ONVO Organovo Holdings Inc

RISK FACTORS

The combined organization will be faced with a market environment that cannot be predicted and that involves significant risks, many of which will be beyond its control. In addition to the other information contained in this proxy statement/prospectus/information statement, you should carefully consider the material risks described below and those described in the section of this proxy statement/prospectus/information statement titled “Forward-Looking Statements” before deciding how to vote your shares of stock. In addition, you should read and consider the risks associated with the business of Organovo because these risks may also affect the combined organization — these risks can be found in Organovo’s Annual Report on Form 10-K, as updated by subsequent Quarterly Reports on Form 10-Q, all of which are filed with the SEC and incorporated by reference into this proxy statement/prospectus/information statement. You should also read and consider the other information in this proxy statement/prospectus/information statement and the other documents incorporated by reference into this proxy statement/prospectus/information statement. Please see the sections titled “Where You Can Find More Information” and “Incorporation of Certain Documents By Reference” in this proxy statement/prospectus/information statement.

Risks Related to the Merger

The Exchange Ratio is not adjustable based on the market price of Organovo common stock so the Merger consideration at the Closing may have a greater or lesser value than at the time the Merger Agreement was signed.

The estimated Exchange Ratio calculation contained herein is based upon Organovo’s and Tarveda’s capitalization immediately prior to the date of this proxy statement/prospectus/information statement, and will be adjusted based on the amount of Organovo net cash, Organovo and Tarveda debt and changes in the capitalization of Organovo or Tarveda prior to the Closing, not taking into account the Organovo Reverse Stock Split, as described in the section titled “The Merger — Merger Consideration and Adjustment” of this proxy statement/prospectus/information statement. Any changes in the market price of Organovo common stock before the completion of the Merger will not affect the number of shares Tarveda securityholders will be entitled to receive pursuant to the Merger Agreement. Therefore, if before the completion of the Merger the market price of Organovo common stock declines from the market price on the date of the Merger Agreement, then Tarveda securityholders could receive merger consideration with substantially lower value. Similarly, if before the completion of the Merger the market price of Organovo common stock increases from the market price on the date of the Merger Agreement, then, Tarveda securityholders could receive merger consideration with considerably more value for their shares of Tarveda capital stock than the parties had negotiated for in the establishment of the Exchange Ratio. The Merger Agreement does not include a price-based termination right. Because the Exchange Ratio does not adjust as a result of changes in the value of Organovo common stock, for each one percentage point that the market value of Organovo common stock rises or declines, there is a corresponding one percentage point rise or decline, respectively, in the value of the total merger consideration issued to Tarveda securityholders.

Failure to complete the Merger may result in Organovo or Tarveda paying a termination fee or reimbursing expenses to the other party and could harm the common stock price of Organovo and future business and operations of each company.

If the Merger is not completed, Organovo and Tarveda are subject to the following risks:

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In addition, if the Merger Agreement is terminated and the Organovo board of directors or the Tarveda board of directors determines to seek another business combination, there can be no assurance that either Organovo or Tarveda will be able to find a partner willing to provide equivalent or more attractive consideration than the consideration to be provided by each party in the Merger on a timely basis, or at all.

The Merger may be completed even though material adverse changes may result from the announcement of the Merger, industry-wide changes and other causes.

In general, either Organovo or Tarveda can refuse to complete the Merger if there is a material adverse change affecting the other party between December 13, 2019, the date of the Merger Agreement, and the Closing. However, certain types of changes do not permit either party to refuse to complete the Merger, even if such change could be said to have a material adverse effect on Organovo or Tarveda, including:

If adverse changes occur and Organovo and Tarveda still complete the Merger, the combined organization stock price may suffer. This in turn may reduce the value of the Merger to the stockholders of Organovo, Tarveda or both.

Some Organovo and Tarveda officers and directors have interests in the Merger that are different from yours and that may influence them to support or approve the Merger without regard to your interests.

Certain officers and directors of Organovo and Tarveda participate in arrangements that provide them with interests in the Merger that are different from yours, including, among others, the continued service as an officer or director of the combined organization, severance benefits, the acceleration of stock option vesting, continued indemnification and the potential ability to sell an increased number of shares of common stock of the combined organization in accordance with Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”). For example, in November 2015 Organovo entered into a Severance and Change in Control Plan Participation Agreement with each of its executive officers and certain key employees pursuant to the Organovo Severance Plan, which was approved by Organovo’s compensation committee. The Organovo Severance Plan establishes the amount of severance payments and benefits available in the event of a (i) termination of employment by

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Organovo for reasons other than cause, death or disability or by the participant for good reason and (ii) termination of employment by Organovo for reasons other than cause, death or disability or by the participant for good reason within six months before or within 12 months after a change in control. Organovo’s executive officers, including Taylor Crouch, Organovo’s Chief Executive Officer, who also serves on Organovo’s board of directors, are each parties to a participation agreement under the Organovo Severance Plan and are contractually entitled to severance payments, including a cash severance payment equal to a multiple of the employee’s base salary, paid in a lump sum, plus a target bonus for the fiscal year in which the termination occurs, health benefit continuation for up to 18 months, and outplacement assistance. In addition, Organovo’s executive officers are also entitled to full accelerated vesting of all outstanding equity grants and a one-year time period to exercise any stock options or stock appreciation rights.

Based on the terms of their respective participation agreements, Organovo’s executive officers will be entitled to receive a total value of approximately $3.06 million (collectively, not individually) in connection with the consummation of the Merger and the associated termination of their employment from Organovo, not including the value associated with the acceleration of their outstanding equity awards.

Additionally, the directors and officers of Organovo are parties to the Organovo support agreements and lock-up agreements with Organovo and Tarveda.

The Organovo board of directors and special committee was aware of these interests and considered them, among other matters, in the decision to approve the Merger Agreement. For more information, please see the section titled “The Merger — Interests of the Organovo Directors and Executive Officers in the Merger” of this proxy statement/prospectus/information statement.

All of Tarveda’s executive officers and certain of its directors have options, subject to vesting, to purchase shares of Tarveda common stock which shall be converted into and become options to purchase shares of Organovo common stock, Tarveda’s directors and executive officers are expected to become directors and executive officers of Organovo upon the consummation of the Merger and all of Tarveda’s directors and executive officers are entitled to certain indemnification and liability insurance coverage pursuant to the terms of the Merger Agreement. In addition, certain of Tarveda’s executive officers and directors and affiliates of Tarveda’s directors currently hold shares of Tarveda common stock and preferred stock. The shares of Tarveda preferred stock will be converted into shares of Tarveda common stock prior to the consummation of the Merger. In addition and for example, certain of Tarveda’s officers received grants of shares of Tarveda common stock prior to the execution of the Merger Agreement, certain of Tarveda’s directors and executive officers have options, subject to vesting, to purchase shares of Tarveda common stock, which shall be converted into and become options to purchase shares of Organovo common stock, certain of Tarveda’s directors and executive officers are expected to become directors and executive officers of Organovo upon the closing of the merger and all of Tarveda’s directors and executive officers are entitled to certain indemnification and liability insurance coverage pursuant to the terms of the Merger Agreement.

These interests, among others, may influence the officers and directors of Organovo and Tarveda to support or approve the Merger. For more information concerning the interests of Organovo and Tarveda executive officers and directors, see the sections titled “The Merger — Interests of the Organovo Directors and Executive Officers in the Merger” and “The Merger — Interests of the Tarveda Directors and Executive Officers in the Merger” in this proxy statement/prospectus/information statement.

The market price of the combined organization’s common stock following the Merger may decline as a result of the Merger.

The market price of Organovo common stock may decline as a result of the Merger for a number of reasons including if:

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Organovo and Tarveda stockholders may not realize a benefit from the Merger commensurate with the ownership dilution they will experience in connection with the Merger.

If the combined organization is unable to realize the full strategic and financial benefits currently anticipated from the Merger, Organovo and Tarveda stockholders will have experienced substantial dilution of their ownership interests in their respective companies without receiving any commensurate benefit, or only receiving part of the commensurate benefit to the extent the combined organization is able to realize only part of the strategic and financial benefits currently anticipated from the Merger.

During the pendency of the Merger, Organovo and Tarveda may not be able to enter into a business combination with another party at a favorable price because of restrictions in the Merger Agreement, which could adversely affect their respective businesses.

Covenants in the Merger Agreement impede the ability of Organovo and Tarveda to make acquisitions, subject to certain exceptions relating to fiduciaries duties, as set forth below, or complete other transactions that are not in the ordinary course of business, subject to certain exceptions, pending completion of the Merger. As a result, if the Merger is not completed, the parties may be at a disadvantage to their competitors during that period. In addition, while the Merger Agreement is in effect, each party is generally prohibited from, among other things, soliciting, initiating, knowingly encouraging or entering into certain extraordinary transactions, such as a merger, sale of assets or other business combination outside the ordinary course of business, with any third party. Any such transactions could be favorable to such party’s stockholders.

