UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended ~~February~~August 2831, 2018

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

Commission File Number: 000-28385

Protalex, Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware

91-2003490

(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification Number)

131 Columbia Turnpike, Suite 1

Florham Park, NJ 07932

(Address of Principal Executive Offices and Zip Code)

215-862-9720

(Registrant’s Telephone Number, Including Area Code)

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that he registrant was required to submit and post such files). x Yes ¨ No

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

Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer ¨x ~~(Do not check if a smaller reporting company)~~ Smaller reporting company x Emerging growth company x

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨ Yes x No

Number of shares outstanding of the issuer’s Common Stock, par value $0.00001 per share, as of ~~April~~October 1312, 2018: 47,325,387 shares.

PROTALEX, INC.

Quarterly Report on Form 10-Q

For the Period Ended ~~February~~August 2831, 2018

TABLE OF CONTENTS

		Page No.
PART I.	FINANCIAL INFORMATION
ITEM 1.	Financial Statements:
	Condensed Balance Sheets at February 28, 2018 (Unaudited) and May 31, 2017	3
	Condensed Balance Sheets at August 31, 2018 (Unaudited) and May 31, 2018	3
	Condensed Statements of Operations for the three and nine months ended February 28, 2018 and February 28, 2017 (Unaudited)	4
	Condensed Statements of Operations for the three months ended August 31, 2018 and August 31, 2017 (Unaudited)	4
	Condensed Statement of Stockholders’ (Deficit) for the nine months ended February 28, 2018 (Unaudited)	5
	Condensed Statements of Cash Flows for the three months ended August 31, 2018 and August 31, 2017 (Unaudited)	5
	Condensed Statements of Cash Flows for the nine months ended February 28, 2018 and February 28, 2017 (Unaudited)	6
	Notes to Unaudited Condensed Financial Statements	6
	Notes to Unaudited Condensed Financial Statements	7
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	27
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	34
ITEM 4.	Controls and Procedures	27
ITEM 4.	Controls and Procedures	34
PART II.	OTHER INFORMATION
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34
ITEM 6.	Exhibits	27
ITEM 6.	Exhibits	34
	SIGNATURES	28
	SIGNATURES	35

FORWARD-LOOKING STATEMENTS

Certain statements made in this Quarterly Report on Form 10-Q are “forward-looking statements” regarding the plans and objectives of management for future operations and market trends and expectations. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. Our plans and objectives are based, in part, on assumptions involving the continued expansion of our business. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Although we believe that our assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance that the forward-looking statements included in this Report will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that our objectives and plans will be achieved. We undertake no obligation to revise or update publicly any forward-looking statements for any reason. The terms “we”, “our”, “us”, or any derivative thereof, as used herein refer to Protalex, Inc., a Delaware corporation, and its predecessors.

PART I - FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

PROTALEX, INC.

CONDENSED BALANCE SHEETS

	February 28,			May 31,
	August 31,			May 31,
	2018			~~2017~~2018
	(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents	$	1114,~~440,866~~876		$	~~487~~555,~~383~~411
Prepaid expenses		~~107~~40,~~847~~082			~~107~~74,~~209~~386
Total current assets		1154,~~548,713~~958			~~594~~629,~~592~~797
OTHER ASSETS:
Intellectual technology property, net of accumulated amortization of $17,913 and $17,148 as of February 28, 2018 and May 31, 2017, respectively		1,622			2,387
Intellectual technology property, net of accumulated amortization of $18,423 and $18,168 as of August 31, 2018 and May 31, 2018, respectively		1,112			1,367
Total other assets		1,~~622~~112			21,~~387~~367
Total Assets	$	1156,~~550,335~~070		$	~~596~~631,~~979~~164
LIABILITIES AND STOCKHOLDERS’ (DEFICIT)
CURRENT LIABILITIES:
Accounts payable	$	~~719~~468,~~066~~467		$	~~489~~428,~~029~~383
Accrued expenses		47146,~~859~~577			57200,~~786~~752
Total current liabilities		~~766~~615,~~925~~044			~~546~~629,~~815~~135
LONG TERM LIABILITIES:
Senior Convertible Debt - net of discount ($1,425,000 face value less Senior Convertible Debt Discount of $1,425,000 at February 28, 2018 and $0 Debt and $0 Discount at May 31, 2017)		0			0
Note Payable – related party		2,004,408			1,989,322
Senior Secured Note – related party		0			20,299,366
Senior Convertible Debt - net of discount ($1,475,000 face value less Senior Convertible Debt Discount of $1,324,382 at August 31, 2018 and $1,399,873 at May 31, 2018)		150,618			75,127
Senior Secured Note Accrued Interest – related party		1,974,349			1,490,416
Senior Secured Convertible Note – Accrued Interest		75,747			37,514
Total liabilities		2,~~741~~845,~~274~~817			222,~~336~~731,~~597~~098
STOCKHOLDERS' (DEFICIT)
Preferred stock, par value $0.00001, 1,000,000 shares authorized; none issued and outstanding		0			0
Common stock, par value $0.00001,
Common stock, par value $0.00001, 100,000,000 shares authorized; 47,325,387 and 47,325,387 shares issued and outstanding, respectively		473			473
100,000,000 shares authorized; 47,325,387 and 28,767,582 shares issued and outstanding, respectively		474			288
Additional paid in capital		102,308,325			102,122,025
Additional paid in capital		101,885,724			77,446,343
Accumulated deficit		(104,998,545	)		(104,222,432	)
Accumulated deficit		(103,077,137	)		(99,186,249	)
Total stockholders’ (deficit)		(2,689,747	)		(2,099,934	)
Total stockholders’ (deficit)		(1,190,939	)		(21,739,618	)
Total liabilities and stockholders’ (deficit)	$	156,070		$	631,164
Total liabilities and stockholders’ (deficit)	$	1,550,335		$	596,979

The accompanying notes are an integral part of these unaudited condensed financial statements.

PROTALEX, INC.

CONDENSED STATEMENTS OF OPERATIONS

	Three Months Ended February 28, 2018			Three Months Ended February 28, 2017			Nine Months Ended February 28, 2018			Nine Months Ended February 28, 2017
	Three Months Ended August 31, 2018			Three Months Ended August 31, 2017
	(Unaudited)			(Unaudited)			~~(Unaudited)~~			~~(Unaudited)~~
Revenues	$	0		$	0		$	0		$	0
Operating Expenses
Research and development		~~536~~248,~~815~~933			~~814~~681,~~002~~829			~~1,766,693~~			~~1,738,842~~
Administrative		~~867~~297,~~839~~730			~~127~~142,~~616~~390			~~1,163,517~~			~~580,031~~
Professional fees		~~151~~100,~~943~~386			~~178~~182,~~588~~943			~~475,981~~			~~724,626~~
Depreciation and amortization		255			255			~~765~~			~~765~~
Operating loss		(1647,~~556,852~~304	)		(1,~~120~~007,~~461~~417	)		~~(3,406,956~~	)		~~(3,044,264~~	)
Other income (expense)
Interest income		1			1			2			2
Interest expense		(~~164~~128,~~558~~810	)		(~~141~~157,~~400~~561	)		~~(483,934~~	)		~~(406,207~~	)
Loss before income taxes		(1776,~~721,409~~113	)		(1,~~261~~164,~~860~~977	)		~~(3,890,888~~	)		~~(3,450,469~~	)
Provision for income taxes		0			0			0			0
Net loss	$	(1776,~~721,409~~113	)	$	(1,~~261~~164,~~860~~977	)	$	~~(3,890,888~~	)	$	~~(3,450,469~~	)
Weighted average number of common shares outstanding		2847,~~976~~325,~~097~~387			28,767,582			~~28,835,809~~			~~28,767,582~~
Loss per common share – basic and diluted	$	(0.0602	)	$	(0.04	)	$	~~(0.13~~	)	$	~~(0.12~~	)

The accompanying notes are an integral part of these unaudited condensed financial statements.

PROTALEX, INC.

CONDENSED ~~STATEMENT~~STATEMENTS OF ~~STOCKHOLDERS’ (DEFICIT)~~CASH FLOWS

For Nine Months Ended February 28, 2018

	Three Months			Three Months
	Ended			Ended
	August 31,			August 31,
	2018			2017
	(Unaudited)			(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(776,113	)	$	(1,164,977	)
Adjustments to reconcile net loss to net cash and cash equivalents used in operating activities:
Amortization of debt discount		75,491			0
Depreciation and amortization		255			255
Equity based expense		186,300			0
(Increase)/decrease in:
Prepaid expenses and deposits		34,304			49,076
Increase/(decrease) in:
Accounts payable and accrued expenses		(14,091	)		77,960
Accrued interest payable		53,319			157,561
Net cash and cash equivalents used in operating activities		(440,535	)		(880,125	)

CASH FLOWS FROM INVESTING ACTIVITIES:		0			0

CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of note payable to individuals		0			870,000
Net cash and cash equivalents provided by financing activities		0			870,000

NET DECREASE IN CASH AND CASH EQUIVALENTS		(440,535	)		(10,125	)
Cash and cash equivalents, beginning of period		555,411			487,383
Cash and cash equivalents, ending of period	$	114,876		$	477,258

SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION:
Interest paid	$	0		$	0
Taxes paid	$	0		$	0

	Common Stock Shares		Amount		Additional Paid-in Capital		Accumulated Deficit			Total
Balance, May 31, 2017		28,767,582	$	288	$	77,446,343	$	(99,186,249	)	$	(21,739,618	)
Equity based expense		-		-		745,200		-			745,200
Beneficial conversion feature		-		-		1,425,000		-			1,425,000
Debt to Equity		18,557,805		186		22,269,181		-			22,269,367
Net loss		-		-		-		(3,890,888	)		(3,890,888	)
Balance, February 28, 2018 (unaudited)		47,325,387	$	474	$	101,885,724	$	(103,077,137	)	$	(1,190,939	)

The accompanying notes are an integral part of these unaudited condensed financial statements.

PROTALEX, INC.

CONDENSED STATEMENTS OF CASH FLOWS

	Nine Months			Nine Months
	Ended			Ended
	February 28,			February 28,
	2018			2017
	(Unaudited)			(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(3,890,888	)	$	(3,450,469	)
Adjustments to reconcile net loss to net cash and cash equivalents used in operating activities:
Depreciation and amortization		765			765
Equity based expense		745,200			180,333
(Increase)/decrease in:
Prepaid expenses and deposits		(638	)		(85,596	)
Increase/(decrease) in:
Accounts payable and accrued expenses		704,044			381,750
Net cash and cash equivalents used in operating activities		(2,441,517	)		(2,973,217	)
CASH FLOWS FROM INVESTING ACTIVITIES:		0			0
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of Senior Convertible Notes		1,425,000			-
Proceeds from Related Party Senior Secured Notes		1,970,000			3,110,000
Net cash and cash equivalents provided by financing activities		3,395,000			3,110,000
NET INCREASE IN CASH AND CASH EQUIVALENTS		953,483			136,783
Cash and cash equivalents, beginning of period		487,383			444,179
Cash and cash equivalents, ending of period	$	1,440,866		$	580,962
SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION:
Interest paid	$	0		$	0
Taxes paid	$	0		$	0
Conversion of Related Party Senior Secured Notes		22,269,367			-

The accompanying notes are an integral part of these unaudited condensed financial statements.

PROTALEX, INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

NOTE 1. ORGANIZATION AND BUSINESS ACTIVITIES

The Company is focused on the development of a class of biopharmaceutical drugs for treating autoimmune and inflammatory diseases including rheumatoid arthritis (RA) and Immune Thrombocytopenia (ITP). Its lead product, PRTX-100, is a highly-purified form of Staphylococcal protein A, a bacterial protein known to modify aspects of the human immune system.

The Company maintains an administrative office in Florham Park, New Jersey and currently outsources all of its product development and regulatory activities, including clinical trial activities, manufacturing and laboratory operations, to third-party contract research organizations and facilities.

In April 2009, the Company ceased all operations and terminated all employees in light of insufficient funds to continue its clinical trials and related product development. The Company’s business was dormant until new management took control of its operations in November 2009. Since then the Company has been actively pursuing the commercial development of PRTX-100 for the treatment of RA and ITP. In the United States, the Company has open Investigational New Drug (IND) applications for the treatment of RA and ITP and in Europe, an open Investigational Medicinal Products Dossier (IMPD) for ITP.

PRTX-100 has demonstrated effectiveness in animal models of autoimmune diseases as well as demonstrated activity on cultured human immune cells at very low concentrations, although the effectiveness of PRTX-100 shown in pre-clinical studies using animal models may not be predictive of the results of future human clinical trials. The safety, tolerability and pharmakinetics of PRTX-100 in humans have been characterized in six clinical studies and PRTX-100 has been granted Orphan Drug Designation (ODD) in the United States and Europe for the treatment of ITP. The Company does not anticipate generating operating revenue for the foreseeable future and does not currently have any products that are marketable.

NOTE 2. GOING CONCERN

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. The ability of the Company to continue as a going concern is dependent upon developing products that receive regulatory approval and market acceptance. There is no assurance that these benchmarks will be realized. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.

There is substantial doubt about the Company’s ability to to continue as a going concern. From inception through ~~February~~August 2831, 2018, the Company has incurred an accumulated deficit of $~~103~~104,~~077~~998,~~137~~545. For the years ended May 31, 2018 and 2017 and ~~2016~~three months ended August 31, 2018, the Company had net losses of $5,036,183, $4,563,721 and $9776,~~415~~113,~~450,~~ respectively,. ~~and~~The ~~for the nine months ended February 28, 2018, the~~ Company ~~had~~utilized ~~a net loss of~~ $3,~~890~~376,~~888.~~972, ~~The Company utilized~~ $3,936,796 and $4440,~~279,100~~535 of cash for operating activities for the years ended May 31, ~~2017~~2018 and ~~2016~~2017, ~~respectively,~~ and ~~$2,441,517~~three ~~during the nine~~ months ended ~~February 28~~August 31, 2018, respectively. As of ~~February~~August 2831, 2018, the Company had cash and cash equivalents of $1114,~~440,866~~876 and net negative working capital of $~~781~~460,~~788~~086. The Company has incurred negative cash flow from operating activities since its inception. The Company has spent, and subject to obtaining additional financing, expects to continue to spend, substantial amounts in connection with executing its business strategy, including continued development efforts relating to PRTX-100. Although the Company is exploring all options to raise working capital, if it is not successful in imminently raising additionally working capital, it will be forced to substantially scale back, suspend or discontinue operations.

The Company ~~has~~does nonot ~~significant~~anticipate ~~payments~~generating ~~due~~operating ~~on long-term obligations.~~revenue ~~However,~~for the ~~Company~~foreseeable ~~anticipates~~future ~~entering~~and ~~into~~do ~~significant~~not ~~contracts~~currently tohave ~~perform~~any ~~product~~products ~~manufacturing~~that ~~and~~are marketable. In order to ~~conduct~~continue ~~clinical~~its ~~trials in~~research ~~the~~and ~~future~~development program and ~~that~~commercialization itefforts ~~will~~the ~~need~~Company towill ~~raise~~require substantial additional working capital. The Company currently has no agreements or commitments with respect to ~~fund~~raising the ~~ongoing~~working ~~FDA~~capital ~~regulatory~~necessary ~~approval~~to ~~process~~continue its research and development program and commercialization efforts. IfAlthough the Company is ~~unable~~exploring toall ~~obtain~~options ~~approval~~to ofraise ~~its~~working ~~future~~capital, ~~IND~~if ~~applications~~it oris ~~otherwise~~not ~~advance~~successful in ~~the~~imminently ~~FDA~~raising ~~approval~~additionally ~~process~~working capital, ~~its~~it ~~ability~~will be forced to ~~sustain its~~substantially ~~operations~~scale ~~would~~back, besuspend ~~significantly~~or ~~jeopardized~~discontinue operations.

The Company will require additional working capital to support its operations. The most likely sources of additional financing include the sale of the Company’s equity or debt securities. There is no assurance that additional capital that is required by the Company will be available on reasonable terms, or at all.6

PROTALEX, INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

NOTE 3. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The interim financial data contained in this Report is unaudited; however in the opinion of management, the interim data includes all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of the results for the interim period. The financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) have been omitted pursuant to such rules and regulations, although the Company believes that the disclosures included herein are adequate to make the information presented not misleading. The results of operations in interim periods are not necessarily indicative of the results that may be expected for the full year.

Information regarding the organization and business of the Company, accounting policies followed by the Company and other important information is contained in the notes to the Company's financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended May 31, ~~2017~~2018. This Report should be read in conjunction with the Company’s Annual Report.

Estimates

The preparation of financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions affecting the reported amounts of assets, liabilities, and expense, and the disclosure of contingent assets and liabilities. Estimated amounts could differ from actual results.

Loss per Common Share

The Financial Accounting Standards Board (FASB) has ~~issued~~ issued guidance for “Earnings Per Share” which provides for the calculation of “Basic” and “Diluted” earnings per share. Basic earnings per share includes no dilution and is computed by dividing net loss to common stockholders by the weighted average number of common shares outstanding for the period. All potentially dilutive securities consisting of employee stock options and warrants have been excluded from the computations since they would be antidilutive. However, these dilutive securities could potentially dilute earnings per share in the future. As of ~~February 28~~August 31, 2018 and ~~February~~August 2831, 2017, the Company had ~~potentially~~a ~~dilutive~~total ~~securities consisting~~ of ~~9,316,018 (Senior~~ ~~Convertible Notes of 2~~5,~~375~~560,~~475~~543 and 63,~~940~~980,543, respectively, of Common Stock underlying exercisable stock options) and 3shares from convertible debt of $1,~~980~~475,~~543~~000 ~~stock~~as ~~options~~of August 31, ~~respectively~~2018 of potentially dilutive securities.

Cash and Cash Equivalents

For the purposes of reporting cash flows, the Company considers all cash accounts which are not subject to withdrawal restrictions or penalties, and highly liquid investments with original maturities of 90 days or less to be cash and cash equivalents. The cash and cash equivalent deposits are not insured by The Federal Deposit Insurance Corporation.

Reclassifications

Certain reclassifications have been made to the prior periods to conform to the current presentations in the financial statements.

Research and Development

Research and development costs are expensed as incurred.

8Share Based Compensation

Effective June 1, 2006, the Company adopted the FASB accounting guidance for fair value recognition provisions of the “Accounting for Share-Based Payment”. This standard requires the Company to measure the cost of employee services received in exchange for equity share options granted based on the grant-date fair value of the options. The cost is recognized as compensation expense over the vesting period of the options. The fair value of compensation costs attributed to equity rights issued was $186,300 and $0 and is included in operating expenses for the three months ended August 31, 2018 and August 31, 2017, respectively. These amounts included both the compensation cost of stock options granted prior to but not yet vested as of June 1, 2006 and compensation cost for all options granted subsequent to May 31, 2006. In accordance with the modified prospective application transition method, prior period results are not restated. Incremental compensation cost for a modification of the terms or conditions of an award is measured by comparing the fair value of the modified award with the fair value of the award immediately before the modification. No tax benefit was recorded as of August 31, 2018 in connection with these compensation

PROTALEX, INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

NOTE 3. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

~~Share~~costs due to the uncertainty regarding ultimate realization of certain net operating loss carryforwards. The Company has also implemented the SEC interpretations in Staff Accounting Bulletin (SAB) for “Share-Based ~~Compensation~~Payments,” in connection with the adoption of FASB accounting guidance.

Effective June 1, 2006, the Company adopted the FASB accounting guidance for fair value recognition provisions of the “Accounting for Share-Based Payment”. This standard requires the Company to measure the cost of employee services received in exchange for equity share options granted based on the grant-date fair value of the options. The cost is recognized as compensation expense over the vesting period of the options. The fair value of compensation costs attributed to equity rights issued was $745,200 and $180,333 and is included in operating expenses for the nine months ended February 28, 2018 and February 28, 2017, respectively. These amounts included both the compensation cost of stock options granted prior to but not yet vested as of June 1, 2006 and compensation cost for all options granted subsequent to May 31, 2006. In accordance with the modified prospective application transition method, prior period results are not restated. Incremental compensation cost for a modification of the terms or conditions of an award is measured by comparing the fair value of the modified award with the fair value of the award immediately before the modification. No tax benefit was recorded as of February 28, 2018 in connection with these compensation costs due to the uncertainty regarding ultimate realization of certain net operating loss carryforwards. The Company has also implemented the SEC interpretations in Staff Accounting Bulletin (SAB) for “Share-Based Payments,” in connection with the adoption of FASB accounting guidance.

The accounting guidance requires the use of a valuation model to calculate the fair value of each stock-based award. The Company uses the Black-Scholes model to estimate the fair value of stock options granted based on the following assumptions:

Expected Term or Life. The expected term or life of stock options granted issued represents the expected weighted average period of time from the date of grant to the estimated date that the stock option would be fully exercised. The weighted average expected option term was determined using a combination of the “simplified method” for plain vanilla options as allowed by the accounting guidance. The “simplified method” calculates the expected term as the average of the vesting term and original contractual term of the options.

Expected Volatility. Expected volatility is a measure of the amount by which the Company’s stock price is expected to fluctuate. Expected volatility is based on the historical daily volatility of the price of our common shares. The Company estimated the expected volatility of the stock options at grant date.

Risk-Free Interest Rate. The risk-free interest rate is based on the implied yield on U.S. Treasury zero-coupon issues with remaining terms equivalent to the expected term of our stock-based awards.

At ~~February~~August 2831, 2018, there were 6,940,543 ~~stock~~ stock options outstanding, of which 5,~~360~~560,543 were exercisable. At ~~February~~August 2831, 2018, the aggregate unrecognized compensation cost of unvested options, as determined using a Black-Scholes option valuation model, was $~~745~~372,~~200~~600. The ~~Company~~remaining ~~granted 2,760,000~~options ~~stock~~will ~~options~~be ~~with~~valued anonce ~~exercise~~they ~~price~~vest ofupon $0the future events.54 ~~per~~The ~~share~~Company did not grant any options during the ~~nine~~three months ended ~~February 28~~August 31, 2018, and ~~400,000~~no options expired.

NOTE 4. RECENT ACCOUNTING PRONOUNCEMENTS

Management does not believe that any recently issued, but not yet effective, accounting standards could have a material effect on the accompanying consolidated financial statements. As new accounting pronouncements are issued, the Company will adopt those that are applicable under the circumstances.

InThe ~~August~~amendments ~~2014,~~in ~~the~~ASU ~~FASB~~2017-11 ~~issued~~change ~~Accounting~~the ~~Standards~~classification ~~Update “ASU”~~analysis ~~2014-15 on “Presentation~~ of ~~Financial~~certain ~~Statements~~equity-linked ~~Going~~financial ~~Concern~~instruments (~~Subtopic~~or ~~205-40~~embedded features) –with ~~Disclosure~~down ofround ~~Uncertainties~~features. ~~about~~When determining whether certain anfinancial ~~Entity’s~~instruments ~~Ability~~should tobe ~~Continue~~classified as aliabilities ~~Going~~or ~~Concern”.~~equity ~~Currently~~instruments, ~~there~~a isdown noround ~~guidance~~feature inno ~~U.S.~~longer ~~GAAP~~precludes ~~about management’s~~equity ~~responsibility~~classification towhen ~~evaluate~~assessing whether ~~there~~the instrument is ~~substantial~~indexed ~~doubt~~to ~~about~~ an entity’s ~~ability~~own tostock. ~~continue~~As as a ~~going~~result, ~~concern~~a orfreestanding equity-linked tofinancial ~~provide~~instrument ~~related~~(or ~~footnote~~embedded ~~disclosures.~~conversion ~~The~~option) ~~amendments~~no inlonger ~~this~~would ~~ASU~~be ~~provide~~accounted ~~that~~for ~~guidance.~~as Ina ~~doing~~derivative ~~so,~~liability ~~the~~at ~~amendments~~fair ~~are~~value ~~intended~~as toa ~~reduce~~result ~~diversity~~of in the ~~timing~~existence ~~and~~of ~~content~~a ofdown ~~footnote~~round ~~disclosures~~feature. ~~The~~ASU ~~amendments~~2017-11 ~~require~~defines ~~management~~down toround ~~assess~~feature anas: ~~entity’s ability~~“A tofeature ~~continue~~in as a ~~going~~financial ~~concern~~instrument that byreduces ~~incorporating~~the ~~and~~strike ~~expanding~~price ~~upon~~of ~~certain~~an ~~principles~~issued ~~that~~financial ~~are~~instrument ~~currently~~if ~~in U.S. auditing standards. Specifically,~~ the ~~amendments~~issuer ~~(1)~~sells ~~provide~~shares ~~a definition~~ of ~~the~~its ~~term~~stock ~~substantial~~for ~~doubt,~~an ~~(2)~~amount ~~require~~less ~~an evaluation~~than ~~every~~the ~~reporting~~currently ~~period~~stated ~~including~~strike ~~interim~~price ~~periods,~~of ~~(3) provide principles for considering~~ the ~~mitigating~~issued ~~effect~~financial ofinstrument ~~management’s plans,~~or ~~(4)~~issues ~~require~~an ~~certain~~equity-linked ~~disclosures~~financial ~~when~~instrument ~~substantial~~with ~~doubt is alleviated as~~ a ~~result of consideration of management’s~~strike ~~plans,~~price ~~(5)~~below ~~require~~the ancurrently ~~express~~stated ~~statement~~strike ~~and~~price ~~other~~of ~~disclosures~~the ~~when~~issued ~~substantial~~financial ~~doubt~~instrument. isA ~~not~~down ~~alleviated,~~round ~~and~~feature ~~(6)~~may ~~require~~reduce anthe ~~assessment~~strike price ~~for~~of a ~~period~~financial ofinstrument ~~one~~to ~~year after~~ the ~~date~~current ~~that~~issuance ~~the~~price, ~~financial statements are issued (~~or ~~available~~the toreduction may be ~~issued).~~limited ~~The~~by ~~amendments~~a ~~in this~~floor ~~ASU~~or ~~are~~on ~~effective~~the ~~for~~basis ~~public~~of ~~and~~a ~~nonpublic~~formula that ~~entities~~results ~~for~~in ~~annual~~a ~~periods~~price ~~ending~~that ~~after December 15, 2016. Early adoption~~ is ~~permitted. The~~at ~~Company~~a isdiscount ~~currently~~to ~~reviewing~~ the ~~provisions~~original ofexercise ~~this~~price ~~ASU~~but toabove ~~determine~~the ifnew ~~there~~issuance ~~will~~price ~~be any impact on its results~~ of ~~operations~~the shares, ~~cash~~ ~~flows~~ or may ~~financial~~reduce ~~condition. The~~the ~~Company~~strike ~~does~~price ~~not~~to ~~believe~~below ~~that~~the ~~accounting~~current ~~standards~~issuance ~~currently~~price. ~~adopted~~A ~~will~~standard ~~have~~antidilution aprovision ~~material effect~~is onnot ~~the~~considered ~~accompanying~~a ~~financial~~down ~~statements.~~round feature”

9Early Adoption ASU 2017-11 - For public business entities, the amendments in Part I of this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. For all other entities, the amendments in Part I of this Update are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted for all entities, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period prior to ASU 2017-11. The Company has elected to early adopt this standard and has no other instruments from prior periods that are affected by this adoption.

PROTALEX, INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

NOTE 5. RELATED PARTIES

Niobe Ventures, LLC, a Delaware limited liability company (“Niobe”), the majority stockholder of the Company and the holder of the Consolidated Note (defined in Note 6, below), is controlled by Arnold P. Kling, the Company’s president and a director.

NOTE 6. SENIOR SECURED NOTES - RELATED PARTY

As of May 31, ~~2017~~2018, ~~the~~as ~~outstanding principal~~a ~~balance~~result ~~under~~of the ~~Senior~~Exchange ~~Secured Debt to Niobe totaled $20~~Agreement,~~299,366,~~ ~~including $9,219,366 under a consolidated note~~described ~~issued to Niobe on October 11~~below, ~~2013~~the ~~and~~outstanding ~~$11,080,000~~principal balance under the ~~2014~~Senior ~~Credit~~Secured ~~Facility~~Debt ~~from~~to Niobe ~~(the~~totaled ~~“2014 Credit Facility”)~~$0.

On ~~June~~February 128, ~~2017~~2018, the ~~2014~~Company ~~Credit~~raised ~~Facility was~~an ~~amended~~aggregate toof $1.425 ~~increase~~million ~~the~~from ~~funds~~eight ~~available~~accredited ~~for~~investors ~~loans~~in toa ~~the~~private ~~Company~~placement tofinancing ~~$13.05 million and to extend~~ (the ~~expiration~~“Offering”) ~~date~~ of 10% Senior ~~such~~Convertible ~~facility~~Notes, todue ~~March~~on 31February 28, ~~2018~~2023 (the “~~Fourth~~Senior ~~Amended and Restated Agreement~~Notes”). ~~Each~~No ~~loan~~commissions ~~under~~were ~~the~~paid ~~Fourth~~in ~~Amended and~~connection ~~Restated~~with ~~Agreement~~the Offering ~~will~~which bewas ~~represented~~principally bysold ato ~~senior~~certain ~~secured~~existing ~~promissory~~stockholders ~~note~~of ~~bearing~~the ~~interest~~Company. atProceeds ~~a rate~~ of 3%the ~~per~~Offering have been ~~annum~~used ~~which~~for ~~matures~~working oncapital ~~March 31~~purposes, ~~2018~~principally ~~(each~~to afund ~~“2018~~ongoing ~~Note”).~~clinical ~~The~~trials ~~Security~~and ~~Agreement~~studies ~~was~~and ~~also~~related ~~amended~~activities. ~~and restated~~No toregistration ~~also~~rights ~~secure~~were ~~the~~granted ~~Company’s obligations under all 2018 Notes issued pursuant~~ to the ~~Fourth~~investors ~~Amended~~in ~~and~~the ~~Restated Agreement~~Offering.

OnThe ~~August~~Senior ~~22,~~Notes ~~2017,~~are ~~the~~convertible ~~Company~~into ~~and~~shares ~~Niobe~~of ~~agreed~~Common Stock toat ~~extend~~a price of $0.20 per share at the option of the holder prior to maturity ~~date~~or earlier prepayment, accrue interest at the rate of ~~all~~10% ~~outstanding~~per ~~notes~~annum ~~issued~~and toare ~~Niobe~~due ~~from~~on February 28, 2023. Upon conversion, the ~~current~~note ~~maturity~~holder ~~date~~will receive 5,000 shares of ~~March~~the 31common stock of the Company for each $1,000 ~~2018~~of principal or accrued interest converted. Two-thirds of the shares issuable upon any conversion of the Senior Notes will be acquired by the Company from Niobe for nominal consideration ($.01 per share) pursuant to a ~~new~~mandatory ~~maturity~~call ~~date~~agreement entered into in connection with the Offering (the “Call Agreement”). As a result, for each $1,000 of principal ~~September~~or interest converted, the Company will issue approximately 1,667 ~~2018~~new shares. ~~All~~ ~~other~~Accordingly, ~~terms~~the ~~and~~Company’s ~~provisions~~effective conversion price will be approximately $0.60 per share of ~~such~~Common ~~notes~~Stock, ~~remained~~with ~~unchanged~~Niobe ~~and~~incurring insubstantially ~~full~~all ~~force~~of ~~and~~the associated ~~effect~~dilution. The closing price per share of Common Stock on the date of the Offering was $0.45.

