UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549










FORM 10-Q



|SQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE 
|---------------------------------------------------------
|SECURITIES EXCHANGE ACT OF 1934                          
|                                                         
|For the quarterly period ended June 30, 2012             
|                                                         
|OR                                                       
|                                                         
|£TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
|SECURITIES EXCHANGE ACT OF 1934                          
|                                                         
|For the transition period from  to                       



Commission File Number 000-30929










TG THERAPEUTICS, INC.

(Exact name of registrant as specified
in its charter)





|Delaware                                                       | 36-3898269                          
|-------------------------------------------------------------- | ------------------------------------
|(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.)







787 Seventh Avenue

New York, New York 10019

(Address including zip code of principal
executive offices)



(212) 554-4484

(Registrant's telephone number, including
area code)



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.

Yes xNo £



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 the 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, or a smaller reporting company. See definition of
“large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2
of the Exchange Act.



|Large accelerated filer £                                               | Accelerated filer £       
|----------------------------------------------------------------------- | --------------------------
|Non-accelerated filer £
    (Do not check if smaller reporting company) | Smaller reporting companyx



Indicate by checkmark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes £No x



There were 18,053,995 shares of the registrant’s
common stock, $0.001 par value, outstanding as of August 2, 2012.











TG THERAPEUTICS, INC.

FORM 10-Q

FOR THE QUARTER ENDED JUNE 30, 2012



TABLE OF CONTENTS



|                                                                   |                                                                                                                                                                          | Page
|------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ----
|                                                                   |                                                                                                                                                                          |     
|SPECIAL CAUTIONARY NOTICE
    REGARDING FORWARD-LOOKING STATEMENTS | 3                                                                                                                                                                       
|                                                                   |                                                                                                                                                                          |     
|PART I                                                             | FINANCIAL INFORMATION                                                                                                                                                    | 4   
|                                                                   |                                                                                                                                                                          |     
|Item 1                                                             | Financial Statements:                                                                                                                                                    | 4   
|                                                                   |                                                                                                                                                                          |     
|                                                                   | Condensed Consolidated Balance Sheets as of June 30,
    2012 (unaudited) and December 31, 2011                                                                          | 4   
|                                                                   |                                                                                                                                                                          |     
|                                                                   | Condensed Consolidated Statements of Operations for
    the three and six months ended June 30, 2012  and 2011 and the Cumulative Period ended June 30, 2012 (unaudited) | 5   
|                                                                   |                                                                                                                                                                          |     
|                                                                   | Condensed Consolidated Statement of Equity for the
    six months ended June 30, 2012 (unaudited)                                                                        | 6   
|                                                                   |                                                                                                                                                                          |     
|                                                                   | Condensed Consolidated Statements of Cash Flows for
    the six months ended June 30, 2012 and 2011 and the Cumulative Period ended June 30, 2012 (unaudited)            | 7   
|                                                                   |                                                                                                                                                                          |     
|                                                                   | Notes to Condensed Consolidated Financial Statements (unaudited)                                                                                                         | 8   
|                                                                   |                                                                                                                                                                          |     
|Item 2                                                             | Management's Discussion and Analysis of Financial Condition
    and Results of Operations                                                                                | 19  
|                                                                   |                                                                                                                                                                          |     
|Item 3                                                             | Quantitative and Qualitative Disclosures About Market Risk                                                                                                               | 26  
|                                                                   |                                                                                                                                                                          |     
|Item 4                                                             | Controls and Procedures                                                                                                                                                  | 26  
|                                                                   |                                                                                                                                                                          |     
|PART II                                                            | OTHER INFORMATION                                                                                                                                                        | 26  
|                                                                   |                                                                                                                                                                          |     
|Item 1                                                             | Legal Proceedings                                                                                                                                                        | 26  
|                                                                   |                                                                                                                                                                          |     
|Item 1A                                                            | Risk Factors                                                                                                                                                             | 26  
|                                                                   |                                                                                                                                                                          |     
|Item 6                                                             | Exhibits                                                                                                                                                                 | 45  



2







SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING
STATEMENTS



Certain matters discussed
in this report, including matters discussed under the caption “Management’s Discussion and Analysis of Financial Condition
and Results of Operations,” may constitute forward-looking statements for purposes of the Securities Act of 1933, as amended,
or the Securities Act, and the Securities Exchange Act of 1934, as amended, or the Exchange Act, and involve known and unknown
risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different
from the future results, performance or achievements expressed or implied by such forward-looking statements. The words "anticipate,"
"believe," "estimate," "may," "expect" and similar expressions are generally intended
to identify forward-looking statements. Our actual results may differ materially from the results anticipated in these forward-looking
statements due to a variety of factors, including, without limitation, those discussed under the captions “Risk Factors,”
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this
report, as well as other factors which may be identified from time to time in our other filings with the Securities and Exchange
Commission, (“SEC”), or in the documents where such forward-looking statements appear. All written or oral forward-looking
statements attributable to us are expressly qualified in their entirety by these cautionary statements. Such forward-looking statements
include, but are not limited to, statements about our:



| | · | expectations
                                                                                                               for increases or
                                                                                                               decreases in expenses;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | expectations
                                                                                                               for the clinical
                                                                                                               and pre-clinical
                                                                                                               development, manufacturing,
                                                                                                               regulatory approval,
                                                                                                               and commercialization
                                                                                                               of our pharmaceutical
                                                                                                               product candidates
                                                                                                               or any other products
                                                                                                               we may acquire
                                                                                                               or in-license;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | use
                                                                                                               of clinical research
                                                                                                               centers and other
                                                                                                               contractors;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | expectations
                                                                                                               for incurring capital
                                                                                                               expenditures to
                                                                                                               expand our research
                                                                                                               and development
                                                                                                               and manufacturing
                                                                                                               capabilities;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | expectations
                                                                                                               for generating
                                                                                                               revenue or becoming
                                                                                                               profitable on a
                                                                                                               sustained basis;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | expectations
                                                                                                               or ability to enter
                                                                                                               into marketing
                                                                                                               and other partnership
                                                                                                               agreements;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | expectations
                                                                                                               or ability to enter
                                                                                                               into product acquisition
                                                                                                               and in-licensing
                                                                                                               transactions;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | expectations
                                                                                                               or ability to build
                                                                                                               our own commercial
                                                                                                               infrastructure
                                                                                                               to manufacture,
                                                                                                               market and sell
                                                                                                               our drug candidates;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | acceptance
                                                                                                               of our products
                                                                                                               by doctors, patients
                                                                                                               or payors;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | ability
                                                                                                               to compete against
                                                                                                               other companies
                                                                                                               and research institutions;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | ability
                                                                                                               to secure adequate
                                                                                                               protection for
                                                                                                               our intellectual
                                                                                                               property;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | ability
                                                                                                               to attract and
                                                                                                               retain key personnel;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | availability
                                                                                                               of reimbursement
                                                                                                               for our products;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | estimates
                                                                                                               of the sufficiency
                                                                                                               of our existing
                                                                                                               cash and cash equivalents
                                                                                                               and investments
                                                                                                               to finance our
                                                                                                               operating requirements,
                                                                                                               including expectations
                                                                                                               regarding the value
                                                                                                               and liquidity of
                                                                                                               our investments;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | volatility
                                                                                                               of stock price;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------

| | · | expected
                                                                                                               losses; and
| | - | -----------------------------------------------------------------------------------------------------------------------------------

| | · | expectations
                                                                                                               for future capital
                                                                                                               requirements.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The forward-looking statements
contained in this report reflect our views and assumptions only as of the date this report is signed. Except as required by law,
we assume no responsibility for updating any forward-looking statements.



We qualify all of our
forward-looking statements by these cautionary statements. In addition, with respect to all of our forward-looking statements,
we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform
Act of 1995.



3







PART I. FINANCIAL INFORMATION



ITEM 1. FINANCIAL STATEMENTS



|TG Therapeutics, Inc.                
|-------------------------------------
|(a Development Stage Company)        
|Condensed Consolidated Balance Sheets
|                                     



|                                                                                                                                                                                                                                                                                        |  | June 30, 2012 |             |   | December 31, 2011 |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ----------- | - | ----------------- | -
|                                                                                                                                                                                                                                                                                        |  | (Unaudited)   |             |   | (See Note 1)      |  
|Assets                                                                                                                                                                                                                                                                                  |  |               |             |   |                   |  
|Current assets:                                                                                                                                                                                                                                                                         |  |               |             |   |                   |  
|Cash and cash equivalents                                                                                                                                                                                                                                                               |  | $             | 20,367,079  |   |                   | $
|Other current assets                                                                                                                                                                                                                                                                    |  |               | 89,488      |   |                   |  
|Total current assets                                                                                                                                                                                                                                                                    |  |               | 20,456,567  |   |                   |  
|Equipment                                                                                                                                                                                                                                                                               |  |               | 1,399       |   |                   |  
|In-process research and development                                                                                                                                                                                                                                                     |  |               | 5,441,839   |   |                   |  
|Goodwill                                                                                                                                                                                                                                                                                |  |               | 629,752     |   |                   |  
|Total assets                                                                                                                                                                                                                                                                            |  | $             | 26,529,557  |   |                   | $
|                                                                                                                                                                                                                                                                                        |  |               |             |   |                   |  
|Liabilities and
    equity                                                                                                                                                                                                                                                              |  |               |             |   |                   |  
|Current liabilities:                                                                                                                                                                                                                                                                    |  |               |             |   |                   |  
|Notes payable, current portion                                                                                                                                                                                                                                                          |  | $             | 677,778     |   |                   | $
|Accounts payable - related
    party                                                                                                                                                                                                                                                    |  |               | 1,257,600   |   |                   |  
|Other accounts payable and accrued
    expenses                                                                                                                                                                                                                                         |  |               | 321,725     |   |                   |  
|Interest payable, current portion                                                                                                                                                                                                                                                       |  |               | 91,944      |   |                   |  
|Total current liabilities                                                                                                                                                                                                                                                               |  |               | 2,349,047   |   |                   |  
|Notes payable, noncurrent portion,
    at fair value                                                                                                                                                                                                                                    |  |               | 4,395,100   |   |                   |  
|Total liabilities                                                                                                                                                                                                                                                                       |  |               | 6,744,147   |   |                   |  
|Commitments and contingencies                                                                                                                                                                                                                                                           |  |               |             |   |                   |  
|                                                                                                                                                                                                                                                                                        |  |               |             |   |                   |  
|Equity:                                                                                                                                                                                                                                                                                 |  |               |             |   |                   |  
|TG Therapeutics, Inc. and subsidiaries:                                                                                                                                                                                                                                                 |  |               |             |   |                   |  
|Preferred stock, $0.001 par value per
    share (10,000,000 shares authorized, 0 and 413,388 issued and outstanding as of June 30, 2012 and December 31, 2011, respectively,
    aggregate liquidation value of $0 and $8,267,760 at June 30, 2012 and December 31, 2011, respectively) |  |               | —           |   |                   |  
|Common stock, $0.001 par value per share
    (500,000,000 shares authorized, 18,053,995 and 5,061,399 shares issued and outstanding at June 30, 2012 and December 31, 2011,
    respectively)                                                                                           |  |               | 18,054      |   |                   |  
|Contingently issuable shares                                                                                                                                                                                                                                                            |  |               | 6           |   |                   |  
|Additional paid-in capital                                                                                                                                                                                                                                                              |  |               | 24,001,440  |   |                   |  
|Deficit accumulated in development stage                                                                                                                                                                                                                                                |  |               | (13,003,817 | ) |                   |  
|Total TG Therapeutics, Inc. and subsidiaries equity                                                                                                                                                                                                                                     |  |               | 11,015,683  |   |                   |  
|Noncontrolling interest in subsidiary                                                                                                                                                                                                                                                   |  |               | 8,769,727   |   |                   |  
|Total equity                                                                                                                                                                                                                                                                            |  |               | 19,785,410  |   |                   |  
|Total liabilities and equity                                                                                                                                                                                                                                                            |  | $             | 26,529,557  |   |                   | $



The accompanying
notes are an integral part of the condensed consolidated financial statements.



4







|TG Therapeutics, Inc.                          
|-----------------------------------------------
|(a Development Stage Company)                  
|Condensed Consolidated Statements of Operations
|(Unaudited)                                    
|                                               





|                                                                                          |  |                                 |            |   |                               |   |           |               |  |   |             |   |  | Cumulative    |         
|----------------------------------------------------------------------------------------- |  | ------------------------------- | ---------- | - | ----------------------------- | - | --------- | ------------- |  | - | ----------- | - |  | ------------- | --------
|                                                                                          |  | Three months ended June
    30, |            |   | Six months ended June
    30, |   |           | period ending | 
|                                                                                          |  | 2012                            |            |   | 2011                          |   |           | 2012          |  |   | 2011        |   |  | June 30, 2012 |         
|                                                                                          |  |                                 |            |   |                               |   |           |               |  |   |             |   |  |               |         
|Costs and expenses:                                                                       |  |                                 |            |   |                               |   |           |               |  |   |             |   |  |               |         
|                                                                                          |  |                                 |            |   |                               |   |           |               |  |   |             |   |  |               |         
|Research and development:                                                                 |  |                                 |            |   |                               |   |           |               |  |   |             |   |  |               |         
|Noncash stock expense associated with
    in-licensing agreement                          |  | $                               | —          |   |                               | $ | 297,000   |               |  | $ | 16,578,000  |   |  | $             | 297,000 
|Noncash compensation                                                                      |  |                                 | 109,198    |   |                               |   |           |               |  |   | 109,198     |   |  |               |         
|Other research and development                                                            |  |                                 | 1,536,896  |   |                               |   | —         |               |  |   | 1,700,249   |   |  |               | —       
|Total research and development                                                            |  |                                 | 1,646,094  |   |                               |   | 297,000   |               |  |   | 18,387,447  |   |  |               | 297,000 
|                                                                                          |  |                                 |            |   |                               |   |           |               |  |   |             |   |  |               |         
|General and administrative:                                                               |  |                                 |            |   |                               |   |           |               |  |   |             |   |  |               |         
|Noncash compensation                                                                      |  |                                 | 1,062,793  |   |                               |   | —         |               |  |   | 1,251,302   |   |  |               | —       
|Other general and administrative                                                          |  |                                 | 396,043    |   |                               |   | —         |               |  |   | 851,535     |   |  |               | —       
|Total general and administrative                                                          |  |                                 | 1,458,836  |   |                               |   | —         |               |  |   | 2,102,837   |   |  |               | —       
|                                                                                          |  |                                 |            |   |                               |   |           |               |  |   |             |   |  |               |         
|Total costs and expenses                                                                  |  |                                 | 3,104,930  |   |                               |   | 297,000   |               |  |   | 20,490,284  |   |  |               | 297,000 
|                                                                                          |  |                                 |            |   |                               |   |           |               |  |   |             |   |  |               |         
|Operating loss                                                                            |  |                                 | (3,104,930 | ) |                               |   | (297,000  | )             |  |   | (20,490,284 | ) |  |               | (297,000
|                                                                                          |  |                                 |            |   |                               |   |           |               |  |   |             |   |  |               |         
|Other (income) expense:                                                                   |  |                                 |            |   |                               |   |           |               |  |   |             |   |  |               |         
|Interest income                                                                           |  |                                 | (4,092     | ) |                               |   | —         |               |  |   | (7,760      | ) |  |               | —       
|Other income                                                                              |  |                                 | (272,232   | ) |                               |   | —         |               |  |   | (272,232    | ) |  |               | —       
|Interest expense                                                                          |  |                                 | 228,109    |   |                               |   | —         |               |  |   | 448,258     |   |  |               | —       
|Change in fair value of notes
    payable                                                 |  |                                 | (482,556   | ) |                               |   | —         |               |  |   | (687,853    | ) |  |               | —       
|Total other (income)                                                                      |  |                                 | (530,771   | ) |                               |   | —         |               |  |   | (519,587    | ) |  |               | —       
|                                                                                          |  |                                 |            |   |                               |   |           |               |  |   |             |   |  |               |         
|Consolidated net loss                                                                     |  |                                 | (2,574,159 | ) |                               |   | (297,000  | )             |  |   | (19,970,697 | ) |  |               | (297,000
|Net loss attributable
    to noncontrolling interest                                      |  |                                 | (679,506   | ) |                               |   | (14,895   | )             |  |   | (7,819,954  | ) |  |               | (14,895 
|Net loss attributable to TG Therapeutics,
    Inc. and subsidiaries                       |  | $                               | (1,894,653 | ) |                               | $ | (282,105  | )             |  | $ | (12,150,743 | ) |  | $             | (282,105
|                                                                                          |  |                                 |            |   |                               |   |           |               |  |   |             |   |  |               |         
|Basic and diluted net loss per
    common share                                           |  | $                               | (0.16      | ) |                               | $ | (0.15     | )             |  | $ | (1.44       | ) |  | $             | (0.31   
|                                                                                          |  |                                 |            |   |                               |   |           |               |  |   |             |   |  |               |         
|Weighted average shares used in computing
    basic and diluted net loss per common share |  |                                 | 11,777,563 |   |                               |   | 1,822,154 |               |  |   | 8,419,481   |   |  |               | 916,110 



The accompanying
notes are an integral part of the condensed consolidated financial statements.



5







|                                                  
|--------------------------------------------------
|TG Therapeutics, Inc.                             
|(a Development Stage Company)                     
|Condensed Consolidated Statement of Equity        
|for the six months ended June 30, 2012 (Unaudited)
|                                                  



|                                                                                                       |  |                     |            |   |                  |   |        |          |  |  |            |  |  |              |        |  |              |   |   | Deficit         |  |   | Total TG      |   |  |                |             |   |       |  
|------------------------------------------------------------------------------------------------------ |  | ------------------- | ---------- | - | ---------------- | - | ------ | -------- |  |  | ---------- |  |  | ------------ | ------ |  | ------------ | - | - | --------------- |  | - | ------------- | - |  | -------------- | ----------- | - | ----- | -
|                                                                                                       |  |                     |            |   |                  |   |        |          |  |  |            |  |  |              |        |  |              |   |   | accumulated     |  |   | Therapeutics, |   |  |                |             |   |       |  
|                                                                                                       |  |                     |            |   |                  |   |        |          |  |  |            |  |  | Contingently |        |  | Additional   |   |   | in the          |  |   | Inc. and      |   |  | Noncontrolling |             |   |       |  
|                                                                                                       |  | Preferred
    stock |            |   | Common
    stock |   |        | issuable |  |  | paid-in    |  |  | development  |        |  | subsidiaries |   |   | interest
    in |  |   |               |  
|                                                                                                       |  | Shares              |            |   | Amount           |   |        | Shares   |  |  | Amount     |  |  | shares       |        |  | capital      |   |   | stage           |  |   | equity        |   |  | subsidiary     |             |   | Total |  
|                                                                                                       |  |                     |            |   |                  |   |        |          |  |  |            |  |  |              |        |  |              |   |   |                 |  |   |               |   |  |                |             |   |       |  
|Balance at January 1, 2012                                                                             |  |                     | 413,388    |   |                  | $ | 413    |          |  |  | 5,061,399  |  |  | $            | 5,061  |  |              | $ | 6 |                 |  | $ | 10,472,115    |   |  | $              | (853,074    | ) |       | $
|Changes during the period:                                                                             |  |                     |            |   |                  |   |        |          |  |  |            |  |  |              |        |  |              |   |   |                 |  |   |               |   |  |                |             |   |       |  
|Compensation in respect
    of restricted preferred stock granted to employees                         |  |                     |            |   |                  |   |        |          |  |  |            |  |  |              |        |  |              |   |   |                 |  |   | 188,509       |   |  |                |             |   |       |  
|Preferred stock issued
    at $20.00 per share, net of expenses                                        |  |                     | 695,428    |   |                  |   | 696    |          |  |  |            |  |  |              |        |  |              |   |   |                 |  |   | 12,180,709    |   |  |                |             |   |       |  
|Shares issued in subsidiary
    to noncontrolling interest in connection with in-licensing agreement   |  |                     |            |   |                  |   |        |          |  |  |            |  |  |              |        |  |              |   |   |                 |  |   |               |   |  |                |             |   |       |  
|Conversion of preferred
    stock to common stock in conjunction with reverse stock split              |  |                     | (1,108,816 | ) |                  |   | (1,109 | )        |  |  | 9,857,596  |  |  |              | 9,858  |  |              |   |   |                 |  |   | (8,749        | ) |  |                |             |   |       |  
|Issuance of restricted stock                                                                           |  |                     |            |   |                  |   |        |          |  |  | 3,135,000  |  |  |              | 3,135  |  |              |   |   |                 |  |   | (3,135        | ) |  |                |             |   |       |  
|Compensation in respect
    of restricted common stock granted to employees, directors and consultants |  |                     |            |   |                  |   |        |          |  |  |            |  |  |              |        |  |              |   |   |                 |  |   | 1,171,991     |   |  |                |             |   |       |  
|Net loss                                                                                               |  |                     |            |   |                  |   |        |          |  |  |            |  |  |              |        |  |              |   |   |                 |  |   |               |   |  |                | (12,150,743 | ) |       |  
|Balance at June 30, 2012                                                                               |  |                     | —          |   |                  | $ | —      |          |  |  | 18,053,995 |  |  | $            | 18,054 |  |              | $ | 6 |                 |  | $ | 24,001,440    |   |  | $              | (13,003,817 | ) |       | $



The accompanying
notes are an integral part of the condensed consolidated financial statements.