Certain provisions of the Merger Agreement may discourage third parties from submitting alternative takeover proposals, including proposals that may be superior to the arrangements contemplated by the Merger Agreement.

The terms of the Merger Agreement prohibit each of Organovo and Tarveda from soliciting alternative takeover proposals or cooperating with persons making unsolicited takeover proposals, except in limited circumstances when, among other things, such party’s board of directors determines in good faith that an unsolicited alternative takeover proposal is or is reasonably likely to result in a superior takeover proposal and that failure to cooperate with the proponent of the proposal is a breach of the board’s fiduciary duties. In addition, if Organovo or Tarveda terminate the Merger Agreement under certain circumstances, including terminating because of a decision of a board of directors to recommend a superior proposal, Organovo or Tarveda would be required to pay to the other party a termination fee equal to $1.0 million (or $2.0 million in certain circumstances) and the third-party expenses incurred by the other party, up to a maximum of $0.3 million (or $0.5 million in certain circumstances). This termination fee may discourage third parties from submitting alternative takeover proposals to Organovo or Tarveda or their stockholders, and may cause the respective boards of directors to be less inclined to recommend an alternative proposal.

Because the lack of a public market for Tarveda shares makes it difficult to evaluate the fairness of the Merger, the stockholders of Tarveda may receive consideration in the Merger that is less than the fair market value of the Tarveda shares.

The outstanding capital stock of Tarveda is privately held and is not traded in any public market. The lack of a public market makes it extremely difficult to determine the fair market value of Tarveda. Because the percentage of Organovo equity to be issued to Tarveda stockholders was determined based on negotiations

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between the parties, it is possible that the value of the Organovo common stock to be received by Tarveda stockholders will be less than the fair market value of Tarveda, or Organovo may pay more than the aggregate fair market value for Tarveda.

Because the lack of a public market for Tarveda shares makes it difficult to evaluate the fairness of the Merger, the stockholders of Tarveda may receive consideration in the Merger that is less than the fair market value of the Tarveda shares.

The outstanding capital stock of Tarveda is privately held and is not traded in any public market. The lack of a public market makes it extremely difficult to determine the fair market value of Tarveda. Because the percentage of Organovo equity to be issued to Tarveda stockholders was determined based on negotiations between the parties, it is possible that the value of the Organovo common stock to be received by Tarveda stockholders will be less than the fair market value of Tarveda, or Organovo may pay more than the aggregate fair market value for Tarveda.

If the conditions to the Merger are not met, the Merger will not occur.

Even if the Merger is approved by the stockholders of Organovo and Tarveda, specified conditions must be satisfied or waived to complete the Merger. These conditions are set forth in the Merger Agreement and described in the section titled “The Merger Agreement — Conditions to the Completion of the Merger” in this proxy statement/prospectus/information statement. Organovo and Tarveda cannot assure you that all of the conditions will be satisfied. If the conditions are not satisfied or waived, the Merger will not occur or will be delayed, and Organovo and Tarveda each may lose some or all of the intended benefits of the Merger.

If the Merger does not qualify as a “reorganization” for U.S. federal income tax purposes, U.S. Holders of Tarveda common stock will be required to recognize gain or loss for U.S. federal income tax purposes upon the exchange of their Tarveda common stock for Organovo common stock in the Merger.

The U.S. federal income tax consequences of the Merger to U.S. Holders (as defined in the section titled “The Merger — Certain Material U.S. Federal Income Tax Consequences of the Merger”) will depend on whether the Merger qualifies as a “reorganization” for U.S. federal income tax purposes. Organovo’s and Tarveda’s obligations to effect the Merger are subject to the satisfaction, or waiver, at or prior to the effective time of the Merger, of the condition that each company receive an opinion of counsel (or Organovo’s Replacement Counsel or Tarveda’s Replacement Counsel, in each case, if applicable), dated as of the closing date of the Merger, to the effect that the Merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. If, contrary to the opinions from counsel, the Merger fails to qualify as a reorganization within the meaning of Section 368(a) of the Code, a U.S. Holder of Tarveda common stock would recognize gain or loss for U.S. federal income tax purposes on each share of Tarveda common stock surrendered in the Merger for Organovo common stock and any cash received in lieu of a fractional share. For a more complete discussion of the material U.S. federal income tax consequences of the Merger, please carefully review the information set forth in the section titled “The Merger —Certain Material U.S. Federal Income Tax Consequences of the Merger” in this proxy statement/prospectus/information statement.

Risks Related to the Proposed Organovo Reverse Stock Split

The proposed Organovo Reverse Stock Split may not increase the combined organization’s stock price over the long-term.

The principal purpose of the proposed Organovo Reverse Stock Split is to increase the per-share market price of Organovo common stock and provide for sufficient authorized shares of Organovo common stock to issue shares of Organovo common stock in the Merger. It cannot be assured, however, that the proposed Organovo Reverse Stock Split will accomplish the objective of increasing the per-share market price of Organovo common stock for any meaningful period of time. While it is expected that the reduction in the number

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of outstanding shares of Organovo common stock will proportionally increase the market price of Organovo common stock, it cannot be assured that the proposed Organovo Reverse Stock Split will increase the market price of Organovo common stock by a multiple of the proposed Organovo Reverse Stock Split ratio, or result in any permanent or sustained increase in the market price of Organovo common stock, which is dependent upon many factors, including the combined organization’s business and financial performance, general market conditions and prospects for future success. Therefore, while the stock price of the combined organization might meet the continued listing requirements for The Nasdaq Capital Market initially, it cannot be assured that it will continue to do so.

The proposed Organovo Reverse Stock Split may decrease the liquidity of the combined organization’s common stock.

Although the Organovo board of directors believes that the anticipated increase in the market price of the combined organization’s common stock could encourage interest in its common stock and possibly promote greater liquidity for its stockholders, such liquidity could also be adversely affected by the reduced number of shares outstanding after the proposed Organovo Reverse Stock Split. The reduction in the number of outstanding shares may lead to reduced trading and a smaller number of market makers for Organovo common stock.

The proposed Organovo Reverse Stock Split may lead to a decrease in the combined organization’s overall market capitalization.

Should the market price of the combined organization’s common stock decline after the proposed Organovo Reverse Stock Split, the percentage decline may be greater, due to the smaller number of shares outstanding, than it would have been prior to the proposed Organovo Reverse Stock Split. A reverse stock split may be viewed negatively by the market and, consequently, can lead to a decrease in the combined organization’s overall market capitalization. If the per share market price does not increase in proportion to the proposed Organovo Reverse Stock Split ratio, then the value of the combined organization, as measured by its stock capitalization, will be reduced. In some cases, the per-share stock price of companies that have effected reverse stock splits subsequently declined back to pre-reverse split levels, and accordingly, it cannot be assured that the total market value of Organovo common stock will remain the same after the proposed Organovo Reverse Stock Split is effected, or that the proposed Organovo Reverse Stock Split will not have an adverse effect on the stock price of Organovo common stock due to the reduced number of shares outstanding after the proposed Organovo Reverse Stock Split.

Risks Related to Organovo’s Capital Requirements, Finances and Operations if the Merger is not Completed

There is no assurance that the proposed Merger between Organovo and Tarveda will be completed in a timely manner or at all. If the Merger with Tarveda is not consummated, Organovo’s business could suffer materially and its stock price could decline.

The consummation of the Merger between Organovo and Tarveda is subject to a number of closing conditions, including approval by Organovo’s and Tarveda’s respective stockholders and other customary closing conditions. The parties are targeting a Closing of the transaction in the first calendar quarter of 2020, however, there can be no assurance that the Merger will be consummated within this desired timeframe, or at all.

If the Merger between Organovo and Tarveda is not consummated, Organovo may be subject to a number of material risks, and its business and stock price could be adversely affected, as follows:

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If the Merger is not completed, Organovo may be unsuccessful in completing an alternative strategic transaction on terms that are as favorable as the terms of the proposed transaction with Tarveda, or at all, and Organovo may be unable to reestablish a viable operating business.

To date, Organovo has not generated significant revenue from product sales, and its assets currently consist primarily of cash, cash equivalents and marketable securities, its intellectual property portfolio, license and collaboration agreements, its remaining assets, its listing on The Nasdaq Capital Market and the Merger Agreement with Tarveda. While Organovo has entered into the Merger Agreement with Tarveda, the consummation of the Merger with Tarveda may be delayed or may not occur at all. If the Merger is not completed, the Organovo board of directors may elect to pursue an alternative strategic transaction similar to the proposed Merger with Tarveda. Attempting to complete an alternative transaction will be costly and time consuming. If the Merger with Tarveda is not completed and the Organovo board of directors determines to pursue an alternative transaction, the terms of any such alternative transaction may not be as favorable to Organovo and its stockholders as the terms of the Merger with Tarveda, and Organovo can make no assurances that such an alternative transaction would occur at all. Further, if the Merger with Tarveda is not completed, given the level of investment and time that would be required to redesign its liver tissue product or pursue the development of products and services pursuant to its collaboration agreements, it is unlikely that Organovo would be able to obtain the funding required to recommence its product development activities on terms favorable to its stockholders, or at all.