~~During~~On ~~the~~March ~~nine months ended February 28~~13, 2018, the Company ~~borrowed~~raised an ~~aggregate~~additional of $150,~~970,~~000; in ~~$290,000~~the onOffering ~~June~~and ~~15,~~issued ~~2017,~~a ~~$290,000~~Senior onNote ~~July~~in ~~10,~~the ~~2017,~~principal ~~$290,000~~amount onof ~~August 10, 2017,~~ $~~290~~50,000 onto ~~September~~an ~~15,~~accredited ~~2017,~~investor. ~~$290,000~~In onconnection ~~October~~with ~~23,~~the ~~2017~~foregoing, ~~$200,000~~ on ~~November~~March 1713, ~~2017~~2018, ~~$220,000~~the onCall ~~December~~Agreement ~~15,~~was ~~2017~~amended and ~~$100,000~~ onrestated ~~January 12, 2018. Prior~~ to ~~the~~also ~~Offering~~include ~~described~~two-thirds ~~below,~~of the ~~outstanding~~shares ~~principal~~issuable ~~balance~~upon ~~under~~ the ~~2014~~conversion of ~~Credit~~this ~~Facility totaled~~Senior ~~$13,050,000~~Note.

OnThe ~~February~~Company ~~28,~~evaluated ~~2018,~~ the ~~Company~~conversion ~~raised~~feature anof the Senior Notes ~~aggregate~~and ofdetermined ~~$1.425~~that ~~million~~under ~~from~~the ~~eight~~accounting ~~accredited~~guidance ~~investors~~for in“Accounting for Convertible Securities with Beneficial Conversion Features” that a ~~private~~value ~~placement~~should ~~financing~~be (attributed to the ~~“Offering”)~~embedded ofconversion feature. The Company determined the allocation to the conversion ~~10%~~feature ~~Senior~~to ~~Convertible~~be ~~Notes~~$1.475 million, ~~due~~which onreduced ~~February~~the ~~28,~~face ~~2023~~amount (of the “Senior Notes~~”).~~ Nocarried ~~commissions~~on ~~were~~its ~~payable~~balance insheet to -$0-. This ~~connection~~discount ~~with~~will ~~the~~be ~~Offering~~amortized ~~which~~over ~~was~~60 ~~principally~~months ~~sold~~and will serve to ~~existing~~increase ~~stockholders~~the interest expense of the ~~Company.~~Senior ~~Proceeds~~Notes ofduring the ~~Offering~~term of ~~will~~such benotes. ~~used~~During ~~for~~the ~~working~~year ~~capital~~ended ~~purposes~~May 31, ~~principally~~2018, to$75,127 ~~fund~~of ~~ongoing~~the ~~clinical~~discount ~~trials~~was amortized and ~~studies~~increased ~~and~~interest ~~related~~expense ~~activities.~~by Nothat amount. ~~registration~~As ~~rights~~of ~~were~~August ~~granted~~31, to2018, $1,324,382 of the ~~investors~~original discount remained resulting in the ~~Offering~~net amount of the debt being $150,618 as of August 31, 2018.

~~The~~As ~~Senior~~a ~~Notes~~condition ~~are~~to ~~convertible~~the ~~into~~consummation ~~shares~~ of ~~Common~~the ~~Stock~~Offering, ~~(defined~~on February ~~below)~~28, at2018, athe ~~price~~Company ofentered ~~$0.20~~into ~~per~~an ~~share~~Exchange atAgreement ~~the~~with ~~option~~Niobe of (the ~~holder~~“Exchange ~~prior~~Agreement”) pursuant to ~~maturity~~which orNiobe ~~earlier~~converted ~~prepayment~~$22, ~~accrue~~269,367, ~~interest~~the ataggregate ~~the~~outstanding ~~rate~~principal balance of ~~10%~~the ~~per~~Senior ~~annum~~Secured ~~and~~Debt ~~are~~ due ~~on February 28~~to Niobe, ~~2023.~~into ~~Upon conversion~~18, ~~the note holder will receive 5~~557,~~000~~ 805 shares of ~~the~~Common ~~Company’s~~Stock ~~common~~at ~~stock,~~a ~~par~~conversion ~~value~~price of $1.~~00001~~20 per share. ~~(“Common~~This ~~Stock”)~~resulted ~~for~~in ~~each~~a ~~$1,000~~gain ofon ~~principal~~conversion orof ~~accrued~~$13,918,354, ~~interest~~which ~~converted.~~was ~~Two-thirds~~recognized ofagainst ~~the~~equity ~~shares~~and ~~issuable~~had ~~upon~~no ~~any~~impact ~~conversion~~on of the ~~Senior~~Statement ~~Notes~~of ~~will~~Operations. beThe ~~acquired~~Company byalso ~~the~~issued ~~Company~~a ~~from~~promissory ~~Niobe~~note, ~~for~~dated ~~nominal~~February ~~consideration~~28, ~~($.01~~2018, ~~per share) pursuant~~ to aNiobe ~~mandatory call agreement, entered into~~ in ~~connection with~~ the ~~Offering~~principal ~~(the~~amount ~~“Call~~of ~~Agreement”). As a result, for each~~ $1,~~000~~974,349 ofbearing ~~principal~~interest orat ~~interest~~a ~~converted,~~rate ~~the~~of ~~Company~~3% ~~will~~per ~~issue~~annum ~~approximately~~and ~~1,667~~maturing ~~new~~on ~~shares.~~March ~~Accordingly~~31, 2023 (the ~~effective~~“Niobe ~~conversion~~Note”), ~~price~~ for the ~~Company~~accrued ~~will~~but beunpaid ~~approximately~~interest ~~$0.60 per~~on ~~share~~the ofnotes converted ~~Common~~by ~~Stock, with~~ Niobe ~~incurring substantially all of the associated dilution~~. ~~The~~At ~~closing~~August ~~price~~31, of2018, ~~per~~$2,004,408 ~~share~~was ~~of Common~~outstanding ~~Stock~~under on the ~~date~~Niobe ~~of the Offering was $0~~Note.~~45.~~

109

PROTALEX, INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

NOTE 6. SENIOR SECURED NOTES - RELATED PARTY (Continued)

The Company evaluated the conversion feature of the Senior Notes and determined that under the accounting guidance for “Accounting for Convertible Securities with Beneficial Conversion Features” that a value should be attributed to the embedded conversion feature. On February 28, 2018, the date of issuance of the Senior Notes, the fair market value of Common Stock was $0.45 per share. The Company determined the allocation to the conversion feature to be $1.425 million, which reduced the face amount of the Senior Notes carried on the Company’s balance sheet to -$0-. This discount will be amortized over 60 months and will serve to increase the interest expense of the Senior Notes during the term of such notes.

In addition, as a condition to the consummation of the Offering, on February 28, 2018 the Company and Niobe entered into an Exchange Agreement (the “Exchange Agreement”) pursuant to which Niobe converted $22,269,366 of outstanding notes due September 30, 2018 (the aggregate outstanding principal balance under the Senior Secured Debt to Niobe as of February 28, 2018) into 18,557,805 shares of Common Stock at a conversion price of $1.20 per share. Consequently, other than the Senior Notes issued in the Offering, the only remaining indebtedness on the Company’s balance sheet at February 28, 2018 is approximately $1,974,000, representing the accrued but unpaid interest on the notes converted by Niobe.

The foregoing purchases of securities were for investment and not with a view for distribution. The securities were issued without registration under the Securities Act of 1933, as amended, pursuant to the exemptions provided under Sections 4(a)(2) and 4(a)(5) thereof. All of the securities issued are restricted securities, bear a restrictive legend and will be subject to stop transfer restrictions.

NOTE 7. SUBSEQUENT EVENTS

OnIn ~~March 13,~~ September 2018, the Company ~~raised an additional~~ borrowed $50250,000 infrom ~~the~~Niobe ~~Offering~~ and issued a ~~Senior~~promissory ~~Note~~note to Niobe in the principal amount of $50250,000 tobearing aninterest ~~accredited~~at ~~investor.~~a rate Inof ~~connection~~3% ~~with the~~per ~~foregoing,~~annum and maturing on March 1331, ~~2018,~~2023 (the ~~Call~~“September ~~Agreement~~2018 ~~was~~Note”). ~~amended~~The ~~and~~September ~~restated~~2018 toNote ~~also~~is subordinate ~~include~~to ~~two-thirds of~~ the ~~shares issuable upon the conversion of this~~ Senior ~~Note~~Notes.

The Company has evaluated ~~all other~~ subsequent ~~events~~ events and has determined that there were no other subsequent events to recognize or disclose in these financial statements.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

We are focused on the development of a class of biopharmaceutical drugs for treating autoimmune and inflammatory diseases including rheumatoid arthritis (RA) and Immune Thrombocytopenia (ITP). Our lead product candidate, PRTX-100, a new generation immunomodulatory therapy, is a highly-purified form of Staphylococcal protein A, which is a bacterial protein known to modify aspects of the human immune system. PRTX-100 has demonstrated effectiveness in animal models of autoimmune diseases and has demonstrated activity on cultured human immune cells at very low concentrations, although the effectiveness of PRTX-100 shown in pre-clinical studies using animal models may not be predictive of the results that we would see in future human clinical trials. The safety, tolerability and pharmacokinetics (PK) of PTRX-100 in humans have now been characterized in eight clinical studies and was granted Orphan Drug Designation (ODD) in the United States and Europe for the treatment of ITP.

We do not anticipate generating operating revenue for the foreseeable future and do not currently have any products that are marketable. In order to continue our research and development program and commercialization efforts we will require substantial additional working capital. We currently have no agreements or commitments with respect to raising the working capital necessary to continue our research and development program and commercialization efforts. Although we are exploring all options to raise working capital, if we are not successful in imminently raising additionally working capital, we will be forced to substantially scale back, suspend or discontinue operations.

In March 2015, the FDA accepted our Investigational New Drug (IND) application for a Phase I/II open-label, dose-escalating study of PRTX-100 in adults with persistent/chronic ITP (the “PRTX-100-202 Study”). In June 2015, the U.S. Food and Drug Administration (FDA) granted ODD to PRTX-100 for the treatment of ITP. In July 2015, the European Medicines Agency (EMA) granted approval for a Phase 1b open-label, dose-escalating study of PRTX-100 in adult patients with persistent/chronic ITP (the “PRTX-100-203 Study”). In September 2015, the EMA Committee for Orphan Medicinal Products (COMP) issued a positive opinion recommending PRTX-100 for designation as an orphan medicinal product for the treatment of ITP. In November 2015, we enrolled our first patient in the PRTX-100-202 Study in the United States and in January 2016 we enrolled our first patient in the PRTX-100-203 Study in Europe. Enrollment has been completed in both the PRTX-100-202 Study in the U.S. and the United Kingdom (UK) and in the PRTX-100-203 Study in the UK during the past quarter. In August 2017, the FDA’s Office of Orphan Product Development (OOPD) awarded us a grant of $403,000 to support the future clinical development of PRTX-100 as a treatment for ITP.

In August 2010, we commenced a multi-center Phase 1b clinical trial of PRTX-100 in South Africa in adult patients with active RA on methotrexate or leflunomide (the “PRTX-100-103 Study”). In January 2012, we completed patient dosing in the PRTX-100-103 Study with a total of 37 patients enrolled in four cohorts ranging from 0.15 micrograms/kg to 1.50 micrograms/kg of PRTX-100 or placebo, administered weekly for four weeks. Measures of safety, PK and disease activity were evaluated over 16 weeks following the first dose. The PRTX-100-103 Study results demonstrated that PRTX-100 was generally safe and well-tolerated in patients with active RA at all tested dose levels.

In November 2012, we commenced enrollment in the United States for a new multicenter Phase 1b randomized, multiple-dose, dose-escalation study (the “PRTX-100-104 Study”) of PRTX-100 in combination with methotrexate or leflunomide in adult patients with active RA. The sequential dose-escalation phase of this study was expected to enroll patients into five cohorts ranging from 1.50 micrograms/kg up to 18.0 micrograms/kg of PRTX-100 or placebo. At each dose, one quarter of patients would receive a placebo treatment. Similar to the PRTX-100-103 Study, the primary objective of the PRTX-100-104 Study was to assess the safety and tolerability of intravenous PRTX-100 administered weekly over five weeks in patients with active RA on methotrexate or leflunomide therapy. The secondary objectives included determining the effects of PRTX-100 on measures of disease activity, assessing the immunogenicity and evaluating the PK parameters after repeated doses, and determining possible relationships between the immunogenicity of PRTX-100 and safety and PK.

In August 2013, upon completion of the fourth cohort, we expanded the 3.0 microgram, 6.0 microgram, and 12.0 micrograms/kg dose cohorts of the PRTX-100-104 Study. An additional nine patients were enrolled in the expansion cohort that was completed in October 2013. In total, the first four dose-escalating cohorts of the PRTX-100-104 Study, which included these three expanded cohorts, enrolled 41 patients with doses ranging from 1.5 micrograms/kg up to 12.0 micrograms/kg.

In November 2013, we initiated enrollment of the fifth and final cohort (Cohort 5) in the PRTX 100-104 Study. The Cohort 5 sub-study enrolled 20 patients who received five weekly fixed-weight doses of PRTX-100 followed by up to four additional monthly maintenance doses of PRTX-100 in weeks 8, 12, 16, and 20. The primary objective of the Cohort 5 sub-study was to assess safety and tolerability of these doses administered on a modified schedule. In total, 11 out of 20 patients in Cohort 5 completed all study visits by August 2014 per protocol.

In the Cohort 5 sub-study, the amount of PRTX-100 administered and its dosing frequency were varied from Cohorts 1 through 4 to explore effects on safety, tolerability and measures of disease activity. The addition of four monthly maintenance doses after the five weekly doses did not increase the rate or type of Adverse Event (AE), even in those patients who developed anti-drug antibodies (ADAs), nor indicate any apparent correlation between the development of ADAs and effects on measures of RA disease activity. In addition, Cohort 5 patients showed improvement in measures of disease activity, including ACR20 scores, compared to Cohort 1 through 4 patients who did not receive any monthly maintenance doses, suggesting that the addition of monthly maintenance administration of PRTX-100 and weight-based dosing were an important aspect of the dosing protocol and should be considered in future trials of PRTX-100.

~~ITEM~~A 2total of 61 patients enrolled across five cohorts in the PRTX 100-104 Study at nine study sites in the United States. ~~MANAGEMENT’S~~For ~~DISCUSSION~~patients ~~AND~~in ~~ANALYSIS~~all OFfive ~~FINANCIAL~~cohorts, ~~CONDITION~~PRTX-100 ~~AND~~appeared safe ~~RESULTS~~and OFwell ~~OPERATIONS~~tolerated in all individuals, including those who developed ADAs, and the AE profile was consistent with our prior clinical trial results.

~~Overview~~In February 2015, we commenced enrollment, at a single U.S. site, of a Phase I/II open-label, multiple, fixed-dose study (the “PRTX-100-105 Study”) which was open only to PRTX-100-104 Study patients who indicated their desire for additional treatment. The PRTX-100-105 Study was an open-label, single group study with former participants from the 104 Study who were eligible to receive a fixed dose of PRTX-100 over a 6-month period. The primary study endpoint of the 105 Study was the safety and tolerability of a fixed dose of PRTX-100 administered over an extended period. The secondary endpoints included immunogenicity, effects on measures of RA disease activity, evaluation of anti-PRTX-100 antibody presence, and feasibility of joint evaluations with ultrasound and biomarkers as disease markers. A total of eight patients completed all 105 Study visits per protocol.

WeIn ~~are focused on~~ the ~~development~~PRTX-100-105 ofStudy, a ~~class~~preliminary ofinterim ~~biopharmaceutical~~analysis ~~drugs~~indicated that for ~~treating~~patients ~~autoimmune~~who ~~and~~completed ~~inflammatory~~per ~~diseases including rheumatoid arthritis (RA) and Immune Thrombocytopenia (ITP). Our lead product candidate~~protocol, PRTX-100, aexhibited ~~new~~an ~~generation~~acceptable ~~immunomodulatory~~safety ~~therapy,~~profile isand ~~a highly-purified form of Staphylococcal~~RA ~~protein~~disease A,activity ~~which~~was isimproved in a ~~bacterial~~majority ~~protein~~of ~~known~~patients toat ~~modify~~the ~~aspects~~end of the ~~human~~study ~~immune~~as ~~system~~compared to baseline. ~~PRTX-100~~No ~~has~~serious ~~demonstrated~~adverse ~~effectiveness~~events in(SAEs) ~~animal~~were ~~models~~reported. ofAt ~~autoimmune~~study ~~diseases~~day ~~and~~196, ~~has~~one ~~demonstrated~~month ~~activity~~after onthe ~~cultured~~final ~~human~~dose, ~~immune~~patients ~~cells~~who atcompleted ~~very low concentrations, although~~ the ~~effectiveness~~study ofper ~~PRTX-100~~protocol ~~shown~~demonstrated a inmean ~~pre-clinical~~reduction ~~studies~~of ~~using~~the ~~animal~~DAS28CRP ~~models~~score ~~may~~from ~~not~~5.25 beto ~~predictive~~2.52, ofsuggesting ~~the~~a ~~results~~clinically ~~that we~~meaningful ~~would~~improvement ~~see~~ in ~~future~~disease ~~human~~activity. Additionally, clinical ~~trials.~~assessment ~~The~~by ~~safety,~~Ultrasound ~~tolerability~~Power ~~and~~Doppler ~~pharmacokinetics~~Joint Counts (PKUPD), ofalso ~~PTRX-100~~revealed ina ~~humans~~reduction ~~have~~in ~~now been~~average ~~characterized~~disease inseverity ~~six~~by ~~clinical~~day 196, ~~studies~~ and ~~was~~the ~~granted~~correlation ~~Orphan~~between ~~Drug Designation (ODD) in~~ the ~~United~~UPD ~~States~~ and ~~Europe~~the ~~for~~DAS28CRP ~~the treatment~~was ofr=0.624 ~~ITP~~(p<.0005).

In ~~March~~November 2015, ~~the~~we ~~FDA~~commenced enrollment ~~accepted~~and enrolled our ~~Investigational~~first ~~New~~patient ~~Drug (IND) application for a Phase I/II open-label, dose-escalating study of PRTX-100~~ in ~~adults~~ ~~with persistent/chronic ITP (~~the “PRTX-100-202 Study”). InThe ~~June 2015, the U.S. Food and Drug Administration (FDA) granted ODD to~~ PRTX-100-202 ~~for~~Study ~~the~~may ~~treatment~~enroll ofup ~~ITP.~~to In36 ~~July~~patients ~~2015,~~in ~~the~~as ~~European~~many ~~Medicines~~as ~~Agency (EMA)~~six ~~granted~~cohorts. ~~approval~~Each ~~for~~patient awill ~~Phase~~receive 1bfour ~~open-label,~~weekly ~~dose-escalating~~intravenous ~~study~~doses of PRTX-100 inand ~~adult~~will ~~patients~~be ~~with~~monitored ~~persistent/chronic ITP (the “PRTX-100-203 Study”). In September 2015, the EMA Committee~~ for ~~Orphan~~up ~~Medicinal~~to ~~Products~~48 ~~(COMP)~~weeks ~~issued a~~thereafter. ~~positive~~The ~~opinion~~primary ~~recommending~~study ~~PRTX-100~~endpoint ~~for designation as an orphan medicinal product for the treatment~~ of ~~ITP. In November 2015, we enrolled our first patient in~~ the PRTX-100-202 Study inis ~~the~~a ~~United~~platelet ~~States~~response ~~and~~to inPRTX-100. ~~January~~Secondary ~~2016~~endpoints weinclude ~~enrolled~~safety, ~~our first~~immunogenicity, ~~patient~~and ~~in the PRTX-100-203 Study in Europe~~pharmacokinetics. Enrollment iswas ~~continuing~~completed in the PRTX-100-202 Study inlast ~~the U~~quarter.S. ~~and~~A ~~the~~total ~~United Kingdom~~of ~~(UK)~~13 ~~and~~patients incompleted the PRTX-100-~~203~~ 202 Study inup through the ~~UK.~~fourth Indosage ~~August~~cohort ~~2017, the~~(12 ~~FDA’s~~mg/kg) ~~Office~~with of2 ~~Orphan~~patients ~~Product~~having ~~Development~~had ~~(OOPD)~~a ~~awarded~~platelet usresponse aper ~~grant~~protocol. Preliminary analysis of ~~$403,000~~the toPRTX-100-202 ~~support~~Study ~~the~~data ~~future clinical~~showed ~~development~~that of PRTX-100 ashad aan ~~treatment~~acceptable ~~for~~safety ~~ITP.~~profile Weacross dothe ~~not~~dose ~~anticipate~~range ~~generating~~studied ~~operating~~and ~~revenue~~that ~~for the~~platelet ~~foreseeable~~counts ~~future~~were ~~and~~elevated doin ~~not~~most ~~currently~~patients ~~have~~that ~~any~~received ~~products~~four ~~that~~weeks ~~are~~of ~~marketable~~treatment.

In ~~August~~January ~~2010~~2016, we commenced ~~a multi-center~~enrollment ~~Phase~~of 1bour ~~clinical~~first ~~trial~~patient ofin the European based PRTX-100-203 inStudy. ~~South~~The ~~Africa~~PRTX-100-203 inStudy ~~adult~~may enroll up to 30 patients ~~with~~in ~~active~~as RAmany onas five ~~methotrexate~~cohorts. orEach ~~leflunomide~~patient ~~(the~~will “receive four weekly intravenous doses of PRTX-100~~-103 Study”).~~ Inand ~~January~~will ~~2012,~~be wemonitored ~~completed~~for ~~patient~~up ~~dosing~~to in48 weeks thereafter. The primary study endpoints of the PRTX-100-~~103~~203 Study ~~with~~include asafety, ~~total~~immunogenicity ofand 37pharmacokinetics. ~~patients~~Secondary ~~enrolled in four~~endpoints ~~cohorts~~include ~~ranging~~platelet ~~from~~response 0and duration.15 ~~micrograms/kg~~Enrollment towas ~~1.50~~completed ~~micrograms/kg~~in ofthe PRTX-100-203 orStudy ~~placebo,~~earlier ~~administered~~this ~~weekly~~year. ~~for~~A ~~four~~total ~~weeks.~~of ~~Measures~~15 patients ofcompleted ~~safety,~~the PKPRTX-100-203 ~~and~~Study ~~disease~~up ~~activity~~through ~~were~~the ~~evaluated~~fifth ~~over~~dosage 16cohort ~~weeks~~(24 ~~following~~mg/kg) ~~the~~with ~~first~~3 ~~dose~~patients having had a platelet response per protocol. ~~The~~Preliminary analysis of the PRTX-100-~~103~~203 Study ~~results~~data ~~demonstrated~~ showed that PRTX-100 ~~was~~had ~~generally~~an ~~safe~~acceptable safety profile across the dose range studied and ~~well-tolerated~~that inplatelet ~~patients~~counts ~~with~~were ~~active~~elevated RAin atmost ~~all~~patients ~~tested~~that ~~dose~~received ~~levels~~four weeks of treatment.

InWe ~~November~~maintain ~~2012,~~an weadministrative ~~commenced~~office ~~enrollment~~ in ~~the~~Florham ~~United States for a new multicenter Phase 1b randomized~~Park, ~~multiple-dose,~~New ~~dose-escalation~~Jersey ~~study~~and ~~(the~~currently ~~“PRTX-100-104~~outsource ~~Study”) of~~all ~~PRTX-100 in combination with methotrexate or leflunomide in adult patients with active RA. The sequential dose-escalation phase~~ of ~~this~~our ~~study~~product ~~was~~development ~~expected~~and toregulatory ~~enroll~~activities, ~~patients~~including ~~into~~clinical ~~five cohorts ranging from 1.50 micrograms/kg up to 18.0 micrograms/kg of PRTX-100~~trial ~~or placebo. At each dose~~activities, ~~one~~manufacturing ~~quarter~~and oflaboratory ~~patients would receive a placebo treatment. Similar to the PRTX-100-103 Study~~operations, ~~the primary objective of the PRTX-100-104 Study was~~ to ~~assess the safety and tolerability of intravenous PRTX~~third-~~100~~party ~~administered~~contract ~~weekly~~research ~~over five weeks in patients with active RA on methotrexate or leflunomide therapy. The secondary objectives included determining the effects of PRTX-100 on measures of disease activity~~organizations, ~~assessing~~consultants ~~the immunogenicity~~ and ~~evaluating the PK parameters after repeated doses, and determining possible relationships between the immunogenicity of PRTX-100 and safety and PK~~facilities.

InChange ~~August~~in ~~2013,~~Control ~~upon completion of the fourth cohort, we expanded the 3.0 microgram, 6.0 microgram,~~ and ~~12.0~~Incremental ~~micrograms/kg~~Financing dose cohorts of the PRTX-100-104 Study. An additional nine patients were enrolled in the expansion cohort that was completed in October 2013. In total, the first four dose-escalating cohorts of the PRTX-100-104 Study, which included these three expanded cohorts, enrolled 41 patients with doses ranging from 1.5 micrograms/kg up to 12.0 micrograms/kg.Transactions

In ~~November~~April ~~2013~~2009, weunder ~~initiated~~prior ~~enrollment of~~management, ~~the~~we ~~fifth~~ceased ~~and~~all ~~final~~operations ~~cohort~~and ~~(Cohort~~terminated 5)all employees in ~~the~~light ~~PRTX 100-104 Study. The Cohort 5 sub-study enrolled 20 patients who received five weekly fixed-weight doses~~ of ~~PRTX-100~~insufficient ~~followed~~funds ~~by up~~ to ~~four~~continue ~~additional~~our ~~monthly~~clinical ~~maintenance~~trials ~~doses~~and ~~of PRTX-100 in weeks 8, 12, 16,~~related ~~and~~product 20development. ~~The~~Our ~~primary~~business ~~objective of the Cohort 5 sub-study~~ was todormant ~~assess~~until ~~safety~~current ~~and~~management ~~tolerability~~took ofcontrol ~~these doses administered on a modified schedule. In total, 11 out~~ of 20our ~~patients~~operations in ~~Cohort~~November 52009 ~~completed~~following the ~~all~~change ~~study~~in ~~visits~~control bytransaction ~~August~~more ~~2014~~fully ~~per~~described ~~protocol~~below.

12On November 11, 2009 (the “Effective Date”), we consummated a financing transaction (the “Financing”) in which we raised $3 million of working capital pursuant to a Securities Purchase Agreement (the “Purchase Agreement”) with Niobe Ventures, LLC, a Delaware limited liability company (“Niobe”). Pursuant to the Purchase Agreement, we issued to Niobe (i) 8,695,652 restricted shares of our common stock at a purchase price of $0.23 per share (or $2 million in the aggregate) and (ii) a senior secured convertible promissory note in the principal amount of $1 million convertible into shares of our common stock at an initial conversion price equal to $0.23 per share (the “$1 Million Secured Note”). On February 11, 2011, Niobe converted the $1 Million Secured Note, including $37,500 of accrued interest thereon, into 4,510,870 shares of our common stock.

AAs ~~total~~contemplated ofby 61the ~~patients~~Purchase ~~enrolled~~Agreement, ~~across~~all ~~five~~of ~~cohorts~~our inexecutive officers and all of the ~~PRTX~~members ~~100-104~~of ~~Study~~our atBoard ~~nine~~of ~~study~~Directors ~~sites~~(the in“Board”) prior to the ~~United~~closing ~~States.~~of the ~~For~~Financing, ~~patients~~with inthe ~~all~~exception ~~five~~of ~~cohorts~~Frank M. Dougherty, ~~PRTX~~resigned effective concurrently with the closing of the Financing. Mr. Dougherty resigned effective upon the expiration of the 10-~~100~~day notice period required by Rule 14f-1 under the Securities Exchange ~~appeared~~Act ~~safe~~of ~~and~~1934, ~~well~~as ~~tolerated~~amended in(the ~~all~~“Exchange ~~individuals~~Act”). In addition, ~~including~~effective ~~those~~upon ~~who~~the ~~developed~~closing ~~ADAs~~of the Financing, our Board appointed Arnold P. Kling as a director and ~~the~~then AEelected ~~profile~~him ~~was~~as ~~consistent~~our ~~with~~ president and elected Kirk M. Warshaw as our ~~prior~~chief financial ~~clinical~~officer ~~trial~~and ~~results~~secretary.

InOn February ~~2015~~11, we2011, ~~commenced~~for ~~enrollment,~~the purpose of atproviding aus ~~single~~with ~~U.S.~~additional ~~site~~working capital, ofpursuant ato ~~Phase~~an ~~I/II~~existing ~~open-label,~~Credit ~~multiple,~~Facility ~~fixed-dose~~Agreement ~~study~~dated as of December 2, 2009 (the “~~PRTX-100-105 Study~~Facility”) ~~which~~with ~~was open~~Niobe, ~~only~~we issued to ~~PRTX-100-104~~Niobe ~~Study~~a ~~patients~~senior ~~who~~secured ~~indicated~~convertible ~~their~~promissory ~~desire~~note ~~for~~in ~~additional~~the ~~treatment.~~principal ~~The~~amount ~~PRTX-100-105 Study was an open-label,~~of ~~single~~$2 ~~group~~million ~~study~~(the ~~with~~“$2 ~~former~~Million ~~participants~~Secured ~~from~~Convertible ~~the~~Note”). ~~104~~The ~~Study~~$2 ~~who~~Million ~~were~~Secured ~~eligible~~Convertible toNote ~~receive~~provided afor ~~fixed~~conversion into ~~dose~~shares of ~~PRTX-100~~our ~~over~~common astock ~~6-month period.~~at ~~The~~a ~~primary~~conversion ~~study~~price ~~endpoint~~ of ~~the~~$0.23 ~~105~~per ~~Study~~share, ~~was~~for ~~the~~an ~~safety~~aggregate ~~and tolerability~~ of a8,695,652 ~~fixed~~shares ~~dose~~ of ~~PRTX-100~~our ~~administered~~common ~~over~~stock an(net ~~extended~~of ~~period.~~accrued ~~The~~interest ~~secondary~~thereon), ~~endpoints~~bore ~~included~~interest ~~immunogenicity,~~at ~~effects~~a onrate ~~measures~~ of RA3% ~~disease~~per ~~activity,~~annum ~~evaluation~~and ~~of anti-PRTX-100~~matured ~~antibody~~on ~~presence~~December 31, ~~and~~2013. ~~feasibility~~The oforiginal ~~joint~~maturity was ~~evaluations~~December ~~with~~31, ~~ultrasound~~2012 ~~and~~but ~~biomarkers~~in asDecember ~~disease~~2012 ~~markers.~~Niobe Aagreed, ~~total of~~for ~~eight~~no ~~patients~~consideration, ~~completed~~to ~~all~~extend ~~105~~the ~~Study~~maturity ~~visits~~date ~~per~~to ~~protocol~~December 31, 2013.