6







|TG Therapeutics, Inc.                          
|-----------------------------------------------
|(a Development Stage Company)                  
|Condensed Consolidated Statements of Cash Flows
|(Unaudited)                                    
|                                               





|                                                                                             |  |                               |             |   |              |   |          | Cumulative    | 
|-------------------------------------------------------------------------------------------- |  | ----------------------------- | ----------- | - | ------------ | - | -------- | ------------- | 
|                                                                                             |  | Six months ended June
    30, |             |   | period ended |  
|                                                                                             |  | 2012                          |             |   | 2011         |   |          | June 30, 2012 | 
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                        |  |                               |             |   |              |   |          |               | 
|                                                                                             |  |                               |             |   |              |   |          |               | 
|Consolidated net loss                                                                        |  | $                             | (19,970,697 | ) |              | $ | (297,000 | )             | 
|Adjustments to reconcile consolidated net loss to net cash
    used in operating activities: |  |                               |             |   |              |   |          |               | 
|Stock compensation expense                                                                   |  |                               | 1,360,500   |   |              |   | —        |               | 
|Stock issued in connection with in-licensing agreement                                       |  |                               | 16,578,000  |   |              |   | 297,000  |               | 
|Change in fair value of notes payable                                                        |  |                               | (269,597    | ) |              |   | —        |               | 
|Changes in assets and liabilities, net of effects of
    acquisition:                        |  |                               |             |   |              |   |          |               | 
|Decrease (increase) in other current assets                                                  |  |                               | (2,313      | ) |              |   | —        |               | 
|Increase in accounts payable related party, other accounts
    payable and accrued expenses  |  |                               | 912,685     |   |              |   | —        |               | 
|Increase in interest payable                                                                 |  |                               | 30,003      |   |              |   | —        |               | 
|Net cash used in operating activities                                                        |  |                               | (1,361,419  | ) |              |   | —        |               | 
|                                                                                             |  |                               |             |   |              |   |          |               | 
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                        |  |                               |             |   |              |   |          |               | 
|                                                                                             |  |                               |             |   |              |   |          |               | 
|Purchases of property, plant and equipment                                                   |  |                               | (1,399      | ) |              |   |          |               | 
|Cash acquired in connection with acquisition                                                 |  |                               | —           |   |              |   | —        |               | 
|Net cash (used in) provided by investing
    activities                                      |  |                               | (1,399      | ) |              |   | —        |               | 
|                                                                                             |  |                               |             |   |              |   |          |               | 
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                        |  |                               |             |   |              |   |          |               | 
|                                                                                             |  |                               |             |   |              |   |          |               | 
|Payments of short-term loans                                                                 |  |                               | (200,000    | ) |              |   | —        |               | 
|Proceeds from sale of common stock, net                                                      |  |                               | —           |   |              |   | —        |               | 
|Proceeds from sale of preferred stock, net                                                   |  |                               | 12,257,309  |   |              |   | —        |               | 
|Offering costs paid                                                                          |  |                               | (75,903     | ) |              |   | —        |               | 
|Net cash provided by financing
    activities                                                |  |                               | 11,981,406  |   |              |   | —        |               | 
|                                                                                             |  |                               |             |   |              |   |          |               | 
|NET INCREASE IN CASH AND CASH EQUIVALENTS                                                    |  |                               | 10,618,588  |   |              |   | —        |               | 
|                                                                                             |  |                               |             |   |              |   |          |               | 
|Cash and cash equivalents at
    beginning of period                                         |  |                               | 9,748,491   |   |              |   | —        |               | 
|                                                                                             |  |                               |             |   |              |   |          |               | 
|CASH AND CASH EQUIVALENTS
    AT END OF PERIOD                                               |  | $                             | 20,367,079  |   |              | $ | —        |               | 
|                                                                                             |  |                               |             |   |              |   |          |               | 
|NONCASH TRANSACTIONS:                                                                        |  |                               |             |   |              |   |          |               | 
|Conversion of notes payable to preferred stock                                               |  | $                             | —           |   |              |   | —        |               | 
|Accrued financing costs                                                                      |  | $                             | —           |   |              |   | —        |               | 





The accompanying
notes are an integral part of the condensed consolidated financial statements.



7







|TG Therapeutics, Inc.                                           
|----------------------------------------------------------------
|(a Development Stage Company)                                   
|Notes to Condensed Consolidated Financial Statements (unaudited)
|                                                                



Unless the context requires otherwise,
references in this report to “TG” “Company,” “we,” “us” and “our”
refer to TG Therapeutics, Inc.(formerly known as Manhattan Pharmaceuticals, Inc.) and our subsidiaries.



NOTE 1 – ORGANIZATION AND SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES



Description of Business



We are a biopharmaceutical
company focused on the acquisition, development and commercialization of innovative and medically important pharmaceutical products
for the treatment of cancer and other underserved therapeutic needs. We aim to acquire rights to these technologies by licensing
or otherwise acquiring an ownership interest, funding their research and development and eventually either out-licensing or bringing
the technologies to market. Currently we are developing TGTX-1101 (ublituximab), a novel, third generation monoclonal antibody
that targets a specific and unique epitope on the CD20 antigen found on mature B-lymphocytes. We also hold the development rights
to AST-726, a nasally delivered product for the treatment of Vitamin B12 deficiency, and AST-915, an orally delivered
treatment for essential tremor.



The accompanying unaudited
condensed consolidated financial statements were prepared in accordance with U.S. generally accepted accounting principles (“GAAP”)
for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly,
they may not include all of the information and footnotes required by GAAP for complete financial statements. All adjustments
that are, in the opinion of management, of a normal recurring nature and are necessary for a fair presentation of the consolidated
financial statements have been included. Nevertheless, these consolidated financial statements should be read in conjunction with
the audited consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2011.
The results of operations for the three and six months ended June 30, 2012 are not necessarily indicative of the results that
may be expected for the entire fiscal year or any other interim period.



On December 29, 2011,
the Company entered into and consummated an exchange transaction agreement (the “Exchange Transaction”) with Opus
Point Partners, LLC (“Opus”) and TG Biologics, Inc. (formerly known as TG Therapeutics, Inc.) (“TG Bio”).
The stockholders of TG Bio received the majority of the voting shares of the Company, therefore, the merger was accounted for
as a reverse acquisition whereby TG Bio was the accounting acquirer (legal acquiree) and the Company was the accounting acquiree
(legal acquirer) under the acquisition method of accounting. TG Bio was incorporated in Delaware in November 2010, but did not
commence operations until April 2011.



On April 30, 2012, the
Company filed a Certificate of Amendment to its Certificate of Incorporation to change its name from Manhattan Pharmaceuticals,
Inc. (“Manhattan”) to TG Therapeutics, Inc. In conjunction with this change, the subsidiary formerly named TG Therapeutics,
Inc. filed a Certificate of Amendment changing its name to TG Biologics, Inc.



Liquidity
and Capital Resources



We
have incurred operating losses since our inception and expect to continue to incur operating losses for the foreseeable future
and may never become profitable. As of June 30, 2012, we have an accumulated deficit of $13,003,817.



Our primary source of
cash has been proceeds from the private placement of equity securities. We have not yet commercialized any of our drug candidates
and cannot be sure if we will ever be able to do so. Even if we commercialize one or more of our drug candidates, we may not become
profitable. Our ability to achieve profitability depends on a number of factors, including our ability to obtain regulatory approval
for our drug candidates, successfully complete any post-approval regulatory obligations and successfully commercialize our drug
candidates alone or in partnership. We may continue to incur substantial operating losses even if we begin to generate revenues
from our drug candidates.



8







On
December 30, 2011, we completed the first closing of the private placement of our securities, issuing
4,929,523 shares of Company$0.001 par value common stock(“Common Stock “) at a
price per share of $2.25 for total gross proceeds, before placement commissions and expenses, of $11,091,425 (the “2011
Equity PIPE”). Investors also received warrants to purchase 1,232,381 shares of Common Stock. The warrants have an
exercise price of $2.25 per share and are exercisable for five years.



In 2012, we completed
two additional closings of the 2011 Equity PIPE. These closings were held on January 31, 2012, and February 24, 2012. In these
closings, the Company issued 695,428 shares of our Series A preferred stock (“Company Preferred Stock”) at a price
per share of $20.00, for total gross proceeds, before placement commissions and expenses, of $13,908,560. Each share of Company
Preferred Stock was convertible into 8.89 shares of Common Stock, provided that such conversion rights were subject to sufficient
available authorized shares of Common Stock. In connection with the reverse stock split effected by the Company on April 30, 2012
(as discussed below), all shares of preferred stock issued in the 2011 Equity PIPE were converted to Common Stock. Investors
also received warrants to purchase 1,545,396 shares of Common Stock. The warrants have an exercise price of $2.25 per share and
are exercisable for five years. The shares of Company Preferred Stock and warrants sold in these closings were offered and
sold to accredited investors, including members of management, without registration under the Securities Act, or state securities
laws, in reliance on the exemptions provided by Section 4(2) of the Securities Act, and Regulation D promulgated thereunder
and in reliance on similar exemptions under applicable state laws. Accordingly, the securities issued in the Offering have not
been registered under the Securities Act, and until so registered, these securities may not be offered or sold in the United States
absent registration or availability of an applicable exemption from registration.



Our Common Stock is quoted
on the OTC Bulletin Boardand
trades under the symbol “TGTX.”



Reverse Stock Split



On April 30, 2012, the
Company effected a reverse split of its Common Stock at a ratio of 56.25 for 1, pursuant to a previously obtained stockholder
authorization. All share amounts and per share prices in this Quarterly Report on Form 10-Q have been retroactively adjusted to
reflect the effect of our reverse stock split, on a fifty six and one quarter (56.25) for one (1) basis, unless otherwise indicated.  The
exercise price for all stock options and warrants and the conversion price for convertible securities in the accompanying condensed
consolidated financial statements have been adjusted to reflect the reverse stock split by multiplying the original exercise or
conversion price by fifty six and one quarter (56.25).



Cash and Cash Equivalents



We treat liquid investments with original
maturities of less than three months when purchased as cash and cash equivalents.



Research and Development Costs



Research and development
costs are expensed as incurred. Nonrefundable advance payments for goods or services that will be used or rendered for future
research and development activities are deferred and amortized over the period that the goods are delivered or the related services
are performed, subject to an assessment of recoverability. We make estimates of costs incurred in relation to external clinical
research organizations, or CROs, and clinical site costs. We analyze the progress of clinical trials, including levels of patient
enrollment, invoices received and contracted costs when evaluating the adequacy of the amount expensed and the related prepaid
asset and accrued liability. Significant judgments and estimates must be made and used in determining the accrued balance and
expense in any accounting period. We review and accrue CRO expenses and clinical trial study expenses based on work performed
and rely upon estimates of those costs applicable to the stage of completion of a study. Accrued CRO costs are subject to revisions
as such trials progress to completion. Revisions are charged to expense in the period in which the facts that give rise to the
revision become known. With respect to clinical site costs, the financial terms of these agreements are subject to negotiation
and vary from contract to contract. Payments under these contracts may be uneven, and depend on factors such as the achievement
of certain events, the successful recruitment of patients, the completion of portions of the clinical trial or similar conditions.
The objective of our policy is to match the recording of expenses in our financial statements to the actual services received
and efforts expended. As such, expense accruals related to clinical site costs are recognized based on our estimate of the degree
of completion of the event or events specified in the specific clinical study or trial contract.



9









In-Process Research and Development



Acquired
research and development projects are recorded at their fair value as of the date acquisition. The fair values are assessed annually
in the fourth quarter, or sooner, if there is an indicator of impairment, to ascertain if there has been any impairment of the
recorded value. If there is an impairment, the asset is written down to its current fair value by the recording of an expense.
Impairment testing consists of a comparison of the fair value of the in-process research and development with its carrying amount.



Income Taxes



Income taxes are accounted
for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable
to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective
tax bases, operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes
the enactment date. If the likelihood of realizing the deferred tax assets or liability is less than “more likely than not,”
a valuation allowance is then created.



We, and our subsidiaries,
file income tax returns in the U.S. Federal jurisdiction and in various states. We have tax net operating loss carryforwards that
are subject to examination for a number of years beyond the year in which they were generated for tax purposes. Since a portion
of these net operating loss carryforwards may be utilized in the future, many of these net operating loss carryforwards will remain
subject to examination.



We recognize interest
and penalties related to uncertain income tax positions in income tax expense.



Stock-Based Compensation



We recognize all share-based
payments to employees and to non-employee directors for service on our board of directors as compensation expense in the consolidated
financial statements based on the fair values of such payments. Stock-based compensation expense recognized each period is based
on the value of the portion of share-based payment awards that is ultimately expected to vest during the period. Forfeitures are
estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.



For share-based payments to consultants
and other third-parties, compensation expense is determined at the “measurement date.” The expense is recognized over
the vesting period of the award. Until the measurement date is reached, the total amount of compensation expense remains uncertain.
We record compensation expense based on the fair value of the award at the reporting date. The awards to consultants and other
third-parties are then revalued, or the total compensation is recalculated based on the then current fair value, at each subsequent
reporting date.



Basic and Diluted Net (Loss) Income
Per Share of Common Stock



Basic net income (loss)
per share of Common Stock is calculated by dividing net income (loss) applicable to the Common Stock by the weighted-average number
of shares of Common Stock outstanding for the period. Diluted net loss per share of Common Stock is the same as basic net income
(loss) per share of Common Stock since potentially dilutive securities from stock options, stock warrants and convertible preferred
stock would have an antidilutive effect either because the Company incurred a net loss during the period presented or because
such potentially dilutive securities were out of the money and the Company realized net income during the period presented. The
amounts of potentially dilutive securities excluded from the calculation were 7,433,525 at June 30, 2012. During the three and
six months ended June 30, 2012, the Company incurred a net loss; therefore, all of the dilutive securities are excluded from the
computation of diluted earnings per share.



10







Impairment



Long lived assets are
reviewed for an impairment loss when circumstances indicate that the carrying value of long-lived tangible and intangible assets
with finite lives may not be recoverable. Management’s policy in determining whether an impairment indicator exists, a triggering
event, comprises measurable operating performance criteria as well as qualitative measures. If an analysis is necessitated by
the occurrence of a triggering event, we make certain assumptions in determining the impairment amount. If the carrying amount
of an asset exceeds its estimated future cash flows, an impairment charge is recognized for the difference between the carrying
value and the estimated fair value.



Goodwill is reviewed
for impairment annually or when events arise that could indicate that an impairment exists. We test for goodwill impairment using
a two-step process. The first step compares the fair value of the reporting unit with the unit's carrying value, including goodwill.
When the carrying value of the reporting unit is greater than fair value, the unit’s goodwill may be impaired, and the second
step must be completed to measure the amount of the goodwill impairment charge, if any. In the second step, the implied fair value
of the reporting unit’s goodwill is compared with the carrying amount of the unit’s goodwill. If the carrying amount
is greater than the implied fair value, the carrying value of the goodwill must be written down to its implied fair value. We
will continue to perform impairment tests annually at December 31 and whenever events or changes in circumstances suggest that
the carrying value of goodwill may not be recoverable.



NOTE 2 – FAIR VALUE MEASUREMENTS



We measure certain financial
assets and liabilities at fair value on a recurring basis in the financial statements. The hierarchy ranks the quality and reliability
of inputs, or assumptions, used in the determination of fair value and requires financial assets and liabilities carried at fair
value to be classified and disclosed in one of the following three categories:



| | · | Level
                                                                                                              1 – quoted
                                                                                                              prices in active
                                                                                                              markets for identical
                                                                                                              assets and liabilities;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Level
                                                                                                              2 – inputs
                                                                                                              other than Level
                                                                                                              1 quoted prices
                                                                                                              that are directly
                                                                                                              or indirectly observable;
                                                                                                              and
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Level
                                                                                                              3 – unobservable
                                                                                                              inputs that are
                                                                                                              not corroborated
                                                                                                              by market data.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



As of December 31, 2011
and June 30, 2012, the fair values of cash and cash equivalents, other current assets, notes and interest payable, current portion,
accounts payable and accrued expenses, and interest payable, noncurrent approximate their carrying value.



Upon the merger between
Manhattan and Ariston Pharmaceuticals, Inc. (“Ariston”) in March 2010, Ariston issued $15,452,793 of five-year 5%
notes payable (the “5% Notes”) in satisfaction of several note payable issuances.  The 5% Notes and accrued
and unpaid interest thereon are convertible at the option of the holder into Common Stock at the conversion price of $1,125 per
share.  Ariston agreed to make quarterly payments on the 5% Notes equal to 50% of the net product cash flow received
from the exploitation or commercialization of Ariston’s product candidates, AST-726 and AST-915.  The Company
has no obligations under the 5% Notes aside from a) 50% of the net product cash flows from Ariston’s product candidates,
if any, payable to noteholders; and b) the conversion feature, discussed above.



In connection with the
Exchange Transaction in December 2011, the Company performed a valuation of the assets and liabilities of Manhattan immediately
prior to the transaction. The cumulative liability including accrued and unpaid interest of these notes
was approximately $16,876,000 immediately prior to the Exchange Transaction, $16,883,000 at December 31, 2011, and $17,302,000
at June 30, 2012.As these notes payable are tied directly to net product cash flows derived from the preexisting products
of the Company, this note and accrued interest was recorded at fair value of $4,664,697 as of the date of the Exchange Transaction.
No payments have been made on these notes as of June 30, 2012.



We elected the fair value
option for valuing the 5% Notes upon the completion of the reverse merger with TG Bio, as discussed above. The Company elected
the fair value option in order to reflect in our financial statements the assumptions that market participants use in evaluating
these financial instruments.



11







The valuation methods
used to estimate the 5% Notes’ fair value was a discounted cash flow model, where the expected cash flows of AST-726 and
AST-915 are discounted to the present using a yield that incorporates compensation for the probability of success in clinical
development and marketing, among other factors. The discount rate used in this discounted cash flow model approximated 20% at
December 31, 2011 and June 30, 2012. The assumptions, assessments and projections of future revenues are subject to uncertainties,
are difficult to predict and require significant judgment. The use of different assumptions, applying different judgment to inherently
subjective matters and changes in future market conditions could result in significantly different estimates of fair value and
the differences could be material to our consolidated financial statements.



The following table provides
the fair value measurements of applicable financial liabilities as of December 31, 2011 and June 30, 2012:



|         |  | Financial liabilities
    at fair value  as of December 31, 2011 |  
|-------- |  | ---------------------------------------------------------------- | -
|         |  | Level 1                                                          |  
|         |  |                                                                  |  
|5% Notes |  | $                                                                | —
|Totals   |  | $                                                                | —



|         |  | Financial liabilities
    at fair value  as of June 30, 2012 |  
|-------- |  | ------------------------------------------------------------ | -
|         |  | Level 1                                                      |  
|         |  |                                                              |  
|5% Notes |  | $                                                            | —
|Totals   |  | $                                                            | —



The Level 3 amounts above
represent the fair value of the 5% Notes and related accrued interest.



The following table summarizes
the changes in Level 3 instruments during the six months ended June 30, 2012:



|Fair value at December 31, 2011             |  | $ | 4,664,697 |  
|------------------------------------------- |  | - | --------- | -
|Interest accrued on face value of 5% Notes  |  |   | 418,256   |  
|Change in fair value of Level 3 liabilities |  |   | (687,853  | )
|Fair value at June 30, 2012                 |  | $ | 4,395,100 |  



The change in the fair
value of the Level 3 liabilities is reported in other (income) expense in the accompanying condensed consolidated statements of
operations.



NOTE 3 - ACQUISITION



On December 29, 2011,
the Company completed a reverse acquisition of privately held TG Bio, a Delaware Corporation. The acquisition was effected pursuant
to an Exchange Transaction Agreement (the “Agreement”) dated December 29, 2011 by and among the Company, TG Bio and
Opus, the largest shareholder of TG Bio. In accordance with the terms of the Agreement, 95% of the holders of common stock of
TG Bio (one (1) minority shareholder of TG Bio holding in aggregate 132,000 shares of common stock of TG Bio did not participate)
surrendered their TG Bio common stock. The Agreement caused the Company to issue to TG Bio’s shareholders 281,250 shares
of Company Preferred Stock. Each share of Company Preferred Stock were convertible into 8.89 shares of
the Common Stock provided that such conversion rights were subject to sufficient available authorized shares of Common Stock. In
connection with the reverse stock split effected by the Company on April 30, 2012 (as discussed above), all shares of preferred
stock issued in connection with the Agreement were converted to Common Stock.The Company Preferred Stock issued in
connection with the Agreement provided the former TG Bio shareholders with direct and/or indirect ownership of approximately
95% of the Company’s outstanding Company Common Stock immediately following the consummation of the transaction.



The shares of Common
Stock issued upon the conversion of the Company Preferred Stock are not registered for resale and, therefore, shall
remain subject to the rights and restrictions of Rule 144 under the Securities Act of 1933, as amended.



12







Based on fair value of
the Company’s Common Stock of $2.25 per share at December 29, 2011, the purchase price was $295,933, plus the fair value
of restricted stock assumed of $82,305. In connection with the Exchange Transaction, the Company incurred $231,580 of acquisition
related costs.