If the Merger is not completed, Organovo’s board of directors may decide to pursue a dissolution and liquidation of Organovo. In such an event, the amount of cash available for distribution to its stockholders will depend heavily on the timing of such liquidation as well as the amount of cash that will need to be reserved for commitments and contingent liabilities.

There can be no assurance that the Merger will be completed. If the Merger is not completed, the Organovo board of directors may decide to pursue a dissolution and liquidation of Organovo. In such an event, the amount of cash available for distribution to its stockholders will depend heavily on the timing of such decision, as with the passage of time the amount of cash available for distribution will be reduced as Organovo continues to fund its operations. In addition, if Organovo’s board of directors were to approve and recommend, and its stockholders were to approve, a dissolution and liquidation of Organovo, Organovo would be required under Delaware corporate law to pay its outstanding obligations, as well as to make reasonable provision for contingent and unknown obligations, prior to making any distributions in liquidation to its stockholders. As a result of this requirement, a portion of Organovo’s remaining cash assets may need to be reserved pending the resolution of such obligations. In addition, Organovo may be subject to litigation or other claims related to a dissolution and liquidation of Organovo. If a dissolution and liquidation were pursued, Organovo’s board of directors, in consultation with its advisors, would need to evaluate these matters and make a determination about a reasonable amount to reserve. Accordingly, holders of Organovo common stock could lose all or a significant portion of their investment in the event of Organovo’s liquidation, dissolution or winding up.

Organovo may be unable to continue as a going concern if the Merger is not completed.

Organovo has had recurring losses from operations since inception and will likely not generate meaningful revenue for the foreseeable future. Organovo believes that its existing cash, cash equivalents and marketable securities and interest thereon will be sufficient to fund its projected operating requirements under its current operating plan. However, if the Merger is not completed and Organovo’s operating plans change and its

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projected operating requirements increase, Organovo may be unable to continue as a going concern. In this event, the perception that Organovo may not be able to continue as a going concern may have an adverse impact on its business due to concerns about its ability to meet its future contractual obligations or pursue additional strategic transactions. Further, if Organovo is unable to continue as a going concern, Organovo may have to liquidate its assets, and the values it receives for its assets in liquidation and dissolution could be significantly lower than the values reflected in its financial statements and an investor could lose all or part of its investment in Organovo.

If Organovo were to continue to advance its research and development activities and pursue development of any of its pipeline products, it would require substantial additional funding. Raising additional capital would cause dilution to its existing stockholders, and may restrict its operations or require it to relinquish rights to its technologies or to a product candidate.

Organovo currently does not have any committed external source of funds and does not expect to generate any meaningful revenue in the foreseeable future. Organovo believes that its existing cash, cash equivalents and marketable securities and interest thereon will be sufficient to fund its projected operating requirements under its current operating plan. Organovo has based its estimates on assumptions that may prove to be wrong, and it may use its available capital resources sooner than it currently expects if its operating plans change. If the Merger is not completed and Organovo’s current operating plans change and it determines to pursue further research and development activities, it will require substantial additional funding to operate, and would expect to finance these cash needs through a combination of equity offerings, debt financings, government or other third-party funding and licensing or collaboration arrangements.

To the extent that Organovo raises additional capital through the sale of equity or convertible debt, the ownership interests of its stockholders will be diluted. In addition, the terms of any equity or convertible debt it agrees to issue may include liquidation or other preferences that adversely affect the rights of Organovo’s stockholders. Convertible debt financing, if available, may involve agreements that include covenants limiting or restricting Organovo’s ability to take specific actions, such as incurring additional debt, making capital expenditures, and declaring dividends, and may impose limitations on its ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact its ability to conduct its business.

Additional funds may not be available when Organovo needs them on terms that are acceptable to Organovo, or at all. If adequate funds are not available to Organovo on a timely basis, it may be required to curtail or cease its operations.

If the Merger is not completed, raising additional funding through debt or equity financing would be difficult or not successful at all, would be dilutive and may cause the market price of Orgnanovo’s common stock to decline further.

If the Merger is not completed, raising additional funding through debt or equity financing is likely to be difficult or unavailable altogether given the early stage of Organovo’s therapeutic candidates. To the extent that Organovo raises additional capital through the sale of equity or convertible debt securities, the issuance of those securities would result in substantial dilution for Organovo’s current stockholders and the terms may include liquidation or other preferences that adversely affect the rights of its current stockholders. Furthermore, the issuance of additional securities, whether equity or debt, by Organovo, or the possibility of such issuance, may cause the market price of its common stock to decline further and existing stockholders may not agree with its financing plans or the terms of such financings.

The issuance of shares of Organovo’s common stock to Tarveda’s stockholders in the Merger will dilute substantially the voting power of Organovo’s current stockholders.

If the Merger is completed, each outstanding share of Tarveda capital stock will be converted into the right to receive approximately 0.1311 shares of Organovo common stock, subject to adjustment to account for the

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proposed Organovo Reverse Stock Split. Immediately following the Merger, Organovo’s stockholders and optionholders are expected to own, or hold rights to acquire, approximately 25% of the common stock of Organovo on a fully diluted basis as defined in the Merger Agreement, and Tarveda’s stockholders, optionholders and warrantholders are expected to own, or hold rights to acquire, approximately 75% of the common stock of Organovo on a fully diluted basis as defined in the Merger Agreement. Accordingly, the issuance of shares of Organovo’s common stock to Tarveda’s stockholders in the Merger will reduce significantly the relative voting power of each share of Organovo’s common stock held by its current stockholders. Consequently, Organovo’s stockholders as a group will have significantly less influence over the management and polices of the combined organization after the Merger than prior to the Merger.

Organovo has incurred and will continue to incur significant transaction costs in connection with the Merger.

Organovo has incurred and will continue to incur significant transaction costs in connection with the Merger. Organovo estimates that it will incur aggregate direct transaction costs of approximately $3.9 million associated with the Merger and approximately $0.3 million for its portion of shared transaction expenses, as well as additional costs associated with the commencement of the combined organization’s operation as a public company, which cannot be estimated accurately at this time.

Organovo’s ability to use net operating loss (“NOL”) carryforwards and other tax attributes may be limited in connection with the Merger and other ownership changes.

Organovo has incurred substantial losses during its history and does not expect to become profitable in the near future, and Organovo may never achieve profitability. To the extent that Organovo continues to generate taxable losses, unused losses will carry forward to offset future taxable income, if any, until such unused losses expire (if at all). At March 31, 2019, Organovo had federal and state NOL carryforwards of approximately $170.3 million and $49.2 million, respectively. Such federal and state NOL carryforwards will begin to expire in 2028, unless previously utilized. At March 31, 2019, Organovo had federal and state research and development credit carryforwards of approximately $4.0 million and $3.6 million, respectively. The federal research and development credit carryforwards will begin expiring in 2028, unless previously utilized.

Under the Tax Act, federal NOLs generated in taxable years ending after December 31, 2017, may be carried forward indefinitely but federal NOLs generated in taxable years beginning after December 31, 2017 may only be used to offset 80% of Organovo’s taxable income annually. Organovo’s NOL carryforwards are subject to review and possible adjustment by the U.S. Internal Revenue Service (the “IRS”), and state tax authorities. Under Sections 382 and 383 of the Code, Organovo’s federal NOL and research and development tax credit carryforwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant stockholders over a three-year period in excess of 50 percentage points. Organovo’s ability to utilize its NOL carryforwards and other tax attributes to offset future taxable income or tax liabilities may be limited as a result of ownership changes, including in connection with the Merger. Similar rules may apply under state tax laws. Organovo has not yet determined the amount of the cumulative change in its ownership resulting from the Merger or other transactions, or any resulting limitations on its ability to utilize its NOL carryforwards and other tax attributes. If Organovo earns taxable income, such limitations could result in increased future tax liability to Organovo and its future cash flows could be adversely affected. Organovo has recorded a full valuation allowance related to its NOLs and other deferred tax assets due to the uncertainty of the ultimate realization of the future benefits of those assets.

Risks Related to Tarveda

Tarveda has incurred significant net losses since inception and anticipates that it will continue to incur substantial net losses for the foreseeable future and may never achieve or maintain profitability.