InThe ~~the~~$2 ~~PRTX-100-105~~Million ~~Study,~~Secured aConvertible ~~preliminary interim~~Note ~~analysis~~was ~~indicated~~convertible ~~that~~at ~~for~~any ~~patients~~time, ~~who~~by ~~completed~~the ~~per protocol~~holder, ~~PRTX-100~~subject ~~exhibited~~only anto ~~acceptable~~the ~~safety~~requirement ~~profile~~that ~~and~~we RAhave ~~disease~~sufficient authorized shares of our common ~~activity~~stock ~~was~~after ~~improved~~taking ininto aaccount ~~majority~~all outstanding shares of ~~patients~~our atcommon stock and the ~~end~~maximum number of ~~the~~shares ~~study~~issuable asunder ~~compared~~all issued toand ~~baseline~~outstanding convertible securities. In Noaddition, ~~serious~~the ~~adverse~~$2 ~~events~~Million ~~(SAEs) were~~Secured ~~reported.~~Convertible AtNote ~~study~~would ~~day~~automatically be ~~196,~~converted ~~one~~if ~~month~~we ~~after~~undertake ~~the~~certain ~~final~~Fundamental ~~dose~~Transactions, ~~patients~~as ~~who~~defined ~~completed~~in the ~~study~~$2 ~~per~~Million ~~protocol~~Secured ~~demonstrated~~Convertible aNote, ~~mean~~(such as ~~reduction~~a merger, sale of ~~the~~all ~~DAS28CRP~~of ~~score~~our ~~from~~assets, ~~5.25~~exchange toor ~~2.52~~tender offer, ~~suggesting~~or areclassification ~~clinically~~of ~~meaningful~~our ~~improvement~~stock inor ~~disease~~compulsory ~~activity~~exchange). ~~Additionally,~~ The ~~clinical~~$2 ~~assessment~~Million bySecured ~~Ultrasound~~Convertible ~~Power~~Note ~~Doppler~~also ~~Joint~~provided ~~Counts~~for ~~(UPD),~~the ~~also~~adjustment ~~revealed~~of athe ~~reduction~~conversion price in ~~average~~the ~~disease~~event ~~severity~~of bystock ~~day~~dividends and ~~196~~stock splits, and provides for acceleration of maturity, at the ~~correlation~~holder’s ~~between~~option, upon an event of default, as defined in the ~~UPD~~$2 Million Secured Convertible Note. On August 27, 2013, Niobe elected to convert the principal and accrued interest of $2,155,000 under the ~~DAS28CRP~~$2 ~~was~~Million ~~r=0.624~~Secured ~~(p<~~Convertible Note into 9,369,565 shares of our common stock.~~0005).~~

In ~~November 2015~~2012, wefrom ~~commenced~~February ~~enrollment~~1, ~~and enrolled~~2012 ~~our first patient in the PRTX-100-202 Study. The PRTX-100-202 Study may enroll up to 36 patients in as many as six cohorts.~~through ~~Each~~December ~~patient~~3, ~~will~~2012, ~~receive~~we ~~four~~raised ~~weekly~~an ~~intravenous~~aggregate ~~doses~~ of ~~PRTX-100 and will be monitored for up to 48 weeks thereafter~~$3.5 ~~The~~million ~~primary study endpoint~~ of ~~the~~additional ~~PRTX-100-202~~working ~~Study~~capital ispursuant ~~a platelet response~~ to ~~PRTX-100.~~four ~~Secondary~~loans ~~endpoints~~from ~~include~~Niobe ~~safety, immunogenicity,~~ and ~~pharmacokinetics. One patient in each of the first two cohorts of the PRTX-100-202 Study has had a platelet response per protocol.~~issued ~~Enrollment~~to isNiobe ~~continuing~~four ~~for~~secured ~~patients~~promissory innotes ~~the fourth cohort~~ in the ~~PRTX-100-202~~same ~~Study~~aggregate atprincipal anamount, ~~increased~~hereinafter ~~dose~~referred atto ~~study~~as ~~sites~~the in“2012 ~~both~~Secured ~~the U~~Notes.~~S. and the UK.~~”

In ~~January 2016~~2013, wefrom ~~commenced~~January ~~enrollment~~18, of2013 through ~~our~~August ~~first~~27, ~~patient~~2013, inwe ~~the~~raised ~~European~~an ~~based~~aggregate ~~PRTX-100-203~~of ~~Study~~$5.5 ~~The~~million ~~PRTX-100-203 Study may enroll up to 30 patients in as many as five cohorts. Each patient will receive four weekly intravenous doses~~ of ~~PRTX-100~~additional ~~and~~working ~~will~~capital bepursuant ~~monitored for up~~ to 48three ~~weeks~~loans ~~thereafter. The~~from ~~primary~~Niobe ~~study endpoints of the PRTX-100-203 Study include safety, immunogenicity~~ and ~~pharmacokinetics. Secondary endpoints~~issued ~~include~~to ~~platelet~~Niobe ~~response~~three ~~and~~secured ~~duration.~~promissory ~~Two~~notes ~~patients~~ in the ~~PRTX-100-203~~same ~~Study~~aggregate ~~have~~principal ~~had a platelet response per protocol. Following the recommendation of our Safety and Monitoring Committee upon evaluating safety data from the fifth dosage cohort of 24 mg/kg~~amount, ~~enrollment~~ ishereinafter ~~continuing~~referred ~~in the UK for up~~ to ~~three~~as ~~additional patients in~~ the 18“2013 ~~mg/kg dosage cohort~~Secured Notes.”

WeCollectively, ~~maintain~~the an2012 ~~administrative~~Secured ~~office~~Notes ~~in Florham~~and ~~Park,~~the ~~New~~2013 ~~Jersey~~Secured ~~and~~Notes ~~currently~~represented ~~outsource~~a ~~all~~total of ~~our~~$9 ~~product~~million ~~development~~of ~~and~~loans ~~regulatory~~from ~~activities~~Niobe, ~~including~~hereinafter ~~clinical~~referred ~~trial activities, manufacturing and laboratory operations,~~ to ~~third-party~~as ~~contract~~the ~~research~~“Secured ~~organizations, consultants and facilities~~Notes.”

InOn ~~April~~October ~~2009~~11, ~~under prior management~~2013, we ~~ceased all~~issued ~~operations~~a Consolidated, Amended and ~~terminated~~Restated ~~all~~Promissory ~~employees~~Note to Niobe in ~~light~~the principal amount of ~~insufficient~~$9,219,366 ~~funds~~which tobore ~~continue~~interest ~~our~~at ~~clinical~~a ~~trials~~rate ~~and~~of ~~related~~3% ~~product~~per annum ~~development.~~and, ~~Our~~as ~~business~~amended, was ~~dormant~~due ~~until~~to ~~current~~mature ~~management~~on ~~took~~September ~~control~~1, of2018 ~~our~~(the ~~operations~~“Consolidated inNote”). The ~~November~~face ~~2009~~amount ~~following~~of the ~~change~~Consolidated inNote ~~control~~reflects ~~transaction~~the ~~more~~$9 ~~fully~~million ~~described~~aggregate ~~below~~principal amount of the Secured Notes plus interest accrued at 3% per annum on the notes from their respective dates of issuance.

13On January 23, 2014, we consummated a private placement financing to accredited investors of 471,334 shares of our common stock at $6.00 per share, yielding gross proceeds of $2,828,000. No commissions were payable in connection with the financing transaction. Proceeds of the financing were used for working capital purposes, principally to fund ongoing clinical trials and studies and related activities. The investors in the offering were granted piggy-back registration rights in connection with certain registration statements filed by us, subject to certain exceptions, including a registration statement filed in connection with a primary offering.

~~Change~~On inNovember ~~Control~~4, 2014, we entered into a new Credit Facility Agreement (the “2014 Credit Facility Agreement”) pursuant to which, as amended and ~~Incremental~~restated through ~~Financing~~January ~~Transactions~~2018, we borrowed an aggregate of an additional $13.05 million from Niobe (the “2014 Credit Facility”). Each loan made under the 2014 Credit Facility was represented by a senior secured promissory note which bore interest at a rate of 3% per annum and was due to mature on September 1, 2018. Our obligations under the 2014 Credit Facility were secured by a first priority perfected security interest in all of our assets.

On ~~November~~February 1128, ~~2009 (the “Effective Date”)~~2018, we ~~consummated~~raised aan aggregate ~~financing~~of ~~transaction~~$1.425 ~~(the~~million ~~“Financing”)~~from ineight ~~which~~accredited weinvestors ~~raised~~in ~~$3,000,000 of working capital pursuant to~~ a ~~Securities~~private ~~Purchase~~placement ~~Agreement~~financing (the “~~Purchase Agreement~~Offering”) ~~with Niobe Ventures, LLC, a Delaware limited~~of ~~liability~~10% ~~company~~Senior ~~(“Niobe”).~~Convertible ~~Pursuant to the Purchase Agreement~~Notes, wedue ~~issued~~on toFebruary ~~Niobe (i) 8~~28,~~695,652~~ ~~restricted~~2023 ~~shares of our common stock at a purchase price of $0.23 per share~~ (~~or $2 million in~~ the ~~aggregate)~~“Senior ~~and (ii~~Notes”). aNo ~~senior~~commissions ~~secured~~were ~~convertible promissory~~paid ~~note~~ in connection with the ~~principal~~Offering ~~amount~~which ofwas $1principally ~~million~~sold ~~convertible~~to ~~into~~certain ~~shares~~ of our ~~common~~existing ~~stock~~stockholders. atProceeds anof ~~initial~~the ~~conversion price~~Offering ~~equal~~have tobeen ~~$0.23~~used ~~per~~for ~~share~~working ~~(the~~capital ~~“$1~~purposes, ~~Million~~principally ~~Secured~~to ~~Note”).~~fund Onongoing ~~February~~clinical ~~11,~~trials ~~2011,~~and ~~Niobe~~studies ~~converted~~and ~~the $1 Million Secured~~related ~~Note,~~activities. ~~including~~No ~~$37,500~~registration ofrights ~~accrued~~were ~~interest~~granted ~~thereon,~~to ~~into~~the ~~4,510,870~~investors ~~shares~~in ofthe ~~common stock~~Offering.

As contemplated by the Purchase Agreement, all of our executive officers and all of the members of our Board of Directors (the “Board”) prior to the closing of the Financing, with the exception of Frank M. Dougherty, resigned effective concurrently with the closing of the Financing. Mr. Dougherty resigned effective upon the expiration of the 10-day notice period required by Rule 14f-1 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In addition, effective upon the closing of the Financing, our Board appointed Arnold P. Kling as a director and then elected him as our president and elected Kirk M. Warshaw as our chief financial officer and secretary.13

OnThe ~~February~~Senior ~~11,~~Notes ~~2011,~~are ~~for the~~convertible ~~purpose~~into shares of ~~providing~~our uscommon ~~with~~stock ~~additional~~at ~~working~~a ~~capital,~~price ~~pursuant~~of to$0.20 anper ~~existing~~share ~~Credit~~at ~~Facility~~the ~~Agreement~~option ~~dated~~of asthe ofholder ~~December 2~~prior to maturity or earlier prepayment, ~~2009~~accrue (interest at the ~~“Facility”)~~rate ~~with~~of ~~Niobe,~~10% weper ~~issued~~annum toand ~~Niobe~~are adue ~~senior~~on ~~secured~~February ~~convertible~~28, ~~promissory~~2023. ~~note~~Upon inconversion, the ~~principal amount~~note holder will receive 5,000 shares of $2our common ~~million~~stock ~~(the~~for “each $21,000 ~~Million~~of ~~Secured~~principal ~~Convertible~~or ~~Note”)~~accrued interest converted. ~~The~~Two-thirds $2of ~~Million~~the ~~Secured~~shares ~~Convertible~~issuable ~~Note~~upon ~~provided for~~any conversion of ~~into~~the ~~shares~~Senior ofNotes ~~our~~will ~~common~~be ~~stock~~acquired atby aus ~~conversion~~from ~~price~~Niobe offor nominal consideration ($0.2301 per share,) ~~for~~pursuant anto ~~aggregate~~a ofmandatory ~~8,695,652~~call ~~shares~~agreement ofentered ~~our~~into ~~common~~in ~~stock~~connection ~~(net~~with ofthe ~~accrued~~Offering ~~interest~~(the ~~thereon~~“Call Agreement”),. ~~bore~~As ~~interest~~a atresult, afor ~~rate~~each $1,000 of 3%principal ~~per~~or ~~annum~~interest converted, ~~and~~we ~~matured~~will onissue ~~December~~approximately 311,667 ~~2013~~new shares. ~~The~~ ~~original~~Accordingly, ~~maturity~~our ~~was~~effective ~~December~~conversion ~~31,~~price ~~2012~~will ~~but~~be inapproximately ~~December~~$0.60 per ~~2012~~share ~~Niobe~~of ~~agreed~~our common stock, ~~for~~with noNiobe ~~consideration,~~incurring tosubstantially ~~extend~~all of the ~~maturity~~associated ~~date~~dilution. The closing price per share of toour ~~December~~common ~~31,~~stock ~~2013~~on the date of the Offering was $0.45.

~~The~~On $2March ~~Million Secured Convertible Note was convertible at any time~~13, ~~by the holder~~2018, ~~subject only to the requirement that~~ we ~~have~~raised ~~sufficient~~an ~~authorized shares of common stock~~additional ~~after~~$50,000 ~~taking~~in ~~into~~the ~~account~~Offering ~~all outstanding shares of common stock~~ and ~~the maximum number of shares issuable under all~~ issued ~~and outstanding~~a ~~convertible~~Senior ~~securities. In addition, the $2 Million Secured Convertible~~ Note ~~would automatically be converted if we undertake certain Fundamental Transactions, as defined~~ in the $2principal ~~Million~~amount ~~Secured Convertible Note, (such as a merger, sale~~ of ~~all of our assets~~$50,000 ~~exchange~~to oran ~~tender~~accredited ~~offer, or reclassification of our stock or compulsory exchange)~~investor. ~~The~~ $2In ~~Million Secured~~connection ~~Convertible Note also provided for~~ with the ~~adjustment~~foregoing, ofon ~~the~~March ~~conversion~~13, ~~price~~2018, in the ~~event~~Call ofAgreement ~~stock~~was ~~dividends~~amended and ~~stock~~restated ~~splits, and~~to ~~provides~~also ~~for~~include ~~acceleration~~two-thirds of ~~maturity, at~~ the ~~holder’s~~shares ~~option,~~ issuable upon ~~an event of default, as defined in~~ the $2conversion ~~Million Secured Convertible Note. On August 27, 2013, Niobe elected to convert the principal and accrued interest~~ of ~~$2,155,000~~this ~~under~~Senior ~~the $2 Million Secured Convertible~~ Note ~~into 9,369,565 shares of common stock~~.

OnAs a condition to the consummation of the Offering, on February 128, ~~2012~~2018, we ~~raised~~entered into an Exchange Agreement with Niobe (the “Exchange Agreement”) pursuant to which Niobe converted the $122,~~000~~269,~~000~~367 ofaggregate outstanding principal balance under the Consolidated ~~working~~Note ~~capital~~and ~~pursuant~~the to2014 aCredit ~~loan~~Facility, ~~from~~as ~~Niobe.~~of WeFebruary ~~issued~~28, to2018, ~~Niobe~~into 18,557,805 shares of our common stock at a ~~secured~~conversion ~~promissory~~price ~~note~~of $1.20 per share. This resulted in ~~the~~a ~~principal~~gain ~~amount~~on conversion of $113,~~000~~918,~~000~~354, which was recognized against equity and had no impact on (the ~~“February~~Statement ~~2012~~of ~~Secured Note”)~~Operations. ~~The~~We also issued a promissory note, dated February ~~2012~~28, ~~Secured~~2018, ~~Note~~to ~~bore~~Niobe in the principal amount of $1,974,349 bearing interest at a rate of 3% per annum and ~~had a~~maturing ~~maturity~~on ~~date~~March of31, ~~February 1~~2023, ~~2014~~for the accrued but unpaid interest on the notes converted by Niobe.

OnAll ~~June~~of 5,the ~~2012,~~securities weissued ~~raised~~in anthe ~~additional $1,000,000~~aforementioned offinancings ~~working~~were ~~capital~~issued ~~pursuant~~in toreliance anupon ~~incremental~~the ~~loan~~exemption from ~~Niobe~~the ~~and~~registration ~~issued~~requirements toof ~~Niobe~~the aSecurities ~~secured~~Act ~~promissory~~of ~~note~~1933, inas amended (the ~~principal~~“Act”) ~~amount of~~pursuant ~~$1,000,000,~~to ~~which~~Sections ~~bore~~4(a)(2) ~~interest~~and/or at 4(a)(5) ~~rate~~and Rule 506 of 3%Regulation ~~per~~D ~~annum~~thereof. The offer, sale and ~~had~~issuance of asuch ~~maturity~~securities ~~date~~were ofmade ~~May~~without ~~31,~~general ~~2014~~solicitation ~~(the~~or ~~“June~~advertising. ~~2012~~The ~~Secured~~securities were offered and issued only to “accredited ~~Note~~investors”) as such term is defined in Rule 501 under the Act.

OnAbout ~~October~~PRTX-100 1, 2012, we raised $800,000 of additional working capital pursuant to an incremental loan from Niobe and issued to Niobe a secured promissory note in the principal amount of $800,000, which bore interest at a rate of 3% per annum and had a maturity date of October 1, 2014 (the “October 2012 Secured Note”).

OnPRTX-100 ~~December~~is 3,a ~~2012~~proprietary, wehighly ~~raised~~purified form ~~$700,000~~of the Staphylococcal bacterial protein known as Protein A which is a bacterial protein known to modify aspects of the human ~~additional~~immune ~~working~~system. ~~capital~~PRTX-100 ~~pursuant~~has tothe anability, ~~incremental~~at ~~loan~~very ~~from~~low ~~Niobe~~concentrations, to bind to human B-lymphocytes and ~~issued~~macrophages and to ~~Niobe~~modulate immune aprocesses. ~~secured~~Pre-clinical ~~promissory~~studies ~~note~~also indemonstrate ~~the~~that ~~principal amount~~low doses of ~~$700,000,~~PRTX-100 ~~which~~have ~~bore~~potent ~~interest~~therapeutic ateffects ain ~~rate~~certain models of 3%immune-mediated ~~per~~inflammatory ~~annum~~diseases. Both the PRTX-100-103 and ~~had~~the aPRTX-100-104 ~~maturity~~studies ~~date~~demonstrated ofthat ~~October~~PRTX-100 1was generally safe and well tolerated at all dose levels, ~~2014~~and ~~(the~~at ~~“December~~certain higher doses, more patients showed improvement in measures of disease ~~2012~~activity ~~Secured~~than ~~Note”)~~did patients at the lower dose or placebo cohorts.

~~Collectively,~~Animal ~~the~~Studies ~~February 2012 Secured Note, the June 2012 Secured Note, the October 2012 Secured Note and the December 2012 Secured Note are hereinafter referred to as the “2012 Secured Notes.”~~

14Protalex’s lead product candidate, PRTX-100, has demonstrated positive results in several standard mouse models of autoimmunity, including the following:

OnCollagen-Induced ~~January~~Arthritis 18- PRTX-100 has demonstrated reproducible efficacy in this well-established animal model of RA. Mice received two injections of collagen in order to stimulate an inflammatory response. One group was treated with various doses of PRTX-100, ~~2013~~a second group received Enbrel®, a weleading ~~raised~~commercially $2available treatment for RA,~~500~~ and the control group was injected with vehicle saline solution. The mice were observed for clinical symptoms,~~000~~ joint size and loss of ~~additional~~ ~~working~~function. ~~capital~~The ~~pursuant~~results toshowed anthat ~~incremental~~low ~~loan~~doses ~~from~~of ~~Niobe~~PRTX-100 and ~~issued~~standard todoses of ~~Niobe~~Enbrel® asuppressed ~~secured~~clinical ~~promissory~~symptoms ~~note~~including injoint swelling over the ~~principal amount~~first two to three weeks of $2treatment,~~500~~ and slowed disease progression as compared with the control group. Thereafter,~~000,~~ ~~which~~the ~~bore~~PRTX-100-treated ~~interest~~mice atcontinued to remain disease-free whereas the mice treated with Enbrel® showed a ~~rate~~resumption of 3%joint ~~per~~inflammation ~~annum~~ and ~~had~~tissue adamage. ~~maturity~~This ~~date~~response ofto ~~January~~Enbrel® was ~~15,~~expected ~~2015~~because (the ~~“January~~mice developed immune response to it because it is a foreign protein. Overall, these results indicate ~~2013~~that ~~Secured~~PRTX-100 ~~Note”)~~is a potential treatment for RA in humans. The data from these studies has served as a rationale for conducting clinical trials in human patients.

OnBXSB ~~May~~Mice ~~13,~~- ~~2013,~~These weanimals are ~~raised~~genetically ~~$2,000,000~~predisposed ofto ~~additional working~~autoimmune ~~capital~~diseases. ~~pursuant~~This model is used to anevaluate ~~incremental~~drugs ~~loan~~for ~~from~~autoimmune ~~Niobe~~diseases such as Lupus and ~~issued~~other toautoimmune ~~Niobe~~diseases. aThis ~~secured~~genetic ~~promissory~~model ~~note~~more inclosely approximates the ~~principal~~human ~~amount~~condition in that it is complex, multi-factorial ofand $2usually treated by multiple drug regimens. In these studies,~~000,000,~~ ~~which~~mice ~~bore~~were ~~interest~~treated with PRTX-100 and sacrificed at aregular ~~rate~~intervals. Their oforgans 3%were ~~per~~weighed ~~annum~~and sectioned for histological analysis and ~~had~~their aspleens ~~maturity~~were ~~date~~used offor ~~May~~immunological 13assays. Spleen enlargement, ~~2015~~or (splenomegaly, was significantly reduced in treated animals compared with the ~~“May~~controls ~~2013~~at ~~Secured~~almost every time point, ~~Note”)~~demonstrating the ability of PRTX-100 to delay the onset and severity of this disease.

OnCompleted ~~August~~pre-clinical ~~27,~~safety ~~2013,~~studies wein animals ~~raised~~showed ~~$1,000,000~~no ~~of additional~~drug-related ~~working~~toxicity ~~capital~~at ~~pursuant~~doses up to an5-fold ~~incremental~~the ~~loan~~highest ~~from~~currently ~~Niobe~~planned clinical trial dose. These studies were conducted on New Zealand white rabbits and ~~issued~~on tocynomolgus ~~Niobe~~monkeys. aNo ~~secured~~differences ~~promissory~~were ~~note~~observed in ~~the~~body ~~principal~~weight gain or food ~~amount~~consumption, ofnor $1in hematology,~~000~~ clinical chemistry,~~000~~ urinalysis, ~~which~~or ~~bears~~organ ~~interest~~weight atdata ain ~~rate~~animals oftreated 3%with ~~per~~PRTX-100 ~~annum~~compared with ~~and~~controls ~~matures~~treated onwith ~~August~~vehicle. ~~27,~~These ~~2015~~study ~~(the~~results ~~“August~~represent ~~2013~~a ~~Secured Note”)~~necessary component of our IND application with the FDA.

~~Collectively, the January 2013 Secured Note, the May 2013 Secured Note, and the August 2013 Secured Note are hereinafter referred to as the “2013 Secured Notes.”~~14

~~Collectively,~~Additional ~~the~~studies ~~2012~~in ~~Secured~~monkeys ~~Notes~~have ~~and~~further characterized the ~~2013~~ ~~Secured~~PK, ~~Notes represent a total of $9~~toxicity,~~000,000~~ inand ~~principal~~pharmacodynamics ~~amount~~ of ~~loans~~PRTX-100 ~~from~~with ~~Niobe~~up ~~and are hereinafter referred~~ to as12 ~~the “Secured~~weekly ~~Notes~~doses.”

OnClinical October 11, 2013, we issued a Consolidated, Amended and Restated Promissory Note to Niobe in the principal amount of $9,219,366 (the “Consolidated Note”). The face amount of the Consolidated Note reflects the $9.0 million aggregate principal amount of the Secured Notes plus interest accrued at 3% per annum on each note from its respective date of issuance. The terms of the Consolidated Note were identical to the Secured Notes except that: (a) the maturity date was September 1, 2015, which is after the latest maturity date of any of the Secured Notes; and (b) it provided for partial mandatory repayment in the event that the Company received aggregate gross proceeds in excess of $7.5 million from a single or multiple “Liquidity Events” in an amount equal to twenty-five (25%) percent of such gross proceeds (the “Mandatory Repayment”). A “Liquidity Event” means (a) the sale of any of our equity, or equity-linked, securities, and (b) the receipt of proceeds, directly or indirectly related to a development and/or commercialization relationship entered into with an unaffiliated third party. In the Secured Notes, the entire principal amount of each note was due, at Niobe’s election, upon the consummation of an equity financing of $7.5 million or greater. Consistent with the terms of the Secured Notes and related security agreements entered into, our obligations under the Consolidated Note are secured by a first priority perfected security interest in all of our assets pursuant to a Consolidated, Amended and Restated Security Agreement dated October 11, 2013.Trials

OnFavorable ~~January~~pre-clinical 23safety and efficacy studies for our lead compound, ~~2014~~PRTX-100, welaid ~~consummated~~the afoundation ~~private placement~~for ~~financing~~the IND for treating RA. We submitted the IND to ~~accredited~~the ~~investors~~FDA ofin ~~471,334~~March 2005 ~~shares~~and oflater ~~common~~in ~~stock~~March at2005 ~~$6.00~~the ~~per~~FDA ~~share,~~verbally ~~yielding~~disclosed ~~gross~~to ~~proceeds~~us ofthat $2it had placed our IND on clinical hold,~~828,000.~~ pending additional product Nocharacterization. ~~commissions~~In ~~were~~August ~~payable~~2005, inwe ~~connection~~formally ~~with~~replied to the ~~financing~~FDA ~~transaction. Proceeds~~and ofin September 2005, the ~~financing~~FDA ~~have~~notified ~~been,~~us ~~and~~that ~~will~~it ~~continue~~had lifted tothe ~~be,~~clinical ~~used~~hold ~~for~~on ~~working~~our ~~capital~~IND ~~purposes,~~and ~~principally~~that toour ~~fund~~proposed ~~ongoing~~study could proceed. We have completed five clinical trials ~~and~~under ~~studies~~this IND. Our first Phase I single-dose clinical trial commenced in December 2005 and ~~related~~was ~~activities~~completed in March 2006. ~~The~~ ~~investors~~This trial was performed in healthy volunteers and was designed primarily to assess the ~~offering~~safety ~~were~~and ~~granted~~tolerability ~~piggy~~of a single intravenous dose of PRTX-~~back~~100. This ~~registration~~study ~~rights~~demonstrated inthat ~~connection~~PRTX-100 ~~with~~appears ~~certain~~safe ~~registration~~and ~~statements~~well-tolerated ~~filed by~~at ~~us,~~the ~~subject~~doses toadministered. ~~certain~~There ~~exceptions,~~were ~~including~~no adeaths ~~registration~~or ~~statement~~serious adverse ~~filed~~events. inThe ~~connection~~PK profile was determined and found consistent with athat ~~primary~~projected ~~offering~~from pre-clinical models.

OnIn ~~November~~May 42007, ~~2014,~~ we ~~entered~~filed ~~into~~an aamendment ~~new~~to ~~Credit~~the ~~Facility~~IND ~~Agreement~~with (the ~~“2014~~FDA. ~~Credit~~This ~~Facility~~amendment ~~Agreement”)~~included ~~pursuant~~the tofinal ~~which~~Phase weI ~~may~~safety ~~borrow~~study upreport tofrom anthe ~~additional~~2006 ~~$5.0 Million~~trial, ~~from~~changes ~~Niobe,~~to inour ~~the~~techniques for ~~form~~purification and characterization of ~~secured~~PRTX-100, ~~loans~~a Chemistry, inManufacturing ~~accordance~~and ~~with~~Controls ~~the~~update, ~~2014~~and ~~Credit~~a ~~Facility~~protocol ~~Agreement~~for ata ~~any~~second single-dose ~~time~~Phase ~~prior~~I toclinical ~~the December~~trial. ~~31,~~In ~~2015~~July ~~expiration~~and ~~date~~August ~~(the~~2007 ~~“2014~~a ~~Credit~~second ~~Facility”).~~Phase ~~Each~~I ~~loan~~study ~~made~~was performed under the ~~2014~~IND, ~~Credit~~to ~~Facility~~further ~~Agreement~~characterize ~~has~~the ~~been~~safety, ~~represented~~PK, byand pharmacodynamic profile of a ~~senior~~single-dose ~~secured~~of ~~promissory~~PRTX-100 ~~note~~in ~~bearing~~healthy ~~interest~~volunteers at adoses ~~rate~~in ofthe 3%projected ~~per~~therapeutic range. ~~annum~~Final ~~which~~results ~~matures~~indicated onthat ~~September 1,~~the ~~2016~~drug ~~(each~~appears ansafe ~~“Original~~and ~~Note”)~~well-tolerated. ~~Our~~In ~~obligations~~August ~~under~~2009, ~~each~~a ~~Original~~Phase ~~Note~~1b ~~have~~randomized, ~~been~~double-blind, placebo-controlled, ~~secured~~multiple bydose, adose-escalation ~~first~~and ~~priority~~tolerability ~~perfected security~~study ~~interest~~of PRTX-100 in ~~all~~combination ofwith ~~our~~methotrexate ~~assets~~or ~~pursuant~~leflunomide in topatients ~~the~~with ~~Second~~active ~~Consolidated~~RA, ~~Amended~~(the ~~and~~“PRTX ~~Restated~~100-103 ~~Security~~Study”) ~~Agreement~~was ~~between~~approved usby the South African Medicines Control Agency. ~~and~~The ~~Niobe,~~PRTX-100-103 ~~entered~~Study ~~into~~commenced in August 2010 at ~~the~~three ~~same~~sites ~~time~~in asSouth ~~the~~Africa ~~2014~~and ~~Credit~~was ~~Facility~~completed ~~Agreement~~in ~~(the~~January ~~“Security~~2012 ~~Agreement”)~~as detailed below.

In ~~addition, on~~ November 42012, ~~2014,~~ we ~~entered~~commenced enrollment ~~into~~and dosing of patients at a ~~Note~~total ~~Modification~~of ~~Agreement~~nine (sites in the ~~“Note~~United ~~Modification~~States ~~Agreement”)~~for ~~with~~the ~~Niobe~~PRTX-100-104 ~~pursuant~~Study, toa ~~which~~second ~~the~~multicenter ~~Consolidated~~Phase 1b ~~Note~~randomized, asmultiple-dose, ~~modified~~dose-escalation study of PRTX-100 in ~~October~~combination ~~2014,~~with ~~was~~methotrexate ~~further~~or ~~amended~~leflunomide toin ~~increase~~adults ~~the~~with ~~threshold~~active RA ~~amount~~which ~~requiring~~is astill ~~Mandatory~~in ~~Prepayment~~progress ~~from~~as $7detailed below.~~5 Million~~ toThe ~~more~~PRTX-100-104 ~~than~~Study ~~$10~~sequentially ~~Million.~~escalated Asthe aweekly ~~result,~~dose ~~partial~~of ~~prepayment~~PRTX-100 ~~will~~from 1.5 ~~now~~micrograms/kg, bethe ~~triggered~~highest dose in the ~~event~~prior ofRA apatient ~~Liquidity~~study, ~~Event~~to indoses ~~which we~~of ~~receive~~3.0, ~~gross~~6.0, ~~proceeds~~and in12.0 ~~excess~~micrograms/kg. of ~~$10 million~~PRTX-100. ~~All~~In July ~~other~~2014, ~~terms~~the ~~and~~last ~~provisions~~patient ofin the ~~Consolidated~~PRTX-100-104 ~~Note~~Study ~~remained~~received ~~unchanged and~~their last dose in ~~full~~the ~~force~~fifth and ~~effect~~final cohort.