A summary of the purchase
price calculation is as follows:



|Number of shares of
    Manhattan common stock outstanding at the time of the transaction |  |   | 131,526 |  |  |   |         | 
|----------------------------------------------------------------------------------------- |  | - | ------- |  |  | - | ------- | 
|Multiplied by Manhattan’s
    fair value of the Common Stock                              |  | $ | 2.25    |  |  | $ | 295,933 | 
|Fair value of restricted stock assumed                                                    |  |   |         |  |  |   | 82,305  | 
|Total purchase price                                                                      |  |   |         |  |  | $ | 378,238 | 



The purchase price has
been allocated as follows based on the fair values of the assets and liabilities acquired:



|Cash and cash equivalents                        |  | $ | 10,386    |  
|------------------------------------------------ |  | - | --------- | -
|Other assets                                     |  |   | 90,770    |  
|In-process research and development
    acquired |  |   | 5,441,839 |  
|Total identifiable assets                        |  |   | 5,542,995 |  
|Accounts payable and accrued expenses            |  |   | 197,191   |  
|Notes payable (ICON and Swiss
    Pharma)        |  |   | 939,718   |  
|5% notes payable and accrued interest            |  |   | 4,657,600 |  
|Total identifiable liabilities                   |  |   | 5,794,509 |  
|Net identifiable liabilities                     |  |   | (251,514  | )
|Goodwill                                         |  |   | 629,752   |  
|Total                                            |  | $ | 378,238   |  



A valuation was performed
to determine the fair value of certain identifiable intangible assets of Manhattan.



The fair value of certain
identifiable intangible assets was determined using the income approach. This method starts with a forecast of the expected future
net cash flows. These cash flows are then adjusted to present value by applying an appropriate discount rate that reflects the
risk of achieving the asset’s projected cash flows. The present value of the estimated cash flows are then added to the
present value equivalent of the residual value of the asset, if any, at the end of the discrete projection period to estimate
the fair value.



The valuations are based
on information that is available as of the acquisition date and the expectations and assumptions that have been deemed reasonable
by our management. No assurance can be given, however, that the underlying assumptions or events associated with such assets will
occur as projected. For these reasons, among others, the actual results may vary from the projected results.



The following supplemental
pro forma information presents the financial results as if the transaction had occurred on January 1, 2011 for the three and six
months ended June 30, 2011. This supplemental pro forma information has been prepared for comparative purposes and does not
purport to be indicative of what would have occurred had the acquisition been made on January 1, 2011, nor are they indicative
of future results.



|                                                 |  | Three months ended
    June 30, 2011 |            |   | Six months ended 
June 30, 2011 |  
|------------------------------------------------ |  | ------------------------------------ | ---------- | - | ------------------------------- | -
|Revenue                                          |  | $                                    | —          |   |                                 | $
|Net (loss) income                                |  | $                                    | (3,279,539 | ) |                                 | $
|Basic and diluted (loss) income per common share |  | $                                    | (1.24      | ) |                                 | $



13







NOTE 4 - STOCKHOLDERS' EQUITY



Preferred Stock



Our amended and restated
certificate of incorporation authorizes the issuance of up to 10,000,000 shares of preferred stock, $0.001 par value, with rights
senior to those of our common stock, issuable in one or more series. Upon issuance, the Company can
determine the rights, preferences, privileges and restrictions thereof. These rights, preferences and privileges could include
dividend rights, conversion rights, voting rights, terms of redemption, liquidation preferences, sinking fund terms and the number
of shares constituting any series or the designation of such series, any or all of which may be greater than the rights of common
stock.



In conjunction with the
reverse split effected on April 30, 2012 (as discussed in Note 1), all outstanding Company Preferred Stock automatically converted
to 9,857,596 shares of Common Stock as of that date.



Common Stock



Our amended and restated
certificate of incorporation authorizes the issuance of up to 500,000,000 shares of $0.001 par value common stock.



On
December 30, 2011, we completed the first closing of the private placement of our securities, issuing
4,929,523 shares of Common Stock at a price per share of $2.25 for total gross proceeds, before placement commissions and expenses,
of $11,091,425 (the “2011 Equity PIPE”). Investors also received warrants to purchase 1,232,381 shares of Common
Stock. The warrants have an exercise price of $2.25 per share and are exercisable for five years.



In 2012, we completed
two additional closings of the 2011 Equity PIPE. These closings were held on January 31, 2012, and February 24, 2012. In these
closings, the Company issued 695,428 shares of our Company Preferred Stock at a price per share of $20.00 for total gross proceeds,
before placement commissions and expenses, of $13,908,560. Each share of Company Preferred Stock was convertible into 8.89 shares
of Common Stock provided that such conversion rights were subject to sufficient available authorized shares of Common Stock. In
connection with the reverse stock split effected by the Company on April 30, 2012, all shares of preferred stock issued in the
2011 Equity PIPE were converted to Common Stock. Investors also received warrants to purchase 1,545,396 shares of Common
Stock. The warrants have an exercise price of $2.25 per share and are exercisable for five years. The shares of Company Preferred
Stock and warrants sold in these closings were offered and sold to accredited investors, including members of management, without
registration under the Securities Act, or state securities laws, in reliance on the exemptions provided by Section 4(2) of
the Securities Act, and Regulation D promulgated thereunder and in reliance on similar exemptions under applicable state
laws. Accordingly, the securities issued in the offering have not been registered under the Securities Act, and until so registered,
these securities may not be offered or sold in the United States absent registration or availability of an applicable exemption
from registration. The placement agent received cash commissions equal to 10% of the gross proceeds of the offering, five-year
warrants to purchase shares of the Company’s stock equal to 10% of shares sold in the offering, and a non-accountable expense
allowance equal to two percent of the gross proceeds of the offering for their expenses.



Equity Incentive Plans



The TG Therapeutics,
Inc. Amended and Restated 2012 Incentive Plan (“2012 Incentive Plan”) was adopted in May 2012. Under the 2012 Incentive
Plan, the compensation committee of the Company’s board of directors is authorized to grant stock-based awards to directors,
consultants, employees and officers. The 2012 Incentive Plan authorizes grants to purchase up to 6,000,000 shares of authorized
but unissued common stock. As of June 30, 2012, up to an additional 2,865,000 shares may be issued under the 2012 Incentive Plan.



A summary of the status of the Company’s
stock options as of June 30, 2012 and changes during the period then ended is presented below:



14







A summary of the status of the Company’s
stock options as of June 30, 2012 and changes during the period then ended is presented below:





Stock Options



The following table summarizes
stock option activity for the six months ended June 30, 2012:



|                                             |  | Number of
                                                                                                                                                                                                                  shares |        |   | Weighted- average exercise
                                                                                                                                                                                                                                                                                                                               price |   |          | Weighted- average Contractual Term |  |  | Aggregate Intrinsic Value | 
|-------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------ | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | -------- | ---------------------------------- |  |  | ------------------------- | 
|                                             |  |                                                                                                                                                                                                                                    |        |   |                                                                                                                                                                                                                                                                                                                                                                 |   |          | (in years)                         |  |  |                           | 
|Outstanding at December 31, 2011             |  |                                                                                                                                                                                                                                    | 3,379  |   |                                                                                                                                                                                                                                                                                                                                                                 | $ | 1,315.62 |                                    |  |  | 6.39                      | 
|Granted                                      |  |                                                                                                                                                                                                                                    | —      |   |                                                                                                                                                                                                                                                                                                                                                                 |   | —        |                                    |  |  |                           | 
|Exercised                                    |  |                                                                                                                                                                                                                                    | —      |   |                                                                                                                                                                                                                                                                                                                                                                 |   | —        |                                    |  |  |                           | 
|Forfeited                                    |  |                                                                                                                                                                                                                                    | (2,475 | ) |                                                                                                                                                                                                                                                                                                                                                                 |   | 720.45   |                                    |  |  |                           | 
|Expired                                      |  |                                                                                                                                                                                                                                    | —      |   |                                                                                                                                                                                                                                                                                                                                                                 |   | —        |                                    |  |  |                           | 
|Outstanding at June 30, 2012                 |  |                                                                                                                                                                                                                                    | 904    |   |                                                                                                                                                                                                                                                                                                                                                                 | $ | 2,945.09 |                                    |  |  | 2.24                      | 
|                                             |  |                                                                                                                                                                                                                                    |        |   |                                                                                                                                                                                                                                                                                                                                                                 |   |          |                                    |  |  |                           | 
|Vested and expected to vest at June 30, 2012 |  |                                                                                                                                                                                                                                    | 904    |   |                                                                                                                                                                                                                                                                                                                                                                 | $ | 2,945.09 |                                    |  |  | 2.24                      | 
|Exercisable at June 30, 2012                 |  |                                                                                                                                                                                                                                    | 898    |   |                                                                                                                                                                                                                                                                                                                                                                 | $ | 2,963.46 |                                    |  |  | 2.19                      | 



As of June 30, 2012,
the total compensation cost related to unvested option awards not yet recognized is less than $1,000. The weighted average period
over which it is expected to be recognized is approximately 9 months.



Restricted Stock - Preferred



Certain employees have
been awarded restricted Company Preferred Stock. The restricted stock vesting consists of milestone and time-based vesting. The
following table summarizes restricted share activity for the six months ended June 30, 2012:



|                                      |  | Number
                                                                                                         of Shares Restricted
                                                                                                                           Series A
                                                                                                                                                                                                                                           Preferred Stock(1) |          |   | Weighted Average Grant
                                                                                                                                                                                                                                                                                                                              Date Fair
                                                                                                                                                                                                                                                                                                                                           Value |   |       | Aggregate Intrinsic Value | 
|------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------- | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ----- | ------------------------- | 
|Outstanding at December 31, 2011      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | 129,375  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | $ | 20.00 |                           | 
|Granted                               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | —        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | —     |                           | 
|Vested                                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | —        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | —     |                           | 
|Forfeited                             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |       |                           | 
|Conversion to restricted common stock |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | (129,375 | ) |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | 20.00 |                           | 
|Outstanding at June 30, 2012          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | —        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | $ | —     |                           | 



(1)The restricted Company Preferred Stock listed in the table above was granted in connection with the Exchange Transaction
to certain executives as discussed above. Each share of Company Preferred Stock was convertible into 8.89 shares of the Company’s
Common Stock. In conjunction with the reverse split effected on April 30, 2012 (as discussed in Note 1), all outstanding restricted
Preferred Stock automatically converted to 1,150,000 shares of Common Stock as of that date.



Restricted Stock - Common



Certain employees, directors
and consultants have been awarded restricted stock under the 2012 Incentive Plan. The restricted stock vesting consists of milestone
and time-based vesting. The following table summarizes restricted share activity for the six months ended June 30, 2012:



|                                 |  | Number of Shares |           |  | Weighted Average Grant
                                                                                                                                                                                                                                                                                                                              Date Fair
                                                                                                                                                                                                                                                                                                                                           Value |   |      | Aggregate Intrinsic Value | 
|-------------------------------- |  | ---------------- | --------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ---- | ------------------------- | 
|Outstanding at December 31, 2011 |  |                  | —         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | $ | —    |                           | 
|Converted preferred stock        |  |                  | 1,150,000 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | 2.25 |                           | 
|Granted                          |  |                  | 3,135,000 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | 6.20 |                           | 
|Vested                           |  |                  | —         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | —    |                           | 
|Forfeited                        |  |                  | —         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | —    |                           | 
|Outstanding at June 30, 2012     |  |                  | 4,285,000 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | $ | 5.14 |                           | 



Total expense associated
with restricted stock (both common and preferred) was $1,171,991 and $1,360,500 during the three and six months ended June 30,
2012, respectively.

15











Warrants





The following table summarizes
warrant activity for the six months ended June 30, 2012:



|                                 |  | Warrants |           |   | Weighted- average exercise
                                                                                                                                                                                                                                                                                                                               price |   |          | Aggregate Intrinsic Value | 
|-------------------------------- |  | -------- | --------- | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | -------- | ------------------------- | 
|Outstanding at December 31, 2011 |  |          | 2,118,768 |   |                                                                                                                                                                                                                                                                                                                                                                 | $ | 4.62     |                           | 
|Issued                           |  |          | 2,163,555 |   |                                                                                                                                                                                                                                                                                                                                                                 |   | 2.31     |                           | 
|Exercised                        |  |          | —         |   |                                                                                                                                                                                                                                                                                                                                                                 |   | —        |                           | 
|Expired                          |  |          | (1,449    | ) |                                                                                                                                                                                                                                                                                                                                                                 |   | 2,812.50 |                           | 
|Outstanding at June 30, 2012     |  |          | 4,280,874 |   |                                                                                                                                                                                                                                                                                                                                                                 | $ | 2.50     |                           | 



During the six months
ended June 30, 2012, as part of the 2011 Equity PIPE, we issued warrants to purchase up to 1,545,396 shares of our Company Common
Stock to investors in the 2011 Equity PIPE, none of which have been exercised as of June 30, 2012. The warrants have an exercise
price of $2.25 per warrant share. In addition, we issued to the placement agent in the transaction warrants to purchase up to
618,159 shares of our Company Common Stock at an exercise price of $2.48 per warrant share, none of which have been exercised
as of June 30, 2012.



Stock-Based Compensation



The fair value of stock
options granted is estimated at the date of grant using the Black-Scholes pricing model. The expected term of options granted
is derived from historical data and the expected vesting period. Expected volatility is based on the historical volatility of
our common stock. The risk-free interest rate is based on the U.S. Treasury yield for a period consistent with the expected term
of the option in effect at the time of the grant. We have assumed no expected dividend yield, as dividends have never been paid
to stock or option holders and will not be paid for the foreseeable future. The Company did not grant any stock options during
the six months ended June 30, 2012.



The following table summarizes
stock-based compensation expense information about stock options and restricted stock for the three and six months ended June
30, 2012:



|                                                                      |  | Three
                                                                                                         months ended June
                                                                                                                              30,
                                                                                                                              2012 |           |  | Six
                                                                                                         months ended June
                                                                                                                              30,
                                                                                                                              2012 |  
|--------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -
|Stock-based compensation expense associated
    with restricted stock |  | $                                                                                                                                                                                                                                                                                                                                                                                                     | 1,171,991 |  |                                                                                                                                                                                                                                                                                                                                                                                                     | $
|Stock-based compensation expense
    associated with option grants    |  |                                                                                                                                                                                                                                                                                                                                                                                                       | —         |  |                                                                                                                                                                                                                                                                                                                                                                                                     |  
|                                                                      |  | $                                                                                                                                                                                                                                                                                                                                                                                                     | 1,171,991 |  |                                                                                                                                                                                                                                                                                                                                                                                                     | $



NOTE 5 – NOTES PAYABLE



The following is a summary
of notes payable:



|                                           |  | June
    30, 2012        |         |  | December
    31, 2011         |  
|------------------------------------------ |  | ------------------------ | ------- |  | ----------------------------- | -
|                                           |  | Current
    portion, net |         |  | Non-
    current portion, net |  
|Non-interest Bearing Note Payable,
    Net |  | $                        | —       |  |                               | $
|Convertible 5% Notes Payable               |  |                          | —       |  |                               |  
|ICON Convertible Note                      |  |                          | 677,778 |  |                               |  
|Total                                      |  | $                        | 677,778 |  |                               | $





We assumed the preceding
notes payable as the result of the Exchange Transaction. Accordingly, a valuation was performed and these notes have been presented
at their fair value on the date of the transaction.



16









Non-Interest Bearing Note Payable



In October 2009, Manhattan
entered into a Settlement Agreement and Mutual Release with Swiss Pharma Contract LTD (“Swiss Pharma”) pursuant to
which Manhattan agreed to pay Swiss Pharma $200,000 and issue to Swiss Pharma an interest free promissory note due on October
27, 2011 in the principal amount of $250,000 in full satisfaction of a September 5, 2008 arbitration award. In November 2011,
Manhattan renegotiated the $250,000 promissory note due October 27, 2011 in which the amount of the promissory note was reduced
to $200,000 and the maturity date was extended to February 15, 2012. This amount was paid on February 14, 2012 in full settlement
of this note.



Convertible 5% Notes Payable



On March 8, 2010, Manhattan
entered into an Agreement and Plan of Merger (the "Merger Agreement") by and among the Company, Ariston Pharmaceuticals,
Inc., a Delaware corporation ("Ariston") and Ariston Merger Corp., a Delaware corporation and wholly-owned subsidiary
of the Company (the "Merger Sub").  Pursuant to the terms and conditions set forth in the Merger Agreement, on
March 8, 2010, the Merger Sub merged with and into Ariston (the "Merger"), with Ariston being the surviving corporation
of the Merger.  As a result of the Merger, Ariston became a wholly-owned subsidiary of the Company.



The 5% Notes and accrued
and unpaid interest thereon are convertible at the option of the holder into Common Stock at the conversion price of $1,125 per
share.  Ariston agreed to make quarterly payments on the 5% Notes equal to 50% of the net product cash flow received
from the exploitation or commercialization of Ariston’s product candidates, AST-726 and AST-915.  The
Company has no obligations under the 5% Notes aside from a) 50% of the net product cash flows from Ariston’s product candidates,
if any, payable to noteholders; and b) the conversion feature, discussed above. Interest accrues monthly, is added to principal
on an annual basis, every March 8, and is payable at maturity.



In connection with the
Exchange Transaction in December 2011, the Company performed a valuation of the assets and liabilities of Manhattan immediately
prior to the transaction. The cumulative liability including accrued and unpaid interest of these notes
was approximately $16,876,000 immediately prior to the Exchange Transaction, $16,883,000 at December 31, 2011, and $17,302,000
at June 30, 2012.As these notes payable are tied directly to net product cash flows derived from the preexisting products
of the Company, this note and accrued interest was recorded at fair value as of the date of the Exchange Transaction. No payments
have been made on these notes as of June 30, 2012. See Note 2 for further details.



ICON Convertible Note Payable



In connection with the
merger with Ariston as discussed above, Ariston satisfied an account payable of $1,275,188 to ICON Clinical Research Limited (“ICON”)
through the payment of $275,188 in cash and the issuance of a three-year 5% note payable (the “ICON Note”).  The
principal was to be repaid in 36 monthly installments of $27,778 commencing in April 2010.  Interest was payable monthly
in arrears.   On March 1, 2011, Ariston entered into an amended and restated convertible promissory note (the “Amended
ICON Note”) with ICON. The principal terms of the Amended ICON Note are that monthly payments of principal and interest
will be waived for the thirteen month period ended December 31, 2011 (the “Waiver Period”) in exchange for a single
payment of $100,000 on March 31, 2011, an increase in the interest on the Amended ICON Note from 5% to 8% per annum during the
Waiver Period and a balloon payment on January 31, 2012. The Amended ICON Note is convertible at the option of the holder into
the Company’s Common Stock at the conversion price of $562.50 per share. During the three and six months ended June 30,
2012, the Company recorded $15,150 and $30,003, respectively, of interest expense on the Amended ICON Note. At June 30, 2012,
the principal amount of the Amended ICON Note was $677,778, of which the entire balance has been classified as current, and interest
payable on the Amended ICON Note was $91,944, and is reflected as notes payable, current portion, net, and interest payable, current
portion, net, respectively, in the accompanying balance sheet as of June 30, 2012. This note is currently in default as the Company
did not make the balloon payment due on January 31, 2012, or any subsequent payments. The Company is currently attempting to negotiate
a settlement or alternative arrangement in satisfaction of this note.



17







NOTE 6 – LICENSE AGREEMENTS



In April 2011, TG
Bio, acquired from LFB Biotechnologies, a fully owned subsidiary of France based LFB S.A., an option (the “License Option”)
for exclusive worldwide rights (except France/Belgium) to develop and market ublituximab (“TGTX-1101”), a monoclonal
antibody that targets a specific epitope on the B-cell lymphocyte CD20 antigen. In exchange for the License Option, TG Bio issued
132,000 shares of its common stock to LFB.



On
January 30, 2012, TG Bio exercised the License Option andentered into an exclusive license agreement with LFB Biotechnologies,
GTC Biotherapeutics and LFB/GTC LLC, all wholly-owned subsidiaries of LFB Group, relating to the development of ublituximab (the
“License Agreement”).Under the License Agreement, we have acquired the exclusive
worldwide rights (exclusive of France/Belgium) for the development and commercialization of TGTX-1101 (ublituximab). To date,
we have made no payments to LFB Group and LFB Group is eligible to receive payments of up to an aggregate of approximately $31.0
million upon our successful achievement of certain clinical development, regulatory and sales milestones, in addition to royalty
payments on net sales of ublituximab. The license will terminate on a country by country basis upon the expiration of the last
licensed patent right or 15 years after the first commercial sale of a product in such country, unless the agreement is earlier
terminated.



In connection with
the license agreement, our subsidiary TG Biologics issued 7,368,000 shares of its common stock to LFB, and the Company agreed
to contribute $15 million, less applicable fees and expenses associated with the financing, to TG Bio to fund the development
of ublituximab under the License Agreement in exchange for 7,500,000 shares of TG Bio common stock. The Company recognized approximately
$16,578,000 of noncash research and development expense during the six months ended June 30, 2012 in connection with the issuance
of these shares. In addition, in connection with the issuance of 7,368,000 shares of TG Bio common stock, the Company and TG Bio
provided LFB Group the option to, in its sole discretion, elect to convert all, and not less than all, of the shares of TG
Bio common stock into 7,500,000 shares of the Company’s Common Stock. This option may be exercised by LFB Group at any time
before May 31, 2013.



