
Current Report on Form 8-K filed with the SEC on January 9, 2017
and incorporated by reference.

Item 5.02 Departure of Directors or Certain Officers; Election of
Directors; Appointment of Certain Officers; Compensatory
Arrangements of Certain Officers.

On January 17, 2017, following the recommendations of its
Compensation Committee, the Companys Board of Directors made the
following compensation-related decisions:

* Each RSU represents a right to receive one share of the
Companys common stock contingent upon satisfaction of the
applicable vesting conditions. The number of units is the
quotient of the amount of the cash award for the NEO divided by
the closing per share sales price of the Companys common stock on
January 17, 2016, which was $0.14 per share.

The grant of RSUs is contingent upon the Awardees execution of a
notice of grant and RSU agreement, which include the Awardees
agreement that all of his/her outstanding and unexercised stock
options will be cancelled immediately prior to, but contingent
upon, the consummation of the Merger and cease to be exercisable
as of such date without any accelerated vesting.

In accordance with the notice of grant and RSU agreement, the
RSUs would vest in full if the Awardee is providing services to
the Company on the date the Merger is consummated (provided such
date occurs on or before July 6, 2017) or immediately prior to
such date.To the extent that any NEO is a party to the Lock-Up
Agreement, any sale of shares of common stock of the Company
acquired upon settlement of the RSUs would be subject to the
terms of the Lock-Up Agreement; provided, however, that to the
Lock-Up Amendment, a sale of such shares of common stock would

be allowed prior to the expiration of the lock-up period solely
to the extent necessary to fund the payment of tax withholding
obligations due with respect to the settlement of the RSUs.

The Board approved the following grants to the NEOs:

On January 20, 2017, each of the NEOs executed and delivered
his/her notice of grant and RSU agreement to the Company and the
above-described RSUs were granted to the NEOs.

If all of the RSUs approved by the Board become vested, a total
of approximately 5.1 million shares of the Companys common stock
would be issuable upon settlement of the RSUs and a total of
approximately 16.4 million shares subject to currently
outstanding stock options would be expected to be cancelled and
terminated upon consummation of the Merger because it is unlikely
that an option holder would exercise an option with an exercise
price that is substantially greater than the market price of the
underlying security and all of the exercise prices of the
Companys outstanding options are significantly above the current
market price of the Companys common stock (with the lowest of
such exercises price being $0.41 per share) and, in accordance
with the terms of the RSUs, to the extent any outstanding options
held by the Companys employees and directors are not exercised
prior to consummation of the Merger, they will be canceled as of
that date. to the terms of the Merger Agreement, such options
would be excluded from the Companys outstanding share total as
used in calculating the Exchange Ratio (as defined in the Merger
Agreement), having a beneficial effect for the Companys
stockholders on the overall ownership of the Company upon the
consummation of the Merger.

Additional Information about the Merger and Where to Find It

In connection with the Merger, the Company intends to file
relevant materials with the Securities and Exchange Commission
(SEC), including a registration statement on Form S-4 that will
contain a prospectus, joint proxy and information statement.
Investors and security holders of the Company and Savara are
urged to read these materials when they become available because
they will contain important information about the Company, Savara
and the Merger. The joint proxy statement, information statement,
prospectus, and other relevant materials (when they become
available), and any other documents filed by the Company with the
SEC, may be obtained free of charge at the SEC web site at
www.sec.gov. In addition, investors and security holders may
obtain free copies of the documents filed with the SEC by the
Company by directing a written request to: Mast Therapeutics,
Inc., 3611 Valley Centre Drive, Suite 500, San Diego, CA 92130,
Attention: Investor Relations. Investors and security holders are
urged to read the joint proxy statement, prospectus and the other
relevant materials when they become available before making any
voting or investment decision with respect to the Merger.

This communication shall not constitute an offer to sell or the
solicitation of an offer to sell or the solicitation of an offer
to buy any securities, nor shall there be any sale of securities
in any jurisdiction in which such offer, solicitation or sale
would be unlawful prior to registration or qualification under
the securities laws of any such jurisdiction. No offering of
securities shall be made except by means of a prospectus meeting
the requirements of Section 10 of the Securities Act of 1933, as
amended.

Participants in the Solicitation

The Company and its directors and executive officers and Savara
and its directors and executive officers may be deemed to be
participants in the solicitation of proxies from the stockholders
of the Company in connection with the proposed transaction.
Information regarding the special interests of these directors
and executive officers in the merger will be included in the
joint proxy statement/prospectus referred to above. Additional
information regarding the directors and executive officers of the
Company is also included in the Companys Annual Report on Form
10-K for the year ended December 31, 2015 and the proxy statement
for the Companys 2016 Annual Meeting of Stockholders. These
documents are available free of charge at the SEC web site
(www.sec.gov) and from the Company, Attn: Investor Relations, at
the address described above.

Item 9.01 Financial Statements and Exhibits.

Reference is made to the Exhibit Index included with this Current
Report on Form 8-K.

About Mast Therapeutics, Inc. (NYSEMKT:MSTX)

Mast Therapeutics, Inc. is a biopharmaceutical company. The Company develops clinical-stage therapies for serious or life-threatening diseases with unmet needs. The Company focuses on developing new therapies for sickle cell disease, a chronic and genetic disorder classified as a rare, or orphan, disease in the United States of America and European Union, and for heart failure, a condition with an unmet need for treatment options. The Company’s segment is engaged in the business of developing therapies for serious or life-threatening diseases. The Company focuses on its Molecular Adhesion and Sealant Technology (MAST) platform, to develop MST-188 (vepoloxamer) Injection, its lead product candidate. The Company also develops AIR001, a sodium nitrite solution for intermittent inhalation through nebulizer. The Company’s AIR001 is in Phase II clinical development for the treatment of patients with HFpEF.

Mast Therapeutics, Inc. (NYSEMKT:MSTX) Recent Trading Information

Mast Therapeutics, Inc. (NYSEMKT:MSTX) closed its last trading session up +0.014 at 0.143 with 3,278,527 shares trading hands.