15In February 2015, we commenced enrollment, at a single U.S. site, of a Phase I/II open-label, multiple, fixed-dose study (the “PRTX-100-105 Study”) which was open only to PRTX-100-104 Study patients who indicated their desire for additional treatment. The PRTX-100-105 Study was an open-label, single group study with former participants from the 104 Study who were eligible to receive a fixed dose of PRTX-100 over a 6-month period. The primary study endpoint of the 105 Study was the safety and tolerability of a fixed dose of PRTX-100 administered over an extended period. The secondary endpoints included immunogenicity, effects on measures of RA disease activity, evaluation of anti-PRTX-100 antibody presence, and feasibility of joint evaluations with ultrasound and biomarkers as disease markers. A total of eight patients completed all 105 Study visits per protocol.

OnImmune ~~December~~Thrombocytopenia 1,(ITP) - ~~2015,~~ITP ~~the~~is ~~2014~~an ~~Credit~~uncommon ~~Facility was~~autoimmune ~~amended~~bleeding todisorder ~~increase~~characterized by insufficient platelets in the ~~funds~~blood. ~~available~~The ~~for~~affected ~~loans~~individuals make toantibodies usagainst totheir ~~$7.5~~own ~~million~~platelets ~~and~~leading to ~~extend~~ the ~~expiration~~platelets' ~~date~~destruction, ofwhich ~~such~~in ~~credit~~turn ~~facility~~ leads to ~~December~~the ~~31,~~abnormal ~~2016~~bleeding. A ~~pursuant~~small toclinical ~~which~~trial wein ~~entered~~adult ~~into~~patients ~~and~~with anchronic ~~Amended~~ITP ~~and~~was ~~Restated~~designed ~~2014~~to ~~Credit~~provide ~~Facility~~safety ~~Agreement~~data on repeated weekly dosing with PRTX-100 (the “~~Amended and~~PRTX-100b-103 ~~Restated Agreement~~Study”). ~~Each~~This ~~loan~~clinical study was to be conducted under the ~~Amended~~Australian and ~~Restated~~New ~~Agreement~~Zealand ~~has~~Clinical Trial ~~been~~Notification procedure, not under a U.S. IND, and ~~will~~was beinitiated, ~~represented~~but bynot acompleted. ~~senior~~A leading Australian clinical research ~~secured~~organization ~~promissory~~was ~~note~~contracted ~~bearing~~to ~~interest~~manage atand amonitor ~~rate~~this clinical trial. After the approval of 3%the ~~per~~clinical ~~annum~~protocol ~~which~~by ~~matures~~ethics oncommittees at ~~September~~six 1,sites ~~2017~~in ~~(each~~Australia aand ~~“New~~one ~~Note”). In~~in ~~addition~~New Zealand, the ~~Security~~PRTX-100b-103 ~~Agreement~~Study began enrolling patients in the second quarter of 2008. The PRTX-100b-103 Study was ~~also~~designed ~~amended~~to evaluate the safety and ~~restated~~PK of up to ~~secure~~four ~~our~~doses ~~obligations~~of ~~under~~PRTX-100, ~~all~~starting at the ~~Original~~lowest ~~Notes~~ dose, and ~~all~~ escalating upwards after safety review of the ~~New~~prior ~~Notes~~dose.

OnThe ~~June~~PRTX-100b-103 ~~30,~~Study ~~2016,~~proved ~~the~~difficult ~~2014~~to ~~Credit~~enroll ~~Facility~~due ~~was~~to ~~again~~other ~~amended~~on-going toITP ~~increase~~Phase ~~the~~III ~~funds~~studies ~~available~~and ~~for~~subsequent ~~loans~~availability toof ustwo tonew ~~$9.0~~and ~~million~~effective ~~(the~~medicines ~~“Second~~for ~~Amended~~ITP. Nine ~~and~~patients ~~Restated~~were ~~Agreement”).~~dosed ~~Each~~at ~~loan~~the ~~under~~first two dose levels by the ~~Second~~end ~~Amended~~of ~~and~~the ~~Restated~~first ~~Agreement~~quarter ~~has~~of ~~been~~2009. ~~represented~~At bythis apoint ~~New~~further ~~Note.~~recruitment Inof ~~addition,~~patients ~~the~~was ~~Security~~suspended. ~~Agreement~~No ~~was~~side ~~also~~effects ~~amended~~or ~~and~~toxicities ~~restated~~were tonoted ~~secure~~with ~~our~~repeated ~~obligations~~weekly ~~under~~doses ~~all~~of ~~the~~PRTX-100 ~~notes~~at ~~issued~~doses ~~under~~of ~~the~~0.075 ~~2014~~and 0.15 ~~Credit~~micrograms ~~Facility~~per askg ofthat ~~June~~were ~~30,~~not ~~2016~~seen ~~and~~with ~~all~~single doses in healthy volunteer trials. This repeated-dose safety data from the ~~New~~PRTX-100b-103 Study ~~Notes~~was ~~issued~~included ~~pursuant~~in the clinical trial application to ~~the~~evaluate ~~Second~~PRTX-100 ~~Amended~~in ~~and~~patients ~~Restated~~with ~~Agreement~~RA.

On August 31, 2016, we and Niobe agreed to extend the maturity date of the Consolidated Note and the maturity dates of all thirteen outstanding Original Notes with an aggregate principal amount of $5,030,000, from September 1, 2016 to September 1, 2017. All other terms and provisions of the Consolidated Note and Original Notes remained unchanged and in full force and effect.15

OnIn ~~October~~March 312015, ~~2016,~~ the ~~2014~~ ~~Credit~~FDA ~~Facility~~accepted ~~was~~our ~~amended~~IND application tofor ~~increase~~a ~~the~~Phase ~~funds~~I/II ~~available~~open-label, ~~for~~dose-escalating ~~loans~~study toof usPRTX-100 toin ~~$11.25~~adults ~~million~~with ~~and~~persistent/chronic toITP ~~extend~~ (the ~~expiration~~“PRTX-100-202 ~~date~~Study”). ofIn ~~the facility to~~ June 152015, ~~2017 (~~the ~~“Third~~FDA ~~Amended~~granted ~~and~~ODD ~~Restated~~to ~~Agreement”).~~PRTX-100 ~~Each~~for ~~loan~~the ~~under~~treatment ~~the~~of ~~Third~~ITP. ~~Amended and~~In ~~Restated~~July ~~Agreement~~2015, ~~will~~the beEMA ~~represented~~granted byapproval for a ~~senior~~Phase ~~secured~~1b ~~promissory~~open-label, ~~note~~dose-escalating ~~bearing~~study ~~interest~~of atPRTX-100 ain ~~rate~~adult ofpatients 3%with ~~per~~persistent/chronic ~~annum~~ITP ~~which~~(the “PRTX-100-203 ~~matures~~Study”). onIn ~~March~~September 312015, ~~2018~~COMP ~~(each~~issued a ~~“2018~~positive ~~Note”).~~opinion ~~The~~recommending ~~Security~~PRTX-100 ~~Agreement~~for ~~was~~designation ~~also~~as ~~amended~~an ~~and~~orphan ~~restated~~medicinal toproduct for ~~secure~~the treatment of ITP. In November 2015, we enrolled our ~~obligations~~ ~~under~~first ~~all~~patient in the ~~notes~~PRTX-100-202 ~~issued~~Study ~~under~~in the ~~2014~~United ~~Credit~~States ~~Facility~~and asin January of2016 ~~October~~enrolled ~~31,~~our ~~2016~~first ~~and~~patient ~~all~~in the ~~2018~~PRTX ~~Notes.~~100-203 InStudy ~~addition, we~~in ~~and~~Europe. ~~Niobe~~Enrollment ~~also~~was ~~agreed~~completed toin ~~extend~~both tostudies ~~March~~at ~~31,~~different dosage ~~2018,~~cohorts ~~the~~earlier ~~maturity~~this ~~dates~~year. ofIn ~~the~~August ~~Consolidated~~2017, ~~Note~~OOPD ~~and~~awarded ~~all~~us ~~the~~a ~~notes~~grant ~~issued~~of ~~and outstanding~~$403,000 ~~under~~to support the ~~2014~~future ~~Credit~~clinical ~~Facility~~development of PRTX-100 as ofa ~~October~~treatment ~~31,~~for ~~2016~~ITP.

AsRheumatoid ofarthritis ~~May~~- RA ~~31,~~is ~~2017~~a highly inflammatory polyarthritis often leading to joint destruction, deformity and loss of function. In addition to ~~the~~characteristic ~~outstanding~~symmetric ~~principal~~swelling ~~balance~~of ~~under~~peripheral ~~the~~joints, ~~Senior~~systemic ~~Secured~~symptoms ~~Debt~~related to ~~Niobe~~chronic ~~totaled~~inflammation ~~$20,299,366,~~can ~~including~~commonly ~~$9,219,366~~occur. Chronic ~~under~~pain, disability and excess mortality are unfortunate sequelae. RA is the ~~Consolidated~~most ~~Note~~common ~~and~~autoimmune ~~$11~~disease,~~080,000~~ ~~under~~affecting 1% to 2% of the ~~2014~~world’s ~~Credit~~population, ~~Facility~~with prevalence rising with age to about 5% in women over 55.

OnPRTX-100 ~~June~~shows 1,measurable ~~2017,~~activity ~~the~~in ~~2014~~a standard ~~Credit~~mouse ~~Facility~~model ~~was~~of ~~amended~~autoimmune toarthritis. ~~increase the~~A ~~funds~~substantial ~~available~~body ~~for~~of ~~loans~~published toliterature usand toproprietary ~~$13.05~~data ~~million~~delineate ~~and~~the toimmunomodulatory activities ~~extend~~of ~~the~~PRTX-100, ~~expiration~~which ~~date~~are ofdistinct ~~such~~from ~~facility~~those toof ~~March~~current ~~31,~~major ~~2018~~biologic ~~(the “Fourth~~treatments ~~Amended~~for ~~and~~rheumatoid ~~Restated Agreement”)~~arthritis. ~~Each~~Accordingly, we ~~loan~~believe ~~under~~that ~~the~~RA ~~Fourth~~represents ~~Amended~~a ~~and~~potentially ~~Restated~~important ~~Agreement~~clinical isindication ~~represented by~~for atreatment ~~2018~~with ~~Note~~PRTX-100. ~~The~~While ~~Security~~recent ~~Agreement~~advances ~~was~~in biologic ~~also~~treatments ~~amended~~for ~~and~~RA ~~restated~~have toimproved ~~also~~the ~~secure~~prognosis ~~our~~for ~~obligations~~many ~~under~~patients, ~~all~~many ~~the~~others ~~2018~~continue ~~Notes~~to ~~issued~~live with debilitating RA disease ~~pursuant~~activity due either to the ~~Fourth~~cost, ~~Amended~~side-effects, ~~and~~or ~~Restated~~limited ~~Agreement~~effectiveness of these newer therapies.

OnThe ~~August~~PRTX-100-103 22, 2017, we and Niobe agreed to extend the maturity date of all outstanding notes issued to Niobe from the current maturity date of March 31, 2018 to a new maturity date of September 1, 2018. All other terms and provisions of such notes remained unchanged and in full force and effect.Study

~~During~~In ~~the~~August ~~nine~~2010, ~~months~~we ~~ended~~commenced ~~February~~a ~~28, 2018,~~multi-center wePhase ~~borrowed~~1b anclinical ~~aggregate~~trial of ~~$1,970,000;~~PRTX-100 ~~$290,000~~in South Africa on ~~June~~adult ~~15,~~patients ~~2017,~~with ~~$290,000~~active RA on ~~July~~methotrexate ~~10,~~or ~~2017,~~leflunomide. ~~$290,000~~The onPRTX-100-103 Study ~~August~~served ~~10,~~to ~~2017,~~evaluate ~~$290,000 on~~safety ~~September~~and ~~15,~~potential ~~2017,~~efficacy ~~$290,000~~of onPRTX-100 ~~October~~in ~~23,~~patients ~~2017,~~with ~~$200,000~~active onRA ~~November~~and ~~17,~~was ~~2017,~~approved ~~$220,000~~to onenroll ~~December~~up 15to 40 patients in four dose-escalating cohorts. In January 2012, ~~2017~~we ~~and~~completed $patient dosing in the fourth cohort of the PRTX-100~~,000~~-103 onStudy. ~~January~~A ~~12,~~total ~~2018~~of 37 patients were enrolled in four cohorts ranging from 0.15 ~~Prior~~micrograms/kg to ~~the~~1.50 ~~Offering~~micrograms/kg ~~(described~~of ~~below)~~PRTX-100 or placebo, ~~the~~administered ~~outstanding~~weekly ~~principal~~for ~~balance~~four ~~under~~weeks. Measures of safety, PK, and disease activity were evaluated over 16 weeks following the ~~2014~~first ~~Credit~~dose. ~~Facility~~The PRTX-100-103 Study results demonstrated that PRTX-100 was generally safe and well-tolerated in patients with ~~totaled~~active ~~$13~~RA at all tested dose levels and at the higher doses,~~050,000~~ decreased RA activity as scored by the CDAI.

OnThe ~~February~~number ~~28,~~of ~~2018, we~~patients ~~raised~~with ana ~~aggregate~~DAS28-CRP of< $13.~~425~~2 ~~million~~(Disease ~~from~~Activity ~~eight~~Score) ~~accredited~~at ~~investors~~six inweeks awas ~~private placement financing (~~the ~~“Offering”)~~predefined ofdisease ~~10%~~activity ~~Senior~~endpoint ~~Convertible~~of ~~Notes,~~the ~~due~~study. onThe ~~February~~results ~~28,~~showed ~~2023 (~~that the ~~“Senior~~patients ~~Notes”).~~receiving ~~No commissions~~PRTX-100 were ~~payable~~more inlikely ~~connection~~to ~~with~~respond ~~the~~than ~~Offering~~those ~~which~~receiving ~~was~~placebo ~~principally~~at ~~sold~~all totimes, ~~our~~the ~~existing~~number ~~stockholders. Proceeds~~ of responders ~~the~~increased ~~Offering~~over ~~will~~time beduring ~~used~~the ~~for~~16 ~~working~~week ~~capital~~study ~~purposes~~evaluation period, ~~principally to fund ongoing clinical trials~~ and ~~studies~~that ~~and~~the ~~related activities.~~maximum Notolerated ~~registration~~dose ~~rights~~was ~~were~~not ~~granted~~reached toat the ~~investors~~highest dose ~~in the Offering~~level.

Additionally, the results indicate that PRTX-100 did not change CRP (C-Reactive Protein) levels, even in those patients whose swollen and tender joint count and global VAS (Visual Analogue Scale) scores had decreased to low levels after treatment. Because of the influence of the CRP component on the DAS28-CRP score, a post-hoc analysis was performed examining changes in the CDAI scores in all patients. The CDAI score does not evaluate CRP as a component, but instead comprises physician and patient-assessed chemical markers of disease activity. In the placebo, 0.15 micrograms/kg, and 0.45 micrograms/kg dose groups, one out of eight patients in each group attained low disease activity (CDAI ≤ 10) on two or more consecutive visits. In the 0.90 micrograms/kg and 1.50 micrograms/kg dose groups, two of eight and two of five patients, respectively, attained this same endpoint, and maintained a CDAI < 10 until the week 16 final visit. Of the four apparent responders in the 1.50 micrograms/kg group, two attained a CDAI ≤ 6 (remission), one attained a CDAI ≤ 10 (low activity), and one achieved a CDAI of 10.1 at one or more visits. The mean time to peak response in this group occurred six weeks after their last dose.

The ~~Senior~~disease ~~Notes~~activity ~~are convertible~~results ~~into~~from ~~shares of common of stock at a price of $0.20 per share at~~ the ~~option~~PRTX-100-103 Study ofdemonstrated ~~the~~an ~~holder~~acceptable ~~prior~~safety ~~to maturity or earlier prepayment~~profile, ~~accrue interest at the rate of 10% per annum~~ and ~~are~~suggested ~~due~~treatment onwith ~~February~~PRTX-100 ~~28,~~could ~~2023.~~affect ~~Upon~~disease ~~conversion~~activity, ~~the note~~although ~~holder~~these ~~will~~effects ~~receive~~were ~~5,000~~not ~~shares~~statistically ~~of our common stock for each $1,000 of principal or accrued interest converted~~significant. ~~Two-thirds of~~In ~~the~~November ~~shares~~2012 ~~issuable~~we ~~upon~~commenced ~~any conversion of~~ the ~~Senior~~PRTX-100-104 ~~Notes~~Study ~~will be acquired by us from Niobe for nominal consideration ($.01 per share) pursuant~~ to aprovide ~~mandatory call agreement entered into in connection with the Offering (the “Call Agreement”). As~~ a ~~result,~~better ~~for each $1,000 of principal or interest converted, we will issue approximately 1,667 new~~understanding ~~shares. Accordingly, our effective conversion price will be approximately $0.60 per share~~ of ~~common~~safety ~~stock,~~and ~~with~~potential ~~Niobe incurring~~treatment ~~substantially~~effect ~~all~~on ofRA ~~the~~disease ~~associated~~activity ~~dilution.~~measurements ~~The~~as ~~closing~~well ~~price~~as ofto ~~per~~help ~~share~~define ~~of common stock on~~ the ~~date~~optimal ~~of the Offering was $0~~dose.~~45.~~

WeThe evaluated the conversion feature of the Senior Notes and determined that under the accounting guidance for “Accounting for Convertible Securities with Beneficial Conversion Features” that a value should be attributed to the embedded conversion feature. On February 28, 2018, the date of issuance of the Senior Notes, the fair market value of Common Stock was $0.45 per share. We determined the allocation to the conversion feature to be $1.425 million, which reduced the face amount of the Senior Notes carried on our balance sheet to PRTX-$0100-.104 ~~This discount will be amortized over 60 months and will serve to increase the interest expense of the Senior Notes during the term of such notes.~~Study

In ~~addition~~November 2012, ~~as a~~we ~~condition~~commenced toenrollment in the ~~consummation~~United ofStates ~~the~~for ~~Offering,~~a onnew ~~February~~multicenter ~~28,~~Phase ~~2018~~1b werandomized, ~~entered~~multiple-dose, ~~into~~dose-escalation anstudy ~~Exchange Agreement with Niobe~~ (the “~~Exchange~~PRTX-100-104 ~~Agreement~~Study”) of ~~pursuant~~PRTX-100 toin ~~which~~combination ~~Niobe~~with ~~converted~~methotrexate ~~$22,269,366~~or ofleflunomide ~~outstanding~~in ~~notes~~adult ~~due~~patients ~~September~~with ~~30,~~active RA. The sequential dose-escalation phase ~~2018~~of ~~(the~~this ~~aggregate~~study ~~outstanding~~was ~~principal~~expected ~~balance~~to ~~under~~enroll ~~the~~up ~~Consolidated~~to ~~Note~~40 ~~and~~patients ~~the~~into ~~2014~~five ~~Credit~~cohorts ~~Facility~~ranging asfrom of1.50 ~~February~~micrograms/kg ~~28, 2018)~~up ~~into~~to 18.0 micrograms/kg of PRTX-100 or placebo. At each dose,~~557,805~~ ~~shares~~one quarter of ~~common~~patients ~~stock~~would atreceive a ~~conversion~~placebo ~~price~~treatment. ofSimilar ~~$1.20~~to ~~per~~the ~~share.~~PRTX-100-103 ~~Consequently~~Study, the ~~other~~primary ~~than~~objective of the ~~Senior Notes~~PRTX-100-104 ~~issued~~Study inwas ~~the~~to ~~Offering,~~assess the ~~only~~safety ~~remaining~~and ~~indebtedness~~tolerability of intravenous PRTX-100 administered weekly over five weeks in patients with active RA on ~~our~~methotrexate ~~balance~~or ~~sheet~~leflunomide attherapy. ~~February~~The ~~28,~~secondary ~~2018~~objectives isincluded determining ~~approximately~~the $1effects of PRTX-100 on measures of disease activity,~~974,000,~~ ~~representing~~assessing the ~~accrued~~immunogenicity ~~but~~and ~~unpaid~~evaluating ~~interest~~the onPK parameters after repeated doses, and determining possible relationships between the ~~notes~~immunogenicity ~~converted~~of byPRTX-100 ~~Niobe~~and safety and PK.

All of the securities issued in the aforementioned financings were issued in reliance upon the exemption from the registration requirements of the Securities Act of 1933, as amended (the “Act”) pursuant to Sections 4(a)(2) and/or 4(a)(5) and Rule 506 of Regulation D thereof. The offer, sale and issuance of such securities were made without general solicitation or advertising. The securities were offered and issued only to “accredited investors” as such term is defined in Rule 501 under the Act.16

~~About~~In August 2013, following a planned interim safety review by our Independent Data Safety Monitoring Committee and upon completion of the fourth cohort, we expanded the 3.0 microgram, 6.0 microgram, and 12.0 micrograms/kg dose cohorts of the PRTX-100-104 Study. An additional nine patients were enrolled in the expansion cohort that was completed in October 2013. In total, the first four dose-escalating cohorts of the PRTX-100-104 Study, which included these three expanded cohorts, enrolled 41 patients at five U.S. clinical centers with doses ranging from 1.5 micrograms/kg up to 12.0 micrograms/kg. Five patients withdrew from the study prior to their day 85 visit.

~~PRTX-100~~In isNovember ~~a proprietary~~2013, ~~highly~~following ~~purified~~completion ~~form~~ of the ~~Staphylococcal~~Cohort ~~bacterial~~4 ~~protein~~expansion ~~known~~cohorts, aswe ~~Protein~~initiated Aenrollment ~~which~~of isthe afifth ~~bacterial~~and ~~protein~~final ~~known~~cohort to(Cohort ~~modify~~5) ~~aspects~~in of the ~~human immune system.~~ PRTX- 100-104 ~~has~~Study. The ~~the~~Cohort ~~ability,~~5 atsub-study ~~very~~enrolled ~~low~~20 ~~concentrations,~~patients towho ~~bind~~received tofive ~~human~~weekly Bfixed-~~lymphocytes~~weight ~~and~~doses ~~macrophages~~of ~~and~~PRTX-100 tofollowed ~~modulate immune~~by ~~processes.~~up ~~Pre-clinical~~to ~~studies~~four ~~also~~additional monthly ~~demonstrate~~maintenance ~~that low~~ doses of PRTX-100 ~~have~~in ~~potent~~weeks ~~therapeutic~~8, ~~effects~~12, in16, ~~certain~~and ~~models of~~20. ~~immune-mediated~~The ~~inflammatory~~primary ~~diseases.~~objective ~~Both~~of the ~~PRTX~~Cohort 5 sub-~~100-103~~study was to assess safety and tolerability of these doses administered on a modified schedule. Secondary objectives included determining the effects of PRTX-100~~-104~~ ~~studies~~on ~~demonstrated~~measures ~~that~~of ~~PRTX-100~~disease ~~was~~activity, ~~generally safe~~assessing the immunogenicity and ~~well~~evaluating ~~tolerated~~the atPK ~~all~~parameters ~~dose~~after ~~levels~~repeated doses, and atdetermining ~~certain~~possible ~~higher~~relationships ~~doses,~~between ~~more~~the ~~patients~~immunogenicity ~~showed~~of ~~improvement~~PRTX-100 inand ~~measures~~safety, ofPK ~~disease~~and efficacy parameters. In ~~activity~~total, ~~than~~11 ~~did~~out of 20 patients atin ~~the~~Cohort ~~lower~~5 ~~dose~~completed orall ~~placebo~~study ~~cohorts~~visits by August 2014 per protocol.

~~Animal~~In ~~Studies~~November 2014, we announced final data from Cohorts 1 through 4 and an interim analysis of pooled data from Cohort 5 of the 104 Study. For patients in all five cohorts of the 104 Study, PRTX-100 appeared safe and well tolerated in all individuals, including those who developed ADAs, and the AE profile was consistent with our prior clinical trial results.

~~Protalex’s~~In ~~lead~~the ~~product~~Cohort ~~candidate~~5 sub-study, the amount of PRTX-100 administered and its dosing frequency were varied from Cohorts 1 through 4 to explore effects on safety, tolerability ~~has~~and ~~demonstrated~~measures ~~positive~~of ~~results~~disease inactivity. ~~several~~In ~~standard~~total, ~~mouse~~twenty ~~models~~patients were randomized to 420 µg PRTX-100 (12 patients), 240 µg PRTX-100 (3 patients) or placebo (5 patients). The addition of ~~autoimmunity~~four monthly maintenance doses after the five weekly doses did not increase the rate or type of AEs, ~~including~~even in those patients who developed ADAs nor indicate any apparent correlation between the ~~following:~~development of ADAs and effects on measures of RA disease activity.

~~Collagen-Induced~~In ~~Arthritis~~addition, ~~- PRTX-100~~Cohort ~~has~~5 ~~demonstrated~~patients ~~reproducible~~showed ~~efficacy in this well-established animal model of RA. Mice received two injections of collagen~~improvement in ~~order~~measures ~~to stimulate an inflammatory response. One group was treated with various doses~~ of ~~PRTX-100,~~disease ~~a second group received Enbrel®~~activity, a ~~leading~~including ~~commercially~~ACR20 ~~available treatment for RA~~scores, ~~and~~compared ~~the~~to ~~control~~Cohort ~~group~~1 ~~was~~through ~~injected~~4 ~~with~~patients ~~vehicle~~who ~~saline~~did ~~solution.~~not ~~The~~receive ~~mice~~any ~~were~~monthly ~~observed~~maintenance ~~for clinical symptoms~~doses, ~~joint~~suggesting ~~size~~that ~~and~~the ~~loss~~addition of ~~function.~~monthly ~~The~~maintenance ~~results~~administration ~~showed that low doses~~ of PRTX-100 and ~~standard~~weight-based ~~doses~~dosing were ofan ~~Enbrel®~~important ~~suppressed~~aspect ~~clinical~~of ~~symptoms including joint swelling over~~ the ~~first~~dosing ~~two~~protocol ~~to three weeks of treatment,~~ and ~~slowed disease~~should ~~progression~~be asconsidered ~~compared~~in ~~with~~future ~~the~~trials ~~control~~of ~~group. Thereafter, the~~ PRTX-100~~-treated~~. ~~mice~~A ~~continued~~total ~~to remain disease-free whereas the mice treated with Enbrel® showed a resumption~~ of ~~joint~~61 ~~inflammation~~patients ~~and tissue damage. This response to Enbrel®~~enrolled ~~was~~across ~~expected because~~ the ~~mice~~five ~~developed~~cohorts ~~immune~~in ~~response~~the ~~to it because it is a foreign protein. Overall, these results indicate that~~ PRTX- 100-104 isStudy aat ~~potential~~nine ~~treatment~~study ~~for~~sites RA in ~~humans.~~the ~~The~~United ~~data from these studies has served as a rationale for conducting clinical trials in human patients~~States.

17The PRTX-100-105 Study

~~BXSB~~In ~~Mice~~February -2015, ~~These~~we ~~animals~~commenced ~~are~~enrollment, ~~genetically~~at ~~predisposed~~a tosingle ~~autoimmune diseases~~U.S. ~~This~~site, ~~model~~of isa ~~used~~Phase toI/II ~~evaluate~~open-label, ~~drugs~~multiple, ~~for~~fixed-dose ~~autoimmune~~study ~~diseases~~(the ~~such~~“PRTX-100-105 asStudy”) ~~Lupus~~which ~~and~~was ~~other~~open ~~autoimmune~~only ~~diseases.~~to ~~This~~PRTX-100-104 ~~genetic~~Study ~~model~~patients ~~more~~who ~~closely~~indicated ~~approximates~~their ~~the~~desire ~~human~~for ~~condition~~additional intreatment. ~~that~~The itPRTX-100-105 isStudy ~~complex,~~was ~~multi~~an open-~~factorial~~label, ~~and~~single ~~usually~~group ~~treated~~study bywith ~~multiple~~former ~~drug~~participants ~~regimens.~~from Inthe ~~these~~104 ~~studies,~~Study ~~mice~~who were ~~treated~~eligible ~~with~~to receive a fixed dose of PRTX-100 ~~and~~over ~~sacrificed~~a at6-month period. ~~regular~~The ~~intervals. Their~~primary ~~organs~~study ~~were~~endpoint ~~weighed~~of ~~and~~the ~~sectioned~~105 ~~for~~Study ~~histological~~was ~~analysis~~the safety and ~~their~~tolerability ~~spleens~~of ~~were~~a ~~used~~fixed ~~for~~dose ~~immunological~~of ~~assays.~~PRTX-100 ~~Spleen~~administered over ~~enlargement,~~an orextended ~~splenomegaly,~~period. ~~was~~The ~~significantly~~secondary ~~reduced~~endpoints inincluded ~~treated~~immunogenicity, ~~animals~~effects ~~compared~~on ~~with~~measures ~~the~~of ~~controls~~RA atdisease ~~almost~~activity, ~~every~~evaluation ~~time~~of anti-PRTX-100 ~~point~~antibody presence, ~~demonstrating~~ ~~the~~and ~~ability~~feasibility of ~~PRTX-100~~joint toevaluations ~~delay~~with ~~the~~ultrasound ~~onset~~ and ~~severity~~biomarkers as disease markers. A total of ~~this~~eight ~~disease~~patients completed all 105 Study visits per protocol.

~~Completed~~In ~~pre~~the PRTX-~~clinical~~100-105 Study, a preliminary interim analysis indicated that for patients who completed per protocol, PRTX-100 exhibited an acceptable safety ~~studies~~profile inand ~~animals~~RA ~~showed~~disease noactivity ~~drug-related~~was ~~toxicity~~improved atin ~~doses~~a upmajority toof ~~5-fold~~patients at the ~~highest~~end ~~currently~~of ~~planned~~the ~~clinical~~study ~~trial~~as ~~dose~~compared to baseline. ~~These~~No ~~studies~~SAEs were ~~conducted~~reported. onAt ~~New~~study ~~Zealand~~day ~~white~~196, ~~rabbits~~one ~~and~~month onafter ~~cynomolgus~~the ~~monkeys.~~final Nodose, ~~differences~~patients ~~were~~who ~~observed~~completed inthe ~~body~~study ~~weight~~per ~~gain~~protocol ordemonstrated ~~food~~a ~~consumption,~~mean ~~nor~~reduction of inthe ~~hematology,~~DAS28CRP ~~clinical~~score ~~chemistry,~~from ~~urinalysis~~5.25 to 2.52, orsuggesting ~~organ~~a ~~weight~~clinically ~~data~~meaningful improvement in ~~animals~~disease ~~treated~~activity. ~~with~~Additionally, ~~PRTX-100~~clinical assessment ~~compared~~by ~~with~~UPD, ~~controls~~also ~~treated with~~revealed ~~vehicle.~~a ~~These~~reduction ~~study~~in ~~results~~average ~~represent~~disease aseverity ~~necessary~~by ~~component~~day of196, ~~our~~and ~~IND~~the ~~application~~correlation ~~with~~between the ~~FDA~~UPD and the DAS28CRP was r=0.624 (p<.0005).