Furthermore, should
LFB Group choose to exercise the option for Company Common Stock, the Board of Directors of the Company shall appoint an
individual designated by LFB Group to serve as a director of the Company until the next annual meeting of the stockholders and
until his or her successor has been duly elected. Thereafter the Board of Directors of the Company shall nominate a designee named
by LFB Group for election at each annual meeting of the stockholders until such time as LFB Group owns less than 10% of the outstanding
Company Common Stock.



NOTE 7 – RELATED PARTY TRANSACTIONS



On December 30, 2011,
OPN Capital Markets (“OPNCM”) and its affiliated broker-dealer, National Securities Corporation (“NSC”
and collectively with OPNCM, “National”), both affiliates of National Holdings Corporation (“National Holdings”),
entered into a Placement Agency Agreement (the “PAA”) with the Company in connection with the initial closing of the
2011 Equity PIPE, offering of up to $25 million of stock and warrants of the Company.  Pursuant to the PAA, National
acted as the Company’s placement agent for 2011 Equity PIPE.



Until April 2012, Michael
S. Weiss was a director and Non-Executive Chairman of the Board of Directors of National Holdings.  He is also a stockholder
of National Holdings and, when combined with his ownership indirectly through Opus and its affiliates, beneficially owns 23.6%
of National Holdings, the parent company of NSC. Mr. Weiss disclaims such beneficial ownership other than to the extent of
his pecuniary interest. In addition, at the time, Opus and NSC were parties to a 50/50 joint venture that shared profits from
OPNCM, the investment banking division of NSC that was responsible for managing the Offering. This joint venture was dissolved
in April 2012.



18







As placement agent, National
received cash commissions equal to 10% of the gross proceeds of the 2011 Equity PIPE, five-year warrants to purchase shares of
Company Preferred Stock equal to 10% of shares sold in the 2011 Equity PIPE, and a non-accountable expense allowance equal to
two percent of the gross proceeds of the 2011 Equity PIPE for National’s expenses (not including up to $80,000 of National’s
legal expenses and any blue sky fees, both of which the Company also reimbursed). In addition to acting as placement, National
provided advisory services in connection with the Exchange Transaction and received an advisory fee of $150,000 for such services.



Under the terms of the
Company’s License Agreement with LFB Group, the Company utilizes LFB Group for certain development and manufacturing services.
The Company recognized approximately $1,258,000 in such expenses during the three and six months ended June 30, 2012, which has
been included in other research and development expenses in the accompanying condensed consolidated financial statements.



ITEM 2. MANAGEMENT’S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



The following discussion
and analysis contains forward-looking statements about our plans and expectations of what may happen in the future. Forward-looking
statements are based on a number of assumptions and estimates that are inherently subject to significant risks and uncertainties,
and our results could differ materially from the results anticipated by our forward-looking statements as a result of many known
or unknown factors, including, but not limited to, those factors discussed in “Risk Factors.” See also the “Special
Cautionary Notice Regarding Forward-Looking Statements” set forth at the beginning of this report.



You should read the following
discussion and analysis in conjunction with the unaudited consolidated financial statements, and the related footnotes thereto,
appearing elsewhere in this report, and in conjunction with management’s discussion and analysis and the audited consolidated
financial statements included in our annual report on Form 10-K for the year ended December 31, 2011.



OVERVIEW



We are a biopharmaceutical
company focused on the acquisition, development and commercialization of innovative and medically important pharmaceutical products
for the treatment of cancer and other underserved therapeutic needs. We aim to acquire rights to these technologies by licensing
or otherwise acquiring an ownership interest, funding their research and development and eventually either out-licensing or bringing
the technologies to market. Currently we are developing ublituximab (TGTX-1101), a novel, third generation monoclonal antibody
that targets a specific and unique epitope on the CD20 antigen found on mature B-lymphocytes.



Developed for the treatment
of B-cell proliferative disorders, including Non-Hodgkin’s Lymphoma (“NHL”) and Chronic Lymphocytic Leukemia
(“CLL”), anti-CD20 antibodies target and aid in the depletion of B-cell lymphocytes. Anti-CD20 antibodies have also
been shown to be effective in treating select autoimmune diseases such as Rheumatoid Arthritis (“RA”) and Systemic
Lupus Erythematosus (“SLE”), along with the neurological disorder Multiple Sclerosis (“MS”).



Our portfolio of product
candidates is summarized below:

| | · | TGTX-1101
                                                                                                              (ublituximab), an
                                                                                                              anti-CD20 monoclonal
                                                                                                              antibody for oncology
                                                                                                              and B-cell related
                                                                                                              disorders
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | AST-726,
                                                                                                              a nasally delivered  form
                                                                                                              of hydroxocobalamin
                                                                                                              for the treatment
                                                                                                              of vitamin B12 deficiency
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



We also actively evaluate
complimentary products, technologies and companies for in-licensing, partnership, acquisition and/or investment opportunities.
To date, we have not received approval for the sale of any of our drug candidates in any market and, therefore, have not generated
any product sales from our drug candidates.



TGTX-1101 (ublituximab)



Overview



TGTX-1101 (“LFB-R603”
or “R603”) is a chimeric murine/human monoclonal antibody with the generic name “ublituximab” that targets
the CD20 antigen found on the surface of B-cell lymphocytes and has been developed to aid in the depletion of circulating B-cells.
We hold exclusive worldwide rights (excepting France/Belgium) to develop and commercialize ublituximab for all indications, including
the treatment of cancer and autoimmune diseases such as Non-Hodgkin’s Lymphoma (“NHL”) and Chronic Lymphocytic
Leukemia (“CLL”).



19







Multiple preclinical
studies bothin vitroand in vivo produced data that support the activity and potency of ublituximab as an efficient
and selective B-cell targeting anti-CD20 antibody with the ability to effectively deplete B lymphocytes in both malignant laboratory
cell models as well as NHL and CLL patient donor cell lines.



Generally, anti-CD20
antibodies are believed to exert their B-cell depleting effects through three primary mechanisms: direct or programmed cell death
(“DCD” or “PCD”), complement dependent cytotoxicity (“CDC”), and antibody dependent cell-mediated
cytotoxicity (“ADCC”). Ublituximab has been specifically bio-engineered to enhance the ADCC effects, which enhances
its ability to deplete B-cells and may improve its anti-cancer effects as compared to Rituxan®, the leading anti-CD20
monoclonal antibody, which had worldwide sales in 2011 of approximately $7 billion.



A two part dose escalating
Phase I clinical trial was completed in France in which ublituximab was introduced in relapsed or refractory CLL patients. In
Part 1 of the study, 21 CLL patients in escalating dosage cohorts received once weekly infusions of ublituximab over the course
of 4 weeks, with an additional 12 patients in Part 2 of the study receiving weekly infusions of ublituximab at a higher flat dose
for 8 weeks. According to the investigators, results of Part 2 indicate single agent ublituximab therapy was well tolerated with
primary adverse events including infusion related reactions, neutropenia, transient elevations in liver enzymes, pyrexia and thrombocytopenia.
Though the primary endpoint of this Phase I clinical study was to assess the safety and tolerability of ublituximab in CLL patients,
robust B-cell depletion and an encouraging rate of partial responses may suggest preliminary evidence of efficacy. A portion of
the data from Part 2 of this study was presented at the 53rd Annual American Society of Hematology Meeting in San Diego,
CA. The Company intends to utilize the data generated from patients in the recently completed Phase I clinical trial to design
and conduct future Phase I, II and III studies in the United States and internationally.



Manufacturing of ublituximab is currently
performed by our partner, LFB Biotechnologies, using mammalian cells with plans to explore a second manufacturing method utilizing
a transgenic animal vector developed by GTC Biotherapeutics, a wholly owned subsidiary of LFB S.A.



AST-726



AST-726 is a nasally
delivered form of hydroxocobalamin for the treatment of Vitamin B12 deficiency.  The Company acquired global rights to AST-726
as part of the Ariston acquisition. AST-726 has demonstrated pharmacokinetic equivalence to a marketed intramuscular injection
product for Vitamin B12 remediation.



The Company is currently
reviewing its development plans for AST-726, which may include: (1) ceasing further development and attempting to sell or license
AST-726, (2) continuing development as originally contemplated under the SPA or (3) evaluating and implementing alternative development
plans. No decision has been made as to which approach to execute. A final decision is expected to take 6-12 months, but may occur
earlier or later.



AST-915



The Company has a sponsored
research arrangement for AST-915, an orally delivered treatment for essential tremor. Patient enrollment, treatment, and follow-up
concluded for a Phase 1 dose escalation trial of AST-915 in early June 2012 and data analysis is currently ongoing, with final
data estimated to be available in the third quarter of 2012. It is unlikely that the Company will continue the development of
AST-915 thereafter, but a final determination will be reserved until development activities have concluded.



RECENT DEVELOPMENTS



TGTX-1101 (ublituximab)



In March 2012, the Company
submitted to the U.S. Food and Drug Administration (“FDA”) an Investigational New Drug Application (“IND”)
for TGTX-1101 (ublituximab). The Company received notification of acceptance of this IND in April of 2012, permitting the initiation
of clinical trials for TGTX-1101 in oncology patients in the US. Pursuant to the acceptance of this IND, the Company intends to
initiate a Phase I/II study with ublituximab in the third quarter of 2012.



20







GENERAL CORPORATE



We have not earned any
revenues from the commercial sale of any of our drug candidates or from any other source.



Our research and development
expenses consist primarily of expenses related to in-licensing of new product candidates, fees paid to consultants and outside
service providers for clinical and laboratory development, facilities-related and other expenses relating to the design, development,
manufacture, testing and enhancement of our drug candidates and technologies. We expense our research and development costs as
they are incurred.



Our general and administrative
expenses consist primarily of salaries and related expenses for executive, finance and other administrative personnel, recruitment
expenses, professional fees and other corporate expenses, including investor relations, legal activities and facilities-related
expenses.



Our results of operations
include noncash compensation expense as a result of the grants of stock options and restricted stock. Compensation expense for
awards of options and restricted stock granted to employees and directors represents the fair value of the award recorded over
the respective vesting periods of the individual awards. The expense is included in the respective categories of expense in the
consolidated statements of operations. We expect to continue to incur significant noncash compensation expenses.



For awards of options
and restricted stock to consultants and other third-parties, compensation expense is determined at the “measurement date.”
The expense is recognized over the vesting period of the award. Until the measurement date is reached, the total amount of compensation
expense remains uncertain. We record compensation expense based on the fair value of the award at the reporting date. The awards
to consultants and other third-parties are then revalued, or the total compensation is recalculated based on the then current
fair value, at each subsequent reporting date. This results in a change to the amount previously recorded in respect of the equity
award grant, and additional expense or a reversal of expense may be recorded in subsequent periods based on changes in the assumptions
used to calculate fair value, such as changes in market price, until the measurement date is reached and the compensation expense
is finalized.



In addition, certain
restricted stock issued to employees vest upon the achievement of certain milestones; therefore, the total expense is uncertain
until the milestone is probable.



Our clinical trials will
be lengthy and expensive. Even if these trials show that our drug candidates are effective in treating certain indications, there
is no guarantee that we will be able to record commercial sales of any of our drug candidates in the near future. In addition,
we expect losses to continue as we continue to fund in-licensing and development of new drug candidates. As we continue our development
efforts, we may enter into additional third-party collaborative agreements and may incur additional expenses, such as licensing
fees and milestone payments. In addition, we may need to establish the commercial infrastructure required to manufacture, market
and sell our drug candidates following approval, if any, by the FDA, which would result in us incurring additional expenses. As
a result, our quarterly results may fluctuate and a quarter-by-quarter comparison of our operating results may not be a meaningful
indication of our future performance.



RESULTS OF OPERATIONS



Three months ended June 30, 2012 and June
30, 2011



Noncash Stock Expense
Associated with In-licensing Agreement. Noncash stock expense associated with in-licensing agreement decreased by $297,000
to $0 for the three months ended June 30, 2012, as compared to $297,000 for the three months ended June 30, 2011. The expense
in 2011 primarily related to a noncash expense of $297,000 recorded in conjunction with the stock issued to LFB Group for the
license option to TGTX-1101.



Noncash Compensation
Expense (Research and Development). Noncash compensation expense (research and development) related to equity incentive grants
equaled $109,198 for the three months ended June 30, 2012. The noncash compensation expense was related to the period’s
expense for restricted stock grants to research and development personnel. We expect noncash compensation expense (research and
development) to increase modestly during the remainder of 2012.



21







Other Research and
Development Expenses. Other research and development expenses totaled $1,536,896 for the three months ended June 30, 2012.
These expenses are due primarily to an increase in research and development expenses related to TGTX-1101, and the Company’s
preparations for a U.S. based Phase I/II study. We expect our other research and development costs to increase for the remainder
of 2012 due to the commencement of our clinical development program for TGTX-1101.



Noncash Compensation
Expense (General and Administrative). Noncash compensation expense (general and administrative) related to equity incentive
grants equaled $1,062,793 for the three months ended June 30, 2012. The noncash compensation expense was related to the period’s
expense for restricted stock grants to general and administrative personnel. We expect noncash compensation expense (general and
administrative) to decrease modestly during the remainder of 2012.



Other General and
Administrative Expenses. Other general and administrative expenses totaled $396,043 for the three months ended June 30, 2012.
This expense was primarily related to legal and personnel costs. We expect our other general and administrative expenses to remain
at a comparable level during the remainder of 2012.



Other (Income) Expense.
Other (income) expense totaled $(530,771) for the three months ended June 30, 2012. The other income was primarily due to a refund
of New York State Franchise tax of approximately $272,000 and the change in the fair value of our notes payable, partially offset
by interest expense on our short-term note payable.



Six months ended June 30, 2012 and June
30, 2011



Noncash Stock Expense
Associated with In-licensing Agreement. Noncash stock expense associated with in-licensing agreement increased by $16,281,000
to $16,578,000 for the six months ended June 30, 2012, as compared to $297,000 for the six months ended June 30, 2011. The expense
during the six months ended June 30, 2012 primarily related to a noncash expense of $16,578,000 recorded in conjunction with the
stock issued to LFB Group for the license to TGTX-1101. The expense during the six months ended June 30, 2011 primarily related
to a noncash expense of $297,000 recorded in conjunction with the stock issued to LFB Group for the license option to TGTX-1101.



Noncash Compensation
Expense (Research and Development). Noncash compensation expense (research and development) related to equity incentive grants
equaled $109,198 for the six months ended June 30, 2012. The noncash compensation expense was related to the period’s expense
for restricted stock grants to research and development personnel. We expect noncash compensation expense (research and development)
to increase during the remainder 2012.



Other Research and
Development Expenses. Other research and development expenses totaled $1,700,249 for the six months ended June 30, 2012. These
expenses are due primarily to an increase in research and development expenses related to TGTX-1101, and the Company’s preparations
for a U.S. based Phase I/II study. We expect our other research and development costs to increase for the remainder of 2012 due
to the commencement of our clinical development program for TGTX-1101.



Noncash Compensation
Expense (General and Administrative). Noncash compensation expense (general and administrative) related to equity incentive
grants equaled $1,251,302 for the six months ended June 30, 2012. The noncash compensation expense was related to the period’s
expense for restricted stock grants to general and administrative personnel. We expect noncash compensation expense (general and
administrative) to decrease modestly during the remainder of 2012.



Other General and
Administrative Expenses. Other general and administrative expenses totaled $851,535 for the six months ended June 30, 2012.
This expense was primarily related to legal and personnel costs. We expect our other general and administrative expenses to remain
at a comparable level during the remainder of 2012.



Other (Income) Expense.
Other (income) expense totaled $(519,587) for the six months ended June 30, 2012. The other income was primarily due to a refund
of New York State Franchise tax of approximately $272,000 and the change in the fair value of our notes payable, partially offset
by interest expense on our short-term note payable.



22







LIQUIDITY AND CAPITAL RESOURCES



Our primary source of
cash has been proceeds from the private placement of equity securities. We have not yet commercialized any of our drug candidates
and cannot be sure if we will ever be able to do so. Even if we commercialize one or more of our drug candidates, we may not become
profitable. Our ability to achieve profitability depends on a number of factors, including our ability to obtain regulatory approval
for our drug candidates, successfully complete any post-approval regulatory obligations and successfully commercialize our drug
candidates alone or in partnership. We may continue to incur substantial operating losses even if we begin to generate revenues
from our drug candidates.



As of June 30, 2012,
we had $20,367,079 in cash and cash equivalents. We currently anticipate that our cash and cash equivalents as of June 30, 2012
are sufficient to fund our anticipated operating cash requirements for approximately 20-24 months from June 30, 2012. The actual
amount of cash that we will need to operate is subject to many factors, including, but not limited to, the timing, design and
conduct of clinical trials for our drug candidates. We are dependent upon significant financing to provide the cash necessary
to execute our current operations, including the commercialization of any of our drug candidates.



Cash used in operating
activities for the six months ended June 30, 2012 was $1,361,419, which primarily related to general and administrative and research
and development expenses associated with TG commencing operations and development of TGTX-1101.



For the six months ended
June 30, 2012, net cash provided by financing activities of $11,981,406 related primarily to net proceeds from the issuance of
Company Preferred Stock, partially offset by the repayment of a short-term loan.



2011 Equity PIPE



On
December 30, 2011, we completed the first closing of the private placement of our securities, issuing
4,929,523 shares of Common Stock at a price per share of $2.25 for total gross proceeds, before placement commissions and expenses,
of $11,091,425 (the “2011 Equity PIPE”). Investors also received warrants to purchase 1,232,381 shares of Common
Stock. The warrants have an exercise price of $2.25 per share and are exercisable for five years.



In 2012, we
completed two additional closings of the 2011 Equity PIPE. These closings were held on January 31, 2012, and February 24,
2012. In these closings, the Company issued 695,428 shares of our Company Preferred Stock at a price per share of $20.00 for
total gross proceeds, before placement commissions and expenses, of $13,908,560. Each share of Company Preferred Stock were
convertible into 8.89 shares of Common Stock provided that such conversion rights were subject to sufficient available
authorized shares of Common Stock. In connection with the reverse stock split effected by the Company on April 30, 2012, all
shares of Company Preferred Stock issued in the 2011 Equity PIPE were converted to Common Stock. Investors also received
warrants to purchase 1,545,396 shares of Common Stock. The warrants have an exercise price of $2.25 per share and are
exercisable for five years. The shares of Company Preferred Stock and warrants sold in these closings were offered and
sold to accredited investors, including members of management, without registration under the Securities Act, or state
securities laws, in reliance on the exemptions provided by Section 4(2) of the Securities Act, and Regulation D
promulgated thereunder and in reliance on similar exemptions under applicable state laws. Accordingly, the securities issued
in the offering have not been registered under the Securities Act, and until so registered, these securities may not be
offered or sold in the United States absent registration or availability of an applicable exemption from registration. The
placement agent received cash commissions equal to 10% of the gross proceeds of the offering, five-year warrants to purchase
shares of the Company’s stock equal to 10% of shares sold in the offering, and a non-accountable expense allowance
equal to two percent of the gross proceeds of the offering for their expenses.



OFF-BALANCE SHEET ARRANGEMENTS



We have not entered into
any transactions with unconsolidated entities whereby we have financial guarantees, subordinated retained interests, derivative
instruments or other contingent arrangements that expose us to material continuing risks, contingent liabilities, or any other
obligations under a variable interest in an unconsolidated entity that provides us with financing, liquidity, market risk or credit
risk support.



23







CRITICAL ACCOUNTING POLICIES



The discussion and analysis
of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared
in accordance with U.S. generally accepted accounting principles. The preparation of these consolidated financial statements requires
us to make estimates and judgments that affect the reported amount of assets and liabilities and related disclosure of contingent
assets and liabilities at the date of our financial statements and the reported amounts of revenues and expenses during the applicable
period. Actual results may differ from these estimates under different assumptions or conditions.



We define critical accounting
policies as those that are reflective of significant judgments and uncertainties and which may potentially result in materially
different results under different assumptions and conditions. In applying these critical accounting policies, our management uses
its judgment to determine the appropriate assumptions to be used in making certain estimates. These estimates are subject to an
inherent degree of uncertainty. Our critical accounting policies include the following:



Stock Compensation.
We have granted stock options and restricted stock to employees, directors and consultants, as well as warrants to other third
parties. For employee and director grants, the value of each option award is estimated on the date of grant using the Black-Scholes
option-pricing model. The Black-Scholes model takes into account volatility in the price of our stock, the risk-free interest
rate, the estimated life of the option, the closing market price of our stock and the exercise price. We base our estimates of
our stock price volatility on the historical volatility of our common stock and our assessment of future volatility; however,
these estimates are neither predictive nor indicative of the future performance of our stock. For purposes of the calculation,
we assumed that no dividends would be paid during the life of the options and warrants. The estimates utilized in the Black-Scholes
calculation involve inherent uncertainties and the application of management judgment. In addition, we are required to estimate
the expected forfeiture rate and only recognize expense for those equity awards expected to vest. As a result, if other assumptions
had been used, our recorded stock-based compensation expense could have been materially different from that reported. In addition,
because some of the options and warrants issued to employees, consultants and other third-parties vest upon the achievement of
certain milestones, the total expense is uncertain.