Since inception in 2016, Tarveda has incurred significant net losses and has never generated any revenue from product sales. Tarveda’s net loss was $10.4 million and $11.5 million for the six months ended

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September 30, 2019 and 2018, and $22.1 million and $19.0 million for years ended March 31, 2019 and 2018, respectively. As of September 30, 2019, Tarveda had an accumulated deficit of $115.6 million. Although Tarveda completed a private placement of its securities and recapitalization in December 2019 raising gross proceeds of $13.6 million before deducting estimated offering expenses, Tarveda expects to continue to incur significant expenses and increasing net losses for the foreseeable future. Since inception, Tarveda has devoted substantially all of its efforts to identifying, researching and conducting preclinical and clinical activities for its product candidates, acquiring and developing its Pentarin, including its Heat Shock Protein 90 (“HSP90”) binding miniature drug conjugate platforms and know-how to develop miniature drug conjugates, organizing and staffing the company, business planning, raising capital and establishing its intellectual property portfolio. To date, Tarveda has never obtained regulatory approval for, or commercialized, any products. It could be several years, if ever, before Tarveda has a commercialized product. The net losses Tarveda incurs may fluctuate significantly from quarter to quarter and year to year. Tarveda anticipates that its expenses will increase substantially if, and as, it:

To become and remain profitable, Tarveda must succeed in developing and eventually commercializing products that generate significant revenue. This will require Tarveda to be successful in a range of challenging activities, including completing preclinical studies and clinical trials of its current and future product candidates, obtaining regulatory approval, procuring commercial-scale manufacturing, marketing and selling any products for which it obtains regulatory approval (including through third parties), as well as discovering or acquiring and developing additional product candidates. Tarveda is only in the preliminary stages of most of these activities. Tarveda may never succeed in these activities and, even if it does, may never generate revenue that is sufficient to offset its expenses and achieve profitability.

Because of the numerous risks and uncertainties associated with biopharmaceutical product development, Tarveda is unable to accurately predict the timing or amount of expenses or when, or if, it will be able to achieve profitability. If Tarveda is required by regulatory authorities to perform studies in addition to those currently expected, or if there are any delays in the initiation and completion of its clinical trials or the development of any of its product candidates, its expenses could increase.

Even if Tarveda does achieve profitability, it may not be able to sustain or increase profitability on a quarterly or annual basis. Tarveda’s failure to become and remain profitable would decrease the value of the

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company and could impair its ability to raise capital, maintain its research and development efforts, expand its business or continue its operations.

There is substantial doubt about Tarveda’s ability to continue as a going concern.

Tarveda has incurred recurring losses since inception, including net losses of $22.1 million and $19.0 million for the years ended March 31, 2019 and 2018, respectively. In addition, as of March 31, 2019, Tarveda had an accumulated deficit of $105.2 million. Tarveda expects to continue to generate operating losses for the foreseeable future and will need to raise additional capital to finance its future operations. Tarveda’s management has concluded that these matters raise substantial doubt about its ability to continue as a going concern. Tarveda’s financial statements do not include any adjustments that might result from the outcome of this uncertainty. Tarveda’s auditors have included an explanatory paragraph in their audit report for this uncertainty. If Tarveda cannot continue as a viable entity, its securityholders may lose some or all of their investment in Tarveda.

Even after completion of the Merger, Tarveda will require substantial additional funding to finance its operations. If Tarveda is unable to raise capital when needed, it could be forced to delay, reduce or terminate certain of its development programs or other operations.

As of September 30, 2019, Tarveda had cash and cash equivalents of $6.8 million. Tarveda believes that the $13.6 million of gross proceeds from the December private placement of its Series 1 preferred stock and recapitalization, together with its existing cash and cash equivalents as of September 30, 2019, will be sufficient to fund its operating expenses, capital expenditure requirements and debt service payments through September 2020 as a stand-alone private company. Upon completion of the Merger, and after taking into account the expected cash that Organovo will have on its balance sheet at the effective time of the Merger, Tarveda expects to have sufficient cash to fund the combined organization’s current operating plans through at least the 18 months following the anticipated effective time of the Merger. However, the combined organization’s operating plans may change as a result of many factors currently unknown to Tarveda, and the combined organization may need to seek additional funds sooner than planned. Tarveda expects to finance its cash needs through public or private equity or debt financings, third-party (including government) funding and marketing and distribution arrangements, as well as other collaborations, strategic alliances and licensing arrangements, or any combination of these approaches. The combined organization’s future capital requirements will depend on many factors, including:

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Identifying potential product candidates and conducting preclinical testing and clinical trials is a time-consuming, expensive and uncertain process that takes years to complete, and Tarveda may never generate the necessary data or results required to obtain regulatory approval and achieve product sales. In addition, Tarveda’s product candidates, if approved, may not achieve commercial success. Tarveda’s commercial revenue, if any, will be derived from sales of products that it does not expect to be commercially available for several years, if at all. Accordingly, Tarveda will need to continue to rely on additional financing to achieve its business objectives. Adequate additional financing may not be available to Tarveda on acceptable terms, or at all. If Tarveda is unable to raise capital when needed or on attractive terms, it could be forced to delay, reduce or altogether terminate its research and development programs or future commercialization efforts, which may adversely affect its business, financial condition, results of operations and prospects. In addition, Tarveda may seek additional capital due to favorable market conditions or strategic considerations even if Tarveda believes it has sufficient funds for its current or future operating plans.

The incurrence of debt may impact Tarveda’s financial position and subject it to additional financial and operating restrictions.

In March 2019, Tarveda entered into a $10.0 million senior secured term loan credit facility with Oxford. Tarveda’s overall leverage and certain covenants and obligations contained in the related documentation could adversely affect its financial health and business and future operations by, among other things:

Furthermore, substantially all of Tarveda’s assets, including its intellectual property, secure the Oxford loan. If an event of default under the Oxford loan occurs and is continuing, Oxford may request the acceleration of the related debt and foreclose on the underlying security interests. While Oxford consented to the entry into the Merger Agreement, Tarveda does not yet have Oxford’s consent to the consummation of the Merger. Oxford may request additional covenants or other concessions from Tarveda in order to consent to the Merger.

The LIBOR calculation method may change and LIBOR is expected to be phased out after 2021.

Interest on the outstanding principal balance of the loans under the Oxford loan is calculated based on one-month LIBOR, plus an applicable margin. On July 27, 2017, the U.K. Financial Conduct Authority (the “FCA”) announced that it will no longer require banks to submit rates for the calculation of LIBOR after 2021. In the meantime, actions by the FCA, other regulators or law enforcement agencies may result in changes to the method by which LIBOR is calculated. At this time, it is not possible to predict the effect of any such changes or any other reforms to LIBOR that may be enacted in the United Kingdom or elsewhere.

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Raising additional capital may cause dilution to Tarveda’s stockholders, restrict its operations or require it to relinquish rights to its product candidates.

Until such time, if ever, as Tarveda can generate substantial product revenue, it expects to finance its cash needs through public or private equity or debt financings, third-party (including government) funding and collaborations and strategic alliances, or any combination of these approaches. To the extent that Tarveda raises additional capital through the sale of equity or convertible debt securities, your ownership interest may be diluted and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a stockholder. Debt and equity financings, if available, may involve agreements that include covenants limiting or restricting Tarveda’s ability to take specific actions, such as redeeming its shares, making investments, incurring additional debt, making capital expenditures, declaring dividends or placing limitations on its ability to acquire, sell or license intellectual property rights. For example, Tarveda’s existing loan with Oxford is secured by a first priority lien on Tarveda’s assets and intellectual property, and requires compliance with certain affirmative and negative covenants.

If Tarveda raises additional capital through future collaborations or strategic alliances, it may have to relinquish valuable rights to its intellectual property, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to Tarveda. If Tarveda is unable to raise additional capital when needed, it may be required to delay, limit, reduce or terminate its product development or future commercialization efforts or grant rights to develop and market product candidates that it would otherwise develop and market ourselves.

Tarveda’s limited operating history may make it difficult for you to evaluate the success of its business to date and to assess its future viability.

Tarveda is a clinical-stage company that spun out its legacy business and renamed itself Tarveda Therapeutics, Inc. in 2016. Since the spinout, Tarveda’s operations have been largely focused on identifying, researching and conducting preclinical and clinical activities of its product candidates, PEN-866 and PEN-221, acquiring and developing its HSP90 binding miniature drug conjugate platform and know-how to develop miniature drug conjugates, organizing and staffing the company, business planning, raising capital and establishing its intellectual property portfolio. As an organization, Tarveda has not yet demonstrated an ability to successfully complete clinical development, obtain regulatory approvals, manufacture a commercial-scale product or conduct sales and marketing activities necessary for successful commercialization or arrange for a third party to conduct these activities on its behalf. Consequently, any predictions about Tarveda’s future success or viability may not be as accurate as they could be if it had a longer operating history.

Tarveda currently has two product candidates in its development pipeline. Tarveda may encounter unforeseen expenses, difficulties, complications, delays and other known or unknown factors in achieving its business objectives, including with respect to its Pentarin platform including its HSP90 binding miniature drug conjugate platform, and product candidates. Tarveda will need to transition at some point from a company with a research and development focus to a company capable of supporting commercial activities. Tarveda may not be successful in such a transition.

Risks Related to the Design and Development of Tarveda’s Drug Candidates

Tarveda is early in its development efforts and its lead drug candidates, PEN-866 and PEN-221 are still in early stage clinical development. Tarveda has not successfully completed late-stage clinical trials or obtained regulatory approval for any drug candidate. Tarveda may never obtain approval for any of its drug candidates or achieve or sustain profitability.