~~Additional~~The ~~studies in monkeys have further characterized the PK, toxicity, and pharmacodynamics of~~ PRTX-100-202 ~~with up to 12 weekly doses.~~Study

~~Clinical~~In ~~Trials~~November 2015, we commenced enrollment and enrolled our first patient in the PRTX-100-202 Study. The PRTX-100-202 Study may enroll up to 36 patients in as many as six cohorts. Each patient will receive four weekly intravenous doses of PRTX-100 and will be monitored for up to 48 weeks thereafter. The primary study endpoint of the PRTX-100-202 Study is a platelet response to PRTX-100. Secondary endpoints include safety, immunogenicity, and pharmacokinetics. Enrollment was completed in the PRTX-100-202 Study last quarter. A total of 13 patients completed the PRTX-100-202 Study up through the fourth dosage cohort (12 mg/kg) with 2 patients having had a platelet response per protocol. Preliminary analysis of the PRTX-100-202 Study data showed that PRTX-100 had an acceptable safety profile across the dose range studied and that platelet counts were elevated in most patients that received four weeks of treatment.

Favorable pre-clinical safety and efficacy studies for our lead compound, PRTX-100, laid the foundation for the IND for treating RA. We submitted the IND to the FDA in March 2005 and later in March 2005 the FDA verbally disclosed to us that it had placed our IND on clinical hold, pending additional product characterization. In August 2005, we formally replied to the FDA and in September 2005, the FDA notified us that it had lifted the clinical hold on our IND and that our proposed study could proceed. We have completed five clinical trials under this IND. Our first Phase I single-dose clinical trial commenced in December 2005 and was completed in March 2006. This trial was performed in healthy volunteers and was designed primarily to assess the safety and tolerability of a single intravenous dose of PRTX-100. This study demonstrated that PRTX-100 appears safe and well-tolerated at the doses administered. There were no deaths or serious adverse events. The PK profile was determined and found consistent with that projected from pre-clinical models.17

In May 2007, we filed an amendment to the IND with the FDA. This amendment included the final Phase I safety study report from the 2006 trial, changes to our techniques for purification and characterization of PRTX-100, a Chemistry, Manufacturing and Controls update, and a protocol for a second single-dose Phase I clinical trial. In July and August 2007 a second Phase I study was performed under the IND, to further characterize the safety, PK, and pharmacodynamic profile of a single-dose of PRTX-100 in healthy volunteers at doses in the projected therapeutic range. Final results indicated that the drug appears safe and well-tolerated. In August 2009, a Phase 1b randomized, double-blind, placebo-controlled, multiple dose, dose-escalation and tolerability study of PRTX-100 in combination with methotrexate or leflunomide in patients with active RA, (the “PRTX 100-103 Study”) was approved by the South African Medicines Control Agency. The PRTX-100-~~103~~203 Study ~~commenced in August 2010 at three sites in South Africa and was completed in January 2012 as detailed below.~~

In ~~November~~January ~~2012~~2016, we commenced enrollment ~~and~~ ~~dosing~~ of ~~patients~~our atfirst apatient ~~total of nine sites~~ in the ~~United~~European ~~States~~based ~~for~~PRTX-100-203 ~~the~~Study. The PRTX-100-~~104~~203 Study, amay ~~second~~enroll ~~multicenter~~up ~~Phase~~to 1b30 ~~randomized,~~patients in as many as ~~multiple-dose,~~five ~~dose-escalation~~cohorts. ~~study~~Each patient will receive four weekly intravenous doses of PRTX-100 inand ~~combination~~will ~~with~~be ~~methotrexate~~monitored orfor ~~leflunomide~~up into ~~adults~~48 ~~with~~weeks ~~active~~thereafter. The RAprimary ~~which is~~study ~~still~~endpoints inof ~~progress~~the asPRTX-100-203 ~~detailed~~Study ~~below~~include safety, immunogenicity and pharmacokinetics. ~~The~~Secondary endpoints include platelet response and duration. Enrollment was completed in the PRTX-100-~~104~~203 Study ~~sequentially~~earlier ~~escalated~~this ~~the~~year. ~~weekly~~A ~~dose~~total of 15 patients completed the PRTX-100-203 ~~from~~Study ~~1.5~~up ~~micrograms~~through the fifth dosage cohort (24 mg/kg~~, the~~) ~~highest~~with ~~dose~~3 inpatients ~~the~~having ~~prior~~had RAa ~~patient~~platelet ~~study,~~response toper protocol. ~~doses~~Preliminary analysis of ~~3.0,~~the ~~6.0,~~PRTX-100-203 ~~and~~Study ~~12.0~~data ~~micrograms/kg.~~showed ofthat PRTX-100. Inhad ~~July~~an ~~2014,~~acceptable ~~the~~safety ~~last patient~~profile inacross the dose ~~PRTX-100-104~~range ~~Study~~studied ~~received~~and ~~their~~that ~~last~~platelet ~~dose~~counts were elevated in ~~the~~most ~~fifth~~patients ~~and~~that ~~final~~received ~~cohort~~four weeks of treatment.

InManufacturing February 2015, we commenced enrollment, at a single U.S. site, of a Phase I/II open-label, multiple, fixed-dose study (the “PRTX-100-105 Study”) which was open only to PRTX-100-104 Study patients who indicated their desire for additional treatment. The PRTX-100-105 Study was an open-label, single group study with former participants from the 104 Study who were eligible to receive a fixed dose of PRTX-100 over a 6-month period. The primary study endpoint of the 105 Study was the safety and tolerability of a fixed dose of PRTX-100 administered over an extended period. The secondary endpoints included immunogenicity, effects on measures of RA disease activity, evaluation of anti-PRTX-100 antibody presence, and feasibility of joint evaluations with ultrasound and biomarkers as disease markers. A total of eight patients completed all 105 Study visits per protocol.

18We currently contract the manufacturing of our lead drug substance PRTX-100 to Eurogentec S.A. in Belgium where it is produced under Current Good Manufacturing Practice, or cGMP, conditions. Specifically, we contract with Eurogentec for the manufacture of additional bulk drug substance (our “active pharmaceutical ingredients”) (“API”), which we believe is in sufficient supply for completion of our current clinical studies. The stability testing and packaging of the final drug product for clinical supplies is performed by Eurogentec. The packaging of the final drug product is conducted at separate FDA-approved facilities. These companies, in the aggregate, have provided the drug product for both toxicological testing and clinical supplies. We believe that this entire process is scaleable to commercial production but will require additional manufacturing resources. The original three clinical trials of PRTX-100 were conducted with a liquid formulation and all subsequent studies have utilized a newer lyophilized formulation designed to achieve better stability and longer product shelf-life. Compared to therapeutic doses of other biologic products used to treat RA and ITP, we believe the overall costs for these proposed therapeutic doses of PRTX-100 are significantly less due to the low dose and the simplicity of drug substance manufacture.

~~Immune~~Markets Thrombocytopenia (ITP) - ITP is an uncommon autoimmune bleeding disorder characterized by insufficient platelets in the blood. The affected individuals make antibodies against their own platelets leading to the platelets' destruction, which in turn leads to the abnormal bleeding. A small clinical trial in adult patients with chronic ITP was designed to provide safety data on repeated weekly dosing with PRTX-100 (the “PRTX-100b-103 Study”). This clinical study was to be conducted under the Australian and New Zealand Clinical Trial Notification procedure, not under a U.S. IND, and was initiated, but not completed. A leading Australian clinical research organization was contracted to manage and monitor this clinical trial. After the approval of the clinical protocol by ethics committees at six sites in Australia and one in New Zealand, the PRTX-100b-103 Study began enrolling patients in the second quarter of 2008. The PRTX-100b-103 Study was designed to evaluate the safety and PK of up to four doses of PRTX-100, starting at the lowest dose, and escalating upwards after safety review of the prior dose.

~~The~~RA ~~PRTX-100b-103~~is ~~Study~~our ~~proved~~most ~~difficult~~advanced toprimary indication. ~~enroll~~RA ~~due~~is toa ~~other~~serious ~~on-going~~autoimmune ~~ITP~~disorder ~~Phase~~that ~~III~~causes ~~studies~~the ~~and~~body’s ~~subsequent~~immune ~~availability~~system ofto ~~two~~produce ~~new~~antibodies ~~and~~that ~~effective~~attack ~~medicines~~the ~~for~~lining ~~ITP. Nine~~of ~~patients were dosed at~~ the ~~first~~joints, ~~two~~resulting ~~dose~~in ~~levels~~inflammation byand ~~the~~pain. ~~end~~RA ofcan ~~the~~lead ~~first~~to ~~quarter~~joint ofdeformity ~~2009.~~or Atdestruction, ~~this~~organ ~~point~~damage, ~~further~~disability ~~recruitment~~and ofpremature ~~patients was suspended~~death. NoAccording ~~side~~to ~~effects~~both orthe ~~toxicities~~Arthritis ~~were~~Foundation ~~noted~~and ~~with~~the ~~repeated~~American ~~weekly~~College ~~doses~~ of ~~PRTX-100~~Rheumatology atwebsites, ~~doses~~approximately ~~of 0~~1.~~075~~5 ~~and 0.15~~million ~~micrograms~~people ~~per~~in kgthe ~~that~~United ~~were~~States ~~not~~have ~~seen~~RA, ~~with~~which ~~single~~is ~~doses~~approximately in1% ~~healthy~~of ~~volunteer~~the ~~trials.~~nation’s ~~This~~adult ~~repeated-dose~~population. ~~safety~~There ~~data~~are ~~from~~nearly ~~the~~three ~~PRTX-100b-103~~times ~~Study~~as ~~was~~many ~~included~~women inas men with the ~~clinical~~disease. ~~trial~~The ~~application~~disease tooccurs ~~evaluate~~in ~~PRTX-100~~all ethnic groups and in ~~patients~~every ~~with~~part RAof the world.

InRA ~~March~~was ~~2015,~~chosen ~~the~~as ~~FDA~~a ~~accepted~~target ~~our~~disease ~~IND application~~because ~~for~~it represents a ~~Phase I/II open~~well-~~label~~defined, ~~dose-escalating~~rapidly ~~study~~growing ofmarket ~~PRTX-100~~for inwhich ~~adults~~there ~~with~~is ~~persistent/chronic~~no ~~ITP~~current ~~(the~~uniformly ~~“PRTX-100-202~~effective ~~Study”)~~treatment. Sixty percent Inof ~~June~~people ~~2015,~~with ~~the~~inadequately ~~FDA~~treated ~~granted~~RA ~~ODD~~are unable to ~~PRTX-100~~work ~~for~~10 ~~the~~years ~~treatment~~after ~~of ITP~~onset. InIt ~~July~~is ~~2015,~~estimated ~~the~~that ~~EMA~~despite ~~granted~~treatment ~~approval~~with ~~for~~current approved aRA ~~Phase~~therapeutics, 1bat ~~open~~least one-~~label, dose-escalating~~third ~~study~~ of ~~PRTX-100~~patients incontinue ~~adult~~to ~~patients~~have ~~with~~significant ~~persistent/chronic~~disability ~~ITP~~and ~~(the~~limitations ~~“PRTX-100-203~~due ~~Study”).~~to Intheir ~~September~~disease. ~~2015,~~Current ~~COMP~~treatments ~~issued~~are acostly, ~~positive~~some ~~opinion~~are ~~recommending~~associated ~~PRTX-100~~with ~~for~~increased ~~designation~~risk asof ancancer ~~orphan~~and ~~medicinal~~opportunistic ~~product~~infections, ~~for~~and ~~the~~in ~~treatment~~most ofcases ~~ITP.~~must Inbe ~~November~~continued ~~2015,~~for wedecades. ~~enrolled~~The ~~our~~market ~~first~~for ~~patient in~~ the ~~PRTX-100-202~~existing ~~Study~~biologic inRA ~~the~~drugs ~~United~~is ~~States~~primarily ~~and~~limited into ~~January~~those ~~2016~~countries ~~enrolled~~that have ~~our~~a ~~first~~high ~~patient~~per incapita ~~the~~income ~~PRTX~~because ~~100-203~~treatment ~~Study~~can incost ~~Europe.~~tens ~~Enrollment~~of isthousands ~~continuing~~of indollars ~~the~~per ~~PRTX-100-202 Study~~patient atper ~~study~~year. ~~sites~~Thus, ina ~~both~~large portion of the ~~U.S.~~world’s ~~and~~patient ~~the~~population UKcannot ~~and~~afford the ~~PRTX-100-203~~existing ~~Study~~biologic inRA ~~the UK~~drugs. In ~~August 2017~~contrast, ~~OOPD~~we ~~awarded~~believe usthat aPRTX-100 ~~grant~~could ofpotentially ~~$403,000~~provide topatients ~~support~~with ~~the~~a ~~future~~therapy ~~clinical~~that ~~development~~is ofefficacious, ~~PRTX~~cost-~~100~~effective, asand has a ~~treatment~~highly ~~for~~favorable ~~ITP~~benefit-risk ratio.

~~Rheumatoid~~Once ~~arthritis~~further -developed ~~RA is~~and aapproved, ~~highly~~we believe ~~inflammatory~~that ~~polyarthritis~~PRTX-100 ~~often~~could ~~leading~~be used to ~~joint~~treat ~~destruction,~~patients ~~deformity~~with ~~and~~moderate ~~loss of function. In addition~~ to ~~characteristic symmetric~~severe ~~swelling~~cases of ~~peripheral joints~~RA, ~~systemic~~and ~~symptoms~~particularly ~~related~~those toindividuals ~~chronic~~for whom ~~inflammation~~other ~~can~~treatments ~~commonly occur~~failed. ~~Chronic~~Given ~~pain,~~the ~~disability and~~differences ~~excess~~in ~~mortality~~the ~~are~~regulatory ~~unfortunate~~approval ~~sequelae.~~process RAin isdifferent ~~the~~parts ~~most~~of ~~common~~the ~~autoimmune disease~~world, ~~affecting~~it 1%is reasonable to 2%believe ofthat ~~the~~PRTX-100 ~~world’s population,~~might ~~with~~first ~~prevalence~~be ~~rising~~used ~~with~~in ~~age~~the todeveloping ~~about~~world 5%and then in ~~women~~Europe ~~over~~and 55North America.

~~PRTX-100~~In ~~shows~~addition, ~~measurable~~we ~~activity~~believe inITP also represents a ~~standard~~potential ~~mouse~~indication ~~model~~for ~~of autoimmune arthritis~~PRTX-100. AITP ~~substantial~~or ~~body~~Immune ofthrombocytopenia ~~published~~is ~~literature~~a ~~and~~bleeding ~~proprietary~~disorder ~~data~~in ~~delineate~~which the ~~immunomodulatory~~immune ~~activities of~~system ~~PRTX-100~~destroys platelets, which are ~~distinct~~necessary ~~from~~for ~~those~~normal ofblood ~~current~~clotting. ~~major~~Persons ~~biologic~~with ~~treatments~~the ~~for~~disease ~~rheumatoid~~have ~~arthritis.~~too ~~Accordingly,~~few weplatelets ~~believe that~~in RAthe ~~represents~~blood. aITP ~~potentially~~affects women ~~important~~more ~~clinical~~often ~~indication~~than ~~for~~men, ~~treatment~~and ~~with~~it ~~PRTX-100.~~is ~~While~~more ~~recent~~common ~~advances~~ in ~~biologic~~children ~~treatments for~~than RAin ~~have~~adults. ~~improved~~In children, the ~~prognosis~~disease ~~for~~usually ~~many~~resolves ~~patients,~~without treatment. ~~many~~Adults ~~others~~are ~~continue~~usually totreated ~~live~~ with ~~debilitating~~an RAanti-inflammatory ~~disease~~steroid ~~activity~~medicine ~~due~~(prednisone). ~~either~~ In some cases, surgery to remove the ~~cost,~~spleen ~~side-effects,~~(splenectomy) oris ~~limited~~recommended ~~effectiveness~~which ofincreases ~~these~~the ~~newer~~platelet ~~therapies~~count in about half of patients.

~~The~~ITP has no known cure, and relapses may occur years after seemingly successful medical or surgical management. If the patient’s condition does not improve with the use of prednisone, a corticosteroid drug that is the first line therapy for ITP, other treatments may include: danazol (Danocrine), a drug taken by mouth; infusions of high-dose gamma globulin (an immune factor); drugs that suppress the immune system; anti-RhD therapy for people with certain blood types; and newer agents like romiplostim (Nplate) and eltrombopag (Promacta) that stimulate the bone marrow to make more platelets. Global sales of Nplate and Promacta were approximately $642 million and $867 million, respectively, in 2017. Neither romiplostim nor eltrombopag impact the principal pathological mechanism of ITP, namely immune-mediated plated destruction, and we believe that PRTX-100 may have a more direct impact on ITP disease processes. Thus, we believe that PRTX-~~103~~100 may ~~Study~~complement or reduce the use of thrombopoeitic agents in adult patients with ITP. Tavalisse (fostamatinib disodium hexahydrate) is most recent new agent approved for the treatment of adult patients with chronic ITP who have an insufficient response to a previous treatment. Approved by the FDA in April 2018, Rigel’s Tavalisse is an oral spleen tyrosine kinase (SYK) inhibitor.

In August 2010, we commenced a multi-center Phase 1b clinical trial of PRTX-100 in South Africa on adult patients with active RA on methotrexate or leflunomide. The PRTX-100-103 Study served to evaluate safety and potential efficacy of PRTX-100 in patients with active RA and was approved to enroll up to 40 patients in four dose-escalating cohorts. In January 2012, we completed patient dosing in the fourth cohort of the PRTX-100-103 Study. A total of 37 patients were enrolled in four cohorts ranging from 0.15 micrograms/kg to 1.50 micrograms/kg of PRTX-100 or placebo, administered weekly for four weeks. Measures of safety, PK, and disease activity were evaluated over 16 weeks following the first dose. The PRTX-100-103 Study results demonstrated that PRTX-100 was generally safe and well-tolerated in patients with active RA at all tested dose levels and at the higher doses, decreased RA activity as scored by the CDAI.18

~~The~~Preliminary ~~number~~information ofgained ~~patients~~in ~~with~~the ~~a DAS28-CRP <~~laboratory ~~3.2~~on ~~(Disease~~the ~~Activity~~mechanism ~~Score)~~of ataction ~~six~~of ~~weeks~~PRTX-100 ~~was~~also ~~the~~suggests ~~predefined~~potential ~~disease~~efficacy ~~activity~~in ~~endpoint~~a range of ~~the~~autoimmune ~~study.~~and ~~The~~inflammatory ~~results~~diseases, ~~showed~~including, but ~~that~~not ~~the patients~~limited ~~receiving~~to ~~PRTX-100~~psoriasis, ~~were~~myasthenia ~~more~~gravis ~~likely~~(MG), tochronic ~~respond~~idiopathic ~~than~~demyelinating ~~those~~polyneuropathy, ~~receiving~~and ~~placebo~~pemphigus. atWe ~~all~~recently completed ~~times,~~a ~~the~~second ~~number~~confirmatory study of ~~responders~~PRTX-100 ~~increased over~~in ~~time~~an ~~during~~animal ~~the~~model 16of ~~week~~MG ~~study~~with ~~evaluation~~promising ~~period,~~results. ~~and~~MG ~~that~~is ~~the~~an ~~maximum~~autoimmune ~~tolerated~~disorder caused ~~dose~~by ~~was~~anti-self ~~not~~antibodies ~~reached~~that atreact with the ~~highest~~neuromuscular ~~dose~~junction ~~level~~causing muscle weakness and fatigability.

19Our long-term strategy contemplates the pursuit of FDA approval of PRTX-100 to treat other autoimmune and inflammatory diseases in addition to RA and ITP.

~~The~~We ~~disease~~believe, ~~activity~~based ~~results~~on ~~from~~the pre-clinical trials and the results to date of our five Phase I RA clinical studies, that PRTX-100~~-103~~ has a potential competitive advantage as it may ~~Study~~be ~~demonstrated~~safer anand ~~acceptable~~more ~~safety~~efficacious ~~profile~~than existing RA therapies, and ~~suggested~~may ~~treatment~~cost ~~with~~less ~~PRTX~~to manufacture than competing biologic-~~100~~based ~~could~~therapies. Current ~~affect~~RA ~~disease~~treatments ~~activity~~are characterized by complex manufacturing methods and, ~~although these~~in ~~effects~~2016, ~~were~~resulted ~~not~~in ~~statistically~~an ~~significant.~~average Inannual ~~November~~retail ~~2012~~cost of weapproximately ~~commenced~~$13,000 to $30,000 per patient, if the ~~PRTX~~newer disease-~~100~~modifying anti-~~104~~rheumatic ~~Study~~drugs approved in the last 20 years were used. The cost can increase according to ~~provide~~the size/weight of a ~~better~~patient ~~understanding~~and the number of doses required. Additionally, patients are faced with the cost of ~~safety~~the infusion itself and ~~potential~~blood ~~treatment~~tests ~~effect~~which onare RAoften ~~disease~~not ~~activity~~included ~~measurements~~in asthose ~~well~~cost asestimates. Several topharmaceutical ~~help~~agents ~~define~~are currently being used, with varying degrees of success, to control the ~~optimal~~signs ~~dose~~and symptoms of RA and slow its progression. Available treatment options include:

~~The~~· ~~PRTX~~Analgesic/anti-~~100~~inflammatory preparations, ranging from simple aspirin to the COX-~~104~~2 ~~Study~~inhibitors;

In· November 2012, we commenced enrollment in the United States for a new multicenter Phase 1b randomized, multiple-dose, dose-escalation study (the “PRTX-100-104 Study”) of PRTX-100 in combination with methotrexate or leflunomide in adult patients with active RA. The sequential dose-escalation phase of this study was expected to enroll up to 40 patients into five cohorts ranging from 1.50 microgramsImmunosuppressive/kgantineoplastic ~~up to 18.0 micrograms/kg of PRTX-100 or placebo. At each dose~~drugs, ~~one~~including ~~quarter~~azathioprine ~~of patients would receive a placebo treatment. Similar to the PRTX-100-103 Study, the primary objective of the PRTX-100-104 Study was to assess the safety~~ and ~~tolerability of intravenous PRTX-100 administered weekly over five weeks in patients with active RA on~~ methotrexate or leflunomide therapy. The secondary objectives included determining the effects of PRTX-100 on measures of disease activity, assessing the immunogenicity and evaluating the PK parameters after repeated doses, and determining possible relationships between the immunogenicity of PRTX-100 and safety and PK.;

In· ~~August~~TNF ~~2013,~~(Tumor ~~following~~Necrosis aFactor) ~~planned interim safety review by our Independent Data Safety Monitoring Committee and upon completion of the fourth cohort~~inhibitors, wealso ~~expanded~~known ~~the~~as ~~3.0 microgram, 6.0 microgram, and 12.0 micrograms/kg dose cohorts of the PRTX~~anti-~~100-104~~TNF ~~Study. An additional nine patients were enrolled in the expansion cohort that was completed in October 2013. In total~~therapy, ~~the~~currently ~~first~~represented ~~four~~by ~~dose-escalating~~etanercept ~~cohorts of the PRTX-100-104 Study~~(Enbrel®), ~~which~~infliximab ~~included these three expanded cohorts~~(Remicade®), ~~enrolled~~and 41adalimumab ~~patients~~(Humira®) atand ~~five U.S. clinical centers with doses ranging from 1.5 micrograms/kg up to 12.0 micrograms/kg. Five patients withdrew from~~ the ~~study~~newer ~~prior~~entries, tocertolizumab ~~their~~(Cimzia®) ~~day~~and 85golimumab ~~visit.~~(Simponi®);

In· ~~November~~Soluble ~~2013,~~Interleukin-l ~~following~~(IL-I) ~~completion~~Receptor ~~of the Cohort 4 expansion cohorts~~Therapy, weAnakinra ~~initiated enrollment of the fifth and final cohort~~ (~~Cohort 5~~Kineret®) in the PRTX 100-104 Study. The Cohort 5 sub-study enrolled 20 patients who received five weekly fixed-weight doses of PRTX-100 followed by up to four additional monthly maintenance doses of PRTX-100 in weeks 8, 12, 16, and ~~20. The primary objective of the Cohort 5 sub~~(Il-~~study~~6) ~~was~~tocilizumab to assess safety and tolerability of these doses administered on a modified schedule. Secondary objectives included determining the effects of PRTX-100 on measures of disease activity, assessing the immunogenicity and evaluating the PK parameters after repeated doses, and determining possible relationships between the immunogenicity of PRTX-100 and safety, PK and efficacy parameters. In total, 11 out of 20 patients in Cohort 5 completed all study visits by August 2014 per protocol.(Actemra®);

In· ~~November~~Costimulatory ~~2014,~~molecule weinhibitor ~~announced~~abatacept final data from Cohorts 1 through 4 and an interim analysis of pooled data from Cohort 5 of the 104 Study. For patients in all five cohorts of the 104 Study, PRTX-100 appeared safe and well tolerated in all individuals, including those who developed ADAs, and the AE profile was consistent with our prior clinical trial results.(Orencia®);

In· ~~the~~Anti ~~Cohort~~CD20 ~~5 sub~~B-~~study, the amount of PRTX~~cell-~~100~~directed ~~administered and its dosing frequency were varied from Cohorts 1 through 4 to explore effects on safety~~therapy, ~~tolerability~~rituximab ~~and measures of disease activity. In total, twenty patients were randomized to 420 µg PRTX-100~~ (~~12 patients~~Rituxan®),; 240 µg PRTX-100 (3 patients) or placebo (5 patients). The addition of four monthly maintenance doses after the five weekly doses did not increase the rate or type of AEs, even in those patients who developed ADAs nor indicate any apparent correlation between the development of ADAs and ~~effects on measures of RA disease activity.~~

20· Janus Kinase (JAK) inhibitor, tofacitinib citrate (Xeljanz).

InMany ~~addition,~~large ~~Cohort~~and 5small ~~patients~~pharmaceutical ~~showed improvement~~companies are active in ~~measures~~this ofmarket, ~~disease~~with ~~activity~~Amgen Corporation (with Pfizer), ~~including~~Johnson ~~ACR20~~& ~~scores~~Johnson, ~~compared~~Inc. (with Merck) and Abbott Laboratories dominating the market for biologic therapies with their respective products, Enbrel®, Remicade® and Humira®. According to ~~Cohort~~each 1company’s ~~through~~2017 4annual ~~patients~~report, ~~who~~Enbrel ~~did~~generated ~~not~~revenues ~~receive~~of ~~any~~approximately ~~monthly~~$7.9 billion combined for Amgen and Pfizer, ~~maintenance~~Remicade ~~doses~~generated revenues of more than $7.2 billion combined for Johnson & Johnson and Merck, ~~suggesting~~and ~~that~~AbbVie ~~the~~reported ~~addition~~generated revenues of ~~monthly~~over ~~maintenance~~$18.4 ~~administration~~billion for Humira. For other TNF inhibitors, Cimzia generated revenues of ~~PRTX-100~~$1.7 billion for UCB; Simponi generated revenues of $2.7 billion for Johnson & Johnson and ~~weight-based~~Merck; ~~dosing~~and ~~were~~Orencia generated revenues of $2.5 billion for Bristol anMyers ~~important~~Squibb. ~~aspect~~Kineret generated revenues of $126 million in sales for SOBI, which acquired from Amgen the ~~dosing~~rights ~~protocol~~to develop and commercialize ~~should~~Kineret bein ~~considered~~2014. inActemra ~~future~~generated ~~trials~~revenues of ~~PRTX-100~~$1.97 Abillion ~~total~~for ofRoche. 61Also ~~patients~~for ~~enrolled~~Roche, Rituxan earned $7.5 billion ~~across~~total ~~the~~for ~~five~~multiple ~~cohorts~~indications. inXeljanz had the ~~PRTX~~largest ~~100-104~~increase ~~Study~~for atPfizer ~~nine~~from ~~study~~$927 ~~sites~~million in 2016 to almost $1.4 billion in 2017. Revenue figures above reflect the ~~United~~use ~~States~~of these drugs for RA, other indications and off label uses.

~~The~~Post–marketing ~~PRTX~~experience has indicated that current and newly-~~100~~marketed disease modifying anti-~~105~~rheumatic ~~Study~~drugs (DMARDs) subject patients to an increased risk of certain SAEs. Products which inhibit the action of TNF-alpha, being the longest on the market and the most studied, have demonstrated an increased incidence of certain SAEs. Due to suppression of the immune system by these products, these SAEs include serious and opportunistic infections such as tuberculosis, fungal infections, and listeria infection, and increased risk of lymphomas. Transient neutropenia and other blood dyscrasias have been reported. TNF inhibitors are also not recommended in patients with demyelinating disease or with congestive heart failure. Rituxan (anti-CD20) use increases the potential for Hep B reactivation and multifocal leukoencephalopathy, a fatal viral disease. Kineret (IL-1) also shows an increased the risk of infection. Actemra (IL-6) use has led to increased liver enzyme levels, hypertension, transient neutropenia, and an increase in cholesterol levels. Orencia (T cell inhibition) also works by weakening the immune system, therefore can increase the risk of infections. Patients using Orencia have developed lymphoma and lung cancer. Xeljanz (JAK) is the newest RA treatment to enter the market. It has demonstrated similar side effects to TNF inhibitors, including invasive and opportunistic infections and the reactivation of tuberculosis. Lymphomas and other malignancies have been observed in patients treated with Xeljanz. In a study by a Swedish research group published in November 2012 by the American College of Rheumatology entitled, “Mortality Rates in Patients with Rheumatoid Arthritis Treated with Tumor Necrosis Factor Inhibitors”, following treatment of RA with either of the TNF inhibitors Enbrel, Humira or Remicade, mortality rates were on average approximately one death per 30 patients treated in the first three years of treatment. Findings such as these and the long list of serious adverse events for all of the currently marketed treatments indicate that new and safer treatments for autoimmune diseases such as RA are needed.

In February 2015, we commenced enrollment, at a single U.S. site, of a Phase I/II open-label, multiple, fixed-dose study (the “PRTX-100-105 Study”) which was open only to PRTX-100-104 Study patients who indicated their desire for additional treatment. The PRTX-100-105 Study was an open-label, single group study with former participants from the 104 Study who were eligible to receive a fixed dose of PRTX-100 over a 6-month period. The primary study endpoint of the 105 Study was the safety and tolerability of a fixed dose of PRTX-100 administered over an extended period. The secondary endpoints included immunogenicity, effects on measures of RA disease activity, evaluation of anti-PRTX-100 antibody presence, and feasibility of joint evaluations with ultrasound and biomarkers as disease markers. A total of eight patients completed all 105 Study visits per protocol.19

InGovernment ~~the PRTX-100-105 Study, a preliminary interim analysis indicated that for patients who completed per protocol, PRTX-100 exhibited an acceptable safety profile~~ Regulation and RAProduct disease activity was improved in a majority of patients at the end of the study as compared to baseline. No SAEs were reported. At study day 196, one month after the final dose, patients who completed the study per protocol demonstrated a mean reduction of the DAS28CRP score from 5.25 to 2.52, suggesting a clinically meaningful improvement in disease activity. Additionally, clinical assessment by UPD, also revealed a reduction in average disease severity by day 196, and the correlation between the UPD and the DAS28CRP was r=0.624 (p<.0005).Approval

The ~~PRTX-100-202~~FDA ~~Study~~and comparable regulatory agencies in state and local jurisdictions and in foreign countries impose substantial requirements upon the testing (preclinical and clinical), manufacturing, labeling, storage, recordkeeping, advertising, promotion, import, export, marketing and distribution, among other things, of drugs and drug product candidates. If we do not comply with applicable requirements, we may be fined, the government may refuse to approve our marketing applications or allow us to manufacture or market our products, and we may be criminally prosecuted. We and our manufacturers may also be subject to regulations under other U.S. federal, state, local and foreign laws.