Total compensation expense
for options and restricted stock issued to consultants is determined at the “measurement date.” The expense is recognized
over the vesting period for the options and restricted stock. Until the measurement date is reached, the total amount of compensation
expense remains uncertain. We record stock-based compensation expense based on the fair value of the equity awards at the reporting
date. These equity awards are then revalued, or the total compensation is recalculated based on the then current fair value, at
each subsequent reporting date. This results in a change to the amount previously recorded in respect of the equity award grant
and additional expense or a reversal of expense may be recorded in subsequent periods based on changes in the assumptions used
to calculate fair value, such as changes in market price, until the measurement date is reached and the compensation expense is
finalized.



In-Process Research
and Development. All acquired research and development projects are recorded at their fair value as of the date acquisition.
The fair values are assessed as of the balance sheet date to ascertain if there has been any impairment of the recorded value.
If there is an impairment, the asset is written down to its current fair value by the recording of an expense.



Accruals for Clinical
Research Organization and Clinical Site Costs.We make estimates of costs incurred in relation to external clinical research
organizations (“CROs”), and clinical site costs. We analyze the progress of clinical trials, including levels
of patient enrollment, invoices received and contracted costs when evaluating the adequacy of the amount expensed and the related
prepaid asset and accrued liability. Significant judgments and estimates must be made and used in determining the accrued balance
and expense in any accounting period. We review and accrue CRO expenses
and clinical trial study expenses based on work performed and rely upon estimates of those costs applicable to the stage of completion
of a study.  Accrued CRO costs are subject to revisions as such trials progress to completion. Revisions are charged to expense
in the period in which the facts that give rise to the revision become known.With respect to clinical site costs, the
financial terms of these agreements are subject to negotiation and vary from contract to contract. Payments under these contracts
may be uneven and depend on factors such as the achievement of certain events, the successful recruitment of patients, the completion
of portions of the clinical trial or similar conditions. The objective of our policy is to match the recording of expenses in
our financial statements to the actual services received and efforts expended. As such, expense accruals related to clinical site
costs are recognized based on our estimate of the degree of completion of the event or events specified in the specific clinical
study or trial contract.



24







Accounting Related
to Goodwill. As of June 30, 2012, there was approximately $630,000 of goodwill on our consolidated balance sheets. Goodwill
is reviewed for impairment annually or when events arise that could indicate that an impairment exists. We test for goodwill impairment
using a two-step process. The first step compares the fair value of the reporting unit with the unit's carrying value, including
goodwill. When the carrying value of the reporting unit is greater than fair value, the unit’s goodwill may be impaired,
and the second step must be completed to measure the amount of the goodwill impairment charge, if any. In the second step, the
implied fair value of the reporting unit’s goodwill is compared with the carrying amount of the unit’s goodwill. If
the carrying amount is greater than the implied fair value, the carrying value of the goodwill must be written down to its implied
fair value.



We are required to perform
impairment tests annually at December 31 and whenever events or changes in circumstances suggest that the carrying value of an
asset may not be recoverable. For all of our acquisitions, various analyses, assumptions and estimates were made at the time of
each acquisition that were used to determine the valuation of goodwill and intangibles. In future years, the possibility exists
that changes in forecasts and estimates from those used at the acquisition date could result in impairment indicators.



Accounting for Income
Taxes. In preparing our consolidated financial statements, we are required to estimate our income taxes in each of the jurisdictions
in which we operate. This process involves management estimation of our actual current tax exposure and assessment of temporary
differences resulting from differing treatment of items for tax and accounting purposes. These differences result in deferred
tax assets and liabilities. 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. To the extent we establish
a valuation allowance or increase this allowance in a period, we must include an expense within the tax provision in the consolidated
statement of operations. Significant management judgment is required in determining our provision for income taxes, our deferred
tax assets and liabilities and any valuation allowance recorded against our net deferred tax assets. We have fully offset our
deferred tax assets with a valuation allowance. Our lack of earnings history and the uncertainty surrounding our ability to generate
taxable income prior to the reversal or expiration of such deferred tax assets were the primary factors considered by management
in maintaining the valuation allowance.



Fair Value of 5% Notes
Payable. We measure certain financial assets and liabilities at fair value on a recurring basis in the financial statements.
The hierarchy ranks the quality and reliability of inputs, or assumptions, used in the determination of fair value and requires
financial assets and liabilities carried at fair value to be classified and disclosed in one of three categories.



We elected the fair value
option for valuing our Convertible 5% Notes Payable upon the completion of the reverse merger with TG Bio, as discussed above.
The Company elected the fair value option in order to reflect in our financial statements the assumptions that market participants
use in evaluating these financial instruments.



In connection with the
Exchange Transaction in December 2011, the Company performed a valuation of the assets and liabilities of Manhattan immediately
prior to the transaction. The cumulative liability including accrued and unpaid interest of these notes
was approximately $16,876,000 immediately prior to the Exchange Transaction, $16,883,000 at December 31, 2011, and $17,302,000
at June 30, 2012.As these notes payable are tied directly to net product cash flows derived from the preexisting products
of the Company, this note and accrued interest was recorded at fair value as of the date of the Exchange Transaction. No payments
have been made on these notes as of June 30, 2012. The fair value of the 5% Notes Payable was approximately $4,664,697 as of December
31, 2011 and $4,395,100 at June 30, 2012.



The valuation methods
used to estimate the 5% Notes’ fair value was a discounted cash flow model, where the expected cash flows of AST-726 and
AST-915 are discounted to the present using a yield that incorporates compensation for the probability of success in clinical
development and marketing, among other factors. The discount rate used in this discounted cash flow model approximated 20% at
December 31, 2011 and June 30, 2012. The assumptions, assessments and projections of future revenues are subject to uncertainties,
are difficult to predict and require significant judgment. The use of different assumptions, applying different judgment to inherently
subjective matters and changes in future market conditions could result in significantly different estimates of fair value and
the differences could be material to our consolidated financial statements.



25







ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK



The primary objective
of our investment activities is to preserve principal while maximizing our income from investments and minimizing our market risk.
We invest in government and investment-grade corporate debt in accordance with our investment policy. Some of the securities in
which we invest have market risk. This means that a change in prevailing interest rates, and/or credit risk, may cause the fair
value of the investment to fluctuate. For example, if we hold a security that was issued with a fixed interest rate at the then-prevailing
rate and the prevailing interest rate later rises, the fair value of our investment will probably decline. As of June 30, 2012,
our portfolio of financial instruments consists of cash equivalents, including bank deposits. Due to the short-term nature of
our investments, we believe there is no material exposure to interest rate risk, and/or credit risk, arising from our investments.



ITEM 4. CONTROLS AND PROCEDURES



Evaluation of Disclosure Controls and
Procedures



As of June 30, 2012,
management carried out, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer,
an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules
13a-15(e) and 15d-15(e) under the Exchange Act). Our disclosure controls and procedures are designed to provide reasonable assurance
that information we are required to disclose in the reports that we file or submit under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in applicable rules and forms. Based upon that evaluation, our Chief
Executive Officer and Chief Financial Officer concluded that, as of June 30, 2012, our disclosure controls and procedures were
not effective. This conclusion was reached because a lack of segregation of duties exists, as all financial and accounting duties
are performed by the Chief Financial Officer. The Company intends to address this deficiency by hiring additional accounting personnel
to alleviate the segregation of duties issue.



Internal Control Over Financial Reporting



There were no changes
in our internal control over financial reporting during the quarter ended June 30, 2012, that have materially affected, or are
reasonably likely to materially affect, our internal control over financial reporting.



PART II. OTHER INFORMATION



ITEM 1. LEGAL PROCEEDINGS



We, and our subsidiaries,
are not a party to, and our property is not the subject of, any material pending legal proceedings.



ITEM 1A. RISK FACTORS

You should carefully consider the following
risks and uncertainties. If any of the following occurs, our business, financial condition or operating results could be materially
harmed. These factors could cause the trading price of our common stock to decline, and you could lose all or part of your investment.



Risks Related to the Company’s
Business and Industry



Because the Company has in-licensed
its product candidates from third parties, any dispute with or non-performance by its licensors will adversely affect its ability
to develop and commercialize the applicable product candidates.



Our product candidates
have been in-licensed from third parties. Under the terms of our license agreements, the licensors generally will have the right
to terminate such agreement in the event of a material breach by us. The licensors will also have the right to terminate the agreement
in the event we fail to use diligent and reasonable efforts to develop and commercialize the product candidate worldwide.



26







If there is any conflict,
dispute, disagreement or issue of non-performance between us and our licensing partners regarding our rights or obligations under
the license agreements, including any such conflict, dispute or disagreement arising from our failure to satisfy payment obligations
under such agreement, our ability to develop and commercialize the affected product candidate and our ability to enter into collaboration
or marketing agreements for the affected product candidate may be adversely affected. Any loss of our rights under these license
agreements would delay or completely terminate its product development efforts for the affected product candidate.



We do not have full internal development
capabilities, and are thus reliant upon our partners and third parties to generate clinical, preclinical and quality data necessary
to support the regulatory applications needed to conduct clinical trials and file for marketing approval.



In order to submit an
Investigational New Drug application (“IND”) and Biologics License Application (“BLA”) to the FDA, it
is necessary to submit all information on the clinical, non-clinical, chemistry, manufacturing, controls and quality aspects of
the product candidate. We rely on our licensing partners and, in some cases, third parties, to provide this data. If we are unable
to obtain this data, or the data is not sufficient to meet the regulatory requirements, we may experience significant delays in
our development programs. Additionally, an IND must be active in each division in which we intend to conduct clinical trials.
While we maintain an active IND for ublituximab enabling the conduct of studies in the FDA’s Division of Hematology and
Oncology; there can be no assurance given that we will be successful in obtaining an active IND for ublituximab in any other division
under whose supervision we may seek to develop ublituximab.



We are highly dependent on the success
of our product candidates and cannot give any assurance that these or any future product candidates will be successfully commercialized.



We are a development-stage
biopharmaceutical company, and do not currently have any commercial products that generate revenues or any other sources of revenue.
We may never be able to successfully develop marketable products. Our pharmaceutical development methods are unproven and may
not lead to commercially viable products for any of several reasons.



If we are unable to develop,
or receive regulatory approval for or successfully commercialize any of our product candidates, we will not be able to generate
product revenues.



Because the results of preclinical
studies and early clinical trials are not necessarily predictive of future results, any product candidate we advance into clinical
trials may not have favorable results in later clinical trials, if any, or receive regulatory approval.



Pharmaceutical development
has inherent risk. We will be required to demonstrate through adequate and well-controlled clinical trials that our product candidates
are effective with a favorable benefit-risk profile for use in diverse populations for their target indications before we can
seek regulatory approvals for their commercial sale. Success in early clinical trials does not mean that later clinical trials
will be successful because product candidates in later-stage clinical trials may fail to demonstrate sufficient safety or efficacy
despite having progressed through initial clinical testing. Companies frequently suffer significant setbacks in advanced clinical
trials, even after earlier clinical trials have shown promising results. In addition, there is typically an extremely high rate
of attrition from the failure of pharmaceutical candidates proceeding through clinical trials.



We plan on conducting
additional Phase I and II clinical trials for ublituximab. If the results from these trials are different from those found in
the completed Phase I clinical trial of ublituximab, we may need to terminate or revise our clinical development plan, which could
extend the time for conducting our development program and could have a material adverse effect on our business.







27







Any product candidates
we may advance into clinical development are subject to extensive regulation, which can be costly and time consuming, cause unanticipated
delays or prevent the receipt of the required approvals to commercialize our product candidates.



The clinical development,
manufacturing, labeling, storage, record-keeping, advertising, promotion, import, export, marketing and distribution of our product
candidates or any future product candidates are subject to extensive regulation by the FDA in the United States and by comparable
health authorities worldwide or in foreign markets. In the United States, we are not permitted to market our product candidates
until we receive approval of a BLA or NDA from the FDA. The process of obtaining BLA and NDA approval is expensive, often takes
many years and can vary substantially based upon the type, complexity and novelty of the products involved. Approval policies
or regulations may change and the FDA has substantial discretion in the pharmaceutical approval process, including the ability
to delay, limit or deny approval of a product candidate for many reasons. In addition, the FDA may require post-approval clinical
trials or studies which also may be costly. The FDA approval for a limited indication or approval with required warning language,
such as a boxed warning, could significantly impact our ability to successfully market our product candidates. Finally, the FDA
may require adoption of a Risk Evaluation and Mitigation Strategy (REMS) requiring prescriber training, post-market registries,
or otherwise restricting the marketing and dissemination of these products. Despite the time and expense invested in clinical
development of product candidates, regulatory approval is never guaranteed. Assuming successful clinical development, we intend
to seek product approvals in countries outside the United States. As a result, we would be subject to regulation by the European
Medicines Agency (“EMA”), as well as the other regulatory agencies in many of these countries.



Approval procedures vary
among countries and can involve additional product testing and additional administrative review periods. The time required to
obtain approval in other countries might differ from that required to obtain FDA approval. Regulatory approval in one country
does not ensure regulatory approval in another, but a failure or delay in obtaining regulatory approval in one country may negatively
impact the regulatory process in others. As in the United States, the regulatory approval process in Europe and in other countries
is a lengthy and challenging process. The FDA, EMA and any of the applicable European and other regulatory bodies can delay, limit
or deny approval of a product candidate for many reasons, including:

| | · | the
                                                                                                              FDA or comparable
                                                                                                              foreign regulatory
                                                                                                              authorities may
                                                                                                              disagree with the
                                                                                                              design or implementation
                                                                                                              of our clinical
                                                                                                              trials;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | we
                                                                                                              may be unable to
                                                                                                              demonstrate to the
                                                                                                              satisfaction of
                                                                                                              the FDA or comparable
                                                                                                              foreign regulatory
                                                                                                              authorities that
                                                                                                              a product candidate
                                                                                                              is safe and effective
                                                                                                              for any indication;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | the
                                                                                                              FDA may not accept
                                                                                                              clinical data from
                                                                                                              trials which are
                                                                                                              conducted by individual
                                                                                                              investigators or
                                                                                                              in countries where
                                                                                                              the standard of
                                                                                                              care is potentially
                                                                                                              different from the
                                                                                                              United States;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | the
                                                                                                              results of clinical
                                                                                                              trials may not meet
                                                                                                              the level of statistical
                                                                                                              significance required
                                                                                                              by the FDA or comparable
                                                                                                              foreign regulatory
                                                                                                              authorities for
                                                                                                              approval;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | we
                                                                                                              may be unable to
                                                                                                              demonstrate that
                                                                                                              a product candidate's
                                                                                                              clinical and other
                                                                                                              benefits outweigh
                                                                                                              its safety risks;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | the
                                                                                                              FDA or comparable
                                                                                                              foreign regulatory
                                                                                                              authorities may
                                                                                                              disagree with our
                                                                                                              interpretation of
                                                                                                              data from preclinical
                                                                                                              studies or clinical
                                                                                                              trials;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | the
                                                                                                              data collected from
                                                                                                              clinical trials
                                                                                                              of our product candidates
                                                                                                              may not be sufficient
                                                                                                              to support the submission
                                                                                                              of a BLA or other
                                                                                                              submission or to
                                                                                                              obtain regulatory
                                                                                                              approval in the
                                                                                                              United States or
                                                                                                              elsewhere;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | the
                                                                                                              FDA or comparable
                                                                                                              foreign regulatory
                                                                                                              authorities may
                                                                                                              fail to approve
                                                                                                              the manufacturing
                                                                                                              processes or facilities
                                                                                                              of third-party manufacturers
                                                                                                              with which we or
                                                                                                              our collaborators
                                                                                                              contract for clinical
                                                                                                              and commercial supplies;
                                                                                                              or
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | the
                                                                                                              approval policies
                                                                                                              or regulations of
                                                                                                              the FDA or comparable
                                                                                                              foreign regulatory
                                                                                                              authorities may
                                                                                                              significantly change
                                                                                                              in a manner rendering
                                                                                                              our clinical data
                                                                                                              insufficient for
                                                                                                              approval.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



In addition, recent events
raising questions about the safety of certain marketed pharmaceuticals may result in increased cautiousness by the FDA and other
regulatory authorities in reviewing new pharmaceuticals based on safety, efficacy or other regulatory considerations and may result
in significant delays in obtaining regulatory approvals. Regulatory approvals for our product candidates may not be obtained without
lengthy delays, if at all.  Any delay in obtaining, or inability to obtain, applicable regulatory approvals would prevent
us from commercializing our product candidates.



Any product candidate we advance into
clinical trials may cause unacceptable adverse events or have other properties that may delay or prevent their regulatory approval
or commercialization or limit their commercial potential.



Unacceptable adverse
events caused by any of our product candidates that we take into clinical trials could cause either us or regulatory authorities
to interrupt, delay or halt clinical trials and could result in the denial of regulatory approval by the FDA or other regulatory
authorities for any or all targeted indications. This, in turn, could prevent us from commercializing the affected product candidate
and generating revenues from its sale.



28







We have not completed
testing of any of our product candidates for the treatment of the indications for which we intend to seek product approval in
humans, and we currently do not know the extent that adverse events, if any, will be observed in patients who receive any of its
product candidates. To date, clinical trials using ublituximab and our other product candidates have demonstrated a toxicity profile
that was deemed acceptable by the investigators performing such studies. Such interpretation may not be shared by future investigators
or by the FDA and in the case of ublituximab, even if deemed acceptable for oncology applications, like the completed clinical
trial, it may not be acceptable for diseases outside the oncology setting, and likewise for any other product candidates we may
develop. Additionally, the severity, duration and incidence of adverse events may increase in larger study populations. With respect
to ublituximab, the toxicity when manufactured under different conditions is not known, nor is the toxicity of transgenically
derived ublituximab, and it is possible that additional and/or different adverse events may appear upon the human use of those
formulations and those adverse events may arise with greater frequency, intensity and duration than in the current formulation.
If any of our product candidates cause unacceptable adverse events in clinical trials, we may not be able to obtain marketing
approval and generate revenues from its sale.



If any of our product
candidates receives marketing approval and we, or others, later identify unacceptable adverse events caused by the product, a
number of significant negative consequences could result, including:

| | · | regulatory
                                                                                                              authorities may
                                                                                                              withdraw their approval
                                                                                                              of the affected
                                                                                                              product;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | regulatory
                                                                                                              authorities may
                                                                                                              require a more significant
                                                                                                              clinical benefit
                                                                                                              for approval to
                                                                                                              offset the risk;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | regulatory
                                                                                                              authorities may
                                                                                                              require the addition
                                                                                                              of labeling statements
                                                                                                              that could diminish
                                                                                                              the usage of the
                                                                                                              product or otherwise
                                                                                                              limit the commercial
                                                                                                              success of the affected
                                                                                                              product;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | we
                                                                                                              may be required
                                                                                                              to change the way
                                                                                                              the product is administered,
                                                                                                              conduct additional
                                                                                                              clinical trials
                                                                                                              or change the labeling
                                                                                                              of the product;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | we
                                                                                                              may choose to discontinue
                                                                                                              sale of the product;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

| | · | we
                                                                                                              may not be able
                                                                                                              to enter into collaboration
                                                                                                              agreements on acceptable
                                                                                                              terms and execute
                                                                                                              on our business
                                                                                                              model; and
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | our
                                                                                                              reputation may suffer.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------



Any one or a combination
of these events could prevent us from obtaining regulatory approval and achieving or maintaining market acceptance of the affected
product or could substantially increase the costs and expenses of commercializing the affected product, which in turn could delay
or prevent us from generating any revenues from the sale of the affected product.



We may experience delays in the commencement
of our clinical trials or in the receipt of data from preclinical and clinical trials conducted by third parties, which could
result in increased costs and delay its ability to pursue regulatory approval.



Delays in the commencement
of clinical trials and delays in the receipt of data from preclinical or clinical trials conducted by third parties could significantly
impact our product development costs. Before we can initiate clinical trials in the United States for our product candidates,
we need to submit the results of preclinical testing, usually in animals, to the FDA as part of an IND, along with other information
including information about product chemistry, manufacturing and controls and its proposed clinical trial protocol for its product
candidates.



While we currently maintain
an active IND for cell derived ublituximab, we plan to rely on preclinical and clinical trial data from third parties for the
IND submissions for transgenically derived ublituximab and any other product candidates we may develop. If receipt of that data
is delayed for any reason, including reasons outside of our control, it will delay our plans for IND filings, and clinical trial
plans. This, in turn, will delay our ability to make subsequent regulatory filings and ultimately, to commercialize our products
if regulatory approval is obtained. If those third parties do not make this data available to us, we will likely, on our own,
have to develop all the necessary preclinical and clinical data which will lead to additional delays and increase the costs of
our development of our product candidates.



Before we can test any
product candidate in human clinical trials the product candidate enters the preclinical testing stage. Preclinical tests include
laboratory evaluations of product chemistry, toxicity and formulation, as well as animal studies to assess the potential safety
and activity of the pharmaceutical product candidate. The conduct of the preclinical tests must comply with federal regulations
and requirements including good laboratory practices (GLP).