Tarveda currently has no products that are approved for sale. Tarveda is early in its development efforts and has only recently completed enrollment in the Phase 1 portion of the Phase 1/2a trial evaluating PEN-866 in patients with advanced solid tumors. Tarveda’s only other drug candidate in clinical trials, PEN-221 is currently

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being investigated in an ongoing Phase 2a clinical trial in patients with neuroendocrine cancers, including gastrointestinal, neuroendocrine tumors (“GI NET”), pancreatic neuroendocrine tumors and small cell lung cancer. There can be no assurance that PEN-866, PEN-221 or any future drug candidates in development will achieve success in their clinical trials or obtain regulatory approval.

Tarveda’s ability to generate product revenues, which it does not expect will occur for many years, if ever, will depend heavily on the successful development and eventual commercialization of PEN-866, PEN-221 or any other future drug candidates in development. The success of its drug candidates, including PEN-886 and PEN-221, will depend on several factors, including the following:

Many of these factors are beyond Tarveda’s control, and it is possible that none of its drug candidates will ever obtain regulatory approval even if Tarveda expends substantial time and resources seeking such approval. If Tarveda does not achieve one or more of these factors in a timely manner or at all, it could experience significant delays or an inability to successfully commercialize its drug candidates, which would materially harm its business. For example, Tarveda’s business could be harmed if results of the clinical trials of PEN-866, PEN-221 or any other drug candidates vary adversely from its expectations.

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Tarveda’s approach to the discovery and development of Pentarin miniature drug conjugates, including using its HSP90 binding miniature drug conjugate platform, is based on novel technologies that are unproven and may not result in marketable products.

The scientific research that forms the basis of Tarveda’s efforts to discover and develop Pentarin miniature drug conjugates, including based on its HSP90 binding miniature drug conjugate platform, is ongoing. Further, the scientific evidence to support the feasibility of developing therapeutic miniature drug conjugates, which it refers to as Pentarin miniature drug conjugates, based on Tarveda’s HSP90 binding miniature drug conjugate platform and other know-how is both preliminary and limited. Tarveda may not be correct in its assumptions about the superiority of its HSP90 binding miniature drug conjugate platform to develop effective therapeutics that bind to HSP90 to deliver anti-cancer payloads. If its HSP90 binding miniature drug conjugate platform is not able to develop Pentarin miniature drug conjugates that are successful in delivering an anti-cancer payload while minimizing toxicity outside the tumor environment, it could have a material and adverse effect on Tarveda’s business, financial condition, results of operations and prospects. Further, if PEN-866, as Tarveda’s first Pentarin developed using the HSP90 binding miniature drug conjugate platform is not successful in achieving its clinical objectives, it would materially and adversely effect Tarveda’s ability to leverage its HSP90 binding miniature drug conjugate platform to develop other Pentarin miniature drug conjugates to deliver other payloads, which would have a material and adverse effect on Tarveda’s business, financial condition, results of operations and prospects.

Drug development involves a lengthy and expensive process. Tarveda may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of PEN-866, PEN-221 or any other drug candidates.

Tarveda currently has only two drug candidates in clinical development, and the risk of failure is high. Tarveda is unable to predict when or if its drug candidates will prove effective or safe in humans or will obtain marketing approval. Before obtaining marketing approval from regulatory authorities for the sale of any drug candidate, Tarveda must complete preclinical development and then conduct extensive clinical trials to demonstrate the safety and efficacy of its drug candidates in humans. Clinical testing is expensive, difficult to design and implement, can take many years to complete and is uncertain as to the outcome. A failure of one or more clinical trials can occur at any stage of testing. The outcome of preclinical testing and early clinical trials may not be predictive of the success of later clinical trials, and interim or preliminary results of a clinical trial do not necessarily predict final results. In particular, the small number of patients in Tarveda’s early clinical trials may make the results of these trials less predictive of the outcome of later clinical trials. For example, the Phase 1 trial for PEN-866 consists of approximately 30 patients of various tumor types and the various cohorts of Phase 2a for PEN-221 range from 10 to 25 patients in each cohort.

Tarveda may experience numerous unforeseen events during, or as a result of, clinical trials that could delay or prevent its ability to obtain marketing approval or commercialize its drug candidates, including:

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Tarveda’s product development costs will increase if it experiences delays in preclinical studies or clinical trials or in obtaining marketing approvals. Tarveda does not know whether any of its planned preclinical studies or clinical trials will begin on a timely basis or at all, will need to be restructured or will be completed on schedule, or at all. For example, the FDA may place a partial or full clinical hold on, any of Tarveda’s clinical trials for a variety of reasons. For example, early in the development of PEN-866 the Phase 1 clinical trial was delayed to resolve a solubility issue. Although rectified, additional issues could arise in the future that could further delay Tarveda’s development of PEN-866.

Significant preclinical or clinical trial delays also could shorten any periods during which Tarveda may have the exclusive right to commercialize its drug candidates or allow Tarveda’s competitors to bring products to market before it does and impair Tarveda’s ability to successfully commercialize its drug candidates and may harm its business and results of operations.

Any delays in the commencement or completion, or termination or suspension, of Tarveda’s ongoing, planned or future clinical trials could result in increased costs to Tarveda, delay or limit its ability to generate revenue and adversely affect its commercial prospects.

Before Tarveda can initiate clinical trials of a drug candidate in any indication, Tarveda must submit the results of preclinical studies to the FDA along with other information, including information about the drug candidate’s chemistry, manufacturing and controls and its proposed clinical trial protocol, as part of an IND or similar regulatory filing.

Before obtaining marketing approval from the FDA for the sale of PEN-866, PEN-221 or any other drug candidate in any indication, Tarveda must conduct extensive clinical studies to demonstrate safety and efficacy. Clinical testing is expensive, time consuming and uncertain as to outcome. In addition, Tarveda expects to rely in part on preclinical, clinical and quality data generated by its contract research organizations (“CROs”) and other third parties for regulatory submissions for its drug candidates. While Tarveda has or will have agreements governing these third parties’ services, Tarveda has limited influence over their actual performance. If these third parties do not make data available to Tarveda, or, if the quality or completeness of the data is not appropriate, or if applicable, make regulatory submissions in a timely manner, in each case pursuant to Tarveda’s agreements with them, its development programs may be significantly delayed and it may need to conduct additional studies or collect additional data independently. In either case, Tarveda’s development costs would increase. To date, Tarveda has submitted two INDs to the FDA: Phase 1/2a clinical trials for both PEN-866 and PEN-221 to evaluate safety and tolerability and one clinical trial authorization (“CTA”) to conduct a Phase 1/2a clinical trial

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of PEN-221 in the United Kingdom. The FDA may require Tarveda to conduct additional preclinical studies for any drug candidate before it allows Tarveda to initiate clinical trials under any IND, which may lead to additional delays and increase the costs of its preclinical development programs.

Any delays in the commencement or completion of Tarveda’s ongoing, planned or future clinical trials could significantly affect its product development costs. Tarveda does not know whether its planned trials will begin on time or at all, or be completed on schedule, if at all. The commencement and completion of clinical trials can be delayed for a number of reasons, including delays related to:

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Tarveda could also encounter delays if a clinical trial is suspended or terminated by it, by the IRBs/ECs of the institutions in which such trials are being conducted, by a Data Safety Monitoring Board for such trial or by the FDA. Such authorities may impose such a suspension or termination due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or its clinical protocols, inspection of the clinical trial operations or trial site by the FDA resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using a pharmaceutical, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial. In addition, changes in regulatory requirements and policies may occur, and Tarveda may need to amend clinical trial protocols to comply with these changes. Amendments may require Tarveda to resubmit its clinical trial protocols to IRBs/ECs for reexamination, which may impact the costs, timing or successful completion of a clinical trial.

If Tarveda experiences delays in the completion of, or termination of, any clinical trial of PEN-866 or PEN-221 or any other drug candidate, the commercial prospects of such drug candidate will be harmed, and Tarveda’s ability to generate product revenues will be delayed. Moreover, any delays in completing its clinical trials will increase its costs, slow down its development and approval process and jeopardize Tarveda’s ability to commence product sales and generate revenues, which may harm its business, financial condition, results of operations and prospects significantly.

If Tarveda experiences delays or difficulties in enrolling patients in its ongoing or planned clinical trials, its receipt of necessary regulatory approval could be delayed or prevented.