In ~~November~~the ~~2015~~United States, wethe ~~commenced~~FDA ~~enrollment and~~regulates ~~enrolled~~drugs ~~our~~under ~~first patient in~~ the ~~PRTX-100-202~~Food ~~Study.~~Drug ~~The~~and ~~PRTX-100-202~~Cosmetic ~~Study~~Act, ~~may~~or ~~enroll~~FDCA, ~~up to 36 patients in as many as six cohorts. Each patient will receive four weekly intravenous doses of PRTX-100~~ and ~~will~~implementing ~~be monitored for up to 48 weeks thereafter~~regulations. The ~~primary study~~process ~~endpoint~~required ofby the ~~PRTX-100-202~~FDA ~~Study~~before isour ~~a platelet response to PRTX-100. Secondary endpoints include safety, immunogenicity,~~drug ~~and~~candidates ~~pharmacokinetics.~~may ~~One~~be ~~patient~~marketed in ~~each of~~ the ~~first~~United ~~two~~States ~~cohorts~~generally ofinvolves the ~~PRTX-100-202~~following ~~Study~~(although ~~has~~the ~~had~~FDA ais ~~platelet~~given ~~response~~wide ~~per~~discretion ~~protocol.~~to ~~Enrollment~~impose isdifferent ~~continuing~~or ~~for~~more ~~patients~~stringent inrequirements ~~the~~on ~~fourth~~a ~~cohort in the PRTX~~case-~~100~~by-~~202~~case ~~Study at an increased dose at study sites in both the U.S. and the UK.~~basis):

~~The~~· ~~PRTX-100-203~~completion ~~Study~~of extensive preclinical laboratory tests, preclinical animal studies and formulation studies, all performed in accordance with the FDA’s Good Laboratory Practice or GLP regulations and other regulations;

In· ~~January~~submission ~~2016, we commenced enrollment of our first patient in the European based PRTX-100-203 Study. The PRTX-100-203 Study may enroll up~~ to ~~30 patients in as many as five cohorts. Each patient will receive four weekly intravenous doses of PRTX-100 and will be monitored for up to 48 weeks thereafter. The primary study endpoints of~~ the ~~PRTX-100-203~~FDA Study include safety, immunogenicity and pharmacokinetics. Secondary endpoints include platelet response and duration. Two patients in the PRTX-100-203 Study have had a platelet response per protocol. Following the recommendation of ~~our~~an ~~Safety~~IND ~~and~~application ~~Monitoring~~which ~~Committee~~must ~~upon~~become ~~evaluating~~effective ~~safety~~before ~~data~~clinical ~~from~~trials ~~the~~may ~~fifth dosage cohort of 24 mg/kg, enrollment is continuing for up to three additional patients in the 18 mg/kg dosage cohort.~~begin;

~~Manufacturing~~· performance of multiple adequate and well-controlled clinical trials meeting FDA requirements to establish the safety and efficacy of the product candidate for each proposed indication;

We· ~~currently~~submission ~~contract the manufacturing~~ of ~~our~~ ~~lead~~a ~~drug~~Biological ~~substance~~License ~~PRTX-100~~Application ~~to Eurogentec S.A. in Belgium where it is produced under Current Good Manufacturing Practice,~~ or ~~cGMP,~~BLA conditions. Specifically, we contract with Eurogentec for the manufacture of additional bulk drug substance (our “active pharmaceutical ingredients”) (“API”), which we believe is in sufficient supply for completion of our current clinical studies. The stability testing and packaging of the final drug product for clinical supplies is performed by Eurogentec. The packaging of the final drug product is conducted at separate FDA-approved facilities. These companies, in the aggregate, have provided the drug product for both toxicological testing and clinical supplies. We believe that this entire process is scaleable to commercial production but will require additional manufacturing resources. The original three clinical trials of PRTX-100 were conducted with a liquid formulation and all subsequent studies have utilized a newer lyophilized formulation designed to achieve better stability and longer product shelf-life. Compared to therapeutic doses of other biologic products used to treat RA and ITP, we believe the ~~overall costs for these proposed therapeutic doses of PRTX-100 are significantly less due to the low dose and the simplicity of drug substance manufacture.~~FDA;

21· satisfactory completion of an FDA pre-approval inspection of the manufacturing facilities at which the product candidate is produced, and potentially other involved facilities as well, to assess compliance with cGMP, regulations and other applicable regulations; and

~~Markets~~· the FDA review and approval of the BLA prior to any commercial marketing, sale or shipment of the drug.

RAThe istesting ~~our~~and ~~most~~approval ~~advanced~~process ~~primary indication.~~requires RAsubstantial ~~is a serious autoimmune disorder that causes the body’s immune system to produce antibodies that attack the lining of the joints~~time, ~~resulting~~effort ~~in inflammation~~ and ~~pain.~~financial ~~RA can lead to joint deformity or destruction~~resources, ~~organ damage, disability~~ and ~~premature death.~~we ~~According~~cannot tobe ~~both~~certain ~~the~~that ~~Arthritis~~any ~~Foundation~~approvals ~~and~~for ~~the~~our ~~American~~drug ~~College~~candidates ofwill ~~Rheumatology~~be ~~websites, approximately 1.5 million~~granted ~~people~~on ina ~~the~~timely ~~United States have RA~~basis, ~~which~~if isat ~~approximately~~all. 1%Risks ofto ~~the~~us ~~nation’s~~related ~~adult~~to ~~population.~~these ~~There~~regulations are ~~nearly~~described ~~three~~in ~~times as many women as men with~~ the ~~disease.~~Risk ~~The~~Factors ~~disease occurs~~ in ~~all~~Item ~~ethnic~~1A ~~groups and in every part~~ of ~~the~~this ~~world~~Annual Report.

RAA ~~was~~separate ~~chosen~~submission asto athe ~~target~~FDA, ~~disease because it~~under ~~represents~~an aexisting ~~well-defined,~~IND ~~rapidly~~must ~~growing~~also ~~market~~be made for ~~which~~each ~~there~~successive isclinical notrial ~~current~~conducted ~~uniformly~~during ~~effective~~product ~~treatment~~development. ~~Sixty~~The ~~percent~~FDA ~~of people~~must ~~with~~also ~~inadequately~~approve changes ~~treated RA are unable~~ to ~~work~~an 10existing ~~years after onset~~IND. ItFurther, isan ~~estimated~~independent ~~that~~institutional ~~despite~~review ~~treatment~~board, ~~with~~or ~~current approved RA therapeutics~~IRB, atfor ~~least~~each ~~one-third~~medical ofcenter ~~patients~~proposing ~~continue~~ to ~~have~~conduct the ~~significant~~clinical ~~disability~~trial ~~and~~must ~~limitations~~review ~~due~~and toapprove ~~their~~the ~~disease. Current~~plan ~~treatments~~for ~~are~~any ~~costly,~~clinical ~~some~~trial ~~are~~before ~~associated~~it ~~with~~commences ~~increased~~at ~~risk~~that ofcenter ~~cancer~~ and ~~opportunistic~~it ~~infections,~~must ~~and in most cases~~monitor ~~must~~the bestudy ~~continued~~until ~~for decades~~completed. The ~~market~~FDA, ~~for~~ the ~~existing~~IRB ~~biologic~~or RAthe ~~drugs~~sponsor ismay ~~primarily~~suspend ~~limited to those countries that have~~ a ~~high~~clinical ~~per~~trial ~~capita~~at ~~income~~any ~~because~~time ~~treatment~~on ~~can~~various ~~cost tens of thousands of dollars per patient per year. Thus~~grounds, including a ~~large~~finding ~~portion~~that of the ~~world’s~~subjects ~~patient~~or ~~population~~patients ~~cannot~~are ~~afford~~being ~~the~~exposed ~~existing~~to ~~biologic~~an RAunacceptable ~~drugs~~health risk. InClinical ~~contrast,~~testing wealso ~~believe~~must ~~that~~satisfy ~~PRTX-100 could~~extensive ~~potentially~~Good ~~provide~~Clinical ~~patients~~Practice ~~with~~or aGCP ~~therapy~~requirements ~~that is efficacious, cost-effective,~~ and ~~has~~regulations afor ~~highly~~informed ~~favorable benefit-risk ratio~~consent.

~~Once~~Clinical further developed and approved, we believe that PRTX-100 could be used to treat patients with moderate to severe cases of RA, and particularly those individuals for whom other treatments failed. Given the differences in the regulatory approval process in different parts of the world, it is reasonable to believe that PRTX-100 might first be used in the developing world and then in Europe and North America.Trials

InFor ~~addition,~~purposes weof ~~believe~~BLA ~~ITP~~submission ~~also~~and ~~represents~~approval, aclinical ~~potential~~trials ~~indication for PRTX-100. ITP or Immune thrombocytopenia is a bleeding disorder in which the immune system destroys platelets, which~~ are ~~necessary~~typically ~~for~~conducted ~~normal blood clotting. Persons with the disease have too few platelets~~ in the ~~blood.~~following ~~ITP~~three ~~affects women~~sequential ~~more often than men~~phases, ~~and~~which itmay isoverlap ~~more common in children than in adults. In children, the disease usually resolves without treatment. Adults are usually treated with an anti-inflammatory steroid medicine~~ (~~prednisone).~~although Inadditional ~~some~~or ~~cases, surgery to remove~~different ~~the~~trials ~~spleen~~may ~~(splenectomy)~~be isrequired ~~recommended~~by ~~which increases~~ the ~~platelet~~FDA ~~count~~as ~~in about half of patients.~~well):

~~ITP~~· ~~has~~Phase noI ~~known~~clinical ~~cure,~~trials ~~and~~are ~~relapses~~initially ~~may~~conducted ~~occur years~~in ~~after~~a ~~seemingly~~limited ~~successful~~population ~~medical~~to ortest ~~surgical management. If~~ the ~~patient’s condition does not improve with the use of prednisone, a corticosteroid~~ drug ~~that~~candidate ~~is the first line therapy~~ for ~~ITP~~safety, ~~other~~dose ~~treatments~~tolerance, ~~may~~absorption, ~~include: danazol (Danocrine)~~metabolism, a ~~drug~~distribution ~~taken by mouth; infusions of high-dose gamma globulin (an immune factor); drugs that suppress the immune system; anti-RhD therapy for people with certain blood types;~~ and ~~newer~~excretion ~~agents~~in ~~like~~healthy ~~romiplostim~~humans ~~(Nplate)~~or, ~~and~~on ~~eltrombopag~~occasion, ~~(Promacta)~~in ~~that~~patients, ~~stimulate the~~such ~~bone~~as ~~marrow~~cancer ~~to make more platelets~~patients. ~~Global~~In ~~sales~~some ofcases, ~~Nplate~~particularly ~~and~~in ~~Promacta~~cancer ~~were approximately $584 million and $635 million~~trials, ~~respectively, in~~a ~~2016.~~sponsor ~~Neither~~may ~~romiplostim~~decide ~~nor~~to ~~eltrombopag~~conduct ~~impact~~what ~~the~~is ~~principal~~referred ~~pathological~~to ~~mechanism~~as ofa ~~ITP,~~“Phase ~~namely~~1b” ~~immune-mediated plated destruction~~evaluation, ~~and~~which weis ~~believe~~a ~~that~~second ~~PRTX~~safety-~~100~~focused ~~may~~Phase ~~have~~I aclinical ~~more~~trial ~~direct~~typically ~~impact~~designed onto ~~ITP~~evaluate ~~disease processes. Thus, we believe that PRTX-100 may complement or reduce~~ the ~~use~~impact of ~~thrombopoeitic~~the ~~agents~~drug candidate in ~~adult~~combination ~~patients~~ with ~~ITP~~currently FDA-approved drugs.

~~Preliminary~~· ~~information~~Phase ~~gained~~II clinical trials are generally conducted in ~~the~~a ~~laboratory on~~limited ~~the~~patient ~~mechanism~~population ofto ~~action~~identify ofpossible ~~PRTX-100~~adverse ~~also~~effects ~~suggests~~and ~~potential~~safety ~~efficacy~~risks, into adetermine ~~range~~the efficacy of ~~autoimmune~~the ~~and~~drug ~~inflammatory~~candidate ~~diseases,~~for ~~including, but~~specific ~~not~~targeted ~~limited~~indications and to ~~psoriasis,~~determine ~~myasthenia~~an ~~gravis~~optimal ~~(MG),~~dosage. ~~chronic~~Multiple ~~idiopathic~~Phase ~~demyelinating~~II ~~polyneuropathy,~~clinical ~~and~~trials ~~pemphigus.~~may Webe ~~recently completed~~conducted aby ~~second~~the ~~confirmatory~~sponsor ~~study~~to ofobtain ~~PRTX-100~~information inprior anto ~~animal~~beginning ~~model~~larger ofand MGmore ~~and~~expensive ~~expect~~Phase III clinical trials. In some cases, a sponsor may decide to ~~have~~conduct ~~top-line~~what ~~results~~is inreferred ~~the~~to ~~2nd~~as ~~quarter of~~a ~~2018.~~“Phase MGIIb” evaluation, which is ana ~~autoimmune~~second, ~~disorder~~confirmatory ~~caused~~Phase byII ~~anti-self~~clinical ~~antibodies~~trial that ~~react~~could, ~~with~~if positive and accepted by the ~~neuromuscular~~FDA, ~~junction~~serve ~~causing~~as ~~muscle weakness~~a ~~and~~pivotal ~~fatigability~~clinical trial in the approval of a drug candidate.

~~Our~~· ~~long-term~~Phase ~~strategy~~III ~~contemplates~~clinical ~~the~~trials ~~pursuit~~are ofcommonly ~~FDA~~referred ~~approval~~to as pivotal trials. When Phase II clinical trials demonstrate that a dose range of ~~PRTX-100~~the todrug ~~treat~~candidate ~~other~~is ~~autoimmune~~ effective and ~~inflammatory~~has ~~diseases~~an acceptable safety profile, Phase III clinical trials are undertaken in ~~addition~~large patient populations to RAfurther evaluate dosage, to provide substantial evidence of clinical efficacy and ~~ITP~~to further test for safety in an expanded and diverse patient population at multiple, geographically dispersed clinical trial sites.

22In some cases, the FDA may condition continued approval of a BLA on the sponsor’s agreement to conduct additional clinical trials with due diligence. In other cases, the sponsor and the FDA may agree that additional safety and/or efficacy data should be provided; however, continued approval of the BLA may not always depend on timely submission of such information. Such post-approval studies are typically referred to as Phase IV studies.

~~Competition~~20

WeBiological ~~believe,~~License based on the pre-clinical trials and the results to date of our five Phase I RA clinical studies, that PRTX-100 has a potential competitive advantage as it may be safer and more efficacious than existing RA therapies, and may cost less to manufacture than competing biologic-based therapies. Current RA treatments are characterized by complex manufacturing methods and, in 2016, resulted in an average annual retail cost of approximately $13,000 to $30,000 per patient, if the newer disease-modifying anti-rheumatic drugs approved in the last 20 years were used. The cost can increase according to the size/weight of a patient and the number of doses required. Additionally, patients are faced with the cost of the infusion itself and blood tests which are often not included in those cost estimates. Several pharmaceutical agents are currently being used, with varying degrees of success, to control the signs and symptoms of RA and slow its progression. Available treatment options include:Application

·The ~~Analgesic/anti-inflammatory~~results ~~preparations~~of drug candidate development, preclinical ~~ranging~~testing ~~from~~and ~~simple~~clinical ~~aspirin~~trials, together with, among other things, detailed information on the manufacture and composition of the product and proposed labeling, and the payment of a user fee, are submitted to the ~~COX~~FDA as part of a BLA. The FDA reviews all BLAs submitted before it accepts them for filing and may request additional information rather than accepting a BLA for filing. Once a BLA is accepted for filing, the FDA begins an in-2depth ~~inhibitors;~~review of the application.

·During ~~Immunosuppressive/antineoplastic~~its ~~drugs~~review of a BLA, the FDA may refer the application to an advisory committee for review, evaluation and recommendation as to whether the application should be approved. The FDA may refuse to approve a BLA and issue a not approvable letter if the applicable regulatory criteria are not satisfied, or it may require additional clinical or other data, including ~~azathioprine~~one or more additional pivotal Phase III clinical trials. Even if such data are submitted, the FDA may ultimately decide that the BLA does not satisfy the criteria for approval. Data from clinical trials are not always conclusive and ~~methotrexate;~~the FDA may interpret data differently than we or our collaboration partners interpret data. If the FDA’s evaluations of the BLA and the clinical and manufacturing procedures and facilities are favorable, the FDA may issue either an approval letter or an approvable letter, which contains the conditions that must be met in order to secure final approval of the BLA. If and when those conditions have been met to the FDA’s satisfaction, the FDA will issue an approval letter, authorizing commercial marketing of the drug for certain indications. The FDA may withdraw drug approval if ongoing regulatory requirements are not met or if safety problems occur after the drug reaches the market. In addition, the FDA may require testing, including Phase IV clinical trials, and surveillance programs to monitor the effect of approved products that have been commercialized, and the FDA has the power to prevent or limit further marketing of a drug based on the results of these post-marketing programs. Drugs may be marketed only for the FDA-approved indications and in accordance with the FDA-approved label. Further, if there are any modifications to the drug, including changes in indications, other labeling changes, or manufacturing processes or facilities, we may be required to submit and obtain FDA approval of a new BLA or BLA supplement, which may require us to develop additional data or conduct additional preclinical studies and clinical trials.

·Fast ~~TNF~~Track (Tumor Necrosis Factor) inhibitors, also known as anti-TNF therapy, currently represented by etanercept (Enbrel®), infliximab (Remicade®), and adalimumab (Humira®) and the newer entries, certolizumab (Cimzia®) and golimumab (Simponi®);Designation

·The ~~Soluble~~FDA’s ~~Interleukin-l~~fast ~~(IL~~track program is intended to facilitate the development and to expedite the review of drugs that are intended for the treatment of a serious or life-I)threatening condition ~~Receptor~~and ~~Therapy~~that demonstrate the potential to address unmet medical needs. Under the fast track program, ~~Anakinra~~applicants ~~(Kineret®)~~may ~~and~~seek traditional ~~(Il~~approval for a product based on data demonstrating an effect on a clinically meaningful endpoint, or approval based on a well-6)established ~~tocilizumab~~surrogate ~~(Actemra®);~~endpoint. The sponsor of a new drug candidate may request the FDA to designate the drug candidate for a specific indication as a fast track drug at the time of original submission of its IND, or at any time thereafter prior to receiving marketing approval of a marketing application. The FDA will determine if the drug candidate qualifies for fast track designation within 60 days of receipt of the sponsor’s request.

·If ~~Costimulatory~~the ~~molecule~~FDA ~~inhibitor~~grants ~~abatacept~~fast ~~(Orencia®);~~track designation, it may initiate review of sections of a BLA before the application is complete. This so-called “rolling review” is available if the applicant provides and the FDA approves a schedule for the submission of the remaining information and the applicant has paid applicable user fees. The FDA’s Prescription Drug User Fee Act or PDUFA review clock for both a standard and priority BLA for a fast track product does not begin until the complete application is submitted. Additionally, fast track designation may be withdrawn by the FDA if it believes that the designation is no longer supported by emerging data, or if the designated drug development program is no longer being pursued.

·In ~~Anti~~some ~~CD20~~cases, ~~B-cell-directed~~a ~~therapy,~~fast ~~rituximab~~track ~~(Rituxan®);~~designated drug ~~and~~candidate may also qualify for one or more of the following programs:

· ~~Janus~~Priority ~~Kinase~~Review. ~~(JAK)~~As ~~inhibitor~~explained above, ~~tofacitinib~~a ~~citrate~~drug ~~(Xeljanz)~~candidate may be eligible for a six-month priority review. The FDA assigns priority review status to an application if the drug candidate provides a significant improvement compared to marketed drugs in the treatment, diagnosis or prevention of a disease. A fast track drug would ordinarily meet the FDA’s criteria for priority review, but may also be assigned a standard review. We do not know whether any of our drug candidates will be assigned priority review status or, if priority review status is assigned, whether that review or approval will be faster than conventional FDA procedures, or that the FDA will ultimately approve the drug.

~~Many~~· ~~large~~Accelerated ~~and~~Approval. ~~small~~Under ~~pharmaceutical companies~~the ~~are~~FDA’s ~~active~~accelerated inapproval ~~this market~~regulations, ~~with~~the ~~Amgen~~FDA ~~Corporation~~is ~~(with~~authorized ~~Pfizer),~~to ~~Johnson~~approve &drug ~~Johnson,~~candidates ~~Inc.~~that ~~(with~~have ~~Merck)~~been ~~and~~studied ~~Abbott Laboratories~~for ~~dominating~~their ~~the~~safety ~~market~~and ~~for~~efficacy ~~biologic~~in ~~therapies~~treating ~~with~~serious ~~their~~or ~~respective~~life-threatening ~~products,~~illnesses ~~Enbrel®, Remicade®~~ and ~~Humira®. According~~that toprovide ~~each~~meaningful ~~company’s~~therapeutic ~~2016~~benefit ~~annual~~to ~~report,~~patients ~~Enbrel~~over ~~generated~~existing ~~revenues~~treatments ofbased ~~approximately~~upon ~~$8.9~~either ~~billion~~a ~~combined~~surrogate ~~for~~endpoint ~~Amgen and~~that ~~Pfizer,~~is ~~Remicade~~reasonably ~~generated~~likely ~~revenues~~to ofpredict ~~more~~clinical ~~than~~benefit ~~$8.2~~or ~~billion~~on ~~combined~~the ~~for~~basis ~~Johnson~~of &an ~~Johnson~~effect ~~and~~on ~~Merck,~~a ~~and~~clinical ~~AbbVie~~endpoint ~~reported generated~~other ~~revenues~~than ofpatient ~~over~~survival ~~$16~~or ~~billion~~irreversible ~~for Humira~~morbidity. ~~For~~ ~~other~~In ~~TNF~~clinical ~~inhibitors~~trials, ~~Cimzia~~surrogate ~~generated~~endpoints ~~revenues~~are alternative measurements of ~~$1.4~~the ~~billion~~symptoms ~~for UCB;~~of ~~Simponi~~a ~~generated~~disease ~~revenues~~or ofcondition ~~$2.5~~that ~~billion~~are substituted for ~~Johnson~~measurements &of ~~Johnson~~observable ~~and~~clinical ~~Merck;~~symptoms. ~~and~~A ~~Orencia~~drug ~~generated~~candidate ~~revenues~~approved ofon ~~$2.3~~this ~~billion for~~basis ~~Bristol~~is ~~Myers~~subject ~~Squibb. Kineret~~to ~~generated~~rigorous ~~revenues~~post-marketing ofcompliance ~~$114~~requirements, ~~million~~including inthe ~~sales~~completion ~~for~~of ~~SOBI,~~Phase ~~which~~IV ~~acquired~~or ~~from~~post-approval ~~Amgen~~clinical ~~the~~trials ~~rights~~ to ~~develop~~validate ~~and~~the ~~commercialize~~surrogate ~~Kineret~~endpoint inor ~~2014. Actemra~~confirm ~~generated~~the ~~revenues~~effect ofon $1the clinical endpoint.7 ~~billion~~Failure ~~for~~to ~~Roche.~~conduct ~~Also~~required ~~for~~post-approval ~~Roche~~studies with due diligence, ~~Rituxan earned~~or ~~$1.5~~to ~~billion~~validate ~~for~~a ~~the~~surrogate ~~treatment~~endpoint ofor RAconfirm ~~alone,~~a ~~and~~clinical ~~billions~~benefit ~~more~~during ~~for~~post-marketing ~~other~~studies, ~~indications.~~may ~~Xeljanz~~cause ~~nearly~~the ~~doubled~~FDA ~~its~~to ~~earnings for~~seek ~~Pfizer~~to ~~from~~withdraw ~~$523~~the ~~million~~drug infrom ~~2015~~the tomarket ~~$927~~on ~~million~~an inexpedited ~~2016~~basis. ~~Revenue~~All ~~figures~~promotional ~~above~~materials ~~reflect~~for ~~the~~drug ~~use~~candidates ofapproved ~~these~~under ~~drugs~~accelerated ~~for~~regulations ~~RA,~~are ~~other indications~~subject ~~and~~to ~~off~~prior ~~label~~review ~~uses~~by the FDA.

Post–marketing experience has indicated that current and newly-marketed disease modifying anti-rheumatic drugs (DMARDs) subject patients to an increased risk of certain SAEs. Products which inhibit the action of TNF-alpha, being the longest on the market and the most studied, have demonstrated an increased incidence of certain SAEs. Due to suppression of the immune system by these products, these SAEs include serious and opportunistic infections such as tuberculosis, fungal infections, and listeria infection, and increased risk of lymphomas. Transient neutropenia and other blood dyscrasias have been reported. TNF inhibitors are also not recommended in patients with demyelinating disease or with congestive heart failure. Rituxan (anti-CD20) use increases the potential for Hep B reactivation and multifocal leukoencephalopathy, a fatal viral disease. Kineret (IL-1) also shows an increased the risk of infection. Actemra (IL-6) use has led to increased liver enzyme levels, hypertension, transient neutropenia, and an increase in cholesterol levels. Orencia (T cell inhibition) also works by weakening the immune system, therefore can increase the risk of infections. Patients using Orencia have developed lymphoma and lung cancer. Xeljanz (JAK) is the newest RA treatment to enter the market. It has demonstrated similar side effects to TNF inhibitors, including invasive and opportunistic infections and the reactivation of tuberculosis. Lymphomas and other malignancies have been observed in patients treated with Xeljanz. In a study by a Swedish research group published in November 2012 by the American College of Rheumatology entitled, “Mortality Rates in Patients with Rheumatoid Arthritis Treated with Tumor Necrosis Factor Inhibitors”, following treatment of RA with either of the TNF inhibitors Enbrel, Humira or Remicade, mortality rates were on average approximately one death per 30 patients treated in the first three years of treatment. Findings such as these and the long list of serious adverse events for all of the currently marketed treatments indicate that new and safer treatments for autoimmune diseases such as RA are needed.21

23When appropriate, we intend to seek fast track designation, accelerated approval or priority review for our drug candidates. We cannot predict whether any of our drug candidates will obtain fast track, accelerated approval, or priority review designation, or the ultimate impact, if any, of these expedited review mechanisms on the timing or likelihood of the FDA approval of any of our drug candidates.

Satisfaction of the FDA regulations and approval requirements or similar requirements of foreign regulatory agencies typically takes several years, and the actual time required may vary substantially based upon the type, complexity and novelty of the product or disease. Typically, if a drug candidate is intended to treat a chronic disease, as is the case with the drug candidate we are developing, safety and efficacy data must be gathered over an extended period of time. Government ~~Regulation~~ regulation may delay or prevent marketing of drug candidates for a considerable period of time and ~~Product~~impose ~~Approval~~costly procedures upon our activities. The FDA or any other regulatory agency may not grant approvals for changes in dosage form or new indications for our drug candidates on a timely basis, or at all. Even if a drug candidate receives regulatory approval, the approval may be significantly limited to specific disease states, patient populations and dosages. Further, even after regulatory approval is obtained, later discovery of previously unknown problems with a drug may result in restrictions on the drug or even complete withdrawal of the drug from the market. Delays in obtaining, or failures to obtain, regulatory approvals for our drug candidate would harm our business. In addition, we cannot predict what adverse governmental regulations may arise from future U.S. or foreign governmental action.

~~The~~Regulatory ~~FDA~~Requirements and comparable regulatory agencies in state and local jurisdictions and in foreign countries impose substantial requirements upon the testing (preclinical and clinical), manufacturing, labeling, storage, recordkeeping, advertising, promotion, import, export, marketing and distribution, among other things, of drugs and drug product candidates. If we do not comply with applicable requirements, we may be fined, the government may refuse to approve our marketing applications or allow us to manufacture or market our products, and we may be criminally prosecuted. We and our manufacturers may also be subject to regulations under other U.S. federal, state, local and foreign laws.

InAny ~~the~~drugs ~~United~~manufactured ~~States,~~or ~~the~~distributed by us or any potential collaboration partners pursuant to future FDA ~~regulates~~approvals ~~drugs~~are subject to continuing regulation by the FDA, including ~~under~~recordkeeping requirements and reporting of adverse experiences associated with the ~~Food~~drug. Drug manufacturers and ~~Cosmetic~~their ~~Act,~~subcontractors are orrequired ~~FDCA~~to register with the FDA and certain state agencies, and ~~implementing~~are ~~regulations.~~subject ~~The~~to ~~process~~periodic ~~required~~unannounced inspections by the FDA and ~~before~~certain state agencies for compliance with ongoing regulatory requirements, including cGMP, which impose certain procedural and documentation requirements upon us and our ~~drug~~third-party ~~candidates~~manufacturers. Failure to comply with the statutory and regulatory requirements ~~may~~can subject a manufacturer to possible legal or regulatory action, such as warning letters, suspension of manufacturing, sales or use, seizure of product, injunctive action or possible civil penalties. We cannot be ~~marketed~~certain inthat ~~the~~we ~~United~~or ~~States~~our ~~generally~~present ~~involves~~or ~~the~~future third-party ~~following~~manufacturers ~~(although~~or suppliers will be able to comply with the ~~FDA~~cGMP isregulations ~~given~~and ~~wide~~other ~~discretion~~ongoing toFDA ~~impose~~regulatory ~~different~~requirements. If our present or ~~more~~future ~~stringent~~third-party manufacturers or suppliers are not able to comply with these requirements, onthe FDA may halt our clinical trials, require us to recall a ~~case-by-case~~drug ~~basis):~~from distribution, or withdraw approval of the BLA for that drug.

·The ~~completion~~FDA closely regulates the post-approval marketing and promotion of ~~extensive~~drugs, ~~preclinical~~including ~~laboratory~~standards ~~tests~~and regulations for direct-to-consumer advertising, ~~preclinical~~off-label ~~animal~~promotion, industry-sponsored ~~studies~~scientific and ~~formulation~~educational ~~studies,~~activities ~~all~~and ~~performed~~promotional inactivities ~~accordance~~involving ~~with~~the Internet. A company can make only those claims relating to safety and efficacy that are approved by the FDA’s. ~~Good~~Failure ~~Laboratory~~to ~~Practice~~comply with these requirements can result in adverse publicity, warning and/or ~~GLP~~untitled ~~regulations~~letters, corrective advertising and ~~other~~potential ~~regulations;~~civil and criminal penalties.

