NOTE 4 — STOCKHOLDERS’ EQUITY (DEFICIT)

Common Stock

On February 18, 2015, the Company completed an underwritten public offering of 8.3 million shares of its common stock and accompanying warrants to purchase up to 8.3 million shares of common stock. Net proceeds from the sale of common stock and

accompanying warrants, excluding the proceeds, if any, from the exercise of the warrants issued in the offering, were approximately $28.1 million after deducting the underwriting discount and offering expenses payable by the Company.

The warrants issued in the February 2015 offering carry an initial exercise price of $10.86 per share and are exercisable commencing with the date six months following the issuance date and continuing through the date that is five years from the issuance date. On the 30th trading day following the earlier of (i) the date two years from the issuance date or (ii) the later to occur of (a) the date on which top-line efficacy data from the Company’s Phase 3 clinical trial of evofosfamide plus doxorubicin versus doxorubicin alone in patients with locally advanced unresectable or metastatic soft tissue sarcoma is publicly announced by the Company or (b) the date on which top-line efficacy data from the Phase 3 MAESTRO clinical trial of evofosfamide in combination with gemcitabine in patients with previously untreated, locally advanced unresectable or metastatic pancreatic adenocarcinoma is publicly announced by the Company, the warrant exercise price will be adjusted to equal the average of the volume-weighted average price of the Company’s common stock for each of the 20 trading days immediately preceding the applicable date, provided that in no event will the exercise price be adjusted above $10.86 or below $3.62. After the date of foregoing adjustment to the warrant exercise price (such date, the “Adjustment Date”), the exercise price of the warrants will then be subject to price-based anti-dilution protection such that to the extent the Company’s issues and sells any shares of common stock, or any securities convertible or exchangeable for shares of common stock (in each case subject to certain exceptions), at a price per share below the warrant exercise price then in effect, the warrant exercise price will be adjusted downward to equal the price at which such securities are issued and sold by the Company (but in no event will the warrant exercise price be reduced below $3.62 per share). The exercise price of the warrants is also subject to adjustment in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting the Company’s common stock. The warrants must be exercised for cash, except that if the Company fails to maintain an effective registration statement covering the exercise of the warrants, the warrants may be exercised on a net, or cashless basis. In addition, subject to the satisfaction of certain conditions set forth in the warrants, at the Company’s option, the Company has the right to force the holders of the warrants to exercise their warrants in full if the volume-weighted average price of the Company’s common stock for any 20 consecutive trading-day period beginning after the 90th day following the Adjustment Date exceeds $18.00 per share.

Common Stock Warrant Valuation

The Company accounts for its common stock warrants under guidance in ASC 815 that clarifies the determination of whether an instrument (or an embedded feature) is indexed to an entity’s own stock, which would qualify for classification as liabilities. The guidance requires the Company’s outstanding warrants to be classified as liabilities and to be fair valued at each reporting period, with the changes in fair value recognized as other income (expense) in the Company’s consolidated statements of operations.

At March 31, 2015 and February 18, 2015, the Company had warrants outstanding to purchase 8,300,000 shares of common stock, respectively, having an initial exercise price of $10.86 per share, which warrants were issued by the Company in the February 2015 offering. The fair value of these warrants on March 31, 2015 and February 18, 2015 was determined using a Monte-Carlo simulation model that accounted for the estimated changes to exercise price between the issuance date and the Adjustment Date along with the following key level 3 inputs:

On February 18, 2015, the Company determined the fair value of the February 2015 warrants to be $14.7 million and classified that amount of the net proceeds from the February 2015 offering to warrant liability. During the three months ended March 31, 2015, the change in fair value of $1.2 million of noncash income related to the February 2015 warrants was recorded as other income (expense) in the Company’s consolidated statement of operations.

At both March 31, 2015 and December 31, 2014, the Company also had warrants outstanding to purchase 3,846,165 shares of common stock, having an exercise price of $2.46 per share, which warrants were initially issued by the Company in an underwritten public offering in March 2011. The fair value of these warrants on March 31, 2015 and December 31, 2014 was determined using a Black Scholes valuation model with the following level 3 inputs:

During the three months ended March 31, 2015, the change in fair value of $2.7 million of noncash expense related to the March 2011 warrants was recorded as other income (expense) in the Company’s consolidated statement of operations.

The following table sets forth the Company’s financial liabilities, related to warrants issued in the February 2015 and March 2011 offerings, subject to fair value measurements as of March 31, 2015 and December 31, 2014:

The following table is a reconciliation of the warrant liability measured at fair value using level 3 inputs (in thousands):