Tarveda may not be able to initiate or continue its ongoing or planned clinical trials for its drug candidates if it is unable to identify and enroll a sufficient number of eligible patients to participate in these trials as required by the FDA. In addition, some of Tarveda’s competitors may have ongoing clinical trials for drug candidates that would treat the same patients as PEN-866 or PEN-221 or any other drug candidates, and patients who would otherwise be eligible for Tarveda’s clinical trials may instead enroll in clinical trials of its competitors’ drug candidates. For example, this is relevant for Tarveda’s development of PEN-866 for the treatment of small cell lung cancer, an indication for which investigational drugs are competing for clinical trial participants. In addition, introduction of new drugs to the market place may have an effect on the number of patients available or timing of the availability of the patients. For example, the introduction of Lutathera has changed the treatment paradigm for neuroendocrine patients in the United States and has an impact on the availability of patients for inclusion in the PEN-221 trial. Patient enrollment is also affected by other factors, including:

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Tarveda’s inability to enroll a sufficient number of patients for its clinical trials would result in significant delays or may require it to abandon one or more clinical trials altogether. Enrollment delays in its clinical trials may result in increased development costs, which would cause the value of the company to decline and limit its ability to obtain additional financing.

Adverse side effects or other safety risks associated with PEN-866, PEN-221 or any other drug candidates could delay or preclude approval, cause Tarveda to suspend or discontinue clinical trials or abandon further development, limit the commercial profile of an approved label, or result in significant negative consequences following marketing approval, if any.

As is the case with pharmaceuticals generally, and with oncology drugs in particular, Tarveda has observed side effects and adverse events associated with PEN-866 and PEN-221, including but not limited to toxicities consistent with the anti-cancer payloads, including but not limited to fatigue, diarrhea, and neutropenia. While Tarveda has not experienced any serious adverse events to date, they could occur in the future.

Results of Tarveda’s ongoing and planned clinical trials could reveal a high and unacceptable severity and prevalence of side effects or unexpected characteristics. Undesirable side effects caused by Tarveda’s drug candidates could result in the delay, suspension or termination of clinical trials by Tarveda or the FDA for a number of reasons. Additionally, due to the high mortality rates of the cancers for which Tarveda is pursuing development and the pretreated nature of many patients in its ongoing and planned clinical trials of PEN-866 and PEN-221 and future drug candidates, a material percentage of patients in these clinical trials may die during a trial. The percentage of patient death, timing of patient death, or cause thereof could impact development of PEN-866, PEN-221 or future drug candidates. If Tarveda elects or is required to delay, suspend or terminate any clinical trial, the commercial prospects of its drug candidates will be harmed and its ability to generate product revenues from its drug candidates will be delayed or eliminated. Serious adverse events observed in clinical trials could hinder or prevent market acceptance of Tarveda’s drug candidates. Any of these occurrences may harm Tarveda’s business, prospects, financial condition and results of operations significantly.

Moreover, if Tarveda’s drug candidates are associated with undesirable side effects in clinical trials or have characteristics that are unexpected, Tarveda may elect to abandon or limit their development to more narrow uses or subpopulations in which the undesirable side effects or other characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective, which may limit the commercial expectations for its drug candidates, if approved. Tarveda may also be required to modify its study plans based on findings in its clinical trials. Many drugs that initially showed promise in early stage testing have later been found to cause side effects that prevented further development. In addition, regulatory authorities may draw different conclusions or require additional testing to confirm these determinations.

It is possible that as Tarveda tests its drug candidates in larger, longer and more extensive clinical trials, including with different dosing regimens, or as the use of its drug candidates becomes more widespread

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following any regulatory approval, illnesses, injuries, discomforts and other adverse events that were observed in earlier trials, as well as conditions that did not occur or went undetected in previous trials, will be reported by patients. If such side effects become known later in development or upon approval, if any, such findings may harm Tarveda’s business, financial condition, results of operations and prospects significantly.

In addition, if any of Tarveda’s drug candidates receive marketing approval, and it or others later identify undesirable side effects caused by treatment with such drug, a number of potentially significant negative consequences could result, including:

Any of these events could prevent Tarveda from achieving or maintaining market acceptance of its drug candidates, if approved, and could significantly harm its business, financial condition, results of operations and prospects.

Interim, topline and preliminary data from Tarveda’s clinical trials that it announces or publishes from time to time may change as more patient data become available, and are subject to audit and verification procedures that could result in material changes in the final data.

From time to time, Tarveda may publicly disclose preliminary, interim or topline data from its clinical trials such as Phase 1 dose escalation data for PEN-866 presented at the European Society for Medical Oncology Congress held in Barcelona, Spain in September 2019, or the PEN-221 Phase 1 clinical data presented at the American Society of Clinical Oncology Annual Meeting held in Chicago, Illinois in June, 2018. These interim updates are based on a preliminary analysis of then-available data, and the results and related findings and conclusions are subject to change following a more comprehensive review of the data related to the particular study or trial. Tarveda also makes assumptions, estimations, calculations and conclusions as part of its analyses of data, and Tarveda may not have received or had the opportunity to fully and carefully evaluate all data. As a result, the topline results that it reports may differ from future results of the same studies, or different conclusions or considerations may qualify such results, once additional data have been received and fully evaluated. Topline data also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data it previously published. As a result, topline data should be viewed with caution until the final data are available. In addition, Tarveda may report interim analyses of only certain endpoints rather than all endpoints. Interim data from clinical trials that Tarveda may complete are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available. Adverse changes between interim data and final data could significantly harm its business and prospects. Further, additional disclosure of interim data by Tarveda or by its competitors in the future could result in stock price volatility.

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Further, others, including regulatory agencies, may not accept or agree with Tarveda’s assumptions, estimates, calculations, conclusions or analyses or may interpret or weigh the importance of data differently, which could impact the value of the particular program, the approvability or commercialization of the particular drug candidate or product and the company in general. In addition, the information Tarveda chooses to publicly disclose regarding a particular study or clinical trial is typically selected from a more extensive amount of available information. You or others may not agree with what Tarveda determines is the material or otherwise appropriate information to include in its disclosure, and any information Tarveda determines not to disclose may ultimately be deemed significant with respect to future decisions, conclusions, views, activities or otherwise regarding a particular drug, drug candidate or its business. If the preliminary or topline data that Tarveda reports differs from late, final or actual results, or if others, including regulatory authorities, disagree with the conclusions reached, Tarveda’s ability to obtain approval for, and commercialize, PEN-866, PEN-221 or any other drug candidates may be harmed, which could harm its business, financial condition, results of operations and prospects.

The continued development and future commercial success of PEN-221 depends in part on the continued availability of FDA-approved screening diagnostic tests that detect SSTR2 expression; the failure to have a readily available FDA-approved screening diagnostic would negatively impact the commercial success of PEN-221 if the continued availability of such screening tests is not assured.

PEN-221 is being developed to treat tumors that express SSTR2. SSTR2 expression is an indicator of many neuroendocrine tumors, and there are currently available FDA-approved screening diagnostic tests that are used to detect such SSTR2 expression and diagnose the existence of neuroendocrine tumors. Because PEN-221 is being developed for tumors that express SSTR2, the inability to detect or differentiate among various types of cancers, and detect SSTR2 expression, would negatively impact both the continued development of PEN-221, as well as future commercial success. Although there are currently approved screening diagnostics on the market, if the owners of such tests fail to maintain FDA-approval, it could prevent or delay approval of PEN-221. In addition, the commercial success of PEN-221 will be tied to and dependent upon the continued availability of an approved screening diagnostic to detect SSTR2 expression begin available to doctors and patients on reasonable terms in the relevant geographies.

Tarveda may expend its limited resources to pursue a particular drug candidate or indication and fail to capitalize on drug candidates or indications that may be more profitable or for which there is a greater likelihood of success.

Because Tarveda has limited financial and managerial resources, it focuses on research programs and drug candidates that it identifies for specific indications or on specific paradigms including specific payloads. As a result, Tarveda may forego or delay pursuit of opportunities with other drug candidates or for other indications that later prove to have greater commercial potential. Tarveda’s resource allocation decisions may cause it to fail to capitalize on viable commercial products or profitable market opportunities. Tarveda’s spending on current and future research and development programs and drug candidates for specific indications may not yield any commercially viable products. If Tarveda does not accurately evaluate the commercial potential or target market for a particular drug candidate, it may relinquish valuable rights to that drug candidate through collaboration, licensing or other royalty arrangements in cases in which it would have been more advantageous for Tarveda to retain sole development and commercialization rights to such drug candidate.

Tarveda may not be successful in its efforts to design additional potential drug candidates, nor move any that are designed into the clinic.

A key element of Tarveda’s strategy is to apply its knowledge and understanding of conjugating HSP90 binders to appropriate payloads to design miniature drug conjugates that maintain therapeutic properties while remaining miniature in size to enable rapid penetration into solid tumors. The therapeutic design and development activities that Tarveda is conducting may not be successful in developing drug candidates that are

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useful in treating cancer or other diseases. Tarveda’s research programs may initially show promise in identifying potential drug candidates, yet fail to yield drug candidates for clinical development for a number of reasons, including:

Research programs to identify and design new drug candidates require substantial technical, financial and human resources. Tarveda may choose to focus its efforts and resources on a potential drug candidate that ultimately prove to be unsuccessful. If Tarveda is unable to identify and design suitable drug candidates for preclinical and clinical development, it will not be able to obtain revenues from the sale of products in future periods, which likely would result in significant harm to its financial position and adversely impact your investment.