·Orphan ~~submission~~Drug toDesignation in the ~~FDA~~United ofStates, anthe ~~IND~~European Union ~~application~~and ~~which~~other ~~must~~foreign ~~become effective before clinical trials may begin;~~jurisdictions

·In ~~performance~~June of2015, ~~multiple~~the ~~adequate~~FDA ~~and~~granted ~~well~~Orphan Drug Designation to PRTX-~~controlled~~100 ~~clinical~~in ~~trials~~the ~~meeting~~treatment ~~FDA~~for ~~requirements~~ITP. In September 2015, COMP issued a positive opinion recommending PRTX-100 for designation as an orphan medicinal product for ITP. Based upon study data to ~~establish~~date, ~~the~~we ~~safety~~believe ~~and~~that ~~efficacy~~PRTX-100 ofmay be effective in the ~~product~~treatment of ~~candidate~~ITP, ~~for~~as ~~each~~well ~~proposed~~as ~~indication;~~other orphan immunological diseases.

·Under ~~submission~~the U.S. Orphan Drug Act, Orphan Drug Designation is granted by the FDA to drugs intended to treat a rare disease or condition, which for this program is defined as having a prevalence of fewer than 200,000 individuals in the United States. Orphan Drug Designation must be requested before submitting a ~~Biological~~marketing ~~License~~application. ~~Application~~After orthe ~~BLA~~FDA togrants an Orphan Drug Designation, the generic identity of the therapeutic agent and its potential orphan use are disclosed publicly by the FDA;.

·Orphan ~~satisfactory~~Drug ~~completion~~Designation ofdoes annot ~~FDA~~shorten the ~~pre-~~regulatory review and approval ~~inspection~~process, ofnor does it provide any advantage in the ~~manufacturing~~regulatory ~~facilities~~review atand approval process. However, if a product which has an Orphan Drug Designation subsequently receives the ~~product~~first ~~candidate~~FDA isapproval ~~produced,~~for ~~and~~the ~~potentially~~indication ~~other~~for ~~involved~~which ~~facilities~~it has assuch ~~well~~designation, the product is entitled to ~~assess~~an ~~compliance~~orphan ~~with~~exclusivity ~~cGMP~~period, ~~regulations~~in ~~and~~which the FDA may not approve any other ~~applicable~~applications to ~~regulations;~~market ~~and~~the same drug for the same indication for seven years in the United States, except in limited circumstances.

·In addition, outside of the ~~FDA~~U.S. ~~review~~medicinal products used to treat life-threatening or chronically debilitating conditions that affect no more than five in 10,000 people in European Union and ~~approval~~medicinal products which, for economic reasons, would be unlikely to be developed without incentives may be granted orphan designation in the European Union. The application for orphan designation is submitted to the EMA before an application is made for marketing authorization. Once authorized, orphan medicinal products are entitled to ten years of market exclusivity. During this ten-year period, with a limited number of exceptions, neither the ~~BLA~~competent ~~prior~~authorities of the European Union member states nor the EMA are permitted to ~~any~~accept ~~commercial~~applications or grant marketing authorization for other similar medicinal products with the same orphan indication. However, ~~sale~~marketing authorization may be granted to a similar medicinal product with the same orphan indication during the ten-year period with the consent of the marketing authorization holder for the original orphan medicinal product or ~~shipment~~if the manufacturer of the ~~drug~~original orphan medicinal product is unable to supply sufficient quantities. Marketing authorization may also be granted to a similar medicinal product with the same orphan indication if this product is safer, more effective or otherwise clinically superior to the original orphan medicinal product.

The testing and approval process requires substantial time, effort and financial resources, and we cannot be certain that any approvals for our drug candidates will be granted on a timely basis, if at all. Risks to us related to these regulations are described in the Risk Factors in Item 1A of this Annual Report.22

AWe ~~separate~~retained ~~submission to~~ the ~~FDA,~~consulting ~~under~~services anof ~~existing~~Coté ~~IND~~Orphan ~~must~~Consulting, ~~also~~LLC be(Coté) ~~made~~to ~~for~~submit ~~each~~the ~~successive~~application ~~clinical~~for ~~trial~~Orphan ~~conducted~~Drug ~~during~~Designation ~~product~~in ~~development.~~the ~~The~~EU ~~FDA~~for ~~must~~PRTX-100 ~~also approve~~as ~~changes~~Protalex, toInc. andoes ~~existing~~not ~~IND.~~maintain ~~Further,~~a anEuropean ~~independent~~subsidiary. ~~institutional~~On ~~review~~October ~~board~~9, ~~or IRB~~2015, ~~for~~PRTX-100 ~~each~~was ~~medical~~granted ~~center~~Orphan ~~proposing~~Drug toDesignation ~~conduct~~in EU ~~the~~as ~~clinical~~EU/3/15/1562 ~~trial~~(EMA/OD/111/15) ~~must~~for ~~review and approve~~ the ~~plan~~treatment ~~for~~of ~~any~~Immune ~~clinical~~Thrombocytopenia. ~~trial~~Coté ~~before~~Orphan itConsulting ~~commences~~UK atLimited, ~~that~~a ~~center and it must monitor~~subsidiary ~~the~~of ~~study~~Coté ~~until~~Orphan ~~completed.~~Consulting, ~~The FDA~~LLC, ~~the~~is ~~IRB~~identified oras the sponsor ~~may~~of ~~suspend~~the adesignation ~~clinical~~for ~~trial~~PRTX-100 atin ~~any time on various grounds, including a finding that~~ the ~~subjects or patients are being exposed to an unacceptable health risk~~EU. ~~Clinical~~Under ~~testing~~our ~~also~~agreement with ~~must~~Coté, ~~satisfy~~we ~~extensive Good~~retain ~~Clinical~~all ~~Practice~~ownership orin ~~GCP~~the ~~requirements~~Orphan ~~and~~Drug ~~regulations~~Designation for ~~informed~~PRTX-100 ~~consent~~in the EU.

~~Clinical~~In ~~Trials~~August 2017, the OOPD awarded us a grant of $403,000 to support the future clinical development of PRTX-100 as a treatment for ITP.

~~For~~Foreign ~~purposes~~Regulation of BLA submission and approval, clinical trials are typically conducted in the following three sequential phases, which may overlap (although additional or different trials may be required by the FDA as well):

·In ~~Phase~~addition Ito ~~clinical~~regulations ~~trials~~in ~~are~~the ~~initially~~United States, ~~conducted~~we inwill abe ~~limited~~subject ~~population~~ to ~~test~~a ~~the~~variety ~~drug~~of ~~candidate~~foreign ~~for~~regulations ~~safety,~~governing ~~dose~~clinical ~~tolerance,~~trials ~~absorption,~~and ~~metabolism,~~commercial ~~distribution~~sales and ~~excretion~~distribution of inour ~~healthy~~future ~~humans~~products. Whether or, onnot ~~occasion,~~we inobtain ~~patients~~FDA approval for a product, ~~such~~we asmust ~~cancer~~obtain ~~patients.~~approval Inof ~~some~~a ~~cases,~~product ~~particularly~~by inthe ~~cancer~~comparable regulatory authorities of foreign countries before we can commence clinical trials, aor ~~sponsor~~marketing ~~may~~of ~~decide~~the toproduct ~~conduct~~in ~~what~~those iscountries. The ~~referred~~approval toprocess asvaries afrom ~~“Phase~~country ~~1b”~~to ~~evaluation~~country, ~~which~~and isthe atime ~~second~~may ~~safety-focused~~be ~~Phase~~longer Ior ~~clinical~~shorter ~~trial~~than ~~typically~~that ~~designed~~required tofor ~~evaluate~~FDA approval. The requirements governing the ~~impact~~conduct of ~~the~~clinical ~~drug~~trials, ~~candidate~~product inlicensing, ~~combination~~pricing ~~with~~and ~~currently~~reimbursement ~~FDA-approved~~vary ~~drugs~~greatly from country to country.

·Under ~~Phase~~European IIUnion ~~clinical~~regulatory ~~trials~~systems, marketing ~~are~~authorizations ~~generally~~may ~~conducted~~be insubmitted aeither ~~limited~~under ~~patient~~a ~~population~~centralized toor ~~identify~~mutual ~~possible~~recognition ~~adverse~~procedure. ~~effects~~The ~~and~~centralized ~~safety~~procedure provides ~~risks,~~for ~~to determine~~ the ~~efficacy~~grant of ~~the~~a ~~drug~~single ~~candidate~~marketing ~~for~~authorization ~~specific~~that ~~targeted~~is ~~indications~~valid ~~and~~for toall ~~determine~~European anUnion ~~optimal~~member ~~dosage~~states. ~~Multiple~~The ~~Phase~~mutual IIrecognition procedure ~~clinical~~provides ~~trials~~for ~~may~~mutual berecognition ~~conducted~~of bynational ~~the~~approval ~~sponsor to obtain information prior to beginning larger and more expensive Phase III clinical trials~~decisions. InUnder ~~some~~this ~~cases~~procedure, athe ~~sponsor~~holder ~~may~~of ~~decide to conduct what is referred to as~~ a ~~“Phase~~national ~~IIb”~~marketing authorization ~~evaluation,~~may ~~which~~submit isan aapplication ~~second,~~to ~~confirmatory~~the ~~Phase~~remaining IImember ~~clinical~~states. ~~trial~~Within ~~that~~90 days ~~could,~~of ifreceiving ~~positive~~the applications and ~~accepted by the FDA~~assessment report, ~~serve~~each asmember astate ~~pivotal~~must ~~clinical~~decide ~~trial~~whether into ~~the~~recognize approval ~~of a drug candidate~~.

24In addition to regulations in Europe and the United States, we will be subject to a variety of foreign regulations governing clinical trials and commercial distribution of our future products.

· Phase III clinical trials are commonly referred to as pivotal trials. When Phase II clinical trials demonstrate that a dose range of the drug candidate is effective and has an acceptable safety profilePatents, ~~Phase III clinical trials are undertaken in large patient populations to further evaluate dosage~~Trademarks, ~~to provide substantial evidence of clinical efficacy~~ and toProprietary ~~further test for safety in an expanded and diverse patient population at multiple, geographically dispersed clinical trial sites.~~Technology

InPatents ~~some~~and ~~cases,~~other ~~the~~proprietary ~~FDA~~rights ~~may~~are important ~~condition~~to ~~continued~~our ~~approval~~business. ofOur apractice ~~BLA on~~is ~~the~~to ~~sponsor’s~~file ~~agreement~~patent applications to ~~conduct~~protect ~~additional~~technology, ~~clinical~~inventions ~~trials~~and ~~with~~improvements ~~due~~to ~~diligence.~~our technologies Inthat ~~other~~are ~~cases,~~considered important to the ~~sponsor~~development ~~and~~of ~~the FDA~~our ~~may~~business. ~~agree~~We ~~that~~have ~~additional~~filed ~~safety~~several U.S. patent applications and~~/or~~ international ~~efficacy~~counterparts ~~data~~of ~~should~~certain beof ~~provided;~~these ~~however,~~applications. ~~continued~~We ~~approval~~also ofrely ~~the~~upon ~~BLA~~our ~~may~~trade ~~not~~secrets, ~~always depend~~know-how, onand ~~timely~~continuing ~~submission~~technological innovations, ofas ~~such~~well ~~information.~~as ~~Such~~patents ~~post-approval~~that ~~studies~~we ~~are~~may ~~typically~~license ~~referred~~from other parties, to asdevelop ~~Phase IV~~and ~~studies~~maintain our competitive position.

~~Biological~~Our ~~License~~success ~~Application~~will depend on our ability to maintain our trade secrets and proprietary technology in the United States and in other countries.

The ~~results~~table ofbelow ~~drug~~provides candidate development, preclinical testing and clinical trials, together with, among other things, detailed information on the manufacture and composition of the product and proposed labeling, and the payment of a ~~user~~list ~~fee, are submitted to the FDA as part~~ of ~~a BLA. The FDA reviews~~our ~~all~~issued BLAs submitted before it accepts them for filing and may request additional information rather than accepting a BLA for filing. Once a BLA is accepted for filing, the FDA begins an in-depth review of the application.patents:

During its review of a BLA, the FDA may refer the application to an advisory committee for review, evaluation and recommendation as to whether the application should be approved. The FDA may refuse to approve a BLA and issue a not approvable letter if the applicable regulatory criteria are not satisfied, or it may require additional clinical or other data, including one or more additional pivotal Phase III clinical trials. Even if such data are submitted, the FDA may ultimately decide that the BLA does not satisfy the criteria for approval. Data from clinical trials are not always conclusive and the FDA may interpret data differently than we or our collaboration partners interpret data. If the FDA’s evaluations of the BLA and the clinical and manufacturing procedures and facilities are favorable, the FDA may issue either an approval letter or an approvable letter, which contains the conditions that must be met in order to secure final approval of the BLA. If and when those conditions have been met to the FDA’s satisfaction, the FDA will issue an approval letter, authorizing commercial marketing of the drug for certain indications. The FDA may withdraw drug approval if ongoing regulatory requirements are not met or if safety problems occur after the drug reaches the market. In addition, the FDA may require testing, including Phase IV clinical trials, and surveillance programs to monitor the effect of approved products that have been commercialized, and the FDA has the power to prevent or limit further marketing of a drug based on the results of these post-marketing programs. Drugs may be marketed only for the FDA-approved indications and in accordance with the FDA-approved label. Further, if there are any modifications to the drug, including changes in indications, other labeling changes, or manufacturing processes or facilities, we may be required to submit and obtain FDA approval of a new BLA or BLA supplement, which may require us to develop additional data or conduct additional preclinical studies and clinical trials.

Patent Title	Number	Expiration Date
Protein A Compositions and Methods of Use	U.S. Patent No. 7,211,258	Nov. 6, 2022
Protein A Methods of Use	U.S. Patent No. 7,425,331	Nov. 6, 2022
Protein A Compositions and Methods of Use	U.S. Patent No. 7,807,170	April 10, 2022
Protein A Compositions and Methods of Use	U.S. Patent No. 8,168,189	June 16, 2022
Protein A Compositions and Methods of Use	U.S. Patent No. 8,603,486	April 10, 2022

~~Fast Track Designation~~23

The FDA’s fast track program is intended to facilitate the development and to expedite the review of drugs that are intended for the treatment of a serious or life-threatening condition and that demonstrate the potential to address unmet medical needs. Under the fast track program, applicants may seek traditional approval for a product based on data demonstrating an effect on a clinically meaningful endpoint, or approval based on a well-established surrogate endpoint. The sponsor of a new drug candidate may request the FDA to designate the drug candidate for a specific indication as a fast track drug at the time of original submission of its IND, or at any time thereafter prior to receiving marketing approval of a marketing application. The FDA will determine if the drug candidate qualifies for fast track designation within 60 days of receipt of the sponsor’s request.

Protein A Compositions and Methods of Use	European Patent No. 2570136	March 6, 2023
Protein A Composition and Method of Use	Japanese Patent No. 5523796	March 6, 2023
Protein A Compositions and Methods of Use	U.S. Patent No. 9,370,552	November 6, 2022
Protein A Compositions and Methods of Use	European Patent No. 2,206,511	September 13, 2025
Protein A Compositions and Methods of Use	Canadian Patent No. 2,894,098	March 6, 2023
Protein A Compositions and Methods of Use	Canadian Patent No. 2,481,282	March 6, 2023
Protein A Compositions and Methods of Use	European Patent No. 1,499,345	March 6, 2023
Protein A Compositions and Methods of Use	Hong Kong Patent No. 1145805B	September 13, 2025

IfIt ~~the FDA grants fast track designation, it may initiate review of sections of a BLA before the application~~ is ~~complete.~~our ~~This~~policy ~~so-called~~to ~~“rolling~~require ~~review”~~our ~~is available~~employees, ifconsultants, ~~the~~and ~~applicant~~parties ~~provides~~to ~~and~~collaborative ~~the~~agreements ~~FDA~~to ~~approves~~execute aconfidentiality ~~schedule~~agreements ~~for~~upon the ~~submission~~commencement of ~~the~~employment or ~~remaining~~consulting ~~information~~relationships ~~and~~or ~~the~~collaborations ~~applicant~~with ~~has paid applicable user fees~~us. ~~The~~These ~~FDA’s~~agreements ~~Prescription~~generally ~~Drug~~provide ~~User~~that ~~Fee~~all ~~Act~~confidential orinformation ~~PDUFA review clock for both a standard and priority~~developed ~~BLA~~or ~~for~~made aknown ~~fast~~during ~~track product does not begin until~~ the ~~complete~~course ~~application~~of ~~is submitted. Additionally, fast track designation may be withdrawn by~~ the ~~FDA~~relationship ifwith itus ~~believes that the designation~~ is noto ~~longer~~be ~~supported~~kept byconfidential ~~emerging~~and ~~data,~~not orto ifbe ~~the~~disclosed ~~designated~~to ~~drug~~third parties ~~development~~except ~~program~~in isspecific ~~no longer being pursued~~circumstances.

25Employees

InWe ~~some~~have ~~cases~~two employees, our president and our chief financial officer. We also have a ~~fast~~Scientific ~~track~~Advisory ~~designated~~Board ~~drug~~which is staffed by highly qualified consultants with the ~~candidate~~background ~~may~~and ~~also~~scientific ~~qualify~~expertise ~~for~~we ~~one~~need orto ~~more~~carry out our long-term business objectives. We believe that our relationship with all of ~~the~~our ~~following~~employees ~~programs:~~and our Scientific Advisory Board is generally good.

·Critical ~~Priority~~Accounting Review. As explained above, a drug candidate may be eligible for a six-month priority review. The FDA assigns priority review status to an application if the drug candidate provides a significant improvement compared to marketed drugs in the treatment, diagnosis or prevention of a disease. A fast track drug would ordinarily meet the FDA’s criteria for priority review, but may also be assigned a standard review. We do not know whether any of our drug candidates will be assigned priority review status or, if priority review status is assigned, whether that review or approval will be faster than conventional FDA procedures, or that the FDA will ultimately approve the drug.Policies

·Our ~~Accelerated~~financial ~~Approval.~~statements ~~Under~~are ~~the~~prepared ~~FDA’s~~in conformity ~~accelerated~~with ~~approval~~accounting ~~regulations,~~principles ~~the~~generally ~~FDA~~accepted ~~is authorized to approve drug candidates that have been studied for their safety and efficacy~~ in treating serious or life-threatening illnesses and that provide meaningful therapeutic benefit to patients over existing treatments based upon either a surrogate endpoint that is reasonably likely to predict clinical benefit or on the ~~basis~~United ofStates ~~an effect on a clinical endpoint other than patient survival or irreversible morbidity. In clinical trials, surrogate endpoints are alternative measurements~~ of ~~the symptoms of a disease or condition that are substituted for measurements of observable clinical symptoms~~America. ANote ~~drug~~3 ~~candidate approved on this basis is subject~~ to ~~rigorous post-marketing compliance requirements, including~~ the ~~completion~~financial ofstatements ~~Phase IV or post-approval clinical trials to validate~~ describes the ~~surrogate~~significant ~~endpoint~~accounting orpolicies ~~confirm~~and ~~the~~methods ~~effect~~used onin the ~~clinical~~preparation ~~endpoint.~~of ~~Failure~~our tofinancial conduct required post-approval studies with due diligence, or to validate a surrogate endpoint or confirm a clinical benefit during post-marketing studies, may cause the FDA to seek to withdraw the drug from the market on an expedited basisstatements. ~~All promotional materials for drug candidates approved under accelerated regulations are subject to prior review by the FDA.~~

~~When~~We ~~appropriate,~~have weidentified ~~intend~~the topolicies ~~seek~~below ~~fast track~~as ~~designation,~~some ~~accelerated~~of ~~approval~~the ormore ~~priority~~critical ~~review~~to ~~for~~our business and the understanding of our ~~drug~~financial ~~candidates~~position and results of operations. These policies Wemay ~~cannot~~involve ~~predict~~a ~~whether~~high ~~any~~degree of ~~our~~judgment ~~drug~~and ~~candidates~~complexity in their application and represent the critical accounting policies ~~will~~used ~~obtain~~in ~~fast~~the ~~track,~~preparation ~~accelerated~~of ~~approval,~~our orfinancial ~~priority~~statements. ~~review~~Although ~~designation~~we believe our judgments and estimates are appropriate and correct, actual future results may differ from estimates. If different assumptions or conditions were to prevail, the ~~ultimate~~results could be materially different from these reported results. The impact, ifand any, ofassociated ~~these~~risks ~~expedited review~~related ~~mechanisms~~to these policies on ~~the~~our ~~timing~~business oroperations are ~~likelihood~~discussed ofthroughout ~~the~~this ~~FDA~~Report ~~approval~~where ofsuch ~~any~~policies ofaffect our ~~drug~~reported ~~candidates~~and expected financial results.

~~Satisfaction~~The ofpreparation ~~the FDA regulations and approval requirements or similar requirements~~ of ~~foreign~~our ~~regulatory~~financial ~~agencies typically takes several years~~statements, ~~and the actual time required may vary substantially~~ ~~based~~in ~~upon~~conformity ~~the~~with ~~type,~~accounting ~~complexity~~principles ~~and~~generally ~~novelty~~accepted ofin the ~~product~~United ~~or disease. Typically~~States, ifrequires amanagement ~~drug candidate is intended~~ to ~~treat~~make aestimates ~~chronic~~and assumptions ~~disease,~~that asaffect is the ~~case~~reported ~~with~~amounts ~~the~~of ~~drug candidate we are developing~~assets, ~~safety~~liabilities and ~~efficacy~~equity ~~data~~and ~~must~~disclosure ~~be gathered over an extended period~~ of ~~time.~~contingent ~~Government~~assets ~~regulation may delay or prevent marketing of drug candidates for a considerable period of time~~ and ~~impose~~liabilities ~~costly procedures upon our activities. The FDA or any other regulatory agency may not grant approvals for changes in dosage form or new indications for our drug candidates on a timely basis, or~~ at ~~all. Even if a drug candidate receives regulatory approval,~~ the ~~approval~~date ~~may~~of bethe ~~significantly~~financial ~~limited~~statements ~~to specific disease states, patient populations~~ and ~~dosages. Further, even after regulatory approval is obtained, later discovery of previously unknown problems with a drug may result in restrictions on~~ the ~~drug~~reported oramounts ~~even complete withdrawal~~ of ~~the~~expenses ~~drug~~during ~~from~~ the ~~market~~reporting period. ~~Delays~~These inestimates ~~obtaining,~~have ora ~~failures~~material ~~to obtain, regulatory approvals for our drug candidate~~impact ~~would~~on ~~harm~~ our ~~business.~~financial Instatements ~~addition,~~and weare ~~cannot~~discussed ~~predict~~in ~~what~~detail ~~adverse~~throughout ~~governmental~~this ~~regulations may arise from future U~~Report.~~S. or foreign governmental action.~~

~~Regulatory~~As ~~Requirements~~part of the process of preparing our financial statements, we are required to estimate income taxes in each of the jurisdictions in which we operate. This process involves estimating actual current tax expense together with assessing temporary differences resulting from differing treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included within the balance sheet. We must then assess the likelihood that our deferred tax assets will be recovered from future taxable income and to the extent we believe that recovery is not likely, we must establish a valuation allowance. In the event that we determine that we would be able to realize deferred tax assets in the future in excess of the net recorded amount, an adjustment to the deferred tax asset valuation allowance would increase income in the period such determination was made.

Any drugs manufactured or distributed by us or any potential collaboration partners pursuant to future FDA approvals are subject to continuing regulation by the FDA, including recordkeeping requirements and reporting of adverse experiences associated with the drug. Drug manufacturers and their subcontractors are required to register with the FDA and certain state agencies, and are subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with ongoing regulatory requirements, including cGMP, which impose certain procedural and documentation requirements upon us and our third-party manufacturers. Failure to comply with the statutory and regulatory requirements can subject a manufacturer to possible legal or regulatory action, such as warning letters, suspension of manufacturing, sales or use, seizure of product, injunctive action or possible civil penalties. We cannot be certain that we or our present or future third-party manufacturers or suppliers will be able to comply with the cGMP regulations and other ongoing FDA regulatory requirements. If our present or future third-party manufacturers or suppliers are not able to comply with these requirements, the FDA may halt our clinical trials, require us to recall a drug from distribution, or withdraw approval of the BLA for that drug.24

26We account for our stock option grants under the provisions of the accounting guidance for Share-Based Payments. Such guidance requires the recognition of the fair value of share-based compensation in the statements of operations. The fair value of our stock option awards was estimated using a Black-Scholes option valuation model. This model requires the input of highly subjective assumptions and elections in adopting and implementing this guidance, including expected stock price volatility and the estimated life of each award. The fair value of share-based awards is amortized over the vesting period of the award and we have elected to use the straight-line method for awards granted after the adoption of this guidance.

~~The~~Results ~~FDA closely regulates the post-approval marketing and promotion~~ of drugs, including standards and regulations for direct-to-consumer advertising, off-label promotion, industry-sponsored scientific and educational activities and promotional activities involving the Internet. A company can make only those claims relating to safety and efficacy that are approved by the FDA. Failure to comply with these requirements can result in adverse publicity, warning and/or untitled letters, corrective advertising and potential civil and criminal penalties.Operations

~~Orphan~~For ~~Drug~~the ~~Designation~~Three inMonths ~~the~~Ended ~~United~~August ~~States~~31, ~~the~~2018 ~~European Union~~ and ~~other~~August ~~foreign jurisdictions~~31, 2017

InResearch ~~June~~and ~~2015,~~Development ~~the~~Expenses ~~FDA~~- Research ~~granted~~and ~~Orphan~~Development ~~Drug Designation~~expenses to(“R&D ~~PRTX-100~~Expenses”) inwere ~~the~~$248,933 ~~treatment~~and $681,829 for ~~ITP.~~the Inthree ~~September~~months ~~2015~~ended August 31, ~~COMP~~2018 ~~issued~~and aAugust ~~positive~~31, ~~opinion~~2017, ~~recommending~~respectively. The ~~PRTX-100~~decrease ~~for designation~~in asR&D anexpenses ~~orphan~~for ~~medicinal~~the ~~product~~three ~~for~~month ~~ITP.~~period ~~Based~~ended ~~upon~~August ~~study~~31, 2018 ~~data~~compared to ~~date,~~the wesame ~~believe~~prior ~~that~~year ~~PRTX-100~~period ~~may~~was bedue ~~effective~~to a decrease in ~~the~~ ~~treatment~~clinical ofactivities ~~ITP,~~and asa ~~well~~decrease asin ~~other~~drug ~~orphan~~material ~~immunological~~and ~~diseases~~drug product related activities.

~~Under~~There ~~the~~are ~~U.S.~~significant ~~Orphan~~risks ~~Drug~~and uncertainties ~~Act,~~inherent ~~Orphan~~in ~~Drug~~the ~~Designation~~preclinical isand ~~granted~~clinical bystudies ~~the~~associated ~~FDA~~with toour ~~drugs~~research ~~intended~~and todevelopment ~~treat~~program. aThese ~~rare~~studies ~~disease~~may oryield varying ~~condition~~results that could delay, ~~which~~limit ~~for~~or ~~this~~prevent a program is’s ~~defined~~advancement asthrough ~~having~~the avarious ~~prevalence~~stages of ~~fewer~~product ~~than~~development and ~~200,000~~significantly ~~individuals~~impact in the ~~United~~costs ~~States.~~to ~~Orphan~~be ~~Drug~~incurred, ~~Designation~~and ~~must~~time beinvolved, ~~requested before~~in ~~submitting~~bringing a ~~marketing~~program ~~application~~to completion. ~~After~~As ~~the~~a ~~FDA~~result, ~~grants~~the ancosts to ~~Orphan~~complete ~~Drug~~such ~~Designation~~programs, ~~the~~as ~~generic~~well ~~identity~~as of the ~~therapeutic agent~~period ~~and~~in ~~its~~which ~~potential~~net ~~orphan~~cash ~~use~~outflows from such programs are ~~disclosed~~expected ~~publicly~~to bybe ~~the~~incurred, ~~FDA~~are not reasonably estimable.

~~Orphan~~Administrative ~~Drug~~Expenses ~~Designation~~- ~~does not shorten the~~Administrative ~~regulatory~~expenses ~~review~~were $297,730 and ~~approval process~~$142,390 ~~nor~~for ~~does~~the itthree ~~provide~~months ~~any~~ended ~~advantage~~August in31, ~~the~~2018 ~~regulatory~~and ~~review~~August ~~and~~31, ~~approval~~2017, ~~process~~respectively. The ~~However,~~increase ifin aadministrative ~~product~~expenses ~~which has an Orphan Drug Designation subsequently receives the first FDA approval~~ for the ~~indication~~three ~~for~~month ~~which~~period ~~it has~~ended ~~such~~August ~~designation~~31, ~~the~~2018 ~~product~~compared ~~is entitled~~ to ~~an orphan exclusivity period, in which~~ the ~~FDA~~same ~~may~~prior ~~not~~year ~~approve~~period ~~any~~was ~~other~~due ~~applications~~ to ~~market~~an increase ~~the same drug for the same indication for seven years~~ in ~~the~~stock ~~United~~compensation ~~States, except in limited circumstances~~expense.

InProfessional ~~addition,~~Fees ~~outside~~- ~~of the U.S. medicinal~~Professional ~~products~~expenses ~~used~~were ~~to treat life-threatening or chronically debilitating conditions that affect no more than five in 10~~$100,~~000~~386 ~~people in European Union~~ and ~~medicinal products which~~$182,943 for ~~economic reasons, would be unlikely to be developed without incentives may be granted orphan designation in~~ the ~~European~~three ~~Union.~~months ~~The~~ended ~~application~~August ~~for orphan designation is submitted to the EMA before an application is made for marketing authorization. Once authorized~~31, ~~orphan~~2018 ~~medicinal~~and ~~products~~August ~~are entitled to ten years of market exclusivity. During this ten-year period~~31, ~~with a limited number of exceptions~~2017, ~~neither~~respectively. ~~the~~The ~~competent authorities of the European Union member~~decrease ~~states~~for ~~nor~~ the ~~EMA~~three ~~are~~month ~~permitted~~period toended ~~accept~~August ~~applications or grant marketing authorization for other similar medicinal products with the same orphan indication. However~~31, ~~marketing~~2018 ~~authorization~~was ~~may~~principally bedue ~~granted~~ to ~~a similar medicinal product with~~ the ~~same orphan indication during the ten~~non-~~year~~recurring ~~period~~nature ~~with the consent~~ of ~~the~~fundraising ~~marketing~~expenses ~~authorization holder for the original orphan medicinal~~incurred ~~product~~in ~~or if~~ the ~~manufacturer~~three ofmonths ~~the~~ended ~~original~~August ~~orphan medicinal product is unable to supply sufficient quantities. Marketing authorization may also be granted to a similar medicinal product with the same orphan indication if this product is safer~~31, ~~more effective or otherwise clinically superior to the original orphan medicinal product~~2017.