29







We must submit the results
of the preclinical tests, together with manufacturing information, analytical data, any available clinical data or literature
and a proposed clinical protocol, to the FDA as part of the IND. The IND automatically becomes effective 30 days after receipt
by the FDA, unless the FDA places the IND on a clinical hold within that 30-day time period. In such a case, the Company and the
FDA must resolve any outstanding concerns before the clinical trials can begin. The FDA may also impose clinical holds on a product
candidate at any time before or during clinical trials due to safety concerns or non-compliance. Accordingly, we cannot be sure
that submission of an IND will result in the FDA allowing clinical trials to begin, or that, once begun, issues will not arise
that suspend or terminate such clinical trial.



The FDA may require that
we conduct additional preclinical testing for any product candidate before it allows us to initiate the clinical testing under
any IND, which may lead to additional delays and increase the costs of our preclinical development.



Even assuming an active
IND for a product candidate, we do not know whether our planned clinical trials for any such product candidate will begin on time,
or at all. The commencement of clinical trials can be delayed for a variety of reasons, including delays in:

| | · | obtaining
                                                                                                              regulatory clearance
                                                                                                              to commence a clinical
                                                                                                              trial;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | identifying,
                                                                                                              recruiting and training
                                                                                                              suitable clinical
                                                                                                              investigators;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | reaching
                                                                                                              agreement on acceptable
                                                                                                              terms with prospective
                                                                                                              contract research
                                                                                                              organizations (“CROs”)
                                                                                                              and trial sites,
                                                                                                              the terms of which
                                                                                                              can be subject to
                                                                                                              extensive negotiation,
                                                                                                              may be subject to
                                                                                                              modification from
                                                                                                              time to time and
                                                                                                              may vary significantly
                                                                                                              among different
                                                                                                              CROs and trial sites;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | obtaining
                                                                                                              sufficient quantities
                                                                                                              of a product candidate
                                                                                                              for use in clinical
                                                                                                              trials;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | obtaining
                                                                                                              institutional review
                                                                                                              board (“IRB”)
                                                                                                              or ethics committee
                                                                                                              approval to conduct
                                                                                                              a clinical trial
                                                                                                              at a prospective
                                                                                                              site;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | identifying,
                                                                                                              recruiting and enrolling
                                                                                                              patients to participate
                                                                                                              in a clinical trial;
                                                                                                              and
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | retaining
                                                                                                              patients who have
                                                                                                              initiated a clinical
                                                                                                              trial but may withdraw
                                                                                                              due to adverse events
                                                                                                              from the therapy,
                                                                                                              insufficient efficacy,
                                                                                                              fatigue with the
                                                                                                              clinical trial process
                                                                                                              or personal issues.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Any delays in the commencement
of our clinical trials will delay our ability to pursue regulatory approval for our product candidates. In addition, many of the
factors that cause, or lead to, a delay in the commencement of clinical trials may also ultimately lead to the denial of regulatory
approval of a product candidate.



Delays in the completion of clinical
testing could result in increased costs to the Company and delay our ability to generate product revenues.



Once a clinical trial
has begun, patient recruitment and enrollment may be slower than we anticipate. Clinical trials may also be delayed as a result
of ambiguous or negative interim results. Further, a clinical trial may be suspended or terminated by us, an Institutional Review
Board (“IRB”), an ethics committee or a Data Monitoring Committee overseeing the clinical trial, any of our clinical
trial sites with respect to that site or the FDA or other regulatory authorities due to a number of factors, including:

| | · | failure
                                                                                                              to conduct the clinical
                                                                                                              trial in accordance
                                                                                                              with regulatory
                                                                                                              requirements or
                                                                                                              our clinical protocols;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | inspection
                                                                                                              of the clinical
                                                                                                              trial operations
                                                                                                              or clinical trial
                                                                                                              site by the FDA
                                                                                                              or other regulatory
                                                                                                              authorities resulting
                                                                                                              in the imposition
                                                                                                              of a clinical hold;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | unforeseen
                                                                                                              safety issues or
                                                                                                              any determination
                                                                                                              that the clinical
                                                                                                              trial presents unacceptable
                                                                                                              health risks; and
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | lack
                                                                                                              of adequate funding
                                                                                                              to continue the
                                                                                                              clinical trial.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Changes in regulatory
requirements and guidance also may occur and we may need to amend clinical trial protocols to reflect these changes. Amendments
may require us to resubmit our clinical trial protocols to IRBs for re-examination, which may impact the costs, timing and successful
completion of a clinical trial. If we experience delays in the completion of, or if we must terminate, any clinical trial of any
product candidate that we advance into clinical trials, our ability to obtain regulatory approval for that product candidate will
be delayed and the commercial prospects, if any, for the product candidate may be harmed. In addition, many of these factors may
also ultimately lead to the denial of regulatory approval of a product candidate. Even if we ultimately commercialize any of our
product candidates, other therapies for the same indications may have been introduced to the market during the period we have
been delayed and such therapies may have established a competitive advantage over our product candidates.



30







We intend to rely on third parties
to help conduct our planned clinical trials. If these third parties do not meet their deadlines or otherwise conduct the trials
as required, we may not be able to obtain regulatory approval for or commercialize our product candidates when expected or at
all.



We intend to use CROs
to assist in the conduct of our planned clinical trials and will rely upon medical institutions, clinical investigators and contract
laboratories to conduct our trials in accordance with our clinical protocols. Our future CROs, investigators and other third parties
may play a significant role in the conduct of these trials and the subsequent collection and analysis of data from the clinical
trials.



There is no guarantee
that any CROs, investigators and other third parties will devote adequate time and resources to our clinical trials or perform
as contractually required. If any third parties upon whom we rely for administration and conduct of our clinical trials fail to
meet expected deadlines, fail to adhere to its clinical protocols or otherwise perform in a substandard manner, our clinical trials
may be extended, delayed or terminated, and we may not be able to commercialize our product candidates.



If any of our clinical
trial sites terminate for any reason, we may experience the loss of follow-up information on patients enrolled in our ongoing
clinical trials unless we are able to transfer the care of those patients to another qualified clinical trial site. In addition,
principal investigators for our clinical trials may serve as scientific advisors or consultants to us from time to time and receive
cash or equity compensation in connection with such services. If these relationships and any related compensation result in perceived
or actual conflicts of interest, the integrity of the data generated at the applicable clinical trial site may be jeopardized.



As the product candidates for which
we hold an exclusive license agreement, are still under development; manufacturing and process improvements implemented in the
production of ublituximab, or any of our product candidates, may affect their ultimate activity or function.



TGTX-1101 (ublituximab)
is in the initial stages of development and is currently manufactured in small batches for use in pre-clinical and clinical studies.
Process improvements implemented to date have, and process improvements in the future may change the activity of the antibody,
which may affect the safety and efficacy of the product. No assurance can be given that the material manufactured from any of
the optimized processes will perform comparably to ublituximab as manufactured to date and used in currently available pre-clinical
data and in early clinical trials reported in this or any previous filing. Additionally, future clinical trial results will be
subject to the same level of uncertainty if, following such trials, additional process improvements are made, including without
limitation, the introduction of transgenically derived ublituximab.



If we fail to adequately understand
and comply with the local laws and customs as we expand into new international markets, these operations may incur losses or otherwise
adversely affect our business and results of operations.



We expect to operate
a portion of our business in certain countries through subsidiaries or through supply and marketing arrangements. In those countries,
where we have limited experience in operating subsidiaries and in reviewing equity investees, we will be subject to additional
risks related to complying with a wide variety of national and local laws, including restrictions on the import and export of
certain intermediates, drugs, technologies and multiple and possibly overlapping tax structures. In addition, we may face competition
in certain countries from companies that may have more experience with operations in such countries or with international operations
generally. We may also face difficulties integrating new facilities in different countries into our existing operations, as well
as integrating employees hired in different countries into our existing corporate culture. If we do not effectively manage our
operations in these subsidiaries and review equity investees effectively, or if we fail to manage our alliances, we may lose money
in these countries and it may adversely affect our business and results of our operations.



31







If our competitors
develop treatments for the target indications for which any of our product candidates may be approved, that are approved more
quickly, marketed more effectively or demonstrated to be more effective than our product candidates, our commercial opportunity
will be reduced or eliminated.



We operate in a highly
competitive segment of the biotechnology and biopharmaceutical market. We face competition from numerous sources, including commercial
pharmaceutical and biotechnology enterprises, academic institutions, government agencies, and private and public research institutions.
Many of our competitors have significantly greater financial, product development, manufacturing and marketing resources. Large
pharmaceutical companies have extensive experience in clinical testing and obtaining regulatory approval for drugs. Additionally,
many universities and private and public research institutes are active in cancer research, some in direct competition with us.
We may also compete with these organizations to recruit scientists and clinical development personnel. Smaller or early-stage
companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established
companies.



The cancer indications
for which we are developing our product, TGTX-1101, have a number of established therapies with which we will compete. Most major
pharmaceutical companies and many biotechnology companies are aggressively pursuing new cancer development programs for the treatment
of NHL, CLL, and other B-cell proliferative malignancies, including both therapies with traditional, as well as novel, mechanisms
of action.



If approved, we expect
TGTX-1101 to compete directly with Roche Group’s Rituxan® (Rituximab), Spectrum Pharmaceutical’s Zevalin®(Y90-Ibritumomab Tiuxetan), GlaxoSmithKline’s Bexxar® (I131-Tositumomab), Dr.
Reddy’s Laboratories’ Reditux®, and Genmab and GlaxoSmithKline’s Arzerra® (Ofatumomab)
among others, each of which is currently approved for the treatment of various diseases including NHL and CLL. New developments,
including the development of other pharmaceutical technologies and methods of treating disease, occur in the pharmaceutical and
life sciences industries at a rapid pace.



These developments may
render our product candidates obsolete or noncompetitive. Compared to us, many of our potential competitors have substantially
greater:

| | · | research
                                                                                                              and development
                                                                                                              resources, including
                                                                                                              personnel and technology;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | regulatory
                                                                                                              experience;
| | - | ------------------------------------------------------------------------------------------------------------------------------------

| | · | pharmaceutical
                                                                                                              development, clinical
                                                                                                              trial and pharmaceutical
                                                                                                              commercialization
                                                                                                              experience;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | experience
                                                                                                              and expertise in
                                                                                                              exploitation of
                                                                                                              intellectual property
                                                                                                              rights; and
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | capital
                                                                                                              resources.
| | - | --------------------------------------------------------------------------------------------------------------------------------



As a result of these
factors, our competitors may obtain regulatory approval of their products more rapidly than us or may obtain patent protection
or other intellectual property rights that limit our ability to develop or commercialize our product candidates. Our competitors
may also develop products for the treatment of lymphoma or CLL that are more effective, better tolerated, more useful and less
costly than ours and may also be more successful in manufacturing and marketing their products. Our competitors may succeed in
obtaining approvals from the FDA and foreign regulatory authorities for their product candidates sooner than we do for our products.



We will also face competition
from these third parties in recruiting and retaining qualified personnel, establishing clinical trial sites and enrolling patients
for clinical trials and in identifying and in-licensing new product candidates.



We rely completely on third parties
to manufacture our preclinical and clinical pharmaceutical supplies and we intend to rely on third parties to produce commercial
supplies of any approved product candidate, and our commercialization of any of our product candidates could be stopped, delayed
or made less profitable if those third parties fail to obtain approval of the FDA, fail to provide us with sufficient quantities
of pharmaceutical product or fail to do so at acceptable quality levels or prices.



The facilities used by
our contract manufacturers to manufacture our product candidates must be approved by the FDA pursuant to inspections that will
be conducted only after we submit a BLA or NDA to the FDA, if at all. We do not control the manufacturing process of our product
candidates and are completely dependent on our contract manufacturing partners for compliance with the FDA’s requirements
for manufacture of finished pharmaceutical products (good manufacturing practices, GMP). If our contract manufacturers cannot
successfully manufacture material that conforms to our specifications and the FDA’s strict regulatory requirements of safety,
purity and potency, we will not be able to secure and/or maintain FDA approval for our product candidates. In addition, we have
no control over the ability of our contract manufacturers to maintain adequate quality control, quality assurance and qualified
personnel. If our contract manufacturers cannot meet FDA standards, we may need to find alternative manufacturing facilities,
which would significantly impact our ability to develop, obtain regulatory approval for or market our product candidates. Our
partner, LFB, is currently exploring long-term, scalable contract manufacturers for ublituximab and/or the build-out of such capabilities.
No assurance can be given that a long-term, scalable manufacturer can be identified or that they can make clinical and commercial
supplies of ublituximab at an appropriate scale and cost to make it commercially feasible. If they are unable to do so, it could
have a material adverse impact on our business. If that is the case, we may need to rely exclusively on transgenically manufactured
material, which may introduce additional risk and uncertainty the extent of which cannot be fully determined today.



32







In addition, the Company
does not have the capability to package finished products for distribution to hospitals and other customers. Prior to commercial
launch, we intend to enter into agreements with one or more alternate fill/finish pharmaceutical product suppliers so that we
can ensure proper supply chain management once we are authorized to make commercial sales of our product candidates. If we receive
marketing approval from the FDA, we intend to sell pharmaceutical product finished and packaged by such suppliers. We have not
entered into long-term agreements with our current contract manufacturers or with any fill/finish suppliers, and though we intend
to do so prior to commercial launch of our product candidates in order to ensure that we maintain adequate supplies of finished
product, we may be unable to enter into such an agreement or do so on commercially reasonable terms, which could have a material
adverse impact upon our business.



In most cases, our manufacturing
partners are single source suppliers. It is expected that our manufacturing partners will be sole source suppliers from single
site locations for the foreseeable future. Given this, any disruption of supply from these partners could have a material, long-term
impact on our ability to supply products for clinical trials or commercial sale. Additionally, the proprietary transgenic technology
that supports the manufacture of transgenically derived ublituximab is not easily transferrable, if at all, and it is expected
that GTC will be the sole supplier of transgenically derived ublituximab at a single site for the foreseeable future. If the Company’s
suppliers do not deliver sufficient quantities of ublituximab on a timely basis, or at all, and in accordance with applicable
specifications, there could be a significant interruption of our supply of ublituximab, which would adversely affect clinical
development and commercialization of the product. In addition, if the Company’s current or future supply of ublituximab
should fail to meet specifications during its stability program there could be a significant interruption of our supply of drug,
which would adversely affect the Company’s clinical development and commercialization of the product.



Clinical trials of our transgenically
produced products may be unsuccessful or delayed, which may prevent us from meeting our anticipated development timeline.



The Company and its collaborators
must demonstrate through preclinical and clinical trials that our transgenically produced products are safe and effective for
use in humans. Clinical trials are expensive and may take several years. Several factors could prevent or delay completion of
these trials, including an inability to enroll the required number of patients or demonstrate adequately the safety or efficacy
of the product for humans. If safety concerns develop, regulatory authorities could stop or delay trials of transgenically derived
ublituximab or any other product candidate evaluated by the Company. Furthermore, the results from early clinical trials are often
not predictive of results in later clinical trials.



To our knowledge, Pharming
Group N.V. and GTC Biotherapeutics, Inc. are the only other entities to have completed human clinical trials sufficient to support
the filing for regulatory approval of a product produced from a transgenic mammal. If we are unable to complete all clinical trials
and to satisfy any requirements that may be required by the FDA or the EMA for approval of transgenically derived ublituximab,
it could have a material adverse effect on our business and operations.



Any transgenically produced products
for which we obtain regulatory approval will be subject to continuing review and extensive regulatory requirements, which could
affect their manufacture and marketing.



If and when the FDA or
other foreign agencies approve our transgenically produced products under development, the manufacture and marketing of these
products will be subject to continuing regulation and product approvals may be withdrawn if problems occur after initial approval.
Post-approval regulation includes compliance with current Quality Systems Regulations and Good Manufacturing Practices, (“QSR/GMP”),
adverse event reporting requirements and prohibitions on promoting a product for unapproved uses. In addition, the FDA could require
us to conduct post-approval clinical trials or studies. We will also be required to obtain additional approvals for any significant
alterations in the product’s labeling or manufacturing process. Enforcement actions resulting from failure to comply with
QSR/GMP requirements could result in fines, suspensions of approvals, recalls of products, operating restrictions and criminal
prosecutions, and affect the manufacture and marketing of our transgenically produced products. The FDA or other regulatory agencies
could withdraw a previously approved product from the market upon receipt of newly discovered information, including a failure
to comply with regulatory requirements and the occurrence of unanticipated problems with products, including adverse events, manufacturing
and quality problems, following approval. Any of these withdrawals could adversely affect our operating results.



33







The Company may face public concerns
about genetic engineering in animals.



The activities of the
Company’s development and manufacturing affiliate involve genetic engineering in animals. The success of our potential commercial
products will depend in part on public acceptance of the use of genetic engineering. Public attitudes may be influenced by claims
and perceptions that these types of activities are unsafe and our products may not gain the acceptance of the public or the medical
community. Negative public reaction to genetic engineering activities in general could result in greater restrictive legislation
and regulations involving nuclear transfer and other methodologies which could impede our ability to conduct our business efficiently,
delay preclinical studies or future clinical trials, or prevent us or our partners from obtaining regulatory approvals or commercializing
transgenically produced products.



Our transgenically produced products
may be subject to technology risks that may restrict or prevent their development and commercialization.



Developing products based
on transgenic technology is subject to significant development risks. Each DNA construct is unique and it is possible that it
might not be expressed in the transgenic animal’s milk at a level that is commercially viable. Purifying the recombinant
protein out of the milk to use as a biotherapeutic may be too difficult to be commercially feasible. In addition, production of
the recombinant protein may have negative effects on the health of either the mammary gland or more systematically on the animal
as a whole. This would compromise the ability of the animal to produce the recombinant protein. Directing the mammary gland to
produce additional proteins in the milk could negatively affect lactation, thereby shutting down milk production. The mammary
gland may also modify a protein in such a manner that it is non-functional or harmful in humans. It is also possible that there
may be disease agents present in the animals that would prevent the use of productsderived from these animals. If an as
yet unknown disease was identified that could not be effectively mitigated, government agencies may confiscate or destroy the
animals, or prevent the utilization of their milk. Any of these governmental actions would prevent the use of the recombinant
proteins and may result in a material adverse effect on our business.



We may not be able to recover from
any catastrophic event affecting our suppliers’ animals or facilities.



While our suppliers have
measures in place to minimize and recover from catastrophic events that may substantially destroy their animal herd(s), these
measures may not be adequate to recover production processes quickly enough to support critical timelines, collaborator needs,
or market demands. These catastrophic events may include, but are not limited to, animal diseases that breach biosecurity measures
or weather events such as tornadoes, earthquakes or fires. In addition, these catastrophic events may render some or all of the
products at the affected facilities unusable.



We currently have no marketing and
sales organization and no experience in marketing pharmaceutical products. If we are unable to establish sales and marketing capabilities
or fail to enter into agreements with third parties to market and sell any products we may develop, we may not be able to effectively
market and sell our products and generate product revenue.



We do not currently have
the infrastructure for the sales, marketing and distribution of our biotechnology products, and we must build this infrastructure
or make arrangements with third parties to perform these functions in order to commercialize our products. We plan to either develop
internally or enter into collaborations or other commercial arrangements to develop further, promote and sell all or a portion
of our product candidates.



The establishment and
development of a sales force, either by us or jointly with a development partner, or the establishment of a contract sales force
to market any products we may develop will be expensive and time-consuming and could delay any product launch, and we cannot be
certain that we or our development partners would be able to successfully develop this capability. If the Company or its development
partners are unable to establish sales and marketing capability or any other non-technical capabilities necessary to commercialize
any products we may develop, we will need to contract with third parties to market and sell such products. We currently possess
limited resources and may not be successful in establishing our own internal sales force or in establishing arrangements with
third parties on acceptable terms, if at all.



34







If any product candidate that the Company
successfully develops does not achieve broad market acceptance among physicians, patients, healthcare payors, and the medical
community, the revenues that we generate from its sales will be limited.



Even if our product candidates
receive regulatory approval, they may not gain market acceptance among physicians, patients, healthcare payors, and the medical
community. Coverage and reimbursement of our product candidates by third-party payors, including government payors, generally
is also necessary for commercial success. The degree of market acceptance of any of our approved products will depend on a number
of factors, including:

| | · | the
                                                                                                       efficacy and safety as
                                                                                                       demonstrated in clinical
                                                                                                       trials;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | the
                                                                                                       clinical indications for
                                                                                                       which the product is approved;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | acceptance
                                                                                                       by physicians, major operators
                                                                                                       of cancer clinics and patients
                                                                                                       of the product as a safe
                                                                                                       and effective treatment;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | the
                                                                                                       potential and perceived
                                                                                                       advantages of product candidates
                                                                                                       over alternative treatments;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | the
                                                                                                       safety of product candidates
                                                                                                       seen in a broader patient
                                                                                                       group, including its use
                                                                                                       outside the approved indications;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | the
                                                                                                       cost of treatment in relation
                                                                                                       to alternative treatments;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | the
                                                                                                       availability of adequate
                                                                                                       reimbursement and pricing
                                                                                                       by third parties and government
                                                                                                       authorities;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | relative
                                                                                                       convenience and ease of
                                                                                                       administration;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | the
                                                                                                       prevalence and severity
                                                                                                       of adverse events; and
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | the
                                                                                                       effectiveness of our sales
                                                                                                       and marketing efforts.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



If any product candidate
is approved but does not achieve an adequate level of acceptance by physicians, hospitals, healthcare payors and patients, we
may not generate sufficient revenue from these products and we may not become or remain profitable.