Tarveda may not be able to obtain or maintain orphan drug designation or exclusivity for its drug candidates.

Regulatory authorities in some jurisdictions, including the United States, may designate drugs for relatively small patient populations as “orphan drugs.” Under the Orphan Drug Act, the FDA may designate a drug candidate as an orphan drug if it is intended to treat a rare disease or condition, which is generally defined as a patient population of fewer than 200,000 individuals in the United States, or if the disease or condition affects more than 200,000 individuals in the United States and there is no reasonable expectation that the cost of developing and making a drug product available in the United States for the type of disease or condition will be recovered from sales of the product.

Orphan drug designation entitles a party to financial incentives, such as opportunities for grant funding towards clinical trial costs, tax advantages and user-fee waivers. Additionally, if a product that has orphan designation subsequently receives the first FDA approval for the disease or condition for which it has such designation, the product is entitled to orphan drug exclusivity. This means that the FDA may not approve any other applications to market the same drug or biological product for the same indication for seven years, except in certain circumstances, including proving clinical superiority (i.e., another product is safer, more effective or makes a major contribution to patient care) to the product with orphan exclusivity. Competitors, however, may receive approval of different products for the indication for which the orphan product has exclusivity, or obtain approval for the same product but for a different indication than that for which the orphan product has exclusivity. In addition, exclusive marketing rights in the United States may be limited if Tarveda seeks approval for an indication broader than the orphan-designated indication or may be lost if the FDA later determines that the request for designation was materially defective.

Tarveda has obtained orphan drug designation in the United States for use of PEN-866 for treatment of pancreatic cancer, and for use of PEN-221 in treatment of neuroendocrine cancers and separately for the treatment of small cell lung cancer. Tarveda may apply for similar designations in other geographies or for its other drug candidates in the future. Orphan drug status does not ensure that Tarveda will receive marketing exclusivity in a particular market, and Tarveda cannot assure you that any future application for orphan drug designation in any other geography or with respect to any other drug candidate will be granted. Orphan drug designation neither shortens the development time or regulatory review time of a drug, nor gives the drug any advantage in the regulatory review or approval process.

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Risks Related to Tarveda’s Dependence on Third Parties

Tarveda relies, and intends to continue to rely, on third parties to conduct its clinical trials and perform some of its research and preclinical studies. If these third parties do not satisfactorily carry out their contractual duties, fail to comply with applicable regulatory requirements or do not meet expected deadlines, Tarveda’s development programs may be delayed or subject to increased costs or it may be unable to obtain regulatory approval, each of which may have an adverse effect on its business, financial condition, results of operations and prospects.

Tarveda does not have the ability to independently conduct all aspects of its preclinical testing or clinical trials itself. As a result, Tarveda is dependent on third parties to conduct its ongoing and planned clinical trials of PEN-866 and PEN-221 and preclinical studies, and any preclinical studies and clinical trials of any other drug candidates. The timing of the initiation and completion of these trials will therefore be partially controlled by such third parties and may result in delays to its development programs. Specifically, Tarveda expects CROs, clinical investigators and consultants to play a significant role in the conduct of these trials and the subsequent collection and analysis of data. However, Tarveda will not be able to control all aspects of their activities. Nevertheless, Tarveda is responsible for ensuring that each clinical trial is conducted in accordance with the applicable protocol and legal, regulatory and scientific standards, and its reliance on the CROs and other third parties does not relieve it of its regulatory responsibilities. Tarveda and its CROs are required to comply with GCP requirements, which are regulations and guidelines enforced by the FDA for drug candidates in clinical development. Regulatory authorities enforce these GCP requirements through periodic inspections of trial sponsors, clinical trial investigators and clinical trial sites. If Tarveda or any of its CROs or clinical trial sites fail to comply with applicable GCP requirements, the data generated in its clinical trials may be deemed unreliable, and the FDA may require Tarveda to perform additional clinical trials before approving its marketing applications. Tarveda cannot assure you that, upon inspection, the FDA will determine that its clinical trials comply with GCPs. In addition, Tarveda’s clinical trials must be conducted with product produced under cGMP regulations. Tarveda’s failure or the failure of third parties on whom it relies to comply with these regulations may require it to stop and/or repeat clinical trials, which would delay the marketing approval process.

There is no guarantee that any such CROs, clinical trial investigators or other third parties on which Tarveda relies will devote adequate time and resources to Tarveda’s development activities or perform as contractually required. If any of these third parties fail to meet expected deadlines, adhere to Tarveda’s clinical protocols or meet regulatory requirements, otherwise perform in a substandard manner, or terminate their engagements with Tarveda, the timelines for its development programs may be extended or delayed or its development activities may be suspended or terminated. If Tarveda’s clinical trial site terminates for any reason, it may experience the loss of follow-up information on subjects enrolled in such clinical trial unless it is able to transfer those subjects to another qualified clinical trial site, which may be difficult or impossible.

Furthermore, these third parties may also have relationships with other entities, some of which may be Tarveda’s competitors for whom they may also be conducting clinical trials or other pharmaceutical product development activities that could harm its competitive position. If these third parties do not successfully carry out their contractual duties, meet expected deadlines or conduct its clinical trials in accordance with regulatory requirements or Tarveda’s stated protocols, Tarveda will not be able to obtain, or may be delayed in obtaining, marketing approvals for PEN-866, PEN-221 or any other drug candidates and will not be able to, or may be delayed in its efforts to, successfully commercialize its products.

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Manufacturing pharmaceutical products is complex and subject to product loss for a variety of reasons. Tarveda contracts with third parties for the manufacture of its drug candidates for preclinical testing and clinical trials and expects to continue to do so for commercialization. This reliance on third parties increases the risk that Tarveda will not have sufficient quantities of its drug candidates or products or such quantities at an acceptable cost or quality, which could delay, prevent or impair its development or commercialization efforts.

Tarveda does not have any manufacturing facilities. Tarveda produces in its laboratory very small quantities of PEN-866 and PEN-221 and other drug candidates for evaluation in its research programs. Tarveda relies, and expects to continue to rely, on third parties for the manufacture of its drug candidates for preclinical and clinical testing, as well as for commercial manufacture if any of its drug candidates obtain marketing approval. Some of Tarveda’s manufacturers represent its sole source of supply, including PEN-866 and PEN-221. This reliance on third parties increases the risk that Tarveda will not have sufficient quantities of its drug candidates or products or such quantities at an acceptable cost or quality, which could delay, prevent or impair its development or commercialization efforts.

Tarveda may be unable to establish any agreements with third-party manufacturers or to do so on favorable terms. Even if Tarveda is able to establish agreements with third-party manufacturers, reliance on third-party manufacturers entails additional risks, including:

Tarveda has only limited arrangements in place with respect to acquiring and manufacturing necessary for clinical trials, and these arrangements do not extend to commercial supply. Tarveda acquires many key materials on a purchase order basis. As a result, it does not have long-term committed arrangements with respect to its drug candidates and other materials. If Tarveda obtains marketing approval for any of its drug candidates, it will need to establish an agreement for commercial manufacture with a third party.

Third-party manufacturers may not be able to comply with cGMP regulations or similar regulatory requirements outside of the United States. Tarveda’s failure, or the failure of its third-party manufacturers and suppliers, to comply with applicable regulations could result in sanctions being imposed on Tarveda, including clinical holds, fines, injunctions, civil penalties, delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of drug candidates or products, operating restrictions and criminal prosecutions, any of which could significantly and adversely affect supplies of its products. In addition, Tarveda’s third-party manufacturers and suppliers are subject to numerous environmental, health and safety laws and regulations, including those governing the handling, use, storage, treatment and disposal of waste products, and failure to comply with such laws and regulations could result in significant costs associated with civil or criminal fines and penalties for such third parties. Based on the severity of regulatory actions that may be brought against these third parties in the future, Tarveda’s clinical or commercial supply of drug and packaging and other services could be interrupted or limited, which could harm its business.

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Tarveda’s drug candidates and any products that it may develop may compete with other drug candidates and products for access to manufacturing facilities. As a result, Tarveda may not obtain access to these facilities on a priority basis or at all. There are a limited number of manufacturers that operate under cGMP regulations and that might be capable of manufacturing for Tarveda.

As Tarveda prepares for later-stage clinical trials and potential commercialization, Tarveda will need to take steps to increase the scale of production of its drug candidates. Tarveda has not yet scaled up the manufacturing process for any of its drug candidates. Even minor deviations from normal manufacturing processes could result in reduced production yields, product defects and other supply disruptions. If microbial, viral or other contaminations are discovered in its drug candidates or in the manufacturing facilities in which its drug candidates are made, such manufacturing facilities may need to be closed for an extended period of time to investigate and remedy the contamination.