WeNet ~~retained~~Loss the consulting services of Coté Orphan Consulting, LLC (Coté) to submit the application for Orphan Drug Designation in the EU for PRTX-100 as Protalex, Inc. does not maintain a European subsidiary. On October 9, 2015, PRTX-100 was granted Orphan Drug Designation in EU as EU/3/15/1562 (EMA/OD/111/15) for the treatment of Immune Thrombocytopenia. Coté Orphan Consulting UK Limited, a subsidiary of Coté Orphan Consulting, LLC, is identified as the sponsor of the designation for PRTX-100 in the EU. Under our agreement with Coté, we retain all ownership in the Orphan Drug Designation for PRTX-100 in the EU.Outlook

InWe ~~August~~have ~~2017~~not generated any operating revenues, have ~~the~~incurred ~~OOPD~~operating ~~awarded~~losses ussince ainception ~~grant~~and have not achieved profitable operations. Our accumulated deficit from inception ofthrough ~~$403~~August 31,~~000~~ 2018 was approximately $105 million and we expect to ~~support~~continue ~~the~~to incur substantial losses in future ~~clinical~~periods. We ~~development~~expect that our operating losses in future periods will be the result of continued research and development expenses relating to PRTX-100, as awell ~~treatment~~as costs incurred in preparation for ~~ITP~~the potential commercialization of PRTX-100.

~~Foreign~~We ~~Regulation~~do not anticipate generating operating revenue for the foreseeable future and do not currently have any products that are marketable. In order to continue our research and development program and commercialization efforts we will require substantial additional working capital. We currently have no agreements or commitments with respect to raising the working capital necessary to continue our research and development program and commercialization efforts. Although we are exploring all options to raise working capital, if we are not successful in imminently raising additionally working capital, we will be forced to substantially scale back, suspend or discontinue operations.

In addition to ~~regulations~~additional ~~in the United States~~financing, we are ~~will~~highly bedependent ~~subject to~~on athe ~~variety~~success of ~~foreign~~our ~~regulations~~research ~~governing~~and ~~clinical~~development ~~trials~~efforts and, ~~commercial~~ultimately, ~~sales~~upon regulatory approval and ~~distribution~~market acceptance of our ~~future~~ products. ~~Whether or~~under ~~not we obtain FDA approval for a product~~development, weparticularly ~~must~~our ~~obtain~~lead ~~approval of a~~ product bycandidate, ~~the~~PRTX-100. We ~~comparable~~may ~~regulatory~~never ~~authorities~~receive ~~of foreign~~regulatory ~~countries~~approval ~~before~~for weany ~~can commence clinical trials or marketing~~ of ~~the~~our product incandidates, ~~those~~generate ~~countries.~~product ~~The~~sales ~~approval process varies from country to country~~revenues, ~~and~~achieve ~~the~~profitable ~~time~~operations ~~may be longer~~ or ~~shorter~~generate ~~than~~positive cash ~~that~~flows ~~required~~from ~~for~~operations, ~~FDA~~and ~~approval.~~even ~~The~~if ~~requirements~~profitable ~~governing~~operations ~~the~~are ~~conduct of clinical trials~~achieved, ~~product~~they ~~licensing,~~may ~~pricing~~not ~~and~~be ~~reimbursement~~sustained ~~vary~~on ~~greatly~~a ~~from~~continuing ~~country to country~~basis.

27Liquidity and Capital Resources

~~Under~~Since ~~European~~1999, ~~Union~~we ~~regulatory~~have ~~systems,~~incurred ~~marketing~~significant ~~authorizations~~losses ~~may~~and bewe ~~submitted~~expect ~~either~~to ~~under~~experience aoperating ~~centralized~~losses orand ~~mutual~~negative ~~recognition~~operating ~~procedure.~~cash ~~The~~flow ~~centralized procedure provides~~ for the ~~grant~~foreseeable offuture. aHistorically, our ~~single~~primary ~~marketing~~source ~~authorization~~of ~~that~~cash isto ~~valid~~meet ~~for~~short-term ~~all~~and ~~European~~long-term ~~Union~~liquidity ~~member~~needs ~~states.~~has ~~The~~been ~~mutual~~the ~~recognition~~sale ~~procedure provides for mutual recognition~~ of ~~national~~shares ~~approval decisions. Under this procedure, the holder~~ of aour ~~national~~common ~~marketing~~stock ~~authorization~~and ~~may~~loans ~~submit~~from anour ~~application~~majority ~~to the remaining member states~~stockholder. ~~Within~~We ~~90 days~~have ofissued ~~receiving~~shares ~~the~~in ~~applications~~private ~~and~~placements ~~assessment~~at ~~report, each~~discounts ~~member~~to ~~state~~then ~~must~~current ~~decide~~market ~~whether to recognize approval~~price.

InAs ~~addition~~of toAugust ~~regulations~~31, in2018, ~~Europe~~we had cash and ~~the~~cash ~~United~~equivalents ~~States~~of $114,876 weand ~~will~~net negative working capital of $460,086, which, based on our current “burn” berate, ~~subject~~is insufficient to asustain ~~variety~~our ongoing operations. In order to sustain our operations through the end of ~~foreign~~the current ~~regulations~~fiscal ~~governing~~year ~~clinical~~in ~~trials~~a ~~and~~manner ~~commercial~~consistent ~~distribution~~with past practice we require a working capital infusion of at least $3.0 million. We currently have no agreements or commitments with respect to raising the working capital necessary to continue our ~~future~~research ~~products~~and development program and commercialization efforts. Although we are exploring all options to raise working capital, if we are not successful in imminently raising additionally working capital, we will be forced to substantially scale back, suspend or discontinue operations.

~~Patents, Trademarks, and Proprietary Technology~~25

~~Patents~~On ~~and~~February ~~other~~28, ~~proprietary~~2018, ~~rights~~pursuant ~~are~~to ~~important~~the Exchange Agreement and as a condition to ~~our~~the ~~business.~~consummation ~~Our~~of ~~practice~~the isOffering to(more ~~file~~fully ~~patent~~described ~~applications~~above), toNiobe ~~protect~~converted ~~technology~~the $22,269,367 aggregate ~~inventions~~outstanding principal balance under the Consolidated Note and ~~improvements~~the to2014 ~~our~~Credit ~~technologies that~~Facility, ~~are~~as ~~considered~~of ~~important~~February to28, ~~the~~2018, ~~development~~into 18,557,805 shares of our ~~business.~~common Westock ~~have~~at ~~filed~~a ~~several~~conversion Uprice of $1.S20 per share. ~~patent~~This ~~applications~~resulted ~~and~~in ~~international counterparts~~a ofgain ~~certain~~on conversion of ~~these~~$13,918,354, which ~~applications~~was recognized against equity and had no impact on the Statement of Operations. We also ~~rely~~issued ~~upon~~a ~~our~~promissory ~~trade~~note, ~~secrets~~dated February 28, ~~know-how~~2018, ~~and~~to ~~continuing~~Niobe ~~technological~~in ~~innovations~~the principal amount of $1, as974,349 ~~well~~bearing asinterest ~~patents~~at ~~that~~a werate ~~may~~of ~~license~~3% ~~from~~per ~~other~~annum ~~parties~~and maturing on March 31, to2023, for ~~develop~~the ~~and~~accrued ~~maintain~~but ~~our~~unpaid ~~competitive~~interest ~~position~~on the notes converted by Niobe.

~~Our~~On ~~success~~February ~~will~~28, 2018 ~~depend~~and onMarch ~~our~~13, ~~ability~~2018, ~~to maintain~~we ~~our~~raised ~~trade~~an ~~secrets~~aggregate ~~and~~of ~~proprietary~~$1.475 ~~technology~~million from nine accredited investors in the ~~United~~Offering ~~States~~of Senior Notes. No commissions were paid in connection with the Offering which was principally sold to certain of our existing stockholders. Proceeds of the Offering have been used for working capital purposes, principally to fund ongoing clinical trials and studies and related activities. No registration rights were granted to the investors in ~~other~~the ~~countries~~Offering.

~~The~~Subsequent ~~table below provides a list of our issued patents:~~Event

Patent Title	Number	Expiration Date
Protein A Compositions and Methods of Use	U.S. Patent No. 7,211,258	Nov. 6, 2022
Protein A Methods of Use	U.S. Patent No. 7,425,331	Nov. 6, 2022
Protein A Compositions and Methods of Use	U.S. Patent No. 7,807,170	April 10, 2022
Protein A Compositions and Methods of Use	U.S. Patent No. 8,168,189	June 16, 2022
Protein A Compositions and Methods of Use	U.S. Patent No. 8,603,486	April 10, 2022
Protein A Compositions and Methods of Use	European Patent No. 2570136	March 6, 2023
Protein A Composition and Method of Use	Japanese Patent No. 5523796	March 6, 2023
Protein A Compositions and Methods of Use	U.S. Patent No. 9,370,552	November 6, 2022
Protein A Compositions and Methods of Use	European Patent No. 2,206,511	September 13, 2025
Protein A Compositions and Methods of Use	Canadian Patent No. 2,894,098	March 6, 2023
Protein A Compositions and Methods of Use	Canadian Patent No. 2,481,282	March 6, 2023
Protein A Compositions and Methods of Use	European Patent No. 1,499,345	March 6, 2023
Protein A Compositions and Methods of Use	Hong Kong Patent No. 1145805B	September 13, 2025

In September 2018, we borrowed $250,000 from Niobe and issued a promissory note to Niobe in the principal amount of $250,000 bearing interest at a rate of 3% per annum and maturing on March 31, 2023 (the “September 2018 Note”). The September 2018 Note is subordinate to the Senior Notes.

ItNet isCash ~~our~~Used ~~policy~~in toOperating ~~require~~Activities ~~our employees, consultants,~~ and ~~parties~~Operating ~~to collaborative agreements to execute confidentiality agreements upon the commencement of employment or consulting~~Cash ~~relationships~~Flow orRequirements collaborations with us. These agreements generally provide that all confidential information developed or made known during the course of the relationship with us is to be kept confidential and not to be disclosed to third parties except in specific circumstances.Outlook

28Our operating cash outflows for the three months ended August 31, 2018 and 2017 were primarily attributable to research and development expenditures associated for PRTX-100 and administrative purposes. We expect to continue to use cash resources to fund operating losses and expect to continue to incur operating losses in fiscal 2018 and beyond due to continuing research and development activities.

~~Employees~~Net Cash From Investing Activities and Investing Requirements Outlook

We ~~have~~do ~~two~~not ~~employees,~~expect ~~our~~to ~~president~~be ~~and~~required ~~our~~to make ~~chief~~any ~~financial~~significant ~~officer.~~investments Wein ~~also~~information ~~have~~technology ~~a Scientific Advisory Board which is staffed by highly qualified consultants with the background~~ and ~~scientific~~laboratory ~~expertise~~equipment ~~we need~~ to ~~carry~~support ~~out~~ our ~~long-term~~future ~~business~~research ~~objectives. We believe that our relationship with all of our employees~~ and ~~our~~development ~~Scientific Advisory Board is generally good~~activities.

~~Critical~~We ~~Accounting~~may ~~Policies~~never receive regulatory approval for any of our product candidates, generate product sales revenues, achieve profitable operations or generate positive cash flows from operations, and even if profitable operations are achieved, these may not be sustained on a continuing basis. We have invested a significant portion of our time and financial resources since our inception in the development of PRTX-100, and our potential to achieve revenues from product sales in the foreseeable future is dependent largely upon obtaining regulatory approval for and successfully commercializing PRTX-100, especially in the United States. We expect to continue to use our cash and investments resources to fund operating and investing activities.

~~Our~~Net ~~financial~~Cash ~~statements~~Provided ~~are~~by ~~prepared~~Financing inActivities ~~conformity with accounting principles generally accepted in the United States of America. Note 3 to the financial statements describes the significant accounting policies~~ and ~~methods~~Financing ~~used in the preparation of our financial statements.~~Requirements Outlook

We ~~have~~did ~~identified~~not ~~the~~have ~~policies~~any ~~below~~cash asflow ~~some~~from financing ofactivities for the ~~more~~three ~~critical~~months toended ~~our~~August ~~business~~31, 2018 and ~~the~~our ~~understanding~~cash offlow ~~our~~from ~~financial~~financing ~~position~~activities ~~and~~for ~~results~~the ofthree ~~operations. These~~months ~~policies~~ended August ~~may~~31, ~~involve~~2017 awas ~~high~~primarily ~~degree~~attributable ofto ~~judgment~~our ~~and~~borrowings ~~complexity~~under inthe ~~their~~2014 ~~application~~Credit ~~and~~Facility ~~represent~~as ~~the~~described ~~critical~~above. ~~accounting~~We ~~policies~~continue ~~used~~to actively inseek ~~the~~sources ~~preparation~~ of ~~our~~financing ~~financial~~to ~~statements.~~fund ~~Although we believe~~ our ~~judgments~~continuing operations and ~~estimates~~development ~~are~~programs. ~~appropriate~~To ~~and~~raise ~~correct~~additional capital, ~~actual future~~we ~~results~~ may ~~differ~~sell equity ~~from~~or ~~estimates~~debt securities. IfThere ~~different~~can ~~assumptions~~be orno ~~conditions~~assurance ~~were~~that towe ~~prevail,~~will ~~the results could~~ be ~~materially different~~able ~~from~~to ~~these~~complete ~~reported~~any ~~results.~~future ~~The~~financing ~~impact~~transaction ~~and~~in ~~any~~a ~~associated~~timely manner ~~risks~~or ~~related~~on toacceptable ~~these~~terms ~~policies~~or onotherwise. ~~our~~If ~~business~~we ~~operations~~ are ~~discussed~~not ~~throughout~~able ~~this~~to ~~Report~~raise ~~where~~additional ~~such~~cash, ~~policies~~we ~~affect~~may ~~our~~be ~~reported~~forced ~~and~~to ~~expected~~delay, ~~financial~~curtail, ~~results~~or cease our operations.

~~The~~Off-Balance ~~preparation~~Sheet of our financial statements, in conformity with accounting principles generally accepted in the United States, requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and equity and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. These estimates have a material impact on our financial statements and are discussed in detail throughout this Report.Arrangements

As ~~part~~ of ~~the~~August ~~process~~31, ~~of preparing our financial statements~~2018, we ~~are~~had ~~required~~no ~~to estimate income taxes in each of the jurisdictions in which we operate. This process involves estimating~~off-balance ~~actual~~sheet ~~current~~arrangements ~~tax~~such ~~expense~~as ~~together~~guarantees, ~~with~~retained ~~assessing~~or ~~temporary~~contingent ~~differences~~interest ~~resulting from differing treatment of items for tax and accounting purposes. These differences result~~ in ~~deferred tax~~ assets ~~and liabilities~~transferred, ~~which~~obligation ~~are~~under ~~included~~a ~~within~~derivative ~~the balance sheet.~~instrument ~~We must then assess the likelihood that our deferred tax assets will be recovered from future taxable income~~ and toobligation ~~the~~arising ~~extent we~~out ~~believe~~of ~~that~~or ~~recovery is not likely, we must establish~~ a ~~valuation~~variable ~~allowance.~~interest ~~In the event that we determine that we would be able to realize deferred tax assets~~ in ~~the future in excess of the net recorded amount,~~ an ~~adjustment~~unconsolidated ~~to the deferred tax asset valuation allowance would increase income in the period such determination was made~~entity.

We account for our stock option grants under the provisions of the accounting guidance for Share-Based Payments. Such guidance requires the recognition of the fair value of share-based compensation in the statements of operations. The fair value of our stock option awards was estimated using a Black-Scholes option valuation model. This model requires the input of highly subjective assumptions and elections in adopting and implementing this guidance, including expected stock price volatility and the estimated life of each award. The fair value of share-based awards is amortized over the vesting period of the award and we have elected to use the straight-line method for awards granted after the adoption of this guidance.26

Results of Operations

For the Three Months Ended February 28, 2018 and February 28, 2017

Research and Development Expenses - Research and Development expenses (“R&D Expenses”) were $536,815 and $814,002 for the three months ended February 28, 2018 and February 28, 2017, respectively. The decrease in R&D Expenses for the three month period ended February 28, 2018 compared to the three month period ended February 28, 2017 was primarily the result of a decrease in the activities associated with the manufacturing of PRTX-100.

There are significant risks and uncertainties inherent in the preclinical and clinical studies associated with our research and development program. These studies may yield varying results that could delay, limit or prevent a program’s advancement through the various stages of product development and significantly impact the costs to be incurred, and time involved, in bringing a program to completion. As a result, the costs to complete such programs, as well as the period in which net cash outflows from such programs are expected to be incurred, are not reasonably estimable.

Administrative Expenses - Administrative expenses were $867,839 and $127,616 for the three months ended February 28, 2018 and February 28, 2017, respectively. The increase in administrative expenses for the three month period ended February 28, 2018 compared to the same prior year period was due to an increase in stock compensation expense.

Professional Fees - Professional expenses were $151,943 and $178,588 for the three months ended February 28, 2018 and February 28, 2017, respectively. The decrease for the three month period ended February 28, 2018 was principally due to a decrease in legal fees.

For the Nine Months Ended February 28, 2018 and February 28, 2017

Research and Development Expenses - R&D Expenses were $1,766,693 and $1,738,842 for the nine months ended February 28, 2018 and February 28, 2017, respectively. The decrease in R&D Expenses for the nine month period ended February 28, 2018 compared to the nine month period ended February 28, 2017 was primarily the result of a decrease in the activities associated with the manufacturing of PRTX-100.

Administrative Expenses - Administrative expenses were $1,163,517 and $580,031 for the nine months ended February 28, 2018 and February 28, 2017, respectively. The increase in administrative expenses for the nine month period ended February 28, 2018 compared to the same prior year period was due to an increase in stock compensation expense.

Professional Fees - Professional expenses were $475,981 and $724,626 for the nine months ended February 28, 2018 and February 28, 2017, respectively. The decrease for the nine month period ended February 28, 2018 was principally due to a decrease in legal and banking fees related to our filing of Amendment #1 to the Registration Statement on Form S-1 in June 2016.

Net Loss Outlook

We have not generated any product sales revenues, have incurred operating losses since inception and have not achieved profitable operations. Our accumulated deficit from inception through February 28, 2018 was $103,077,137 and we expect to continue to incur substantial losses in future periods. We expect that our operating losses in future periods will be the result of continued research and development expenses relating to PRTX-100, as well as costs incurred in preparation for the potential commercialization of PRTX-100.

In addition to additional financing, we are highly dependent on the success of our research and development efforts and, ultimately, upon regulatory approval and market acceptance of our products under development, particularly our lead product candidate, PRTX-100. We may never receive regulatory approval for any of our product candidates, generate product sales revenues, achieve profitable operations or generate positive cash flows from operations, and even if profitable operations are achieved, they may not be sustained on a continuing basis.

Liquidity and Capital Resources

Since 1999, we have incurred significant losses and we expect to experience operating losses and negative operating cash flow for the foreseeable future. Historically, our primary source of cash to meet short-term and long-term liquidity needs has been the sale of shares of our Common Stock and loans from our majority stockholder. We have issued shares in private placements at discounts to then current market price.

On December 2, 2009, we entered into the Facility with Niobe to provide us with up to $2,000,000 of additional working capital in the form of secured loans at any time prior to June 30, 2012 subject to our achievement of certain predetermined benchmarks. On February 11, 2011 we received $2,000,000 of additional working capital from Niobe under the Facility, and issued to Niobe the $2 million Secured Convertible Note. On the same date, Niobe converted the $1 Million Secured Note and accrued interest thereon, into 4,510,870 shares of our Common Stock.

On August 27, 2013, Niobe elected to convert the principal and accrued interest of $2,155,000 under the $2 Million Secured Convertible Note into 9,369,565 shares of Common Stock.

From February 1, 2012 through August 27, 2013 we raised an aggregate of $9,000,000 of working capital pursuant to seven loans from Niobe, in varying principal amounts and issued to Niobe the Secured Notes.

As described above, on October 11, 2013 we issued the Consolidated Note to Niobe. The face amount of the Consolidated Note reflects the $9.0 million aggregate principal amount of the Secured Notes plus interest accrued at 3% per annum on each note from its respective date of issuance. Our obligations under the Consolidated Note are secured by a first priority perfected security interest in all of our assets pursuant to a Consolidated, Amended and Restated Security Agreement dated October 11, 2013.

On January 23, 2014, we consummated a private placement financing to accredited investors of 471,334 shares of Common Stock at $6.00 per share, yielding gross proceeds of $2,828,000.

On November 4, 2014, we entered into the 2014 Credit Facility Agreement pursuant to which we may borrow up to an additional $5 million from Niobe, in the form of secured loans, in accordance with the 2014 Credit Facility Agreement at any time prior to the December 31, 2015 expiration date. Each loan made under the 2014 Credit Facility Agreement is represented by an Original Note and secured by a first priority perfected security interest in all of our assets.

In addition, on November 4, 2014, the Consolidated Note was further amended to increase the threshold amount requiring a Mandatory Prepayment from $7.5 million to more than $10 million. As a result, partial prepayment will now be triggered in the event of a Liquidity Event in which we receive gross proceeds in excess of $10 million. All other terms and provisions of the Consolidated Note remained unchanged and in full force and effect.

On December 1, 2015, the 2014 Credit Facility was amended to increase the funds available for loans to us to $7.5 million and to extend the expiration date of such credit facility to December 31, 2016 pursuant to which we entered into the Amended and Restated Agreement. Each loan under the Amended and Restated Agreement has been and will be represented by a New Note. In addition, the Security Agreement was also amended and restated to secure our obligations under all the Original Notes and all the New Notes.

We are actively seeking sources of financing to fund our continuing operations and development programs. To raise additional capital, we may sell equity or debt securities. There can be no assurance that we will be able to complete any future financing transaction in a timely manner or on acceptable terms or otherwise. If we are not able to raise additional cash, we may be forced to delay, curtail, or cease our operations.

On June 30, 2016, the 2014 Credit Facility was again amended to increase the funds available for loans to us to $9.0 million pursuant to the Second Amended and Restated Agreement. Each loan under the Second Amended and Restated Agreement has been represented by a New Note. In addition, the Security Agreement was also amended and restated to secure our obligations under all the notes issued under the 2014 Credit Facility as of June 30, 2016 and all the New Notes issued pursuant to the Second Amended and Restated Agreement.

On October 31, 2016, the funds available for loans to us under the 2014 Credit Facility was increased to $11.25 million and the expiration date was extended to June 15, 2017 pursuant to the Third Amended and Restated Agreement. Each loan under the Third Amended and Restated Agreement will be represented by a 2018 Note. The Security Agreement was also amended and restated to secure our obligations under all the notes issued under the 2014 Credit Facility as of October 31, 2016 and all the 2018 Notes. In addition, we and Niobe also agreed to extend to March 31, 2018, the maturity dates of the Consolidated Note and all the notes issued and outstanding under the 2014 Credit Facility as of October 31, 2016.

As of May 31, 2017, the outstanding principal balance under the Senior Secured Debt to Niobe totaled $20,299,366, including $9,219,366 under the Consolidated Note and $11,080,000 under the 2014 Credit Facility.

On June 1, 2017, the 2014 Credit Facility was amended to increase the funds available for loans to us to $13.05 million and to extend the expiration date of such facility to March 31, 2018 (the “Fourth Amended and Restated Agreement”). Each loan under the Fourth Amended and Restated Agreement is represented by a 2018 Note. The Security Agreement was also amended and restated to also secure our obligations under all the 2018 Notes issued pursuant to the Fourth Amended and Restated Agreement.

On August 22, 2017, we and Niobe agreed to extend the maturity date of all outstanding notes issued to Niobe from the current maturity date of March 31, 2018 to a new maturity date of September 1, 2018. All other terms and provisions of such notes remained unchanged and in full force and effect.

During the nine months ended February 28, 2018, we borrowed an aggregate of $1,970,000; $290,000 on June 15, 2017, $290,000 on July 10, 2017, $290,000 on August 10, 2017, $290,000 on September 15, 2017, $290,000 on October 23, 2017, $200,000 on November 17, 2017, $220,000 on December 15, 2017 and $100,000 on January 12, 2018. Prior to the Offering (described below), the outstanding principal balance under the 2014 Credit Facility totaled $13,050,000.

On February 28, 2018, we raised an aggregate of $1.425 million from eight accredited investors in the Offering of Senior Notes. No commissions were payable in connection with the Offering which was principally sold to our existing stockholders. Proceeds of the Offering will be used for working capital purposes, principally to fund ongoing clinical trials and studies and related activities. No registration rights were granted to the investors in the Offering.

The Senior Notes are convertible into shares of common of stock at a price of $0.20 per share at the option of the holder prior to maturity or earlier prepayment, accrue interest at the rate of 10% per annum and are due on February 28, 2023. Upon conversion, the note holder will receive 5,000 shares of our common stock for each $1,000 of principal or accrued interest converted. Two-thirds of the shares issuable upon any conversion of the Senior Notes will be acquired by us from Niobe for nominal consideration ($.01 per share) pursuant to the Call Agreement. As a result, for each $1,000 of principal or interest converted, we will issue approximately 1,667 new shares. Accordingly, the effective conversion price will be approximately $0.60 per share of common stock, with Niobe incurring substantially all of the associated dilution. The closing price of per share of common stock on the date of the Offering was $0.45.

We evaluated the conversion feature of the Senior Notes and determined that under the accounting guidance for “Accounting for Convertible Securities with Beneficial Conversion Features” that a value should be attributed to the embedded conversion feature. On February 28, 2018, the date of issuance of the Senior Notes, the fair market value of Common Stock was $0.45 per share. We determined the allocation to the conversion feature to be $1.425 million, which reduced the face amount of the Senior Notes carried on our balance sheet to -$0-. This discount will be amortized over 60 months and will serve to increase the interest expense of the Senior Notes during the term of such notes.

In addition, as a condition to the consummation of the Offering, on February 28, 2018 Niobe converted $22,269,366 of outstanding notes due September 30, 2018 (the aggregate outstanding principal balance under the Consolidated Note and the 2014 Credit Facility as of February 28, 2018) into 18,557,805 shares of common stock at a conversion price of $1.20 per share. Consequently, other than the Senior Notes issued in the Offering, the only remaining indebtedness on our balance sheet at February 28, 2018 is approximately $1,974,000, representing the accrued but unpaid interest on the notes converted by Niobe.

Net Cash Used in Operating Activities and Operating Cash Flow Requirements Outlook

Our operating cash outflows for the nine months ended February 28, 2018 and February 28, 2017 have resulted primarily from research and development expenditures associated for PRTX-100 and administrative purposes. We expect to continue to use cash resources to fund operating losses and expect to continue to incur operating losses in this fiscal year and beyond due to continuing research and development activities.

Net Cash Used in Investing Activities and Investing Requirements Outlook

We do not expect to be required to make any significant investments in information technology and laboratory equipment to support our future research and development activities.

We may never receive regulatory approval for any of our product candidates, generate product sales revenues, achieve profitable operations or generate positive cash flows from operations, and even if profitable operations are achieved, these may not be sustained on a continuing basis. We have invested a significant portion of our time and financial resources since our inception in the development of PRTX-100, and our potential to achieve revenues from product sales in the foreseeable future is dependent largely upon obtaining regulatory approval for and successfully commercializing PRTX-100, especially in the United States. We expect to continue to use our cash and investments resources to fund operating and investing activities.

Subsequent Events

On March 13, 2018, we raised an additional $50,000 in the Offering and issued a Senior Note in the principal amount of $50,000 to an accredited investor. In connection with the foregoing, on March 13, 2018, the Call Agreement was amended and restated to also include two-thirds of the shares issuable upon the conversion of this Senior Note.

Off-Balance Sheet Arrangements

As of February 28, 2018, we had no off-balance sheet arrangements such as guarantees, retained or contingent interest in assets transferred, obligation under a derivative instrument and obligation arising out of or a variable interest in an unconsolidated entity.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a smaller reporting company we are not required to provide the information required by this Item.

ITEM 4. CONTROLS AND PROCEDURES

(a)

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of both of our president and chief financial officer, carried out an evaluation of the effectiveness of our “disclosure controls and procedures” (as defined in the Securities Exchange Act of 1934, as amended (the “Exchange Act”), Rules 13a-15(e) and 15-d-15(e)) as of the end of the period covered by this Report (the “Evaluation Date”). Based upon that evaluation, both of our president and chief financial officer concluded that as of the Evaluation Date, our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act (i) is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and (ii) is accumulated and communicated to our management, including our president and our chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

(b)

Changes in Internal Control over Financial Reporting

There were no changes in our internal controls over financial reporting that occurred during the quarter covered by this Report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On February 28, 2018 and March 13, 2018, we raised an aggregate of $1.475 million ($1.425 million as of February 28, 2018) from nine accredited investors in the Offering of Senior Notes. The Senior Notes are convertible into shares of common of stock at a price of $0.20 per share at the option of the holder prior to maturity or earlier prepayment, accrue interest at the rate of 10% per annum and are due on February 28, 2023. Upon conversion, the note holder will receive 5,000 shares of our common stock for each $1,000 of principal or accrued interest converted. Two-thirds of the shares issuable upon any conversion of the Senior Notes will be acquired by us from Niobe for nominal consideration ($.01 per share) pursuant to the Call Agreement, as amended on March 13, 2018. As a result, for each $1,000 of principal or interest converted, we will issue approximately 1,667 new shares. Accordingly, the effective conversion price will be approximately $0.60 per share of common stock, with Niobe incurring substantially all of the associated dilution. The closing price of per share of common stock on the date of the Offering was $0.45.

The Senior Notes were sold for investment and not with a view for distribution. The Senior Notes were issued without registration under the Act pursuant to the exemptions provided under Sections 4(a)(2) and 4(a)(5), and Rule 506 of Regulation D thereof. All of the Senior Notes issued are restricted securities, bear a restrictive legend and will be subject to stop transfer restrictions.

ITEM 6. EXHIBITS

Exhibit
Exhibit No.	Description
No.	Description
4.1	Promissory Note issued to Niobe in the principal amount of $250,000, dated as of September 20, 2018.	Filed herewith.
4.1	Final form of the 10% Senior Convertible Note, due February 28, 2023 (included as Exhibit A in Exhibit 10.1).	Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on March 6, 2018.
10.1	Final Form of the Securities Purchase Agreement dated February 28, 2018 (including Form of the 10% Senior Convertible Note, due February 28, 2023).	Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on March 6, 2018.
10.2	Final Form of Exchange Agreement dated February 28, 2018.	Incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on March 6, 2018.
10.3	Final Form of the Amended & Restated Call Agreement dated March 13, 2018.	Filed herewith.
31.1	Certification of Chief Executive Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act	Filed herewith.
31.2	Certification of Chief Financial Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act	Filed herewith.
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act	Furnished herewith in accordance with Item 601 (32) (ii) of Regulation S-K.
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act	Furnished herewith in accordance with Item 601 (32) (ii) of Regulation S-K.
101.INS	XBRL Instance Document.	Filed herewith.
101.SCH	XBRL Taxonomy Extension Schema Document.	Filed herewith.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.	Filed herewith.
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.	Filed herewith.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.	Filed herewith.
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.	Filed herewith.

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SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: April 13, 2018	PROTALEX, INC.
Date: October 12, 2018	PROTALEX, INC.
	By:	/s/ Arnold P. Kling
	By: /s/ Arnold P. Kling
	Arnold P. Kling, President	~~Arnold P. Kling, President~~
	(Principal Executive Officer)	~~(Principal Executive Officer)~~

Date: April 13, 2018
Date: October 12, 2018
	By:	/s/ Kirk M. Warshaw
	By: /s/ Kirk M. Warshaw
	Kirk M. Warshaw, Chief Financial Officer	~~Kirk M. Warshaw, Chief Financial Officer~~
	(Principal Financial Officer)	~~(Principal Financial Officer)~~

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