If product liability lawsuits are brought
against the Company, we may incur substantial liabilities and may be required to limit commercialization of our product candidates.



We face an inherent risk
of product liability exposure related to the testing of our product candidates in human clinical trials, and will face an even
greater risk if we sell our product candidates commercially. Although we are not aware of any historical or anticipated product
liability claims against us, if we cannot successfully defend ourselves against product liability claims, we may incur substantial
liabilities or be required to cease clinical trials of our drug candidates or limit commercialization of any approved products.
An individual may bring a liability claim against the Company if one of our product candidates causes, or merely appears to have
caused, an injury. If we cannot successfully defend our self against product liability claims, we will incur substantial liabilities.
Regardless of merit or eventual outcome, liability claims may result in:

| | · | decreased
                                                                                                              demand for our product
                                                                                                              candidates;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | impairment
                                                                                                              to our business
                                                                                                              reputation;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | withdrawal
                                                                                                              of clinical trial
                                                                                                              participants;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | costs
                                                                                                              of related litigation;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------

| | · | distraction
                                                                                                              of management’s
                                                                                                              attention from our
                                                                                                              primary business;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | substantial
                                                                                                              monetary awards
                                                                                                              to patients or other
                                                                                                              claimants;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | the
                                                                                                              inability to commercialize
                                                                                                              our product candidates;
                                                                                                              and
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | loss
                                                                                                              of revenues.
| | - | -------------------------------------------------------------------------------------------------------------------------------



We believe that we have
obtained sufficient product liability insurance coverage for our clinical trials. We intend to expand our insurance coverage to
include the sale of commercial products if marketing approval is obtained for any of our product candidates. However, we may be
unable to obtain this product liability insurance on commercially reasonable terms and with insurance coverage that will be adequate
to satisfy any liability that may arise. On occasion, large judgments have been awarded in class action or individual lawsuits
relating to marketed pharmaceuticals. A successful product liability claim or series of claims brought against the Company could
cause its stock price to decline and, if judgments exceed our insurance coverage, could decrease our cash and adversely affect
our business.



35







Reimbursement may be limited or unavailable
in certain market segments for our product candidates, which could make it difficult for us to sell our products profitably.



We intend to seek approval
to market our future products in both the United States and in countries and territories outside the United States. If we obtain
approval in one or more foreign countries, we will be subject to rules and regulations in those countries relating to our product.
In some foreign countries, particularly in the European Union, the pricing of prescription pharmaceuticals and biologics is subject
to governmental control. In these countries, pricing negotiations with governmental authorities can take considerable time after
the receipt of marketing approval for a product candidate. In addition, market acceptance and sales of our product candidates
will depend significantly on the availability of adequate coverage and reimbursement from third-party payors for any of our product
candidates and may be affected by existing and future healthcare reform measures.



Government authorities
and third-party payors, such as private health insurers and health maintenance organizations, decide which pharmaceuticals they
will pay for and establish reimbursement levels. Reimbursement by a third-party payor may depend upon a number of factors, including
the third-party payor’s determination that use of a product is:

| | · | a
                                                                                                               covered benefit
                                                                                                               under its health
                                                                                                               plan;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | safe,
                                                                                                               effective and medically
                                                                                                               necessary;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | appropriate
                                                                                                               for the specific
                                                                                                               patient;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | cost-effective;
                                                                                                               and
| | - | ----------------------------------------------------------------------------------------------------------------------------------

| | · | neither
                                                                                                               experimental nor
                                                                                                               investigational.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Obtaining coverage and
reimbursement approval for a product from a government or other third-party payor is a time consuming and costly process that
could require that we provide supporting scientific, clinical and cost-effectiveness data for the use of our products to the payor.
We may not be able to provide data sufficient to gain acceptance with respect to coverage and reimbursement. If reimbursement
of our future products is unavailable or limited in scope or amount, or if pricing is set at unsatisfactory levels, we may be
unable to achieve or sustain profitability.



In both the United States
and certain foreign countries, there have been a number of legislative and regulatory changes to the healthcare system that could
impact our ability to sell our products profitably. In particular, the Medicare Modernization Act of 2003 revised the payment
methodology for many products reimbursed by Medicare, resulting in lower rates of reimbursement for many types of drugs, and added
a prescription drug benefit to the Medicare program that involves commercial plans negotiating drug prices for their members.
Since 2003, there have been a number of other legislative and regulatory changes to the coverage and reimbursement landscape for
pharmaceuticals. Most recently, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation
Act of 2010, collectively, the “Affordable Care Act,” was enacted. The Affordable Care Act contains a number of provisions,
including those governing enrollment in federal healthcare programs, the increased use of comparative effectiveness research on
healthcare products, reimbursement and fraud and abuse changes, and a new regulatory pathway for the approval of biosimilar biological
products, all of which will impact existing government healthcare programs and will result in the development of new programs.
An expansion in the government’s role in the U.S. healthcare industry may further lower rates of reimbursement for pharmaceutical
and biotechnology products.



There have been, and
likely will continue to be, legislative and regulatory proposals at the federal and state levels directed at broadening the availability
of healthcare and containing or lowering the cost of healthcare products and services. The Company cannot predict the initiatives
that may be adopted in the future. The continuing efforts of the government, insurance companies, managed care organizations and
other payors of healthcare services to contain or reduce costs of healthcare may adversely affect:

| | · | the
                                                                                                               demand for any
                                                                                                               products for which
                                                                                                               we may obtain regulatory
                                                                                                               approval;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | our
                                                                                                               ability to set
                                                                                                               a price that we
                                                                                                               believe is fair
                                                                                                               for our products;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | our
                                                                                                               ability to generate
                                                                                                               revenues and achieve
                                                                                                               or maintain profitability;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | the
                                                                                                               level of taxes
                                                                                                               that the Company
                                                                                                               is required to
                                                                                                               pay; and
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | the
                                                                                                               availability of
                                                                                                               capital.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



In addition, governments
may impose price controls, which may adversely affect our future profitability.





36







The Company will need to increase the
size of its organization and the scope of our outside vendor relationships, and we may experience difficulties in managing this
growth.



As of June 30, 2012,
the Company has 5 full and part time employees. Over time, we will need to expand our managerial, operational, financial and other
resources in order to manage and fund our operations and clinical trials, continue research and development activities, and commercialize
our product candidates. Our management and scientific personnel, systems and facilities currently in place may not be adequate
to support our future growth. Our need to effectively manage our operations, growth, and various projects requires that we:

| | · | manage
                                                                                                              our clinical trials
                                                                                                              effectively;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | manage
                                                                                                              our internal development
                                                                                                              efforts effectively
                                                                                                              while carrying out
                                                                                                              our contractual
                                                                                                              obligations to licensors,
                                                                                                              contractors and
                                                                                                              other third parties;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | continue
                                                                                                              to improve our operational,
                                                                                                              financial and management
                                                                                                              controls and reporting
                                                                                                              systems and procedures;
                                                                                                              and
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | attract
                                                                                                              and retain sufficient
                                                                                                              numbers of talented
                                                                                                              employees.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



We may utilize the services
of outside vendors or consultants to perform tasks including clinical trial management, statistics and analysis, regulatory affairs,
formulation development and other pharmaceutical development functions. Our growth strategy may also entail expanding our group
of contractors or consultants to implement these tasks going forward. Because we rely on a substantial number of consultants,
effectively outsourcing many key functions of our business, we will need to be able to effectively manage these consultants to
ensure that they successfully carry out their contractual obligations and meet expected deadlines. However, if we are unable to
effectively manage our outsourced activities or if the quality or accuracy of the services provided by consultants is compromised
for any reason, our clinical trials may be extended, delayed or terminated, and we may not be able to obtain regulatory approval
for our product candidates or otherwise advance its business. There can be no assurance that we will be able to manage our existing
consultants or find other competent outside contractors and consultants on economically reasonable terms, or at all. If the Company
is not able to effectively expand its organization by hiring new employees and expanding its groups of consultants and contractors,
we may be unable to successfully implement the tasks necessary to further develop and commercialize our product candidates and,
accordingly, may not achieve our research, development and commercialization goals.



If the Company fails to attract and
keep key management and clinical development personnel, we may be unable to successfully develop or commercialize our product
candidates.



We will need to expand
and effectively manage our managerial, operational, financial and other resources in order to successfully pursue our clinical
development and commercialization efforts for our product candidates and future product candidates. We are highly dependent on
the development, regulatory, commercial and financial expertise of the members of our senior management. The loss of the services
of any of our senior management could delay or prevent the further development and potential commercialization of our product
candidates and, if we are not successful in finding suitable replacements, could harm our business. We do not maintain “key
man” insurance policies on the lives of these individuals. We will need to hire additional personnel as the Company continues
to expand its manufacturing, research and development activities.



Our success depends on
our continued ability to attract, retain and motivate highly qualified management and scientific personnel and we may not be able
to do so in the future due to the intense competition for qualified personnel among biotechnology, pharmaceutical and other businesses.
Our industry has experienced a high rate of turnover of management personnel in recent years. If the Company is not able to attract
and retain the necessary personnel to accomplish its business objectives, we may experience constraints that will impede significantly
the achievement of our development objectives, our ability to raise additional capital, and our ability to implement our business
strategy.



If the Company fails to comply with
healthcare regulations, it could face substantial penalties and its business, operations and financial condition could be adversely
affected.



In addition to FDA restrictions
on the marketing of pharmaceutical and biotechnology products, several other types of state and federal laws have been applied
to restrict certain marketing practices in the pharmaceutical and medical device industries in recent years, as well as consulting
or other service agreements with physicians or other potential referral sources. These laws include anti-kickback statutes and
false claims statutes that prohibit, among other things, knowingly and willfully offering, paying, soliciting or receiving remuneration
to induce, or, in return for, purchasing, leasing, ordering or arranging for the purchase, lease or order of any healthcare item
or service reimbursable under Medicare, Medicaid or other federally-financed healthcare programs, and knowingly presenting, or
causing to be presented, a false claim for payment to the federal government, or knowingly making, or causing to be made, a false
statement to get a false claim paid. The majority of states also have statutes or regulations similar to the federal anti-kickback
law and false claims laws, which apply to items and services reimbursed under Medicaid and other state programs, or, in several
states, apply regardless of the payor. Although there are a number of statutory exemptions and regulatory safe harbors protecting
certain common activities from prosecution, the exemptions and safe harbors are drawn narrowly, and any practices we adopt may
not, in all cases, meet all of the criteria for safe harbor protection from anti-kickback liability. Sanctions under these federal
and state laws may include civil monetary penalties, exclusion of a manufacturer’s products from reimbursement under government
programs, criminal fines and imprisonment. Any challenge to its business practices under these laws could have a material adverse
effect on our business, financial condition, and results of operations.



37







The Company uses biological and hazardous
materials, and any claims relating to improper handling, storage or disposal of these materials could be time consuming or costly.



We use hazardous materials,
including chemicals and biological agents and compounds, which could be dangerous to human health and safety or the environment.
Our operations also produce hazardous waste products. Federal, state and local laws and regulations govern the use, generation,
manufacture, storage, handling and disposal of these materials and wastes. Compliance with applicable environmental laws and regulations
may be expensive, and current or future environmental laws and regulations may impair our pharmaceutical development efforts.



In addition, we cannot
entirely eliminate the risk of accidental injury or contamination from these materials or wastes. If one of our employees was
accidentally injured from the use, storage, handling or disposal of these materials or wastes, the medical costs related to his
or her treatment would be covered by our workers’ compensation insurance policy. However, we do not carry specific biological
or hazardous waste insurance coverage and our property and casualty and general liability insurance policies specifically exclude
coverage for damages and fines arising from biological or hazardous waste exposure or contamination. Accordingly, in the event
of contamination or injury, we could be held liable for damages or penalized with fines in an amount exceeding our resources,
and our clinical trials or regulatory approvals could be suspended, or operations otherwise affected.



All product candidate development timelines
and projections in this filing are based on the assumption of further financing.



The timelines and projections
in this filing are predicated upon the assumption that we will raise additional financing in the future to continue the development
of our product candidates. In the event the Company does not successfully raise subsequent financing, our product development
activities will necessarily be curtailed commensurate with the magnitude of the shortfall. If our product development activities
are slowed or stopped, we would be unable to meet the timelines and projections outlined in this filing. Failure to progress our
product candidates as anticipated will have a negative effect on our business, future prospects, and ability to obtain further
financing on acceptable terms (if at all), and the value of the enterprise.



Risks Relating to Acquisitions



Acquisitions, investments and strategic
alliances that we may make in the future may use significant resources, result in disruptions to our business or distractions
of our management, may not proceed as planned, and could expose us to unforeseen liabilities.



We may seek to expand
our business through the acquisition of, investments in and strategic alliances with companies, technologies, products, and services,
such as the Exchange Transaction between the Company and TG Bio. Acquisitions, investments and strategic alliances involve a number
of special problems and risks, including, but not limited to:

| | · | difficulty
                                                                                                              integrating acquired
                                                                                                              technologies, products,
                                                                                                              services, operations
                                                                                                              and personnel with
                                                                                                              the existing businesses;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | diversion
                                                                                                              of management’s
                                                                                                              attention in connection
                                                                                                              with both negotiating
                                                                                                              the acquisitions
                                                                                                              and integrating
                                                                                                              the businesses;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | strain
                                                                                                              on managerial and
                                                                                                              operational resources
                                                                                                              as management tries
                                                                                                              to oversee larger
                                                                                                              operations;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | difficulty
                                                                                                              implementing and
                                                                                                              maintaining effective
                                                                                                              internal control
                                                                                                              over financial reporting
                                                                                                              at businesses that
                                                                                                              we acquire, particularly
                                                                                                              if they are not
                                                                                                              located near our
                                                                                                              existing operations;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



38







| | · | exposure
                                                                                                              to unforeseen liabilities
                                                                                                              of acquired companies;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | potential
                                                                                                              costly and time-consuming
                                                                                                              litigation, including
                                                                                                              stockholder lawsuits;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | potential
                                                                                                              issuance of securities
                                                                                                              to equity holders
                                                                                                              of the company being
                                                                                                              acquired with rights
                                                                                                              that are superior
                                                                                                              to the rights of
                                                                                                              holders of our common
                                                                                                              stock, or which
                                                                                                              may have a dilutive
                                                                                                              effect on our stockholders;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | risk
                                                                                                              of loss of invested
                                                                                                              capital;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | the
                                                                                                              need to incur additional
                                                                                                              debt or use cash;
                                                                                                              and
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | the
                                                                                                              requirement to record
                                                                                                              potentially significant
                                                                                                              additional future
                                                                                                              operating costs
                                                                                                              for the amortization
                                                                                                              of intangible assets.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



As a result of these
or other problems and risks, businesses we acquire may not produce the revenues, earnings, or business synergies that we anticipated,
and acquired products, services, or technologies might not perform as we expected. As a result, we may incur higher costs and
realize lower revenues than we had anticipated. We may not be able to successfully address these problems and we cannot assure
you that the acquisitions will be successfully identified and completed or that, if acquisitions are completed, the acquired businesses,
products, services, or technologies will generate sufficient revenue to offset the associated costs or other negative effects
on our business.



Any of these risks can
be greater if an acquisition is large relative to our size. Failure to effectively manage our growth through acquisitions could
adversely affect our growth prospects, business, results of operations, financial condition and cash flows.



Risks Relating to the Company’s
Intellectual Property



The Company’s success depends
upon our ability to protect our intellectual property and proprietary technologies, and the intellectual property protection for
our product candidates depends significantly on third parties.



Our commercial success
depends on obtaining and maintaining patent protection and trade secret protection for our product candidates and their formulations
and uses, as well as successfully defending these patents against third-party challenges. If LFB Biotechnologies or any of our
other licensors fails to appropriately prosecute and maintain patent protection for these product candidates, our ability to develop
and commercialize these product candidates may be adversely affected and we may not be able to prevent competitors from making,
using and selling competing products. This failure to properly protect the intellectual property rights relating to these product
candidates could have a material adverse effect on our financial condition and results of operations.



Currently, the composition
of matter patent and several method of use patents for ublituximab in various indications and settings have been applied for but
have not yet been issued. The patent application process is subject to numerous risks and uncertainties, and there can be no assurance
that we or our partners will be successful in protecting our product candidates by obtaining and defending patents.



These risks and uncertainties
include the following:

| | · | the
                                                                                                              patent applications
                                                                                                              that we or our partners
                                                                                                              file may not result
                                                                                                              in any patents being
                                                                                                              issued;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | patents
                                                                                                              that may be issued
                                                                                                              or in-licensed may
                                                                                                              be challenged, invalidated,
                                                                                                              modified, revoked
                                                                                                              or circumvented,
                                                                                                              or otherwise may
                                                                                                              not provide any
                                                                                                              competitive advantage;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | as
                                                                                                              of March 16, 2013,
                                                                                                              the U.S. will convert
                                                                                                              from a “first
                                                                                                              to invent”
                                                                                                              to a “first
                                                                                                              to file” system.
                                                                                                              After this time
                                                                                                              if we do not win
                                                                                                              the filing race,
                                                                                                              we will not be entitled
                                                                                                              to inventive priority;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | our
                                                                                                              competitors, many
                                                                                                              of which have substantially
                                                                                                              greater resources
                                                                                                              than we do, and
                                                                                                              many of which have
                                                                                                              made significant
                                                                                                              investments in competing
                                                                                                              technologies, may
                                                                                                              seek, or may already
                                                                                                              have obtained, patents
                                                                                                              that will limit,
                                                                                                              interfere with,
                                                                                                              or eliminate its
                                                                                                              ability to make,
                                                                                                              use, and sell our
                                                                                                              potential products
                                                                                                              either in the United
                                                                                                              States or in international
                                                                                                              markets;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | there
                                                                                                              may be significant
                                                                                                              pressure on the
                                                                                                              U.S. government
                                                                                                              and other international
                                                                                                              governmental bodies
                                                                                                              to limit the scope
                                                                                                              of patent protection
                                                                                                              both inside and
                                                                                                              outside the United
                                                                                                              States for disease
                                                                                                              treatments that
                                                                                                              prove successful
                                                                                                              as a matter of public
                                                                                                              policy regarding
                                                                                                              worldwide health
                                                                                                              concerns; and
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | countries
                                                                                                              other than the United
                                                                                                              States may have
                                                                                                              less restrictive
                                                                                                              patent laws than
                                                                                                              those upheld by
                                                                                                              United States courts,
                                                                                                              allowing foreign
                                                                                                              competitors the
                                                                                                              ability to exploit
                                                                                                              these laws to create,
                                                                                                              develop, and market
                                                                                                              competing products.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



39







If patents are not issued
that protect ublituximab, it could have a material adverse effect on our financial condition and results of operations.



In addition to patents,
we and our partners also rely on trade secrets and proprietary know-how. Although we have taken steps to protect our trade secrets
and unpatented know-how, including entering into confidentiality agreements with third parties, and confidential information and
inventions agreements with employees, consultants and advisors, third parties may still obtain this information or we may be unable
to protect its rights. If any of these events occurs, or we otherwise lose protection for our trade secrets or proprietary know-how,
the value of this information may be greatly reduced.



Patent protection and
other intellectual property protection are crucial to the success of our business and prospects, and there is a substantial risk
that such protections will prove inadequate.



If the Company or its partners are
sued for infringing intellectual property rights of third parties, it will be costly and time consuming, and an unfavorable outcome
in that litigation would have a material adverse effect on our business.



Our commercial success
also depends upon our ability and the ability of any of our future collaborators to develop, manufacture, market and sell our
product candidates without infringing the proprietary rights of third parties. Numerous United States and foreign issued patents
and pending patent applications, which are owned by third parties, exist in the fields in which we are developing products, some
of which may be directed at claims that overlap with the subject matter of our intellectual property. For example, Roche has the
Cabilly patents in the U.S. that block the commercialization of antibody products derived from a single cell line, like ublituximab.
Also, Roche, Biogen Idec, and Genentech hold patents for the use of anti-CD20 antibodies utilized in the treatment of CLL in the
U.S. While these patents have been challenged, to the best of our knowledge, those matters were settled in a way that permitted
additional anti-CD20 antibodies to be marketed for CLL. If those patents are still enforced at the time we are intending to launch
ublituximab, then we will need to either prevail in a litigation to challenge those patents or negotiate a settlement agreement
with the patent holders. If we are unable to do so we may be forced to delay the launch of ublituximab or launch at the risk of
litigation for patent infringement, which may have a material adverse effect on the Company.



In addition, because
patent applications can take many years to issue, there may be currently pending applications, unknown to us, which may later
result in issued patents that our product candidates or proprietary technologies may infringe. Similarly, there may be issued
patents relevant to our product candidates of which we are not aware.



There is a substantial
amount of litigation involving patent and other intellectual property rights in the biotechnology and biopharmaceutical industries
generally. If a third party claims that we or any collaborators of ours infringe their intellectual property rights, we may have
to:

| | · | obtain
                                                                                                              licenses, which
                                                                                                              may not be available
                                                                                                              on commercially
                                                                                                              reasonable terms,
                                                                                                              if at all;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | abandon
                                                                                                              an infringing product
                                                                                                              candidate or redesign
                                                                                                              its products or
                                                                                                              processes to avoid
                                                                                                              infringement;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | pay
                                                                                                              substantial damages,
                                                                                                              including treble
                                                                                                              damages and attorneys’
                                                                                                              fees, which we may
                                                                                                              have to pay if a
                                                                                                              court decides that
                                                                                                              the product or proprietary
                                                                                                              technology at issue
                                                                                                              infringes on or
                                                                                                              violates the third
                                                                                                              party’s rights;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | pay
                                                                                                              substantial royalties,
                                                                                                              fees and/or grant
                                                                                                              cross licenses to
                                                                                                              our technology;
                                                                                                              and/or
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | defend
                                                                                                              litigation or administrative
                                                                                                              proceedings which
                                                                                                              may be costly whether
                                                                                                              we win or lose,
                                                                                                              and which could
                                                                                                              result in a substantial
                                                                                                              diversion of our
                                                                                                              financial and management
                                                                                                              resources.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



No assurance can be given
that patents issued to third parties do not exist, have not been filed, or could not be filed or issued, which contain claims
covering its products, technology or methods that may encompass all or a portion of our products and methods. Given the number
of patents issued and patent applications filed in our technical areas or fields, we believe there is a risk that third parties
may allege they have patent rights encompassing our products or methods.



Other product candidates
that we may in-license or acquire could be subject to similar risks and uncertainties.



40







We may be involved in lawsuits to protect
or enforce our patents or the patents of our licensors, which could be expensive, time consuming and unsuccessful.



Competitors may infringe
our patents or the patents of our licensors. To counter infringement or unauthorized use, we may be required to file infringement
claims, which typically are very expensive, time-consuming and disruptive of day-to-day business operations. In addition, in an
infringement proceeding, a court may decide that a patent of ours or our licensors is not valid or is unenforceable, or may refuse
to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question.
An adverse result in any litigation or defense proceedings could put one or more of our patents at risk of being invalidated,
held unenforceable, or interpreted narrowly. The adverse result could also put related patent applications at risk of not issuing.



Interference proceedings
provoked by third parties or brought by the U.S. Patent and Trademark Office (“PTO”) may be necessary to determine
the priority of inventions with respect to our patents or patent applications or those of our collaborators or licensors. An unfavorable
outcome could require us to cease using the related technology or to attempt to license rights to it from the prevailing party.
Our business could be harmed if the prevailing party does not offer us a license on commercially reasonable terms. Litigation
or interference proceedings may fail and, even if successful, may result in substantial costs and distract its management and
other employees. We may not be able to prevent, alone or with our licensors, misappropriation of our trade secrets or confidential
information, particularly in countries where the laws may not protect those rights as fully as in the United States. Moreover,
as of March 16, 2013, the U.S. will convert from a “first to invent” to a “first to file” system. After
that time, should there be any innovations that we invented first, but on which we filed the patent application second, we will
have limited options available to reclaim invention priority.



Furthermore, because
of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some
of our confidential information could be compromised by disclosure during this type of litigation. In addition, there could be
public announcements of the results of hearings, motions or other interim proceedings or developments. If securities analysts
or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock.



The Company may be subject to claims
that its consultants or independent contractors have wrongfully used or disclosed alleged trade secrets of their other clients
or former employers to it.



As is common in the biotechnology
and pharmaceutical industry, we engage the services of consultants to assist us in the development of our product candidates.
Many of these consultants were previously employed at, may have previously been, or are currently providing consulting services
to, other biotechnology or pharmaceutical companies, including our competitors or potential competitors. Although no claims against
us are currently pending, we may be subject to claims that these consultants or the Company has inadvertently or otherwise used
or disclosed trade secrets or other proprietary information of their former employers or their former or current customers. Litigation
may be necessary to defend against these claims. Even if we are successful in defending against these claims, litigation could
result in substantial costs and be a distraction to management and day-to-day business operations.



Risks Relating to the Company’s
Finances and Capital Requirements



The Company will need to raise additional
capital to continue to operate its business.



As of June 30, 2012,
we had net cash on hand of approximately $20,367,000. We believe that our cash on hand will sustain our operations for the next
20-24 months. As a result, we will need additional capital to continue our operations beyond that time. We will need to seek additional
sources of financing in the future, which might not be available on favorable terms, if at all, to continue our operations. If
we do not succeed in raising additional funds on acceptable terms, we might be unable to complete planned preclinical and clinical
trials or obtain approval of any of our product candidates from the FDA or any foreign regulatory authorities. In addition, we
could be forced to discontinue product development, reduce or forego sales and marketing efforts and forego attractive business
opportunities. Any additional sources of financing will likely involve the issuance of the Company’s equity securities,
which would have a dilutive effect on your holdings of our capital stock.



Currently, none of our
product candidates have been approved by the FDA or any foreign regulatory authority for sale. Therefore, for the foreseeable
future, we will have to fund all of our operations and capital expenditures from cash on hand and amounts raised in future offerings.



41







We have a history of operating losses,
expect to continue to incur losses, and are unable to predict the extent of future losses or when it will become profitable, if
ever.



The Company was incorporated
in December 1993. We have not yet demonstrated an ability to obtain regulatory approval for or commercialize a product candidate.
Our short operating history makes it difficult to evaluate our business prospects and consequently, any predictions about our
future performance may not be as accurate as they could be if we had a history of successfully developing and commercializing
pharmaceutical or biotechnology products. The Company’s prospects must be considered in light of the uncertainties, risks,
expenses and difficulties frequently encountered by companies in their early stages of operations and the competitive environment
in which we operate.



The Company has never
been profitable, and, as of June 30, 2012, we had an accumulated deficit of approximately $13,003,817. We have generated operating
losses in all periods since the Company was incorporated. We expect to make substantial expenditures resulting in increasing operating
costs in the future and our accumulated deficit may increase significantly as we expand development and clinical trial efforts
for our product candidates. Our losses have had, and are expected to continue to have, an adverse impact on our working capital,
total assets and stockholders’ equity. Because of the risks and uncertainties associated with product development, we are
unable to predict the extent of any future losses or when we will become profitable, if ever. Even if we achieve profitability,
we may not be able to sustain or increase profitability on an ongoing basis.



We have not generated any revenue from
our product candidates and may never become profitable.



Our ability to become
profitable depends upon our ability to generate significant continuing revenues. To obtain significant continuing revenues, we
must succeed, either alone or with others, in developing, obtaining regulatory approval for and manufacturing and marketing our
product candidates (or utilize early access programs to generate such revenue). To date, our product candidates have not generated
any revenues, and we do not know when, or if, we will generate any revenue. Our ability to generate revenue depends on a number
of factors, including, but not limited to:

| | · | successful
                                                                                                              completion of preclinical
                                                                                                              studies of its product
                                                                                                              candidates;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | successful
                                                                                                              commencement and
                                                                                                              completion of clinical
                                                                                                              trials of its product
                                                                                                              candidates and any
                                                                                                              future product candidates
                                                                                                              we advance into
                                                                                                              clinical trials;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | achievement
                                                                                                              of regulatory approval
                                                                                                              for our product
                                                                                                              candidates and any
                                                                                                              future product candidates
                                                                                                              we advance into
                                                                                                              clinical trials
                                                                                                              (unless we successfully
                                                                                                              utilize early access
                                                                                                              programs which allow
                                                                                                              for revenue generation
                                                                                                              prior to approval);
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | manufacturing
                                                                                                              commercial quantities
                                                                                                              of our products
                                                                                                              at acceptable cost
                                                                                                              levels if regulatory
                                                                                                              approvals are obtained;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | successful
                                                                                                              sales, distribution
                                                                                                              and marketing of
                                                                                                              our future products,
                                                                                                              if any; and
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | our
                                                                                                              entry into collaborative
                                                                                                              arrangements or
                                                                                                              co-promotion agreements
                                                                                                              to market and sell
                                                                                                              our products.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



If the Company is unable
to generate significant continuing revenues, we will not become profitable and we may be unable to continue our operations without
continued funding.



We will need substantial additional
funding and may be unable to raise capital when needed, which would force us to delay, reduce or eliminate our development programs
or commercialization efforts.



We expect to spend substantial
amounts on development, including significant amounts on conducting clinical trials for our product candidates, manufacturing
clinical supplies and expanding our pharmaceutical development programs. We expect that our monthly cash used by operations will
continue to increase for the next several years. We anticipate that we will continue to incur operating losses for the foreseeable
future.



We will require substantial
additional funds to support our continued research and development activities, as well as the anticipated costs of preclinical
studies and clinical trials, regulatory approvals, and eventual commercialization. We anticipate that we will incur operating
losses for the foreseeable future. We have based these estimates, however, on assumptions that may prove to be wrong, and we could
expend our available financial resources much faster than we currently expect. Further, we will need to raise additional capital
to fund our operations and continue to conduct clinical trials to support potential regulatory approval of marketing applications.
Future capital requirements will also depend on the extent to which we acquire or in-license additional product candidates. We
currently have no commitments or agreements relating to any of these types of transactions.



42







The amount and timing
of our future funding requirements will depend on many factors, including, but not limited to, the following:

| | · | the
                                                                                                              progress of our
                                                                                                              clinical trials,
                                                                                                              including expenses
                                                                                                              to support the trials
                                                                                                              and milestone payments
                                                                                                              that may become
                                                                                                              payable under our
                                                                                                              license agreements;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | the
                                                                                                              costs and timing
                                                                                                              of regulatory approvals;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | the
                                                                                                              costs and timing
                                                                                                              of clinical and
                                                                                                              commercial manufacturing
                                                                                                              supply arrangements
                                                                                                              for each product
                                                                                                              candidate;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | the
                                                                                                              costs of establishing
                                                                                                              sales or distribution
                                                                                                              capabilities;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | the
                                                                                                              success of the commercialization
                                                                                                              of our products;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | our
                                                                                                              ability to establish
                                                                                                              and maintain strategic
                                                                                                              collaborations,
                                                                                                              including licensing
                                                                                                              and other arrangements;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | the
                                                                                                              costs involved in
                                                                                                              enforcing or defending
                                                                                                              patent claims or
                                                                                                              other intellectual
                                                                                                              property rights;
                                                                                                              and
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | the
                                                                                                              extent to which
                                                                                                              we in-license or
                                                                                                              invest in other
                                                                                                              indications or product
                                                                                                              candidates.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Until the Company can
generate a sufficient amount of product revenue and achieve profitability, we expect to finance future cash needs through public
or private equity offerings, debt financings or corporate collaboration and licensing arrangements, as well as through interest
income earned on cash balances. If we were to be unable to raise additional capital, we would have to significantly delay, scale
back or discontinue one or more of our pharmaceutical development programs. We also may be required to relinquish, license or
otherwise dispose of rights to product candidates or products that it would otherwise seek to develop or commercialize itself
on terms that are less favorable than might otherwise be available.



Raising additional funds by issuing
securities or through licensing or lending arrangements may cause dilution to our existing stockholders, restrict our operations
or require us to relinquish proprietary rights.



The Company may raise
additional funds through public or private equity offerings, debt financings or licensing arrangements. To the extent that we
raise additional capital by issuing equity securities, the share ownership of existing stockholders will be diluted. Any future
debt financing we enter into may involve covenants that restrict our operations, including limitations on our ability to incur
liens or additional debt, pay dividends, redeem our stock, make certain investments and engage in certain merger, consolidation
or asset sale transactions, among other restrictions.



In addition, if we raise
additional funds through licensing arrangements, it may be necessary to relinquish potentially valuable rights to our product
candidates, or grant licenses on terms that are not favorable to us. If adequate funds are not available, our ability to achieve
profitability or to respond to competitive pressures would be significantly limited and we may be required to delay, significantly
curtail or eliminate the development of one or more of our product candidates.



We are controlled by current officers,
directors and principal stockholders.



Our directors, executive
officers and principal stockholders beneficially own approximately 34% percent of our outstanding voting stock, including shares
underlying outstanding options and warrants. Our directors, officers and principal stockholders, taken as a whole, have the ability
to exert substantial influence over the election of our Board of Directors and the outcome of issues submitted to our stockholders.



Our stock price is, and we expect it
to remain, volatile, which could limit investors’ ability to sell stock at a profit.



The trading price of
our common stock is likely to be highly volatile and subject to wide fluctuations in price in response to various factors, many
of which are beyond our control. These factors include:

| | · | the
                                                                                                              global economic
                                                                                                              crisis, which affected
                                                                                                              stock prices of
                                                                                                              many companies,
                                                                                                              and particularly
                                                                                                              many small pharmaceutical
                                                                                                              companies like ours;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | publicity
                                                                                                              regarding actual
                                                                                                              or potential clinical
                                                                                                              results relating
                                                                                                              to products under
                                                                                                              development by our
                                                                                                              competitors or us;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | delay
                                                                                                              or failure in initiating,
                                                                                                              completing or analyzing
                                                                                                              nonclinical or clinical
                                                                                                              trials or the unsatisfactory
                                                                                                              design or results
                                                                                                              of these trials;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | achievement
                                                                                                              or rejection of
                                                                                                              regulatory approvals
                                                                                                              by our competitors
                                                                                                              or us;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | announcements
                                                                                                              of technological
                                                                                                              innovations or new
                                                                                                              commercial products
                                                                                                              by our competitors
                                                                                                              or us;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



43







| | · | developments
                                                                                                              concerning proprietary
                                                                                                              rights, including
                                                                                                              patents;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | developments
                                                                                                              concerning our collaborations;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | regulatory
                                                                                                              developments in
                                                                                                              the United States
                                                                                                              and foreign countries;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | economic
                                                                                                              or other crises
                                                                                                              and other external
                                                                                                              factors;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | period-to-period
                                                                                                              fluctuations in
                                                                                                              our revenues and
                                                                                                              other results of
                                                                                                              operations;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | changes
                                                                                                              in financial estimates
                                                                                                              by securities analysts;
                                                                                                              and
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | sales
                                                                                                              of our common stock.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------



We will not be able to
control many of these factors, and we believe that period-to-period comparisons of our financial results will not necessarily
be indicative of our future performance.



In addition, the stock
market in general, and the market for biotechnology companies in particular, has experienced extreme price and volume fluctuations
that may have been unrelated or disproportionate to the operating performance of individual companies. These broad market and
industry factors may seriously harm the market price of our common stock, regardless of our operating performance.



Our Common Stock is not listed on
a national exchange and there is a limited market for the Common Stock which may make it more difficult for you to sell your stock.



Our Common Stock is
quoted on the OTC Bulletin Board under the symbol "TGTX." There is a limited trading market for our Common Stock which
negatively impacts the liquidity of our Common Stock not only in terms of the number of shares that can be bought and sold at
a given price, but also through delays in the timing of transactions and reduction in security analysts’ and the media’s
coverage of us. Accordingly, there can be no assurance as to the liquidity of any markets that may develop for the Common Stock,
the ability of holders of our Common Stock to sell the Common Stock, or the prices at which holders may be able to sell the Common
Stock.



The fact that our common stock is
not listed on a national exchange may negatively impact our ability to attract investors and to use our common stock to raise
capital to fund our operations.



In order to maintain
liquidity in our common stock, we depend upon the continuing availability of a market on which our securities may be traded. We
need to raise substantial additional funds in the future to continue our operations and the fact that our common stock is not
listed on a national exchange may impact our ability to attract investors and to use our common stock to raise sufficient capital
to continue to fund our operations.



If we fail to file periodic reports
with the SEC our common stock may be removed from the OTCBB.



Pursuant to the Over-The-Counter
Bulletin Board ("OTCBB") rules relating to the timely filing of periodic reports with the SEC, any OTCBB issuer which
fails to file a periodic report (Form 10-Qs or 10-Ks) by the due date of such report (as extended by the filing of a Form 12b-25),
three (3) times during any twenty-four (24) month period is automatically de-listed from the OTCBB. In the event an issuer is
de-listed, such issuer would not be eligible to be re-listed on the OTCBB for a period of one-year, during which time any subsequent
late filing would reset the one-year period of de-listing. If the Company is late in its filings three (3) times in any twenty-four
(24) month period and is de-listed from the OTCBB, the Common Stock would likely be listed for trading only on the “Pink
Sheets,” which generally provide an even less liquid market than the OTCBB. In such event, investors may find it more difficult
to trade the Common Stock or to obtain accurate, current information concerning market prices for the Common Stock.



There is a risk of market fraud.



OTCBB securities are
frequent targets of fraud or market manipulation. Not only because of their generally low price, but also because the OTCBB reporting
requirements for these securities are less stringent than for listed or NASDAQ traded securities, and no exchange requirements
are imposed. Dealers may dominate the market and set prices that are not based on competitive forces. Individuals or groups may
create fraudulent markets and control the sudden, sharp increase of price and trading volume and the equally sudden collapse of
market prices.



44







Penny stock regulations may impose
certain restrictions on marketability of our securities.



The Securities and Exchange
Commission has adopted Rule 15g-9 which establishes the definition of a “penny stock,” for the purposes relevant to
us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per
share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require:

| | · | that
                                                                                                              a broker or dealer
                                                                                                              approve a person’s
                                                                                                              account for transactions
                                                                                                              in penny stocks;
                                                                                                              and
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | the
                                                                                                              broker or dealer
                                                                                                              receives from the
                                                                                                              investor a written
                                                                                                              agreement to the
                                                                                                              transaction, setting
                                                                                                              forth the identity
                                                                                                              and quantity of
                                                                                                              the penny stock
                                                                                                              to be purchased.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



In order to approve a
person’s account for transactions in penny stocks, the broker or dealer must:



| | · | obtain
                                                                                                              financial information
                                                                                                              and investment experience
                                                                                                              objectives of the
                                                                                                              person; and
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | make
                                                                                                              a reasonable determination
                                                                                                              that the transactions
                                                                                                              in penny stocks
                                                                                                              are suitable for
                                                                                                              that person and
                                                                                                              the person has sufficient
                                                                                                              knowledge and experience
                                                                                                              in financial matters
                                                                                                              to be capable of
                                                                                                              evaluating the risks
                                                                                                              of transactions
                                                                                                              in penny stocks.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The broker or dealer
must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the Commission relating to the
penny stock market, which, in highlight form:

| | · | sets
                                                                                                              forth the basis
                                                                                                              on which the broker
                                                                                                              or dealer made the
                                                                                                              suitability determination;
                                                                                                              and
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | that
                                                                                                              the broker or dealer
                                                                                                              received a signed,
                                                                                                              written agreement
                                                                                                              from the investor
                                                                                                              prior to the transaction.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Generally, brokers
may be less willing to execute transactions in securities subject to the “penny stock” rules. This may make it more
difficult for investors to dispose of our Common Stock and cause a decline in the market value of our stock.



Disclosure also must
be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions
payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and
remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing
recent price information for the penny stock held in the account and information on the limited market in penny stocks.



We have not paid dividends in the
past and do not expect to pay dividends in the future, and any return on investment may be limited to the value of your stock.



We have never paid
dividends on our Common Stock and do not anticipate paying any dividends for the foreseeable future. You should not rely on an
investment in our stock if you require dividend income. Further, you will only realize income on an investment in our stock in
the event you sell or otherwise dispose of your shares at a price higher than the price you paid for your shares. Such a gain
would result only from an increase in the market price of our Common Stock, which is uncertain and unpredictable.



ITEM
6. EXHIBITS



The exhibits
listed on the Exhibit Index are filed with this report.



| | 3.1  | Amended and Restated Certificate of Incorporation of TG Therapeutics,
    Inc. dated April 26, 2012.                                                                              
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                   
| | 3.2  | Restated Bylaws of TG Therapeutics, Inc. dated May 14, 2012 (incorporated
    by reference to the Registrant’s Form 10-Q for the quarter ended March 31, 2012 filed May 14, 2012).
| |      |                                                                                                                                                                                   
| | 31.1 | Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a),
    as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated August 9, 2012.    
| |      |                                                                                                                                                                                   
| | 31.2 | Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a),
    as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated August 9, 2012.    
| |      |                                                                                                                                                                                   
| | 32.1 | Certification
    of Chief Executive Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002, datedAugust 9, 2012.          
| |      |                                                                                                                                                                                   
| | 32.2 | Certification
    of Chief Financial Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002, datedAugust 9, 2012.          



45







SIGNATURES



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



|                    | TG THERAPEUTICS, INC.
|------------------- | ---------------------
|                    |                      
|Date:August 9, 2012 | By:                  
|                    |                      
|                    |                      



46







EXHIBIT INDEX



The
following exhibits are included as part of this Quarterly Report on Form 10-Q:



| | 3.1  | Amended and Restated Certificate of Incorporation of TG Therapeutics,
    Inc. dated April 26, 2012.                                                                          
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                               
| | 31.1 | Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a),
    as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated August 9, 2012.
| |      |                                                                                                                                                                               
| | 31.2 | Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a),
    as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated August 9, 2012.
| |      |                                                                                                                                                                               
| | 32.1 | Certification
    of Chief Executive Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002, datedAugust 9, 2012.      
| |      |                                                                                                                                                                               
| | 32.2 | Certification
    of Chief Financial Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002, datedAugust 9, 2012.      





47