Any performance failure on the part of Tarveda’s existing or future manufacturers could delay clinical development or marketing approval. Tarveda does not currently have arrangements in place for redundant supply or a second source for bulk drug substance for PEN-866 or PEN-221. If Tarveda’s current contract manufacturers for preclinical and clinical testing cannot perform as agreed, Tarveda may be required to replace such manufacturers. Although Tarveda believes that there are several potential alternative manufacturers who could manufacture its drug candidates, Tarveda may incur added costs and delays in identifying and qualifying any such replacement manufacturer or be able to reach agreement with any alternative manufacturer.

Tarveda’s current and anticipated future dependence upon others for the manufacture of its drug candidates or products may adversely affect its future profit margins and ability to commercialize any products that obtain marketing approval on a timely and competitive basis.

Tarveda may enter into collaborations with third parties for the development and commercialization of its drug candidates. If those collaborations are not successful, it may not be able to capitalize on the market potential of these drug candidates.

Tarveda may in the future seek third-party collaborators for the development and commercialization of some of its drug candidates on a selected basis. Tarveda’s likely collaborators for any collaboration arrangements include large and mid-size pharmaceutical companies, regional and national pharmaceutical companies and biotechnology companies. Tarveda faces significant competition in seeking appropriate collaborators. Its ability to reach a definitive agreement for a collaboration will depend, among other things, upon its assessment of the collaborator’s resources and expertise, the terms and conditions of the proposed collaboration and the proposed collaborator’s evaluation of a number of factors.

If Tarveda does enter into any such arrangements with any third parties, it will likely have limited control over the amount and timing of resources that such collaborators dedicate to the development or commercialization of its drug candidates. Tarveda’s ability to generate revenues from these arrangements will depend on its collaborators’ abilities and efforts to successfully perform the functions assigned to them in these arrangements. Collaborations involving Tarveda’s drug candidates would pose numerous risks, including the following:

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Risks Related to Regulatory Approval and Marketing of Tarveda’s Drug Candidates and Other Legal Compliance Matters

The development and commercialization of pharmaceutical products are subject to extensive regulation, and Tarveda may not obtain regulatory approvals for PEN-866, PEN-221 or any other drug candidates, on a timely basis or at all.

The clinical development, manufacturing, labeling, packaging, storage, recordkeeping, advertising, promotion, export, import, marketing, distribution, adverse event reporting, including the submission of safety and other post-marketing information and reports, and other possible activities relating to PEN-866 and PEN-221, currently Tarveda’s only drug candidates in clinical trials, as well as any other drug candidate that Tarveda may develop in the future, are subject to extensive regulation. Marketing approval of drugs in the United States requires the submission of a new drug application (“NDA”) to the FDA and Tarveda is not permitted to market any drug candidate in the United States until it obtains approval from the FDA of the NDA for that product. An NDA must be supported by extensive clinical and preclinical data, as well as extensive information regarding pharmacology, chemistry, manufacturing and controls.

FDA approval of an NDA is not guaranteed, and the review and approval process is an expensive and uncertain process that may take several years. The FDA also has substantial discretion in the approval process. The number and types of preclinical studies and clinical trials that will be required for NDA approval varies depending on the drug candidate, the disease or the condition that the drug candidate is designed to treat and the regulations applicable to any particular drug candidate. Despite the time and expense associated with preclinical studies and clinical trials, failure can occur at any stage. The results of preclinical and early clinical trials of PEN-866, PEN-221or any other drug candidate may not be predictive of the results of Tarveda’s later-stage clinical trials.

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Clinical trial failure may result from a multitude of factors including flaws in trial design, dose selection, placebo effect, patient enrollment criteria and failure to demonstrate favorable safety or efficacy traits, and failure in clinical trials can occur at any stage. Companies in the pharmaceutical industry frequently suffer setbacks in the advancement of clinical trials due to lack of efficacy or adverse safety profiles, notwithstanding promising results in earlier trials. Based upon negative or inconclusive results, Tarveda may decide, or regulators may require it, to conduct additional clinical trials or preclinical studies. In addition, data obtained from clinical trials are susceptible to varying interpretations, and regulators may not interpret Tarveda’s data as favorably as it does, which may further delay, limit or prevent marketing approval.

The FDA could delay, limit or deny approval of a drug candidate for many reasons, including because they:

Generally, public concern regarding the safety of pharmaceutical products could delay or limit Tarveda’s ability to obtain regulatory approval, result in the inclusion of unfavorable information in its labeling, or require it to undertake other activities that may entail additional costs. Tarveda has not obtained FDA approval for any product. This lack of experience may impede its ability to obtain FDA approval in a timely manner, if at all, for PEN-866 and PEN-221.

If Tarveda experiences delays in obtaining approval or if it fails to obtain approval of PEN-866, PEN-221 or its other drug candidates, its commercial prospects will be harmed and its ability to generate revenues will be materially impaired which would adversely affect its business, prospects, financial condition and results of operations.

Tarveda’s failure to obtain marketing approval in foreign jurisdictions would prevent its drug candidates from being marketed abroad, and any approval it is granted for its drug candidates in the United States would not assure approval of drug candidates in foreign jurisdictions.

In order to market and sell its products in any jurisdiction outside the United States, Tarveda must obtain separate marketing approvals and comply with numerous and varying regulatory requirements. The approval procedure varies among countries and can involve additional testing. The time required to obtain approval may differ substantially from that required to obtain FDA approval. The regulatory approval process outside the United States generally includes all of the risks associated with obtaining FDA approval. In addition, in many countries outside the United States, it is required that the product be approved for reimbursement before the

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product can be approved for sale in that country. Tarveda may not obtain approvals from regulatory authorities outside the United States on a timely basis, if at all. Approval by the FDA does not ensure approval by regulatory authorities in other countries or jurisdictions, and approval by one regulatory authority outside the United States does not ensure approval by regulatory authorities in other countries or jurisdictions or by the FDA. Tarveda may not be able to submit for marketing approvals and may not receive necessary approvals to commercialize its products in any market.

Even if Tarveda obtains marketing approval for its drug candidates, the terms of approvals and ongoing regulation of its products may limit how it manufactures and markets its products and compliance with such requirements may involve substantial resources, which could materially impair its ability to generate revenue.

Even if marketing approval of a drug candidate is granted, an approved product and its manufacturer and marketer are subject to ongoing review and extensive regulation, which may include the requirement to implement a REMS or to conduct costly post-marketing studies or clinical trials and surveillance to monitor the safety or efficacy of the product. Tarveda must also comply with requirements concerning advertising and promotion for any of its drug candidates for which it obtains marketing approval. Promotional communications with respect to prescription drugs are subject to a variety of legal and regulatory restrictions and must be consistent with the information in the product’s approved labeling. Thus, Tarveda will not be able to promote any products it develops for indications or uses for which they are not approved. In addition, manufacturers of approved products and those manufacturers’ facilities are required to ensure that quality control and manufacturing procedures conform to cGMPs, which include requirements relating to quality control and quality assurance as well as the corresponding maintenance of records and documentation and reporting requirements. Tarveda and its contract manufacturers could be subject to periodic unannounced inspections by the FDA to monitor and ensure compliance with cGMPs.

Accordingly, assuming Tarveda obtains marketing approval for one or more of its drug candidates, it and its contract manufacturers will continue to expend time, money and effort in all areas of regulatory compliance, including manufacturing, production, product surveillance and quality control. If Tarveda is not able to comply with post-approval regulatory requirements, it could have the marketing approvals for its products withdrawn by regulatory authorities and its ability to market any future products could be limited, which could adversely affect Tarveda’s ability to achieve or sustain profitability. As a result, the cost of compliance with post-approval regulations may have a negative effect on Tarveda’s operating results and financial condition.

Any drug candidate for which Tarveda obtains marketing approval will be subject to ongoing enforcement of post-marketing requirements and Tarveda could be subject to substantial penalties, including withdrawal of its product from the market, if Tarveda fails to comply with all regulatory requirements or if it experiences unanticipated problems with its products, when and if any of them are approved.

Any drug candidate for which Tarveda obtains marketing approval, along with the manufacturing processes, post-approval clinical data, labeling, advertising and promotional activities for such product, will be subject to continual requirements of and review by the FDA and other regulatory authorities. These requirements include, but are not limited to, restrictions governing promotion of an approved product, submissions of safety and other post-marketing information and reports, registration and listing requirements, cGMP requirements relating to manufacturing, quality control, quality assurance and corresponding maintenance of records and documents, and requirements regarding drug distribution and the distribution of samples to physicians and recordkeeping.

The FDA and other federal and state agencies, including the Department of Justice, closely regulate compliance with all requirements governing prescription drug products, including requirements pertaining to marketing and promotion of drugs in accordance with the provisions of the approved labeling and manufacturing of products in accordance with cGMP requirements. Violations of such requirements may lead to investigations alleging violations of the Food, Drug, and Cosmetic Act (“FDCA”), and other statutes, including the False Claims Act and other federal and state healthcare fraud and abuse laws as well as state consumer protection laws.

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Tarveda’s failure to comply with all regulatory requirements, and later discovery of previously unknown adverse events or other problems with its products, manufacturers or manufacturing processes, may yield various results, including: